30 Mo. App. 483 | Mo. Ct. App. | 1888
I. The controlling question for determination on this record is, whether the deed from Grau to May is a chattel mortgage, or deed of assignment. We have had occasion in two recent cases (Smith & Keating Imp. Co. v. Thurman, 29 Mo. App. 186, and Mills v. Williams, not yet reported), to consider the distinction between a chattel mortgage and deed of assignment. . Without again going into detail, we will state that the principal difference is, that a deed of assignment is an absolute alienation of the property by the grantor in trust to raise a fund for the purpose of paying the debts of the assignor. Under such deed the trustee takes the property immediately, to sell at all events to create the fund to discharge the trust. There-is no equity of redemption in the assignor. The alienation as to him is complete. By operation of law his-only interest is in any surplus remaining after satisfying, fully the purposes of the trust. A mortgage, or deed of trust in the nature of a mortgage, is a conveyance in. trust for the purpose of securing a debt, subject to a, condition of defeasance. The title to the property remains in the mortgageor until condition broken, and he has the equity of redemption until foreclosure. The possession, in the absence of a provision to the contrary in the deed, remains with the mortgageor until condition broken, or it may pass at once to the mortgagee, if so-provided in the deed, with the right of redemption intact until foreclosure.
No particular form of words is necessary in the construction of the mortgage ; so it appears that the conveyance in fact was made to secure the payment of the debt expressed, with the right of the mortgageor to redeem by discharging the debt before sale under the deed. Gage v. Cheeseboro, 49 Wis. 491-2; Cooper v. Brock, 41 Mich. 490.
II. Looking at the first part of the deed under consideration there could no debatable question arise but that it contains the essential qualities of a chattel
The subsequent provisions of .this deed are very peculiar; and, aside from what the evidence affirmatively shows, bears evidence on its face of the fact that the-scrivener used a printed form of a chattel mortgage in expressing, or attempting to carry out, the design of so-framing the instrument as, while giving May a preference as to his debt, to secure the whole residue of the-property to other creditors of the debtor, pari passu. So after utilizing the fore-part of the printed form, with, the usual characteristics of a chattel mortgage, leaving-the right of immediate possession and sale of the property to the operation of common-law principles, he-added in ink the following words : “ One of said notes now being due and payable, and realizing my utter-inability to pay same, hereby convey and assign to said May, agent, as aforesaid, all the property, goods, wares, etc., herein mentioned and described, and surrender-immediate possession to said May.” Then follows the provision authorizing said May “upon taking possession, either in case of default, or as above provided”, to proceed to sell “at public auction, to the highest bidder for cash, or at private sale, if the interests and rights of. interested parties is thereby subserved.”
This was a virtual admission of insolvency on the-part of the grantor, and an immediate surrender of the possession of the property, and indicated an abandonment,, on account of his utter inability to redeem, of the right of redemption. And while I should hesitate to hold, if the-deed contained nothing more, that if the grantor had the-next day, and before the goods were sold, tendered to May the payment of the debt, he could, not have reclaimed.
This is an unusual provision in' a chattel mortgage, and is one which I do not believe can be upheld against the plain policy and provisions of the statute concerning voluntary assignments.
III. We make no question of the well-settled law in this jurisdiction, that a debtor, in insolvent circumstances, has the right to prefer one creditor to another. The mortgageor after executing a mortgage providing for the security of a single creditor, may on the same day execute a general assignment for the benefit of all his creditors, and the mortgage will be upheld, if otherwise made in good faith, to secure a bona-fide indebtedness. The assignee in such case will take the residue of the estate after satisfying the mortgage debt. Sampson v. Shaw, 19 Mo. App. 274.
But I find no authority for the proposition that the insolvent debtor may in one and the same instrument create a preference by way of mortgage in favor of one creditor, and then provide for an unconditional distribution by the beneficiary under the mortgage of the whole residue of the property conveyed, among his other creditors, prorata; and that, too, without naming such other creditors. The instrument must be either a mortgage or assignment — a deed of trust to secure debts, or á trust deed to raise a fund to pay debts. It cannot be both. If it is to operate to distribute any part of the property conveyed among all the creditors, the statute steps in and declares that the whole property conveyed
The effect of the deed in question is certainly to pay first and in full the debt of May. The surplus remaining is to be divided ratably by May among all the other - creditors of Grau. This surplus is not to revert to Grau, as is usual in deeds of mortgage, and thereby be left in-a situation to be reached by process at the suit of any vigilant creditor; but the satire is locked up by an express trust, to be administered by a trustee who is the-named preferred creditor. None of the other creditors are named. How is the trustee May to ascertain who-they are? And how is he to pass upon the claims of.’ these unnamed and unknown creditors when they present them for allowance ? Is he to assume the functions ■ of a gwcm-domestic court and pass upon those claims, subject to review by the courts ? Or is he to ask a court of equity to aid and protect him in his office ? In other words can a debtor, outside and in despite of the statutory provisions governing and regulating deeds of" assignment, appoint his own assignee, to proceed without giving bond, or being subject to the immediate-supervision and control of the circuit court of the-county where the deed is recorded, as provided by statute ? If he can the statute is a dead letter.
I am of opinion that no such compound form of" conveyance, or jangled words and terms, as found in-this deed, can evade the manifest policy of the statute.
IY. Our conclusion is, that the circuit court was.
V. Respecting the questions of fraud raised by the ¿attaching creditors, we fail to find any evidence in this record which would have justified a. verdict finding such .fraud. On this issue we adhere to the ruling in Douglass v. Cissna, 17 Mo. App. 44. There is no evidence that the creditors who will share under the deed of assignment did any act or uttered one word in the .remotest degree indicative of fraud. And had the jury -.on the evidence found any such fact, it would have been .the plain duty of the trial court to set the verdict aside.
The other judges concurring, the judgment of the ¿circuit courtis affirmed.
