784
J'EDlllRAL REPORTElf,
vol. 5L
reIiefin oourt equity n1tlst as 1l.'llcOiJditi6n:prebedent'show that he has or able ,to,do, all the essential and material acts requiredofbiin in thespebiflc'executionof the, contract accordrngtoits:terms."Vfhe court :stipulated of law have the full benefit of the for in a contract,in addition to a right of action for any injury done in tlie J>8.sf by faihlre'on the; patt iM;tbe plaintiffto'obserre ,it, on .terms more favora.ble than he c6utdclail:ll the·same in equity. " I am of the opinion that it wouldhavebeeniright dnd lawfuI'to h!l:ve granted this motion if.it:had beenmade"promptiliyalter the attachments were issued, and before other paymedt$;'beoatne due), or if the payments had been continued·eachmonthaccorcUng to the contract. This court'cannot, in an action 'at :law, exercise the powers of a chancelldf,uor deeree that both parties fulfill their promises. It can only determine their rights according to what has been·done. Inasmuch as the defendant has not liVild,up to this agreement himself, Ihold that his only remedy for the breach of it, alleged to ,have been committed by the phlintiff, is to be found in an. action for damages. The motion to dissolve the attachments is denied.
of
HAT
:MALqpL1>t et al., (WAPLES, Intervener.) 9,1892.)
(Circutt Court qf.Appeals, Eighth. Circuit.
No.111. I
1·. FBDBRA.L .COURTS..,..INTBRPRBTA,"Oli 0'11 ij1'ATO'l'IlB-FpLLOWlNG .STATlI CoURTS.
.
8." C,J:lATTllL MORTGAGB-WUATCoWITITlJTIlS. . :. An instrument executed the Indian Territory conveyed a stock of goods toa trustee with right to immediate possession, but was conditioned to be void if the grantor, within ,60 days, should· pay the ,amounts due certain creditors named therein: othel'Wise the trustee was to sell the goods, and apply the proceeds to the payment of the grantor's debts, in the order named. Held that, under the law of the territorY as adopted from Arkansas, the instrument was, in effect, a mortgage with a power of sale, and not an assignment fOl' the benefit of oreditors. B. CUATTELMoRTGAGllS-DllPECTIVB ACKNOWLEDGMllNT-POSSESSION BY MORTGAGBE. Actual possession of mortgaged chattels by the mortgagee, before the rights of third persons have intervened, renders immaterial any defects in acknowledging the mortgage.
In delillrmining whether an instrument.execUtlld in the Indian Territory is an assignment for the benefit of creditors' or a mortgage, the circuit court of appeals will follow.the. decisions of the: court ilf Arlransas in the construction of the Arkansas statute governiugassul;nments,wbicll was put in force in the Indian Territory by 26 8t. at Large, pp. 81, 94. v. It'low, 48 Fed. Rep. 152, and Appalos v. Bmely, 4,9 Fed. Rep. 401. fOllOWed,
In Error to the United States Court in: the Indian Territory. Action commenced by attachment by the Hat Company against John Malcolm. Paul Waples intervened, claiming the attached goods under a deed of trust from Malcolm. Judgment and verdict for theintervenAr, and for defendant Malcolm on the issue as to the attachment. Plaintiff brings error. Affirmed.
RAINW
B;4T 00.
11.
MALCOLM·
735
. , ,tatement1:>yCALD:wEL:L, Circuit Jupge: On the day of January, 1891, John Malqolm made and delivered to Paul Waples, the thereiQ named, the following instrument: "DURANT. INDIAN TERRITORY.
"Know all men. that I. JohnMalcolm, a merchant and doing business at. Durant, Indian, Territpry. in cOllsideratio[). of one dollar to me in haud paid. have this ,day and bytheseprt'sentsdo bargain. sell, and deliver to Paul Waplps. of Denison, the following described personal property. to wit: [Here follows 'a description of the property. whidh consillted chiefly of a stock of condition of this conveyance is such, however. that whereas. I goods.] am'lndebted' to the Leeper Hardware Company $2,552.23, and to Waples, .8ft .Co. two notes aggregating $745.00. not including interest or atand toWa,terman. Stur &,Co. $224.95, and to Burton, Lingo & Co. $18,4.00; and to John R. C/lrrestate $142.90, and to various other na,med A and B. ,hereto annexed and mllde a. part hereof. in the imms thl'irrespectiv,e n,ames: .Now, if. at anytime within sixty daysff,Qq! I payoff anddischarge all·of the indebtedness described interelilt, this conveyance shall bl! null and void.llon(1 of no 01' effect. and propel'ty shall ,tome. J fail s;\id with accrued be interest, if any, withinthesi)l;ty days aforesaid. then said Paul Qr lind it shall be his dllty. at the expiration after first,ad,vertising the time, terms. and place of sale for of said slx!'Y ten days prllvious to the day of sale in the Denison Dailyllerald; to the aforesaid· property thel}.on hand in the fr,ont of said storehouse to the ,highest .at public out(:ry for cash. Pelldi ng said sale said Paul Waples shall take ex.clusive possession of all the aforesaid property in person or by his agents or employes. and the merchandise he shall have the right to sell in due cOllrse of business for cash only. it appearing to me that such sales would operate to the benefit of all concerned. The sums of money realized from the salelil of afprt'lilaid property, or any portion thereof. whet11llr at public Sllle or private sale, In due course of business pending the public sale. and al\ sucb as may be realized at public sale, shall be appropriated as follows: Firs,t. Towards payment of the reasonable expenses of executing this trust. induding reasopaiJ1e compensation to such agents and serva,nts 80S it may be Waplt'..8 to employ, and reasonable compensation for necessary fOfsaid $75.00 per month and board; but it is. dishis pwn servicps, not that whatever attention I give to the property herein conJ may render the said Paul Waples. shall be veyed, or voluntary onmy part. and (or wl,lich I. am to receive nothing. Second. To the payment of.the claim ,of said Leeper H!lrdware Co., Waples. Platter & Co., Lingo, Waples & Co.· Waterman. Star & Co.· Burton, Lingo & Co·· John Carr estate.in full. inc.luding interest. If .not enough for that purpose, the same shall be prorated between them. Third. To the payment of the ereditorlil named in Schedule Ain full ·. .If not enough for that purpose, the balance between them. To the payment of creditors named shall bt' in Schedule B in full; and. if not enough for that purpose, the bulance shall be prorated between them ·. Fifth. The balance, if any. shall be paid to me. Witness my hand this the nineteenth day of Janual'y. 1891. "JOHN MALCOLM."
n.
On the day the instrument was executed, Waples, the trustee,took actual and exclusive possessioh of the personal property therein described, which he retained until the same was taken from him in the manner Two days a{tElr the execution of this instrument and now to b.e
736
J'EDERAL REPORTER, vol.
51.
delivery of the property to the trustee, RainHat Company, brought. suit by attachment :in the United in the Indian: Territory against John Malcolm; the grantor in,saidJostrument, for $295.75, aud caused the marshal to levy the writ ofattaohment 00 the personal property so cODveyed by Malcolm to W..plee., 'l'he latter intervened in the suit, and claimed the property as ti'u\$Ie'uoder said instrument. The trial, court held that the instrument On was a deed of trust in the nature of a mprtgage, and so in$tructeq, jury. " . 'The, court, at the request of the plaintiff in error, instructed the jury"That where an debtor executes one or more instruments, by whatsoever name or form, with the intent that they shall operate as a security to 'his cI;editor or creditors, thus giving time to enable him to raise funds to meet his debts, then such instrument or instruments constitute a mortgage; but it the debtor executes one or more, instruments, by whatsoever name or form, with the intention, expressed or implied, that the same shall operate as an absolute conveyance of the property to the grantee, to enable him to raise a fund'to pay the debts of the grantor, then such instrument or instruments constitute an assignment. The testis this': If the debtor title to his propertY,lJnd the same is delivered actually or conditionally to the grantee merely as a security for his debt pendinA" a day to be fixed by the instrument, within which time the debtor may pay the (iebt and regain his property, then theinsttument or instruments fJonstitute a mortgago; but if the debtor transfers to the grantee with power to convert the property forthwith into cash to pay debts, then the instrument is an assignment, although the debtor may have reserved in the instrument the right to payoff the debts, and regain his property, before a final sale thereof." The court gave other instructions, and among them the following: "The court instructs the jury the form of an instrument, or the name given to it bY,the parties, is not conclusive of the character of the instrument. A in form may be conditional and defeasable in fact, while an instrument with formed defeasance may be intended to be and may operate as an absoluteconveyance; the intention of the parties as gathered from the instrument, and all the facts and circumstances surrounding its execution,determines its character. The court instructs thejl1ry that where an insolvent debt6r recognizes the fact that he can no longer go on in business, and determines to yield the dominion' of his entire. estate, and in execution of that purpose, or with the intent to evade the statutes, transfers all or substantially all .of his property to a trustee for the benefit of his creditors, with the intent to part with the title as willI 8S the control of such property, then shch instrument or instruments by which such transfer is made will' be held to operate as an assignment. The court instructs you that you are the sole jUdges of the evidence and its effect, and it is!or yOIl to say from all the evidence in this cause whether Or not the instruments read in evidence were to o,perate 8S an assignment .or mortgage; and in determining this you will take into consideration whether or not the grantor conveyed all or a greater portion of, his property to the grantee; whether or not the debtor included all of his creditors in said instrument; whether the debts thereby seclIred, or a material portion thereof, had matured; whether the defeasance in the instl"Ument was bonafide, or whether it was a mert;! device to cover his real intention. together with all the other facts and cir,cumstances connected with the transacUons; and from all these facts and circumstances you will, under the law given you by the court, determine by your verdict whether or
BAINWATER-BOOGBER BAT
co.
tI. IIALCOLII.
737
DOt the histrumeot read io evidence was intended to ope:rate as a mortgage or u 3n There was a verdict and judp;ment for the intervener, and a verdict and judgment for the defendant Malcolm on the issue on th& attach· I ment, and the plaintiff sued out this writ of error. W. T. Hutchings and L. P. SandelB, (Sandell &: Hill, on the brief,) fOI plaintiff in error. G. G. RandeU, for defendant in error Malcolm· .A. G. Moseley, for defendant in error Waples. Before CALDWELL and Circuit Judges, and SBmAs, District Judge. CALDWELL, Circuit Judge, (after stating the/acts.) The case presents but a single question: Is this instrument a deed of trust in the nature ora mortgage or a deed ·of assignment for the benefit of creditors? If the former; it is valid; if the latter, it. is void for noncompliance with the requirements of the statute in force in the Indian Territory regulating assignments for. the benefit of creditors. The statute in question is an Arkansas sl;at)lte put in force in the Indian Territory by the act of conthedecisiol)s gress of May 2,:18.90. (26 St. pp. 81,94, Q. 182, § 31,) of the supreme court of that state construing the statute, and determin· ing when an instrument is a deed of assignment and when a mortgage, are followed by this court in -cases coming"from that territory. Sanger v. Flmo,4 U. S. App. 32, 1 C. C. A. 56,48 Fed. Rep. 152; AppoloB v. Brady, 4 U. S. App,. 209, ,1 C. Fed. RElP. 401. Construed in the Hght of the decisions ofthe supteme court of Arkansas, this illlltrpment o,n its is a deed of trust in the nature <>,f a mortgage,-the legal equivalent of a mortgage with a power of sale,-and not a deed of assignment for the benefit ofcreditors. Richmond v. Missi88ippi Mills, 52 Ark. 30, 11 S. W. Rep. 960; State v. 'Dupuy, 52 Ark. 48, 11 ... W. Rep. 964; RobsDnv.TomlinsDn, 54 Ark. 229,15 S. W. Rep. 456j Penzel Co. v. Jett, 54 Ark. 428, 16 S. W.Rep. 120. Reviewing these decisions; Judge SRmAs, in delivering the opinion of this court in Appolos v. Brady, 4,U. S. App. 209, 1 C. C. A. 299, 49 Fed. Rep. 403, said: "These cases dedare the test to be, has the party made an absolute appropr.iation of property as a means for raising, a fund to pay debts, without reserving to himself in good faith an equity ofredemption in the property conveyed?" There is in this deed what the learned counsel for plaintiff in error not inaptly characterizes as "an apparently iron-clad defeasance." There is nothinK on the face of the deed to warrant the court in declaring this defeasance clause a nullity, or from which the court can say it was not inserted in the instrument in good faith. Whether the mortgagor enter. tained an honest hope or expectation of redeeming the property, or whether the defeasance clause was inserted as a mere device to evade the statute on the subject of assignments for the benefit of creditors. was a question of fact for the jury. For the purpose of showing that itwaa a me're device to"avoid the statute on the of assignments, the p1alD-
v.61 Ji'.· no.11-47
·'h'1:'lm-orcanedJthe maker of the'instruIIlent as:a witness, and he.iea.: tifted that he desired and expected to pay the mortgage debt and redeem-th. property: inside of the 00 days. .That· he did ;,not do so cannot atfoonhe validity of the deed·. ,. A sufficient explanation of his failure to do. so, if any is necessary, is foUnd in the attachments fiued out by the pblintiff in error and '.otfierstwo:daysafter the execution·of the mortgage. Attachments against merchants commonly upset their business plans and destroy their commercialcredit;:·But,:aswe have said, the question of good faith was one for thejurYI and it was submitted to them under inlitrn<AA'Ons cenaiillyas. fa\tbrable to ;theplaintiff in error 88 it had any right to ask. The deed is not obnoxious to the· statute of frauds. ' The objection that it. was not duly acknowledged, if well. founded in faetrhli6 DOrorea, trustee took actu:al pdssesslonof the mortthe'\ixecution of the deed, and continued in "po&session"uritilit WMitakenfrom him under the'attaehment.Actual posof:mbftgageddbattels by th&IIlortgagee, before the rightsofthird parties' hnve :triter'tened; dlspenses'with the necessity of acknowledging the m6rtgageJ Wc>Od 104tJ;S. 786; Hauselt v. Harri8cm,105 U. 8.'401', 405; Cameron v.' :26 Kan. G12; Greelev v. Reading, 74: Mo. 809. ·:The judgment of tlle trial Gourt is ·affirmed. '! '. " · ,
s.
f
Co··· ,BEN!i1.B'l. Sept.etllber
'qr Apptaza, 81:efhCircuUNodl8; J
101801.)
r
,
'1,'
oUrade bunatn; tn .. .· 'csgo, autisoriptlonldor that purpoile were sought 'froM' the owne1'8 of neighboring ".' Qll. that the ;t)lereqf would be largely illcreased by the . 'erectlolji ofsqqh a biUlding. Defend6t\tll"agreed to pS:y a certain sum in cOnsideration .ot'thei !ptbpOaarto. sell· tlie sfte, 8hd' Of; the probable increase· in value oUhe ''all''' the col\814eratlollthat th,e said board of trade shall ereqt and complete said proposed.1)u!1diog and occupy the same for Ita regu'1lU' 116olous within' Wlo years from January I, 1881." Held, that the latter oondi.. . aD,d .. Jlreaoll. suit could be maintained .. SAME-QUANTUM: MERUIT.
"Ii..
D.efendantw ..
to it
1.la.lll!:l. u nd.er.. . ...
" m ....,C9lJnta . . qUan t'Ummll1'Uit. for the . .m.ou ..on.: .. ' &.
determined by the
''''In ErrOl'lto tl1'eatcuit CoUl'\'of the United States for the Northern .. 0' ,;). 1:. Jolin cR. Bensley's,gltinnthe Cincinnati l Sandusky & Olev&laild , Verdibt andJudglilent for plaintiff. Defend. &nt.bring&;er1'Or. I . ., . ..' 8tatEifuEnit: b.yBROwN, Circuit Justiee. lLn&ction to .1'e<l,<)ver·.the 'amount oflB eertain subMription made by the defendant railroad company towards the purchaae of a 10$
DiStrict of