Nicholson v. Golden

27 Mo. App. 132, 1887 Mo. App. LEXIS 15

• Court: Missouri Court of Appeals
• Decided: June 6, 1887
• Status: Published

Opinion

Philips, P. J.

I. The first contention of appellants is that the trial court erred in overruling the motion to advance on the docket and first try the action to set aside the mortgage for fraud. The most that can be conceded to this contention is, that section 448, Revised Statutes, which authorizes the attaching creditors to maintain an action for. the purpose of setting aside a fraudulent conveyance, 'etc., where the suit is brought prior to the issue and determination of an interplea, the interpleader claiming title under the assailed instrument of conveyance, would obviate the necessity of a trial of the interplea; as the object of the statute is thus to determine the very issues arising on the inter-plea. The first action, therefore, would be another suit pending between the same parties on the same cause of action. By section 3515, Revised Statutes, concerning practice, this objection is made the ground of special demurrer. Section 3519 declares that, “When any of the matters enumerated in section 3515 do not appear on the face of the petition, the objection may be taken by answer. If no such objection be taken, either by demurrer or answer, the defendant shall be deemed to. have waived the same, excepting only the objection to the jurisdiction of the court over the subject matter of the action, and excepting the objection that the petition does not state facts sufficient to constitute a cause of action.” As the fact of the pendency of' the action to set aside the mortgage in question, did not appear upon the face of the petition, the interplea, the objection should have been raised by answer. Having failed to so raise the same, it must be held to have been waived by the plaintiffs.

II. The mortgage is not void on its face. As it was duly acknowledged and recorded, the fact that it might be construed possibly as contemplating that the mortgageors should remain in possession of the goods, would not vitiate it. Weber v. Armstrong, 70 Mo. 217. The fact that sales were made afterwards by the mortgageors, apparently in the usual course of business, raises simply a question of fact for the determination of the jury, as to whether it was so done pursuant to a secret understanding between the parties that the mortgageors should so sell to their own use. Notwithstanding they may have sold goods, and that such was the understanding between them and the mortgagees, that would not vitiate the mortgage, if the proceeds arising from such a sale were to be applied to the use of the mortgagees under the mortgage. Hewson v. Tootle, 72 Mo. 635.

The appellants had the full benefit of the law in the instructions given by the court, and more than the law requires. In fact it is quite apparent that the court tried the case on the theory, at plaintiffs’ insistence, that the mortgage was void on its face, and that, therefore, absolute, unqualified, and uninterrupted possession of the goods must be shown in the mortgagees, from the time of the execution of the mortgage up to the time of the attachment, otherwise the verdict must be for the plaintiffs. And this issue having been found for the interpleaders by the jury, it must eliminate from this case many of the criticisms and suggestions made at this bar touching the merits. The jury having found by their verdict, that interpleaders took and held possession of the goods, openly and continuously, and there having been evidence tending to support this finding, the conclusion of the jury is binding on this court, and cuts up by the roots any attack on the form of the deed. Jones’ Chat. Mort. 178; Greeley v. Reading, 74 Mo. 309; Moser v. Claes, 23 Mo. App. 420.

III. There is no ground for questioning, as in the argument at this bar, the existence and bona fldes of the debt secured by the mortgage. In fact, it is manifest, from the record, that no contention as to this matter was made by plaintiffs on the trial. In none of the instructions asked by plaintiffs, did they demand the opinion of the jury on this important fact.

On the contrary, the uncontradicted evidence was that the contract provided for the delivery of the ties by Golden & Company, at the mouth of the Osage river. That being the designated point for final delivery, the contract was not fully performed by Golden & Company, by a delivery short of that point. The ties, until so delivered, remained at the risk of the contractors. The fact that Phillips & Company were to pay a certain per cent, on the contract price, on Golden & Company placing the ties along the river bank, and their inspection, was no more than if they had agreed to pay Golden & Company so much in advance, or cm the felling of the timber. Had the ties not been delivered at the mouth of the river, the contract would have been broken, and the measure of damages would have been the value of the ties at the mouth of the river. Dobbins v. Edmonds, 18 Mo. App. 321; Rickey v. Tenbroek, 63 Mo. 567.

IV. The only real question, therefore, left for the determination of the jury was, whether there was any secret agreement or understanding between the parties to the mortgage, that it should be given, and the goods taken and held thereunder, to the use and benefit of the mortgageors, so as to shield the property from the other creditors of the mortgageors. No matter what may have been the fraudulent purpose and intent of the mortgageors in making the conveyance, unless such fraudulent intent was known to, and participated in by, the mortgagees, the mortgage would stand. Shelley v. Boothe, 73 Mo. 74.

We wholly fail to discover, in this record, any evidence whatever of any overt act or word of the mortgagees, anterior to the execution of the mortgage, from which a jury would be upheld in finding a verdict predicated of such fact. This, then, narrows the issue to the acts, conduct, and declarations of the mortgagees and. of the mortgageors, made known to, and acquiesced in by, the mortgagees, after the execution of the mortgage.

The instructions, taken as a whole, although subject to some verbal criticism, we think, quite clearly and fairly presented this issue to the jury. Criticism is made on some of the instructions that they single out certain facts, disjecta membra, and tell the jury that this and that will not constitute fraud, rather than by grouping together all the facts and circumstances in evidence, which is permitted in the investigation of fraud. We do not think the criticism justly applied to the instructions in this case.

It is proper enough, under certain circumstances, to have the jury told as to the legal effect of one fact upon another. “ Instructions of that character are far more satisfactory guides to the jury than those which deal in vague generalities.” Zimmerman v. Railroad, 71 Mo. 71. For instance, as in the case of Hewson v. Tootle (supra), where the evidence showed that, after the execution of the mortgage, the mortgageors continued to sell, apparently in the usual course of trade, which was a badge of fraud; yet if this was done pursuant to an agreement between the parties to the mortgage, in good faith, that the goods should be so sold and the proceeds applied to the satisfaction of the mortgage debt, this would disprove the fraudulent intent which the jury might infer from the first fact or act, and the mortgagee Avould be entitled to have the jury so instructed.

The third instruction, given for the interpleaders, told the jury that, although the agent, Lee Sedgewick, claimed by interpleaders to have -been placed in charge-of the store for them, may have been absent when the goods were seized under the writ of attachment, yet if the jury further found that such absence was merely temporary, without any design to surrender the possession, and his prior possession had been in good faith, such absence ought not to avoid the mortgage, or defeat the interpleaders’ claim. This was the.law, and the interpleaders were entitled to have the jury so directed. Jones’ Chat. Mort. 180; Carpenter v. Snelling, 97 Mass. 452.

Y. The fourth instruction, given for the inter-pleaders, is objected to, because it is predicated of the fact and assent of one David Nicholson, whereas, it is claimed by appellants there was no evidence to warrant the jury in finding that he had any authority from his principals, the plaintiffs, to bind them in the matter.

It may be conceded, to the contention of appellants, that a mere authority to David Nicholson, to collect the debt owing to Peter Nicholson & Company, did not authorize him to compromise the debt. But the question, in such cases, is not so much what was the actual instruction to, or limitation upon, the agent, as between him and his principal, as what power or authority third persons have a right to assume was given him by the principal. Story on Agency, sect. 127. And such apparent authority is to be gathered from all the facts and circumstances in evidence, and is a question of fact to be drawn therefrom by the jury. Brooks v. Johnson, 55 Mo. 505; Sigerson v. Pomeroy, 13 Mo. 620; Howe v. Machine Co., 32 Iowa, 435-6-7; Hough v. Ins. Co., 3 Wood & M. 529.

The evidence of Clayton Phillips was that he went to St. Louis for the purpose of laying before the creditors of Golden & Company their embarrassment, and submitting a proposition for compromise; that he, accordingly, saw the creditors, including, presumably, the plaintiffs; that a creditors’ meeting was accordingly arranged,' and that, at said meeting, said David Nicholson, from the plaintiffs’ house,- appeared. The reasonable presumption would be that the plaintiffs sent him there. This meeting, after hearing the proposition, entrusted the matter to a committee of three, to select an attorney to go on the ground and act for them. No one dissented. That committee selected Davis. So, Phillips, Davis, and David Nicholson appeared simultaneously at Tnscumbia, on or about the first day of March, just three days before the mortgage was executed. Phillips was unwilling to give the forty cents on the dollar, and undertake to give additional aid and money, unless all the creditors accepted the forty cents. After the parties returned to Jefferson City, Phillips and Davis testified directly that David Nicholson did consent, for his house, to accept the forty cents on the dollar; and that, in reliance thereon, Phillips entered into the arrangement of taking the mortgage and advancing this sum, amounting to about forty-five hundred dollars. Clayton Phillips had communicated to Phillips what occurred at St. Louis. It was not an unreasonable inference for the jury to make, from all these facts and' circumstances, that David Nicholson had come up, after this creditors’ meeting, his house knowing the object of the debtors was to effect a compromise, clothed with full authority to represent his house and enter into the compromise.

If Phillips was thereby induced, as he testified, to enter into the arrangement of taking the mortgage and advancing the money, and the plaintiffs had assented thereto, through their agent, so long as Phillips was ready and willing to comply and pay the plaintiffs their forty per cent., what concern was it of the plaintiffs what Phillips afterwards did with the goods ? The arrangement with Phillips & Company was valid, based on a valuable consideration, and it was to Phillips & Company the plaintiffs should, thereafter, have looked for the execution of the compromise. Assenting to the compromise, they could not assail- the mortgage for fraud. Burros v. Alter, 7 Mo. 424. But, say the learned counsel, this may all be true, on the assumption that Phillips was acting in good faith, and was not in confederation with Golden & Company to fraudulently bring about such settlement for the benefit of Golden & Company, and that plaintiffs were entitled to have that question passed on by the jury.

In the first place, it may be answered that plaintiffs asked no such instruction, and directly presented no such issue at the trial; and if it had been presented, we are unable to discover in this record, as presented to this court, any evidence to justify an honest jury in so finding. At the time of the consummation of this comromise, at the Madison House, in Jefferson City, the day before the mortgage was executed, there is not one particle of evidence on which any court could permit a verdict to stand, finding that there was any combination or confederation between the Goldens and Phillips to fraudulently coerce a settlement with the creditors. On the contrary, Phillips had manifested a reluctance to adventure any more money where he already had so much at hazard. And the evidence of all parties was that the affairs of Golden & Company were in a most unpromising condition; and the result shows that they were hopelessly insolvent, entailing a loss of about ten thousand dollars on Phillips and Sedgewick. While the greatest latitude is allowed, necessarily, in the investigation of questions of secret fraud, the court should not throw down entirely the lines to the jury, and allow them to run at will, without evidence, or guide, or restraint.

Had Nicholson & Company brought this action, by attachment, on the day this compromise was effected, there would not have been a shadow of evidence for it to stand on. The only pretext of any evidence oh which to base their contention is as to certain matters which transpired after Sedgewick was put in possession of the store, consisting, almost entirely, in such acts as a failure to take down the sign of Golden & Company, and the clerks not knowing of any change of proprietorship, and the like (which have little force, in the case of a mortgage, acknowledged and recorded), and the more substantial acts of Golden & Company giving orders in their own name, and possibly using some goods out of the store for family ¡use, when they were not receiving any pay for their services. But it was a mortgage not yet due, with the right of redemption yet in the mortgageors. To predicate the existence of a fraudulent anterior arrangement and combination between the parties to coerce plaintiffs- into the compromise would be unreasonable, most speculative, and without substantial evidence to hang it upon.

YI. It may be well enough, in this connection, to notice that the fifth instruction asked by plaintiffs did request the court to declare that if the mortgage was taken and accepted for the purpose of compelling the other creditors to accept fifty cents, or less, on the dollar, the jury should find for the plaintiffs. But this, it will be observed, is predicated of the fact that the acceptance •of the compromise was effected after the mortgage was taken ; whereas the undisputed evidence is, so far as the plaintiff is concerned, that his assent was given prior to the making of the mortgage, and when they knew that Phillips was to take the mortgage, in part to secure him for the very advances he and Sedgewick were to make, embracing the forty cents on the dollar to be paid plaintiffs, the whole transaction was open and understood. Nor can it make any difference that Phillips agreed to the arrangement, on condition that all the creditors assented thereto. This but goes to show his good faith, .and was designed for the protection of Phillips & Company, and can in no wise affect the plaintiffs’ rights, as he consented to take that sum, and thereby induced Phillips to take the mortgage.

VII. Some of the instructions asked by plaintiffs, and refused by the court, are so palpably faulty as not to justify review. The seventh instruction was faulty in that it entirely ignored the question as to the inter-pleaders’ knowledge of, or acquiescence in, the act of Golden & Company. The tenth instruction was properly refused. The fact that the parties to the mortgage, lon'g after its execution, and long after bringing the attachment suit, agreed that the mortgagees might take the property and release the debt, when the mortgageors were confessedly insolvent, and without hope of reclamation, we are unable to perceive how it should affect, much less destroy, the interpleaders’ right of recovery, existing at the time of the levying of the writ of attachment.

The fourth instruction, asked by plaintiffs, might have been given, without any serious objection. And if we could perceive that there was a reasonable probability that the conclusion of the jury might have been different, had it been given, it might invite a reversal. But as all the substantial issues were presented in the instructions given, and the merits appear to us to be so decidedly in favor of the verdict of the jury, on the whole case, we do not feel justified in remanding for a trial de now, on this account.

Other questions have been discussed on this appeal, but they are not, in our opinion, of sufficient importance to justify the prolongation of this opinion, and they could not alter our conclusion.

The other judges concurring,

the judgment of the circuit court is affirmed.