First National Bank v. Comfort

L. K. Church, J. This action was brought to recover damages for the alleged conversion of certain personal property claimed by the plaintiff, and which the defendant, as sheriff of Hughes county, seized under sundry warrants of attachment against the property of MacMahon & Co. The firm of MacMahon & Co., doing business at Pierre, consisted of [170] John MacMahon and Kate MacMahon, his wife; and the firm of Young, MacMahon & Co., of Blunt, and Gotlieb, MacMahon & Co., of Fort Pierre, were branch establishments of MacMahon & Co. On the tenth day of July, 1883, MacMahon & Co., then being financially embarrassed, and threatened by creditors with legal proceedings, mortgaged to W. G. Nixon, cashier of the plaintiff, all goods, wares, and merchandise in their store in Pierre; all goods stored in their warehouse or shed in the rear of said store; and all other goods belonging to said firm, wherever situated, in the city of Pierre; also one horse and delivery wagon and carriage, together with ponies belonging to said firm; all sheds, warehouses, etc., of the firm in the rear of said store; all notes, claims, and evidences of indebtedness of any kind whatever, due to said firm; and all interest of said firm in the business of Young, MacMahon & Co., and Gotlieb, MacMahon & Co., — to secure the payment of $6,000., with interest thereon, according to the terms of four promissory notes, as follows: One for $1,000, payable August 1, 1883; one for $3,500, payable September 1, 1883; and one for $1,000, payable October 1, 1883. The mortgage provided that in case of the mortgagor’s attempting to dispose of or remove from the county of Hughes the goods and chattels, or any part thereof, or in case the mortgagee should at any time deem him • self insecure, then it should be lawful for him to take posses - sion, and sell at public auction. It was agreed, however, outside of the mortgage, that the mortgagor’s should continue business as before, disposing, of the mortgaged property by retail, at private sale, in the usual course of trade. On the following day the mortgagors gave to Nixon a bill of sale of the same property, and included, in addition, all goods then in transit, or should thereafter be in transit, or in way come into their possession; also all goods in transit, or thereafter to be in transit, to Young, MacMahon & Co., or Gotlieb, MacMahon & Co.; and all the interest of the grantors in .any indebtedness which might become due to either of said firms; the intention evidently being to include MacMahon & Co. ’s entire property. It is claimed that this bill of sale was intended as a mere [171] security, and to cure possible defects in the mortgage. The next day (July 12th) it is claimed that there was a meeting of plaintiff’s board of directors upon the subject of the security which had been taken from MacMahon & Co., at which time it was concluded that the security was unsafe; and thereupon, on the same day, plaintiff took MacMahon & Co.’s stock of merchandise under a parol agreement by which after selling by retail at private sale enough goods to satisfy its claim, it was to account to MacMahon & Co. for the surplus. MacMahon continued in the store; the clerks were to go on and sell the goods in the usual way; nothing was said about reducing prices; no inventory of the goods was taken; MacMahon’s sign was not taken down, — in fact, nothing was done in any way to change the outward or inward appearance of the manner of conducting the business, except that Mr. Carlin, as agent for the bank, was quietly put in charge, and he was to remain in charge only until the bank was paid, and then, according to the parol agreement, the bank’s interest ceased. The anxiety of the bank people, and their diligence in looking after the interest of the bank, and the acknowledgment that they did not deem the bank sufficiently secured by the chattel mortgage, and the manner and circumstances under which the bill of sale was procured, and all the admitted facts, show they were aware of the failing or embarrassed circumstances of MacMahon & Co. The defendant attached said property on July 13th, and it is admitted said attachment proceedings are regular. The only error assigned is the action of the court in directing the verdict. We are of the opinion that the entire transaction was an assignment by MacMahon & Co. to the bank; and, whether in name a “mortgage” or “bill of sale,” there was no delivery of the property, — there was a secret trust for the benefit of MacMahon & Co. If considered as a mortgage, it was fraudulent and void in law as against creditors. When the mortgagor, by an arrangement, express or implied, is permitted to continue in possession of, and sells, a mortgaged stock of goods, shifting in their na.ture, at retail, for his own [172] benefit, the mortgage is unavailing against his creditors. The law will not aid a party to directly or indirectly continue to dispose of his property to a creditor with a secret reservation to himself, not apparent upon the paper, but existing in parol. Civil Code, §§ 2023, 2024; Bump, Fraud. Conv. 192; Porter v. Graves, 104 U. S. 691; Wait, Fraud. Conv. § 238; Cheney v. Palmer, 6 Cal. 119; Jones, Chat. Mortg. § 352; McKibbin v. Martin, 64 Pa. St. 352; Brown v. Webb, 20 Ohio, 389; Lukin v. Aird, 6 Wall. 78. The rule in this territory is that such an arrangement is, as a matter of law, fraudulent and void, as against creditors, and consequently there was no question of fact to submit to the jury. Yet if there was some evidence in favor of the party, if it is insufficient to sustain a verdict, so that one based thereon will be set aside, the court is not bound to submit the case to the jury, but must direct them what verdict to render. Herbert v. Bentley, 97 U. S. 320; Improvement Co. v. Anderson 14 Wall. 442; Pleasant v. Fant, 22 Wall. 116; Ringgold v. Haven, 1 Cal. 108. The necessity of moving for a new trial in the court below, to obtain a review of the whole case is the remaining question. Section 22, Code, sup. 2, provides the supreme court may review upon appeal every actual determination; among others enumerated, an order which grants or refuses a new trial. Sub. 5 provides an appeal cannot be taken before the final determination of the action in which the order is made; “but upon the final judgment or decision being rendered, the appellant, on his appeal from such final judgment or decision, may have any intermediate order enumerated in this section reviewed by the supreme court, by designating such order sought to be reviewed, in his notice of appeal from the final judgment or decision. ” The practice, as indicated by Section 288 of Code, is that a party intending to move for a new trial must, within ten days after the verdict of the jury, if the action was tried by a jury, or after notice of the decision of the court or referee, if the action ;was tried without a jury, serve upon the adverse party a notice of his intention to move for a new trial, designating the [173] grounds upon which the motion will be made. The object being to give the opposite party time to prepare for the motion, the notice of intention must be given before the court can entertain the motion for a new trial. The defeated party may appeal from the judgment, and, in connection with such appeal, may appeal from and review the order refusing a new trial. The appeal from, the judgment does not depend upon the motion for a new trial. It is undoubtedly the intention of the statute that the question of the insufficiency of the evidence can only be raised by a motion for a new trial. Judgment affirmed. Francis, J., dissenting; Tripp, C. J., counsel below, not sitting.