105 Mo. App. 27 | Mo. Ct. App. | 1904
Lead Opinion
The undisputed facts taken from appellant’s statement are as follows:
On June 20, 1902, the Van Natta-Lynds Drug Co. sued Greo„ Aley, Jr., on account for merchandise sold for $251.46 and obtained a writ of attachment in aid of said suit which was levied upon a stock of drugs belonging to the debtor, situated in his store at Quitman, Mo. Afterwards the respondents interpleaded for the goods, claiming the right to possession by virtue of a chattel mortgage executed to them by Aley, Jr. on March 25, 1902, to secure a note for $1,290. A trial resulted in a verdict and judgment for the interpleaders and the drug company appeals.
It appears from respondents ’ evidence without dispute that in 1900 Aley, Jr., purchased the stock from Dr. Carter. He borrowed $800 of the purchase price from a Mr. Weber, a banker, to whom he executed a first mortgage on the goods and the balance of the purchase money was secured to Dr. Carter by a second mortgage on the same property. Aley took possession of the store and conducted his business in the usual course of trade for about two years, during which time he paid nothing upon his debt. In March, 1902, Mr. Weber became dissatisfied with his security and thereupon he advanced sufficient money to pay off the Carter mortgage, and Aley executed to Weber his personal note due on or about one year after date for the entire indebtedness, amounting to $1,290 for the payment of which Aley’s father and brother-in-law, interpleaders herein, became sureties. At the same time, Aley, Jr., executed to his father and brother-in-law an unconditional note for $1,290 payable on or before one year after date and secured it by mortgage upon his stock of drugs — the mortgage under which they claim title here.
The testimony for the interpleaders is that Aley, Jr., was not indebted to them in any sum and that the
On these undisputed facts disclosed by respondents ’ evidence, it is insisted by appellant that the mortgage is invalid and that the court erred in refusing a demurrer to the evidence. Error in the instructions is also assigned. Appellant contends that the mortgage is void for the reason that it discloses that its object was to secure an indebtedness that did not exist; that the note evidenced a fictitious lien; and that both concealed the actual liabilities of the mortgagor, and the interest he had in the mortgaged goods, which was calculated to
In Ayers v. Husted, 15 Conn. l. c. 513, the court held: “The tendency of an absolute, unconditional note, given merely for the security of one who has assumed only a conditional liability for the maker, is directly to delude the creditors of the maker, and to mislead them as to his resources for the payment of Ms debts. ’ ’ See also, Sanford v. Wheeler, 33 Am. Dec. 389 (13 Conn. 165); Bramhall v. Flood, 41 Conn. 71; Pattison v. Letton, 56 Mo. App. 325; Molaska Mfg. Co. v. Steele, 36 Mo. App. 496, and Galbreath v. Cook, 30 Ark. 417, have no application to the question under consideration. We find only one decision in this State decisive of the question, viz.: Sparks v. Brown, 33 Mo. App. 505, the holding being that in the absence of fraud, a mortgage on its face although purporting to secure an unconditional debt, yet in fact to secure a contingent liability, is not void as to creditors. And so it was held in Blencoe v. Lee, 12 Bush (Ky.) 358; Goodheart v. Johnson, 88 Ill. 58. Consistency at least requires that we adhere to a former decision of this court, especially where it is founded upon respectable authority, although it may appear that other courts of equal respectability have held differently.
It is claimed that as the evidence showed that the mortgagor was permitted to remain in possession and sell his goods in the regular course of trade without being obligated to apply the proceeds to the mortgage debt and was permitted to run the business as he did before the mortgage was given, the mortgage is to the use of the mortgagor and void as to creditors. In Rubber Mfg. Co. v. Supply Co., 149 Mo. 538, it was
The evidence disclosed that the mortgagor remained in possession of the goods with the knowledge and consent of plaintiff and conducted the business as he had previously without being required to turn over the proceeds to the mortgagees or to the banker, Weber, the payee in the note for which interpleaders were the sureties for tlie mortgagor, Aley, Jr. As already set out herein, the only witness who testified in the case was the plaintiff Gee who stated that “he did not know that Aley, Jr., bought goods partly on credit and partly for cash, but he supposed that he did, which was equivalent to knowledge of the fact. Under these undisputed facts it was the duty of the court to have instructed the jury peremptorily to return a verdict for defendant.
But our attention is called to later decisions of the appellate courts in which it is claimed that the ruling in Rubber Mfg. Co. v. Supply Co., ante, has been modified, viz.: Dunham v. Stevens, 160 Mo. 95; State ex rel. v. Fidelity Co., 94 Mo. App. 184. In the former the holding was: “A mortgage of a stock of goods is not rendered fraudulent by the fact that the mortgagor is to remain in possession and sell in the usual course of trade, if he is required to account to the mortgagee of
There was no conflict in the evidence as there was but one witness who was one of the plaintiffs, and no question being raised as to his credibility, it became the duty of the court upon this uncontradicted testimony to declare the effect of his testimony as a matter of law.
Under this undisputed evidence the mortgage became fraudulent in law and the defendant’s demurrer should have been sustained. The cause is reversed. '
Rehearing
Opinion on Motion for Rehearing.
It is still insisted by respondents that the court misapprehends the effect of the decision in Dunham v. Stevens, 160, Mo. 95. In the original opinion we held that the ruling in Rubber Mfg. Co. v. Supply Co., 149 Mo. 538, had not been modified by that in Dunham v. Stevens, supra. The contention of the respondents therefore is to the effect that in the latter case the holding is that, where a mortgagor by the terms of the mortgage is permitted to remain in possession of the mortgaged goods and to sell at retail and apply the proceeds on the debt, his failure, by the permission of the mortgagee, to make such application does not render the mortgage void as to creditors. It is not conceivable that the court intended to enunciate a conclusion so radically opposed to the well-established rule that the permission of the mortgagee to the mortgagor to sell and divert the proceeds of mortgaged property from the payment of the debt is void as to creditors. The object of the provision in the mortgage to allow the mortgagor
In Dunham v. Stevens the mortgagee acted in good faith. For eighteen months the mortgagor returned to him each month a statement showing the amount of purchases and sales of goods and profits after deducting expenses. Not much was paid on the debt as the profits were small. The mortgagor kept up the stock to about its original value and the business was continued until the mortgagee became dissatisfied because his debt was not being paid as the mortgage provided, when he asserted his right to take possession.
Not so in this case. The mortgagee made no inquiries whatever as to what the mortgagor was doing in the business and the mortgagor made no reports to them, and they never at any time took notice-of what the mortgagor was doing but supposed he was conducting the business as he had been before the giving of the mortgage — that is, in the usual and ordinary course for his own benefit. When it was shown that the mortgagor had not applied the proceeds of the sale of the goods upon the debt it made a prima facie case against the mortgagees at least which they did not attempt to meet.
The motion for rehearing is overruled.