Bank of Kaukauna v. Joannes

PiNnby, J. The conclusive inference from the facts testified to by the witnesses is that there was an implied or tacit agreement or understanding that the mortgagor was to be at liberty to use,-sell, and dispose of the mortgaged property, and apply the proceeds to his own use, in like manner as before, and as if they had not been mortgaged to the bank. It is evident that the plaintiff knew, or had the ready means of knowledge, of the manner in which Strong was dealing with the mortgaged property. Strong’s store and the stock of goods, which was not large, was next door, and within twenty feet of the entrance of the bank. No objection was made on the part of the plaintiff to his course of proceeding, and no effort was made to show that the property or its proceeds was applied to the payment of the mortgage debt. The evidence was very cogent and convincing that the mortgage was given with the understanding mentioned, and there was no fair or adequate explanation offered of the transaction consistent with the integrity and validity of the mortgage. As said in Anderson v. Patterson, 64 Wis. 559: “ That the inevitable tendency and effect of a mortgage, fair and valid on its face, but void because of some extrinsic or secret infirmity, must be to hinder and delay the creditors of the mortgagor in the collection of their debts, is perfectly obvious, and the parties cannot be heard to say that they did not intend that such effect should result from their actions. . . . When property is mortgaged to one creditor to secure his demand, good faith to other creditors of the mortgagor requires that, if the same is sold, the proceeds shall be applied to the payment of the mortgage debt.” The case of Anderson v. Patterson, supra, and cases there cited, are decisive. We must hold-that the chattel mortgage relied on by t'he plaintiff is fraudulent and void, and the trial court should have given judgment for the defendants accordingly. By the Oou/rt.— The judgment of the circuit court is reversed, and the cause remanded "with' directions to enter judgment in favor of the defendants.