Robinson, Norton & Co. v. Norton

Lumpkin, P. J. A petition for injunction was filed by J. C. Norton, as receiver of the assets of Thomas J. Peeples, against C. C. Bemis and certain named fire-insurance companies, to restrain them from- paying “ to said Bemis, his counsel, or any other person claiming under or through him,” the money alleged to be due upon certain policies which had been issued to him. Subsequently these companies, under an order of the judge, paid the money to an attorney at law to be held subject to the further order of the court, and were discharged from the litigation. At the interlocutory hearing, J. M. Robinson, Norton A Co., and others, creditors of Bemis, intervened and were made parties. The receiver claimed the fund on the ground that Peeples had an equitable lien thereon, arising, as alleged, in the following manner: Bemis, for the purpose of securing to [563] Peeples the payment of two promissory notes amounting to $5,000, besides interest, had executed and delivered to the latter & mortgage upon certain goods, with an agreement to insure the same for his benefit. This was done; the insured goods were afterwards destroyed by fire, and the money now in controversy is the proceeds of the policies by which the insurance stipulated for by Peeples was effected. The intervenors claimed under assignments from Bemis to them of the policies in question. These assignments were executed after the destruction of the goods. After hearing evidence and argument, the judge below held that the receiver was entitled to the fund, and accordingly granted an injunction restraining the payment thereof to the intervenors; and they excepted. The bill of exceptions presents several questions, but the case, upon facts as to which there is practically no dispute, is controlled by the propositions announced in the headnote, and we will limit our -discussion accordingly. In the mortgage which Bemis gave to Peeples he described the property upon which it was to operate as “my entire stock of groceries now in my store on the east side of Hamilton street, Dalton, in said county.” According to the sworn petition, Bemis, after executing the mortgage, “secured a wareroom just south of his salesroom some three hundred feet, or thereabouts, and as he would receive goods in quantities not convenient or desirable to keep in his salesroom, he would transfer them to his wareroom, first passing them through and making them a part of his stock of goods in his salesroom.” The wareroom was a building in the same block with the salesroom and had been previously used by another merchant. The goods destroyed by fire were in the ware-room, and consisted of groceries, dry goods, notions, etc. At the time'the mortgage was given, the store above designated as the “salesroom” was the only building occupied by the mortgagor. The evidence showed that Bemis, after he began to use the wareroom, would, on receiving consignments of goods in bulk or in large quantities, have them placed temporarily in the salesroom, “some being retained for use in selling and others carried through the salesroom to the wareroom and brought back as needed.” It also appears that some of the stock of goods in the [564] salesroom at the time of the execution of the mortgage were, for convenience, afterwards moved into the wareroom, but the value of the same was not shown nor does it appear that they were not returned to the salesroom before the fire. From the foregoing it will readily be seen that the physical situation of the wareroom was in ho sense such as to justify a holding that it was merely an annex, or addition to, or integral part of the salesroom. The buildings were entirely separate and distinct, and could not, of course, be regarded as parts-of one and the same house. According to the literal import-of the descriptive words used in the mortgage, it covered only such groceries as were in the store of Bemis, i. e. the salesroom, on the date of its execution. Doubtless, however, it was the intention of the parties that the mortgage should attach to the stock of groceries — as distinguished from the various articles composing that stock — which the mortgagor then had, or • might thereafter keep, in the “store” designated. That is to say, the parties evidently intended to respectively give and receive a mortgage upon a stock of groceries constantly changing in specifics, so as to enable the mortgagor to carry on his business and sell goods to customers, in due course of trade, free from any incumbrance or lien. The mortgagee necessarily, therefore, relied on the good faith of the mortgagor to-keep up a stock of groceries approximating in value that on hand at the date of the mortgage. If this should not be done,, however, the mortgagee would be remediless; for, no matter how many goods of this character the mortgagor might thereafter buy, the mortgage lien could not attach thereto until such goods actually became part and parcel of the stock kept in the store, such being essentially the terms of the contract-as written, which made the test of lien the location, in a certain definitely described building, of a stock of groceries belonging to the mortgagor. It follows that the mortgage created a lien on such groceries only as constituted the original stock or were subsequently actually added to the same. The evidence shows that the goods carried through the salesroom were-not intended to be at once added to the stock kept therein. On the contrary, the salesroom -was inadequate to receive and [565] hold them as “stock,” and another building was secured in which it was designed to store these purchases until such future -time as required their addition to the stock kept in the salesroom. The mortgage attached, not to all purchases made by Bemis, but only to such groceries as he might thereafter actually set apart and add to the stock kept in this particular store. The purchases were not, in point of fact, immediately added, but were kept elsewhere until needed, and then given a final .and irrevocable location (except as to bona fide sales) in the store. The mere transit of the goods through the store on their way to the wareroom could not operate to make them a part of the “stock,” and until they did become a part thereof the mortgage lien could not attach. This case differs from that of Wardlaw v. Mayer, 77 Ga. 620. In that case there was a mistake in the mortgage, and the instrument was reformed, the court ruling that formal correction was not essential. It was, however, clear beyond controversy that the mortgagor intended to mortgage the goods the proceeds of which were in dispute. That was- the controlling point. That case really turned on the question of intention, .and so does this. After a careful consideration of the evidence, we do not think Bemis intended that the mortgage he gave to Peeples should cover any goods, purchased after the execution •of the mortgage, while they were stored in the warehouse. Again, as this mortgage expressly covered a stock of groceries only, it certainly created no lien upon dry goods, notions, etc., and could not, therefore, be made the basis of a claim to an equitable lien upon the proceeds of insurance policies arising from the payment of a loss, upon goods of the character last mentioned. Peeples does, by affidavit, testify that he had a mortgage upon the entire stock of goods, but he could not, of course, thus contradict or add to the terms of the mortgage, which was in evidence and spoke for itself. In this connection it is also proper to note that the petition in this case alleges that the mortgage ivas upon the “entire stock of groceries” in ■the store of Bemis. There was no evidence showing with any •degree of certainty what was the value of the burned groceries or what amount of insurance money was realized thereon. The [566] plaintiff furnished no data whatever from which his claims to-the proceeds of the policies, based on the loss of these .groceries, could be reduced to dollars and cents. The same thing is true as to the particular lots of groceries, if any, which were in the store when the mortgage was given and which were subsequently carried to the wareroom. Even if the mortgage lien attached to these after removal, there is no proof of their quantity or value; nor, as above shown, is it at all certain that in due course of business they were not returned to the salesroom before the fire. The case then is simply this: Peeples had a mortgage covering a stock of groceries in a designated building. His receiver contends that the lien of this mortgage attached to a stock of goods, including groceries and other merchandise, located in another and distinct building. These goods merely passed through the store mentioned in the mortgage, and, with the possible exception of a few articles, had never in fact become a part of the stock therein contained. The receiver further contends that the mortgaged goods having been insured for the benefit of the mortgagee and having been destroyed by fire, he has an equitable lien upon the proceeds of the policies. The first contention is not maintainable, and therefore the receiver’s entire claim must fall.' The mortgage certainly had no lien on anything but groceries, and we do not think its lien attached to the groceries in the wareroom, except possibly as to those, if any, which had actually constituted a part of the stock originally kept in the store. But even if the mortgage lien attached to all the groceries in the wareroom, it was, as has been seen, impossible, under the evidence, to arrive at any amount for which the lien was enforceable. A plaintiff must make out his case by evidence showing with at least reasonable certainty his right to the relief for which he prays. As the receiver failed to do this, the court erred in granting the injunction. Judgment reversed. All the Justices concurring.