Tufts v. Thompson

Philips, P. J. This is an action in replevin The facts, essential to a proper understanding of the questions to be decided, are about as follows : On the eighth'day of April, 1884, the- plaintiff sold to Smith & Faris, partners, doing business as druggists, in Kansas City, a soda, fountain, for which Smith & Faris executed to plaintiff their written promises, maturing at different times. The contract contained an express stipulation that until the several sums were paid, the title of the property should remain'in the vendor, and that upon the failure of the vendees to make payment of any one of the sums, according to the tenor and effect of the promise, the plaintiff might retake the possession of the fountain ; but this contract was not acknowledged nor recorded. No part of these sums have been paid, though some of them were past due at the date of the institution of this suit. On the thirty-first day of May, 1884, while Smith & Faris were in possession of said fountain in their drug store, they gave to the defendants, other than Thomas, severally, their promissory notes, for different sums; and, to secure their payment, executed several mortgages on the stock of drugs and fixtures, including the soda fountain in question. On the same day of the execution of these notes and mortgages, Smith & Faris made an assignment for the benefit of their creditors, to the defendant Thomas, as assignee. Thomas, having possession of the fountain as such assignee, and refusing to surrender [568] the same to plaintiff on demand, this action was instituted. By stipulation of parties, the mortgagees were admitted to come in as defendants to litigate the validity of their respective mortgages, as against the plaintiff and the assignee. On trial had before the court sitting as a jury, the court found the issues for the plaintiff. Defendants prosecute this appeal. I. As between Tufts, the vendor, and Smith & Faris, the vendees, the soda fountain remained the property of plaintiff. This was the well settled law of this state prior to 1877. Parmlee v. Catherwood, 36 Mo. 480; Little v. Page, 44 Mo. 412 ; Mathews v. McElroy, 79 Mo. 202 ; Kingsland-Ferguson Manufacturing Co. v. Culp, 85 Mo. 548. The act of 1877, now incorporated in sections 2505, 2507, 2508, Revised Statutes, in no wise affected the rule as between vendor and vendee. This statute only invalidates such contracts when not acknowledged and recorded, in favor of subsequent purchasers and creditors in good faith, etc. As a corrolary of this proposition, Thomas, the assignee of Smith & Faris, occupies no better situation than his assignors. He took the property burdened with the same incidents and infirmities as to the title, and subject to the same equities, which attached to it in the hands of the assignors. Brown v. Heathcote, 1 Atk. 162 ; Wakeman v. Barrow, 2 N. W. Rep. 50; Fletcher v. Marcy, 2 Story Rep. 565; Donald’s Assignee v. Farewell, 93 U. S. ; Horschon v. Conway, 98 Mass. 150; Mitchell v. Winslow, 2 Storey Rep. 637 ; Hawk v. Pritzloff, 51 Wis. 160; Roberts v. Austin, 26 Iowa, 315. II. It must follow that if the mortgagees can take this property from the plaintiff, which is the legal effect of their status in this action, it must be by virtue of the statute above referred to. It is held by the St. Louis court of appeals, in Defiance Machine Works v. Trisler (21 Mo. App. 69), that [569] this statute only postpones the claim of such a vendor, who has failed to have his contract duly acknowledged and recorded, in favor of subsequent purchasers and creditors in good faith, without notice. It does not apply to debts created prior to the sale of the property. This construction is in accord with my preconceived view, and the argument of Thompson, J., who delivered the opinion, has confirmed and strengthened it. If, therefore, the mortgagees are neither subsequent creditors nor purchasers within the terms of the statute, the plaintiff should prevail. The evidence at the trial was, without contradiction, that all the notes given by Smith & Faris, on May 31, 1884, were given in consideration of notes held by the parties long prior to April 8, 1884, and the original notes were not notes or debts of the firm of Smith & Faris, but were the debts of individual members of the firm. Counsel for appellant seek to escape the force of this fact by the assumption that there was a new consideration to support the notes of May 31. After a careful examination of the facts, as presented in this record, we fail to find any satisfactory evidence to support this contention. The firm of Smith & Faris never received one cent, nor even a promise, for the making of the firm notes for the individual debts. It was a bald assumption by the partners, as such, of the debts of one member of the firm, without any consideration moving the firm thereto. It was a perversion of partnership responsibility, and an attempted wrongful diversion of partnership assets, pledged to the payment of partnership debts before one dollar could be taken for the debts of the individual partner. It would have been the plain duty of the assignee of Smith & Faris to resist the mortgages, and to see that they were postponed in favor of the creditors of the firm. The evidence, for instance, shows that Campbell’s claim arose in February, 1884, for which he held the in [570] dividual note of Faris, secured by chattel mortgage of household goods, and on the individual interest of Faris in the drug store. It is suggested by counsel for Campbell that the consideration for the note was the surrendering up of the individual note and the cancellation of the chattel mortgage. This fact seems to have occurred alone to the mind of the able counsel at this hearing. It certainly never so occurred to Campbell. In his testimony he expressly stated “that these original notes were the consideration for the giving of said note of May 31 ; that when said note of May 31 was given, said original notes were not given back to Smith.” On the contrary, the original notes were in the hands of Campbell’s attorney, at the time of the trial of this cause. So of the claim of the bank. One Overly held the individual note of Smith, dated January 29, 1884. Overly sold this note to the defendant bank. The bank had nothing to do with the transaction of May 31. Overly seems to have managed the matter in his own interests. He simply indorsed the new note over to the bank. It was simply an additional security, as Overly supposed, for his own protection. The bank parted with nothing. It lost nothing by the transaction. As to the other note, that of Mrs. Smith — the wife of Smith, of the firm of Smith & Faris — -there is not the shadow of a pretense to hang the claim on that there was any new consideration. She held the individual note of her husband, executed to her in February previous. She had nothing to do, personally, with the manoeuvers of May 31. Her husband, doubtless, con amove, sought to strengthen her security by giving her the firm’s note and mortgage. She never surrendered the original note. The truth is, that no impartial mind can read this record without being impressed with the fact that, when these creditors of the individual members of the firm of Smith & Faris discovered that the concern was on the verge [571] of a collapse, and being aware that there were no other sources of payment outside of the partnership assets, they rushed in, and obtained the assent of Smith & Faris to make the debts partnership debts and secure-them, if possible, by mortgages on the partnership assets. The transaction was without consideration moving' to Smith & Faris, or any sacrifice on the part of the-mortgagees. It was an attempt to perpetrate a fraud upon the partnership creditors. III. We shall not discuss the suggestion that these-mortgagees are subsequent purchasers in contemplation of the statute. The statute admits of no such construction. Fleming, Adm'r, v. Clark, ante, p. —; Goodman v. Simmons, 19 Mo. 108; Terrey v. Hickman, 1 Mo. App. 123-4. IV. The court below, it is quite probable, found that the mortgages and deed of assignment were made-so near together in point of time, and in view of all the surrounding circumstances, as to constitute, in contemplation of law, but one transaction. Speaking for myself, the instruction touching this issue correctly stated the law; but as the case was decided in’ favor of the-right party, on the other branch already discussed, it is not necessary to pass upon any other matter in the record. The judgment of the circuit court is affirmed. All concur.