The Tenney Company, a Corp. v. Thomas
| Decision Date | 14 July 1931 |
| Docket Number | 5926 |
| Citation | 237 N.W. 710,61 N.D. 202 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Barnes County, Englert J. Action to foreclose a chattel mortgage and to set aside a prior mortgage covering the same property. From a judgment for the defendant mortgagee, plaintiff appeals.
Affirmed.
W H. Stutsman and Stinchfield, Mackall, Crounse McNally & Moore, for appellant.
A notary public should not be permitted to come into court upon the foreclosure of a mortgage and give testimony impeaching his own to the mortgage which is being foreclosed. First Nat. Bank v. Glenn, 10 Idaho 224, 77 P. 623.
To allow an officer to impeach his certificate would expose weak or dishonest men to the most dangerous temptations. Stone v. Montgomery, 35 Miss. 83; Green v. Godfrey, 44 Me. 25; Pickens v. Knisely, 29 Va. 1, 11 S.E. 932.
An antecedent debt constitutes value if it was either payable on demand or at a future date. Horton v. Wright, 36 N.D. 622, 162 N.W. 936; Hanson v. Johnson, 42 N.D. 431, 177 N.W. 452; Baird v. Savings Bank, 56 N.D. 811, 219 N.W. 569.
The court will demand proof of an intent and understanding that the money advanced should be paid back, and will scrutinize carefully the transactions between relatives. Tomlinson v. Farmers & Merchants Bank, 58 N.D. 217, 225 N.W. 315; Rasmussen v. Chambers, 52 N.D. 648, 204 N.W. 178.
Ritchie & Ployher, Miller, Gorham & Wales, John J. McMahon and Martin O. Weisbrod, for respondent.
A debtor has the right to pay one creditor in preference to another. He who questions this right must lay his hands upon the law which takes away the right in a given case. Cutler v. Pollack, 4 N.D. 205, 59 N.W. 1062.
If the creditor receives only so much property as is reasonably necessary to satisfy his debt, and receives it in good faith for that purpose, the fact that he may know that his grantor is actuated solely by a desire to defraud his other creditors, will in no manner taint the transaction. Paulson v. Ward, 4 N.D. 106, 58 N.W. 792; Carper v. Bank (Ala.) 11 So. 760; Nadal v. Brittin (N.C.) 16 S.E. 914; Young v. Clapp (Ill.) 32 N.E. 187; Bannister v. Burnham (Neb.) 72 N.W. 497; Carey v. Dyer, 89 Wis. 357, 74 N.W. 783; Mapes v. Burnes, 72 Mo.App. 411.
The absence of a date does not invalidate a mortgage. As the validity of the mortgage does not depend upon its being dated, but it becomes effective by delivery. Grove & Fultz v. Loan Bank, 17 N.D. 352.
A person cannot occupy the double position of agent of one party to the contract, and be himself the other party to it. Clendenning v. Hawk, 10 N.D. 93, 86 N.W. 114.
If a mortgage is dated, it is presumed until it is proven otherwise, that it was executed and delivered at its date. Jones, Chattel Mortg. 5th ed. § 103; Briggs v. Fleming (Ind.) 14 N.E. 86.
A written contract may be proved by parol, as to its true date of execution and delivery and its consideration. Moore v. Williamson (Ala.) 42 A.L.R. 981.
The date of filing of a mortgage is the determining date which operates as notice to subsequent purchasers and encumbrancers. Reynolds v. Case (Mich.) 26 N.W. 828.
The negligent person must at the time owe some duty to the person affected by the alleged negligence or to the public of which he is one; and the result, at least in the law of estoppel, has come about in or in immediate connection with the negligent act or omission. Bigelow, Estoppel, 6th ed. 712; Le Livre & Dennis v. Gould, L.R. 1 Q.B. Div. 491.
Where fraud is not expressly proved, estoppel cannot be based on acts or conduct consistent with the honest purpose and absence of negligence. Smith v. Vara, 202 N.Y.S. 209.
This action was brought to foreclose a chattel mortgage executed to the plaintiff by the defendant John W. Thomas, and to set aside a mortgage given by John to his brother Harry Thomas covering the same property. Harry Thomas answered and interposed a cross-complaint wherein he set out his mortgage as a prior lien and asked for a foreclosure of the same as such.
It appears that John Thomas was desirous of engaging in the grain business. In May, 1929, he procured $ 24,000 from his brother Harry. With this money he purchased two grain elevators and appurtenances at Valley City. The Tenney Company, hereinafter referred to as the Company, is engaged in the grain commission business. In the course of its business it makes advances to buyers who consign to and sell grain through it. Thomas needed money to carry on his grain business so he arranged in the customary manner with the Company to make advances as he might require them. He represented that he owned the elevator properties and that the same were free from encumbrances. During the summer of 1929 the Company made advances to the extent of $ 10,000 or $ 11,000, but in fact Thomas bought no grain with this money. He used it for the final payments on his elevators and to make improvements on his plants. Later on in the season, however, he began to buy grain and further advances were made so that on October 8 he was indebted to the Company to the extent of more than $ 32,000. The Company was concerned about this indebtedness so one of its travelers called on Thomas. He found that a part of the money advanced had been used in paying for the plants and making improvements thereon and tried to get a reduction of the indebtedness. Some arrangements were made in this behalf and thereafter the indebtedness was reduced to about $ 21,000. On December 14 the Company's representative again called on Thomas and took from him a contract which included a chattel mortgage on the elevator properties. When this was presented for filing at the office of the register of deeds, it was discovered that contrary to his representations Thomas had executed a mortgage to his brother Harry in the amount of $ 24,000 covering the elevator properties and appurtenances. This mortgage was dated June 24, the date when the properties were acquired by John, and acknowledged before one Sad as of that date. It was filed for record on October 9. The contract agreement between the Company and Thomas contained the provisions that if at any time the former became dissatisfied it might refuse to make further advances and realize upon any security that it had. When it was discovered that John had mortgaged the properties to Harry the Company tried to get him to turn them over to it subject to Harry's mortgage. John, however, refused to do this and this action was begun. On December 17, when it was discovered that the mortgage had been given to Harry, the Company interviewed John with respect to the matter and from what was said and done at this interview and later the Company was justified in believing that the mortgage was executed on June 24 but was purposely not filed for record in order that John's credit might not be impaired. The Company's course of action thereafter was predicated on this belief. However, on the trial of the case, it appeared that the mortgage was in fact executed on October 8 and dated back to June 24, and that the acknowledgment was dated as of the latter date purposely and to create a false impression as to the date of the execution thereof.
On this state of facts the Company contended that the mortgage executed to Harry Thomas was fraudulent and therefore void as against it and other creditors of John. It further contended that if the mortgage was in fact executed on October 8, the acknowledgment was designedly false and therefore amounted to no proper and legal acknowledgment, accordingly the mortgage was not entitled to be filed, and so the filing thereof afforded no constructive notice; that the mortgage must be considered as having been executed on June 24, and under the provisions of § 6758, Comp. Laws 1913, it was void as against the Company which had given credit and made advances to John Thomas on his representations that the properties were clear; that, in any event, Harry Thomas was estopped to establish that the mortgage was delivered on October 8 or thereafter, or was executed on that date, for the reason that the Company had been misled by the false date and acknowledgment of the mortgage into believing that it was in fact executed and delivered on June 24, and so believing it acted to its prejudice in not forcing John into bankruptcy and having the instrument declared void as constituting a preference.
The trial court held contrary to the Company's contentions. It found that the Harry Thomas mortgage was in fact executed on October 8 and refused to set it aside, held it prior to the mortgage of the plaintiff and ordered a foreclosure thereof. Thereupon the Company perfected this appeal.
It is undisputed that John Thomas procured $ 24,000 from his brother Harry in May. This money constituted the greater part of the consideration paid for the elevator properties. Both John and Harry insisted that the arrangement between them whereby the money was provided was one of loan. The company insists that the transaction was one of gift. We think the record justifies the conclusion that, though the arrangement was one between brothers and at the time it was made and the money was provided nothing was said as to whether it was a loan or a gift or as to whether and when it should be paid nevertheless it amounted to a loan. The company knew whence the money came but made no inquiry as to the nature of the transaction. The arrangement between John and the company was that the latter should make advances wherewith he...
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