Court Opinion

ID: 8008471
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:55:37.36545+00
Date Added: 2024-06-11T16:35:58.541962
License: Public Domain

Norton, J.
The judges of the Kansas City court of appéals, being divided in opinion in reference to the-propriety of instruction number three, given for plaintiffs, have certified the case to this court. The suit is by attachment, against defendant Barrett; the writ wa& levied upon a certain stock of goods and fixtures as the property of Barrett: defendant, Donnell, appeared to the action, and by permission of the court filed an interplea, claiming the right to the property under and- by virtue of a mortgage executed by Barrett, acknowledged and recorded before the levy of attachment, conveying to said Donnell a stock of goods, merchandise and fix*188tures to secure, the payment of a debt therein specified. On the trial of the issue raised upon the interplea, among other evidence introduced, evidence was offered tending to show that it was agreed and understood between Barrett, the mortgageor, and Donnell, the mortgagee, that Barrett was to remain in possession of the stock of goods mortgaged and sell them in the usual course of trade for his own use and benefit. It is concéded that the mortgage in question was fair and valid on its face.
To meet the state of facts which the evidence tended to establish, the court gave instruction numbered three which is as follows :
‘ ‘ 3. The court instructs the jury that if they believe from the evidence that there was an understanding or .agreement between Donnell and Barrett, at the time the mortgage in question was executed, that the said Barrett was to remain in possession of the stock of goods mortgaged and continue to sell the same in the ordinary course of business and dispose of the proceeds for his„ own use and benefit, and if the jury shall believe that the said Barrett did in pursuance of such agreement so remain in possession of said stock, and did continue to •sell the same for his own use and benefit with the knowl•edge and consent of and in pursuance of an agreement theretofore made with the said Donnell, then said mortgage was and is fraudulent in fact, and your verdict must be against the interpleader.”
While it is conceded that if the -vitiating facts stated in the instructions had appeared in the mortgage in quesrion, that it would be void as matter of law, without reference to the intention of the parties, it is contended, that where such facts are made to appear by extrinsic ■evidence, the mortgage, if fair on its face, is not fraudulent unless it is made further to appear that the intent ■of the parties was in fact to hinder and delay creditors. It has been held by this court in numerous cases that when it appears on the face of the mortgage' conveying *189goods and merchandise that the mortgageor is to retain possession of the goods, and to sell and dispose of them in the nsnal course of business for his own benefit, that such mortgage is void as to creditors, on the ground and for the reason that such a conveyance is deemed in law to be for the use of the grantor, and, therefore, void by virtue of section 2196, Revised Statutes. Reed v. Pelletier, 28 Mo. 173; State to use, etc., v. Tasker, 31 Mo. 445; State to use, etc., v. D'Oench, 31 Mo. 453. It logically follows from this ruling that, in a case where the mortgage is fair on its face and the same impeaching facts are proven by extrinsic evidence, the same legal consequence flows from them when established. It is the facts which invalidate the deed, and not that they are made to appear by this or that evidence. It is sufficient if they are made manifest; and it can make no difference in principle, as to the legal effect of the facts, whether they appear on the face of the instrument itself, or whether they are made to appear by extrinsic evidence. In the former case when the facts appear in the deed, as it is the province of the court to pass upon the legal effect of it, it is its duty to deciare it to be void; in the latter case when the facts do not appear on the face of the deed, but are sought to be established by extrinsic evidence, it is the duty of the court to submit to the jury for their determination whether the facts sought to be proven have been proved, and to tell them that if established to their satisfaction that they must find the deed to be void as to creditors.
This question, we think, has been settled in the cases of Reed v. Pelletier, 28 Mo. 173 ; and Slate to use, etc., v. Tasker, 31 Mo. 445. In the former case it is said: “When the maker of a deed of trust or mortgage that conveys a stock of goods continues in possession and sells in the usual course of business, with the knowledge of the cestui que trust, very slight evidence ought *190to be required to prove that his dealing in that manner ■ was pursuant to a right secured contemporaneously with the execution of the instrument, which would stamp the transaction with constructive fraud, at least, as effectually as if the provision had been incorporated into the ■deed.” In the latter case it is said: “ It is not the mere possession of the pi-operty by the grantor, but it is the possession, with the power of sale, which defeats the in•strument ;■ and if this appears to be the intent of the parties, although neither expressed in terms nor neces•sarily implied from the deed, yet the effect must necessarily be the same; But where this characteristic is not .-stamped on the face of the deed, either expressly or by implication, the question is for the jury, under instructions explanatory of the facts which will constitute legal fraud. It is like the case of a voluntary conveyance by a party wt o is insolvent. Whatever may be the intention of the parties, such, conveyances are invalid against prior creditors, and no enquiry into the motive is necessary.”
We have been cited to the case of Zeigler v. Maddox, 26 Mo. 575, as being in conflict with what is here said. If the opinion in that case is to be construed as holding that when it is proved to the satisfaction of the jury that by the agreement of the parties made at the time of the execution of a mortgage conveying goods and merchandise that the grantor was to retain possession and sell the goods in the usual course of business, for his own benefit, that the court would not be j ustified in instructing the jury that the deed was 'void, but must go further and tell them that notwithstanding they might believe such facts, unless they further believed as :a fact - that the parties intended to hinder, delay and defraud creditors, that the deed was valid and they must find for the parties claiming under it as against a ■creditor. If the opinion holds this, we may say of it that it is virtually overruled by the case of Reed v. Pellelier, 28 Mo. 173, in which opinion Judge Scott, *191who delivered the opinion in the case of Zeigler v. Maddox, supra, concurred. We are disposed to adhere to the rule announced in the cases cited herein, believing it to be founded in correct principle and in harmony with the policy which dictated the enactment of section 2496, Revised Statutes.
The deed in question, in addition to the stock of goods, conveyed certain fixtures. No evidence was offered tending to show that the fixtures were to'remain in possession of the grantor and be disposed of by him for his benefit, and as the instruction complained of ■declared the deed void as to them as well as the goods, it was erroneous in that particular and for this error the judgment will be reversed and cause remanded. Donnell n. Byern, 69 Mo. 468.
All concur.