Bowling v. Armourdale Bank
Bowling v. Armourdale Bank
Opinion of the Court
The opinion of the court was delivered by
This is a controversy between a mortgagee and attaching creditors. M. V. Ingram, a merchant at Kansas City, borrowed money from time to time from the Armourdale Bank for the purpose of carrying on his business, and on the morning of November 18, 1890, he was indebted upon a note held by the bank in the sum of $2,000. He had purchased goods upon credit, and upon the day named the creditors were pressing him for the payment of their claims, and had taken the preliminary steps for an attachment of his stock of goods. The cashier of the bank, upon learning of the situation, hastened to obtain security. A mortgage was made by Ingram upon the stock of goods to secure the $2,000 note, and upon the suggestion that an additional amount of money had been obtained on the afternoon of the same day — the exact amount of which was not then known to the parties present — a note and mortgage for $1,000 were executed for the purpose of securing this indebtedness, and it was understood at the same time that the excess, if any, should stand as security for 'any expense that there might be connected with litigation or the foreclosure of the $2,000 mortgage. The mortgages so executed
The validity of the $2,000 mortgage is conceded, but the attaching creditors claim that the $1,000 mort■gage was made without consideration, for the purpose of delaying and defrauding creditors ; that both constituted one transaction, and therefore that the fraud committed as to the -$1,000 mortgage tainted the whole transaction and vitiated both mortgages. To enforce this view, an instruction was asked that under the evidence the execution of the two mortgages constituted parts of one and the same transaction, and its refusal is the principal error assigned.
Upon the testimony, the jury found that the two mortgages did not constitute a single transaction, and further, that the taking of the second mortgage was not for the purpose of delaying or defrauding other creditors of Ingram in the collection of their debts. Under the testimony, the court ruled correctly in refusing to instruct the jury that both mortgages should be treated as parts of the same transaction. The $2,000 mortgage was first made and delivered. It se
Whether both mortgages were a part of a single transaction was clearly a question of fact for the determination of the jury. One was for a debt of long standing and of a definite amount, and was executed and delivered before it was determined between the parties what security should be taken for the overdrafts of that day. Although the cashier intended to protect the bank by security or otherwise, and although the mortgages were proximately executed, they were so far distinct and independent of each other as to leave it an open question for "the jury whether they should be treated as parts of the same transaction. The testimony sustains the finding made by the jury, and it having been determined that they did not constitute one transaction, there is but little left in the case for consideration.
The $2,000 claim was a bona fide debt. It was competent for Ingram to give a preference and to secure the bank by a mortgage upon his merchandize. The mortgage was taken in good faith, and being a separate, valid transaction entitled the bank to the possession of the mortgaged goods. The payment of that
The taking of a second and separate mortgage, even if fraudulent, would not defeat the right of possession under the first. As we have seen, however, the testimony does not compel the conclusion that there was bad fairh or fraudulent intent in taking the second mortgage. There was an actual indebtedness of $500, and the circumstances explain the necessity for haste and the reasons why the parties did not definitely ascertain the amount of the debt. The fact that the amount of money named in the mortgage is greater than the actual indebtedness may be received as tending to show bad faith, but it is not conclusive, and may be explained consistently with good faith in the mortgagee. Nor is the antedating of the note conclusive evidence of fraud, but, like other circumstances connected with the transaction, is to be submitted to the jury upon the question of the good faith and honesty of purpose of the parties. (Hughes v. Shull, 33 Kan. 127; Bush v. T. G. Bush & Co., 38 id. 556; Allen v. Fuget, 42 id. 672.) The idea of Quarles, that part of the $1,000 mortgage should stand as security for expenses, including attorneys’ fees, in protecting and foreclosing the mortgages taken, was wrong; but he testified, and the jury have believed his testimony, that he entertained the honest belief that such expenses might be allowed. The main purpose of the-mortgage, however, was to secure the payment of an existing bona fide indebtedness, the exact amount of; which was uncertain; and the fact that a part of the-debt secured is invalid does not necessarily avoid the mortgage. The erroneous notion of the parties concerning the right to secure attorneys’ fees, among-
What has been said disposes of the material objections to the rulings of the court in charging the jury. All of the questions raised upon the instructions have been considered by the court, and in them we find no prejudicial error or anything which calls for further comment. The verdict appears to be sustained by the testimony, and we do not regard the objections to the special findings to be important.
The judgment of the district court will be affirmed.
Reference
- Full Case Name
- T. B. Bowling, as Sheriff of Wyandotte County v. The Armourdale Bank
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- 1 case
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- Published