16 N.M. 497 | N.M. | 1911
OPINION OF THE COURT.
This court has declared the law upon this subject in the case of Ilfeld v. Baca, 13 N. M. 32-38. The court, speaking by Chief Justice Mills, said: “Registration'is not to protect creditors unless specifically provided for in the law. That the registration act of this territory is not made to protect creditors is shown by the reading of Heclion 3953, of the Compiled Laws of 1897, which says:. ‘From and after the first day of January, 1888, no deed, mortgage or 'other instrument in writing, not recorded in accordance with Section 2953, shall affect the title or rights to, or in any real estate, of any purchase or mortgage in good faith, without knowledge of the existence of such unrecorded instruments.” Nothing is said in the act about creditors of the grantor. There is a great diversity in the statutes of the several states and territories as to the protection afforded to creditors by their several registry laws. In pome states an unregistered deed is declared void as against ‘creditors,’ in others as against ‘judgment creditors,’ while in a Considerable number (and New Mexico is among them), creditors are not mentioned in the statutes at all, and unrecorded conveyances are held valid as at common law against even judgment and attaching creditors. Unless the words of the statute are so broad as to manifestly include creditors at large, only those áre regarded as creditors who obtain a lien by judgment, attachment or otherwise, before, an antecedent deed or mortgage is recorded. Webb on Record of Title, sec. 10.” This ease was again before this court on rehearing, 14 N. M. 65, but, while an opinion was written upon the rehearing, the construction of the registration statutes of the Territory as declared in the original opinion was not in any respect set aside or modified in the later opinion. The construction given those statutory provisions in the original opinion, - therefore, must be adhered to as the views of the court upon that subject and are properly applied to the present case. Bean v. Orr, 182 Fed. 599. " 'Every conveyance’ * * * 'not so recorded shall be fraudulent and void against any subsequent purchaser, lessee- or mortgagee in good faith for a vaulable consideration. None of the creditors whose claims are represented by theassignee are either subsequent purchasers, lessees or mortgagees, and are therefore not within the classes against whom the intrument is by statute declared to be fraudulent and void. Runyan v. McClellan, 24 Ind. 165; Kirkpatrick v. Caldwell Admr., 32 Ind. 299; Shirk v. Thomas, 121 Ind., 147; 16 A. S. R. 381; Mann v. State, 116 Ind. 383; Emmons v. Pence, 78 Ind. 439. We cannot extend the terms of the statute so as to include general creditors in the classes of persons against whom unrecorded mortgages are to be deemed as an inference of law fraudulent and void, for that would be legislation.” Hutchison v. First National Bank,, 133 Ind. 271; 36 A. S. R. 537, at 545. See, also, Loveland on Bankruptcy, 3 ed., pp. 438, 139, note 31 and p. 595, and cases cited. Collier on Bankruptcy, 6 ed., 555, and cases cited; Jones on Chattel Mortgages, 5 ed., secs. 237,, 325,, 364, 356, and cases cited. See, also, Rogers v. Page, 140 Fed. 596, at p. 606. This case seems to be conclusive in that it holds distinctly that the failure to record a chattel mortgage does not constitute-a fraud in law and render the same void as to creditors in this territory.' In the brief of counsel for appellant, the attention of the court is called to a number of cases which counsel strongly contend support their contention that the mortgage in this ease was fraudulent in law as against the creditors of the bankrupt estate. This contention is-based on the failure of the bank to promptly record its-mortgage. It must be admitted that the authorities are not harmonious on this subject, but an examination discloses that the difference of the statutes of the different states as to the effect of recording deeds, mortgages, and other instruments is th,e basis for this divtertsi'ty ¡of opinion. Counsel for appellant refer to several cases Avhich, it is contended by them, are conclusive of this case. The first case relied upon is Blennerhassett v. Sherman, 105 U. S. 100. While this is a Avell considered case, the facts of the case are essentially different from the present case. In the Blennerhassett case there was positive notice of insolvency and an absolute want of good faith in addition to the failure to record the instrument promptly. .As to knowledge of insolvency, the coprt said: “Notice of his insolvency Avas also brought home to Stephens and Blennerliassett by their loiQAvledge of the fact that he had appropriated to his own schemes and speculations a fund A’vhich, principal and interest, amounted to over $800,000, committed to his custody as a trustee and receiver. The eAddence that they kneAv of the fact of his appointment as receiver, the amount of the fund which came to his hands and the appropriation of the fund to his own uses is conclusive.” In addition to this, the court found that Blennerhassett and Stephens actively concealed the incumbrance for the unlaAvful purpose of inducing credit and, also, by false representations by Blennerhassett and Stephens. In fact, the case discloses a studied scheme of fraud and deception. The case at bar is different in almost every respect. The bank paid the $9,000 in cash for the sole purpose of paying in full all of the then indebtedness of Haverkampf, so that the bank should be his sole creditor, and the money was used for that purpose,, as is not denied. It is true that for the purpose of replenishing the stock of goods which was necessary and incident to a mercantile business, permission was given to purchase, but upon condition that all, bills should be paid when due. It also appears that at the time the mortgage was executed, Haverkampf Avas required by the bank to make a schedule of his assets and liabilities, from which it appeared that his assets were valued at approximately $35,000.00, while-the liabilities were $.10,000, which schedule was signed by Haverkampf. It further appea'rs from the evidence that Haverkampf had $3,000.00 to his credit in the bank. The bank, therefore, could have no notice or evidence of insolvency, or reasonable grounds for believing that Haverkampf was,, or was likely to become, insolvent. In addition to this, the facts show that Haverkampf claimed that he transacted business to the amount of $35,000 per annum, so that the loan was not made to bolster a failing-concern. From the facts found the bank made the loan, secured by the mortgage, with the utmost good faith and the mortgage was not promptly recorded because of the confidence reposed in Haverkampf and the solvency of his business. Those facts are not seriously disputed, so that the case of Blannerhassett v. Sherman, supra, appears to be inapplicable. The case of Bean v. Orr, 182 Fed. 599, is so nearly on all fours with the case now under consideration, that reference will be made at this point. “After a careful reading of the evidence, we are unable to find sufficient facts warranting- the holding that Bean acted otherwise than in the utmost good faith, or that he was in any wise a party to any intention to hinder and delay or defraud any of the creditors of the Tysor-Cheatham Mercantile Company, or, at the time of advancing his money to the said, company, he had any suspicion that the same company was insolvent. In fact, the case shows that the very $4,000 which Bean advanced on the security in question was full consideration and was intended to be used, and was used, to pay off creditors, and the propriety and necessity of the loan is shown to have been the dullness and embarrassment of business, crops being short, collections poor, and that the company was presently unable to dispose of its goods. It is true that Tysor, of the Tysor-Cheatham Mercantile Company, was a brother-in-law of Bean, and Bean wanted to help him, and he testifies that he had confidence that Tysor could and would repay him; and it is also true, under the circumstances fairly explained by Bean, that his mortgage was' not recorded until some months .subsequent to its execution. It is on these last-mentioned circumstances that the referee held that the mortgage was executed to hinder and delay creditors, relying upon the case of Clayton v. Exchange Bank, 121 Fed. 630, 57 C. C. A. 656, in which this court, in a case where there was a mortgage upon a stock of goods on hand and to be added to by subsequent purchases, and an agreement to withhold the mortgage from the record for the purpose of aiding the credit of the mortgagor, and the mortgage was withheld from record until the mortgagor decided to take the benefit of the bankruptcy act, and where there were other circumstances pointing to fraud, held, stressing the withholding from record, that the mortgage was fraudulent under Georgia Law, as made to hinder and defraud creditors. Here the mortgage is on real estate,, and the evidence shows, at best, only suspicion that fraud was intended by either party to it, while Bean, the mortgagee, so far as such showing can be made, vindicates himself of all fraud or intention to defraud or to aid to defraud. Neglecting to promptly record a mortgage is not in itself fraudulent as against other creditors, and it is not made fraudulent by the additional fact that brothers-in-law are adverse parties to the mortgage.” From this case it is clear that the mere fact of a failure to promptly record a mortgage will not authorize a holding that the mortgage is fraudulent as to creditors. There must be something more than this. The case from Georgia referred to in the above quotation is instructive upon this point and is one of the cases relied upon by appellant’s counsel. There were no fraudulent representations or acts attributable to the bank or its officers, as -the court declared in its eleventh finding of fact. In the case of in re Hunt, 139 Fed. 283, the court said: “But while the court may have its suspicions that such was the fact, it is not, therefore, at liberty to so find or hold, even if those suspicions are justified by, and grew out of, the evidence. Fraud must be proved. It may be inferred from facts established by competent proof, but the inference of fraud cannot legally be drawn and is not justifiable when the inference of innocence is just as consistent with the facts. T cannot find from this evidence that the failure to record the mortgage was accompanied by such acts on the part of the mortgagee or of its agents that a fictitious credit was given to Hunt, now the bankrupt, or that the acts of the defendant induced any creditor to forego any right. The defendant is not es-topped from asserting the mortgage.” In re Shirley, 112 Fed. 301. In this case the court discussed the effect of an unrecorded mortgage as to creditors under a statute in Ohio, declaring such instruments void. The court said, in part: “A creditor which was selling goods to its debtor took a chattel mortgage to secure his past indebtedness, but agreed, at the instance and request of the debtor, to withhold such mortgage from record so long as he should pay a certain sum per month and should pay cash for subsequent purchases. The creditor supposed that it was furnishing the debtor with practically all the goods he purchased, and there was no actual fraudulent intent. Held that, under such circumstances, the mortgagee was not estopped from subsequently filing its mortgage and asserting its lien thereunder from that date upon property ether than the mortgagor’s stock, as against other creditors who had in the meantime sold goods to him, without the mortgagee’s knowledge.
In ih.e present case, therefore, to hold that there was legal fraud it would be necessary to predicate this upon the fact that the mortgage was not recorded for about one month after the officers of the bank became aware of the fact that Haverkampf had purchased goods and failed to pay for them, in violation of his agreement with the-hank. Until this time -all the testimony and circumstances tend to show that the officers of the bank regarded the hank as the sole creditor of Haverkampf. It is true that the mortgage was not recorded for more than one year after its execution, hut, having been given for full cash consideration, not in contemplation of insolvency, hut for the sole purpose of enabling Haverkampf to pay his entire indebtedness, together with an agreement that, no new indebtedness, of any consequence, should be incun’ed by him, without any agreement that the mortgage should not be recorded and with no evidence whatever of efforts on the part of the bank or its officers to induce the-extension of credit to Haverkampf, we are of the opinion that this case is not governed by the doctrine announced in the cases relied upon by the appellant, but is within the law as laid down in the cases last above referred to. If so, the bank should not be barred or postponed from enforcing its lien. Judgments for sums aggregating about $1,000.00 were rendered against the defendant, Haverkampf, on the same day on which he was adjudicated a bankrupt, but whether the judgments were rendered prior .to the adjudication is not made clear. However, the mortgage, having been recorded January 9th, 1907, and the judgments rendered May- 27th, 1907, the mortgage was a prior lien. All other creditors of the bankrupt were general, and not, lien creditors. That the trustee in bankruptcy stands in the shoes of the bankrupt and that his lights are similar, is settled by numerous authorities. York Mfg. Co. v. Cassell, 201 U. S. 353; Humphrey v. Tattman, 198 U. S. 95; in re Economical Printing Co., 110 Fed. 514; Security Warehousing Co. v. Hand, 206 U. S. 424; Hewitt v. Berlin Machine Works, 194 U. S. 302. That a mortgage, valid under state law made before the four months’ period is valid as against the trustee of the ihortgagor, is also declared by the above authorities. The mortgage in this case, having been both executed and recorded more than four months prior to the filing of the petition in bankruptcy, its lien would be valid under the bankrupt law and creditors represented by the trustee having no prior and subsisting lien. From these conclusions it follows that the judgment of the court below should be affirmed with costs. It is so ordered.