Tallon v. John B. Ellison & Sons

Maxwell, J. The only alleged error insisted upon in the argument of this cause, was as to ruling of the court below upon the motion to dissolve the attachment issued therein. The agent of the defendants in error swears in his affidavit that at the time the credit was given, Tallón, although really insolvent, assured him that his entire indebtedness did not exceed the sum of fifteen hundred dollars, and that his stock on hand and debts due largely exceeded his total indebtedness, and it is alleged that the credit was given solely on the strength of these representations. Tallón admits that he stated to the agent of the defendants in error, that his indebtedness to other houses did not exceed the sum of fifteen hundred dollars, and that no' inquiry was made about mortgages, and for that reason he said nothing to the agent about his goods being mortgaged. The agent for the defendants in error also says, that it was not until about the 27th day of March, 1870, that defendants in error were informed of the existence of the mortgages on the stock of goods, that at that time the entire stock of Tallón would not pay more than seventy per cent, of his liabilities, and that Price was insolvent. The grounds set forth in the affidavit for an attachment in the court below were: “First. That the defendant had fraudulently contracted the debt. Second. That he had fraudulently disposed of his property, or a part thereof with the intent to defraud his creditors.” These are two of the grounds mentioned in the statute for an attachment. General Statutes, 556. An affidavit for an attachment is sufficient if it be in the words of the statute. Ellison v. Tallon, 2 Neb., 14. Coston v. Paige, 9 Ohio State, 397. [74] The charge thus made if denied by the defendant, must be sustained by the plaintiff to the satisfaction of the court; upon the plaintiff, by the denial, is thrown the burden of proof. Id. It is clearly shown in this case that the plaintiff in error at the time he made his first purchase of goods, Sept. 22, 1869, in answer to the inquiry of the agent of the defendants in error, as to the amount of his indebtedness to other houses, stated that his indebtedness was about the sum of fifteen hundred dollars, evidently intending to convey 'the impression that that was the entire amount of his indebtedness, although there were mortgages on his stock at that time exceeding the sum of five thousand dollars. The principle is well established, that if a party for the purpose of obtaining credit, make false representations as to his solvency or of the condition of his financial affairs, whereby the other party relying on these statements is induced to sell his goods or part with his property, it is manifestly a fraud on such party. And the misrepresentation may be either by words, or acts, or the suppression of material facts, with intent to deceive. The important inquiry, therefore, in all this class of cases is, whether one party has been wilfully deceived or misled by the other to his injury; for if this be once shown, redress will be afforded without regard to the means by which the deception was affected. Story’s Eq. § 192. Hanson v. Edgerly, 9 Foster, 345. Denny v. Gilman, 26 Maine, 149. Allen v. Addington, 7 Wend., 10. Kidney v. Stoddard, 7 Met., 252. A further question arises as to the effect of the mortgages to Jones and Stutsman, Ryland Jones, and "White, Heath and Co., on the goods of the plaintiff in error. A mortgage of chattels is a sale with a condition. • The legal title passes to the mortgagee, subject to the mortgagor’s right to perform the condition and after default the legal title is said to become absolute in the mortgagee. [75] Our statute provides that “ every sale made by a vendor of goods and chattels, in Ms possession or under his control, and every assignment of goods and chattels'by way of mortgage or security, or upon any condition whatever, unless the same be accompanied by -an immediate delivery, and be followed by an actual and continued change of possession of the things sold, mortgaged or assigned, shall be presumed to be fraudulent and void as against the- creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith; and shall be conclusive evidence of fraud, unless it shall be made to appear on the part of the persons claiming under such sale or assignment, that the same was made in good faith, and without any intent to defraud such creditors or purchasers.” General Statutes, 393, sec. 11. Many respectable authorities were produced on the argument of this case, to show that a mortgage of goods and chattels, with possession and power of sale in the mortgagor, is a valid mortgage against the creditors of the mortgagor. "With due respect to the ability displayed in a number of the opinions thus cited, we cannot regard them as the law upon that subject. “, The very nature of a mortgage is to fasten a lien upon specific property, and the courts have gone far enough when they have permitted an honest possession in the mortgagor; because that opens up a door by which an honest vendee, may be defrauded by purchase without notice, but in this case there is no specific lien, but a floating mortgage which attaches, swells, and contracts as the stock in trade changes, increases, or diminishes, or may wholly expire by entire sale and disposition, at the will of the mortgagor. Such a mortgage is no certain security upon specific property; it all depends upon the honesty and good faith of the debtor, and as he might dispose of it to a creditor at will, to satisfy a debt, we see no reason why a [76] creditor may not seize it against his will, for the same purpose. In such a case the whole right to dispose of the property to pay a debt depends on the will of the debtor.” Collins and McElroy v. Myers, 16 Ohio, 551. Freeman v. Ransom, 5 Ohio State, 1. Harman v. Allen, 7 Id., 218. Edgell v. Hart, 9 New York, 217. Divver v. McLaughlin, 2 Wend., 596. Griswold v. Sheldon, 1 New York, 588. Such a mortgage is void as against creditors and subsequent purchasers in good faith. The judgment of the district court is clearly right and must be affirmed. Judgment aeeirmed. Mr. Justice Gantt, concurs.