Reagan v. Aiken/Opinion of the Court

by David Josiah Brewer

United States Supreme Court

138 U.S. 109

Reagan  v.  Aiken

Many assignments of error and many questions are presented by the counsel for plaintiffs in error. We notice those which seem to be substantial. It is alleged, first, that there was error in refusing to transfer the law action to the equity docket. This was an action at law, brought by certain mortgagees to recover the value of goods mortgaged to them, which had been seized, sold, and appropriated by the defendant, the United States marshal, to other purposes. Nothing is plainer than that such an action is one at law. It is urged that the debts secured by the chattel mortgage were also secured by a real-estate mortgage; that the real estate thus conveyed had been sold, and the proceeds applied in reduction of the debts; that, therefore, an accounting was necessary to show the amount still due to the various creditors, and that such an accounting could only be had in an equitable action. The ruling of the circuit court was unquestionably correct. The recovery of the plaintiffs, the chattel mortgagees, was limited to the amount of the debts secured by the chattel mortgage. If any portion of the debts thus secured had been paid subsequently to the mortgage by the voluntary act of the debtor or the appropriation of the proceeds of other securities, this was matter of defense which could be pleaded and proved in an action at law as fully and satisfactorily as in a suit in equity. It was simply a question as to the partial payment of indebtedness. How it was made was immaterial; the fact and amount were the substantial matters; and these were matters provable and determinable in an action at law. There was no error, therefore, in refusing to transfer the case from the law to the equity docket.

A second proposition is that the chattel mortgage, so called, was not in fact a chattel mortgage, but an assignment for the benefit of creditors; and therefore void under the statute of Texas, as giving preferences, and not being for the equal benefit of all creditors. But the instrument is in form and expressed intent and scope a mortgage. It recites that the grantor is indebted to sundry parties, naming them, and giving the amounts of the debts; that he is desirous of securing such creditors, and in consideration of the premises conveys to three of the creditors named the property, with instructions to take possession and sell, and, after paying expenses, to apply the proceeds to the payment, ratably, of the debts, and the balance, if any, to return to the grantor. It then reads: 'This instrument is intended as a chattel mortgage to secure the debts herein mentioned;' and states that it is made to the three creditors mentioned, in behalf of themselves and the other creditors named, because on account of the great number of the latter it would be inconvenient for them all to act in its execution. It is true that there is no expressed condition of defeasance, but that attaches to every conveyance made simply or security, and it is unnecessary to state that which the law implies. That it contained a direction for the mortgagees to sell is not material, for, in the absence of such a direction, a mortgagee, on taking possession, should sell and apply the proceeds to the satisfaction of his debt. Instruments similar in form have been rpea tedly presented to the consideration of the supreme court of Texas, and adjudged to be chattel mortgages, and not within the scope of the act of March 24, 1879, providing for assignments for the benefit of creditors, or in conflict with the eighteenth section of that act, which forbids preferences in assignments. Wagon-Works v. Tidball, 59 Tex. 291; Stiles v. Hill, 62 Tex. 429; Bank v. Lovenberg, 63 Tex. 506; Jackson v. Harby, 65 Tex. 710; Calder v. Ramsey, 66 Tex. 218; Watterman v. Silberberg, 67 Tex. 100, 2 S. W. Rep. 578; Scott v. McDaniel, 67 Tex. 317, 3 S. W. Rep. 291. Nor can any advantage be taken by the plaintiffs in error of the opinion expressed by the trial court, when the instrument was offered in evidence, that its validity depended entirely on the fact as to whether, when it was made the grantor was insolvent or contemplated insolvency, and this irrespective of whether that opinion was correct or not, for the verdict of the jury in favor of the plaintiffs negatives the existence of such conditions if their existence avoided the instrument.

That the law was fully given by the court to the jury we are bound to presume, in the absence from the record of the entire charge; and that it was correctly stated from the fact that plaintiffs in error took no exceptions to it. True, the record contains four special instructions given by the court, and two asked by the defendants and refused. It also shows that two days after the verdict, and in their motion for a new trial, the defendants protested and excepted to such giving and refusal; but no where is it stated that these four instructions were all that were given, and in the federal courts a motion for a new trial is a mere application to the discretion of the trial court, and it is too late then to tender to the first time exceptions to rulings made at the trial. Express Co. v. Malin, 132 U.S. 531, 538, 10 Sup. Ct. Rep. 166. So, although one of the instructions asked by the defendants, and refused, relates to the effect on the instrument of the insolvency of the grantor therein, it may have been refused because already fully given in the general charge. For these reasons there is nothing in respect to the instructions, either those given or refused, which can now be considered.

Another error alleged is that the court permitted H. D. McDonald, one of the counsel for plaintiffs, to testify that he was present at the time of the execution of the chattel mortgage, and to state what transpired at that time. The parties present at that interview were the mortgagor and certain of the creditors, and the interview was held with a view of obtaining from the mortgagor the security which was in fact given. McDonald was present both as a creditor and as attorney for the creditors. It is objected that communications to an attorney are confidential, and that he can neither be compelled nor permitted to disclose them as a witness; but the creditors whose counsel he was did not object to his testimony, and, as stated, he was present both as party and counsel. Under these circumstances, we see no error in the admission of his testimony. These are the substantial matters presented for our consideration, and in them we find no error. The judgment, therefore, will be affirmed.

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