SECTION 4.-LOANS SECURED

ANDERSON v. LISTON et al.

(Supreme Court of Minnesota, 1897. 69 Minn. 82, 72 N. W. 52.)

Action by W. J. Anderson against John Liston and others. From a judgment for defendant Herman Wallis, plaintiff appeals.

MITCHELL, J. This action was brought to foreclose a chattel mortgage, and to determine certain adversary claims to the mortgaged property. Several persons were defendants or interveners, all of whom are out of the case except the defendant Wallis, the contest now being entirely between him and plaintiff. Hence many of the findings of fact, and all of the conclusions of law except the first two, are wholly irrelevant to this appeal.

The defendant Wallis, being in the lawful possession of a half section of land, entered into a contract (Exhibit J) with one Liston for the farming of the land "on shares" by the latter during the seasons of 1895 and 1896. This contract was filed in the town clerk's office on May 10, 1895. With the exception of dates and the names of the parties, it was in all material respects a copy of the contract which we considered and construed in Strangeway v. Eisenman (Minn.) 71 N. W. 617. Counsel for plaintiff objects that the court failed to find the date. on which this contract was executed, but, as it must have been executed before it was filed, the precise date of its execution is immaterial. On May 16, 1895, Liston executed to plaintiff, Anderson, a chattel mortgage on "all the grain to be grown" in 1895 and 1896 on 160 acres of this same land. This mortgage was filed in the town clerk's office July 24, 1895. The court finds, and the finding is supported by the evidence, that during the season of 1895 Wallis advanced to Liston, under the terms of this contract, goods and money to the amount and value of $572, and became liable for $160 more for goods and machinery purchased and used by Liston in carrying on the farm during that season, no part of which sums has been paid by Liston; also, that Liston is indebted to Wallis in the further sum of $171 on account of his default in the performance of the terms of his contract in respect to replowing the land. The contest between Anderson and Wallis is regarding the crop of 1895. Anderson claims that he is entitled under his mortgage to Liston's two-thirds of the crop; that is, the twothirds to which Liston would confessedly have been entitled had he fully performed all the conditions of his contract, and paid all the advances, etc., made to him by Wallis. Wallis, on the other hand, claims that under the terms of the contract he is entitled to enough of this two-thirds to indemnify and repay him for the advances which he made to, and the liabilities which he incurred for, Liston, as well as what the latter is indebted to him on account of his failure to perform the terms of the contract as to plowing, and that plaintiff is only entitled to so much of the two-thirds of the crop as may then be left. The trial court sustained the contention of Wallis.

Under the terms of their agreement, Wallis and Liston were tenants in common of the crops, with the title, however, in Wallis as security for the performance of the conditions of the contract, and for the

repayment of "all advances made by him to Liston," and for the payment of "all indebtedness due him from Liston." Strangeway v. Eisenman, supra. So far as it was security for "advances" and "indebtedness," it may be conceded, as the law probably is, that the contract was in effect a chattel mortgage, and was required to be filed, as to subsequent bona fide purchasers and as to creditors. It was filed before the execution of the mortgage to plaintiff. Some of the advances made by Wallis to Liston were made after plaintiff's mortgage was filed; and plaintiff's counsel objects to the refusal of the court to find what part of the advances were made before and what part after the filing of plaintiff's mortgage; also, to the finding of the court that Wallis "had no actual notice of the existence of that mortgage until after the advances ($572) and the obligation hereinbefore mentioned ($160) had been made and incurred," there being no evidence either way on that point. The filing of plaintiff's mortgage was no notice to Wallis that any subsequent lien had attached to the property, so as to prevent him from making further advances. A subsequent mortgagee can limit the credit that may be given under a mortgage to secure future advances only by giving the holder actual notice of his lien. There are authorities to the effect that where the advances are optional, and not obligatory, each advance made is to be regarded as a fresh mortgage, and will be subject to the lien of any mortgage filed or recorded when the advance is made, whether he has actual notice or not; but in our opinion the better rule, and the one sustained by the great weight of authority, is as we have stated. See Jones, Mortg. § 372, and cases cited. If plaintiff would postpone Wallis' lien to his own, the burden was on him to prove such notice; and, having failed to do so, the court was right in finding against him.

In answer to some suggestions made by counsel, we would add that there is nothing in the point that the advances were not such as were contemplated by the contract; also, that we can see no distinction between advances made directly to Liston, and the liabilities to third parties assumed by Wallis for goods and machinery purchased and used. by Liston in carrying on the farm.

Counsel also claims that the evidence shows, and that the court should have found, that, if Wallis ever had a lien on the two-thirds of the crops, he had released it by dividing the crops and unconditionally delivering the two-thirds to Liston as his property. We do not so understand the evidence. When this action was commenced, the whole crop, then undivided, was placed by the court in the hands of a receiver. As plaintiff conceded that Wallis was entitled to one undivided third, and never laid any claim to it, the receiver delivered it to Wallis. As we understand the evidence, this is the division to which the witnesses refer. This disposes of all questions of substance presented by the record, and the result is that the judgment must be affirmed. So ordered.

SECTION 5.-NECESSITY FOR RECORDING OR RETENTION OF POSSESSION

SECOND NAT. BANK OF MONMOUTH v. GILBERT.

(Supreme Court of Illinois, 1898. 174 Ill. 485, 51 N. E. 584, 66 Am. St. Rep. 306.)

This is an action upon the case brought against the sheriff by the appellant, charging that the appellee unlawfully refused to levy a writ of execution. It appears from the facts that appellants got a judgment against Frederick S. Eames and William J. Tewksbury, who were partners in managing the Savoy Hotel, in Chicago. Shortly before the judgment above referred to, the partners executed a bill of sale to the father of Eames to secure money which had been advanced. The manager in charge thereafter claimed to hold under the title of the father. After the judgment, the partners gave a chattel mortgage to the father of Eames to take the place of the bill of sale. At this time the execution was in the hands of the sheriff and by reason of statute formed a lien on any property the partners might have. The chattel mortgage had a provision in it to the effect that "said mortgagors are lawfully possessed of said goods and chattels as for their own property." The appellant contends that the bill of sale was then ineffective and that the mortgage was of no effect because of the judgment. Judgment below was for appellee..

MAGRUDER, J. * * * It is not claimed that the bill of sale, which is alleged to have been executed by Tewksbury and Frederick S. Eames in the latter part of October, 1893, was an absolute transfer of title to the personal property in the hotel. Such bill of sale is conceded to have been merely security for the indebtedness alleged to have existed in favor of Henry F. Eames from Tewksbury and Frederick S. Eames. Of course, the bill of sale, not having been acknowledged or recorded in accordance with the requirements of the chattel mortgage act, was not valid as against creditors, and third persons, unless the mortgagee, Henry F. Eames, was in possession of the property. It is claimed that Henry F. Eames was in possession of the property through the manager of the hotel, Hanna. The proof shows conclusively that Hanna was manager of the hotel for Tewksbury and Frederick S. Eames before the execution of the bill of sale, and continued to act as manager thereafter. The proof also shows that Hanna made reports to Tewksbury and Frederick S. Eames as well as to Henry F. Eames after the execution of the bill of sale, and that he operated the hotel for the grantors in the bill of sale after its execution, as he had done. before. The grantee of the bill of sale was the father of Frederick S. Eames, the judgment debtor, and one of the grantors in the bill of sale. When the known and previously recognized agent of an alleged vendor remains in possession of personal property, the appearance to the world is the same as though the vendor himself remained in possession, unless there is substantial and visible signs of a change of title. The change in the character of the possession should be indicated by such outward, open, actual, and visible signs as can be seen and known to the public, or persons dealing with the property. Where parties to such a transfer are near relations, clearer and more convinc

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ing proof is required of the good faith of the transaction than when they are strangers. Notwithstanding the fact that the same. manager who had operated the hotel for the grantors in the bill of sale still continued to manage it after the execution of the bill of sale, and notwithstanding the relationship which existed between one of the grantors in the bill of sale and the grantee, the trial court found that there was an actual delivery under the bill of sale to Hanna for Henry F. Eames.

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We would not be disposed to disturb this finding of fact by the trial court, if the propositions held as law were correct. The apparent want of change in the character of the possession after the execution of the bill of sale, and the near relationship existing between one of the grantors therein and the grantee, are strong circumstances tending to throw suspicion upon the bona fides of the transfer. Still, the force of these circumstances may be overcome, when the proof is sufficient to show good faith and an actual change of possession. It may be as assumed, therefore, that the finding of the trial court as to a change of possession was justified by the evidence. If there was an actual and bona fide change of possession, so that, after the execution of the bill of sale, Henry F. Eames was in the possession of the property in the hotel, then there is presented the case of a mortgagee of personal property, who is in actual possession of the same. Where the possession of personal property is transferred from the mortgagor in a chattel mortgage to the mortgagee therein before the rights of creditors actually intervened, the mortgagee will hold the property, and a levy cannot be made thereon. So long as Eames was in possession of the property as mortgagee under the bill of sale, the appellant could not insist upon a levy being made by the sheriff under the execution issued upon its judgment. While, therefore, the bill of sale was in force the sheriff could not levy. But the proof shows that on December 5, 1893, while the execution of the appellant was yet alive, the grantee in the bill of sale, who was, in fact, a mere mortgagee, accepted from Frederick S. Eames and his partner, Tewksbury, a chattel mortgage upon the property in the hotel. This mortgage was duly acknowledged, and recorded upon the docket of the justice of the pence, who took the acknowledgment, and was recorded in the recorder's office on December 20, 1893. After this day, to wit, on December 23, 1893, the attorney of the appellant stated to the sheriff that the judgment debtor, Frederick S. Eames, owned property in the hotel subject to levy. We are of the opinion that it was then the duty of the sheriff to levy upon the property subject to the chattel mortgage. Although property embraced in a chattel mortgage cannot be levied upon while the mortgagee is in possession, yet it can be levied upon where the mortgagor is in possession, and the mortgage given by him is executed in accordance with the statute. Where a mortgagee of chattels is in possession, after condition broken, before the rights of creditors have attached, his title to the chattels becomes absolute at law. But here the mor.gagee, Henry F. Eames, changed his attitude and possession. The mortgage which was accepted by him was executed on December 5, 1893, contained a statement that the mortgagors were in possession of the property, and that they were lawfully possessed thereof "as of their own property." After accepting such a mortgage, Henry F. Eames was estopped from denying the truth of the state

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ments therein contained. It is well settled in this state that, when a chattel mortgage is (not) properly acknowledged and recorded, a third person, who is a creditor of the mortgagor, may levy an attachment or execution upon the property in the possession of the mortgagor.

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Judgment reversed.

SECTION 6.-WAIVER OF MORTGAGE LIEN

PETERSON v. ST. ANTHONY & DAKOTA ELEVATOR CO. (Supreme Court of North Dakota, 1899. 9 N. D. 55, 81 N. W. 59, 81 Am. St. Rep. 528.)

Action by Pehr Peterson against the St. Anthony & Dakota Elevator Company. Judgment for plaintiff. Defendant appeals.

WALLIN, J. This action was brought to recover damages for the alleged conversion of certain wheat upon which plaintiff had a chattel mortgage. The trial in the district court was had without a jury, and judgment was entered in favor of the plaintiff. The defendant appealed from such judgment, and the action is now before this court for trial de novo.

On the trial it was stipulated that the mortgagor delivered at defendant's elevator at Stiles, N. D., 135 bushels of wheat, worth 65 cents per bushel; and it is practically uncontroverted that the plaintiff bought the wheat of the mortgagor, and at his request paid one Kinney for such wheat; also, that the plaintiff had a chattel mortgage upon the wheat to secure a sum in excess of the judgment.

Appellant's counsel contend that the judgment should be reversed, and base their contention upon two grounds: (1) Upon the ground that it does not appear that before the action was brought there was a demand made for the wheat, followed by a refusal to deliver the same; (2) that it does affirmatively appear that there was a waiver by the plaintiff of the lien created by the mortgage, whereby the lien was destroyed, prior to the sale of the wheat to defendant. We shall have occasion, in disposing of the case, to consider only the point of waiver, and will be compelled to hold, under the evidence, that plaintiff did waive the lien of the mortgage. A perusal of the testimony given by plaintiff's witnesses discloses that plaintiff-the mortgagee-visited the premises where the grain was grown on the day the mortgagor finished threshing in the year in question, and on that occasion requested the mortgagor to pay the debt secured by the mortgage. The mortgagor replied, in substance, that he would have to sell the wheat before he could get the money to pay with. To this plaintiff replied, in substance, that the mortgagor should go and get it. The mortgagor testified as follows: "Well, he didn't really tell me I should sell it. But I told him I would have to haul the wheat before I could get the money. Then he said I should get the money, he wanted the money." The testimony of the plaintiff is equally clear, and to the same effect. While on the stand, the plaintiff was asked as follows: "Q. Did you ever tell him anything about it? A. I told him to haul the wheat and sell

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