Sherwin v. Gaghagen

• Decision Date: 07 February 1894
• Citation: 57 N.W. 1005,39 Neb. 238
• Parties: SHERWIN v. GAGHAGEN ET AL.
• Court: Nebraska Supreme Court

39 Neb. 238

57 N.W. 1005

SHERWIN

v.GAGHAGEN ET AL.

Supreme Court of Nebraska.

Feb. 7, 1894.

Syllabus by the Court.

1. As a general rule, a court of equity will not interpose an objection to its own jurisdiction on the ground that the plaintiff has an adequate remedy at law, but will retain the cause for trial, and award the relief to which the parties would have been entitled in a court of law.

2. Objection to the jurisdiction of a court of equity on the ground that the plaintiff has an adequate remedy at law must be made before judgment on the merits of the cause, and will not be entertained when made for the first time in this court on the appeal of the objecting party.

3. A provision in a chattel mortgage for possession and power of sale by the mortgagor raises a conclusive presumption of fraud, and such conveyance will be held void as to creditors.

4. But in every case where the conveyance is not fraudulent on its face the question of fraud is one of fact.

5. Fraud in a chattel mortgage by reason of a stipulation for possession and power of sale by the mortgagor is available only to creditors whose executions or attachments are levied before delivery to the mortgagee under the terms of the mortgage.

6. A mortgage of personal property for a part of the purchase price thereof will not be declared void as to creditors of the mortgagor on the ground that the value of the property mortgaged is largely in excess of the amount of the debt secured.

Appeal from district court, Lancaster county; Chapman, Judge.

Action by Harlan P. Sherwin against Lemuel L. Gaghagen, Ephraim I. Ferguson, Samuel McClay, sheriff, and others to restrain the execution of a judgment, and for other relief. There was judgment for plaintiff, and defendants appeal. Affirmed.John D. Pope and Pound & Burr, for appellants.

Robert Ryan and Thos. Ryan, for appellee.

POST, J.

This is an appeal from a decree of the district court of Lancaster county. In the petition it is charged, in substance, that on the 1st day of August, 1890, the appellant Gaghagen executed in favor of Sherwin, the appellee, three promissory notes, to wit, one for $150, due September 1, 1890; one for $200, due October 1, 1890; and one for $1,225.36, due November 1, 1890; all bearing interest at 8 per cent. per annum. In order to secure the notes above described, Gaghagen at the same time executed in favor of Sherwin a mortgage upon a stock of drugs and fixtures in the city of Lincoln, including counters, show cases, soda fountain, etc. Immediately following the description of the property mortgaged is this recital: “The intention being to convey to said H. P. Sherwin all the drugs and fixtures heretofore sold by said Sherwin to said Gaghagen, and this mortgage is given to secure a part of the purchase money for the said drugs, fixtures, and toilet articles, said fixtures being in 1124 O street, on east side of building, in Lincoln, Nebraska. The above-described chattels are now in my possession, are owned by me, and free from incumbrance in all respects; but said possession immediately is transferred to H. P. Sherwin, and all the money realized from the sale of goods to apply on said notes as same becomes due by J. H. Pinkerton, agent for H. P. Sherwin.” Said mortgage was filed in the office of the county clerk of Lancaster county September 22d. On the 23d day of September, the note for $150 remaining wholly unpaid, Sherwin demanded possession of the mortgaged property, whereupon it was all surrendered by Gaghagen to him, to be sold in accordance with the conditions of the mortgage; but upon the representation of Gaghagen that he would in the mean time procure the means to discharge the several notes, Sherwin agreed that he would not advertise the mortgaged property for sale until September 26th. That the representation aforesaid was willfully false, and Gaghagen, instead of trying to secure money with which to pay said notes within the time agreed upon for that purpose, conspired with his codefendant Ferguson to cheat and defraud the plaintiff out of his claim. That, in pursuance of such conspiracy, said parties procured to be assigned to Ferguson certain claims against Gaghagen, amounting in the aggregate to $1,365.75, most of which were not due, and many of which were purchased for 50 per cent. of the face thereof. That, on the 25th day of September, Gaghagen voluntarily appeared before the district court, and confessed judgment in favor of Ferguson for the amount of said claims. That an execution was immediately procured and placed in the hands of a deputy sheriff for service, who, within an hour thereafter, under the direction of Ferguson and Gaghagen, levied upon the property in controversy; and the defendant McClay, as sheriff, has advertised said property for sale to satisfy the judgment aforesaid. That the assignment of said claims, as well as the confession of the said judgment, was fraudulent, and designed by the defendants named to defraud the plaintiff; and that McClay, as sheriff, is using his office in order to assist the other defendants in their efforts to deprive the plaintiff of his security. The prayer is for a decree enjoining the several defendants from selling the property to satisfy the execution against Gaghagen, and from otherwise interfering with his possession, or the foreclosure of the plaintiff's mortgage.

The defendants joined in an answer, to which they admit the execution of the notes and mortgage by Gaghagen, the confession of judgment, the issuing of the execution, and levy upon the mortgaged property as alleged, and deny the other allegations of the petition. The answer contained a charge of fraud in the following language: “Said notes were fraudulently obtained from said Gaghagen by said plaintiff, through a trade made between said parties, by which said plaintiff, by misrepresentation and misstatements, and by cheating and defrauding said Gaghagen, obtained said notes set out in said petition, as well as the chattel mortgage made to secure said notes. Defendants, further answering, say that the chattel mortgage set out in plaintiff's petition was fraudulent as to defendant E. I. Ferguson, who is a judgment creditor of said Lemuel L. Gaghagen. That said chattel mortgage was given to the said plaintiff by the said Lemuel L. Gaghagen, by which the said Gaghagen obtained possession of said stock of goods covered by said chattel mortgage, and allowed the said Gaghagen to retain possession of said goods and chattels, and to buy and sell in his own name up to the time the said sheriff of Lancaster county, by his deputy, levied an execution upon the same under a valid and subsisting judgment; said judgment and execution being mentioned in the petition filed herein.” It is further alleged that Gaghagen was at the time of the levy in possession of the mortgaged property; also that the plaintiff has an adequate remedy at law. The reply is a general denial of the affirmative allegations of the answer. The cause was sent to a referee, with instructions to find the facts, and who, accordingly, at the next term of court, submitted the following findings:

“(1) I find that on the 16th day of July, 1890, the plaintiff, Harlan P. Sherwin, was the owner of a certain stock of drugs and fixtures situated in the east half of the room No. 1124 O street, in the city of Lincoln, Neb., and that the defendant Lemuel L. Gaghagen was the owner of a farm, with certain stock, crops, and farming implements near the town of Friend, in Saline county, Nebraska.

(2) I find that on said 16th day of June, 1890, the said Harlan P. Sherwin and Lemuel L. Gaghagen made and entered into an agreement in writing, whereby they agreed to make an exchange of their respective property, as described in the first finding.

(3) I find that said agreement was duly executed, and said exchange consummated, on or about the 1st day of August, 1890, and each party duly entered into possession of the property so acquired by him.

(4) I find that the said stock of drugs and fixtures was found to exceed in value the said property of L. L. Gaghagen in sum of $1,570.36.

(5) I find that to secure the payment of said difference in value the said Lemuel L. Gaghagen made, executed, and delivered to said H. P. Sherwin three promissory notes, as follows: One for $150, due September 1, 1890; one for $200, due October 1, 1890; and one for $1,220.36, due November 1, 1890,--with 8 per cent. interest; and to further secure the said promissory notes said L. L. Gaghagen made, executed, and delivered to the said Harlan P. Sherwin a chattel mortgage upon the said stock of drugs and fixtures so purchased by him of said Harlan P. Sherwin.

(6) I find that said chattel mortgage was duly filed for record in the office of the county clerk of Lancaster county, Neb., on the 22d day of September, 1890, at four o'clock P. M., and has ever since remained of record in said office.

(7) I find that said trade or exchange between said Harlan P. Sherwin and said Lemuel L. Gaghagen was open and fair, and without fraud on the part of either party thereto, and that said notes and chattel mortgage were bona fide, and for a valuable consideration, and without any intention to defraud creditors or purchasers, and that no portion of the consideration for the same has failed.

(8) I find that possession of said stock of drugs and fixtures was taken by L. L. Gaghagen on or about August 1, 1890, and continued by him until the evening of September 22, 1890, and that up to said time the business was conducted and carried on in the name of said L. L. Gaghagen.

(9) I find that on the 24th day of September, 1890, the said L. L. Gaghagen was indebted to the following persons in Saline county, Nebraska: Mrs. McDougall, note dated April 30, 1890, due July 30, 1890, for $22.10, 10 per cent.; T. D. B. Mason, note dated October 23, 1889, due October 23, 1890, $125, 10 per cent.; J. A. Copperthwaite, note dated November 4, 1889, due ...