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Hubbell et al. v. Allen et al., Appellants

Supreme Court of Missouri1886-10
90 Mo. 574

Summary

Holding. The judgment is reversed and the cause remanded for trial anew. Hubbell & Company cannot recover property covered only by the prior mortgage of Amos Horner or property not included in their mortgage, and their mortgage is not fraudulent on its face.

John T. Horner operated two drug stores and granted multiple mortgages on the inventory and fixtures of each location. He mortgaged the Cassville store to both Hubbell & Company (plaintiffs) and Amos Horner, with Amos Horner's mortgage recorded first. He also mortgaged the Exeter store to other defendants. After Horner moved the Cassville stock to Exeter and combined the inventories, the defendants took possession to satisfy their debts. Hubbell & Company then sued in replevin and obtained a judgment recovering all the property.

The court found the judgment must be reversed because Hubbell & Company's mortgage only covered the Cassville property, not the Exeter stock, so they had no claim to the latter. Additionally, Amos Horner's earlier mortgage on the Cassville store gave him priority over Hubbell & Company's later mortgage on the same property. The court also rejected the plaintiffs' argument that their mortgage was fraudulent on its face, finding that the provision allowing the mortgagor to retain possession and sell the property to pay the debt did not constitute fraud, since the power to sell was expressly tied to debt repayment rather than the mortgagor's personal benefit.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Scope of a chattel mortgage's coverage of combined inventory
  • Priority between successive mortgages on the same property
  • Whether a mortgage allowing the mortgagor to retain possession and sell property to pay the debt is fraudulent on its face

Procedural posture

Hubbell & Company brought a replevin action seeking recovery of combined drug store inventory after the mortgagors removed property between locations, obtained a judgment for possession at trial, and the defendants appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Black, J. —

This was an action of replevin. The . record discloses the following facts: John T. Horner owned two small drug stores, one at Cassville, and the .other at Exeter, villages some four miles apart. He made two mortgages on the Cassville stock, fixtures and furniture, one to secure a debt due to the plaintiffs, Hubbell & Company, and the other to secure a debt to the defendant, Amos Horner. The mortgage to AmosHorner was acknowledged and recorded on the sixteenth, and that to the plaintiffs on the twentieth of January, 1882. About the same time he made two mortgages on the Exeter store, one in favor of defendant, Pilant, and the other to defendant, Rebstock. The mortgageor then removed the Cassville store to Exeter and there combined the two stocks. Shortly after this the defendants, acting together and with the consent of the mortgageor,. took possession of the combined stocks, and were proceeding to make their debts, which are conceded to be just and unpaid, when the plaintiffs commenced this suit, and under the order of delivery got possession of all of the property, and for which they recovered judgment on a trial by the court without a jury.

It is clear the judgment must be reversed, for the. plaintiffs do not claim the property save by virtue of their mortgage, and that covered no part of the Exeterstock, furniture or fixtures, and as to that property the defendants should have prevailed. ■ Amos Horner’s mortgage upon the Cassville store was prior to the plaintiffs’ mortgage on the same property. Unless the Amos Horner mortgage was, for some reason, invalid, in whole or in part, the plaintiffs were not entitled to recover any part of that stock, furniture or fixtures. We cannot see -from the record before us that the validity of that mortgage was questioned in the trial court, and no such question is urged here. Indeed, the respondents make no appearance in this court.

The defendants insist that the plaintiffs’ mortgage is fraudulent on its face, and an instruction to that effect was refused. The mortgage contains this provision: “I, the said J. T. Horner, hereby bind myself, in consideration that I am to keep the possession of said drugs and medicines, fixtures and furniture, for the purpose of selling and payiug said indebtedness, to keep strict account of sales,” etc. If the two payments provided for are not made at the times stated then the mortgagee has the right to take possession. If it appears upon the face of a chattel mortgage that the mortgageor is to retain possession and have the powerto sell and dispose of the property in the course of his business for his own benefit, then it is fraudulent as to creditors and purchasers, because made to the use of the mortgageor, and the courts will so declare as a matter of law without regard to the intention of the parties. Bullene v. Barrett, 87 Mo. 186; W hite v. Graves, 68 Mo. 218; Weber v. Armstrong, 70 Mo. 217; Lodge v. Samuels, 50 Mo. 204. But it was held in Metzner v. Graham, 57 Mo. 404, that a stipulation whereby the mortgageor was to remain in possession with authority to sell, by applying the proceeds of sales to the payment of the secured debt, did not render the mortgage fraudulent on its face, for the power to sell was not for the use of the mortgageor. So here the authority to sell is expressed to be given for the purpose of paying the secured debt, and to that end a strict account of sales is to be kept. The present case does not come within the rule first stated, but is in all material respects like the case last cited; the instruction was, therefore, properly refused. •

The judgment is reversed and the cause remanded for trial anew.

All concur.