Missouri, Kansas & Texas Trust Co. v. Richardson

Sullivan, J. In October, 1891, Theodore F. Barnes was the owner of the Windsor Hotel in the city of Lincoln. The property was incumbered' by two mortgages, the first being for $25,000 and the second for $5,000. The second mortgage was given to, and owned by, the appellant, the Missouri, Kansas & Texas Trust Company. The hotel was leased by Barnes to F. G. Richardson for a term of five years, commencing February 10, 1892, at a monthly rental of $416.66, payable each month in advance. This lease was assigned by.the lessor to the trust company as collateral security for his indebtedness to it; and in order to induce said company to dismiss a pending action for the foreclosure of its mortgage, Mr. Richardson, at [619] tbe instance of Barnes, paid to tbe appellant upon tbe lease tbe sum of $3,368.75. This payment was made on or about October 8, 1891, that being tbe day upon wbicb tbe lease was executed. January 1, 1893, Richardson assigned bis lease to Jennie Opelt, and at tbe same time sold her tbe hotel furniture, supplies, etc., taking back, as security for tbe unpaid purchase price, wbicb amounted to $6,500, a chattel mortgage upon tbe property sold. April 2, 1894, to secure an indebtedness of $1,215.83, Mrs. Opelt gave Richardson a second chattel mortgage covering tbe same property described in tbe $6,500 mortgage. This second mortgage was on September 28, 1894, assigned to tbe appellant as security for rent then in arrears. July 28,1893, Richardson transferred to bis daughter, Clara M. Richardson, tbe first mortgage upon tbe hotel furniture and other property therein described. After the trust company became tbe assignee and owner of tbe second chattel mortgage it commenced this action against Jennie Opelt, F. G. and Clara Richardson in tbe district court of Lancaster county. Tbe purpose of tbe suit is indicated by tbe prayer of tbe petition, wbicb is here set out: “Wherefore this plaintiff asks that an injunction issue restraining tbe sale of said property described in said first named chattel mortgage, or tbe taking of said property under said chattel mortgage, for tbe purpose of foreclosure; that tbe assignment thereof from said Frederick G. Richardson to bis daughter, Clara M. Richardson, be declared null and void, and that it be set aside and held for naught; that an accounting be taken of tbe amount yet due from said Frederick G. Richardson to plaintiff and judgment entered therefor; that tbe lien of tbe first chattel mortgage be declared junior and inferior to tbe lien of tbe plaintiff, and that tbe amount found due on said chattel mortgage No. 59710 be declared a first lien on said chattel property; that it be declared in full force and effect, valid and subsisting, and that on tbe final bearing of this case tbe injunction be declared and da [620] creed perpetual; and that the plaintiff have such other, further, or different relief as it may be entitled to, including costs of this case.” The court rendered judgment against Richardson for the sum of $11,702.19, and against Opelt for the sum of $12,948.34. The other relief prayed for was denied. In view of the conclusion at which we have arrived it will not be necessary' to separately consider the several propositions ably discussed by counsel for the trust company. Plaintiff acquired its chattel mortgage with notice of the fact that it was junior and subordinate to the mortgage for $6,500 executed by Opelt to Richardson. It had a right, of course, to proceed by action to enforce its security, and as an incident to that right it was entitled to bring the Richardsons before the court in order to have the rank of their mortgage and the amount due upon it adjudicated. But clearly the plaintiff is not entitled to have the transfer from Mr. Richardson to his daughter canceled, nor the further disposition of the mortgage by Miss Richardson enjoined. It is true the plaintiff had a second mortgage on the hotel' furniture, but it did not have a specific lien upon the first mortgage. That was Richardson’s property, and a mere general creditor could not impound it. The mortgaged chattels belong to Mrs. Opelt, and the plaintiff can assert no right to them except through the mortgages. The first mortgage was not made in fraud of the rights of Richardson’s creditors, and a fraudulent assignment of it could not change the fact that it was and is a first lien on the hotel furniture. .. If it is an equitable asset available to Richardson’s creditors, it must be reached in the usual way after the ordinary remedy has been exhausted. (High, Injunctions sec. 1041; Dormueil v. Ward, 108 Ill. 216; Briggs v. Austin, 129 N. Y. 208; People’s Savings Bank v. Bates, 120 U. S. 556.) We approve the action of the trial court in refusing to annul the transfer of the mortgage from Richardson to his daughter and in refusing to enjoin her from making a sale or -other disposi [621] tion of tlie security; but we think a decree should have been rendered foreclosing the plaintiff’s mortgage and fixing the amount due upon the first mortgage. The facts alleged in the petition and proven on the trial entitled the trust company to that relief. The prayer for general relief was quite sufficient. Its vagueness did not mislead the defendants, and in fact no one complains of it who is entitled to be heard upon that question. (3 Ency. Pl. & Pr. 347; Danforth v. Smith, 23 Vt. 257; Simplot v. Simplot, 14 Ia. 449.) In determining the amount due from Richardson to the .plaintiff the trial court credited Richardson with the sum of $1,246.15 as interest upon the advance payment of rent made in October, 1891. From the evidence we are satisfied that Richardson is entitled to a credit upon the lease; but we think the court erred in its computation of the amount of interest for which credit should be given. To the extent only that rent was paid before it became due the lessee is entitled to interest thereon. The whole amount of the advance payment was-bearing interest up to February 10, 1892. After that time the sum bearing interest was reduced $416.66 each month until the advancement was entirely exhausted by being applied upon the lease in accordance with the terms of that instrument. Richardson complains of the decree, and contends that he is no longer liable on the lease assigned by Barnes to the plaintiff. The grounds for his contention are (1) that the plaintiff accepted Mrs. Opelt as its tenant, and (2) that he was, at most, Mrs. Opelt’s surety, and as such has become discharged by a change in the terms of the original contract made without his knowledge or consent. The evidence does not sustain the propositions of fact upon which Richardson’s argument is founded. The findings of the trial court are against him, and they rest upon adequate proof. Neither is it true as a proposition of law that the assignment of a leasehold interest discharges the lessee from an express covenant to pay [622] rent. He cannot, without the lessor’s consent, release himself from or change the ■ conditions of his obligation. (Le Gierse v. Green, 61 Tex. 128; Fanning v. Stimson, 13 Ia. 42.) The judgment is reversed so far as it fails to conform to the views herein expressed. The cause is remanded with direction to the district court (1) to fix the amount due on the $6,500 mortgage and adjudge it to be a first lien on the property; (2) to render a decree foreclosing the plaintiff’s mortgage; and (3) to increase the amount of the judgment against Richardson, by reducing the credit allowed him on account of interest, from $1,246.15 to the sum of $143.51. Reversed and remanded.