Bank of Liberal v. Anderson

ELLISON, J. The plaintiff brought its action against defendant on a promissory note and sued out an attachment in aid. On a trial of the plea in abate — 570 — ment the verdict was for defendant and the attachment was thereupon dissolved. The principal cause of attachment alleged was that defendant had fraudulently conveyed his property so as to hinder and delay his creditors. The evidence showed that defendant was largely indebted. That he owed the plaintiff and certain implement dealers doing business as Conrad Brothers, besides several other debts. The immediate or principal cause of the attachment, was a chattel mortgage given by defendant to the Con-rads on September 8th, 1900, to secure six notes, aggregating $225, being the purchase price of two “McCormick Com Binders. ’ ’ The notes were to fall due a few months apart in sums ranging from fifteen to forty-five dollars. The first for $15, was to become due in a few days from date, and the last, for $40, in two years thereafter. To secure these notes the defendant executed the chattel mortgage on all his personal property and growing crops, including nine head of horses, two milch cows, one heifer and one steer, four farm wagons, 125 acres of Kaffir corn, 75 acres of Indian corn, the'two machines, to secure the payment of which the mortgage was given, and a variety of other farm property, in all aggregating, according to defendant’s testimony, a value of between four and five thousand dollars. The mortgage provided that defendant might retain possession of the property, but any sale, disposal or depreciation thereof, should be cause of forfeiture. The testimony given by Conrad and by defendant himself is all that need be considered in order to dispose of the ease. It was substantially as follows: That defendant having bought one machine of the Conrads, in a few days concluded that he needed another in order to harvest his Kaffir corn. He went to one of the Conrads to make the purchase, but was informed that he must give a chattel mortgage; and he replied that he would give one on all his property. That in naming over the property, perhaps half in value of what he finally gave, — 571 — Conrad said that, was sufficient, bnt defendant pnt it all in and Conrad accepted it. We will not attempt to set ont all the evidence of these two parties, for it is sufficient to say of it, that it shows, beyond doubt, they had a verbal understanding that defendant might sell, at least a large part of the property and use it in the payment of debts due other creditors than Conrad, as well as otherwise for his own benefit. Conrad said on recross-examination by Mr. Thurman: ‘ ‘ Q. What was going to be done with the Kaffir corn? A. He told me he was going to thresh it. Q. What was he going to do with it? A. Sell it. And he told me at that time, he said----. He mentioned some debts that he had to pay, and he said, ‘I will come out all right in it.’ Q. Was there anything said about the other corn, and what he was going to do with it? A. No, sir. Q. He was going to use it — thresh his Kaffir corn and pay it on his debts? A. That is the way I understood it. Q. It was not to be paid on your debt? A. Nothing said about that. Q. You understood that he was cutting this corn and going to pay it on his debts, ‘ so he come out all right?’ A. Yes, sir. Q. You understood that at the time this mortgage was executed? A. Yes, sir; but understand that he wanted these notes in payments. Q. He wanted your notes in payments ? A. Yes, sir. Q. They were put in payments? A. Yes, sir. Q. Run way long up until 1902? A. Yes, sir; two or three years. Q. There was nothing said about what he was going to do with the Indian corn? A. No, sir; I don’t remember of his saying anything about any Indian corn; that is, about what he was going to do with it. Q. What did you expect him to do with the Indian com? A. I expected him to do with it whatever he wanted to. I expected to let him take it and do what he pleased with it. As long as he met his obligations with me I didn’t expect to touch it. Q. You expected to' let him do just as he pleased with all the property that was mortgaged as long as he met his obligations — 572 — with you? A. Yes, sir. Q. That was the understanding between you and him? A. Yes, sir.” He then said in answer to a question on re-direet examination by Mr. Cole: “I didn’t say I had any understanding with him. I say, this is my understanding, that I took the mortgage on that stuff to secure these notes; that he was to take the stock and crop and do the best he could with it towards meeting his debts. Q. Was there any understanding that he could dispose of any of this property without applying it on the debt? What I mean is, did you and him have any understanding that the property that was mortgaged to you could be sold by him? A. The corn. Q. Without accounting for it on the claim? A. The corn. 'He was to take that and dispose of it. Q. This growing corn in the field? A. Yes, sir.” By the Court: “Q. Do' you mean Indian corn and Kaffir corn, too? A. Yes, sir. Q. He could sell that and dispose of it without applying on your debt? A. If he paid up the paper that he owed me. Q. If he had paid up all the paper, or the paper that was due? A. The paper that was due. ’’ The defendant testified: “Q. I will ask you whether or not after the mortgage was executed, if there was any understanding, or any agreement, about how you should dispose of the property that was mortgaged? A. There was no agreement about how, but Henry (Conrad) said when I went home, ‘Now you have got two machines, you have got good stock; go take care of that Kaffir corn and take care of that stock; thresh that Kaffir corn and pay me my money, and balance you can have for use on your place and do as you are a mind to about it.’ ” He further said that he expected to thresh the Kaffir corn, sell it and pay Conrad’s first note falling due and then the plaintiff’s. He further said, in answer to a question of what he was going to do with the Indian corn: “I would do, I reckon, like other farmers would: shuck it and crib it. Q. Selling it when you got ready, or did you intend to keep it? A. — 573 — Well, to keep and sell both, of course; keep it or sell it either, just as I saw proper. Q. Were you at that time using it, along about the first of September? A. I was feeding the stock with it, cows and horses. Q. You expected to gather it and sell it when you gm ready, just like any other farmer? A. Yes, sir.” The entire face of defendant’s testimony shows that he expected to use the property, or portions of it, by sale for the purpose, not only of paying the Conrad debt as the notes fell due, but also his other debts. Now, when there is an understanding that the mortgagor who retains possession of the property may sell it, or portions of it, for the purpose of paying debts other than that named in the mortgage, it is a conveyance to his own use and consequently fraudulent. It is not for him and his chosen mortgagee to first encumber his property and then provide, verbally or otherwise how it may be used for other creditors. While he may prefer a creditor if he chooses, he must do so in some proper way, whereby such creditors and their rights and preferences may be known. In two eases in the St. Louis Court of Appeals, in opinions by Judge Bland, it is expressly ruled that an understanding that the mortgagor might sell the mortgaged property and apply the proceeds on the claims of his other creditors was a conveyance to his own use. Hardware Co. v. Riddle, 84 Mo. App. 276; Dry Goods Co. v. McLaughlin, 78 Mo. App. 578. The plaintiff asked an instruction which peremptorily directed a verdict for plaintiff under the evidence which we have discussed. It should have been given. 2. But it is suggested that no exception was taken to the court’s action in overruling the motion for new trial. The abstract shows that the bill of exceptions recited that the motion for new trial was overruled. The bill further recited that a record entry was made showing it to be overruled and that exceptions were duly taken. While this was rather unusual language to use — 574 — in a bill of exceptions, yet it makes the fact sufficiently ■appear in tbe bill. Tbe judgment is reversed and cause remanded with ■directions to enter judgment sustaining the attachment. The other judges concur.