The parties agreed upon and submitted to the court the following statement of facts:
"On and immediately prior to 1 February, 1887, the plaintiff was the owner of a stock of tailoring goods and tailor's utensils, and the furniture and fixtures of a merchant tailor's establishment, in the city of Raleigh; the goods, etc., being then in a storehouse until recently theretofore occupied by the firm of Kreth Weikel.
That on 1 February, 1887, the plaintiff sold all of the goods, etc., to the defendant, A. Belsmeyer, and contemporaneously with such sale, Belsmeyer, to secure the purchase money, made and delivered the mortgage set forth below.
That the purchase money was to be paid in installments according to the tenor and effect of the notes of Belsmeyer to plaintiff.
That at the time of the above sale Belsmeyer was a tailor by trade, and had no property other than that purchased as above from plaintiff, and owed other debts to other persons, and was insolvent. These debts *Page 228 were due to Henkelman, Jackson Co., and to Focke Sprenkle, and amounted to two or three hundred dollars and have been since paid. The plaintiff did not know of them when the mortgage was made to her.
That Belsmeyer took possession of the goods, etc., sold to him by plaintiff, and proceeded to manufacture the same into suits, and bought other goods from the defendants, Henkelman, Jackson Co., and from other parties, and with all the goods thus purchased by him from the plaintiff and from Henkelman, Jackson Co., and other parties, he carried on the merchant tailoring business in the city of Raleigh (265) for nearly twelve months, until the sale by him to Henkelman, Jackson Co., as hereinafter state. That he carried on this business with the goods thus obtained by him without any control or interference on the part of the plaintiff or any other person. That in this way he sold off, prior to the commencement of this action, a considerable amount of goods, including a large part of that purchased of plaintiff; that he paid plaintiff something over six hundred dollars from the proceeds of such sales, and used the residue of such proceeds in payment of other debts due and owing by him, and in his business and for his family and household expenses.
That between 1 February, 1887, and 16 January, 1888, Belsmeyer became indebted to the defendants Henkelman, Jackson Co., without the knowledge of plaintiff, for goods purchased of them as aforesaid, to be used in his business as a merchant tailor, in the sum of eight hundred and sixty-three dollars and _____ cents, and being so indebted he made and delivered to said Henkelman, Jackson Co., his other mortgage, to secure the said debt.
That immediately upon the execution of the other mortgage, defendants Henkelman, Jackson Co., took possession of the goods described in the complaint which were conveyed to them, and held possession of the same, through their agent, the defendant J. A. Rogers, until 17 January, 1888, when they were taken from their possession by the sheriff of Wake County, under and by virtue of process caused to be issued by the plaintiff in this action, and were by the sheriff delivered to plaintiff, by whom they have since been sold and disposed of.
That the goods described in the complaint consisted of some of those originally purchased by Belsmeyer from the plaintiff and some purchased by him from defendants Henkelman, Jackson Co., and some purchased by him from other persons, and were so intermingled (266) as not to be separable or distinguishable at the time of the seizure by the sheriff.
That the matters of fact stated in the said mortgages are admitted to be true, except as modified herein. *Page 229
That plaintiff claims these goods in this action as mortgagee, and the indebtedness still due upon her mortgage is more than thirteen hundred dollars.
The defendants Henkelman, Jackson Co., claim the goods as mortgagees, and the whole indebtedness secured by their mortgage is still due.
That the value of the goods described in the complaint is $1,250.
That both of the mortgages were duly proved and registered in the office of the register of deeds in and for the said county of Wake — the first on 3 February, 1887, and the second on the ____ day of January, 1888.
It was agreed between the parties that if the court should be of the opinion, upon the foregoing case agreed, that the plaintiff is the owner of and entitled to hold the goods and property, then judgment shall be entered that the plaintiff retain possession thereof and recover her costs. If, on the contrary, the court should be of the opinion that the defendants Henkelman, Jackson Co., were the owners of the goods and entitled to the possession thereof, then judgment should be entered in favor of Henkelman, Jackson Co., for the sum of $863, less credit of $25, and interest on their counterclaim, and for their costs."
The defendants contended, that on the facts agreed the plaintiff had not rebutted the presumption of fraud, and that the mortgage to the plaintiff was fraudulent and void as to the defendants Henkelman, Jackson Co., and that therefore the plaintiff could not recover. His Honor declined so to hold, but held that the mortgage was not fraudulent under these facts.
The defendants further contended, that there was no sufficient (267) description of the property conveyed in the mortgage, and as after acquired property was so mixed with that on hand when the mortgage was made as not to be distinguishable, that no property passed to the plaintiff, or at least that only such property passed as was on hand when the mortgage was executed, and as this could not be separated that the plaintiff was not entitled to recover in this action. His Honor refused so to hold, but ruled that all the goods on hand when the plaintiff took possession under the proceedings in this action were covered by the mortgage, and that the plaintiff was entitled to recover them.
The following is a copy of the material portion of the mortgage under which the plaintiff claims:
This deed, made, etc., witnesseth: That for and in consideration of the sum of twenty-five hundred dollars, to said August Belsmeyer in hand paid by said Mary C. D. Kreth, the receipt whereof is hereby acknowledged, the said August Belsmeyer hath bargained and sold and *Page 230 he doth hereby bargain, sell and convey unto said Mary C. D. Kreth, her executors, administrators and assigns forever the following described property, to wit: All the stock of cloth, clothing, tailors' trimmings, sewing machine, desk, stove and pipe, tables, tailors' utensils, lamp, chairs and boxes in the storehouse on Fayetteville street, lately occupied by Kreth Weikel, being the property this day sold by said M. C. D. Kreth to said Belsmeyer, and all property of like character which the said Belsmeyer shall acquire for and in his business as a merchant tailor, until the mortgage shall be satisfied.
And he covenants with said M. C. D. Kreth to buy for cash and to keep the stock of goods fully up to present value, and not to remove such stock from said city.
To have and to hold the said property, etc.
(268) The conditions of this deed are such that whereas the said August Belsmeyer and one Bernard Greenwood, of Wilson County, are justly indebted to said M. C. D. Kreth in the sum of twenty-five hundred dollars for the purchase money of said articles of property bought by said Belsmeyer, as evidenced by the thirteen single bonds of said A. Belsmeyer and B. Greenwood, bearing even tenor and date herewith, said bonds bearing interest from date at the rate of eight percentum per annum.
Now, therefore, if said bonds and interest thereon shall be promptly paid according to the tenor of the same, then this deed shall be null and void, otherwise to remain in full force and effect.
And if default shall be made in payment of any of said bonds when the same shall fall due, or shall commit a breach in either of his said covenants, then in either such event said Mary C. D. Kreth, her executors, administrators and assigns, are hereby fully authorized and empowered to take possession of and sell the above conveyed property at public outcry, at the courthouse in Raleigh, after advertisement for twenty days in some newspaper published in Raleigh, for cash, and out to the proceeds to deduct, first, the costs of advertisement and sale; second, the amount which shall then be due on said bonds, with interest accrued to day of sale; and if there should then remain any surplus, to pay the same over to said A. Belsmeyer, his personal representatives or assigns. And in the event of a sale under this power, said M. C. D. Kreth, her executors, administrators and assigns, are fully empowered to execute all necessary deeds and instruments of conveyance to the purchaser or purchasers of said property.
It is further expressly understood and agreed between the parties hereto, that if default shall be made in the payment of either of said bonds, when the same shall be due, then all of said bonds shall *Page 231 immediately become due and payable, whether due by their terms at (269) the time of such default or not, and the said Mary C. D. Kreth, her executors, administrators and assigns, shall be at liberty to exercise the power of sale above given and conferred, notwithstanding the fact that one or more of said bonds shall not at the time of said default be due and demandable by their terms.
And said A. Belsmeyer further covenants that he will pay all taxes that shall be assessed on said property while any of the money secured by this mortgage shall remain unpaid, and that he will keep the same insured in some insurance company in good standing, having a resident agent in the county of Wake, for the benefit of the mortgagee and her assigns, in a sum not less than $2,500, as long as anything shall remain due on the amount hereby secured. And if he fail to pay said taxes and to effect and keep up said insurance, the mortgagee aforesaid shall be at liberty to pay said taxes and to effect and maintain said insurance, and any sum or sums by her or them so paid shall be added to the principal of the sum then due on the first of said bonds thereafter to become due and draw interest accordingly.
In testimony whereof, etc.
"The court, upon the facts set out in the case agreed, found as a conclusion of law and fact that the mortgage made by the defendant, A. Belsmeyer, to the plaintiff, dated 21 February, 1887, was not made with the purpose and intent to delay, hinder and defraud the creditors of said Belsmeyer, or such person as should thereafter purchase from him. And upon the above finding, and other facts in the case agreed, it is considered, ordered and adjudged that the plaintiff is the owner of and entitled to hold the goods and property described in the pleadings and in controversy in this action, and that plaintiff retain possession thereof and recover of the defendants her costs of this action." From this judgment the defendants appealed. It was conceded on the argument that the deed of mortgage, under which the plaintiff claims title to the goods in controversy, was not upon its face fraudulent and void in law, but it was contended that the facts recited in the deed and other facts in evidence raised the presumption of fact that it was fraudulent, and that such presumption had not been rebutted.
If it be granted that such presumption arose, we think there was evidence to rebut it. The deed itself supplied such evidence. The plaintiff sold a stock of goods to the mortgagor on a credit, taking his promissory *Page 232 notes, coming due successively at different times, for the purchase-money, and to secure the payment of the same took the mortgage under which she claims. It is not pretended that this was done, nor is there the slightest evidence tending to prove that it was done in bad faith.
Such a transaction was in itself legitimate. The deed was not intended to secure debts antecedent to it in view of and involving an impending failure in business of the mortgagor; on the contrary, it contemplated that the mortgagor should go forward actively in a promising enterprise, and from the first fruits of it, in the course of a reasonable period pay the purchase-money. In this respect, the case is very different from that of Cheatham v. Hawkins, 76 N.C. 335, and other like cases relied upon by the defendants, in which the mortgagor owed and purported, by the mortgage, to secure debts antecedent to it, was insolvent and about to fail in his business enterprise, and in view of such fact executed a mortgage of his property, preferring some of his creditors, while he remained in possession of the goods, having control of the same, and devoting part of the proceeds thereof to his own use, and doing other acts suggestive of a bad and fraudulent purpose. The prudential (271) and cautionary provisions and stipulations in the mortgage under consideration, in respect to the business to be conducted, the requirement that the purchases of replenishing goods should be for cash down, the payment within a few months of more than six hundred dollars of the debt secured by the mortgage — these and like facts and circumstances appearing from the deed and the case agreed, certainly made evidence tending strongly to rebut any presumption of fraud arising from the mere fact that it was intended that the mortgagor should have possession of and sell the goods, and that in violation of his agreement bought other goods on a credit and intermingled them with a part of the goods he so purchased from the plaintiff.
The parties agreed that the court should find the facts and apply the law of the case, and accordingly it found that there was no fraud in fact in the mortgage and transaction in question. As there was evidence to warrant such finding, it must be treated as conclusive. And as the mortgage was unaffected by fraud, it must be allowed to have just legal effect.
Then, unquestionably, the plaintiff was entitled to have possession of and to apply such of the goods in controversy as she so sold to the mortgagor. But it is insisted that these goods have been so intermingled with the like goods the mortgagor purchased from the defendant that they cannot be ascertained. And it is further contended that the title to the goods purchased by the mortgagor from the defendant did not pass to the plaintiff because, first, the mortgage in her favor did not embrace *Page 233 them; and secondly, if it did, then, as to these goods, the mortgage was not registered as required by the statute.
Granting that there might be force in this last contention, we think that the plaintiff should not suffer prejudice by such intermingling of the goods. She was in no just sense to be blamed on that account. She did not direct or procure it to be done; on the contrary, she required the mortgagor to covenant in the deed that he would purchase replenishing goods for cash down, and thus prevent occasion for (272) such prejudice to any person.
The mortgage was duly registered, and the defendants, therefore, had notice of it and its provisions, and of the nature and circumstances of the mortgagor's business and the rights of the plaintiff in respect thereto. It was their duty to themselves to be cautious in their dealings with him. Nevertheless, they sold him goods on a credit with the knowledge — it is fair to so infer — that he would probably intermingle them with the goods of the plaintiff as mortgagee. It was their laches, their misfortune, thus to deal with such a mortgagor, and thus place their goods beyond recognition and identification.
In such a case one party or the other must suffer prejudice. Which shall it be? Surely not that one to whom no blame attaches. As surely that one so chargeable with laches. The case states that part of the goods in controversy belonged to the plaintiff, but these could not be distinguished from the goods sold to the mortgagor by the defendants and others. But, as we have seen, that was not the plaintiff's fault. She was entitled to have her goods, and when it was admitted on the trial that a part of the goods in question, under the circumstances, were hers, then the burden was on the defendants, chargeable with laches, to distinguish and prove such of the goods as belonged to them, because the mortgagor wrongfully purchased like goods from the defendants on a credit, to be placed with the plaintiff's goods, and this the defendants knew, and they knew also that the mortgagor would probably intermingle their goods with the plaintiff's, and impliedly they gave their consent that he might do so. The goods thus undistinguishable became the property of the plaintiff, as mortgagee. Queenv. Wernwag, 97 N.C. 383, and the authorities there cited.
Judgment affirmed.
Cited: Brown v. Dail, 117 N.C. 47; Messick v. Fries, 128 N.C. 451;Cooper v. Rouse, 130 N.C. 204; Grocery Co. v. Taylor, 162 N.C. 312. *Page 234
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