Bates v. Wiggin , 37 Kan. 44 ( 1887 )

Opinion by

Holt, C.:

The first question that presents itself is, was the contract between Bates and Clark a conditional sale, or was it a mortgage on the property in controversy? The testimony is not uniform concerning the agreement. Some of the witnesses testify that the title should pass, and the property become absolutely the property of Bates at once. They all agree that the title to the property should be in Bates until the notes were paid to the bank, but there is some testimony showing that the title to the property remaining should revert to Clark upon the payment of the notes, at once, and without any formal transfer. The testimony shows that Clark fed his stock out of a part of the property purchased. The writer of this opinion is inclined to believe that the agreement constituted a mortgage, yet there was testimony enough introduced tending to show that it was a conditional sale, so that it might have been a proper question for the jury to determine whether the transaction was á mortgage or^a sale. ( Goodwin v. Kelly, 42 Barb. 194.) If it had been a sale of the property, then certainly Bates, the owner of the same, could maintain his action for the possession of it.

The defendant contends that if it was an oral mortgage it would be void without an actual delivery of the property to Bates. We do not believe that claim is tenable. There is a distinction between mortgages and pledges, but there is no distinction, nor reason for a distinction, between oral and written mortgages in this respect. There is no provision in our statutes, as there is in some states, that the sale of personal property of a certain value, unaccompanied by delivery, shall be void unless a memorandum of the sale iu writing be made and signed by one of the parties thereto. There is no question of purchaser or creditor arising in this action under the evidence brought here. It is simply a controversy between Bates and the receiver of H. B. Clark. Such receiver took the property of Clark subject to all existing equities and liens, and has no greater rights than Clark himself would have against Bates, and can interpose no defense that Clark could not. (In re Gutta Percha Co., 17 How. Pr. 549; Lorch v. Aultman & Co., 75 Ind. 162; Highton Receivers, §138.)

The testimony in this action tends to show that this transaction wasjjentered into in good faith, and that the conditional sale or mortgage, whichever it may be, was given upon a sufficient consideration; and when inquired into between the parties themselves, or between parties having no greater or different rights, we know of no rule, or reason for a rule, that would make delivery indispensable as between them any more than under a written mortgage. (Jones on Chattel Mortgages, §2; Morrow v. Turney, 35 Ala. 131.) If a sale of chattels, not in writing, is valid without delivery, we know of no reason why an oral mortgage should be void between the parties thereto, without delivery.

In the view we take of this case, it is of very little importance whether the transaction was a conditional sale or a mortgage. If it was a mortgage, it was a transaction to secure two thousand five hundred dollars; and the statement of the values in the affidavit of the plaintiff shows the total value of the property claimed to be only one thousand four hundred and thirty-nine dollars and seventy-five cents, much less than the amount sought to be secured.

It is contended that if this transaction is a mortgage, the plaintiff could not maintain an action of replevin for this property until he had paid the notes, or some part thereof, upon which he was surety. Whatever the general rule may be, we believe where the surety has a mortgage on the property of his principal to secure him for signing his principal’s notes, after the maturity of the debt, he is not bound to wait until he has actually paid as surety, but may have the mortgage foreclosed at once; and where the principal is insolvent, he may retain any funds in his hands to apply to the discharge of his liability.

The purpose of this contract between Bates and Clark was to hold Bates harmless against loss or damage by reason of his signing Clark’s notes at the bank as surety. At the commencement of this action he was legally liable on the notes, and was entitled to obtain possession of the property given him to save him harmless, because he signed the same. (Brandt on Suretyship and Guaranty, §193; Baylies on Sureties and Guarantors, 352; DeCottes v. Jeffers, Cothran & Co., 7 Fla. 284; Succession of Montgomery, 2 La. An. 469; Daniel v. Joyner, 3 Ired. Eq. 513.)

It is recommended that the judgment of the court below be reversed.

By the Court: It is so ordered.

All the Justices concurring.