previous vote or promise. does not entitle him to it. The rule which excludes compensation applies to the president chosen by the directors from their own number. and also to a treasurer when a director." The supreme court of Kansas, in a late case, after an exhaustive examination of the question, conclude: "We do not agree with all the authorities heretofore cited as to the lack of power on the part of the di.rectors to appropriate money in payment of the salary of the cashier or other officer after the services have' been rendl"red, and in cases when such cashier or other officer happens to be a director. We think the rule is, in the absence of positive restrictions, that. when no salary is prescribed. one appointed to an executive offine. like that of cashier, is entitled to reasonable compens<Ltion for his services. and that the directors have power to fix the salary after the expiration of the term of office. and this, though such appuintee is also a director. and continues to be such while holding the independent office." , For extra services an officer receiving a salary is not entitled to compensation. unless there was an express agreement. or such circumstances as to raise a presumption, that the parties intended them to be paid for; and the mere fact that the services were rendered would not raise such presumption. l In Santa. etc.· Ass'n v. Meredith. 2 on the contrary. the doctrine seems to be announced that in the absence of circumstances indicating a different understanding, merely rendering the services would raise an implied contract for compensation whenever that result would follow between private individuals. Cincinnati. May, 1884. J. C. HARPER.
130 Mass. 391.
v. First Nat. Bank of Gloucester,
'49 Md. 389; S. C. 33 A.m&. Rep. 264.
and another v. LANGBEIN and others.
April 29, 1884.)
(Circuit Court. N. D. Iowa. E. D.
FRAUDULENT CONVEYANCE-CHATTEL MORTGAGE-RESERVATIONS IN FAVOR 011' MOR'l'GAGOR.
A chattel mortgage reserving to the mortgagor the to dispose of the goods in the usual course of trade, provided the stock be kept up, is void with respect to the creditors of the mortgagor.
2. SAME-NOT CURED BY POSSESSION A.FTERWARDS TAKEN. Possession taken hy the mortgagee under a chattel mortgage, originally void as in fraud of before its validity is atlacked by them, is affected with the ol'iginal fraUd, and gives the mortgagee no rights against the mortgagor's creditors, who can at once attach the property.
Hende1·son. Hurd rf: Daniels, for plaintiffs. O. P. Brown and Robinson. Powers et Lacy, for garnishees. SHIRAS, J.' The defendants. C. H. Langbein & Bro., were engaged in the mercantile business at Ossian, Iowa, and on the twenty-eighth day of September, 1883, they executed a chattel mortgage on their entire stock of merchandise. together with their store fixtures and books of account, and all the additions t.o be made to the stock, to se· cure payment of a promissory note of $916.70, due one Louisa Wight, payable September 28, 1884. And on the same day they executed a
second mortgage on the same property to one Ferdinand Langbein, to secure a promissory note of $575, payable January 2, 1885. On the ninth of October, 1883, they executed a third mortgage on the same property to Davis & Madary to secure a note of $248.19, payable October 9, 1884. Each of these mortgages contains the provision that the "grantors have. the right to dispose of the goods in the usual course of trade, provided they keep up the stock.". Between the twenty-sixth of July and twenty-eighth of September, 1883, the plaintiffs sold on credit to C. H. Langbeln & Bro. goods to tite amount of $518.34, and on the fifteenth of October, 1883, this suit was brought to recover therefor, a writ of attachment being issued, was served by garnishing M.'J. Carter, Louisa Wight, F. Langbein, Davis & Co., and others, service being made October 16, 1883. By agreement, the answer given by M. J. Carter stands as the answer of all the garnishees, and from it it appears that on the tenth of October, 1883, M. J. Carter, as attorney and agent for the several mortgagees named, took possession of the mortgaged property, and has since converted the same into cash, and holds the money thus realized in his possession, claiming that it should be applied in payment of the mortgages above described. The plaintiffs claim that the mortgages are void as against creditors, and the question for determination· is as to the validity of the mortgages as against the attaching creditors. As the mortgages in express terms provide that the mortgagors should remain in possession, with the right to sell the mortgaged property in the usual course of trade, they come within the rule laid down in Robinson v. Elliott,' 22 Wall. 513, and Orooks v. Stuart, 2 McCrary 13, S. C. 7 FED. REP. SOl, wherein it is declared that the reservation of such rights to the mortgagor, upon the face of a mortgage, shows conclusively that it is intended as a shield and protection to the mortgagor, and operates as a fraud upon the rights of the creditors of the mortgagor, and is therefore void. On behalf of the mortgagees it is claimed that, granting the correctness of the rule recognized in the cases cited, it is not applicable to the present case, for the reason that the mortgagees, through their agent, had taken possession of the property before the writ of attachment in favor of plaintiffs was served by garnishment of the mortgagees and their agent. As already stated, the answer of the garnishee shows that he received possession of the property under the mortgages as agent of the mortgagees. The facts do not present a case wherein all rights under the mortgages were abandoned, and the parties entered into a new and wholly independent arrangement, whereby the goods were placed in the hands of the garnishee as a pledge for the payment of the debts due the parties named as mortgagees. The possession of the goods was delivered to the mortgagees for the purpose of fulfilling the conditions of the mortgages, and the possession was held under the terms thereof, and not by virtue of any new con-
WELLS t1. LANGBEIN.
tract: The point to be decided, therefore, is whether the taking pOSsession of the mortgaged property by the mortgagee in pursuance of the terms of the mortgage, before any creditor attacks the validity of the conveyance, will validate a mortgage Which contains provisions showing that it is a fraud upon the rights of creditors. Counsel for the mortgagees cite in favor of the affirmative of the proposition the cases of Congreve v. Evetts, 10 Exch. 298; Read v. Wilson, 22 Ill. 379; Brown v. Webb, 20 Ohio, 389. In Congreve v. Evetts the question was as to the effect of a bill of sale of future crops. It was held thl1t the execution of the bill of sale did not create any lien, legal or equitable, upon the future crops, but that if, after the crops were growing, actual possession thereof was delivered to the creditor, he could hold the same against an execu· tion creditor. The point decided was that an executory contract, which may be ineffectual at its date to create a lien upon property not then in existence, may be rendered binding and complete by delivery of possession after the property has been created or acquired. In Read v. Wilson the decision is based upon the construction of a statute then in force in Illinois, by which it was provided that by the insertion of certain clauses in the mortgage the mortgagor might be authorized to remain in possession for two years. 'rhe court held that the provisions of the mortgage did not comply with the requirements of the statute, and did not therefore authorize the mortgagor to remain in possession, but that as the mortgagee took possession of the property before any other creditor obtained a lien thereon, such possession would cure the fraud, if any, imputed by reason of the fact that the mortgagor had continued in possession for a time contrary to the terms of the statute. In Brown v. Webb it appeared that one Gamier, insolvent, made a transfer of property to one Bour, which transfer was in fraud of his creditors. Brown & Co., creditors of Garnier, with knowledge of the fraud in the transfer from Garnier to Bour, procured, with Garnier's consent, a chattel mortgage from Bour upon the property transferred to him, to secure the debt due them from Garnier. The court held that the transfer from Garnier to Bour, though void as against creditors, was good as between them, and conveyed the legal title to Bour, and that Webb & Co. were justified in getting security for the debt due them from Garnier, by taking the mortgage from Bour, as thereby they got security on Garnier's property, the title of which was in Bour. Of these cases, therefore, the only one that has any bearing upon the question at issue is that of Read v. Wilson, and in that case the court was ruling solely upon the fact that the mortgagee had not promptly taken possession under a mortgage which, by its terms, required him to take possession. In Robinson v. Elliott and Crooks v. Stuart, supra, it appears from the statement of facts in each case that possession under the m.ort-
gage hlld been taken before the attaching creditors had obtained any lien upon the property, yet it was not held that this fact in any way affected the conclusion announced. ffhe supreme court of California, in Chenery v. Palmer, 6 Cal. 123; the supreme court of New York, in Delaware v. Ensign, 21 Barb. 85; and Dutcherv. Swartwood, 15 Hun, 31; the court of appeals of New York, in Parshall 54 N. Y. 18; the snpreme court of Wisconsin, in Blakeslee v. Rossman, 43 Wis. 116; and the supreme court of Minnesota, in Steinv. Munch, 24 Minn. 390,-all hold that where the mortgage is void for fraud as to creditors, 'taking possession there. under, before a lien is obtained on the property in favor of a creditor, will not render it valid. The fraud existing in the mortgage itself vitiates all steps taken under it. Without citing further authorities upon the proposition, it seems to me clear that the cases last named announce the true rule. If the mortgage under which possession is taken is fraudulent and void as to creditors, then the effort to enforce it by taking possession under it cannot purge it of the existing fraud, nor render valid as against credo itors that which the law, on grounds of public policy, declares to be fraudulent and therefore void. When a chattel mortgage, bill of sale, or other like instrument is imperfect through insufficien'i. description, or because the property is not then in existence, or because the mort· gltgee did not promptly take possession, or record the mortgage, or for any reason not bottomed on fraud, then taking possession may render complete and valid that· which was before incomplete; but when the invalidity of the conveyance is caused by the fact that it is a .fraud upon the rights of third parties, upon what principle can it be held that enforcing the fraudulent mor,tgage, by taking possession under it, shall have the effect of validating it? The title and rights of the mortgagee are based upon the mortgage. He enters into pos· session under and by virtue of the mortgage. If the mortgage is void as to creditors by reason of fraud, the title and possession based thereon must, if attacked by creditors, fall with the foundation on which they rest. Any other rnle would in most cases enable the parties to the fraud to reap the benefits of their fraudulent practices, as in that case a debtor could give a chattel mortgage upon his property to a favored creditor or friend, remain in possession, continue to sell in the usual course of trade, use the proceeds for his own purposes, and still protect the mortgage from successful attack by being suffi· ciently on the alert to ,hand over possession to the mortgagee j uat before the injured creditors make a levy upon the property. As the mortgages to Louisa Wight, F. Langbein, and Davis & Madary are void as to creditors by reason of the stipulations therein contained, the property passing into the possession of the mort· gagees was the property of C. H. Langbein & Bro., for the value of which the garnishees must respond to the plaintiffs, so far as the same may be needed pay the judgment in favor of plaintiffs.
GARTSIDE OOAL 00.
v. MAXWELL and others.!
April 22, 1884.)
(Oircuit Oourt, E.
DEPOSITIONS-PLACE OF TAKING.
Depusitions will not be suppressed because taken at a different place from the one named in the notice, if taken in the presence of both parties or their represen tatives.
The certificate of the officer before whom depositions have been taken should state that he is disinterested, and is not the attorney 01' counsel of either party to the suit. Where the certificate fails to state these facts, leave will be given to with draw the depositions in order that the certificate may be amended.
At Law. Motion by defendant to suppress depositions taken in behalf of the plaintiff. Hiram J. Grover, for plaintiff. Henry Hitchcock, Lucien Eaton, and Walker d; Walker, for defendants. BREWER, J. This is a motion to suppress the deposition of a witness taken on behalf of the plaintiff. The first ground of the motion is that there is a defect in this, that the notice named the office of - - - , No. 24 Gay street, Knoxville, Tenn., as the place of taking the deposition, while the certificate states that it was taken at the office of - - - , No. 124 Gay street, Knoxville, Tenn.; but as the counsel and parties on both sides were represented, I cannot think that that defect is immaterial. The description, though partially incorrect, was sufficient. It named correctly the person at whose office the deposition was taken, and the only defect was in the street number of the office. Besides, the party served appeared, and the sole object of notice is to give an opportunity to appear. The other ground of the motion is, that the certificate does not set forth that the officer taking the deposi.tion was not of counselor attorney for either of the parties, and that he was not interested in the event of the cause. I think that is a defect. It should appear affirmatively on the face of the certificate that the officer taking the deposition was disinterested, just as much as it should appear that the officer. was one of the class of officers authorized to take depositions. The mere signature of A. B., without any designation of his office, or any description of his capacity to take the deposition, would be insufficient; and so the fact that he is disinterested should appear affirmatively somewhere in the certificate. It was affirmed and denied by the respective counsel on the argument that a different ruling had been made by my predecessor, but no case was cited. It is true that there are a couple of cases in 2 Cranch which seem to differ from this view, yet I think the
by Bcnj. F. Rex, Esq.., of the St. Louis bar.