ARGUED AND DETERMINED
CAPITAL CITY BANK OF DES MOINES
HODGIN and others. 1
(Oircuit Oourt, S. D. Iowa, O. D. June 4,1885.)
CHATTEL lIIORTGAGE-DELIVERy-Two MORTGAGES EXECUTED ON SAME DAYRECOHDING-PmORITY-PREVIOUS AGREE)-IElST.
When a party, to secure an indorser of his notes, in pursuance of a previous agreement, executes and files for record a chattel mortgage on his stock in trade, and at the same time executes another mortgage on the same goods, to secure a creditor, but does not file it for record until the next daY,in order that the indorser may have a first lien on his property, and neilhcrof thc mortgagees knows at the time of the execution of the mortgages, or at the time of their filing for record what has been done, but both of them, on learning what has been done, accept them, the mortgage first recorded willlJe a first lien on the goods.
In Equity. W. L. Reed and Goode, Wishard & Phillips, for complainant. Nonrse & Kanjfman and N. B. Raymond, for defendants. SHIMS, J. In the year 1883 Frank L. Hodgin was engaged in the clothing business at Des Moines, Iowa. In November of that year he executed upon his stock in trade two mortgages: one to his mother, Adaline Hodgin, who resided in Ohio; the other to the Capital City of Des Moines. The indebtedness secured by these mortgages coming due and remaining unpaid, possession of the stock was taken under the mortgage to Adaline Hodgin, and thereupon the Capital City Bank brought this suit, claiming the prior right to and lien upon the mortgaged property. 'fhe question upon which the rights of the parties depends, is that of priority. It appears from the evidence that Adaline Hodgin had indorsed the notes given by F. L. Hodgin to Leon Marks & Co., of Cincinnati, for goods purchased of them, and that she had been assured that in case of trouble she should be protected by security against
by Robertson Howard, Esq., of the St. Paul bar.
such liability. About the first of November, 1883, F. L. Hodgin vis. ite,d his mother at her home in Ohio, and she testifies that on that occasion it was agreed and understood that, upon the son's return to Des Moines, he should execute to her a chattel mortgage upon the stock of goods then owned by the son, and kept in the store at Des Moines. The business at Des Moines had originally been carried on by Robert and FI;ank L. Hodgin, under the firm name of Hodgin Bros.; but, during the summer of 1883, Robert withdrew from the firm. The indebtedness of the Capital City Bank was for money horrowed and used 'in the business .of the firm; and it appears from the evidence that the president of the bank had been assured that, in case of need,the bank should be protected by the execution of a mortgage upon the stock. On the twelfth day of November, 1883, F. L. Hodgin signed two mortgages covering the stock: one to his mother, and the other to the bank. lIe instructed his attorney, who drew up the instruments, that he wished to give his mother the preference, by giving her the first lien npon the property. The attorney informed him that this could be done by recording the mortgage to the mother befor(;l the one· to the bank. The mortgage to Mrg. Hodgin was accordingly taken by the attorney to the recorder's office the afternoon of the twelfth of November, and filed for record. And on the next morning, the mortgage to the bank was, in like manner, filed for record. At the time of the signing and filing for record of these instruments, neither of the mortgagees knew of the signing of the same. On or about the fourteenth of November, 1883, the president of the bank, having learned of the execution of a mortgage to the bank, sent one of the employes of the bank to the recorder's office to make inquiry concerning the same; and the recorder informed him that two mortgages had been filed: one to Mrs. Hodgin, and one to the bank. A few days after the recording of the mortgage to Mrs. Hodgin, she was infol'med by letter of its execution. Upon part of the complainant, it is claimed that neither mortgage took effect until a complete delivery had been made to the mortgagee; that, under the doctrine laid down in Oobb v. Chase, 54 Iowa, 253, S. C. 6 N. W. Rep. 300, the fact that the mortgage was recorded for the benefit of Mrs. Hodgin, and knowledge of its execution communicated to her, would not, without affirmative action upon her part, amount to an acceptance of the instrument, so as to complete the delivery of the mortgage. In the case of Oobb v. Ohase it appeared that there was an agreement that a mortgage should be given upon a certain kind of property, to-wit, live-stock, but the number, nor the specified animals, was not agreed upon; and under this state of facts the supreme court held that the previous agreement could not be construed as equivalent to an acceptance of the mortgage. In the case of EVM'ett v. Wh'itney, 55 Iowa, 146, S. C. 7 N. W. Hep. 487, a similar question came before the same comt, and it was
OAPITAL CITY BANK V. HODGIN.
held that a delivery would be held to have taken place ber-anse it had been agreed that the mortgagor was to select the property to be mortgaged, and was to deliver the mortgage to the recorder. In the case now before the court the agreement between Mrs. Hodgin and her son was that a mortgage was to be executed upon his return to Des Moines upon his stock in trade kept in his store at Des Moines. And this was the identical property included in the mortgage. The facts in this case tend more strongly to prove a delivery and acceptance of the mortgage than those held sufficient in Everett v. Whitney. Many cases hold that the passing of a deed or mortgage from the actual control of the grantor into the hands of a third party, the conveyance being beneficial to the grantee, raises a presumption of delivery and acceptance. Tompkins v. Wheeler, 16 Pet. 118; Robinson v. Gould, 26 Iowa, 89; Mitchell v. Ryan, 3 Ohio St. 377. As it appears from the evidence that the mortgage to Mrs. Hodgin was executed in pursuance of a previous agreement, and that she has recognized its validity by taking possession of the property under it, there can be no question that it is binding and in force between the mortgagor and the mortgagee; and that, as between them, it took effect at the time it was delivered to the recorder. The bank holds under a mortgage, which it clearly appears was intended by the mortgagor to be subject to the mortgage executed to Mrs. Hodgin. When knowledge of the execution of the mortgage to the bank was given to the officers of the bank, they knew that a mortgage had been executed to Mrs. Hodgin, and filed for record the day before the filing of the one to the bank. This was notice to the bank that the mortgage to it was intended to be the second lien upon the property. The bank was not bound to accept this mortgage. Had it refused to accept the second mortgage, and obtained a lien, by attachment or execution, upon the property, it could then have presented the question of its rights as against the mortgage to Mrs. Hodgin, upon the theory that it had acquired a lien upon the property before a complete delivery of the mortgage to Mrs. Hodgin. Instead of so doing, however, the bank accepted the mortgage, and claimed only the rights conferred thereby·. The evidence shows that the mortgagor intended to create a second lien upon the property by the delivery of the mortgage to the bank. There is nothing disclosed in the evidence which creates an equity in favor of the bank as against Mrs. Hodgin, and consequently there is nothing which would justify the court in defeating the intent of the mortgagor in the execution of the two mortgages. The mortgagor intended to give the first and paramount lien to Mrs. Hodgin. She has accepted the mortgage as executed, and taken possession of the prop· erty under it. The mortgagor intended to create a second lien upon the property in favor of the bank, and with that intent executed the second mortgage. The bank has accepted the mortgage, and, under the facts of the case, must be held to have accepted it as it was in·
tended by the mortgagor. The evidence shows that the property included in the mortgages has been sold, pending this litigation, by consent of all interested, and that it 'did not realize enough to pay the amount secured by the first mortgage. As complainants could only reach any surplus left after payment of the prior lien, it follows that there is nothing left to be decreed to complainants, and the .bill therefore must be dismissed; and it is so ordered.
BUN MUT. INS.
V. !SOARD OF' 1.JIo.UIDATION OF THE CITY OF NEW
lCitcuit Oourt, E.
May 14, 1885.}
Where there are two classes of creditors with already existing debts, a legislative act could not, by transfer or appropriation of a debtor's property, give to one class a preference, to the exclusion of the other class, to such a degree as to give to one class an immediate and annual source of payment, and postpone to the other all payment for, possibly, a period of 40 years. See Succession of Taylor, 10 La. Ann. 510; Milne v. Schmidt, 12 La. Ann. 553. It is no more in the power of law makers than of debtors to effect an unequal distribution of the debtor'sestate by making an application or transfer thereof among creditors already existing. Atchafalaya Uo. v. Bean, 3 Rob. (La.) 415. 2. MUNICIPAL BONDS OF THE CITY OF NEW ORLEANS-AcTS OF LA. No. 58 OF 1882, AND No. 67 OF 1884, CONSTRUED. Whatever provisions are contained in the act of 1882 subjecting any property or means of payment, which could be lawfully appropriated, to the payment of the extended bonds or coupon certificates, having been assented to on the part of the holders by accepting of the extension, is a contract which cannot be varied by any change or substitution, no matter how minute, and will continue in its operation upon whatever has been so appropriated till the obligations thereby secured shall have been fUlly paid. If the language in the act of 1882 did include the excess of the premium bond tax and the other property included in the grant under the act of 1884, while it would be valid as a contract between the complainants, the holde.rs of the new obligations, and the city, it would be void so far as concerns the judgment creditors whose judgments are for debts existing antecedently to the passage of the act of 1882, under which the complainants claim, up to the point of the said judgment creditors being admitted to a proportionate or ratable share of such excess and other property.
In Chancery. On rule for an injunction. Henry J. Leavy, E. D. White, and Eugene D. Sanders, for complainant. Henry 0,. Miller, for defendant. BILLINGS, J. This matter is submitted upon a bill of complaint, and affidavits and exhibits, on behalf of the complainants, and affidavits and documents on behalf of the respondents, upon an application for an injunction. The complainants are holders of "extended
by Joseph P. Horner, Esq., of the New Orleans bar.