Voss et al. v. Murray et al.
Attaching creditors—May maintain suit to remove clotid from attached property, in hands of sheriff—Appeal lies from jtidgment in— When such action is premature—How deject waived—• Chattel mortgages— Where made to two or more as joint creditors, either, as agent may make verification—Evidence.
1. A suit may be maintained by an attaching creditor of personal property that is in possession of the sheriff under the attachment, for the purpose of removing clouds upon it created by mortgage or otherwise, that would affect its sale, and either party may appeal from a judgment in the proceeding affecting his rights.
2. Where such proceeding is commenced before the liability of the defendant to the plaintiff in attachment has been determined by judgment, and such liability is denied by answer, the proceeding is premature; but, where no objection is made and the legal issue between the plaintiff and the defendant is, for convenience, made up and tried in the proceeding to quiet title, such arbitrary union of the issues cannot affect the right of either party to appeal from a judgment affecting his claim to the property attached.
3. Where a firm has executed a mortgage to secure a creditor, a declaration by one of the members in the absence of the mortgagee, affecting the firm’s title to the property, and its indebtedness to the creditor, is not competent against the mortgagee.
4. Where a note is made payable to two or more persons as joint creditors, either has an implied authority as agent of the others to take a mortgage and make the affidavit thereon required by section 4154, Revised Statutes, for the purpose of securing its payment.
(Decided Jan. 24, 1893.)
*20Error, to the Circuit Court of Butler county.
January 25, 1888, the plaintiffs, partners under the firm-name of John S. Voss & Son, commenced an action in the court of common pleas of Butler county against Dan I. Murray, upon thirteen several causes of action—one upon an account stated, for the sum of $227.89, the other twelve' being upon promissory notes, a part of which were due and a part not, each being for the sum of $75.00, and dated January 5, 1888; and at the same time obtained an order ot attachment on the ground that the defendant was disposing of his property with the intent to defraud his creditors, under which a stock of jewelry and other chattels were, on the following day, attached as the property of Dan I. Murray. Subsequently the property was, by consent of parties, placed in the hands of a receiver, appointed by the court, who sold and converted the same into money, and holds the same subject to the order of the court.
On February 10, 1888, the plaintiff, by leave of the court, filed what is termed a supplemental petition, making as additional parties, Charles A. Cooch, assignee of Dan. I. Murray & Co., Dan. I. Murray and Charles E. Barnett, partners as Dan. I. Murray & Co., Sarah H. Barnett, Frank H. Barnett, Kate F. Barnett, Mary J. Barnett and Roscoe Barnett, Bena Murray and D. M. Murray, in which supplemental petition they affirmed and adopted all the matters stated in the original petition—recited the issuing of summons against Dan. I. Murray, the proceedings in attachment, the seizure of the stock of goods under the order of attachment, and .the service of the order of attachment—recited a detailed statement of the goods that were seized in attachment, and that the same were duly appraised in pursuance of the statute and return made to the court, and that said proceedings were regular, and the property was in the custody of the sheriff.
The supplemental petition then stated “ that plaintiffs’ claim on the 5th of January, 1888, was against Dan. I. Murray and Charles E. Barnett, as partners by the name of Dan. I. Murray & Co., doing business as jewelers and having *21a jewelry store—that a great portion of the goods seized were purchased by said Dan. I. Murray & Co. from the plaintiffs and formed a part of the basis of their said claim amounting to fifteen hundred and twenty-seven dollars and eighty-nine cents ($1,527.89). That on said 5th of January, 1888, said Dan. I. Murray was so owner of said stock and property in said jewelry store, including the goods attached, he having before that time purchased the interest of his partner, Charles E. Barnett—that on said day said Dan. I. Murray came to plaintiffs’ place of business in Cincinnati, represented that he had purchased his partner’s interest, and in consideration thereof had assumed to pay plaintiffs’ claim; and actually paid him four hundred dollars ($400.00) thereon, and then agreed to pay1- plaintiff two hundred and two dollars and eighty'-nine cents ($202.89) on the 15th of January-, 1888, and for the residue he gave the twelve promissory notes of that date—each seventy-five dollars ($75.00), being the same claim set out in the petition—that no part of either of the claims was paid.”
The petition avers that they made said arrangements with Dan. I. Murray upon the faith of his statements, and of the fact that he had purchased the interest of his partner, Charles E. Barnett. The petition alleged that on the 16th of January, 1888, Dan. I. Murray arid Charles E. Barnett fraudulently' combined and confederated together for the purpose of cheating plaintiffs out of their said claims, and for that purpose on said day falsely' and fraudulently pretended to restore the partnership of Dan. I. Murray & Co., and' then as said partners, executed a chattel mortgage on said property attached as the property' of the firm, when it was in the truth the firm’s property'. One of said mortgages was to D. M. Murray for two hundred and seveuty'-five dollars ($275.00), dated January 16, 1888—the other of said mortgages was to Mary' J. Barnett, Sarah H. Barnett, Frank H. Barnett, Kate F. Barnett, and Roscoe Barnett to secure a pretended note to them of fifteen hundred dollars ($1,500), pretended to have been given April 1, 1884, bearing eight per cent, interest—signed Dan. I. Murray' & Co., by Charles E. Ba-rnett, Ban. I. Murray; and also to secure one note to *22Bena Murray, wife of Dan I. Murray, for three hundred dollars ($300.00), dated April 1, 1887, due at sixty days—said note signed Dan. I. Murray & Co. Said mortgage also dated January 16, 1888.
That no affidavit was filed to the last named mortgage, except by Bena Murray and Frank H. Barnett. And the petition alleges that as to the other parties secured thereby their mortgages are void; and it further avers that all said pretended mortgages are void as being without consideration— given to near relatives of Dan. I. Murray' and Charles E. Barnett, and for the purpose of cheating and delaying the plaintiffs.
The petition further alleges that on January 5,1888, when Dan. I. Murray adjusted their claims, as above stated, he represented to them that the firm debts of Dan. I. Murray & Co. did not exceed three hundred dollars ($300.00), besides plaintiffs’ claim, and that he had bought out his partner’s interest for fifteen hundred dollars ($1,500.00), and given him his note for that sum, upon which statements plaintiffs relied.
The petition alleged that Dan. I. Murray, individually, on the 5th of January, 1888, owned said property—that if there was any reorganization of said partnership it was not done for any business other than to make said mortgages and to make the assignment to Cooch, hereinafter stated, and to hinder and defraud plaintiffs out of their claim. That on the 16th of January, 1888, and as a part of the same scheme, a deed of assignment was prepared and executed by which said Dan. I. Murray & Co. assigned all their partnership property to Charles A. Cooch, as assignee in trust for their creditors;—same dated January 17, and filed on said day in the probate court, and that said Cooch was duly qualified as such assignee.
The petition alleged that the deed of assignment was likewise made for the fraudulent purpose on the part of the assignors to hinder and delay the plaintiffs and other creditors, and that the mortgagees had knowledge of such fraudulent purpose, and fraudulently combined with said Dan. I. Murray and Charles E. Barnett to hinder and defráfcid the plain*23tiffs out of their claim; that Cooch, as assignee, was in possession of the goods when the attachment was levied, but surrendered the same to the sheriff at the time the levy was made.
The petition claims that all said property is first liable under the attachment and to pay plaintiffs’ claim and costs, but that the claim of the assignee and the claims of the mortgagees are a cloud upon the title to said property so attached, which prevents plaintiffs from selling the same under their attachment levy.
The petition further alleges that the mortgage to D. M. Murray was not sworn to by him, but by Cooch, who in fact had no authority to make the affidavit. The prayer of the petition was that each of said mortgages and said deed of assignment as to said property may be set aside; and that plaintiffs may be allowed under said attachment proceedings to sell said property freed from any lien of either of the defendants; and that if necessary a receiver be appointed to take charge of the same, and by order of the court convert the same into money.
Dan. I. Murray answered, averring that* the amount claimed in the petition was the partnership, and not his individual indebtedness; and that this was known to the plaintiff when the action was brought. He admits that his partner, Charles E. Barnett, had proposed to sell to him his interest, but says, being unable to comply with the terms, the sale was not perfected, and that the partnership continued to the time of the assignment, which he avers was made in good faith, with no intention to defraud his creditors. He further denies that he stated to the plaintiff that he had purchased the interest of his partner. Cooch, the assignee, also answered, averring that the property belonged to the firm at the time of the assignment, and that it was made and taken in good faith. The other defendants also answered, setting up their respective mortgages, averring that they were taken and executed'to them in good faith to secure a valid indebtedness of the firm to each at the time of their execution.
*24Sarah, Frank, Kate, Mary and Roscoe Barnett, (the only mortgagees that appealed) answered, setting up a note payable to their order for the sum of $1,500.00, bearing 8 per cent, interest, made and delivered to them by the firm of Dan. I. Murray & Co., April 1, 1884, secured by a chattel mortgage on the attached property, made and delivered January 16, 1888, by the firm, and duly filed with the clerk of the proper township on the same day. The affidavit was made by Frank Barnett, one of the. mortgagees, who, as averred, was duly authorized to act for the others. That the note was given for money loaned the firm at the time of its execution, and, except interest to April 1, 1887, was unpaid. That at the time the mortgage was given the firm of Dan. I. Murray & Co. was the owner of the property and in possession of the same; and asked that the amount due them thereon should be ascertained and declared a lien on the property prior to all others.
A reply was filed by which issues of fact were made upon the averments of the several answers.
The case was tried to the court without a jury, which found for the plaintiffs, and rendered judgment in their favor against Dan. Murray for the amount claimed; and, also, found the matters stated in the supplemental petition true, and held the lien of the plaintiffs under their proceeding in attachment superior to that of any of the other defendants, and ordered it paid accordingly. Cooch, the assignee, and Sarah, Frank, Kate, Mary and Roscoe Barnett appealed to the circuit court, where a motion was made to dismiss the appeal on the ground that several of the issues of fact made upon the petition were such that either party might have demanded a trial by jury.
The court overruled the motion, and thereupon the cause was submitted to the court, and judgment rendered in favor of the appellants; and that the amount, $1,760.00, found due Sarah, Frank, Kate, Mary and Roscoe Barnett upon their mortgage, was a first lien on the goods, and ordered the receiver to paj"- the same, after pa3Úng a portion of the cost and expenses.
*25The plaintiff filed a motion for a new trial which was overruled and a hill of exceptions taken.
The errors assigned are, (1), the action of the court overruling the motion to dismiss the appeal; (2), in rejecting certain evidence offered by the plaintiffs; and (3), in allowing Frank Barnett to state that he was the agent of his •co-payees in securing the mortgage to them, and was authorized by them to make the affidavit.
Thomas Millikin and F. I. Moorman, for plaintiffs in error.
I. We claim that as to the issues made between the plaintiffs and the defendant, Cooch, assignee of Dan. I. Murray & Co., the issue was one which involved the right to specific personal chattels, and, therefore, either party had a right to have the issues tried by a jury. Section 5130, Revised Statutes; section 5226 Revised Statutes; Ladd v. James, 10 Ohio St., 437; Skeeful v. Murty, 30 Ohio St., 50; Taylor v. Leith, 22 Ohio St., 427; Massie v. Stratford, 17 Ohio St., 596; Buckner v. Mear, 26 Ohio St., 515; Smith v. Anderson, 20 Ohio St., 77; Chapman v. Lee, 45 Ohio St., 357; Pomeroy’s Equity Jurisprudence, sec. 178; Gunsaullus v. Pettit, Adm’r, 46 Ohio St., 28; Keller v. Wensall, 23 Ohio St., 519.
II. The next error relied upon is the rejection of the testimony of Joseph S. Voss.
First. Because these declarations were made in relation to the business of the firm by one of its members at the time he was purchasing goods of the plaintiffs for Dan. I. Murray & Co. Wetmore v. Mell, 1 Ohio St., 27.
Second. It was unquestionably competent as against Charles B. Barnett, for each partner is an agent of the other partner in the transaction of the firm’s business. First Wharton Ev. sections 1156, 1162, 1163, 1163a; Larimore v. Wells, Adm’r, 29 Ohio St., 14; Coal Co. v. Davenport, 37 Ohio St., 195; In Hollister v. Reznor, 9 Ohio St., 1.
III. The third error relied upon is that the court erred in allowing Frank Barnett to state that he was the agent of *26Sarah, Kate, Mary and Roscoe Barnett, in securing the mortgage, and that they authorized him to make said affidavit in their behalf.
In this case Frank H. Barnett alone made the affidavit. He makes it as “one of the within named mortgagees.” On the face of the affidavit it does not appear that he acted for the others. He only makes it on his own behalf, and we claim, therefore, that as to the other mortgagees there was no affidavit at all.
Upon objection being made by the plaintiffs to the introduction of this mortgage for the reason above stated the court allowed the defect in the written affidavit to be supplied by parol evidence.
Alex. F. Hume and Doty & Todhunter, for defendant in error.
1. In no sense whatever, can it be said that either the issue joined and tried between plaintiffs in error and the Barnetts, or between plaintiffs in error and Cooch, assignee, is “an issue of fact arising in an action for the recovery of money only, or specific real or personal property”; but said issues are issues of fact such as are mentioned in section 5131, and could only be tried by the court. Rowland v. Entrekin et al., 27 Ohio St., 47; Ellsworth v. Holcomb et al., 28 Ohio St., 66; Fleming v. Kerkendall et al., 31 Ohio St., 568; Keller v. Wenzell, 28 Ohio St., 579.
The case of Smith v. Anderson, cited in brief of plaintiffs in error, 20 Ohio St., 77, is explained and modified in the case of Buckner v. Mear, 26 Ohio St., 514. No comment upon it is necessary.
Neither is it necessary to comment upon the cases of Ladd v. James, 10 Ohio St., 437; Taylor v. Leith, 26 Ohio St., 426; Massie v. Stratford, 17 Ohio St., 596; Sheeful v. Murty, 30 Ohio St., 50, cited in brief of plaintiffs in error. They are well understood.
The case of Chapman v. Lee, 45 Ohio St., page 356, cited by plaintiffs in error, instead of supporting their claim in this case, strongly supports our claim that the Barnetts, *27mortgagees, and Cooch, assignee, had a right to appeal. The case of Alsdorf v. Reed, 45 Ohio St., 653, also strongly supports our claim in this case
II. It will be observed that the circuit court held that the question propounded to the witness, Joseph H. Voss, and the expected answer thereto were incompetent only as against the mortgagees (the Barnetts), as they were the only mortgagees then before the court. The court permitted the plaintiffs to ask that question and as many others as they saw proper, touching that subject, against the other narties before the court.
The statements that plaintiffs sought to show that Dan. I. Murray made to Joseph H. Voss as against the mortgagees (Barnetts) were merely heresay. They were made in the absence of the Barnetts, and were made long before the execution of the Barnetts’ mortgage. And besides there was no issue joined between plaintiffs and the Barnetts that those statements tended to prove. Gambrinus Stock Company v. Webber et al., 41 Ohio St., 689.
The court in the case just cited held that a substantial compliance with the statute is sufficient. An absolute and literal compliance is not required. An affidavit by one of several mortgagees is a substantial compliance with the statute.
The debt secured by the mortgage was the joint debt of all the mortgagees. Each one owned an undivided share of every dollar thereof. Ashley v. Wright, 19 Ohio St., 291; Gardner v. Parmlee, 31 Ohio St., 551.
The court did not err in permitting the mortgagees to call Frank F. Barnett, the mortgagee who made the affidavit to the mortgage, and permit him to testify that he was the agent of the others in the transaction of their business, and that they authorized him to make the affidavit in their behalf.
The statute does not require that the affidavit shall show on its face that, when it is made by an agent of the mortgagee, the person making the affidavit is the agent of the mortgagee. All that the statute requires is that it be made by the agent of the mortgagee. The fact that it was made *28by tbe agent of the mortgagee can be proven or disproven by testimony outside of the affidavit.
Minshall, J.
The first and principal question in the case is, as to whether the appeal should have been dismissed by the circuit court on the motion of the plaintiffs. The action as commenced was for the recovery of money only,— no equitable relief was sought; but, before any judgment was taken or issue joined, the so called supplemental petition was filed, making new parties, the object of which was to have the claims of these parties against the attached property—that of Cooch, as assignee, and of the others as mortgagees—declared invalid as against the plaintiffs; in other words to facilitate a sale of the attached property by removing what is claimed to be a cloud upon the title of the plaintiffs under their attachment. That one who, as an attaching creditor, has acquired a lien upon personal property, may maintain a suit for the purpose of ascertaining the extent or existence of adverse claims to the same property, or removing clouds upon it that would affect its sale in the proceeding, is supported by principle as well as authority. The property being in the custody of the sheriff under the attachment, the creditor has no possessory action against other claimants or lien holders by which the validity of their claims can be determined; and, as they may not choose to institute such an action, he is without any remedy at law, other than to sell the property subject to the clouds upon it, which is not an adequate remedy. For these reasons similar suits have been sustained. Sherman v. Fitch, 98 Mass. 59; Jones on Chattel Mortgages, §848.
That an appeal would generally lie from a judgment in a suit brought to ascertain liens upon property and for an order of sale is not questioned. But it is claimed that in this case it will not, for the reason, that in the supplemental petition was embraced, the determination of the individual liability of Dan. I. Murray upon the notes and account, or, in other words, that the suit against Dan. I. Murray was for the recovery of money only, and the only judgment ren*29dered against him was for money; and so it is claimed that, upon the authority of Ladd v. James, 10 Ohio St. 437, no appeal could be taken from the judgment of the common pleas, notwithstanding other relief was sought and obtained.
The confusion at this point arises, as we think, out of an irregularity in £he proceedings in the common pleas—the commencement of a proceeding to determine liens and adverse claims upon the attached property before the liability of Dan. I. Murray upon the notes and account had been determined by a judgment against him; until that had been done the plaintiff had acquired no perfected lien upon the attached property, and the suit to remove clouds upon it for the purpose of making a sale was premature—should not, and, if objection had been made, could not, have been united with the action at law, against Dan. I. Murray, for the recovery of a judgment on his indebtedness to the plaintiffs. But no objection was taken, and none can now be taken, to this irregularity. The method adopted doubtless suited the convenience of all parties in conducting the litigation, and did not necessarily affect the substantial rights of any; but the action against Dan. I. Murray and the suit on the supplemental petition, were none the less separate and independent actions; and their arbitrary union in the pleadings and trial cannot affect the right of either party tó' appeal from a judgment rendered against him in the suit for equitable relief. This distinguishes the case from Ladd v. James, in which a legal cause of action on a promissory note, and an equitable cause of action for the foreclosure of a mortgage given to secure it, were united; and the only issue, as observed by White, J., in Buckner v. Mear, 26 Ohio St. 519, was on the note, and the case was held not to be appealable.
It is also argued that the issue between the plaintiffs and dooch, assignee, involved the right to specific personal property, and therefore either party had the right to have it tried by a jury. The sheriff took the property into his possession under the attachment of the plaintiffs, where it remained until, by order of the court, it was placed in the hands of a receiver. Cooch might have brought replevin to determine *30the right to the propert3r and its possession, as between himself and the plaintiffs, but he did not. And for such reason the plaintiffs made him a party, not to recover specific personal property', but to remove, if they could, the cloud of the assignment from the property they had taken in attachment. The relief sought was equitable* not legal.
The other errors assigned are presented by a bill 'of exceptions. The first is, that the court erred in rejecting the testimony of Joseph S. Voss as to what Dan. I. Murray said to him when purchasing goods for the firm. The bill of exceptions shows that the rejected testimony was to the effect, that Dan. I. Murray said to the witness, one of the plaintiffs, that Charles E. Barnett, not one of the mortgagees, was to put in the capital, and said Dan. I. Murray was to furnish the skill and services in carrying on the business, he being a practical jeweler; and plaintiffs’ counsel further stated, that he proposed thereafter to prove by other witnesses that the note and mortgage given by the firm to Frank Barnett and others, was for the capital which Charles E. Barnett had alone borrowed and was to furnish.
We fail to perceive any error of the court in rejecting this evidence. None of the parties sought to be affected by it were present, and it was therefore not competent as to them. ®But had the evidence been admitted, we fail to see what effect it could have had upon the voluntary engagement of each member of the firm, evidenced byr the note and mortgage, to Q&y a debt contracted by one of the members for money borrowed to the use of the firm.
The other error assigned is, that the court erred in admitting in evidence the mortgage made by the firm to Frank Barnett and four others, for $ 1,500.00, together -with evidence that the affidavit which was made and signed only by Frank, was made on behalf of himself and the others, joint payees with himself, who had authorized him to act as their agent in the matter. The claim is, that it should have been made and signed by all of them, or that the fact"of his agency should appear in the affidavit. The statute, section 4154, Revised Statutes, requires that, “The mortgagee, his agent or attorne3r, shall, before the instrument is filed, state thereon, *31under oath, the amount of the claim, and that it is just and unpaid, if given to secure the payment of a sum of money only.” The affidavit complied with this requirfement. The language is: “The undersigned makes solemn oath and says he is one of the within named mortgagees, Sarah H., Frank H., Rate F., Mary J., and Roscoe Barnett; that said mortgagees have a valid claim against the within named mortgagors, C. F. Barnett and Dan. I. Murray, partners as Dan. I. Murray & Co., amounting to fifteen hundred dollars and-cents; that said claim is just and unpaid, and that the foregoing mortgage is given to secure the same, and bears eight per cent, interest from April 4th, 1887.” Signed, Frank H. Barnett.
It must be observed that, in this case, the interest of the mortgagees was joint, the mortgage having been executed to secure the payment of a note in which they were, joint payees; so that each had in law an implied agency to act for the others, 1 Par. Cont. 21; and hence the right of Frank to take the mortgage and make the affidavit existed independently of any express authority to do so. The affidavit fully complied with the law, and made the mortgage a valid lien upon the property for each and all of them. The fact that the others had conferred on the one making the affidavit an express authority to do, what he had an implied authority to do, in no way affects the validity of the act done.
Judgme7it affirmed.