#### Charles Falk v. Jacob Decou, *Receiver, etc.*

No. 175.

1. Chattel Mortgages— *Replevin. Held,*that an allegation of absolute ownership of the property in controversy is sustained by evidence which shows the plaintiff to be a chattel mortgagee in possession.

2. *-Defective Description*— Cured *by Possession.*Possession by the mortgagee cures the deficiencies in the description of the mortgaged property.

3. - *Future-acquired Property*— Possession. “When a mortgagee takes possession of the future-acquired property under such a stipulation in the mortgage, he then holds the property by way of pledge, but in the same manner as though the mortgage had been executed at the time he takes possession of the property, and in the same manner as though he had taken the property un- ' der and by virtue of a chattel mortgage covering the property.” *[Cameron, Hull & Co. v. Marvin,*26 Kan. 612.)

4. *-Instructions Examined.*The instructions complained of in respect to the burden of proof held not erroneous.

Error from Edwards district court; S. W. Vandivert, judge.

Opinion filed May 16, 1899.

Affirmed.

*F. Dumont Smith,*for plaintiff in error.

*Rossington, Smith & Dallas, Samuel Barnum,*and *Adrian F. Sherman,*for defendant in error.

The opinion of the court was deliverd by

Milton, J.:

This was an action in replevin by the defendant in error against the plaintiff in error to recover the possession of 827 sacks of flour. The petition alleged that the plaintiff was the owner of 4800 sacks of flour, embracing sis different brands, as enumerated in the petition, which flour was stored in the mill and warehouse of the Kinsley Milling Company ; that the flour was purchased by and delivered to the plaintiff on the 22d day of October, 1890, and *766that thereafter the defendant unlawfully and wrongfully took and detained possession of 827 sacks thereof, 'the same being of the aggregate value of $1245. The answer was a general denial. The case was tried to a jury, which returned a large number of special findings of fact. The verdict was for the plaintiff, in the alternative, and the value of the flour was fixed at $790. The judgment was in accordance with the verdict.

The basis of the plaintiff’s claim of ownership -was an instrument in writing, in form a bill of sale, and in the intention of the parties and in legal effect a chattel mortgage, given to the plaintiff by the Edwards County Bank on October 22, 1890, and filed for record the following day. It was signed “ Edwards Co. Bank, by L. Gf. Boise, cashier.” It was executed and delivered to secure past-due obligations given by the Edwards County Bank to the First National Bank of Larned, as well as an additional loan of about $1800 to the first-named bank at the date of the execution of the instrument. The Edwards County Bank was then, and for several years prior thereto had been, the entire owner of the property purported to be owned by the Kinsley Milling Company, although the title to the milling company’s real property stood in the name of Fred I. Boise and *W.*L. Plobbs. L. G. Boise,- as the representative of the Edwards County Bank, was the general manager of the milling enterprise, and Hobbs was in the employ of the bank, under the supervision of L. G. Boise. Fred I. Boise was in no way connected with the transaction herein ■mentioned. Hobbs was in charge of the operating of the mill. It was agreed between representatives of the creditor bank and Boise, for the debtor bank, that the mortgage should cover 4800 sacks of flour then in *767the mill and warehouse. A count of the sacks of flour haying shown the number to be 4244, it was then agreed that enough flour from the wheat in the mill should be ground to bring the total number of sacks of flour up to 4800, and the transaction was thereupon consummated on that basis. It was agreed that-the Larned bank should take immediate possession of the 4244 sacks of flour, and to this end the said bank appointed L. G. Boise as its agent to take charge of the flour, and gave him the following written authority ;

> “Larned, Kan., Oct. 22, 1890.

> “We hereby authorize L. G. Boise, of Kinsley, Kan., to sell and ship all the flour belonging to the First National Bank of Larned, all of said flour being stored in the mill and warehouse of the Kinsley Milling Company, Kinsley, Kan. All sales of said flour are to be made and the same shipped in the name of the First National Bank of Larned, Kan. ; and all bills of lading are to be made in their name and forwarded to them by L. G. Boise.

> First National Bank op Larned.

> By J. W. Rüsh, *President."*

Boise thereupon-assumed to act as agent for the mortgagee and exhibited the foregoing writing to Hobbs, and instructed him to continue the sale of flour as usual, subject to the said within instructions. The mill was operated for five or six days after the-mortgage was given and 600 or more sacks of flour were manufactured during that time, and placed with that on hand. On October 28 Boise testified that he agreed to sell two wagon-loads of flour in the sack toFaulk, and so informed Hobbs. That quantity of flour was on the same day delivered by Hobbs to Falk. On October 28, Hobbs delivered several hundred sacks of flour to Falk for the purpose, as stated by Hobbs himself, to satisfy a claim which Falk held against *768the milling company for wheat sold and delivered. Falk testified that he intended to give the milling company and the bank credit for the value of the flour he had received and that he had not done so, and did not know the quantity of flour he had obtained. The record is silent as to the number of sacks of flour contained in the two wagon-loads delivered on October 25 and as to the value thereof.

Two of the special findings returned by the jury are as follows :

> “3. Is it not a fact that at the time the defendant took the flour in controversy that the only possession of the same that the Edwards County Bank, the Kinsley Milling Company, L. G. Boise, and W. L. Hobbs, or either of them, had, was possession of the same as agent for plaintiff? A. Yes.”

> ”6. Is it not a fact that the defendant, when he took the flour in controversy, took it for the purpose of converting it to his own use in payment of a claim he had against the Kinsley Milling Company or L. G. Boise or some other party? A. It is.”

The first assignment of error is that the court erred in overruling the demurrer to the plaintiff's evidence. The point argued is, that whereas, the petition axxd affidavit alleged that the plaintiff was the absolute owner of the property in controversy, the evidence showed a limited ownership thex’eof, since the bill of sale was merely a chattel mortgage. The case of *Kennett v. Peters,*54 Kan. 119, 37 Pac. 999, is relied on as sustaining the contentioxi. In the case cited the action was for conversion, and the petition alleged absolute ownership under a chattel mortgage. The supreme court held that the allegation of general ownership was not satisfied by proof of special ownership under the mortgage. Counsel for defendant in error answer this contention by pointing out that the *769mortgage in the present case was given to secure a past indebtedness and a present loan, and that the debt secured by the instrument was due immediately after its execution. They cite the following in support of their position: “If a mortgage is given to secure a past-due indebtedness, and no provision is made for any future credit, the condition as to default in the payment of the indebtedness is broken as soon as it is made.” *(Pollock v. Douglas,*56 Mo. App. 487.)

Counsel also say that as the mortgagee, through its agent Boise, was in possession of the mortgaged property after defáult, the following from *Armel v. Layton,*33 Kan. 47, 5 Pac. 441, is controlling in the premises : “A mortgagee in possession after default is not merely alien-holder, but he is the real owner of the mortgaged property, and in him is vested the entire legal title.” Counsel further cite the following from the. syllabus in *Williams v. Miller,*6 Kan. App. 626, 49 Pac. 702: “A mortgagee in possession is the owner of the personal property described in the mortgage, as against an officer who takes the property under an attachment as the property of the mortgagor ; and possession cures any defect which may arise from authorizing the mortgagor to sell the property.” We think the position of counsel for defendant in error is correct, and that the court did not err in overruliug the demurrer to the evidence.

Counsel for plaintiff in error next contends that the description of the flour in the bill of sale, by merely naming the various brands, without stating the number of sacks of each kind, was insufficient, and that the bill of sale was void for uncertainty. Possession by the mortgagee cured the deficiencies in the description of the property. It may be fairly inferred from the evidence that when the bill of sale was executed *770there was sufficient wheat in the mill to produce, when ground, the number of sacks of flour necessary to make the total number thereof 4800. As fast as it was sacked the flour was placed with that already in the possession of the agent of the plaintiff. (Cameron, *Hull & Co. v. Marvin,*26 Kan. 612; Jones, Chat. Mort. § 178.)

It is further contended that the oral agreement to manufacture flour which should be subject to the mortgage was void. It was held by the supreme court, in the case of *Cameron, Hull & Co. v. Marvin,*supra, that a party cannot mortgage property which is afterward to be created, purchased, or procured; but it is also decided in the same case :

> ‘ ‘ When a mortgagee takes possession of the future-acquired property under such a stipulation in the mortgage, he then holds the property by way of pledge, but in the same manner as though the mortgage had been executed at the time he takes possession of the property and in the same manner as though he had taken the property under and by virtue of a chattel mortgage covering the property.”

It is further contended that the' court erred in instructing the jury that.the mortgage on flour to be made out of wheat then on hand would, under the facts proved, be valid up to the total of 4800 sacks of flour contemplated by the mortgage, and that the burden of proof would be on the defendant to show by a preponderance of the evidence that the flour he purchased was not a part of the mortgaged flour. It is claimed that since the burden of proof in a replevin suit is always on the plaintiff, it devolved on the plaintiff in this action to prove that the flour purchased and taken by Falk was part of the flour in existence when the mortgage was made. Counsel says that since none of the flour manufactured after the mort*771gage was given was covered by the mortgage, Falk or any other person had a perfect right to purchase all or any part of it, and that he did so purchase the flour free from any lien.

The jury found that about 600 sacks of flour were manufactured after the execution of the bill of sale, and were placed in the possession of the mortgagee. It must be held, therefore, that Falk wrongfully took from the possession of the mortgagee the flour in controversy, and that the burden was properly placed on him to show that he obtained flour other than that which was received by the mortgagee’s agent as part of the 4800 sacks. The judgment of the district court is affirmed.