Wilson v. Perrin

• Decision Date: 05 June 1894
• Docket Number: 181.
• Citation: 62 F. 629
• Parties: WILSON et al. v. PERRIN.
• Court: U.S. Court of Appeals — Sixth Circuit

62 F. 629

WILSON et al. v. PERRIN.

No. 181.

United States Court of Appeals, Sixth Circuit.

June 5, 1894

Fletcher & Wanty, for plaintiffs in error.

E. M Irish, for defendant in error.

Before TAFT and LURTON, Circuit Judges.

LURTON Circuit Judge.

The question involved upon this writ of error concerns the validity of a certain chattel mortgage executed by George T Bruen, who was a merchant doing business in the city of Kalamazoo, Mich., to the appellee, Joel J. Perrin. It was made for the purpose of securing an indebtedness of $14,974.36, which amount was due by Bruen to Perrin. The property mortgaged consisted of the entire stock of dry goods, with the furniture and other fixtures usually found in a dry-goods store, and also two horses, a buggy, a cutter and certain harness. It was made on the 31st day of August 1893, and was delivered to Perrin on the 2d day of September following, who on that date took possession of the property described in it, and on the 1st day of the following November he sold the entire property so mortgaged for the sum of $14,500.

The appellant Edward B. Wilson, upon the assumption that the mortgage was void, and being a creditor of the mortgagor Bruen, began a suit against him in the circuit court of the United States for the western district of Michigan on the 13th day of September, 1893, and, under the practice in Michigan, sued out a writ of garnishment against Perrin, the mortgagee, who was then in possession of the goods. This writ of garnishment was taken out under section 8091 of Howell's Annotated Statutes, and is the same statute considered and construed in Treusch v. Ottenburg, 4 C.C.A. 629, 54 F. 867. On October 17, 1893, a judgment was rendered in favor of the plaintiff Wilson against the defendant Bruen for $14,192.22. The case then came on for trial against the garnishee defendant, Perrin.

The contention of the plaintiff was and is that the mortgage was void for uncertainty. The granting part contained this clause:

'All the goods, chattels, stock in trade, fixtures, and chattels and merchandise of every name and nature, now in the store occupied by said first party, and known as '125 West Main Street,' in said city of Kalamazoo, being the entire stock of dry goods and similar lines carried by said first party, together with all tables, counters, and two portable furnaces in said store; also, two horses known as 'David' and 'Dick,' and the carriage horses driven by said first party, one single top buggy, one two-seated surrey, one set double harness, one single harness, one cutter, and all blankets and robes used in connection with said horses and carriages by said first party; also, the safe in said store. The said party of the first part also grants, bargains, sells, transfers, and assigns all the book accounts and bills receivable now on his books kept in connection with the business he has been conducting in said store, and owing to him, due and to become due, unto said second party, and authorizes said second party to collect the same in his own name, and to apply all amounts collected, less the expense of collection, upon the indebtedness already accrued upon the notes which this mortgage is given to secure.'

At the conclusion of the instrument there is to be found the following clause:

'The surplus or residue, if any, to belong and be returned to said first party; it being understood that this mortgage is made subject to all exemptions from execution to which said first party may be entitled under the laws of the state of Michigan, and that his exempt interest is not covered by this mortgage.'

The judge presiding in the circuit court instructed the jury that the provision reserving the mortgagor's exemptions under the law of Michigan did not invalidate the mortgage, and that they should return a verdict for the defendant.

The contention of the learned counsel for the appellant is that this 'was not a mortgage of the entire stock of goods, including the exempt portion, with an added clause that the exempt portion might afterwards be taken out, but it was only a mortgage of that portion which should be left after the exempt portion had been separated. ' The insistance, therefore, is that inasmuch as the mortgagee was garnished before a separation of the exempt portion had been made, there was no means to determine which portion of the stock of goods was conveyed, and which was not.

Under the exemption laws of Michigan, merchandise to the value of $250 is exempt from execution in the hands of a merchant. The trial judge was of the opinion that the question thus presented was to be determined by the law of Michigan. If such a mortgage is valid either under the statute law of that state, or by the well-settled law of the state as declared by its highest courts, then we quite agree that the local law is controlling. Bank v. Bates, 120 U.S. 556, 7 Sup.Ct. 679; Means v. Dowd, 128 U.S. 273, 9 Sup.Ct. 65; Union Nat. Bank v. Bank of Kansas City, 136 U.S. 223, 10 Sup.Ct. 1013; Etheridge v. Sperry, 139 U.S. 276, 11 Sup.Ct. 565. In the case last cited the opinion was by Mr. Justice Brewer. The case involved the validity of a chattel mortgage made in Iowa. After considering the decisions of the supreme court of that state which bore upon the question involved, the court came to the conclusion that the mortgage was valid under the law of Iowa. In discussing the question as to whether its validity was controlled by the law of the state in which the instrument had been made, the court said:

'The matter is not one of purely general commercial law. While chattel mortgages are instruments of general use, each state has a right to determine for itself under what circumstances they may be executed, the extent of the rights conferred thereby, and the conditions of their validity. They are instruments for the transfer of property, and the rules concerning the transfer of property are primarily, at least, a matter of state regulation. We are aware that there is great diversity in the rulings on this question by the courts of the several states, but, whatever may be our individual views as to what the law ought to be in respect thereto, there is so much of a local nature entering into chattel mortgages that this court will accept the settled law of each state as decisive in respect to any case arising therein. ' Pages 276, 277, 139 U.S.,and page 565, 11 Sup.Ct.

It becomes, therefore, necessary that we shall ascertain what is the settled local law, as evidenced by the decisions of the highest courts of the state of Michigan.

In the beginning we may as well say that we attach no particular importance to the suggestion that the conveyance is limited to what should be left after the exemptions should be set apart. The conveyance is of the entire stock of merchandise, subject to the mortgagor's right of exemption. This is the plain and obvious meaning. As to the exemptions, it would seem that the mortgagee would take a feasible title, subject to be defeated upon separation of the statutory amount of exemptions from the stock.

In the case of Hollister v. Loud, 2 Mich. 323, an assignment in trust to secure certain creditors...