Spokane Merchants' Ass'n v. First Nat. Bank

• Decision Date: 22 July 1915
• Docket Number: 12356.
• Court: Washington Supreme Court
• Parties: SPOKANE MERCHANTS' ASS'N v. FIRST NAT. BANK OF COLVILLE et al.

150 P. 434

86 Wash. 367

SPOKANE MERCHANTS' ASS'N v. FIRST NAT. BANK OF COLVILLE et al.

No. 12356.

Supreme Court of Washington

July 22, 1915

Department 2. Appeal from Superior Court, Stevens County; E. H Sullivan, Judge.

Action by the Spokane Merchants' Association against the First National Bank of Colville, and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Fullerton J., dissenting.

F. M Goodwin, J. D. Campbell, and J. B. Campbell, all of Spokane for appellant.

Jesseph & Bourland and F. Leo. Grinstead, all of Colville, for respondents.

MAIN, J.

This was an action in equity brought by the assignee of certain of the creditors of the estate of Victor M. Shick, deceased, for the purpose of having set aside a judgment foreclosing two chattel mortgages, and declaring the mortgages void as to creditors, and restraining the plaintiff in the mortgage foreclosure action from selling the property under the judgment. After the issues were framed the cause in due time was tried before the court sitting without a jury, and resulted in a judgment dismissing the action. From this judgment the plaintiff appeals.

The pertinent facts are substantially as follows: On the 22d day of December, 1910, and for some time prior thereto, Victor M Shick and C. F. Kahl were partners engaged in the hardware business in the town of Addy, Stevens county, Wash., under the firm name and style of Addy Hardware Company. On the date mentioned the partnership borrowed from the First National Bank of Colville, Wash., the sum of $1,100, giving its promissory note due in four months; and on the same date borrowed of the same bank the sum of $1,200, evidenced by a promissory note due in six months after date. These notes were secured by chattel mortgages covering the stock of hardware, furniture, implements, etc., and 'other personal property belonging to the Addy Hardware Company.' On April 14, 1911, Victor M. Shick, a member of the partnership, died intestate. On the 16th day of May, 1911, Mary Shick, the wife of Victor M. Shick, deceased, was appointed administratrix of his estate, no application having been made previously by the surviving partner for letters of administration upon the partnership property. The chattel mortgages dated December 22, 1910, were not recorded until February 21, 1912. On February 21, 1912, the First National Bank of Colville began an action to foreclose the mortgages, making Mary Shick a party thereto as an individual, and as administratrix of the estate of her deceased husband, and also making C. F. Kahl, the surviving member of the partnership, a party to the action. On February 27, 1912, Mary Shick and C. F. Kahl answered in the action to foreclose the mortgages, and admitted all of the allegations of the complaint. The answer was filed on March 5, 1912, and a decree of foreclosure was entered on March 6, 1912. On March 9, 1912, the Spokane Merchants' Association, a corporation, as assignee of certain creditors of the Addy Hardware Company, filed a motion to vacate and set aside the judgment of foreclosure of March 6, 1912, and for leave to intervene and defend. These motions were denied on March 21, 1912. No appeal was prosecuted by the Spokane Merchants' Association from the order overruling and denying its motion to vacate and set aside the judgment foreclosing the chattel mortgages. On March 28, 1912, this action was commenced by the Spokane Merchants' Association for the purposes already indicated.

A considerable portion of the appellant's brief is devoted to argument and the citation of authorities to sustain its contention that the mortgages were void as to creditors. Without reviewing this argument, it may be said that there can be little doubt but what the mortgages were void as to creditors of the estate of Victor M. Shick, deceased. The distinction between the facts in this case and those of the case of Pacific Coast Biscuit Co. v. Perry, 77 Wash. 352, 137 P. 483, is obvious. In that case the mortgage was not recorded until some time after it was executed; and it was held that the mortgage spoke and became valid from the date of its filing for record, the reason being that at that time the mortgagor had the power to make a new mortgage which would prefer a creditor. In this case, approximately 10 months prior to the filing of the mortgages for record, the mortgagor had died. His property had passed to the administratrix, who held the same in trust for the creditors of the estate and the distributees. At the time the mortgage was filed for record a new mortgage could not have been given which would have operated as a preference to any of the creditors.

But even though the mortgage is void as to creditors, it does not follow that the appellant can maintain this action. It is only creditors who have acquired some right to the specific property covered by the mortgage, or some form of lien thereon, that can question the right of the mortgagee to fore close against the mortgaged property. Heal v. Evans, etc., Coke Co., 71 Wash. 225, 128 P 211; Watson v. First Natl. Bank, 82 Wash. 65, 143 P. 451. In the...