Kreth v. . Rogers

Merrimon, J., (after stating the case). It was conceded on the argument that the deed of mortgage, under which the plaintiff claims title to the goods in controversy, was not upon its face fraudulent and void in law, but it was contended the facts recited in the deed, and other facts in evidence, raised the presumption of fact that it was fraudulent, and that such presumption had not been rebutted. If it be granted that such presumption arose, we think there was evidence to rebut it. The deed itself supplied such evidence. The plaintiff sold a stock of goods to the mortgagor on a credit, taking his promissory notes, coming due successively at different times, for the purchase money, and to secure the payment of the same took the mortgage under which she claims. It is not pretended that this was done, nor is there the slightest evidence tending to prove that it was done in bad faith. Such a transaction was in itself legitimate. The deed was not intended to secure debts antecedent to it in view of and involving an impending failure in business of the mortgagor; on the contrary, it contemplated that the mortgagor should go forward actively in a promising enterprise, and from the first fruits of it, in the course of a reasonable period, pay the purcha-e money. In this respect, the case is very different from that of Cheatham v. Hawkins, 76 N. C., 335, and other like cases relied upon b„y the defendants, in which the mortgagor owed and purported, by the mortgage, to secure debts antecedent to it, was insolvent and about to fail in his business enterprise, and in view of such fact executed a mortgage of his property, preferring some of his creditors, .while he remained-im possession of the goods, having control of the same, and devoting part of the proceeds'thereof to his own use,' and doing other acts suggestive of a bad and fraudulent *271 purpose. The prudential and cautionary provisions and stipulations in the mortgage under consideration, in respect to the business to be conducted, the requirement that the purchases of replenishing goods should be for cash down, the payment within a few months of more than six hundred dollars of the debt secured by the mortgage — these and like facts and circumstances appearing from ihe deed and the case agreed, certainly made evidence tending strongly to rebut any presumption of fraud arising from the mere fact that it was intended that the mortgagor should have possession of and sell the goods, and that in violation of his agreement bought other goodson a credit and intermingled them with a part of the goods he so purchased from-the plaintiff. The parlies agreed that the Court should find the facts and apply the law of the case, and accordingly it found that there was no fraud in fact in the mortgage and transaction in question. As there was evidence to warrant such finding, it must be treated as conclusive. Ai d as the mortgage was unaffected by fraud, it must be allowed to have just legal effect. Then, unquestionably, the plaintiff' was entitled to have possession of and to apply such of the goods in controversy as she so sold to the mortgagor. But it is insisted that these goods have been so intermingled with the like goods the mortgagor purchased from the defendant, that they cannot be ascertained. And it is further contended, that the title to the goods purchased by the mortgagor from the defendant did not pass to the plaintiff because, first, the mortgage in her favor did not embrace them; and, secondly, if it did, then, as to these goods, the mortgage was not regi-tered as required by the statute. Granting that there might be force in this last contention, we think that the plaintiff should not suffer prejudice by such intermingling of the goods. She was in no just sense to be blamed on that account. She did not direct or procure it to be done; on the contrary, she required the mort *272 gagor to covenant in the deed that he would purchase replenishing goods for cash down, and thus prevent occasion for such prejudice to any person. The mortgage was duly registered, and the defendants therefore had notice of it and its provisions, and of the nature and circumstances of the mortgagor’s business, and the rights of the plaintiff in respect thereto. It was their duty to themselves to be cautious in their dealings with him. Nevertheless, they sold him goods on a credit with the knowledge— it-is fair to so infer — that he would probably intermingle them with the goods of the plaintiff as mortgagee. It was their laches, their misfortune, thus to deal with such'a mortgagor, and thus place their goods beyond recognition and identification. In such a case one party or the other must suffer prejudice. Which shall it bo? Surely not that one to whom no blame attaches. As surely that one so chargeable with laches. The case states that part of the goods in controversy belonged to the plaintiff, but these could not be distinguished from the goods sold to the mortgagor by the defendants and others. But, as ve have seen, that was not the plaintiff’s fault. She was entitled to have her goods, and when it was admitted on the trial that a part of the goods in question, under the circumstances, were hers, then the burden was on the defendants, chargeable with laches, to distinguish and prove such of the goods as belonged to them, because the mortgagor wrongfudy purchased like goods from the defendants on a credit, to be placed with the plaintiff’s goods, and this the defendants knew, and they knew also that the mortgagor would probably intermingle their goods with the plaintiff’s, and impliedly they gave their consent that he might do so. The goods thus undistinguishable became the property of the plaintiff, as mortgagee. Queen v. Wernwag, 97 N. C., 383, and the authorities there cited. Judgment affirmed.