64 Colo. 388 | Colo. | 1918
delivered the opinion of the court. •
This case, instituted before a justice of the peace, was, upon appeal, tried to the court upon an agreed statement of facts. The judgment was against the plaintiff in error bank, who, upon a traverse of its answer to a garnishee summons, was held to be the debtor of Peter Balmer against whom the defendant in error had a judgment. The agreed record on error discloses, that on June 4th, 1915, Balmer was a farm tenant of one Signor, at which time they gave a joint note to the plaintiff in error for $1,300.00 due December 4th, following, securing it by a chattel mortgage on certain stock, machinery and crops then growing on the Signor place; that on November the 4th, 1915, Balmer and Signor executed to plaintiff in error another note for $340.00 due November 20th, same year, and secured it by chattel mortgage on that portion of the same property not then disposed of; that on December the 27th, following, Balmer turned over to plaintiff in error bank the stock and machinery covered by the mortgages; that on January 6, 1916, the bank sold it at public sale for the sum of $1,007.00 net. The testimony of Nelson, the bank’s cashier, is to the effect that after crediting all amounts received from Balmer, he was still indebted to the bank on the note $147.00. It is admitted that the garnishee summons was served on
The record shows, that early in December, 1915, and before the bank took possession of the property it sold, a bank at Severance had secured a judgment against Balmer and garnisheed the sugar company; that the plaintiff in error bank paid $178.00 of the money received by it from the sales of these crops to the Severance bank in satisfaction of this judgment; that this payment was with the consent of Balmer; that the advertisement of the public sale of the property was signed by the auctioneer but included the language “First National Bank of Fort Collins, mort-gagee”; that at the time of the service of the garnishee summons upon Nelson as cashier of the bank, the only credit endorsed on the notes was one for $414.98 bearing date December the 23rd, 1915. The judgment was against the bank for $270.89 being the amount of the Balmer judgment in favor of the defendant in error. The position of the trial court was that the public sale of the remainder of the property not theretofore sold by Balmer, was under the purported chattel mortgages by consent of Balmer, and not under any agreement between him and the bank by which he turned it over to them as security for the debt, or otherwise, than a surrender of possession under the purported mortgages; that, upon account of the acts of Balmer and the bank, pertaining to the mortgaged property, its disposition, etc., the mortgages were void as against the attaching creditors of Balmer.
The contention of the plaintiff in error that the property was turned over to the bank by Balmer, under an agreement outside of the mortgages, that the bank was to receive it as security for its debt, have it sold and apply the proceeds thereon, — is not sustained by the record. While the agreed statement of facts is not very clear on
The record contains sufficient to sustain findings, that Balmer gave to the bank two notes for $1,640.00 and interest and chattel mortgages to secure each on his stock, equipment, farming implements and crops; that thereafter and during what is termed the life of the mortgages, it allowed Balmer to sell about $2,286.00 worth of crops covered by the mortgages and apply the proceeds to his own use, except $431.45, which the bank credited upon the notes; that checks for about $1,400.00 received from the sales of these crops, included the name of the bank as one of the payees; that checks for an additional sum of about $300.00 payable to Balmer received from the sale of these crops also passed through the plaintiff in error's bank; that the bank knowingly permitted Balmer to otherwise appropriate the most of the wheat and alfalfa crops covered by the mortgages. In such circumstances, we cannot agree with the contention of plaintiff in error that there is.no testimony to sustain the findings of the trial court; that the action of the parties to the mortgages constitute a fraud against the right of the judgment creditors of Balmer. The defendant in error was entitled to its judgment as rendered. It had an execution or attachment outstanding against Balmer at the time of the sale. It
It may be conceded, as urged by counsel, that after a mortgagee takes possession, the mortgage, although otherwise defective or for some reason invalid, is good as between the mortgagor and mortgagee, and also as against creditors of the mortgagor where the mortgagee, in good faith, takes possession before the rights of other creditors have intervened by lien or levy. We cannot agree, however, that this rule should be extended to cover cases where the acts of both mortgagor and mortgagee have been such as to unlawfully defeat the rights of other creditors of the mortgagor in the collection of their debts, or in securing liens upon his property as an aid to their' collection, thereby perpetrating a fraud against them. In such cases, the authorities are to the effect that the mortgage is void as against such creditors, and that the taking of possession by the mortgagee, undier ¡such circumstances, does nofj change this rule.
Wilson v. Voight, 9 Colo. 614, 13 Pac. 726; Livingston v. Dry Goods Co., 12 Colo. App. 331, 56 Pac. 355; Brasher v. Christophe, 10 Colo. 284, 15 Pac. 403; Durr v. Wildish, 108 Wis. 401, 84 N. W. 437; Andrews v. Partee, 79 Miss. 80, 29 So. 788; Putnam v. Osgood, 51 N. H. 192; Robbins v. Parker, 3 Metc. 117, 44 Mass. 117.
The judgment is affirmed.
Affirmed.
Decision en banc.
Justices White, Garrigues and Bailey dissent.