A debtor in Texas mortgaged to a creditor real estate there to
secure the payment of debts to various creditors, and on the same
day by a separate instrument to the same mortgagee personal
property for the same object. Other creditors commenced suit in the
circuit court of the United States against the debtor and caused
the property covered by the chattel mortgage to be seized under
writs of attachment, and to be sold and the proceeds applied toward
payment of their claims in suit. The grantees in the chattel
mortgage sued the marshal and his official sureties at law in the
state court to recover the value of the goods seized and sold. This
action was removed into the circuit court, where the creditors then
filed a bill in equity to restrain the further prosecution of the
action at law. A temporary injunction was issued. The mortgaged
real estate was then sold, and the proceeds applied to the payment
of the debts secured thereby, leaving a balance still due. After
dismissing the injunction suit, the action at law came on for
trial. A motion by the defendant to transfer it to the equity
docket was refused. The defendant contended that the chattel
mortgage was, under the laws of Texas, an assignment for the
benefit of creditors and not a chattel mortgage. The court
instructed the jury that the validity of the instrument as a
mortgage depended upon whether, when it was made, the maker was
solvent or insolvent. One of the counsel for the plaintiffs, who
was also a creditor, testified that he was present at the execution
of the chattel mortgage, at which were also present the mortgagor
and certain other creditors for whose security the mortgage was
executed, and stated what took place then. His evidence was not
objected to by the creditors whose counsel he was. There was a
verdict against the marshal and his sureties.
Held:
(1) There was no error in refusing to transfer the action at law
to the equity docket.
(2) That the instrument in question was not, under the local law
of Texas, an assignment for the benefit of creditors, but a chattel
mortgage.
(3) That the verdict of the jury determined the solvency of the
grantor and the validity of the instrument.
(4) That it was no error to permit the counsel to testify, as
his clients did not object.
Page 138 U. S. 110
It is too late on a motion for a new trial to tender exceptions
to the charge and when the record does not contain the full charge,
and no exceptions to such part as it does contain, the court must
be assumed to have stated the law correctly.
On December 23, 1885, J. M. Anderson and T. W. Anderson, Jr.,
executed a mortgage on certain real estate in Texas to one W. J.
McDonald to secure the payment of certain debts of the mortgagors.
On the same day, J. M. Anderson mortgaged to said McDonald and W.
B. Aiken and L. C. Stiles certain personal property as security for
the payment of the same debts. On December 28, Carter Bros. &
Co., of Louisville, Kentucky, H. T. Simon, Gregory & Co., and
J. H. Wear, Boogher & Co., of St. Louis, commenced in the
Circuit Court of the United States for the Eastern District of
Texas certain actions against J. M. Anderson, and caused writs of
attachment to be issued and levied upon the personal property
covered by the chattel mortgage above mentioned. The goods thus
attached were sold by the marshal, and the proceeds applied in
satisfaction of the claims in suit. On the 29th of March, 1886, the
grantees in the chattel mortgage commenced a suit in the state
court against the United States marshal and the sureties on his
official bond, alleging the seizure and sale under the writs and
seeking to recover the value of the goods thus seized and sold.
This action, commenced in the state court, was removed by
appropriate proceedings to the United States Circuit Court for the
Eastern District of Texas. On February 3, 1887, the attaching
creditors filed their bill in the same circuit court for an
injunction to restrain the further prosecution of the action at
law, the one commenced in the state and removed to the federal
court. This bill was based on the proposition that the creditors of
Anderson were secured by both the real estate and chattel mortgage,
while the attaching creditors had only recourse on the property
covered by the chattel mortgage, and that therefore the creditors
thus doubly secured by the real estate and chattel mortgage should
exhaust the security given by the former before making any claim to
the property secured by the latter. The temporary injunction was
issued as prayed for. The property secured by
Page 138 U. S. 111
the real estate mortgage was sold, and the proceeds applied as
directed therein, but such appropriation of proceeds did not pay
the debts in full, and left a balance due the creditors therein
named secured only by the chattel mortgage. Thereafter, on
September 26, 1887, by stipulation of counsel, the injunction bill
was dismissed and the action at law transferred from the state to
the federal court was continued to the next term, with a proviso as
to the use of the testimony already taken in the injunction suit,
and also that the dismissal should be without prejudice to the
right of the defendants in the law action to move for its transfer
from the law to the equity docket. At the February term, 1888, the
law action came on for trial; an application was made to transfer
it to the equity docket, which was denied, and the case went to
trial and resulted in a verdict and judgment against the marshal
and his sureties for an amount equal to the sums due to the various
creditors secured by the real estate and chattel mortgages and
unsatisfied by the proceeds of the sale of the real estate. To
reverse such judgment, a writ of error has been brought to this
Court.
MR. JUSTICE BREWER, after stating the facts as above, delivered
the opinion of the Court.
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
Page 138 U. S. 112
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
Page 138 U. S. 113
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 repeatedly 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.
La Belle Wagon Works v. Tidball, 59 Tex. 291;
Stiles
v. Hill, 62 Tex. 429;
National Bank v. Lovenberg, 63
Tex. 506;
Jackson v. Harby, 65 Tex. 710;
Calder v.
Ramsey, 66 Tex. 218;
Watterman v. Silberberg, 67 Tex.
100;
Scott v. McDaniel, 67 Tex. 317. 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
nowhere 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
Page 138 U. S. 114
time exceptions to rulings made at the trial.
Pacific
Express Co. v. Malin, 132 U. S. 531,
132 U. S. 538.
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.
