Court Opinion

ID: 6737940
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:00.187268+00
Date Added: 2024-06-11T16:01:51.873754
License: Public Domain

Robinson, J.
(dissenting). The plaintiff brings this action to recover for the conversion of a building. He recovered a verdict and judgment for $375, and defendant appeals from the judgment and an •order denying a new trial. The answer is merely a general denial. The action has been twice tried to a jury, and now, after a lapse of two years from the judgment, the case is here for review. Now, we are asked to vacate the verdict and judgment and to remand the case for a third trial and for another half dozen years of litigation.
On September 15, 1908, the plaintiff owned the building in question, •and he leased it, or sold it conditionally, to the Minot Paper Company. Defendant agreed to pay as rent for the building $100 per month for twenty-three months, according to twenty-three promissory notes, and when the payments were all made the plaintiff agreed to give to the paper company a bill of sale of the building.
On May 5, 1910, the paper company made to the defendant eleven promissory notes of that date, payable monthly and semi-monthly, with interest at 6 per cent. There were six notes, each for $320.25, and five notes, each for $633.69. The last three notes became due in 1911, on January 10th, February 10th, and March 10th, and the notes Were all made to secure a prior debt.
On May 21, 1910, to secure all of said promissory notes, the Minot *632Paper Company made to the defendant a mortgage on a lot of merchandise in the building and also a second mortgage on the fixtures and the building. This second mortgage contained a power to the mortgagee to declare the debt due, and to foreclose in case of default or in case they should deem themselves insecure. It gave them power to foreclose whenever they chose to do it. In December, 1910, they published a foreclosure notice, and on January 7, 1911, they foreclosed both mortgages.
From the stock of goods
They realized ............................................ $1,721.25
And from the furniture and fixings......................... 200.00
And from the building .................................... 1,200.00
Total amount ............................................. $3,121.25
And according to the report of sale there was a balance of $234.62 due the paper company or the owner of the building. The proof showed that at the time of the trial there was at least $375 due on the building, and that plaintiff had never parted with his title to the building. But defendant claimed priority for its mortgage under this statute. Comp. Laws 1913, § 6757. All reservations of title to personal property as security for the purchase money, when possession is delivered to the vendee, are void as to subsequent creditors without notice and purchasers and encumbrancers in good faith and for value, unless the contract is in writing and signed and filed as a mortgage on personal property. Defendants claim to be subsequent encumbrancers in good faith and for value.
The mortgage was made by G. D. Mann, the president of the paper company, pursuant to an agreement with Cushing Wright, the credit manager of the defendants. Mann swears that when he agreed to make the mortgage, he told the credit man all about the transaction with Horton, and that they had paid only $1,800, and there was still due $500, and that he could mortgage only the equity of his company in the building. This is denied by the credit man, but his testimony is worthy of no credit. He swears he would not have taken such a mortgage, and that he would much rather have no mortgage, and of course that is not true. A mortgage which brought $1,400 at forced sale was *633well worth the consideration of any credit man. It was worth having. The testimony of Mann appears to be honest and convincing. He was simple and honest enough to mortgage to the defendant everything his company owned, and they were sharp enough to foreclose the mortgage long before it became due, and to realize $254.62 after paying the debts and all costs of foreclosure. The mortgage has no basis either of good faith or value. At the time of making the mortgage there was no consideration only a past-due debt, and there was not even an extension of credit. When the mortgage was made to secure the instalment notes, it was made sixteen days after the making of the notes, and it gave to the mortgagees a power to foreclose at any time, and they availed themselves of the power to foreclose it long before it became due.
But in the opinion of Judge Grace it is said that there are three rules concerning the character of a purchaser for value. The first is that a creditor who takes a mortgage on property as security for a debt or demand already due is not entitled to the' protection secured to a bona fide purchaser for value, as against prior liens or equities, unless there is some new consideration at the time of the execution of the mortgage. This rule is well supported by the case cited, and we think it is the correct rule in this state. The other rule is that, although a mortgage is given to secure an antecedent debt, nevertheless if, at the time and in consideration of the giving of the mortgage, the creditor grants a definite extension of time of payment, there is such a new consideration as will give him the character of a purchaser for value. Now, in this case if there was any extension, it was at the time of the making of the notes on May 5th, and not on May 21st, when the mortgages were made. And on this second point we should note well that a definite extension of the time of payment is of little consequence, and it is no consideration in case where a party secures a debt which is not collectable, and in cases where the extension practically amounts to nothing. In this ease the paper company was insolvent, and there was no way for the defendant to make collection without some extension and some nursing of his claim and by getting a better grip on their debtor. On the record no judge can possibly say as a question of law that the making of the notes .on May 5th and of the mortgage on May 21st, with a power to foreclose at any time, was such a valuable consideration as to make the defendants purchasers or encumbrancers for value. Indeed, it was far *634from being any consideration or any concession to tbe paper company. Tbe consideration was all on tbe side of tbe defendant. Hence, it :seems clear that tbe case was fairly tried and fairly submitted to a jury, and tbe verdict and judgment is well sustained by tbe evidence. Were'this court to consider tbe case on its merits and lay aside the verdict of tbe jury and tbe order of tbe trial court denying a new trial, we could not do otherwise than 'to affirm tbe judgment. It should be affirmed.