Marshall, Wescoat & Co. v. Crawford , 45 S.C. 189 ( 1895 )

The opinion of the Court was delivered by

Mr. Justice Pope.

The plaintiffs began this action on the 19th day of April, 1894, in the Court of Common Pleas for York County, in this State, against the defendant, who is sheriff of that county, for claim and delivery of certain personal property, consisting of goods, wares, and merchandise, as well as certain show cases, etc., which they claim to have acquired as mortgagees under three chattel mortgages executed by one John Gelzer, after the condition of each was broken. The defendant denied plaintiffs’ right to such relief, and justified his possession of all such personal property by reason of a certain warrant of attachment duly issued to him as sheriff at the suit of the Tabb & Jenkins Hardware Company, as creditors of the said John Gelzer.

The action came on for trial before his Honor, Judge Aldrich, and a jury. At the hearing, several witnesses were examined in open court, and the depositions of several others were published. The defendant presented eleven requests to charge. The presiding Judge refused all but two of them. After the Judge’s charge, the jury rendered a verdict in favor of the plaintiffs. Thereupon the defendant moved for a new trial. This was refused. After entry of judgment, the defendant appealed to this Court. These grounds of appeal, preceded by the Judge’s charge, will be reported, and also’his reasons for refusing a new trial.

Before these grounds of appeal are discussed, it will be better to make a brief statement of the facts underlying this controversy. The plaintiffs are merchants, doing business in the city of Charleston, in this State, while Tabb & Jenkins Hardware Company is a corporation doing business in the city of Baltimore, Maryland. Although Crawford, as sheriff, is the nominal defendant, the contest is really between these two firms- over the assets of the unfortunate merchant, John Gelzer, who lives at Rock Hill, in this State. It seems that John Gelzer, being indebted to J. J. Wescoat as trustee in the sum of $700, executed a note secured by a mortgage on all his personal property as a merchant, as well that in his storehouse as that which he should from time to time add to his stock. Forty days was expressed as the time the debt should mature from the date of its execution— 17th August, 1898. This mortgage was not placed on record until 5th January, 1894, and was never recorded in the county of Charleston, where Gelzer lived when he executed it. The plaintiffs subsequently had this mortgage assigned to them. Gelzer paid all but about $300 due on this debt and mortgage. On the 21st day of January, 1893, the said Gelzer made his obligation in writing, due one day after its date, for the sum of $2,000, and executed a mortgage of all his stock in trade as a merchant at Rock Hill, S. C., together with a mortgage on such goods, wares, and merchandise as he might add thereto, to the Savings Bank of Rock Hill, S. C. There was inserted in said mortgage this stipulation: “It being hereby stipulated that I am to buy, sell, and carry on the hardware business with the said stock until the said debt is paid, or this mortgage foreclosed — all the goods purchased to take the place of those sold.” This mortgage was recorded on the 5th January, 1894. And on the 2d day of January, 1893, the said John Gelzer executed a mortgage to secure five notes — one dated 29th June, 1893, for $500, and due 1st November, 1893; one dated 29th June, 1893, for $1,000, due 27th September, 1893; one dated September 6th, 1893, for $300, due December 1st, 1893; one dated September 15th, 1893, for $500, due December 15th, 1893, and one dated December 2d, 1893, for $800, due and payable on demand. This mortgage was recorded on 5th January, 1894. Both these mortgages were assigned for value to the plaintiffs, and the latter contained a stipulation similar in effect to that above quoted. It is thus evident that the first mortgage has never been recorded as required by law, and as the four notes held by the Tabb & Jenkins Hardware Company were made by John Gelzer to that company after the execution of the first two mortgages and before they were placed on record, these two mortgages need not for the present be considered. The last mortgage was not only recorded within the forty days next ensuing its execution, buf also the condition thereof was broken before any writ in attachment was issued under which alone the defendant, Crawford, claims the goods. This contest, therefore, to a large extent, revolves about this third mortgage. If this mortgage is valid, the plaintiffs are entitled to have all the stock in trade of John Gelzer turned over to them; but if it is not valid, then the defendant as sheriff properly holds the same freed from any interference or control of the plaintiffs. Before going any further, it may as well be stated, that if the plaintiffs hold this third mortgage, and are entitled to the possession of all these goods, they will be compelled to hold the same under the act of the General Assembly of this State, entitled “An act regulating chattel mortgages, and the payment and satisfaction thereof.” 21 Stat. at Targe, p. 7. The text of that act, avoiding the enacting words, is: “That the mortgagor of any chattel shall have the right to redeem the property mortgaged by him at any time before sale by the mortgagee, by paying the mortgage debt and any costs incurred in attempting to enforce its payment, and a tender made by the mortgagor óf an amount sufficient to p'ay said debt and cost, if not accepted, shall render the mortgage null and void.”

1 In considering appellant’s exceptions, we will follow the order adopted in his argument, which involves attention at this time to the first, second, and third of such exceptions. The proposition contended for is this: In South Carolina, in an instrument whereby a conditional sale of personal property is provided, and an agreement therein appears, whereby the grantor or owner of the personal property has expressly reserved the right to retain said personal property, and no notice is given to the world thereof, so far as subsequent purchasers or creditors are concerned, such sale of property is null and void. And it is further contended that, inasmuch as a mortgagee, after condition broken, lias the right to take the mortgaged property in his possession, but does not do so, even allowing the mortgagor to sell and trade such property, the mortgage in such a case must and ought to be treated — as a conditional sale would be — as null and void as to subsequent creditors or purchasers. That there is a contrariety of judicial opinion on this subject, so far as mortgagees are concerned, outside of our State, there can be no doubt. But in our State, it has been decided that it will not render a chattel mortgage null and void, if the mortgagee allows the mortgagor to retain possession of the mortgaged chattels, after condition broken. Mortgages with us are nothing more than securities for debt, and this is as true of chattel mortgages as mortgages of real estate. The distinction between the two sets of mortgages is, that in chattel mortgages, after condition broken, the mortgagee may take possession of and sell the property, while as to mortgages on real estate, the mortgagee, as such, has no such power. As we understand the charge of the Circuit Judge, he sought to enforce this doctrine. We will not press this investigation, for this Court quite recently, through the Chief Justice as the organ of the Court, has considered the effect of a mortgage in this State, as will be found in Porter v. Stricker, 44 S. C., 183. In his opinion, amongst other things, he clearfy recognizes the propriety of such indulgence from the creditor to the debtor, as is evidenced by allowing the debtor to retain the mortgaged property after the condition broken. In this connection he used this language: “It seems to us that the whole testimony points clearly to the conclusion, that the sole object of giving the mortgage was to secure an honest debt due to a very indulgent creditor, and another part of which was for money then loaned to the debtor to carry on his business. The subsequent conduct of the party negatives the idea that there was any intention that the mortgage should operate as a transfer of the property, for the conceded fact is, that the debtor was permitted to retain the property for more than three months after the maturity of the mortgage debt.” But it is contended in this case, that the stipulation in the mortgages from John Gelzer to the Savings Bank of Rock Hill, S. C., whereby the said John Gelzer especially provided that he should retain possession of the property mortgaged, and sell the same in his business as merchant until the said debt is paid, or this mortgage foreclosed; all goods bought to take the place of the goods sold, and that such stipulation is illegal. The third mortgage became due 15th December, 1893, and the said Gelzer was allowed to hold the goods until 6th of February, 1894 — one month and twenty-one days after condition broken. But from the 5th January, 1894, when the last mortgage was duly recorded, all persons had constructive notice, at least, of this stipulation. And appellant contends that it was the dut}' of the Circuit Judge to charge that this stipulation in the two last mortgages was conclusive evidence of a fraudulent'purpose as between the mortgagor and mortgagee — that it was a badge of fraud. Was the charge of the Judge correct, when he refused to so construe the mortgage? If a man, as a legal result necessarily following certain admitted facts, has a right to retain mortgaged chattels after condition broken until a foreclosure of the mortgage, will it be wrong for him to have that legal result stated in a paper containing those admitted facts? In other words, if a mortgagor of chattels has the right to retain those chattels until after condition of his mortgage broken, and also until foreclosure of said mortgage, even if no agreement as to such result is made in the mortgage, will that right be destroyed, if he stipulates in words written in the mortgage for such possession after condition broken and until foreclosure? We do not think so. Now, of course, all that is said up to this moment on this subject relates to the simple presence of the stipulation referred to in the mortgage. But in the event it should be made to appear by testimony that this stipulation and its observance by these parties was because of a corrupt agreement between the mortgagor and the mortgagee, whereby an advantage to the mortgagor over his other creditors was to be obtained, why such an agreement would be a fraud, and would upset everything and everybody connected with it. However, it must be remembered that this would place the burden of proof upon the defendant to prove such a fraud. The charge of the Circuit Judge meets this issue fully, fairly, and thoroughly.

2 As to the fourth ground of' appeal, it nowhere appears in the “Case”-that the mortgages held by the plaintiffs as assignees cover all the property of John Gelzer, and, of course, therefore, the Circuit Judge could not charge as requested, that the three mortgages were executed in fraud. The burden of proof was still, therefore, upon the appellant who alleged fraud.

3 As to the fifth ground of appeal. In this State, the mortgagee is not bound to record his mortgage. The mortgagee loses his prior lien as to subsequent lienees and creditors if he fails to so record his mortgage. As we understand the Circuit Judge, he did charge that if any corrupt agreement existed between the mortgagor and mortgagee as to not recording the two first mortgages within ■forty days after their execution, they would be annulled as fraudulent.

4 As to the sixth ground of appeal. The alleged error here referred to seems to us to have been fully cured by the charge of the Judge. It is not required of him that he shall charge just in the words of the request or in the order in which they occur. He must cover such requests in his charge. When he has done so, the ends of the law in this regard are fully met.

As to the seventh ground of appeal. It was the duty of the Circuit Judge to construe the mortgage. He did so. His language as quoted in this ground of appeal is frank and full. He was not in error in what he said. And the Circuit Judge did.not err in not charging, as requested, that each of the three mortgages' contained unusual and extraordinary stipulations as therein pointed out, as we have hereinbefore fully shown.

As to the eighth ground of appeal. So far as this ground relates to the stipulations contained in the mortgages, we have already decided that it is not well taken. So far as the effect of testimony aliunde the terms of the mortgages themselves, these being questions of fact, we have no power to review them, except to say.that the instructions of the Circuit Judge in relation thereto are approved by us.

As to the ninth ground of appeal. We see no error in the language used by the Circuit Judge. The question was really who had the better title to this personal property. All the other questions were incidents to this leading, controlling question. Of course, the subordinate questions had to be decided in order to solve the question of title.

5 As to the tenth ground of appeal. We can only say, after considering the whole case, that the Circuit Judge did not err here. It was a motion based upon the minutes of the Court. Where facts are involved, we have no right to express any opinion. And where law points are raised, we are satisfied with the conclusions of the Circuit Judge. It follows, therefore, that all these grounds of appeal must be overruled.

It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.

Petition for rehearing was filed on September 25, 1895, and rehearing refused October 11, 1895.