SanFord v. Jensen

• Decision Date: 02 December 1896
• Citation: 69 N.W. 108,49 Neb. 766
• Parties: SANFORD v. JENSEN.
• Court: Nebraska Supreme Court

49 Neb. 766

69 N.W. 108

SANFORD

v.JENSEN.

Supreme Court of Nebraska.

Dec. 2, 1896.

Syllabus by the Court.

1. The retention of possession of mortgaged chattels by the mortgagor is, under section 11, c. 32, Comp. St., prima facie fraudulent as to his creditors, or subsequent good-faith purchasers, in case the mortgage had been duly filed. This presumption may be entirely rebutted by proof.

2. The legal presumption of fraud arising by virtue of said statute can be invoked only by a creditor or purchaser, and the latter cannot do so until he has first established his own good faith. When this is shown, and not until then, the burden is cast upon the person claiming under the mortgage to show that it was made in good faith, and without any intention to defraud.

3. Essential element of “good faith,” as that term is used in the above section, is that the subsequent purchaser must have acquired the mortgaged chattels for a valid consideration, and without actual knowledge of the existence of the mortgage, or notice of such facts as would put an ordinarily prudent man on inquiry.

4. In an action for conversion, a general allegation that the defendant unlawfully and wrongfully converted the property is sufficient.

Error to district court, Saunders county; Bates, Judge.

Conversion by Charles W. Sanford against Iver Jensen. From a judgment for defendant, plaintiff brings error. Reversed.

Clark & Allen, for plaintiff in error.

Simpson & Sornborger, for defendant in error.

NORVAL, J.

This action was instituted by Charles W. Sanford to recover the value of a span of mules which it is claimed the defendant converted. The answer is a general denial. At the close of plaintiff's testimony, the jury, in obedience to a peremptory instruction of the court, returned a verdict for the defendant, upon which judgment was subsequently rendered. Plaintiff prosecutes error.

The question involved is whether, under uncontradicted testimony, the court erred in not submitting the cause to the jury, and in directing a verdict for the defendant. On the 14th day of November, 1887, one J. R. Eddy, a resident of Saunders county, and being the owner of the mules in question, executed and delivered his negotiable promissory note to George A. Crafts for the sum of $680, payable 90 days after date, with interest at 10 per cent., and at the same time secured the payment of said note by a chattel mortgage upon said mules, together with other property. The mortgaged chattels were left in the possession of Eddy, and the mortgage was duly filed in the office of the county clerk of said county (the county in which the mortgagor then resided) on December 31, 1887. Plaintiff purchased the note and mortgage before maturity, in the usual course of business, for an adequate consideration, and he has ever since been the owner and holder thereof. The note secured by the mortgage has not been paid, nor any part thereof. The defendant bought the mules from Eddy long after the filing of the mortgage, and sold them, without the authority or consent of plaintiff, to John Hudkins, and received the purchase price. What consideration, if any, Jensen paid for the mules, or whether he at the time had actual notice of the mortgage, the record does not show. Nor does it appear that the mortgage was made in good faith, and for a valuable consideration. No testimony having been adduced as to these matters, counsel for the defendant argues that the proper verdict was returned, claiming that the burden was upon the plaintiff to establish either the bona fides of the mortgage, or that the defendant is not a purchaser in good faith, without notice. This proposition we shall now consider. Section 11, c. 32, Comp. St., declares that “every sale made by a vendor of goods and chattels in his possession or under his control, and every assignment of goods and chattels, by way of mortgage or security, or upon any condition whatever, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession, of the things sold, mortgaged, or assigned, shall be presumed to be fraudulent and void, as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith; and shall be conclusive evidence of fraud unless it shall be made to appear on the part of the persons claiming under such sale or assignment that the same was made in good faith, and without any intent to defraud such creditors or purchasers.”

The foregoing provisions have been frequently before the court for consideration, and it has been decided repeatedly that the retention of possession of mortgaged chattels by the mortgagor renders the mortgage, although duly filed, prima facie fraudulent as to creditors of the mortgagor and subsequent good-faith purchasers, but that this presumption may be rebutted by evidence; that in such case the mortgage is conclusively fraudulent, unless that it be shown that it was made in good faith, and without any intent to defraud; and that the burden is upon the person claiming under such mortgage to establish its bona fides. Pyle v. Warren, 2 Neb. 252;Robison v. Uhl, 6 Neb. 328;Miller v. Morgan, 11 Neb. 121, 7 N. W. 755;Densmore v. Tomer, 11 Neb. 118, 7 N. W. 535;Marsh v. Burley, 13 Neb. 261, 13 N. W. 279;Turner v. Killian, 12 Neb. 580, 12 N. W. 101;Severance v. Leavitt, 16 Neb. 439, 20 N. W. 273;Lorton v. Fowler, 18 Neb. 224, 24 N. W. 685;Davis v. Scott, 22 Neb. 154, 34 N. W. 353. The rule deducible from these decisions is that, in a...