34 Neb. 709 | Neb. | 1892
On the 2d day of April, 1888, H. C. Dunning, who was then engaged in business as a general merchant at Osceola, P'olk county, executed separate mortgages upon his stock of merchandise in favor of the defendants in error amounting in the aggregate to $2,866.50. Said mortgages were all given to secure the bona fide debts of the mortgagor then past due, to-wit, to Max Isaacs & Son, $262; to Tootle, Hosea & Co., $361.98; to Schuster, Kingston & Co., $1,196; to Barber Bros., $7-15.58; to Turner, Jay & Co., $161, and to Yinyard & Schneider, $171. Said mortgages were all executed and delivered at the same time and all filed for, record at one time. It was the intention of all parties thereto that the several mortgages should share pro rata in the proceeds of the mortgaged property in case it was not sufficient to satisfy all. As evidence of such intention the following provision was written in each of said mortgages: “ This is made at the same time and is to prorate with mortgages made to” (here follows a description of each of the other mortgages).
On the delivery of said mortgages, Mr. King, as attorney for Max Isaacs & Son, Tootle, Hosea & Co., and Schuster, Hingston & Co., and Mr. Mills, as attorney for the other mortgagees, immediately took possession of the property in controversy by virtue of the said mortgages and continued in possession thereof until dispossessed by the plaintiff in error, Hamilton, sheriff of said county, April 7, by virtue of orders of attachment against said Dunning in favor of H. P. Lau and J. J. Brown & Co. Dunning, at the time in question, was indebted to other parties, and subsequent to said time executed other mortgages on the same property to the amount of $2,391.34, all of which were by their terms made subject to the rnort
It is first contended that the petition fails to state a cause of action, and that the court erred in overruling a demurrer thereto. The second amended petition on which the cause was tried is in the usual form in an action on a sheriff’s bond for the conversion of property in the execution of a writ against a stranger except that the facts are set out more in detail than is usual or perhaps necessary. Counsel make the general objections only, and we are unable to observe any infirmity in the petition and think the trial court did not err in overruling the demurrer. The cause of action stated in the first petition was in favor of Max Isaacs & Son only, and against the sheriff only. Afterward the latter moved the court to require the plaintiff to make all of the mortgagees herein named parties to the action in order to avoid a multiplicity of suits, which motion was sustained and leave given to the plaintiff to file an amended petition. Thereupon the defendants in error filed the petition in question and joined the sureties of the sheriff with him as defendants, setting out his official bond in order to recover thereon. The sureties having been served with summons, the defendants .challenged the jurisdiction of the court on the ground that the nature of the action had been changed from one of conversion against the sheriff only to one on his official bond, leave not having been given to make the said sureties defendants, which was overruled and exceptions taken.
The real contention in the case is with reference to the several mortgages. It is claimed by plaintiffs in error that the transaction amounts to a general assignment for the benefit of creditors, and is therefore void as against creditors of Dunning, since it is not made in conformity with the statute regulating voluntary assignment, chapter 6, Compiled Statutes.
It is insisted that the facts in this case bring it within the rule announced in Bonns v. Carter, 20 Neb., 566. In that case the conveyance under consideration was held by a majority of the court to create an express trust in favor of the seven creditors named therein, and in legal effect an assignment for the benefit of creditors, and therefore void as against attaching creditors. In this case there is no trust within the common meaning of the term. It is true that every chattel mortgage contains a trust in one sense. It necessarily creates a trust in favor of the mortgagor as to any surplus. In that sense it may be said that there is a trust in this case. It may be conceded, also, that by virtue of the conditions of the mortgages, a trust is contemplated as against each mortgagee in favor of each of the others. That a debtor in failing circumstances may secure one or more of his creditors by mortgage or transfer absolute of a part or all of his property is a proposition settled by repeated decisions in this state. Nor does the fact that the mortgagor is insolvent affect his right to prefer one creditor to the exclusion of others. The only limitation upon his right in that respect is that the transaction must be in
We agree that the transaction involved is not an assignment for the benefit of creditors, and that the relation between Dunning and defendants in error is that of mortgagor and mortgagees. The question, therefore, of the validity of the mortgages is dependent upon the question of actual good faith or fraudulent intent as to other creditors. This question was fairly submitted to the jury, and the verdict is clearly in accordance with the evidence. There is . in fact no evidence of an intent on the part of any of the parties to defraud any of Dunning’s other creditors, and the verdict cannot be disturbed on that ground.
Exception is taken to two of the instructions given on the courtls own motion, as follows:
“Eighth — If you believe from the evidence that the mortgages, under which the plaintiffs claim title to the stock of goods in question, were made at one and the same time, and as one transaction, that the same wei’e made for the purpose of transferring the stock of goods in question*715 to plaintiffs for the purpose of placing said stock of goods beyond the reach of the creditors of H. C. Dunning, or to hinder and delay the creditors of said Dunning in the collection of their claims against said Dunning, or for the purpose of transferring said property to the plaintiffs for the purpose of securing their claims, and reserving any residue after the payment of said claims for the use and benefit of said Dunning, then said mortgages would be fraudulent and void in law, but these are questions of fact to be determined by the jury from "a consideration of all the evidence in the case.
“Ninth — You are instructed that while a bona fide creditor may take adequate security from his debtor, who is in failing circumstances, by chattel mortgage upon personal property for his own claim, yet he cannot hinder and delay or defraud other creditors in the collection of their claims by placing the debtor’s property beyond their reach, by taking a mortgage to secure a grossly inadequate debt; and in this case if you believe from the evidence that the mortgages, under which plaintiffs claim title to the stock of goods in question, were made for the purpose of hindering, delaying, or defrauding the creditors of said H. C. Dunning, or that said Dunning, being insolvent, conveyed by chattel mortgage to the plaintiffs personal property largely in excess of what was necessary for their own security, and thereby prevented its application to the payment of other debts owing by the said Dunning, then such chattel mortgages would be fraudulent and void in law, and you should return a verdict for the defendants.”
There is no error in these instructions. The question of fraud or good faith under the issues was one of fact for the jury, and the instructions complained of correctly state the. law of the case. Plaintiffs in error requested a number of instructions which were refused, which ruling is assigned as error. It is not necessary to copy them as they are in effect but different statements of one proposition, viz., that
In Hargadine v. Henderson, 97 Mo., 375, a debtor conveyed all of his property not exempt from execution, including a stock of merchandise, to one H., designating the latter as trustee for the purpose of securing five creditors, including the said trustee as surety on one of the said claims, with power to sell at private sale, and after paying said debts to account to him for the balance, if any. It was held that the instrument was a mortgage and not an assignment.
In Robson v. Tomlinson, 54 Ark., 229 [15 S. W. Rep., 456], Cockrill, chief justice, after citing with approval Bank v. Crittenden, 66 Ia., 237, says: “ The controlling guide according to decisions of this court is, was the intention of the parties, at the time the instrument was executed, to divest the debtor of the title and so make an appropriation of the property to raise a fund to pay debts. In arriving at the intent of the parties the question is not whether the debtor intended to avail himself of the equity of redemption by paying the debt, but was it the intention to reserve the equity. If so the instrument is a mortgage and not an assignment.”
In Muchmore v. Budd, New Jersey court of appeals, 22 Atl. Rep., 518, one C. made an absolute bill of sale of all his property, except wearing apparel, to S. The bill of sale
In Warner v. Littlefield, supreme court of Michigan, 50 N. W. Rep., 721, one W. gave a chattel mortgage to the plaintiff, who was‘not a creditor, as trustee, conditioned that he would pay the claims of certain creditors within ten days and save certain other parties harmless from obligations assumed for his accommodation. In case of foreclosure the proceeds were to be distributed pro rata among the creditors. In an action by an unsecured creditor it was held that the instrument was a mortgage and not an ¿ssignment. In the opinion of the court, Champlin, chief justice, says: “The instrument must be read as a whole and the intent gathered from its entire contents. By naming him as trustee the conveyance did not vest in him the absolute title to the property and place it beyond the reach of creditors. If valid, the mortgagor and subsequent lien-holders had a right of redemption. Not so if it was a common law assignment.” True, the term common law as
In Hembree v. Blackburn, supreme court of Oregon, 19 Pac. Rep., 73, the court, after citing with approval Jones on Chattel Mortgages and Herman on Chattel Mortgage's, say: “ The distinction is one clearly defined. A mortgage or deed of trust in the nature of a mortgage is a security for a debt. An assignment is more than that. It is an absolute appropriation of property to the payment of debts. A mortgage creates a lien upon property in favor of creditors, leaving the equity of redemption still the property of the debtor and liable to sale or incumbrance by him.” To the same effect are Campbell v. Col. C. & I. Co., 9 Colo., 60; Fitzgerald v. McCandlish, 50 N. W. Rep. [Mich.], 860, and Weber v. Childs, 51 Id. [Mich.], 543.
In Pomeroy’s Equity Jur., sec. 995, in discussing the subject of deeds of trust to secure debts to creditors named therein, it is said that such instruments, although they authorize the trustee to sell the property and pay the debts provided they are not paid by the debtor within the time named, are mortgages only, and have come into general use as such in many of the states.
I have not, in the course of a careful examination of the authorities, observed that the ease of Bonns v. Carter has been once cited with approval. Nor have I found a case subsequently cited which sustains the conclusion of the court in that case. The only conveyances or transfers of property intended to be affected by our statute are common law assignments. That is apparent from its title, viz., “An act regulating voluntary assignments for the benefit of creditors, the proceedings thereunder, and to prevent the fraudulent violation of the same.” The statute in no other respect or upon no other conditions seeks to interfere with the dominion which at common law the
Affirmed.