Talty v. Schoenholz

• Citation: 323 Ill. 232,154 N.E. 139
• Decision Date: 28 October 1926
• Docket Number: No. 16791.,16791.
• Parties: TALTY v. SCHOENHOLZ, Sheriff.
• Court: Supreme Court of Illinois

323 Ill. 232

154 N.E. 139

TALTY

v.SCHOENHOLZ, Sheriff.

No. 16791.

Supreme Court of Illinois.

Oct. 28, 1926.

Error to Appellate Court, Second District, on Appeal from Circuit Court, Lee County; William J. Emerson, Judge.

Action of replevin by Ellen M. Talty against Frank Schoenholz, Sheriff. Judgment for plaintiff was affirmed by the Appellate Court (238 Ill. App. 635), and defendant brings certiorari.

Reversed and remanded.

R. W. Besse, of Sterling, and Clyde Smith, of Dixon, for plaintiff in error.

H. A. Brooks, of Dixon, and Sonnenschein, Berkson, Lautmann & Levinson, of Chicago (Herbert M. Lautmann, Elmer W. Leesman, and Edward P. Morse, all of Chicago, of counsel), for defendant in error.

PER CURIAM.

In an action of replevin against the sheriff of Lee county, Mrs. Ellen M. Talty recovered a judgment in the circuit court of that county finding the issues in her favor as to certain property upon which the sheriff had levied three executions and which was included in a chattel mortgage in which Mrs. Talty was the grantee. The cause was heard by the court without a jury, the Appellate Court affirmed the judgment, and a writ of certiorari was awarded to bring the record before us for review.

The judgments on which the executions were issued were against P. F. and E. J. Talty. The first, in favor of Herman Matson for $3,376, was delivered to the sheriff on October 15, 1920; the second and third, in favor of the State Bank of Sterling, for $898.72 and $1,940.94, where delivered to the sheriff, respectively, on November 3 and November 4. P. F. Talty, the grantor in the chattel mortgage, was the son of the grantee. He was the owner of a farm, which was heavily incumbered, and of personal property consisting of farming implements, live stock, hay, and grain. Besides the mortgage indebtedness on the farm he owed considerable sums to other creditors, and his mother, previous to the execution of the mortgage, had paid some notes and signed others as security for him, amounting to several thousand dollars. The Union State Bank requestedadditional security of him, and he asked his mother to sign his notes. She said she did not think she would sign any more notes before she got better security. He offered to give her a mortgage on the farm, which was already heavily incumbered, but she said she preferred a chattel mortgage, and he said he would give her a chattel mortgage, on the property on the farm. The mortgage was acknowledged October 12, 1920, and purported to secure a note of the mortgagor to the mortgagee for $6,000, dated October 11, 1920, due two years after date, with interest at 6 per cent. The abstract of the testimony does not show just what date the talk between Mrs. Talty and her son about his giving her a chattel mortgage occurred, but the inference seems quite plain that it was very shortly before the mortgage was executed. Mrs. Talty was not present when the mortgage was executed and filed for record. She lived in Dixon, but was, at the time the mortgage was made and recorded, visiting in Chicago. The mortgage was recorded October 13 and was mailed to her at Harmon. She testified she did not live there, but occasionally got mail there. She returned home about a week after the mortgage was executed and recorded and found it in or on her desk at her home in Dixon. The recorder testified it was mailed, after being recorded, to Mrs. Talty at Harmon, according to instructions given when the mortgage was filed but could not recall who it was gave the instructions. Mrs. Talty testified there was a letter from her attorney with the mortgage when she found it on her desk after her return home. The first information she had of its execution was when she found it on her desk.

No attempt was made by the parties to comply with the bulk sales statute, and it is contended that to make a chattel mortgage valid, that act must be complied with in the same manner necessary to make an absolute sale valid. That question has not heretofore been presented to this court for decision. The first bulk sales act in this state was adopted in 1905 (Laws 1905, p. 284), and was held unconstitutional in 1908 as class legislation. Off & Co. v. Morehead, 235 Ill. 40, 85 N. E. 264,20 L. R. A. (N. S.) 167, 126 Am. St. Rep. 184,14 Ann. Cas. 434. That act provided ‘that a sale of any portion of a stock of merchandise’ otherwise than in the ordinary course of trade or the seller's business, or ‘a sale of an entire stock of merchandise in gross,’ will be presumed to be fraudulent and void as against creditors unless the other provisions of the act were complied with. It will be seen that act mentioned only sales. The present act, passed in 1913 (Laws 1913, p. 258), makes ‘the sale, transfer or assignment’ of the whole or major part of goods and chattels fraudulent and void unless the other provisions of the act are complied with. Counsel for plaintiff in error argue that the use of the words ‘transfer or assignment’ in the present act, in addition to ‘sale,’ shows an intention of the Legislature to give wider scope to the present act than was intended by the first act, and that the words ‘transfer or assignment,’ unless held to embrace a chattel mortgage, would have been wholly unnecessary and meaningless.

Many states of the Union have passed bulk sales acts. The primary object of such statutes is to prevent the owner of goods and chattels who is indebted to creditors from selling the whole or major part of his goods and chattels without giving the purchaser notice who his creditors are and without notice having been given the creditors of the proposed sale. Sales without compliance with the requirements of the statute are declared to be either void, or fraudulent and void, as against creditors. In 1905 (Acts 1905, No. 223), Michigan passed an act the title of which was, ‘An act to regulate the sales, transfers and assignments of stocks of goods, merchandise and fixtures in bulk.’ The body of the act declared that ‘the sale, transfer or assignment’ in bulk of the whole or any part of a stock of merchandise, or merchandise and fixtures, contrary to the requirements of the act, ‘shall be void as against the creditors of the seller, transferrer [or] assignor.’ Oklahoma passed an act in 1907-1908 (Laws 1907-1908, c. 56) which declared, ‘the transfer of any portion of a stock of goods' without complainance with the requirements of the act ‘shall be presumed to be fraudulent and void as against the creditors of such transferrer.’ The Nebraska act was passed in 1907 (Laws Neb. 1097, p. 242), and declared ‘the sale, trade or other disposition’ without compliance with the requirements of the act ‘shall be void as against the creditors of the seller.’ Arkansas passed an act in 1913 (Acts 1913, p. 326), which declared ‘the sale, transfer or assignment, in bulk,’ etc., contrary to the requirements of the statute, ‘shall be void as against the creditors of the seller, transferrer or assignor.’ The Rhode Island act, passed in 1909 (Pub Laws 1909-1910, c. 387), declared ‘the transfer of the major part in value of the whole of a stock of merchandise,’ etc., contrary to the provisions of the statute, ‘shall be fraudulent and void as against all persons who are creditors of the transferrer.’ The Virginia act, passed in 1916 (Law Va. 1916, c. 409), provides‘the sale, transfer or assignment in bulk of any part or the whole of a stock of merchandise,’ etc., contrary to the requirements of the statute, ‘shall be void as against creditors of the seller.’

In each of the above states, except Virginia, the question whether the statute applied to a chattel mortgage given on the goods and chattels of the owner so as to requirecompliance with the provisions of the statute in order to render the chattel mortgage valid has been passed upon by the Supreme Court. In the case of Hannah & Hogg v. Richter Brewing Co., 149 Mich. 220, 112 N. W. 713,12 L. R. A. (N. S.) 178, 119 Am. St. Rep. 674,12 Ann. Cas. 344, decided in 1909, the court, after referring to the rules for construing statutes, and that to find the legislative intent of an act the whole act should be considered and the ordinary meaning given the words used in the statute, said:

‘The terms ‘sale, transfer or assignment,’ used in the entitling and in the body of the act, taken in their usual and ordinary signification, mean the disposition of the entire title of the seller. This meaning is indicated by the provision in the statute relative to notice required to be given to creditors as follows, 'And unless the purchaser, transferee and assignee shall, at least five days before taking possession of such merchandise, or merchandise and fixtures, or paying therefor, notify personally, or by registered mail, every creditor whose name and address are stated in said list, or of which he has knowledge, of the proposed sale and of the price, terms and conditions thereof.' Taking this language and the other language of the act, it is apparent that its object was to regulate those sales made of an entire stock upon an immediate payment and change of possession, and which before the act might have been valid, although in fact a fraud upon creditors. To hold a chattel mortgage within the meaning of the statute it is necessary to hold that it is a sale within the common acceptation of that term, transferring the entire title, and entitling the vendee to immediate possession.'

Counsel for plaintiff in error insist the Michigan statute is different from ours and that the decision of the Michigan court should not be even persuasive. It is pointed out that by the Michigan statute a sale, transfer, or assignment without complying with the act is ‘void,’ and the Illinois act makes it ‘fraudulent and void.’ To our minds that does not distinguished the two statutes and require that they be differently construed. The phraseology of the two acts in other respects is not precisely the same, but they are about as similar...