4 S.D. 184 | S.D. | 1893
On January 10, 1889, one Charles W. Seefield being the owner of a certain steam flouring mill, engine house, engine, boilers, etc., situated upon lands leased from the railway company in the town of Arlington, in Kingsbury county, executed a bill of sale for the same to Rosenbaum Bros., plaintiffs herein, for the consideration of $25,000, and under which said plaintiffs took possession of said property on January 19, 1889. Prior to the execution and delivery of said bill of Sale by said Seefield to the Rosenbaums, he executed and delivered to Foss, Strong & Co., defendants herein, two mortgages to secure the payment of about $15,000, which mortgages included, among other property, the steam flouring mill, engine, engine house, boilers,' etc., included in the bill of sale above described. In April, 1889, the Rosenbaums commenced this action to set aside, annul and cancel the two prior mortgages as against them, on the grounds that neither the original mortgages nor duly authenticated copies of the same were filed in the office of the register of deeds of Kingsbury county, and that the Rosenbaums had no actual notice of the same, but that purported copies of said mortgages were on file in said office that cast a cloud upon the title and interest of said Rosenbaums to the property described in their bill of sale. An answer was filed by the defendants, and the cause was referred to a referee, who found the facts, which the court below adopted as its own find1 ings, except one not material to a decision in this case. Numerous exceptions were taken to the findings, all of which were overruled. A motion for a new trial was made and denied
The findings of facts are exceedingly voluminous, extending over some twenty pages of the printed abstract, but it will only be necessary for the purposes of this decision to refer to a few of them. The bill of sale is set out in finding 5, the material part of which is as follows: ‘‘For and in consideration of the sum of twenty five thousand dollars, to me in hand paid by Rosenbaum Brothers, the receipt whereof is hereby acknowledged, I hereby sell, assign, and make over to said Rosenbaum Brothers all my right, title and interest in and to that certain roller flouring mill, together with the engine house, engine, boiler and appurtenances thereunto belonging situate on land of the Chicago and Northwestern Railway Co., at Arlington, in the territory of Dakota; * * * to have and to hold the same forever; and I do hereby covenant and agree that said property is free and clear of all incumbrances, and that I have full power and lawful right to convey the same in the manner and form aforesaid. All said property is situate in Kingsbury county, Dakota territory; Dated St. Charles, Minnesota, January 10, 1889. Charles W. Seefield. ” By the seventh finding the referee found that the respective parties stipulated that the sail bill of sale was executed and intended as a mortgage to secure the payment of -c'>25,000. The twelfth, thirteenth, and fourteenth findings are as follows: “(12) That after the said Charles W. Seefield had promised to give the said bill of sale and before it was given, and upon the strength of said promise, .said plaintiffs advanced to the said Seefield a large amount of money, to-wit, thirty thousand dollars. (13) That at the time of the taking of said bill of sale plaintiffs believed the property mentioned in the fourth finding herein to be clear of all incumbrances, and, acting upon said belief and understanding, agreed to extend further credit if Seefield would execute a bill of sale of the same to the plaintiffs, to secure "the sum of twenty-five thousand dollars already due. (14) That the plaintiffs, until
Numerous errors are assigned, but, in our view of the case they may be condensed and stated as follows: (1) The plaintiffs, as vendees or mortgagees of the personal property described, have not such an interest in the property as will entitle them to maintain this action. (2) That the action cannot be maintained, for the reason that, if defendant’s mortgages were invalid as against the Rosenbaums’ bill of sale, such invalidity is apparent upon the face of the instrument. (3.) That said Seefield having only transferred his right, title and interest in the property to the Rosenbaums, they took only such interest as Seefield had in the property at the time the bill of sale was executed, and took the title subject to the mortgages outstanding against the property which were valid as against the mortgagor; in other words, the Rosenbaums took only such interest as Seefield had in the property. (4) That the authenticated copies filed in the office of the register of deeds of Kingsbury county were so filed as to give constructive notice to creditors,
1. It is contended by the learned counsel for the appellants that the respondents, by virtue of their bill of sale, executed and intended as a mortgage to secure the payment of money, acquired a lien only upon the personal property described in the bill of sale, and hence have no such interest therein as will authorize them to maintain this action It is true that in this jurisdiction a mortgage does not transfer the title to the property, but creates a lien only thereon; and it is also true that, as between the parties to the transaction, a bill of sale given and intended to secure the payment of a debt constitutes a mortgage only. Comp. Laws §§ 4348, 4350, 4358; Jackson v. Lodge, 36 Cal. 28; Raynor v. Drew, 72 Cal. 307, 13 Pac. Rep. 866; Murdock v. Clark (Cal.) 24 Pac. Rep. 272, 274; Wisconsin Cent. R. Co. v. Wisconsin River Land Co., (Wis.) 36 N. W. Rep. 837, 839; Schriber v. LeClair, 66 Wis. 579, 29 N. W. Rep. 570, 889; Barry v. Ins. Co., 110 N. Y. 1, 17 N. E. Rep. 405; Odell v. Montross, 68 N. Y. 499; Niggeler v. Maurin, 34 Minn. 118, 123, 124, 24 N. W. Rep. 369; Allen v. Kemp, 29 Iowa 452. But we are of the opinion that under the liberal provisions of Section 4644, Comp. Laws, it is not material as to the nature of the interest in or lien upon property, real or personal, a party may have to entitle him to maintain this action, and that whenever he has reasonable apprehension that an instrument void or voidable as to him may, if left outstanding, cause him serious injury, he can proceed in this form of action to cancel the instrument. That section is as follows; “A written instrument, in respect to which there is a reasonable apprehen sion that, if left outstanding, it may cause serious injury to a person against whom it is void or voidable, may, upon his
2. The counsel for appellants further contend that, if the prior mortgages of the defendants were not properly filed, so as to impart constructive notice, their invalidity in this respect is apparent upon their face, and therefore this action cannot be maintained, as the case fails within the provisions of Section 4645. This section reads as follows: “An instrument, the invalidity of which is apparent upon its face, or upon the face of another instrument which is necessary to the use of the former in evidence, is not to be deemed capable of causing injury within the provisions of the last section.” We are of the opinion, however, that this section has no application, as the invalidity of the instruments as against the plaintiffs does not appear upon their face, as the failure to properly file them can only be taken advantage of by the plaintiffs, upon proof on their part that they are subsequent incumbrancers, or purchasers in good faith for value. The section quoted seems to embody the doctrine of the courts of equity upon that subject, and in that court it is well settled that when the party seeking to cancel the instrument, in an action against him upon the instrument or upon a title held under the instrument, would be required to give extrinsic evidence in order to defeat the action or title, or to showthe invalidity of the instrument as against him, the case is not within the provisions of the section. Pom. Eq. Jur. § 1399, and cases cited; Town of Springport v. Bank, supra;
3. Counsel for appellants also insist that the bill of sale from Seefield to the Rosenbaums, and under which they claim, was simply a quitclaim, transferring Seefield’s “right, title, and interest” only in the property, and hence that the plaintiffs are not purchasers or incumbrancers in good faith for value, but only acquired such interest as Seefield actually had in the property, and could lawfully convey, namely, his equity of redemption. In other words, they insist that, as the defendant’s mortgages were valid as against Seefield without being filed for record, they are equally valid as against the Rosenbaums. To sustain their contention the counsel for defendants invoke the doctrine held by some of the courts that a grantee of real property under a quitclaim deed .takes the property subject to all equities or unrecorded deeds of his grantor, though he had no actual or constructive notice or knowledge of them. The counsel for the plaintiffs and respondents deny the propo ■ sition as applicable to conveyances of real property, and further insist that, if the doctrine is as contended for, it has no appli
4. The contention on the part of the appellants that the debt secured by the bill of sale was an antecedent debt, and therefore the plaintiffs, having advanced no new consideration, were not incumbrancers in good faith for value, was not urged in the argument before this court by counsel for the appellants, and hence we shall assume, without giving the question further consideration, that the Rosenbaums were subsequent incumbrancers of the property in good faith for value, and that, as against the mortgage of the plaintiffs, the prior mortgages of the defendants were void, unless properly filed in the' office of the register of deeds of the proper county, so as to operate as constructive notice to the creditors of the mortgagor or subsequent purchasers or incumbrancers of the property in good faith for value.
5. This brings us to the important question in this case, namely, were defendants’ mortgages so filed as to give constructive notice to the plaintiffs, they not having actual notice of the same? It is well settled law that an instrument, to operate as constructive notice, must be executed and filed or recorded in the manner prescribed by statute. See Cannon v. Deming, (S. D.) 53 N. W. Rep. 863, and cases cited. The two sections of the statute necessary to be considered in the determination of the question presented are Sections 4379 and 4382, Comp. Laws. These sections read as follows: “A mortgage of personal property is void as against creditors of the mort
The counsel for the appellants have sought to sustain their construction of these sections by tracing up the history of the chattel mortgage law of this state, but we think they have failed to strengthen their position by such an examination. The original chattel mortgage law of 1862 provided that ‘ ‘any mortgage of personal property, or a copy thereof, may be filed, ” etc. In 1866 the law was changed, by providing that ‘ ‘a mortgage of personal property is duly filed by depositing the original or an authenticated copy thereof in the office of the register of deeds where the property mortgaged is at such time ■situated.” Section 1636. It also contained the following provision: l£A single mortgage of personal property situated in more than one county, must be filed or an authenticated copy thereof in each county where any property is situated and the mortgage is only valid in respect to the property where it is duly filed as above provided. ” Section 1637. It will be observed that this section does not, in terms, provide for filing the original, and that it does not provide by whom the authenticated copy is to be made or authenticated. In 1877 the codifiers substituted the present Section 4382 for the one found in the law of 1866, and it will be noticed that a very material change in the section is made, by providing that the origihal must be filed, and providing by whom the authenticated copy can be made and authenticated, and when and where it may be filed, to have the effect of the original. These important and material changes clearly show that the codifiers intended to
6. An exception was taken to findings- Nos. 4 and 5, which find that Seefield was on' the 10th day of January, 1889, the owner of ‘‘one steam flouring mill and elevator attached,” etc., on the ground that neither in the bill of sale nor evidence is it shown that the elevator was included in the bill of sale, or attached to or an appurtenance of the mill. We think this exception should . have been sustained. The referee found, and the court adopted the finding “(4) that on the 10th day of January, 1889, one Charles W. Seefield was the owner of the following described personal property, to-wit: One steam flouring mill and elevator attached, situate on the south side of the railroad track in the village of Arlington, Kingsbury county,