Merchants' National Bank v. Abernathy

1. Negotiable Instruments: assignee of negotiable notes : effect of assignment as to mortgage. The assignee or indorsee of a negotiable note, under-due (secured by mortgage), takes the mortgage precisely as he takes the note, and as fully freed from all defenses. (Daniel Neg. Inst. sec. 834; Hagermcon v. Sutton, 91 Mo. 519). 2. --: CONTRACT : 'MEANING OF THE PHRASE “ LEGAL REPRESENTATIVES”: CASE adjudged. Primarily the phrase “legal representatives” refers to one’s executors or administrators. It is not necessarily so, except when applied in connection with the decease of some one, and even in that case, the context of the instrument may change the usual meaning of the words in the given case. Held that in this case, these words will include those who may represent the mortgagee by assignment, as well as those who will represent him after his decease. 3. —--- : WHEN NOTES HELD AS COLLATERAL SECURITY : CASE adjudged. Though the notes, in this case, were only indorsed as collateral security, yet the indorsee holds them as for value, and is entitled to be protected as though an absolute bona-fide purchaser. 4. Practice: objections to testimony: when not available-When objections to testimony are not specific, but general, they will not be noticed by this court. On rehearing. 5. Trespass : levy of execution on property not belonging to DEFENDANT : WHEN DEMAND NOT NECESSARY. When an officer levies on property not belonging to the defendant, no demand need be made for its return. His act makes him a trespasser, and he is entitled to no indulgence.- The owner whose projierty has been taken under a writ to which he was not a party may sue in trespass, or in trover, or he may recover the property taken. 6. Execution: interest of mortgageor of personal property : ■ WHEN SUBJECT TO LEVY UNDER ATTACHMENT OR EXECUTION : CASE adjudged. In this state, the interest of a mortgageor of personal property is subject to levy under attachment or execution only when he has a definite and determined right of possession. The right of possession must be for a definite period, — possession during-' the pleasure of the mortgagee will not suffice. Held that the possession, in this case, was not such as is required by the rule in force in this state to. make the mortgageor’s interest subject to levy.

Appeal" from Jac7cson Circuit Court. — Hon. Turner A. G-ill, Judge. The case is stated in the opinion. (1) Instructions one and two given by the court are erroneous in that they fail to give to the jury the proper manner of determining the measure of damages. And further, instruction one tells the jury peremptorily to find for the plaintiff, without giving them the opportunity to pass upon the issues of fact presented by the evidence in the case. (2) In instruction number two, given for plaintiff, the court requires the jury to find the value of the property “at such sum as they may believe from the evidence such property could have been sold for at the time, and in the place and condition it was in when it was first levied . on by the constable, assuming that it could then and there have been sold for its fair and true cash value.” Under the terms of the mortgage the plaintiff, in order to foreclose any rights they might have had in the property, were- compelled to hhve possession taken of it and sell it at public sale. They had no right to the value of it at the time and in the place and condition in which it was at the moment of the levy. The value of plaintiff’s rights in the mortgaged property was when it was sold at public sale, as the mortgage directed. (3) The evidence tends to show that it was agreed and understood'between Gfrauman and Howell that the stock of liquors mentioned .in the mortgage was to be sold and replenished, in the usual course of trade, by Howell, for his own use and benefit. If such was the agreement, the mortgage on such stock of liquors was void, and plaintiff had no right to it; and the question as to whether such an agreement or understanding was had between Grauman and Howell, should have been left to the jury. State ex r'el. v. Jacobs, 2 Mo. App. 183 ; Stanley v. Bunce, 27 Mo. 369 ; Billingsley v. Bunce, 28 Mo. 547; Earl v. Hart, 14 Mo. App. 594; Weber v. Armstrong, 70 Mo. 217. (4) The taking of the property was not tortious, and the defendants were entitled to a demand for its return before any action could be maintained against them. The court, therefore, erred in refusing' defendants’ instructions numbered seventeen and eighteen. Thompson v. Bose, 16 Conn. 71; Bembaugh v. Phipps, 75 Mo. 422 ; Koch v. Branch, 44 Mo. 546 ; Buffington v. Clarke, 8 Atl. Hep. 247. (5) If the mortgage was void for fraud as against these defendants, then they had the right to levy their attachment ; and if they released the same as soon as they found plaintiff had the notes, then the court erred in refusing instructions numbered two, sixteen and seventeen. One of these instructions should have been given. Neimetz v. Mee. Ass'n, 5 Mo. App. 59 ; Kramer ■». Faulkner, 9 Mo. App. 34; - Koch v. Branch, 44 Mo. 546. (6) In order to maintain this action the plaintiff must show that at the time of the alleged conversion it was the legal owner of or entitled to the immediate possession of the property in dispute. Under the terms of the mortgage the only person so entitled to take possession is “ Grauman or his legal representative.” Plaintiff, by reason of being holder of the mortgage notes as collateral security for a debt of Grauman’s, is neither “David Grauman or his legal representative.” McCray v. McCray, 12 Abb. Prac. [N.’Y.] 1; Hogan n. Kean, 3 Dill. [C. C. R.] 125; Atkinson v. Duffy, 16 Minn. 49 ; People v. Pluless, 78 111. 148 ; Wooneke v. Lemben, 71 111. 91; Stockdale v. Nicholson, L. H. Eq. Cas. 365; Cox v. Curwen, 118 Mass. 200; Anderson x. Austin, 34 Barb. [N. Y.] 321 ; Alger x. Parrett, 3 L. R. Eq. Cas. 328; In re Wyndhams, 1 L. R. Eq. Cas. 293 ; Chicago x. Mayor, 18 111. 356 ; Bruteller x. Milwaukee,_ 8 Minn. 103; Dolbear x. Norduft, 84 Mo. 619 ; Buckingham x. Andrews, 34 Barb. 434; Lewis x. Mobley, 34 Am. Dec. 379; Parker x. Bodes, 79 Mo. 91; Myers x. Hale, 17 Mo. App. 209. (7) By the terms of the mortgage, Grauman was the person selected to take possession and sell the property, in case of a breach of the conditions of the mortgage by the mortgageor. This power vested in him was a personal trust, and unless the deed authorizes him to delegate this power, he cannot do so. Graham x. King, 50 Mo. 22; Ilotoard x. Thornton, 50 Mo. 291. (8) The placing of tlie notes secured by the chattel mortgage with the bank, as collateral security for Grauman’s debt, did not give the bank any legal interest in, or any legal right to the possession of the mortgaged property. The mortgagee held the legal title to the property and became a trustee for Howell and the bank. Potter x. .McDowell, 43 Mo. 98. (9) Where a note is secured by mortgage, and there is a provision in the mortgage not contained in the note, the mortgage will control. Dobbins x. Parker, 46 Iowa, 358 ; Muzzy x. Knight, 8 Kan. 456 ; Meyer x. Grauber, 19 Kan. 165. (10) After the maturity of a debt secured by mortgage or deed of trust of personal property, the mortgagee or trustee has the legal title and the right to recover possession. Lacey x. Wathen, 36 Mo. 320; Dean x. Daxis, 12 Mo. 117; Bowens x. Benson, 57 Mo. 26. And the mortgagee is the proper party to maintain an action for damages for the conversion of the property. Pace x. Pierce, 49 Mo. 394. (11) The duty of an endorsee of a note and mortgage is to enquire of the mortgagee if there be any reason why the note and mortgage should not be paid. Colebrooke on Collateral Securities, p. 187, sec. 147; Wilkinson x. Simpson, 2 Moore Pr. Co. 275. (12) The giving of the notes to the bank as collatéral security did not transfer the title to the property mortgaged to the bank. The rules of law governing collateral securities governed the notes; and while the bank had the right in equity to preserve the security, yet it did not have any legal title or right of possession in the mortgaged property. (13) As between the parties, no record of any assignment of the mortgage security, given for the payment of promissory notes, is necessary ; but as against third parties, even where not required by direct statutory provisions, such assignment should be placed on record, thus charging all parties dealing with the property with notice of the rights of the endorsee and assignee. Colebrooke on Collateral Securities, p. 188, secs. 147, 148 ; Ogle v. Turpin, 102 111. 148 ; James v. Johnson, 6 Johns. Ch. 417 ; Johnson v. Carpenter, 7 Minn. 183 ; Gregory v. Savage, 32 Conn. 250 ; Welsh v. Priest, 8 Allen, 165 ; Young v. Miller, 6 Gray, 152 ; Henderson- v. Pilgrim, 22 Tex. 464. (1) The levy of the attachment and carrying off of the property was a breach of all of the safety clauses in the mortgage, for it was an ‘ ‘ attempt to sell or dispose of said property,” “a removal of or attempt to remove the same from the saloon or restaurant above described,” and “an unreasonable depreciation of the value thereof,” upon the violation of either of which clauses, Grauman, if he had still remained the holder of the notes, would have been entitled to take possession of and sell the property. Ashley v. Wright, 19 Ohio St. 291; Bggleston v. Munday, 4 Mich. 298; Welch v. Whittemore, 25 Me. 86 ; Herman on Chat. Mort., sec. 291. (2) But Grauman having assigned and endorsed the notes and delivered the mortgage to the respondent, who received them before maturity, as security for a loan made to Grauman at the time, the respondent was the legal holder of the notes and mortgage, at the time the condi-, tion was broken, and was therefore the proper party to take possession, and exercise the power of sale, etc. Logan v. Smith, 62 Mo. 455 ; Piclcett v.- Jones, 63 Mo. 199 ; Jones on Chat. Mort., sec. 502; Langdon v. Buel, 9 Wend. 80. The elaborate discussion of the meaning of the words “legal representative,” indulged in by-appellants’ counsel, is interesting, but unnecessary; because the law makes the mortgage and all the rights and powers it confers on th® mortgagee, assignable, without any express provision in the mortgage to that effect. If the word “assigns” is left out of a mortgage by the printer who gets up the blank, it is interlined by the court. But it may be noted that in the mortgage in this case the conveyance was expressly to said Grauman, his executors, administrators “and assigns,” and,that the surplus after sale was payable to said “A. J. Howell or his legal representative. ’ ’ Evidently Howell’s assigns, as -well as his administrator, are included as among his “legal representatives,” and if so, why not Grauman’s among his % Warnecke v.- Lenibca, 71 111. 91; Hogan v. Page, 2' Wall. 605; Bowman v. Long, 89 111. 19 ; Eréber v. Att’y Gen., 6 Serg. & R. [Pa.] 81; Phelps v. Smith, 15 111. 572; Delaunay v. Burnett, 4 Gilm. [111.] 454; Pailroadv. Bray on, 8 S. & M. [Miss.] 234. (3) Even if the transaction between Grauman and Howell were designed by both of them as a fraud upon Grauman’s creditors, that could not prejudice the respondent’s rights, because it was an innocent party. A mortgage which secures negotiable notes, “being the incident, partakes of the negotiability of the notes, and passes with a transfer of the notes without any formal assignment or delivery,' or even mention of it,” and an innocent purchaser and holder of the notes takes the same title to the mortgage that he does to the notes; — free from all equities between the parties or the claims of their creditors, or subsequent purchasers, and no record in the recorder’s office of the assignment of the notes'or mortgage is either authorized or required. Hagerman V. Sutton, 91 Mo. 519 ; 8 West. Rep. 312; Johnson v. Johnson, 81 Mo. 331; Logan v. Smith, 62 Mo. 455; Lee v. Clark, 89 Mo. 553. (4) But there is no evidence of Hovrell’s notice or participation in Grauman’s fraud. The evidence shows that he was the chief sufferer and victim of Grauman’s fraud and. not a party to it. The court was authorized and j ustitied in withdrawing that question from the jury, even if it had been material in the case, which it was not. Haussman v. Hope, 20 Mo. App. 197; Jackson v. Hardin, 83 Mo. 175. It is not claimed that plaintiff had any notice or knowledge of fraud as between these parties, nor that it participated in it. (5) The release of the attachment which the appellants ordered the constable to make on January 24, is no defense. The property was seized January 13, eleven days before, and in the meantime had been taken out of the building, where it was located, and distributed around the city with various auction dealers. It was, therefore, necessarily much depreciated in value. It is impossible to close up a business like that, take out the fixtures, utensils, furniture, etc., and hawk them around the city for over a week, without greatly depreciating their value. And besides, there is no evidence that respondent ever knew of this release, and there was no offer to return the property, or any part thereof, until six weeks still later. After the property was seized by appellants, respondent was not obliged to receive it back, even had it not been injured, but could refuse to do so and recover its value. A trespasser and wrongdoer makes his own bed, and must lie on it. Hammers «. Wilsey, 17 Wend. 91; Olis v. Jones, 21 Wend, 394; Tiffany v. Lord, 65 N. Y. 310; Brake on Attach, sec. 185c. (6) The value of the property at the time of conversion was the proper measure of damages. Peckinbaugli v. Quillin, 12 Neb. 586 ; Eggleston v. Munday, 4 Mich. 295; Worthington v. Hanna, 23 Mich. 530. But the court’s instruction told the jury to allow the respondent the value of the property, at the time and place and condition it was in at the time of the levy, not exceeding the bank’s notes against Grauman. There was evidence that the property was worth considerably more than the bank’s claim against Grauman. The.court would have been fully justified in allowing the respondent to recover the full value of the property taken. There is nothin s' in this instruction of which appellants can complain. (7) No demand of tne property from the appellants or the' constable was necessary, because the levy was wrongful. Leonard v. Hair, 133 Mass. 455. (8) Defendants, having seized this property wrongfully, it is immaterial, even if the contrary were not true, that they were ignorant of the wrongful character of their act. (9) Defendants, objections to testimony admitted cannot be considered here, because no reason whatever appears to have been assigned for any of them, and besides all the witnesses were saloon and restaurant men, and familiar with the property in question, and their testimony as to its value was perfectly competent. Irwin sold part of the property to Grauman on December 12, 1882, it was seized by appellants January 13, 1883, only one month afterwards. Irwin testified that the property he sold Grauman was delivered at the restaurant. Gregory also so testified. It was therefore for the jury to say how much, if any, it had changed in value between the time it was bought and the time it was levied upon. There is no error in the record, and the judgment below should be affirmed. (1) Where an officer holding proper legal process takes goods from the defendant named in the writ, his possession is lawful so that replevin or trover cannot be maintained against him without demand. Daumiel v. Gorham, 6 Cal. 43; Kelley v. Scanned, 12 Cal. 73; Ingalls v. Bucldey, 13 111. 316 ; Page v. Orowsby, 24 Pick. [Mass.] 216; Add. on Torts [Wood’s Ed.] pars. 471-475. (2) “A party attaching goods under civil process is entitled to notice of a claim of a third party to the goods, and a demand for them,, or he is not liable in damages to such party for such seizure and detention. A conversation between the claimant of the goods and the officer’s deputy, in which the former asserted that the goods were his, cannot be held as notice or demand to the attaching party.” Taylor v. Seymour, 6 Cal. 512. See also the following cases: Stanchfleld v. Palmer, 4 Greene [Iowa] 23; Gilchrist n. Moore, 7 Iowa, 9 ; Boughton ». Bruce, 20 Wend. 234; Windsor n. Boyce, 1 Houst. [Del.] 605; Wood v. Coleen, 6 Ind. 455 ; Stratton v. Altere, 7 Minn. 504. In such a case it is not necessary that the defendant specially plead want of notice and demand, in order to make such defense. Kelley v. Scannell, supra; Singer Co. v. King, 14 R. I., 511; 24 Am. Law Reg. [N. S.] 51 and note ; Thompson v. Bose, 16 Conn. 71; Bembaugh v. Phipps, 75 Mo. 422 ; Koch v. Branch, 44 Mo. 546 ; Buffington v. Ciarle, 8 Atl. Rep. 247. If the goods are tendered to plaintiff before suit, and refused by him, or if plaintiff demands more than he is entitled to, then there is no conversion. Addison on Torts [Wood’s Ed.] p. 500, par. 472. If defendant retains goods although demanded, for the purpose of investigating plaintiff ’ s title thereto, and after a reasonable time offers to return them, there is no conversion. Addison on Torts [Wood’s Ed.] pp. 500, 503, pars. 472, 473, 474, 475. (3) Grauman, had he remained the owner of the notes, could not have maintained this action without a demand, and even if he could his assignee could not. Boot ». Bonnema, 22 Wis. 539 ; Wash v. Sichler, 20 Mo. App. 378. (4) By the terms of the chattel mortgage, which is the ground of this suit, the plaintiff is not entitled to maintain this action. (5) The most liberal rule of construction, as to effectuating the intention of the parties to the contract, is announced by uniform authority to be this: ‘ ‘ In ascertaining the intention of the parties, where there are doubtful words in a contract, the whole face of the instrument should be regarded, and the acts of the parties and the circumstances surrounding them, at the time of the execution of the contract, should be considered, but the primary meaning of words should not be changed unless it is manifest from such evidence that the parties intended that they should have a different meaning.” Collins v. Lanelle, 44 Yt. 233 ; Jaclcson v. Meyers, 3 Johns. 383; Miller d. Holt, 68 Mo. 587; Bishop on Cont., secs. 381, 384. (1) That the formula “his legal representatives” embraces representatives by contract, such as assignees or grantees, is shown to a demonstration in the opinion already rendered in this case, still we may be pardoned for the following quotation from the case of Hammond v. Coleman, 4 Mo. App. 321: “In the language of the supreme court of the United States : This formula, £ or his legal representatives,’ embraces representatives of the original grantee in the land by contract, such as assignees or grantees, as well as by operation of law, and leaves the question open to inquiry in a court of justice as to the party to whom the certificate of patent or confirmation shall enure. Hoagland v. Page, 2 Wall. 607.” In Loss v. Ins. Co., 41 Mo. 441, it is said: “Legal representatives and personal representatives, in the general or professional sense, mean simply executors or administrators. Although this is the primary, legal meaning, they are often construed differently, if it is clear that the intention was to vest the estate in a different class of persons. * * * The intention must control, and that intention is to be gathered by a view of the context, subject-matter, and the purpose to be attained.” To the same effect see: Waneelce v. Lembea, 71 111. 19 ; Bowen •». Long, 89 111. 19 ; Kreber v. Affiy Gen., 6 Serg. & R. [Pa.] 81; Phelps v. Smith, 15 111. 572; Railroad v. Bray on, 8 S. & M. [Miss.] 234. Here the “purpose to beattained” and “ the subject-matter” was the security of a negotiable note, a note which passes like money, from hand to hand, by a mortgage on personal property. The mortgage was intended to secure the holder of this note whoever he might be. It is necessary to the accomplishment of this purpose that the holder of the note should be enabled to enforce the security on default in payment or other condition broken. (2) The act of appellants in making levy and carrying off property was wrongful and no demand was necessary. The officer who made levy was not only a constable, but he was appellants’ clerk. , His act was their act, without further notice to them.