Second National Bank v. Gilbert

Mr. Justice Magruder delivered the opinion of the court: The ground, upon which the trial court found for the appellee in this case, is stated in proposition No. 15, held by the court of its own motion to be the law in the decision of the case. That proposition, considered in connection with propositions numbered 7 and 8 as modified and held to be the law by the court below, was erroneous. It is not claimed, that the bill of sale, which is alleged to have been executed by Tewksbury and Frederick S. Barnes to Henry F. Barnes in the latter part of October, 1893, was an absolute transfer of the title to the personal property in the hotel. Such bill of sale is conceded to have been merely a security for the indebtedness, alleged to have existed in favor of Henry F. Barnes from Tewksbury and Frederick S. Barnes. Of course, the bill of sale, not having been acknowledged or recorded in accordance with the requirements of the Chattel Mortgage act, was not valid, as against creditors and third persons, unless the mortgagee, Henry F. Barnes, was in possession of the property. It is claimed, that Henry F. Barnes was in possession through the manager of the hotel, Hanna. The proof shows conclusively, that Hanna was manager of the hotel for Tewksbury and Frederick S. Eames before the execution of the bill of sale, and continued to act as manager thereafter. The proof also shows, that Hanna made reports to Tewksbury and Frederick S. Barnes, as well as to Henry F. Eames, after the execution of the bill of sale, and that he operated the hotel for the grantors in the bill of sale after its execution, as he had done theretofore. The grantee in the bill of sale was the father of Frederick S. Barnes, the judgment debtor and one of the grantors in the bill of sale. When the known and previously recognized agent of an alleged vendor remains in possession of personal property, the appearance to the world is the same as though the vendor himself remained in possession, unless there are substantial and visible signs of a change of title. The change in the character of the -possession should be indicated by such outward, open, actual and visible signs as can be seen and known to the public, or persons dealing with the property. (Martin v. Duncan, 156 Ill. 274; Brunswick v. McClay, 7 Neb. 137; Doyle v. Stevens, 4 Mich. 87; Porter v. Parmly, 52 N. Y. 185). Where parties to such a transfer are near relations, clearer and more convincing proof is required of the good faith of the transaction than when they are strangers. (Martin v. Duncan, supra). Notwithstanding the fact that the same manager, who had operated the hotel for the grantors in the bill of sale, still continued to manage it after the execution of the bill of sale, and notwithstanding the relationship, which existed between one of the grantors in the bill of sale and the grantee, the trial court found that there was an actual delivery under the bill of sale to Hanna for Henry F. Barnes. We would not be disposed to disturb this finding of fact by the trial court, if the propositions held as law were correct. The apparent want of change in the character of the possession after the execution of the bill of sale, and the near relationship existing between one of the grantors therein and the grantee, are strong circumstances, tending to throw suspicion upon the loonaftdes of the transfer. Still, the force of these circumstances may be overcome, when the proof is sufficient to show good faith and an actual change of possession. It may be assumed, therefore, that the finding of the trial court as to a change of the possession was justified by the evidence. If there was an actual and 'bona fide change of possession, so that, after the execution of the bill of sale, Henry F. Eames was in the possession of the •property in the hotel, then there is presented the case of a mortgagee of personal property, who is in actual possession of the same. Where the possession of personal property is transferred from the mortgagor in a chattel mortgage to the mortgagee therein before the rights of creditors actually intervene, the mortgagee will hold the property, and a levy cannot be made thereon. (Martin v. Duncan, supra; Read v. Wilson, 22 Ill. 376; Brown v.Riley, id. 46; Frank v. Miner, 50 id. 444). So long as Eames was in possession of the property, as mortgagee under the bill of sale, the appellant could not insist upon a levy being made by the sheriff under the execution issued upon its judgment. While, therefore, the bill of sale was in force and the possession of the grantee therein continued under it, the statement in proposition No. 15, as held by the court, was correct. But the proof shows that, on December 5, 1893, while the execution of appellant was yet alive, the grantee in the bill of sale, who was-in fact a mere mortgagee, accepted from Frederick S. Eames and his partner, Tewksbury, a chattel mortgage upon the property in the hotel. This chattel mortgage was duly acknowledged, and entered upon the docket of the justice of the peace, who took the acknowledgment, and was recorded in the recorder’s office on December 20, 1893. After this day, to-wit, on December 23, 1893, the attorney of the appellant stated to the sheriff that the judgment debtor, Frederick S. Eames, owned property in the hotel subject to levy.- We are of the opinion, that it was then the duty of the sheriff to levy upon the property subject to the chattel mortgage. Although property embraced in a chattel mortgage cannot be levied upon while the mortgagee is in possession, yet it can be levied upon where the mortgagor is in possession, and the mortgage given by him is executed in accordance with the statute. Where a mortgagee of chattels is in possession after condition broken before the rights of creditors have attached, his title to the chattels becomes absolute at law. (Whittemore v. Fisher, 132 Ill. 243). But, here, the mortgagee, Henry F. Fames, changed his attitude and possession. The mortgage accepted by him, which was executed on December 5, 1893, contained a statement that the mortgagors were in possession of the property, and that they were lawfully possessed thereof “as of their own property.” After accepting such a mortgage, Henry F. Eames was estopped from denying the truth of the statements therein contained. It is well settled in this State that, when a chattel mortgagee is properly acknowledged and recorded, a third, person, who is a creditor of the mortgagor, may levy an attachment or execution upon the property in the possession of the mortgagor. (Barchard v. Kohn, 157 Ill. 579; Beach v. Derby, 19 id. 617; Pike v. Colvin, 67 id. 227; Durfee v. Grinnell, 69 id. 371; Dunlap v. Epler, 88 id. 82; Gaar v. Hurd, 92 id. 315; Simmons v. Jenkins, 76 id. 479; Spaulding v. Mozier, 57 id. 148). It follows from what has been said, that the modifications, which the trial court made of propositions, numbered 7 and 8, were erroneous under the circumstances of this case. The modification made of proposition numbered 7 asserts, that the sheriff need not levy on personal property, which had a prior mortgage on it. This was not a correct statement of the law as to the property in the hotel after the execution of the chattel mortgage on December 5, 1893, and its record on December 20, 1893. The sheriff could have levied, and should have levied upon the property in the hotel when requested to do so on December 23, 1893, because, at that date, Frederick S. Eames owned one-half of the furniture, subject to the chattel mortgage executed to his father. This was true, even if the turning over of the possession of the property by Henry F. Eames to his son and Tewksbury did not have the effect of letting in the lien of appellant’s judgment ahead of the chattel mortgage executed upon December 5, 1893. (Blatchford v. Boyden, 122 Ill. 657). The modification made by the court of proposition numbered 8, as originally asked, was erroneous, because the execution of the chattel mortgage upon December 5, 1893, superseded the bill of sale, and operated as an abandonment of the possession held thereunder by Henry F. Eames, if there had been any such possession. It makes no difference that the judgment debtor, Frederick S. Eames, did not come into the possession of the property as owner, until after the mortgage of December 5, 1893, had been executed and recorded. This is true, because he obtained such possession as owner during the life of the execution. The law is, that the lien of a judgment in the hands of a proper officer attaches to all property which the debtor owns, or which he may acquire during the life of the execution. The lien attaches to property acquired by the judgment debtor at any time while the execution is in force. (Blatchford v. Boyden, supra; 1 Freeman on Executions, sec. 197; Shaffner v. Gillmore, 3 W. & S. 438). A sheriff, failing to levy on personal property in the possession of the judgment debtor, can- only discharge himself from liability by showing that the property was not subject to levy; and the burden of proof is upon the officer. Where he negiects to levy upon personal property in possession of the defendant, he must either show that the property was exempt from execution, or must establish such facts as justify his failure to make the levy. (Bonnell v. Bowman, 53 Ill. 460; People v. Palmer, 46 id. 398; Dunlap v. Berry, 4 Scam. 327; 1 Freeman on Executions, secs. 107, 200; 2 id. sec. 252). There is much discussion in the briefs of counsel upon the questions, whether the circumstances justified the sheriff in demanding an indemnifying bond as a condition precedent to making a levy, and whether, if he was justified in calling for such a bond, the bond presented to him was such a sufficient security as the statute requires. (Rev. Stat. chap. 77, sec. 43; 2 Starr & Curt. p. 1408). But we do not deem it necessary to discuss, or pass any ophu ion upon, these questions, as the court below based its finding in favor of the appellee solely upon the theory that, after the mortgage of December 5, 1893, was executed, the previous bill of sale was still in force, and the grantee therein was still in possession of the property as mortgagee. For the reasons above stated, the judgments of the Appellate Court and of the circuit court are reversed and the cause is remanded to the circuit court. Reversed and remanded.