Whitson v. Griffis

[213] Opinion by Clogston, C.: This was an action in replevin, to recover the possession of a stock of goods and fixtures claimed by the plaintiff by virtue of a chattel mortgage executed by his stepdaughter, one M. E. Breese, to secure an indebtedness due from her of $900. The defendant levied upon said goods by virtue of an order of attachment, as the property of Mrs. Breese. The sole question in issue was as to the validity of this mortgage by which plaintiff claimed his right of possession. Plaintiff complains of the instructions of the court to the jury, and the refusal to instruct as requested by him. The court, among other things, instructed the jury as follows: “ 7. But, on the other hand, I instruct you that if the mortgage in question was accompanied by an understanding or agreement that the same was wholly or in part for the benefit of said M. E. Breese, by placing her property out of the reach of creditors, then such mortgage was void as against the plaintiff and attaching creditors, notwithstanding the fact that the plaintiff may have been an actual creditor of said M. E. Breese, and in such case plaintiff cannot recover.” “12. You are further instructed, that if you find from the evidence that at the time the mortgage in question was executed and delivered, C. C. Whitson was the stepfather of the said M. E. Breese, and that they were residing together in the same house, and had so resided together for a long time prior thereto, and were at said time members of the same family, then these facts may be taken into consideration in determining the question of good faith; for where parties are so related they are in law held to a stricter proof and accountability, as to good faith toward creditors, than mere creditors.” These instructions were objected to; the objection was overruled by the court, and excepted to by plaintiff. In addition to these instructions, the plaintiff asked the court to give the following instruction: “ Where a chattel mortgage is given on a stock of goods with a stipulation for possession thereof by the mortgagor, and by agreement, in or outside of the mortgage, the mortgagor is permitted to continue disposing of the goods in the ordinary course of business, and to use a portion of said stock, or the proceeds thereof, for his support, and that of his family, and pay out of such stock or proceeds, rent, fuel, [214] clerk hire, lights, paying the remainder over in discharge of the mortgage debt, the transaction will not be rendered fraudulent and void as to creditors, but will be upheld as valid if entei’ed into and earned out in good faith.” This instruction the court refused to give; which ruling was excepted to by plaintiff. We think the court erred in giving the two instructions above quoted, and in refusing to give the instruction asked by the plaintiff. Instruction No. 7, given by the court, rendered it impossible for the jury to return a verdict for the plaintiff, no matter how honest or how much good faith there was in the .transaction between plaintiff and Breese. The court by that instruction said that if it was understood or agreed between these parties that the transaction was for the benefit, in whole or in part, of Mrs. Breese, by placing her property out of the reach of her creditors, then that the mortgage was void. If this transaction was just as plaintiff claimed it to be, and the mortgage was given in good faith and without any fraudulent intent, yet it would have the effect which the court said would render the mortgage void, if it was partly for her benefit. The mortgage also gave her the right to use a part of the proceeds arising from the sale of the goods; it gave her the right to sell them and to receive compensation for so doing. These would all be benefits resulting to Mrs. Breese, and no matter how much good faith there was in the transaction, still under this instruction the jury was obliged to return a verdict for the defendant. (Howard v. Rohlfing, 36 Kas. 357.) To render a mortgage void by reason of some benefit resulting to the mortgagor from the giving of the mortgage, such benefit must have been given for the purpose of hindering, delaying or defrauding creditors. (Frankhouser v. Ellett, 22 Kas. 127.) Instruction No. 12, given by the court, we think was calculated to mislead the jury. The latter part of the instruction says: “ They are in law held to a stricter proof and accountability, as to good faith toward creditors, than mere creditors.” The jury might, and perhaps did, understand by this instruction that the bare fact that the relationship of step [215] father and stepdaughter existed, and that they were living together as a part of one family, was a circumstance that would render this transaction fraudulent unless the plaintiff by strict proof established the good faith of the transaction. Where a chattel mortgage is given containing a provision, as in this, mortgage, that the mortgagor might retain possession and sell the property in the course of trade, and account for the proceeds, and receive out of such proceeds the expenses of operating the business, together with compensation and the means of subsistence of the family of the mortgagor during the time the business was being run, it has been upheld and sustained by this court. (See Frankhouser v. Ellett, supra; Howard v. Rohlfing, supra; Arn v. Hoerseman, 26 Kas. 413; Randall v. Shaw, 28 id. 419; Leser v. Glaser, 32 id. 546.) This transaction was being questioned, and the defendant had a right to question the good faith of the parties in making this transaction, and if it was found that this condition was put in the mortgage for the purpose of hindering and delaying the collection of a debt, then of course the mortgage would be void; but the court ought to have submitted the question to the jury, and they ought to have been informed that where such conditions and stipulations are contained in a mortgage, and placed there in good faith, that it would not be for that reason void. Such an instruction, or one embodying the principle therein contained, ought to have been given to the jury. It is therefore recommended that the judgment of the court below be reversed. By the Court: It is so ordered. All the Justices concurring.