Opinion
No. 29413.
June 8, 1931.
1. CHATTEL MORTGAGES.
Mortgage on stock of goods in trade, where mortgagor retains possession with power to sell, in usual course of business, is per se fradulent as to mortgagor's creditors.
2. CHATTEL MORTGAGES.
Bona fide purchaser without notice from mortgagor of stock of goods in trade, where mortgagor retains possession, takes good title as against mortgagee.
3. CHATTEL MORTGAGES. Mortgagee of automobile constituting part of mortgagor's stock in trade, where mortgagor retains possession for sale, held estopped to assert claim to automobile as against bona fide purchaser for value without notice of mortgage lien.
Mortgagor, after execution of mortgage on automobile, retained possession for purpose of sale. Automobile in question was sold to purchaser in ordinary course of business, but mortgagor did not inform purchaser of existence of mortgage thereon. Purchaser had no knowledge of mortgage or lien of any character, and mortgage was not recorded until some time after sale of automobile in question.
4. FALSE PRETENSES.
Gist of offense of obtaining money or property through false pretenses based on failure to notify purchaser of lien or incubbrance held intent of seller to cheat and defraud purchaser (Code 1930, section 921).
5. FALSE PRETENSES.
Where purchaser of automobile had good title as against mortgagee, and therefore was not defrauded, mortgagor or seller was not guilty of obtaining money by false pretenses (Code 1930, section 921).
APPEAL from circuit court of Marion county; HON. J.Q. LANGSTON, Judge.
Anderson Buchanan, all of Hattiesburg, for appellant.
We are at loss to understand how a person can be convicted of false pretenses under the circumstances presented in this case.
The state must show not only that the pretenses were false but also that they were made with the design of obtaining the money and that the money was paid in consequence of the pretenses.
Boler v. State, 41 Miss. 570.
This court in construing section 1168 of the Code of 1906, in the case of State v. Mitchell, 109 Miss. 91, held that the mere selling of property on which there is a lien is not criminal — it is the omission to inform the buyer of the state of the title which completes the offence.
In the present case the bank consented at the beginning and it was the bank's understanding that Simmons would sell the automobiles and remit the proceeds to the bank.
If the crime had not been committed by appellant, up to the time of his failure to remit to the bank the money collected, then certainly that act could not revert to or affect the transaction between appellant and witness Robertson.
103 Miss. 790, 151 Miss. 398, 155 Miss. 484.
It cannot be seen by a stretch of the imagination that the Citizens Bank of McHenry could recover the value or the possession of the property from Mr. Robertson.
Shannon v. Blum, 60 Miss. 828; Chapter 64, Code of 1930.
This court has on numerous occasions held that a transfer or mortgage of the kind in question is void.
Peters Shoe Co. v. Gunn, 121 Miss. 679, ___ So. 742; Harmon v. Hookins, 56 Miss. 142; Joseph v. Levi, 58 Miss. 843; Britton v. Criswell, 63 Miss. 394; Baldwin v. Little, 64 Miss. 126, 8 So. 168.
Currie Currie, of Hattiesburg, for appellant.
The proof in the case shows that defendant is not being prosecuted for selling mortgaged property and failing to pay or discharge the debt when due. He is being prosecuted, as shown by the record, for obtaining the money of T.I. Robertson by false pretense on an indictment drawn under section 921, Miss. Code 1930, Annotated, specifically charging him with selling the automobile in question to Robertson for five hundred fifty dollars, good and lawful money of the United States of America, knowing that there was a lien on said automobiles and without informing Robertson of the existence of such lien. The very indictment itself presupposes the existence of a valid lien upon the automobile in question and not only a valid lien, but a lien which can be enforced against Robertson, the alleged purchaser of said automobile.
Unless the state can, under the proven facts in this case, show the existence, in law, of a lien which was enforceable as against T.I. Robertson, this prosecution must fail.
T.I. Robertson is a third party and stands in a better position before the law, as purchaser of said automobile, than a mere creditor of the appellant, and under the settled law of this state the alleged mortgage or deed of trust would be held fraudulent and void as to a mere creditor of the appellant and that being true, it could never be held a valid and binding lien as against T.I. Robertson, a purchaser of the automobile from the appellant, who was a dealer or trader in automobiles, and who, as is shown by the record, bought the automobile as stock in trade and for resale, and who actually resold the same in the usual and ordinary course of his business.
Johnson et al. v. Tuttle et al., 4 So. 553, 65 Miss. 492; First National Bank of Chicago v. Caperton et al., 22 So. 60, 74 Miss. 857; Newton Oil Mfg. Co. et al. v. Carr, 52 So. 353, 97 Miss. 234 -423.
A void thing is, in legal effect, no thing and has no effect whatever.
Russell v. First National Bank of Hartselle, 56 So. 868, 871, 2 Ala. App. 342 (citing 8 Words and Phrases, p. 7332; Hopkins v. Clemson Agricultural College of South Carolina, 31 Sup. Ct. 654, 657, 221 U.S. 636, 644, 55 L.Ed. 890, 35 L.R.A. (N.S.) 243; Cumberland Telephone Telegraph Co. v. City of Evansville (U.S.), 127 Fed. 187, 197.
E.B. Ethridge, Special Agent, for the state.
The statute under which appellant was indicted and tried is section 921 of the Code of 1930.
The gravamen of the crime charged is the disposing of property, or the encumbering of any property upon which the grantor knows there is a lien of any kind without informing the person to whom the property is sold or encumbered of the existence of the lien.
As we conceive it, this cause presents only one principal question for determination by this court and that question is whether or not the appellant here has sold, bartered, exchanged, etc., the De Soto car specified in the indictment at a time when it was under any sort of lien without having informed the grantee of the existence of that lien. We take the position that the question must be answered in the affirmative, and that, therefore, the appellant is guilty of the crime with which he is charged.
State v. Mitchell, 109 Miss. 91.
Argued orally by N.T. Currie, for appellant, and by Eugene B. Ethridge, Assistant Attorney-General, for the state.
The appellant was indicted and convicted in the circuit court of Marion county, under section 921 of the Code of 1930, of the crime of obtaining from I.T. Robertson the sum of five hundred fifty dollars on false pretense, and was sentenced to the penitentiary for a term of two years. From that judgment he prosecutes this appeal.
The statute under which appellant was indicted and convicted follows: "If any person shall sell, barter or exchange or mortgage, or give deed of trust on, any property, real or personal, which he had before sold, bartered or exchanged, or obligated himself to sell, barter or exchange, or which he had mortgaged, or in any manner encumbered, or on which he knows there is a lien of any kind by contract or by law, without informing the person to whom he so sells, barters, exchanges, or bargains, or mortgages or gives deed of trust on it, of the exact state of the property as affected by said acts or of the lien or incumbrance thereon, he shall be guilty of obtaining under false pretenses whatever he received from the person dealing with him, and shall, on conviction, be punished therefor, as for obtaining goods under false pretenses."
The evidence made the following case for the state: Appellant was an automobile dealer. He got a shipment of De Soto automobiles for which he had contracted to pay the sum of two thousand seven hundred ninety-seven dollars and twenty-eight cents. The seller of the automobiles drew a draft on appellant for the sale price, with bill of lading attached; appellant was therefore unable to get possession of the automobiles without first paying the purchase price. He borrowed the required amount for this purpose from the Citizens' Bank of McHenry for which he gave his note, and a mortgage on the automobiles to secure the same. Thereupon appellee paid the draft, took the automobiles, and put them on display at his sales place. The mortgage is silent as to whether or not appellant should have power to resell the automobiles in the ordinary course of his business; but at the time of the execution of the mortgage it was understood by both parties that he should have that right, with this qualification; that no sale should be made without the written consent of the mortgagee. In other words, it was agreed that the mortgagee should be a party to every sale appellant might make. These provisions, however, are not provided for in the mortgage, but rested entirely in parol.
Appellant was engaged in the business of selling and exchanging automobiles, and this shipment of De Soto automobiles constituted part of his stock in trade. Appellant sold I.T. Robertson one of the De Soto automobiles, for which Robertson paid him the sum of five hundred seventy-five dollars in cash, and delivered to him, to cover the balance of the purchase price, a second-hand Dodge automobile. Appellant failed to inform Robertson that the Citizens' Bank of McHenry had a mortgage on the automobile, and the fact was undisputed that Robertson, when he purchased the automobile, knew of no such mortgage or lien of any character against it. The mortgage to the bank was not recorded until about a month after appellant had consummated the sale of the automobile to Robertson.
Appellant contends that the gist of the crime under the statute is an intent to cheat and defraud the purchaser; and that there was no such intent, because the mortgage to the bank, being on a stock of goods in trade, was void both as to creditors and bona fide purchasers without notice from the mortgagor. In other words, appellant's position is that under the law Robertson got a good title to the automobile as against the mortgagee; therefore he was not defrauded, and could not have been; and no fraud having been perpetrated on Robertson in the transaction, the statute was not violated by appellant.
To sustain the conviction, the state relies largely on State v. Mitchell, 109 Miss. 91, 67 So. 853. It is true, the court in its opinion in that case, made the broad statement that the sale of property under a lien, coupled with the failure to disclose the fact of the lien to the seller, constituted the statutory crime; that the absence of any intent to defraud would not avail as a defense, and therefore it was unnecessary to allege in the indictment a fraudulent or felonious intent. However, the language of the indictment, upon the legal sufficiency of which the court was passing, did not justify such broad language, for the indictment sufficiently alleged that the purchaser had been defrauded. Conceding, however, that the language of the court in that case was decision, the principles therein declared have since been modified, if not in part overruled, in the case of Overall v. State, 128 Miss. 59, 90 So. 484, in which the court distinctly held that the gist of the offense under the statute was an intent on the part of the seller to cheat and defraud the purchaser; and if the latter was not defrauded, there was no crime.
A mortgage on a stock of goods in trade where it is either provided in the mortgage, or the agreement rests in parol, that the mortgagor is to retain possession, with the power to sell and add to his stock, in the usual way the particular character of business is carried on, is per se fraudulent and void as to the creditors of the mortgagor. Britton v. Criswell, 63 Miss. 394; Andrews v. Partee, 79 Miss. 80, 29 So. 788.
For at least as strong a reason, a bona fide purchaser without notice from such a mortgagor gets a good title against the mortgagee. It was held in Citizens' Savings Investment Co. v. Hunt's Garage, 128 Miss. 535, 91 So. 133, that a vendee of goods under a contract reserving title in the vendor until the purchase money was paid, intending at the time of the purchase, with the knowledge of the vendor, to resell the goods in the ordinary course of business, had the right to dispose of them to a bona fide purchaser or incumbrancer, without notice, free from any claim of the vendor; that the vendor, having clothed the vendee with apparent ownership of the goods, was estopped to deny that he was the true owner thereof, against bona fide purchasers and incumbrancers for value, citing Columbus Buggy Co. v. Turley, 73 Miss. 529, 19 So. 232, 32 L.R.A. 260, 55 Am. St. Rep. 550; Parry Mfg. Co. v. Lowenberg, 88 Miss. 532, 41 So. 65.
We think that principle is controlling in this case. Here we have the purchase of the automobile by Robertson from appellant; it is a purchase for value; and without notice to Robertson either constructive or actual, that there was any lien on the automobile. The mortgagee was estopped to assert his claim against the purchaser. Robertson was not cheated and defrauded by appellee in the transaction, and could not have been. The gist of the crime, as above stated, is the intent on the part of the seller to cheat and defraud the purchaser. Where the fraud is impossible of accomplishment, there can be no criminal intent — the intent is harmless.
It results from these views that the court should have directed a verdict for the defendant of not guilty.
Reversed, and defendant discharged.