Opinion
August 13, 1927.
1. — Appeal and Error — Appellate Practice — Demurrer — Execution — Third Party Claimant. Where a third party claims property seized on execution and issues are made up between claimant and plaintiff under sections 1635, 1636, Revised Statutes 1919, and the trial court sustains plaintiff's demurrer to the evidence, the appellate court must accept the opposing claimant's evidence as true and accord to him all favorable inferences that can be drawn therefrom.
2. — Fraudulent Conveyances — Preferences — Chattel Mortgages. A debtor has the right to prefer a creditor to the exclusion of all other creditors by giving a chattel mortgage or by other suitable means.
3. — Same — Same — Same — Pre-existing Debt — Consideration. A pre-existing debt constitutes a good consideration for a chattel mortgage but not a valuable consideration and therefore the mortgagee takes the property subject to such equities as might be asserted against his grantor; although it would seem, under section 812, Revised Statutes 1919, making pre-existing debt valuable consideration for promissory note, such debt would also constitute valuable consideration for a chattel mortgage, since under holding, a consideration which will support a promissory note likewise will support a chattel mortgage.
4. — Chattel Mortgages — Liens — Execution — Levy — General Creditors — Priority of Liens. Where plaintiff is a general creditor only, having no existing equity, at the time of the execution of chattel mortgages and the mortgages are recorded before he levies execution upon the chattels, the lien of the chattel mortgages is superior to the lien obtained by the execution levy, whether the chattel mortgages be supported by a good consideration or by a valuable consideration.
5. — Same — Pre-existing Debt — Consideration. Chattel mortgages given to secure pre-existing debt held not void as to creditors, as a matter of law, for want of consideration, being supported by at least a good consideration.
6. — Same — Description — Sufficiency — Question for Jury. Where a chattel mortgage contains a description which would enable a third party, by its aid, together with such inquiries as the instrument itself suggests, to identify the property, the description is sufficient; it then becomes a question of fact for the jury.
7. — Same — Same — Same — Same. Whether chattel mortgage sufficiently described mortgaged property held for the jury, where it specified property as "one pure bred boar, Barrington Burns, Jr.," and other named livestock and other property "located on the C. farm in N.M. County, Mo." and where there was evidence that this farm was well known and had been in the C. family thirty-five years.
8. — Evidence — Written Instruments. The general rule is that, where a written instrument is offered in evidence, the whole contents thereof are in evidence.
9. — Chattel Mortgages — Appeal and Error — Question for Jury. In an action wherein a chattel mortgagee sought to recover mortgaged property taken under execution from mortgagor in possession, where chattel mortgagee introduced chattel mortgages in evidence without objection, whether the mortgages were recorded held a question for the jury, in view of section 2256, Revised Statutes 1919, making an unrecorded chattel mortgage invalid as to others than the parties thereto, where the mortgagor retains possession.
10. — Appeal and Error — Appellate Practice — Chattel Mortgages. Where plaintiff did not at the trial question the fact that chattel mortgages had been duly recorded, he might not question the fact on appeal for the purpose of sustaining a ruling upholding a demurrer to the evidence.
Appeal from the Circuit Court of New Madrid County. — Hon. Henry C. Riley, Judge.
REVERSED AND REMANDED.
M.E. Montgomery and M.G. Gresham for appellant.
(1) (a) On demurrer to the evidence, the claimant, Chaney's evidence must be taken as true and he is entitled to all favorable inferences that may be drawn therefrom. Thos. Cusack Co. v. Lubrite Rfg. Co., 261 S.W. 727; Fisher v. Webb-Knuze Const. Co., 263 S.W. 1022; Baird v. Citizens Ry. Co., 146 Mo. 265, 281; Frost v. Central B.M. Assn., 246 S.W. 628; Van Memelen v. Eads, 244 S.W. 942; Stauffer v. Metropolitan St. Ry., 243 Mo. 305, 316, 147 S.W. 1032; Foy v. United Ry. Co., 226 S.W. 325, 205 Mo. App. 521. (b) And is entitled to have all countervailing inferences favorable to the plaintiff, Sikes, rejected. Troll v. Ehrler Drayage Co., 254 Mo. 332, 337-8, 162 S.W. 185; Stewart v. Laclede Gas Light Co., 241 S.W. 909; Maginnis v. Missouri P.R.R., 268 Mo. 667, 675-6, 187 S.W. 1165; Smallwood v. St. Louis-S.F.R.R., 263 S.W. 550.
(2) The sheriff seizing mortgaged property under an execution, is such a disposition as entitles the mortgagee to take possession of the property. Bank of Union v. Keeney, 134 Mo. App. 74, 79; State ex rel. v. White, 70 Mo. App. 1, 6-7; Straud v. Simpson, 74 Mo. App. 230, 233; State to use v. Murphy, 64 Mo. App. 63; Brown v. Hawkins, 54 Mo. App. 75. (3) Where the description in the mortgage is sufficient to enable a third party to identify the property, aided by such inquiry as the mortgage suggests, the mortgage is not void for indefiniteness of description, and sufficiency of description is question of fact for the jury. Cook v. Wheeler, 218 S.W. 929; Estes v. Springer, 47 Mo. App. 99; Holmes v. Commission Co., 81 Mo. App. 97, 100-1; Kibble v. Ragland, 263 S.W. 507; Cass County Bank v. Hulen, 195 S.W. 74; Ranney v. Meisenheimer, 61 Mo. App. 434, 439-440; Evans-Snyder-Buell Co. v. Turner, 143 Mo. 638, 643-4; Bank of Odessa v. Jennings, 18 Mo. App. 651, 657; McNichols v. Fry, 62 Mo. App. 13; Bank of Mendon v. Mell, 185 Mo. App. 510; Bank of Mexico v. Ragsdale, 158 Mo. 668, 680. (4) An insolvent debtor has the right to appropriate his property by any suitable means to the payment of any of his creditors to the exclusion of all the others and even though the creditor preferred is a near relative. Jaffrey v. Matthews, 120 Mo. 317, 329-330; Schroeder v. Bobbitt, 108 Mo. 289; Kingman Co. v. Cornell et al., 150 Mo. 282, 300-1 and 305; Bangs Milling Co. v. Burns, 152 Mo. 350, 374-6; Mansur-T. Imp. Co. v. Ritchie, 143 Mo. 587; Kuh v. Garvin, 125 Mo. 547, 553-4 and 562; Forrester v. Moore, 77 Mo. 651, 654; Woodson v. Carson, 135 Mo. 521; Stahlhuth v. Nagle, 229 Mo. 570, 582-3; National Bank of Adrian v. Allison, 251 S.W. 475; Meyer Bros. Drug Co. v. White, 165 Mo. 136, 142. (5) (a) It is immaterial whether the claimant Chaney, the mortgagee, had any knowledge whatever of either of the disputed mortgages, or of Riga's intention to execute them, prior to their execution, if he accepted them upon learning of their existence. Ensworth v. King, 50 Mo. 477, 483; Kingman Co. v. Cornell et al., 150 Mo. 282, 310 and 314; Major v. Hill, 13 Mo. 247, 251; Stahlhuth v. Nagle, 229 Mo. 570, 583-4; Botkin v. McIntyre, 81 Mo. 557, 560. (b) And acceptance is presumed, unless grantee disclaims within a reasonable time after mortgage came to his knowledge. Kingman Co. v. Cornell et al., 150 Mo. 282, 308 to 315; Fischer Leaf Co. v. Whipple, 51 Mo. App. 181, 184; Fearey v. O'Niell, 149 Mo. 467, 475-7. (6) (a) The mortgages being regular on their face import verity and prima facie import consideration. State ex rel. v. Cryts, 87 Mo. App. 440 449; Deering Co. v. Collins, 38 Mo. App. 80, 88; Nedvidek v. Meyer, 46 Mo. 600, 602; Shelton v. Railroad, 131 Mo. App. 560, 566; Jackson v. Chicago Ry. Co., 54 Mo. App. 636, 642-3; Strop v. Hughes, 123 Mo. App. 547, 555. (b) Oral evidence may be introduced showing other and additional consideration was given to that recited in the mortgage. Richardson Mach. Co. v. Dix, 245 S.W. 215, 216; Johnson Farming Co. v. Goodwyn, 208 S.W. 110; Jackson v. Chicago Ry. Co., 54 Mo. App. 636, 642-3; Strop v. Hughes, 123 Mo. App. 547, 555-6; O'Day v. Conn, 131 Mo., 321, 327-8. (c) Extension of time of payment of an indebtedness is good consideration for giving security to secure the payment of said indebtedness. White v. Meiderhoff, 281 S.W. 98; Gate City Bank v. Elliott, 181 S.W. 25; Avery Mfg. Co. v. Leathers, 130 Mo. App. 202; Lohrer v. Vogel Real Estate Co., 239 S.W. 1098; Deere v. Marsden, 88 Mo. 512, 514. (d) And extension is good consideration even though for an indefinite time. Powers v. Woolfolk, 132 Mo. App. 354, 360; Mandle v. Horspoll, 201 S.W. 638; Bank of Springfield v. Love, 62 Mo. App. 378. (7) One attacking a conveyance as fraudulent has the burden of proof to show facts invalidating the conveyance. A preferred creditor is under no obligation to show that a preferential conveyance to him is free from fraud. Wall v. Beedy, 161 Mo. 625, 639-640; Mansur-T. Imp. Co. v. Ritchie, 143 Mo. 587, 611-12; Merrill Drug Co. v. Lusk, 73 Mo. App. 571; State ex rel. Robertson v. Hope, 102 Mo. 410, 427-8; Stahlhuth v. Nagle, 229 Mo. 570, 581; Deering Co. v. Collins, 38 Mo. App. 73, 78; State ex rel. v. Cryts, 87 Mo. App. 440, 449. (8) Though Riga, the debtor, was insolvent and transferred all of his property to Chaney, with the fraudulent intention of beating his other creditors and though Chaney knew all of such facts, still if Chaney acted simply to secure his own indebtedness, and without any purpose to aid Riga's fraudulent purpose, the transaction will be upheld. Alberger v. White, 117 Mo. 347, 363-6; Sexton v. Anderson, 95 Mo. 373, 379-80; Wall v. Beedy, 161 Mo. 625, 637-640; Deering Co. v. Collins, 38 Mo. App. 73, 79; Colbern v. Robinson, 80 Mo. 541, 546-7; Growney v. Lowe, 234 Mo. 689, 696-7; Crothers v. Busch, 153 Mo. 606, 612-113; Gust v. Hoppe, 201 Mo. 293, 300-1.
H.C. Blanton for respondent.
(1) Where no new consideration is received at the time of the execution of a chattel mortgage to secure a pre-existing debt, the mortgage is in valid as to third parties. Dry Goods Co. v. Bank, 81 Mo. App. 281, 282; Hume v. Eagon, 83 Mo. App. 576; Bell v. Bell, 133 Mo. App. 570, 113 S.W. 668; Plow Works v. Ross Co., 74, Mo. App. 437, 443; Jones Mortgages, page 685, par. 460, page 687, par. 461. (2) Before an extension of time for the payment of a pre-existing debt can constitute a good consideration as to third parties for the execution of a chattel mortgage, the extension of time must be to a fixed, definite, certain date. Jones Mortgages, page 687, par. 461, page 839, par. 532; Smith v. Richardson, 77 Mo. App. 431; Gate City N. Bank v. Elliott, 181 S.W. 25, 28; Cass Co. v. Oldham, 75 Mo. 50; Am. Nat'l. Bank v. Love, 62 Mo. App. 378; Napa Valley Co. v. Rinehart, 42 Mo. App. 171; Ridings v. Hamilton Bank, 219 S.W. 585, 587, 281 Mo. 288; Allen West Co. v. Richter, 228 S.W. 827, 286 Mo. 691; Page on Contracts, par. 2868; Janis v. Roentgen, 59 Mo. App. 76. (3) The description covering the tractor, disc, hay baler, cows and calves is too indefinite and uncertain to pass title even though there were a consideration. Chandler v. West, 37 Mo. App. 631; State v. Norman, 232 S.W. 452; State v. Hunt, 183 S.W. 333; Bozeman v. Fields, 44 Mo. App. 432. (4) The introduction of the chattel mortgages in evidence did not carry with them proof as to their filing even if it was written on the back thereof by the recorder. Comstock v. Kerwin, 57 Neb. 1, 77 N.W. 387; Levy v. Cunningham, 56 Neb. 348, 76 N.W. 882; Witt v. Campbell Co., 66 Or. 144, 134 P. 316; 109 Neb. 76; 189 N.W. 603; 109 Neb. 86; 189 N.W. 607; Bank v. Bank, 24 Wyo. 423, 160 P. 1171.
Action to try the right, title and interest of claimant to certain personal property seized by the sheriff of New Madrid county by virtue of an execution issued to satisfy a judgment of plaintiff against E.A. Riga. The issues were made as provided by sections 1635 and 1636, Revised Statutes 1919, and no question arises on the pleadings. The trial court sustained a demurrer to the evidence and claimant, J.N. Chaney, has appealed from the judgment in favor of plaintiff.
The facts are substantially as follows: Plaintiff was a general creditor of defendant E.A. Riga and obtained a judgment against him in January, 1925. An execution was issued upon said judgment and placed in the hands of the sheriff, who made a levy on the personal property in controversy, July 26, 1925. J.N. Chaney, hereinafter referred to as claimant, was the father-in-law of defendant, E.A. Riga, and had signed the latter's notes for sums aggregating $1000 or more, which claimant had been compelled to pay. Thereafter, on August 1, 1923, for the purpose of evidencing the indebtedness of defendant to claimant, defendant executed a promissory note for $1000 payable on demand to the order of claimant. This note was unsecured and bore no credits. December 1, 1924, defendant executed a chattel mortgage to plaintiff conveying certain personal property described as follows: "One pure bred Boar Barrington Burns Jr., ten brood sows and all increase, fifteen head milk cows, ten head calves, one Fordson tractor, disc and plows, hay baler. All my household and kitchen furniture of all description.
"Property located on the Chaney farm in New Madrid county, Missouri."
The mortgage recites that it was given to secure the note of date, August 1, 1923. Thereafter, on June 22, 1925, defendant Riga executed a chattel mortgage to claimant to secure the same note above described, said mortgage covering certain growing crops, which need not be further described since no question is made as to the sufficiency of the description in the latter mortgage. This mortgage also contained the following clause: "This conveyance is made as additional security for the payment of a promissory note of grantor herein to grantee herein for $1000 with eight per cent interest from date, and dated August 1, 1923, and due on demand, and is in consideration of the agreement of payee of said note extending the time of payment thereof to September 1, 1925, in addition to the consideration above set out."
The evidence tends to show that claimant had no knowledge of the execution of either of the foregoing chattel mortgages until after they were executed, although there is some evidence that the matter was discussed between defendant and claimant and that defendant had agreed sometime before the mortgages were given that he would secure claimant for his indebtedness to him. Under the view we take of this case it seems unnecessary to set out this testimony in detail. It also appears that, although the chattel mortgages were offered in evidence, there was no separate offer of the filing marks or any other positive proof of recording or filing of the instrument in the Recorder's office.
In passing on the question of the propriety of the court's action in sustaining the demurrer to the evidence, claimant's evidence must be taken as true and he is entitled to all favorable inferences that may be drawn therefrom. [Cusack Co. v. Lubrite Mfg. Co., 261 S.W. 727.] With this rule in mind we shall consider the three points raised on this appeal i.e., (a) Is a pre-existing debt a good consideration for a chattel mortgage as against a general creditor where no new consideration is received at the time of the execution of the chattel mortgage? (b) Does the description in the first chattel mortgage herein, sufficiently describe the property? (c) Did the introduction of the chattel mortgages in evidence carry with them proof of their filing in the Recorder's office shown by the certificate of the Recorder on the back thereof?
(a) It is claimant's contention that a debtor has a right to prefer a creditor by giving a chattel mortgage or by any other suitable means, to the exclusion of all others. Ample authority is cited in support of that proposition. [Jeffrey v. Mathews, 120 Mo. 317, 25 S.W. 187; Schroeder v. Bobbitt, 108 Mo. 289, 18 S.W. 1093; Kingman Co. v. Cornell et al., 150 Mo. 282, 51 S.W. 727; Bangs Milling Co. v. Burns, 152 Mo. 350, 53 S.W. 923; Monsur Imp. Co. v. Ritchie, 143 Mo. 587, 45 S.W. 634; National Bank of Adrian v. Allison, 251 S.W. 475.] On the other hand, plaintiff contends that where no new consideration is received at the time of the execution of a chattel mortgage to secure a pre-existing debt, the mortgage is invalid as to third parties, citing Dry Goods Co. v. Bank, 81 Mo. App. 281; Hume v. Eagon, 83 Mo. App. 576; Bell v. Bell, 133 Mo. App. 570, 113 S.W. 667; Plow Works v. Ross Co., 74 Mo. App. 437. The latter cases of course, do not go to the extent of holding a chattel mortgage void as between the parties because based on no new consideration. In the Dry Goods Company case it was held that "a transfer of personal property as a security for a pre-existing debt does not render the transferee a bona-fide purchaser for value, since the creditor parts with no value, surrenders no right and places himself in no worse legal position than before." That was a case to recover goods sold under a mistake of fact and it was further held the mortgagee was not in a position to invoke the rule protecting innocent purchasers for value. A contrary rule seems to be announced in Splint v. Sullivan, 58 Mo. App. 582, which upholds a mortgage given to secure pre-existing debts as a preference against other creditors. In the Hume case (supra) it was held that a chattel mortgage, given to secure a note past due and subject to a prior mortgage, and where no extension of time or other new consideration was given, was invalid. The authorities cited in the opinion do not support the rule as broadly stated. The Bell case (supra) holds that the securing of a pre-existing debt without other consideration will not support a mortgage given on land by a married woman to secure the debt of her husband. The Plow Works case (supra) holds that a chattel mortgage given to secure a pre-existing debt, without other consideration, does not render the mortgagee a purchaser for value.
The true rule, according to the weight of authority, is that a pre-existing debt constitutes a good consideration for a chattel mortgage but not a valuable consideration and, therefore, the mortgagee takes the property subject to such equities as might be asserted against his grantor. [Cass County Bank v. Hulen, 195 S.W. 74.] We have found no decisions in this State dealing with this proposition from the standpoint of the change in the law as to promissory notes brought about by the adoption of the negotiable instruments law, wherein an antecedent debt is made a valuable consideration for a promissory note, as distinguished from a good consideration. [Sec. 812, R.S. 1919; Bank v. Morris, 156 Mo. App. 43, 135 S.W. 1008.] If such consideration is a valuable one as to a promissory note, it logically follows, we think, that it should also be construed as a valuable consideration for the giving of a chattel mortgage. The law in this State has always been that a consideration which would support a promissory note would likewise support a chattel mortgage. [Napa Valley Wine Co. v. Rinehart, 42 Mo. App. 171, l.c. 180.] If claimant in this case, had taken a new note for the pre-existing debt, although there may have been no other consideration, that consideration would have been sufficient to have constituted him a bona-fide holder for value. What difference should it make that the claimant did not take a new note but simply a chattel mortgage to secure a note already given? We can discover no sound reason for a distinction. But regardless of that proposition, the mortgage in this case was supported at least by a good consideration and since plaintiff was a general creditor only, at the time the chattel mortgages were executed, having no existing equity, the mortgage of claimant, if recorded prior to the levy of execution on plaintiff's judgment was a superior equity or lien. [Corning Co. v. Rinehart Medicine Co., 46 Mo. App. 16; Cass Co-Bank v. Hulen (supra), 5 R.C.L. 420; Knowles Loom Works v. Vacher, 57 N.J.L. 490, 33 L.R.A. 305 (Annotated); Collerd v. Tulley, 78 N.J.L. Ann. Cas. 1912-C, p. 78, (Annotated).] It is our opinion, under the authorities, the chattel mortgages in question were not, as a matter of law, void as to creditors for want of consideration.
(b) The sufficiency of the description in the first chattel mortgage is questioned. The rule is that where a chattel mortgage contains a description which would enable a third party, by its aid, together with such inquiries as the instrument itself suggests, to identify the property, the description is sufficient. It then becomes a question of fact for the jury. [White v. Meiderhoff, 281 S.W. 101, l.c. 102.] The description heretofore set forth is aided by the words "Property located on the Chaney farm in New Madrid county." There was evidence that the Chaney farm was well known and had been in the family for about thirty-five years; that the property conveyed constituted all the hogs, milk cows, calves and other property possessed by defendant and that this particular property was in his possession on the Chaney farm at the time the mortgage was given and remained in his possession until the levy was made, without change. We believe the sufficiency of the description was a question for the jury. [Cook v. Wheeler, 218 S.W. 929; Estes v. Springer, 47 Mo. App. 99; Bank of Mexico v. Ragesdale, 158 Mo. 668, 59 S.W. 987.]
(c) It is urged there was no evidence that the chattel mortgages were recorded. If not recorded prior to the levy the mortgages then would not be entitled to priority. The record shows that the two mortgages were offered in evidence, the offer being in language as follows: "Claimant next introduced in evidence, claimant's exhibit `F,' being a chattel mortgage given by Earl Riga to J.N. Chaney on a part of the property in question and under which claimant makes his claim to said property, being as follows:" It is plaintiff's contention that the introduction of the mortgages in evidence did not carry with them the certificate of the Recorder on the back thereof, showing the recording or filing of the instruments. The rule in Nebraska seems to be that unless the offer is sufficiently broad to cover the indorsements on the back of an instrument the introduction of the instrument in evidence does not carry with it such indorsements. [Comstock v. Kerwin, 57 Neb. 1, 77 N.W. 387; Levy v. Cunningham, 56, Nebr. 348, 76 N.W. 882; Shawnee State Bank v. Vansyckle, 189 N.W. 607, and other cases cited by defendant.] In Noll v. Keneally, 37 Neb. 879, 56 N.W. 722, it was held that the mere offer of a recorded instrument in evidence does not include the filing certificate endorsed thereon by the recording officer. The general rule in this State is that where a written instrument is offered in evidence the whole contents thereof is in evidence. [Box Co. v. Danciger, 161 Mo. App. 640, 143 S.W. 855; Boulard v. Clark, 19 Mo. 570.]
But regardless of that rule, we think it may reasonably be inferred from the evidence that the mortgages were recorded. Claimant alleges the recording thereof in his petition, giving the date. Plaintiff's answer denies that plaintiff has a valid claim, but alleges the title of claimant is the result of a fraudulent conveyance made without consideration. Under the pleadings we doubt if the allegation as to recording contained in the petition was put in issue. It further appears that no objection whatever was made to the introduction of the chattel mortgages in evidence. Under the provisions of section 2256, Revised Statutes 1919, an unrecorded chattel mortgage, where the mortgagor retains possession, is invalid as to all persons other than the parties thereto. Therefore, in the absence of objection to the introduction of the instruments in evidence, and on a question of a demurrer to the evidence, we think claimant would be entitled to the inference that the mortgages were recorded as in the petition alleged. Moreover, no issue of the kind was raised at the trial and the cross-examination of claimant's witnesses practically concedes the recording of the mortgages. The point raised is of course highly technical. That they were recorded is clear and the demurrer to the evidence should not be sustained on any such theory.
We therefore hold that a case was made for the jury and the judgment should be reversed and the cause remanded for new trial. It is so ordered.
Cox, P.J., and Bradley, J., concur.