Cutler v. Huston - 158 U.S. 423 (1895)
U.S. Supreme Court
Cutler v. Huston, 158 U.S. 423 (1895)
Cutler v. Huston
Argued March 27, 1895
Decided May 27, 1895
158 U.S. 423
On the 12th of July, 1889, S. executed to C. a chattel mortgage in Michigan to secure his indebtedness to him and to a bank of which he was president, and the mortgage was placed by the mortgagee in his safe. On the 17th of August, 1889, H. having no knowledge of this mortgage, purchased for a valuable consideration a note of S. On the 29th of August, 1889, C. caused the chattel mortgage to be placed on record. On the 5th of August, 1890, H. instituted garnishee proceedings against C. averring that he had possession and control of property of S. by a title which was void as to the creditors of S. The garnishee answered setting up title under the chattel mortgage. The court below held that, in consequence of the failure to file the chattel mortgage, and of the fact that H. became a creditor of S. in the interim, the chattel mortgage was void under the laws of Michigan as to H., and gave judgment accordingly. Held that in this that court committed no error.
An unreversed judgment of a circuit court is not a nullity, and cannot be collaterally attacked.
Rigdon Huston, who died in May, 1877, left a will by which bequests were made to several persons, among whom was the testator's son, Theodore Huston, the husband of the defendant in error. The executors appointed by the will were the testator's brother, John Huston, and his sons, Charles R. Huston and the said Theodore Huston.
On November 22, 1888, William Steele purchased cattle of the estate of Rigdon Huston, and in payment therefor gave to the said executors his promissory note, dated the day of the purchase, payable on or before one year after date to their order at the Second National Bank of Ionia, Michigan, for the sum of $9,600, with interest at the rate of six percent per annum, and eight percent per annum from maturity.
Dwight Cutler, the plaintiff in error, and the First National Bank of Grand Haven, of which Cutler was President, were creditors of Steele in the respective amounts of $8,000 and $12,000, and Cutler was liable as accommodation endorser of Steele's paper to the amount of $20,000. Steele requested Cutler to make for him a further endorsement to the amount of $25,000. Cutler refused to do this, but he obtained for Steele a loan of the amount required, Steele executing as security therefor certain mortgages on real estate. At the same time, July 12, 1889, Steele executed to Cutler a chattel mortgage to secure the amount of his other indebtedness to Cutler and to the bank, and to indemnify Cutler as his accommodation endorser. These mortgages, together with a certain deed executed by Steele to his wife, were delivered to Cutler, with the request that the deed should be sent for record when the other papers should be sent, and Cutler placed the papers in his safe.
In August, 1889, the said Theodore Huston desired to obtain a portion of his share of Rigdon Huston's estate, and applied for the same to his co-executors. He was willing to take the said note executed to the estate by Steele, but the other executors thought that it might not be well to allow him to have so large an amount at that time. It was then agreed that his wife and he should give their joint note to the estate for $5,000, and that he should give his receipt to the executors for $5,025.60, being the difference between $5,000 and the amount of the Steele note with interest, as for a portion of his distributive share of the estate. On August 17, 1890, Anna B. Huston and Theodore Huston executed the note agreed upon to the estate, and the Steele note was delivered to Theodore Huston, endorsed as follows:
"For value received we assign the within note to Anna B. Huston this 17th day of August, 1889."
"Chas. R. Huston"
"Executors of Rigdon Huston's Estate"
Theodore Huston, on the same day, gave his receipt to John Huston and Charles R. Huston for $5,025.60, to be applied on his distributive share of the estate of Rigdon Huston.
Subsequently, on August 29, 1889, Cutler caused the mortgages executed by Steele on July 12, 1889, including the said chattel mortgage, to be duly recorded in Ionia County, Michigan.
An action was brought on the Steele note on December 14, 1889, in the name of Anna B. Huston, in the Circuit Court of the United States for the Western District of Michigan. The declaration stated that the plaintiff was a citizen of the State of Illinois, but contained no averment with relation to the citizenship of Steele, the defendant. The action was tried in the said court, and the plaintiff obtained a judgment on the note in the sum of $10,410, and for costs in the sum of $31.80.
On August 5, 1890, Anna B. Huston instituted garnishee proceedings in the said court against Dwight Cutler by the filing of an affidavit setting out that the plaintiff was a citizen of the State of Illinois, that Dwight Cutler, the defendant, was a citizen of the State of Michigan, and that the said William Steele was at the time the said judgment was obtained against him a citizen of the State of Michigan, alleging the recovery of the said judgment, etc., and averring the defendant's possession and control of property, money, and credits belonging to William Steele, and property and credits which the defendant held by a conveyance and title that was void as to William Steele's creditors.
To this affidavit the defendant Cutler answered that he had no property, money, or credits whatsoever belonging to William Steele except the property covered by the said chattel
mortgage, as to which property he made the following statement:
"That on the 13th day of July, 1890, the said William Steele gave a chattel mortgage to the garnishee, Dwight Cutler, to secure the repayment of $40,000, upon 160 head of short-horn Devon and Jersey cattle, fourteen work horses, about fifty sheep, a number of hogs, two stallions, and a quantity of farming utensils, and some logs; that the amount secured to said garnishee by said mortgage was now due to him from said William Steele, and unpaid; that said mortgage has been foreclosed in the Circuit Court for the County of Ionia, in chancery, and a decree rendered therein in favor of the garnishee, as complainant, and against the said William Steele, finding the amount due thereon at over $40,000, and directing a sale of said property under said decree; that the garnishee, Dwight Cutler, now holds said property so authorized to be sold by said decree, and is about to sell the same under and by virtue of said mortgage to satisfy said indebtedness."
The defendant further answered that he held no property of the said Steele other than that so mortgaged; that he had held at no time conveyances from Steele in fraud of creditors, and that the security given by Steele was for actual and bona fide indebtedness.
Upon the coming of the case for trial, a jury was waived and, the court, having heard the evidence, made a finding of facts of which the statement of facts given above is the substance, and based thereon the following conclusions of law:
"First. Upon the facts as found, the plaintiff became a creditor of William Steele on the 17th day of August, 1889, within the intent of § 6193 of Howell's Statutes of Michigan, and while the chattel mortgage from Steele to Cutler aforesaid remained unfiled."
"Second. The transfer of the Steele note of $9,600 from the estate of Rigdon Huston to the plaintiff was valid as against Steele and Cutler. At most, it could only be complained of by someone having an interest in the estate of which it was part of the assets. "
"Third. In consequence of the failure to file the chattel mortgage given by Steele to cutler, and of the plaintiff becoming a creditor of Steele in the interim, the said chattel mortgage was and is void as to her and of no effect."
"Fourth. It appearing that the garnishee had property of the principal defendant at the commencement of these proceedings in his possession of value greater than the amount of plaintiff's judgment, and which he has appropriated for his own use, judgment must be entered in favor of the plaintiff and against said garnishee for the amount of plaintiff's judgment against the principal defendant, Steele, and interest on the damages thereby recovered, in all $11,424.96."
Accordingly, judgment in the amount last named was, on May 20, 1891, duly entered in the said court against the defendant Cutler, and he then sued out a writ of error, bringing the case here.