31 Mont. 184 | Mont. | 1904
Lead Opinion
delivered the opinion of the court.
This is an appeal from a judgment entered in favor of the defendant. The plaintiff, at the time of the bringing of the action, was the duly appointed, qualified and acting trustee of the estate of one Frank Rennie, a bankrupt. Rennie, prior to August 11, 1899, and continuously from that date until the 14-tli day of March, 1901, was engaged in the business of a liquor dealer in the county of Gallatin. On that day lit' made, executed and delivered to the Bozeman Rational Rank his promissory note, for $1,800, on which he made certain payments, leaving a balance of about- $800. On February 6, 1901, he, being unable to pay his debts to numerous creditors, made a chattel mortgage of his saloon property, including a large number of articles, running to the defendant, O. AY. Hoffman, to secure him,' he having guarantied in writing the payment of said note to the bank. This mortgage was duly executed, and filed in the office of the county clerk. Rut on the 11th day of August, 1899, a
It is noticeable that the defendant in his answer sets up that this agreement, which was made without formality, and was not filed in the office of the county clerk, was a chattel mortgage to secure him against loss or liability by reason of the written guaranty, whereas the writing itself discloses the fact, as above stated, that it was to secure him (Hoffman) for such sums of money as he might advance to pay the debts of Rennie. The defendant avers that this mortgage of the 6 th of February was made “for the purpose and with the intent of extending said chattel mortgage of August 11, 1899, and the lien thereof, and putting the same in such form as to entitle it to record, so that notice of its existence might be given to all of the aforesaid creditors of said Frank Rennie.”
On the 14th day of May, 1901, Rennie was, by order of the United States Court for the District of Montana, adjudged a bankrupt. It is alleged in the complaint that on the 14th day of March, 1901, Hoffman seized and took possession of all of said property of Rennie under and by virtue of the chattel mortgage — meaning the instrument of February 6, 1901. Defendant denied that the property was taken by him under or by virtue of the chattel mortgage last above mentioned, but avers that he took and seized the same on the 14th day of March, 1901, under
Plaintiff prayed for a decree that the chattel mortgage of February 6, 1901, be declared null and void as against the creditors of Rennie and against the plaintiff, and that Hoffman be required to surrender and deliver up to plaintiff all the property by him seized, and that, if any of said property could not be delivered, plaintiff have judgment for the value thereof, and that plaintiff have attorney’s fees.
The case was tried to the court without a jury, and the court found, among other things, that on February 0, 1901, Rennie having reduced his indebtedness on the note to the bank which Hoffman had guarantied to $800, with a small amount of interest, and being again pressed by creditors, gave to the defendant “another chattel mortgage,” regular in form, for which no new consideration was passed, and that said instrument was intended as a continuation of the security given on August 11, 1899, and that Hoffman, on March 14, 1901, deeming himself insecure, took possession of the property under and by virtue of the instrument of August 11, 1899. The court found further that in April, 1901, proceedings were commenced against Rennie in the Hnited States court, and that he was regularly adjudged a bankrupt, and plaintiff was appointed by the Hnited States court as alleged; and that defendant turned over to plaintiff a portion of the goods in his possession, retaining sufficient to indemnify himself. As conclusions of law the court foiuid, among other things, that the instrument of August 11, 1899, was a valid chattel mortgage as between the parties to it and as against all
Ten specifications of error are relied upon, but it is not necessary to consider more than one of them. Was the court correct in holding that the plaintiff was not entitled to recover a judgment? The property was seized by the defendant, according to his own statement, under and by virtue of the power contained in the instrument of August 11, 1899, it having remained in the possession of Rennie from the time of the making of the instrument until the time of its seizure. There was not any new consideration for the mortgage of February 6, 1901. Possession of i the property was taken less than four months prior to the time that Rennie was declared a bankrupt under the bankruptcy act. At the time of the taking of said property it conclusively appears that Rennie was insolvent. The instrument of August llth was not such as entitled it to filing under the laws of the state of Montana as a chattel mortgage. The insolvent, Rennie, owed considerable sums of money to other parties before the 14th day of March, 1901. There was not any fixed time mentioned in the “mortgage” of August 11, 1899. More than fourteen months had expired after August 11, 1899, before possession was taken under the instrument of that date, and the agreement was not executed and had not been executed up to the time
Section 60 of said Act is as follows: “(a) A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. •(!>) If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such per- ' son. * * *”
Section 4491 of the Civil Code of this state is as follows: “Sec. 4491. Every transfer of personal property, other than a thing in action, or a ship or cargo at sea, or in a foreign port, and every lien thereon, other than a mortgage, when allowed by law, and a contract of bottomry or respondentia, is conclusively presumed, if made by a person having at the time the possession or control of the property, and not accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things transferred, to be fraudulent, and therefore void, against those who are his creditors while he remains in possession, and the successors in interest of such creditors,
It thus appears that the instrument of August 11, 1899, and the transfer made on the 14th day of March, 1901, were not such as are allowed by the law of the state of Montana, and were such as attempted to give an unlawful preference to the defendant. Our conclusion, therefore, is that the judgment of the court below is wrong, and must be reversed.
Reversed and remanded.
Rehearing
On Rehearing.
delivered the opinion of the court.
We held that the instrument of August 11, 1899, and the delivery and taking of the property made on the 14th day of March 1901, were not such as are allowed by the law of this state and were such as attempted to give an unlawful preference to the defendant. Rennie was adjudged a bankrupt on the 14th day of May, 1901. Section 4491 of the Civil Code, cited heretofore, was adopted from California, as was declared in Yanks v. Bordeaux, 23 Mont. at page 210, the section being identical with Section 3440 of the Civil Code of California. In the latter state there were at the time of the enactment of their Civil Code, certain kinds of personal property which it was not lawful to mortgage. This fact was overlooked by the codifiers of the Laws of Montana. In this state all personal property may be mortgaged; therefore, the words “when allowed by law,” as appearing in our Section 4491, are superfluous. Disregarding the phrase “when allowed by law,” all mortgages of personal property are exempted from the operation of the section. A mortgage not executed in manner and form as prescribed by law is good between the parties, as has been frequently declared by our court.
One ground upon which we decided that the delivery of the property to Hoffman was, in effect, to enable him to obtain a preference over other creditors, was that the delivery to him was not to secure a present loan or advance, but one to pledge the payment of an old obligation. Whatever views we had as to this, we are controlled by the utterance of the Supreme Court of the United States in Sawyer v. Turpin, 91 U. S. 114, 23 Lawyers’ Co-op., p. 235. In all matters pertaining to a construction of the United States Bankruptcy Act, the holdings of the Supreme Court of the United States are conclusive. Our attention has been called pointedly to this Federal case upon rehearing, and we find that it is almost identical as to its facts
In the ease before us the taking of the goods related back for authority to the time of the giving of the power on xlugust 11, 1899. The formal mortgage given February 6, 1901, is of no importance in this case, as it did not give or take away any right or power to or from Hoffman, but left him with what rights or power he had. The delivery to and taking by Hoffman of the goods was not unlawful under the law of Montana, and, under the authority of the S'awyer-Turpin Case, was not an unlawful preference under the Bankruptcy Act. The Federal Supremo Court says the giving of the formally executed mortgage was a “mere exchange in the form of the security” and that the preference, if any, was obtained when the bill of sale was. given long before. In the case at bar here, there was a change in the form of the security, or, as the lower court found, the formal mortgage was a continuation of the original security. The preference, if any, was as of August 11, 1899.
Affirmed.