Wilson v. Geiss

• Decision Date: 06 October 1922
• Docket Number: 22,982
• Citation: Wilson v. Geiss, 153 Minn. 211, 190 N.W. 61 (Minn. 1922)
• Parties: JOHN E. WILSON v. JOHN GEISS; FIRST STATE BANK OF LE SUEUR CENTER, ETC., GARNISHEES; MINNESOTA SUGAR COMPANY AND OTHERS, INTERVENERS
• Court: Minnesota Supreme Court

190 N.W. 61

153 Minn. 211

JOHN E. WILSON v. JOHN GEISS; FIRST STATE BANK OF LE SUEUR CENTER, ETC., GARNISHEES; MINNESOTA SUGAR COMPANY AND OTHERS, INTERVENERS

No. 22,982

Supreme Court of Minnesota

October 6, 1922

Action in the district court for Le Sueur county. Defendant did not appear and judgment was entered by default in favor of plaintiff for $1,840.79. Plaintiff garnished the First State Bank of Le Sueur Center and A. C. Tambornino. They disclosed having funds amounting to $1,411.25. Plaintiff then filed a supplemental complaint and prayed judgment for $1,840.75 against the garnishee Tamborino. The bank answered that it held defendant's chattel mortgage in trust for certain of his creditors, prayed that the court adjudicate the claims of the respective creditors to money in its possession and that upon paying the claimants the amounts to be fixed, the bank be discharged from further liability to any of the interveners. James J. Clifford, Minnesota Sugar Company, and other claimants filed complaints in intervention. The case was tried before Tifft, J., who made findings and conclusions of law as stated in the second and third paragraphs of the opinion. From an order denying his motion to amend the findings and conclusions or for a new trial, plaintiff appealed. Affirmed.

SYLLABUS

Chattel mortgage -- lien not discharged as to creditor attaching proceeds of sale.

1. The lien of a chattel mortgage is not discharged as to a creditor of the mortgagor attaching the proceeds of the sale of the mortgaged property in the hands of a third person who received the same pursuant to an agreement between the mortgagor and mortgagee that the property should be sold and the money collected by such third person and applied on the mortgage debt.

Mortgagee not estoppel from claiming proceeds of sale.

2. When a mortgage has been properly filed, the mortgagee is not estopped as against an attaching creditor of the mortgagor from claiming the proceeds of such sale because he did not disclose the agreement with the mortgagor.

Reformation of mortgage cannot be questioned by attaching creditor.

3. A mortgage, intended by the mortgagor to secure the payment of the claims of certain of his creditors, ran to a bank representing the creditors. In a garnishment proceeding against the bank, the court directed that the mortgage be reformed by substituting the names of the creditors as mortgagees. Plaintiff cannot question the reformation. He could not assume to represent his debtor, since they were not in privity with but antagonistic to each other. The facts justified a reformation if one was necessary to enable the creditors to assert their rights under the mortgage.

Mortgage not voidable merely because certain creditors secured a preference.

4. Plaintiff could not avoid the mortgage merely because it gave the creditors it secured a preference over other creditors. He could do so only in aid of bankruptcy or insolvency proceedings.

Findings sustained by evidence.

5. The findings were supported by the evidence and plaintiff, being denied a recovery, is not in a position to question them for alleged imperfections in form.

Kerr & Richardson and L. W. Wilson, for appellant.

W. C. & W. F. Odell and Charles C. Kolars, for respondents.

OPINION

LEES, C.

Appeal from an order denying plaintiff's motion for a new trial of the issues between him and the interveners in a garnishment proceeding. Although the findings of fact are attacked on the ground that they are not supported by the evidence, the principal question is whether they justified the conclusions of law.

In substance the findings are that plaintiff is a judgment creditor of the defendant Geiss; that the intervener, the Minnesota Sugar Company, is a creditor to whom he mortgaged some of his personal property; that the other interveners, except James J. Clifford, are creditors claiming under a chattel mortgage Geiss executed to the garnishee bank. All of the mortgaged property was sold at public auction and the proceeds were in the bank's possession when the garnishment proceeding was instituted. There was a specific finding that before the auction Geiss and the sugar company agreed that the property covered by the company's mortgage should be sold to pay the debt it secured and that the amount realized at the sale should be applied upon the note evidencing the debt. It was found that the sale was had pursuant to such agreement; that Geiss employed the bank to act as clerk at the auction and directed it and A. C Tambornino, its cashier, to pay to the company all moneys received from the sale of the property so mortgaged; and that a portion of the money in the bank's possession when the garnishee summons was served was proceeds of such sale. The court also found that Geiss was indebted to the other interveners (except Clifford, who was the auctioneer), in amounts aggregating $828.80; that he had advertised his property for sale at auction on November 25, 1919; that these creditors insisted that he should pay or secure the payment of their claims, and on November 18, 1919, he executed in good faith a chattel mortgage running to the garnishee bank as security for the payment thereof, all the parties intending that it should be so written and worded as to secure such payment, but that Tambornino, who drew the mortgage, erroneously named the bank as the mortgagee. There was a finding that the property described in this mortgage was sold at the auction pursuant to an agreement between Geiss and these creditors of the same character as the agreement he had with the sugar company; that the remainder of the money in the garnishee's possession represented the proceeds of the sale of such property, and that when the auction was over Geiss had directed Tambornino, as cashier, to collect for the property sold, pay the expenses of the auction, and then pay the remainder of the money to the interveners pro rata. From our examination of the record we are satisfied that each of these findings is sufficiently supported by the evidence.

The conclusions of law were that the mortgage running to the bank should be reformed by substituting the names of the creditors as mortgagees; that the auctioneer's and clerk's fees be paid, and that the sugar company and the creditors secured by the mortgage to the bank have judgment for the remainder of the money. As to Tambornino, it was ordered that the action be dismissed, and, as to plaintiff, that he recover nothing.

Geiss did not appear at the trial and no pleading was interposed in his behalf. Neither the bank nor Tambornino made a claim to the money in question. The contest was wholly between plaintiff, claiming by virtue of the garnishment proceeding, and the interveners, claiming by virtue of their mortgages and the agreements with Geiss.

1. Plaintiff's first point is that the interveners discharged their mortgages and liens by giving consent to the sale by Geiss and standing by and seeing their property sold. This contention, as well as others, must be considered in the light of the general rule that an attaching creditor acquires no greater rights against the...