S. H. Ransom & Co. v. Schmela

Lake, Ci-i. J. The action in the district court was brought by the defendant in error to recover possession of certain personal property claimed by him under a chattel mortgage executed to his intestate by one Andrew Herman. The plaintiffs in error, who on their own motion were made parties defendant in the court below, also claim the property by virtue of a subsequent mortgage from the same party. The first of these mortgages was given January 26th, 1877, and the other January 15th, 1878. The one represented by the defendant in -error, therefore, was prior [76] in point of time, and a first lien upon the property. Being the first lien, it follows that the defendant in error was entitled to have and hold the property for its satisfaction, unless, for some reason urged by the plaintiffs in error, that lien has been either lost or rendered subject to their mortgage. It is claimed o.n behalf of the plaintiff in error that the first mortgage was subordinated to the second one by reason of it not having been refiled and recorded “with a statement exhibiting the _ interest of the mortgagee in the property mortgaged,” as directed by sec. 74, oh. 43, Rev. Statutes. But this claim is not sustained for at least two good reasons, one of which is, that the section referred to, although in force when the mortgage was executed, had ceased to be operative before this step could have been taken according to its terms, it having been repealed by the act “to amend sections seventy-three,” etc., approved February 15th, 1877. Laws 1877, 51. By this repeal, such re-filing and recording was rendered unnecessary thereafter for the protection of the interest of mortgagees. The other reason is that, even if this section had continued in full force, the plaintiffs in error have not shown themselves to be entitled to its aid, which was intended only for creditors of mortgagors, and subsequent purchasers and mortgagees in good faith. They are subsequent mortgagees it is true, but there is nothing in the record to show that they were not well advised of the existence of the prior mortgage when they took theirs. The want of notice is a fact to be alleged, and, when not admitted, proved by evidence, like any other disputed fact in a case. And the burden of proof rests upon him who would establish the character of a mortgagee in good faith. There is no presumption of law to aid him in the absence of evidence. In Gregory v. Thomas, 20 Wend., 17, the court, in commenting on a provision of statute similar to our own, said [77] that “actual notice of the existence of an unpaid prior mortgage of personal property destroys the preference which a second mortgagee would otherwise be entitled to claim, in consequence * * * . * of the omission of the first mortgagee to re-file his mortgage within the period prescribed by statute.” The same rule is found in Hill v. Beebe, 13 N. Y., 556, and in Paine et al. v. Mason et al., 7 Ohio St., 198. It is contended that the mortgage under which the defendant in error claimed the property was erroneously admitted in evidence. This contention is based upon sec. 70, chap. 4, Rev. Stat. — Comp. Stat., sec. 11, chap, 32, which provides, in substance, that without an actual and continued change of possession of the property, a chattel mortgage will be presumed fraudulent as to creditors of the mortgagor and “subsequent purchasers in good faith,” and conclusively so “unless it shall be made to appear that it was made in good faith and without any intent to defraud such creditors or purchasers.” It will be noticed that but two classes of persons are mentioned in this section as entitled to its benefits, viz., creditors and purchasers. To which class, if either, do the plaintiffs in error belong? Clearly not to the former as that term is here used. As mere creditors of the mortgagor they could not raise the question of fraud without first obtaining a judgment or process of some sort against the property. Jones on Chattel Mortgages, sec. 245, and cases there cited. Having acquired the lien or right which they are asserting by a voluntary transfer from- the mortgagor, they are in the attitude of purchasers, and as such cannot invoke the aid of this provision without first establishing their own good faith, which they have neither done nor even attempted to do. As to the witness Herman, the exclusion of whose testimony is assigned for error, he was clearly incompetent. He was the original party defendant, and, notwithstanding [78] liis disclaimer, was interested at least to the extent of the costs that might be adjudged against him. In the language of the statute he had a direct legal interest in the result of the cause, and the adverse party was an administrator of a deceased person. Code of civil procedure, sec. 329. Wamsley et al. v. Crook and Hall, 3 Neb., 344. There is no error in the record, and the judgment is affirmed. Judgment affirmed.