Bagley v. Harmon

BROADDUS, J. — The appellant complains of the action of the court in giving and refusing instructions. Defendant’s instructions Nos. 3, 4, 6, 7, 9 and 11 were properly refused because they only contained abstract propositions of law. The court gave instructions Nos. 1, 2, 3 and 4 for plaintiff. Plaintiff’s first instruction is to the effect that under the pleading and evidence the verdict and finding must be for the plaintiff for the full amount sued for. The second instruction reads as follows: “That under the law of this State the ad-ministratrix is the trustee of and representative of all the creditors, and as such it is her duty to defend against and resist any and all illegal claims against the estate of the deceased, and probate and preserve the estate of the deceased, [29] and. protect and preserve tbe estate for the creditors, according to law, under the orders of the probate court.” The third instruction reads: “The mortgage read in evidence, not having been recorded in the county in which the deceased resided, the same w?as and is void as to the creditors whose claims accrued after the date of said mortgage.” And the fourth instruction is: “If the court believes from the evidence that S. II. Bagley, the mortgagor, remained in possession of the mortgaged property, and continued to buy and sell and carry on the business in the usual course, and applied the proceeds to his own use, then said mortgage was and is void as to his creditors, and the finding of the court must be for the plaintiff for the amount- of the purchase price of said property, with interest thereon at the rate of six per cent per annum from date of said sale.” • Number 1 was a peremptory instruction to find for the plaintiff and Nos. 2 and 3 and 4 were given, it is presumed, for the purpose of indicating the theory upon which the finding is founded. The defendant after the proper effort to have the finding of the court set aside, brings the case here by appeal. The plaintiff tried her case upon the theory that the mortgage mentioned was void as to creditors, and that it was her duty to contest its validity in their behalf. It can not be seriously denied that, the failure to record the mortgage in the county where the mortgagor resided rendered the same void as to creditors (R. S. 1899, section 3404, and many decisions of the Appellate and Supreme Courts of the State). And the facts that the mortgagee permitted the mortgagor to retain possession of the mortgaged property, to sell the same in the usual course of business, and to apply the proceeds to his own use, rendered the mortgage void as to creditors and purchasers. R. S. 1899, sec. 33.97; Barton v. Sitlington, 128 Mo. 164; Rock Island Bank v. Powers, 134 Mo. 432; Mfg. Co. v. Supply Co., 149 Mo. 538. However, it is admitted by both par [30] ties to this suit that as between the parties to the instrument, the mortgagor and mortgagee, it is good in law. But the plaintiff claims that it is not good as against the administratrix because of the fact that the estate of the' mortgagor is indebted, and that therefore the judgment of the circuit court was for the right party. The question of-the solvency of the estate of deceased is not taken into consideration, but the proposition is broadly assumed that the administratrix represents the creditors, and where there are creditors the administrator of the deceased can impeach his acts on the ground of fraud. To support this theory we are cited to the case of Hughes v. Menefee, 29 Mo. App. 192. That case does not sustain respondent for the reason that the contract sought to be enforced was not only void in law as against creditors, but the estate of the deceased was insolvent and the creditors were in court by their lawyers asking that it be not enforced. The language of Judge Ei/lisoN, who delivered the opinion of the court, in speaking of the case, was: “This is not a contest between the parties to the agreement, for while the administrators are the representatives of the deceased, they are also trustees for the creditors.” In this, he spoke with reference to the facts of that particular case, wherein, further illustrating his position, he says: “If this judgment is sustained it is at the expense of the general creditors. If the estate was solvent and the rights of third parties did not intervene, a verbal agreement for a mortgage of personal property could be upheld.” It seems rather to be the opinion of the court in that case, that notwithstanding the administrator is held to be a trustee for the creditors, a contract void as to creditors may be enforced against the administrator where the estate is solvent and the rights of third parties do not intervene. In Jones on Chattel Mortgages, sections 239 and 240, the rulings of different courts are summarized thus: “An unfiled or unrecorded mortgage is valid against the executor or administrator of the mortgagor in the same way that it is valid [31] against the mortgagor himself. But where the estate of the' deceased mortgagor is insolvent, it has been held in some cases that his unfiled or unrecorded mortgage is void as against his personal representative, into whose hands the possession of the property passes directly from the deceased mortgagor.” The author cites in support of that theory, Kilbourne v. Fay, 29 Ohio St. 264, in which two out of the five judges dissented. In the same section (240) the author takes the contrary view, viz.: “Against this view it seems a sufficient answer that a general creditor can not question the validity of an unfiled mortgage until he has obtained a lien upon it by attachment or execution — until he has seized the property by some process of law, the unfiled mortgage upon it is equally valid against the mortgagor’s creditors as it is against the mortgagor himself. The mortgagor’s death gives no specific lien upon his property in favor of a general creditor. The property passes to the personal representative as the mortgagor left it.” At most, under the authorities and sound reason, the estate of the mortgagor upon his death passing to his administrator as he left it, the administrator has no authority to change the status of the property except under peculiar circumstances; for instance, as we have seen, to protect tire rights of creditors as against fraudulent liens where the estate is insolvent. In this case, however, the court declared the law, in instructions Nos. 1, 2, 3 and 4, -given for respondent, to be that the mortgage in question being void as to creditors was void as to the administratrix also. This was error. At most, it was only void as to the administi’atrix in case the estate in her hands was insufficient to pay debts. This view of the 'ease was entirely eliminated from said instructions. But the case must be reversed upon another ground. It could make no difference in this suit whether the estate of the decedent was solvent or insolvent, the plaintiff was not entitled to recover the full purchase price if the contract in suit was as stated by the defendant in his answer and supported by [32] the greater weight of evidence. The answer alleges the existence of the mortgage of Dorney as a lien on the goods, and that in his contract of purchase from the administratrix he was to take them free of said lien. The instructions and finding; of the court wholly ignored that part of the contract and gave judgment for the entire purchase price of the goods. In other words, the eourt enforced that part of the contract that seems good and lawful, and treated as invalid that part deemed fraudulent as to creditors. If the administratrix is to have her contract enforced against defendant-she must enforce it as an entirety. It is not a divisible contract. It is all bad or it is all good as against the parties to it. This is elementary law and needs no elaboration. If defendant’s contention is true that he was to take the property free from the mortgage, then plaintiff was entitled to a judgment for the purchase price of the goods less the amount of the Dorney mortgage and interest. Other questions raised in the briefs and arguments before this court, in view of the holding of this opinion, become immaterial and will not be noticed. Judgment reversed and cause remanded. All concur.