H. Hausner & Co. v. Leebrick

The opinion of the court was delivered by Horton, C. J.: The trial court specially found, among other things, that on the 21st of November, 1888, E. E. Lee-brick was indebted to Walter Korb in the sum of $1,641; that on that date he gave him his promissory note due in six months, bearing interest from date at the rate of 10 per cent, per annum; that on the 19th of April, 1889, Leebrick executed and delivered to Korb a chattel mortgage upon the stock of goods and merchandise in dispute; that on the same day, about half an hour after the delivery of the mortgage, Leebrick delivered the possession of his stock of goods to Korb, telling him he could take possession thereof and sell sufficient to pay his indebtedness'; that Leebrick left the county very soon afterward for Washington territory; that the next morning Korb in person went to the store and remained in personal charge of the same for three or four days, when he went to his home, in Stockton, Rooks county, leaving Mrs. Leebrick, the wife of E. E. Leebrick, in charge, under an arrangement with her that she should sell the goods and account to him for the proceeds thereof; that during the time that Korb and Mrs. Leebrick had charge of the store, including what he sold and what she accounted to him for, he received $73 as the proceeds of the sales; that Korb, after he returned from Stockton, on May 7, 1889, took personal control of the store; that on the same day the sheriff appeared and levied upon the stock; that at the time the sheriff made the levy he found Korb in control of the store, and was informed by him that he had a mortgage on*the stock, and was in possession under his mortgage. This court has decided very often that “A debtor, even in failing circumstances, may prefer creditors, if the same is done in good faith, and this not only in the form of actual payment of money to the particular creditors preferred, but also in the form of the sale or appropria [596] tion of property, or the giving of chattel mortgages to such property.” (Tootle v. Coldwell, 30 Kas. 125; Avery v. Eastes, 18 id. 505; Campbell v. Warner, 22 id. 604.) This court has also ruled, that “In all cases where there is a voluntary delivery of the possession of the property by the mortgagor to the mortgagee, under the mortgage, such delivery will render the mortgage valid as to all persons not then having any specific right or lien upon the property, provided the mortgage was previously valid as between the parties thereto.” (Cameron v. Marvin, 26 Kas. 612; Savings Bank, v. Sargent, 20 id. 576; Frankhouser v. Ellett, 22 id. 127; Dayton v. Savings Bank, 23 id. 421.) It is admitted that the chattel mortgage was never deposited ' with the register of deeds, and the contention of the plaintiffs is, that there was no actual or continued change of the goods mortgaged after the delivery of the chattel mortgage, and that the findings of the trial court are not sustained by the evidence. We think otherwise. It appears from the following testimony that the material facts found are fully supported. Korb testified, among other things, as follows: “Q,ues. Where were you when you took this mortgage of Mr. Leebrick? Ans. I was in Leebrick’s store, in Alton.” “Q. What transpired there after you took the mortgage, in reference to the possession of the goods described in this mortgage? A. Mr. Leebrick had to go to Washington territory, and I told him that he had better turn the goods over to me to secure me, and he did.” “ Q,. How soon after this mortgage was made did he turn the goods over to you? A. Probably half an hour. “Q. Had there been any sales of goods in the meantime? A.- No, sir. “Q,. What time of the night or day was this? A. Along in the eveipng, after dark; I do n’t know just what time, but about dark. “Q,. How long did you remain there in possession of the goods? A. I think I stayed there myself about three days, or something like that, and then I went back home. “Q,. Where did you live at that time? A. At Stockton. “Q. Who did you leave the goods in charge of when you went away? A. Mrs. Leebrick. [597] “Q. In what capacity? A. She agreed to take care of them for me and turn over the proceeds of the sales to me. “Q. When did you come back from Stockton? A. Oh, I think I was away probably four or five days; I do n’t remember exactly; I think about that time. “ Q. How much sales had you made up to the time the attachments were levied? A. The sales amounted to, I think, $73. • “Q. Did he [Leebrick] deliver you the goods? A Yes, sir. “Q. Where did he live at that time? A. In Alton. “ Q. In that same building? A. No, sir. “ Q,. Where were these goods? A. In what they call the ‘Lloyd building’ in Alton. “Q,. What did you do the next morning after this? A. I went down and went into the store. “Q. What was the arrangement with Mr. Leebrick about how you were to sell these goods? A. I was to sell them the best I could. “Q. For what purpose? A. To pay his debt. “Q. Were you in the store when the sheriff came to attach in this case. A. Yes, sir. “Q. What were you doing in the store and who was there? A. Cash Walker, of Alton, was in there, and we were invoicing the goods at that time. “Q,. Cash Walker and you were invoicing the goods? A. Yes, sir. “Q. Anyone else? A. No. sir. “Q. What conversation occurred between you and the sheriff before this attachment was levied? A. I told the sheriff that I had possession of the goods, and they were mine at that time. “Q,. Did you tell him what claim you had them on? A. Yes, sir; I told him I had a mortgage on them to secure an amount of money that Mr. Leebrick owed me. “ Q,. Did the sheriff at the time he took possession of the goods take all the goods and fixtures away? A. Yes, sir, he demanded possession and took the key from me. “Q. And took everything? A. Yes, sir. “Q,. Did he return any portion of them to you? A. No, sir.” W. A. Ware, the sheriff, testified: “Q,. You are sheriff of this county? A. Yes, sir. [598] “Q. You served the attachments in this case? A. Yes, sir. “Q. In both of these cases? A. Yes, sir. “ Q,. Who did you find in possession of the stock of goods when you went to serve the attachments? A. Walter Korb. “Q,. The interpleader here? A. Yes, sir. “Q,. Who else was in the store? A. C. M. Walker, I believe. “ Q. What were they doing there? A. They were taking an invoice of the goods. “Q. What conversation did you have with Mr. Korb with reference to his right and claim on those goods, before you attached them? A. I told him that I had attachment writs to levy on the goods, and he said the goods were his and in his possession. “Q. What did he say about the claim he had upon them? A. I think he told me he had a chattel mortgage upon them. “Q. Did he tell you the amount of the claim? A. I do n’t remember as to that; it is likely he did, but I do n’t remember what the amount was.” As the chattel mortgage was valid between the parties at the time of its execution, and as Korb took actual possession of all the mortgaged property before the sheriff levied thereon, and as the sheriff, representing the attaching creditors, had notice of such possession and the mortgage under which it was taken, the judgment of the trial court must be affirmed. All the Justices concurring.