United Film Ad Service v. Roach

• Decision Date: 27 June 1927
• Parties: UNITED FILM AD SERVICE, APPELLANT, v. GEORGE T. ROACH, CONSTABLE, ET AL., RESPONDENTS. [*]
• Court: Kansas Court of Appeals

297 S.W. 91

222 Mo.App. 339

UNITED FILM AD SERVICE, APPELLANT, v. GEORGE T. ROACH, CONSTABLE, ET AL., RESPONDENTS. ^[*]

Court of Appeals of Missouri, Kansas City

June 27, 1927

Appeal from the Circuit Court of Jackson County.--Hon. Fred W. Coon Judge.

AFFIRMED.

Judgment affirmed.

Leon Greenebaum for appellant.

Holmes Hamilton for respondent Hart.

BLAND J. Arnold, J., concurs. Trimble, P. J., absent.

OPINION

BLAND, J.--

This is a suit in equity in which the plaintiff, a judgment creditor of the Ruth Molly-ets Company, seeks to have a certain fund in the hands of defendant Roach, constable through his deputy, Rice, applied to the payment of plaintiff's judgment after a judgment of one Hatfield is paid out of the fund. Plaintiff prayed for an order from the court upon the constable requiring him to levy under plaintiff's judgment upon the balance of the proceeds in the deputy's hands realized from the sale of certain personal property of the judgment debtor under an execution upon the Hatfield judgment; that the mortgage held by the defendant Hart upon the property sold by the deputy constable be declared void and that the deputy be restrained from paying Hart any of the proceeds of the sale. The court rendered judgment dissolving the restraining order and against plaintiff on the merits. Plaintiff has appealed.

The facts show that on March 1, 1923, at Kansas City, Missouri, The Stricker Trust, a common-law trust, by its trustees for value executed its note to one J. J. Henson in the sum of $ 1617 "to be paid as stated on the reverse hereof." The note contained the following stipulation on the back thereof:

"This note is to be paid by royalties earned by the use of Stricker Automatic Food Molding and Wrapping Machines per contract between the Trustees of the Stricker Trust Estate and J. J. Henson and Ruth Henson, his wife, of date March 1, 1923, for Greater Kansas City. For further particulars see the mortgage securing this note."

This note was secured by a chattel mortgage upon two "Stricker Automatic Food Molding and Wrapping Machines . . . now being in the possession of said J. J. Henson at his storeroom" in Kansas City. The mortgage also described the note and provided that the same was to be paid out of the royalties "earned by the use of the Stricker Automatic Food Molding and Wrapping Machines, per contract between the trustees of Stricker Trust Estate and J. J. Henson and Ruth Henson, his wife, of date March 1, 1923, for Greater Kansas City." Said contract is not shown anywhere in the record but according to the testimony it was an agreement whereby J. J. Henson and his wife contracted to pay for the use of the two machines a royalty of $ 60 per month during the life of the patent owned by the Stricker Trust and that after payment of the note in question had been made the trust was to receive the royalties thereafter to accrue.

At the time the contract was entered into the Ruth Molly-ets Company was conducted by J. J. Henson and his wife but on or about May 26, 1923, the business was incorporated by them under the name of the "Ruth Molly-ets Co." Henson and wife and afterwards the Ruth Molly-ets Company were engaged in the manufacture and sale of a food product known as Molly-ets, which product was made by the Stricker machines. The corporation assumed the payment of the royalties in question. The record is not clear as to how the royalties were paid after the execution of the note, whether to the Stricker Trust and then to Henson or directly to Henson, but the petition alleges that the Ruth Molly-ets Company paid the note according to its terms out of the royalties. The note was reduced by payments made upon it to Henson and on December 6, 1923, he sold and assigned the note to the amount of $ 660 to the defendant Hart, the monthly payments thereon to begin on January 1, 1924. Hart was paid the sum of $ 420 upon the note and according to the petition this and all other sums paid upon the note were paid by the Ruth Molly-ets Company. The last payment made upon the note was on June 3, 1924, and at the time this controversy arose there was owing Hart upon the note the sum of $ 240.

However, at the time Henson offered to sell the note to Hart, the latter was not satisfied with the security and demanded additional security and a chattel mortgage was given on December 6, 1923, by the Ruth Molly-ets Company through Henson, its president, upon its store fixtures, automobile truck, etc., which were later sold by the constable under the Hatfield judgment. It was recited in the mortgage that it was given to secure the payment of "eleven payments of $ 60 each, beginning January 1, 1924" on the note in question. The mortgage also recited that if Henson "shall well and duly pay unto---the sum of---Dollars which--owe--as evidenced by---certain promissory note of even date herewith" the mortgage should be void and should there be a foreclosure "the overplus, if any there be, paid to the Ruth Molly-ets Company." This mortgage was duly recorded on December 6, 1923.

On September 3, 1924, the defendant Hatfield brought suit in the justice court of J. H. Pollock against the Ruth Molly-ets Company and the personal property described in said mortgage executed by that company was attached by the constable, the defendant Roach, through his deputy, the defendant Rice. Judgment was rendered for Hatfield against the Ruth Molly-ets Company on October 10, 1924, in the sum of $ 150 and costs. Execution on this judgment was issued on October 31, 1924. On September 11, 1924, plaintiff herein filed a suit against the Ruth Molly-ets Company asking judgment for $ 500 for the breach of contract dated May 29, 1923, wherein the Ruth Molly-ets Company agreed to pay plaintiff the sum of $ 16 per week for a period of two years for displaying an ad film in certain theaters in Kansas City. This suit was brought by attachment and the property described in Hart's mortgage was attached. Judgment by default was rendered for plaintiff in the last-mentioned suit on October 30, 1924, in the sum sued for. On November 5, 1924, prior to the sale by the constable under the Hatfield judgment, Hart filed in the justice court his affidavit claiming the property levied upon to the extent of $ 240, basing his claim on the chattel mortgage executed by the Ruth Molly-ets Company. On November 7, 1924, Hatfield, in pursuance of an agreement with Hart, filed before the justice an order directing the constable to pay the sum of $ 240 to Hart out of the proceeds of the sale. The balance after the deduction of the costs to be paid to defendant Hatfield. Rice testified that he would have "recognized" this agreement between Hatfield and Hart had it not been for the restraining order served on him in this suit. A few moments before the sale, held on November 10, 1924, plaintiff served defendant Rice with a notice that the purported mortgage was void and that plaintiff claimed a first lien on the property and that the constable would proceed with the sale in the Hatfield suit at his peril. On the date last mentioned the property was offered for sale, subject to the mortgage of Hart, by the deputy constable under the Hatfield judgment. Hart, Hatfield's attorney and Rice were present at the sale. No offer to buy the property subject to the Hart mortgage could be obtained and after a conversation between Hatfield's attorney and Hart, the latter agreed that the property might be sold by the deputy constable free and clear of the mortgage. Rice was so advised and proceeded with the sale of the property free and clear of all encumbrances. The sale brought $ 337.70, which fund still remains in the hands of the constable. $ 269.53 of this sum was realized from the sale of property upon which Hart held his mortgage.

Plaintiff contends that the court erred in rendering judgment against it for the reason that the mortgage from the Ruth Molly-ets Company to Hart is void by reason of the fact that that company was not indebted to Hart when the mortgage was executed and was not a party to the note which the mortgage was given to secure to the extent of Hart's interest therein; that there is nothing in the record to show any assumption on the part of that company of payment of the note; that although the mortgage may have been valid as between the parties, as against third parties it is void.

There is no doubt but that where there is no relationship of debtor and creditor, a chattel mortgage is ordinarily held fraudulent and void as to third persons although as between parties it may be valid. [11 C. J. 446, 447.] However, we are convinced that there was an indebtedness existing between the Ruth Molly-ets Company and Hart upon the assignment of the note to the latter. The evidence shows that the note was to be paid from the royalties accruing out of a contract between the Stricker Trust and J. J. Henson and Ruth Henson, which contract was afterwards assumed by the Ruth Molly-ets Company, a corporation; that while, under the terms of the contract, the royalties were to be...