Miami County National Bank v. Barkalow

[72] The opinion of the court was delivered by •JOHNSTON, J.: This was a controversy regarding the validity of a mortgage and transfer of a stock of groceries, made by J. H. Carroll & Co. to the Miami County National Bank, of Paola. The mortgage was executed to secure an actual indebtedness of the firm to the bank of about $300, and also a claim of $2,700 which the bank held against Frank S. Carrol], who was not a member of the firm of J. H. Carroll & Co. Immediately after the execution of the mortgage, the bank took possession of the stock of goods. They were subsequently seized by George D. Barkalow, as sheriff; under eight executions issued from the district court, upon judgments that had been rendered against J. H. Carroll & Co. The bank and one T. S. McLachlin, who had also obtained a mortgage upon the stock, commenced a joint action of re-plevin against the sheriff, and upon a trial the court sustained a demurrer filed by the defendant, upon the ground that there was a misjoinder of parties plaintiff. They then asked permission to file separate petitions, which was denied, and the jury was discharged. Afterward, upon the application of plaintiffs, a new trial was granted, when a separate petition was filed by plaintiff, and a separate action docketed. The sheriff answered with a general denial, and a trial was had with a jury, which resulted in a verdict for the defendant, that he was entitled to the stock of groceries, the value of which was $1,450, and that the sheriff’s interest therein was $1,532.33. Judgment was rendered against the bank, in favor of the sheriff, for the return of the property, or the recovery of the value of the same, with costs. In this proceeding for review, the first ruling criticised is the one holding that there was a misjoinder of plaintiffs as the action was originally brought. As a new trial was granted, that ruling is no longer material. [73] 11 gage1 vandít/y--pleading” [72] It is contended that there was error in permitting the sheriff to introduce evidence attacking the bona fides of the chattel mortgage, and to show that it was taken by the bank [73] for the purpose of hindering, delaying or defrauding the creditors of J. H. Carroll & Co. The judgment creditors were never substituted as defendants in place of the sheriff, and, as his answer was a general denial, it is contended that he was not entitled to prove that the mortgage to the bank was a fraud upon the creditors of J. H. Carroll & Co. While the creditors might have been substituted, upon the application of themselves and of the sheriff, such a substitution was not essential to the m'aking of a complete defense by the sheriff. He was the representative of all the creditors in whose favor the executions were issued, and entitled to make an7 defense which they might have made had substitution been effected. If there was a conflict of interest among the creditors, it would furnish a strong reason for substitution or the making of such creditors parties with the sheriff; but in this case no such conflict existed, and no application for substitution was made. (Civil Code, § 45; Hoisington v. Brakey, 31 Kas. 560; Wafer v. Harvey County Bank, 36 id. 292.) Under the general denial filed by the sheriff, he was entitled to introduce evidence attacking the chattel mortgage taken by the bank for fraud and invalidity. (Holmberg v. Dean, 21 Kas. 73, and cases cited.) 2. Attachment, re3judicata, In four of the actions wherein the execution creditors obtained judgments, attachments were sued out, and, upon motions of the bank and of J. H. Carroll & Co., these attachments were vacated and discharged. It is now contended that as to those creditors the rulings upon the attachment were conclusive, upon the principle of res adjudicata. The decision of an interlocutory motion, such as these were, is not conclusive, and will not prevent a reexamination of the same subject-matter in a regular form of action in the same or in a subsequent controversy. (Stapleton v. Orr, 43 Kas. 170.) [75] 3' TOiamstoto. [73] It is further contended, that the testimony is insufficient to sustain the verdict and judgment. Under the rule by which [74] the testimony must be ’measured in this court, we think it must be held to be sufficient to sustain the result that was reached. We must assume from the testimony and verdict that the bank included in the mortgage given by the firm a claim of $2,700, which the firm did not owe. The insolvent condition of the firm was well known to the bank, and, with a knowledge that creditors were pressing for a settlement of their claims, the bank included with its small debt against the firm an indebtedness of another, which appears to have been well secured, and which was about 10 times as large as the debt of the firm, thus covering by mortgage the entire assets of the failing firm. Indeed, the amount of the debt named in the mortgage was more than double the value of the mortgaged goods. The mortgage was hurriedly executed, and with the purpose that the bank should at once take possession of the entire stock. It is true, there was an effort made to show that Jennie C. Carroll, one of the firm, was in a certain sense liable for the $2,700 debt included in the mortgage, but the finding of the jury negatives that claim. The charge of the court fairly and fully presented the case to the jury, and leaves the plaintiff no ground for the complaint that is made. They were fully advised that a debtor, although financially embarrassed, might in good faith prefer one creditor to another, and, further, that partners, if they acted in good faith, might mortgage the partnership property to secure the payment of the individual debt of one of the partners. They were further properly instructed, that if the $2,700 note was not a debt of the firm nor of either one of the partners, then the giving of the chattel mortgage by the firm upon the property of the partnership to secure that note was fraudulent and void, although the same mortgage included a just debt from the firm to the bank of about $373. While a small part of the debt was just and due, the acts of the firm and the plaintiff, as disclosed by the testimony and findings, in including an amount in the mortgage so greatly in excess [75] of the real debt of the firm, entirely destroys the validity of the mortgage, so that it furnishes no security for the actual debt covered by it. ( Wallach v. Wylie, 28 Kas. 138; Winstead v. Hulme, 32 id. 568; McDonald v. Gaunt, 30 id. 693; Beavers v. McKinley, 50 id. 602.) The judgment of the district court will be affirmed. All the Justices concurring.