First National Bank of Abilene v. Naill

[215] The opinion of the court was delivered by Allen, J.: J' mortgage vSSent. In order to uphold the judgment in this case under the issues, tried, it must appear either that the plaintiff’s mortgage was made for the purpose of hindering, delaying or defrauding other creditors of M. P. Shearer & Co., or that the relations of the plaintiff with Lawrence, Manning & Cushing were such as to preclude it from the right to obtain security of its own claim to the exclusion of Lawrence, Manning & Cushing. The jury settled the question as to the validity of plaintiff’s claim by finding that there was an actual indebtedness owing by Shearer & Co. to the bank of the amount mentioned in the mortgage. As the highest estimate placed on the value of the mortgaged stock of goods was about $5,000, it cannot be claimed that more property was covered by the mortgage than was fairly necessary to secure plaintiff’s claim. Under this state of facts, although the giving of this mortgage might operate to deprive all other creditors of any opportunity to collect their debts, it still is not fraudulent. In this state a debtor has a right to pay or secure one creditor in preference and to the exclusion of others. (Bliss v. Couch, 46 Kas. 400; Randall v. Shaw, 28 id. 419; Tootle v. Coldwell, 30 id. 125.) [216] ingitsown interests. [215] "Were the relations of the bank to Lawrence, Manning & Cushing such as to preclude it from the right to secure its claim to their exclusion? It appears from the evidence that the claims of Lawrence, Manning & Cushing against Shearer A Co. had been sent to the bank for collection. On April 23, 1888, the cashier of the bank, Mosher, wrote for instructions to hand to an attorney, saying, “It is hardly in our line to assume the functions that would seem necessary in such case,” referring to the taking of security for the claim. It appears that Mr. Manning was in Abilene on the 11th and 12th of April, 1888, for the purpose of securing their claim, which had ail been included in notes before that time. Shearer & Co. made a statement showing their entire indebtedness to be [216] $3,300, which included the claim of Lawrence, Manning & Cushing, and only about $100 or $200 to the bank. Manning testified that this statement was shown by him to Mr. Mosher, who, in answer to the question, “ What do you think of it?” said, “I guess it is right. Of course, I have no means of knowing Martin’s indebtedness, but, from what I know of him, I think he would give you a correct statement, and 1 should judge that statement is nearly correct.” Manning was endeavoring at that time to obtain security for their claim, but failed to get it. After this, and on April 23, Mosher wrote the letter above mentioned. Manning returned to Ot-tumwa, Iowa, where his firm is located, and, on the 31st of May following, again went to Abilene to look after this claim. He had frequent conversations with officers of the bank about it. He also employed án attorney, and his attorney talked with the vice president and attorney of the bank in reference to obtaining security. During all these conversations, from first to last, the existence of the bank’s claim against Shearer & Co. was never disclosed by any officer of the bank to Lawrence, Manning & Cushing, or their attorney. The conduct of the officers of the bank in this respect may perhaps be inconsistent with good morals, but we cannot declare as a matter of law that the plaintiff was bound to disclose to another creditor the existence and amount of its claim. To do so might jeopardize its own interests. In this connection, we might say that Lawrence, Manning & Cushing are not claiming that the chattel mortgage which the bank took inured to their benefit because of the fiduciary relations existing between them, but are attacking the validity of the mortgage itself, and are claiming, not through the title acquired by the plaintiff, but adversely to it. They were on the ground with an attorney for the purpose of protecting their rights. The fact that the bank kept silent as to its own claim and protected its own interest in preference to theirs A A cannot be held to be fraud. Nor is the claim that they were relying on the bank to protect their interests supported by their own evidence. While it it true that they coun [217] seled and advised with the officers of the bank, Mr. Manning, one of the firm, was there, and was certainly free at all times to act on his own judgment. The answer does not allege any action or declaration on the part of the plaintiff constituting an estoppel against the assertion of its claim, nor do the facts disclosed by the evidence show that the defendants parted with any property or made any contract on the faith of information received from the officers of the bank, or of their statements or conduct in relation to these matters. There is evidence in the record tending to impeach the validity of plaintiff’s claim against Shearer & Co., but the jury settled all that controversy in favor of the plaintiff, having found that the plaintiff had a valid claim for $4,444, the exact amount for which it took security. We are unable to find evidence in the record showing that it sustained any such relation to other creditors as to preclude it from protecting its own interests. It will be observed that the verdict and judgment are in favor of all the defendants, thus not merely sustaining the attachment of Lawrence, Manning & Cushing, but also exempting the defendant Naill from all liability on account of the seizure of the stock of goods, and in effect sustaining the attachments in favor of the other parties named in the sheriff’s answer, to whom it is not claimed that the plaintiff sustained any peculiar or fiduciary relations. The judgment must by reversed, and a new trial ordered. All the Justices concurring.