Westheimer v. Goodkind
| Decision Date | 16 April 1900 |
| Citation | 60 P. 813,24 Mont. 90 |
| Parties | WESTHEIMER et al. v. GOODKIND et al. |
| Court | Montana Supreme Court |
Appeal from district court, Lewis and Clarke county; Henry C. Smith Judge.
Action by Ferdinand Westheimer and others against A. L. Goodkind and another for conversion. From a judgment in favor of defendants, and an order overruling a motion for a new trial plaintiffs appeal. Reversed.
This action was brought to recover damages for the alleged conversion of personal property, the title to which is claimed by the plaintiffs under a sale thereof by one Reeves to them. The jury returned a verdict for the defendants. The plaintiffs have appealed from the judgment, and from the order denying their motion for a new trial. The facts necessary to be stated are these: Reeves and one Powell co-partners under the firm name of Reeves & Powell, were engaged in the dramshop business at Malta, in Valley county and on the 10th day of May, 1895, were indebted to Wise & Goodkind in the sum of $374.14 for goods sold. On that day Powell made to the defendant Goodkind, a member of the firm of Wise & Goodkind, a chattel mortgage upon the property in question, to secure the payment of a note of Reeves & Powell to Goodkind, due at seven months, for $600, which amount included the indebtedness mentioned, and was intended to cover such future advances by way of credit as the firm of Wise & Goodkind might make. Powell subscribed to the mortgage the name of his firm, and also the names of himself and Reeves, as individual persons. He also subscribed his name and that of Reeves to the affidavit accompanying the mortgage; and the notary certified that both Reeves and Powell were sworn to the truth of the matter stated therein, and also certified that each of the mortgagors acknowledged that he had executed the instrument freely and voluntarily, and for the uses and purposes therein mentioned. As a matter of fact, however, Reeves did not sign the mortgage or affidavit, nor did he make any oath thereto. The possession of the property remained with the mortgagors, and the mortgage was filed. Reeves afterwards acquiesced in the mortgage, but never signed or made affidavit to it. At the time the mortgage to Goodkind was executed, the debt of Reeves & Powell to the plaintiffs was $275.33, and on December 12th it amounted to $330.88. Some time during the summer of 1895 the firm of Reeves & Powell was dissolved, and Reeves became the owner, or was at least authorized to dispose, of the property. On December 12th he executed to the plaintiffs a bill of sale of the chattels to satisfy the indebtedness owing by the late firm of Reeves & Powell to the plaintiffs, who had actual knowledge of the prior mortgage. The sale was accompanied by an immediate delivery, and followed by an actual and continued change of possession; the plaintiffs remaining in possession until the property was taken from them by the defendants. On December 20, 1895, the amount owing to Wise & Goodkind, or Goodkind, by Reeves & Powell, was $336.89; and on that day the defendant Willis, as sheriff, at the request of the mortgagee took from the plaintiffs the possession of the property, and sold it under the authority vested in defendants by the chattel mortgage, and not otherwise, for the purpose of paying the amount last mentioned, with interest and costs of sale. At the sheriff's sale the property brought $435, the purchaser being an agent of the plaintiffs. The jury, in addition to their general verdict for the defendant, made certain special findings, all of which are included in the foregoing statement, except three; and these are to the effect that the mortgage to Goodkind was made and received in good faith by the parties thereto; that the bill of sale to the plaintiffs was given by Reeves, and taken by the plain tiffs, for the purpose and with the intent of hindering the collection by Goodkind of the debt owing him, and to defraud him of the benefit of the mortgage.
Clayberg, Corbett & Gunn, for appellants.
H. G. McIntire, for respondents.
PIGOTT J. (after stating the facts).
1. At the time the mortgage was made to Goodkind to secure the payment of the $600 note, the real indebtedness of Reeves & Powell to Wise & Goodkind was $374.14; and the mortgage was given to secure the debt then existing, as well as future advances. The plaintiffs asked the court to instruct the jury that the effect of the mortgage in the particular mentioned was to hinder, delay, and defraud persons who were the creditors of Reeves & Powell at the time the mortgage was executed, and that if the plaintiffs were creditors at the time, and afterwards received a conveyance of the property in satisfaction of the indebtedness owing to them by Reeves & Powell, then their verdict must be for the plaintiffs. The refusal so to charge is assigned as error. Counsel insist that where a chattel mortgage is given to secure an amount then owing, and also future advances, it is necessary that the mortgage itself shall show the amount of the intended advances. The law is, however, very well settled that a mortgage need not itself disclose that it was given to secure the payment of future advances, and that it may be, as the one under consideration is, in the shape of a security for the payment of a sum certain, leaving the true nature and condition of the debt or obligation to be shown by evidence dehors the mortgage. Jones, Chat. Mortg. (4th Ed.) §96, and cases cited in the notes. The question whether such a mortgage was given with an honest purpose and intent is ordinarily one of fact for the jury to determine under proper instructions from the court. Wood v. Franks, 67 Cal. 32, 7 P. 50; Davis v. Schwartz, 155 U.S. 631, 15 S.Ct. 237, 39 L.Ed. 289. In the case at bar there was evidence tending to show that, in making the mortgage to secure the payment of a sum in excess of the debt then owing, the purpose of the parties was without intent to hinder, delay, or defraud any creditor of the mortgagors, and the findings of the jury are in accord with such evidence.
2. The chattel mortgage was executed while section 1538 of the fifth division of the Compiled Statutes of 1887 was in force, and prior to the 1st day of July, 1895, when section 3861 of the Civil Code took the place of the former section. The defendants assert that the rights of the plaintiffs are to be determined by the statute as it stood when they purchased the property from Reeves, on December 12, 1895; and, if this position be correct, the provision of section 3861, that a chattel mortgage is void against creditors of the mortgagor, and subsequent purchasers and incumbrances of the property in good faith for value, unless possession be delivered to and retained by the mortgagee, or the mortgage provide that the possession may remain with the mortgagor, and be duly verified, acknowledged, and filed as therein required, is applicable to the plaintiffs, who were purchasers for value, but not in good faith. They had notice of the Goodkind mortgage, and this would in itself prevent them from being purchasers for value, but not in good faith. They had notice of the Goodkind mortgage, and this would in itself prevent them from being purchasers in good faith, within the meaning of section 3861. One buying with notice of a mortgage, or with intent to delay or defraud creditors, is not a purchaser in good faith. The presence of such notice or of such intent will constitute him a purchaser mala fide, against whom the mortgage is valid under the present statute. The position is untenable. Section 3861 has to do exclusively with mortgages given after 12 o'clock noon of July 1, 1895. It does not in any manner affect mortgages theretofore executed. When the mortgage to Goodkind was made and filed in May, 1895, it was, for the want of an affidavit and acknowledgment such as section 1538, supra, requires to accompany the instrument, invalid as against the rights and interests of any other persons than the parties thereto. That section 3861 of the Civil Code did not vitalize the mortgage, or make it valid as to third persons acquiring rights and interests in the property after July 1, 1895, is apparent. The validity and effect of the mortgage must be tested and determined by the application to it of the law in force when it was made, and not by the application of section 3861, which became the law subsequently, but which has no retroactive effect. Sections 1625, 4651, Civ. Code; Trust Co. v. O'Marr, 18 Mont. 568, 46 P. 809, 47 P. 4.
3. Section 1538 of the fifth division of the Compiled Statutes of 1887, supra, which was the law at the time the mortgage to Goodkind was executed and filed, provided that "no mortgage of goods, chattels or personal property shall be valid as against the rights and interests of any other person than the parties thereto, unless the possession of such goods, chattels or personal property be delivered to and retained by the mortgagee, or the mortgage provide that the property may remain in the possession of the mortgagor, and be accompanied by an affidavit of all the parties thereto or, in case any party is absent, an affidavit of those present and of the agent or attorney of such absent party, that the same is made in good faith to secure the amount named therein and without any design to hinder or delay the creditors of the mortgagor, and be acknowledged and filed as hereinafter provided." The possession of the chattels was not delivered to the mortgagee, but was retained by the mortgagors; nor was the mortgage accompanied by an affidavit of Reeves, one of the parties to it. The mortgage was therefore invalid as against the rights and interests of any other person than the parties thereto. Such is the denunciation of the statute, as interpreted in Hardware...
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