(16 Idaho, 513) MARTIN v. HOLLOWAY. (Supreme Court of Idaho. May 12, 1909.) 1. CHATTEL MORTGAGES (§ 164*)-USE AND DISPOSITION OF PROPERTY-BY MORTGAGOR. A mortgagor and mortgagee may make an agreement, valid as between themselves, that the possession of the mortgaged property shall remain in the mortgagor, with power to dispose of the mortgaged property and apply all or a part of the proceeds in payment of the mortgage indebtedness. [Ed. Note.-For other cases, see Chattel Mortgages, Cent. Dig. § 295; Dec. Dig. § 164.*] 2. CHATTEL MORTGAGES (§ 156*)-POSSESSION BY MORTGAGEE-NOTICE. Rev. Codes, § 3409, recognizes the right of a mortgagor and mortgagee to agree that the possession of the mortgaged property may remain in the mortgagor, or be given to the mortgagee, and that if the mortgagee receive and retain actual possession of the mortgaged property, such possession is equivalent to the recording of such mortgage, and gives to the world the same notice that is given by the recording of such mortgage. [Ed. Note. For other cases, see Chattel Mort [Ed. Note. For other cases, see Chattel Mortgages, Cent. Dig. §§ 282-285; Dec. Dig. § 161.*] 4. CHATTEL MORTGAGES (§ 198*)-POSSESSION BY MORTGAGOR-SUBSEQUENT POSSESSION BY MORTGAGEE. If a mortgagee takes possession of the mortgaged chattels, consisting of a stock of merchandise, with the consent of the mortgagor, before any other right or lien attaches, his right to possession under the mortgage is good against everybody, if it was previously valid between the mortgagor and mortgagee, although such mortgage contained a provision that the mortgagor shall retain possession of the mortgaged property, with power to dispose of the same in the ordinary course of business, applying only a part of the proceeds in discharge of the mortgaged debt. chandise, containing a provision that the mortgagor retain possession with power to sell the mortgaged property, and apply only a part of the proceeds to the payment of the mortgaged debt, and that, subsequent to the execution of such mortgage the mortgagor and the mortgagee agreed that the mortgagee should take possession of such mortgaged property for the better securing of such debt, and that the mortgagee went into such possession under such mortgage, such complaint states a cause of action, as against an officer levying a writ of attachment upon such property, subsequent to the time the mortgagee went into possession under such mortgage. STEWART, J. This is an action in claim gages, Cent. Dig. §§ 265-271; Dec. Dig. § 156.*] and delivery. The plaintiff, appellant here, 3. CHATTEL MORTGAGES (§ 161*)-POSSESSION alleges that on the 18th day of June, 1908, BY MORTGAGEE. A stipulation in a mortgage, which author-one C. H. Winston executed and delivered to izes the mortgagee upon named contingencies to him a certain promissory note for the sum of take possession of the mortgaged property, is $1,100 due in 11 months, with interest at 10 valid under the laws of this state. per cent., to be paid on the 18th day of every month, and if not so paid, the whole to bethe payment of the said amount said Winston come due; that for the purpose of securing executed and delivered on the same day a chattel mortgage, whereby he mortgaged to plaintiff "all those certain goods and chattels now being in one certain store known as the 'Big Cash Store,' located at 1324 Main street, Boise, state of Idaho"; that the said chattel mortgage was duly filed so as to entitle it to record, and was recorded in the office of the county recorder of Ada county; that there has been paid on said note $300, and there is now due thereon $800, with interest from the 18th day of June, 1908; "that on the 13th day of October, 1908, the said C. H. Winston, for the purpose of more adequately securing the said plaintiff on account of the said promissory note, did deliver to the said plaintiff all of the property described in the said chattel mortgage, being the property, goods, and chattels situate in what is known as the 'Big Cash Store' at 1324 Main street, Boise, Ada county, Idaho"; that said property was of the value of $1,200; that on the 14th day of October, 1908, and while the plaintiff was in the actual and exclusive possession of said goods and chattels, and without the plaintiff's consent, the defendant took the said goods and chattels from the possession of the plaintiff, and ever since has and still retains possession of the same; that de [Ed. Note. For other cases, see Chattel Mortgages, Cent. Dig. § 442; Dec. Dig. § 198.*] 5. CHATTEL MORTGAGES (§ 198*)-TAKING OF POSSESSION BY MORTGAGEE-MORTGAGE VOID AS TO CREDITORS. Where a chattel mortgage upon a stock of merchandise contains a provision that the mortgagor shall retain possession, and have power to dispose of the mortgaged property in the ordinary course of trade, and apply part of the proceeds upon the mortgaged debt, and it appears that the mortgagee took possession of the mortgaged property with the consent of the mortgagor before any specific right or lien upon the property is acquired by a creditor, the possession of such mortgagee is valid, and cures such defect, if any, in the mortgage, and gives the mortgagee the right to retain the possession, for the purpose of enforcing such lien, against the right to such possession of a subsequent attaching creditor. [Ed. Note.-For other cases, see Chattel Mort-mand was made for the goods; that the degages, Cent. Dig. § 442; Dec. Dig. § 198.*] 6. CHATTEL MORTGAGEE'S POSSESSION GOOD. Where a complaint, in an action in claim and delivery, alleges the giving of a chattel mortgage to the plaintiff upon a stock of mer fendant unlawfully holds and retains the same; that they were not taken for a tax. assessment, or fine pursuant to any statute of this state. The complaint then alleges For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes that actions were brought in the justice's and probate court of Ada county by parties to recover debts from C. H. Winston, and writs of attachment were caused to issue in said actions, and that such writs were placed in the hands of the defendant, and under and by virtue of which the defendant levied upon and took possession of the goods and chattels in controversy in this case. The mortgage given by Winston to plaintiff was made a part of the complaint, and is in the ordinary form of chattel mortgages, except it contains the following provision: "The said party of the first part is allowed to dispose of the said goods and personal property in due course of business and promises and agrees to keep an account of all the sales made on the same and to keep the said property in safe condition and to protect the same from fire and damages, and to pay not less than fifty per cent. of the gross receipts of the sales to the said second party, which percentage is not to be less than one hundred dollars per month, which said sum and interest on the hereinafter described note are due and payable on the 18th of each month, and to be applied on liquidating the hereinafter described note of even date." To this complaint the defendant filed a demurrer, on the ground that the complaint fails to state facts sufficient to constitute a cause of action. The demurrer was sustained by the trial court, and the plaintiff refused to plead further, and a judgment of dismissal of said cause was entered and for costs, from which judgment this appeal was taken. Two questions are presented by the complaint and demurrer: First. Is the chattel mortgage in question void as against attaching creditors, by reason of the provision contained therein, which allows the mortgagor to dispose of the mortgaged property in the usual course of trade, and pay not less than 50 per cent. of the gross receipts of the sales to the mortgagee? Second. Does the allegation, which the demurrer admits to be true, that the mortgagor delivered possession of the mortgaged property to the mortgagee for the purpose of more adequately securing the mortgagee, and the taking possession of such property by the mortgagee, who was in possession of the same when the writs of attachment were served. aid the mortgagee, and give him such right to possession that the same was not subject to attachment at the suit of a creditor of the mortgagor? The position of the respective parties may be stated thus: Respondent argues that the mortgage involved in this case was absolutely void as to creditors, while appellant argues that the mortgage was valid as between the parties, and that its fraudulent character is a question of fact, and not a matter of law. Counsel for appellant also contends that, the mortgage being valid as between the parties, even though it be void as to creditors, still, the mortgagee having taken possession of the rights of any creditor attached to such property, whatever defects may have been in the mortgage were cured by taking such possession. In answer to this contention respondent contends that the mortgage was not due, and that there had been no default in its provisions at the time the possession was taken. Therefore the possession could not have been taken under the mortgage; and, if not taken under the mortgage, it must have been by reason of an independent transaction which was void under the bulk sales law. Our attention has not been directed to any provision of the statute, and we have found none, which prohibits a mortgagor and mortgagee of chattels as between themselves agreeing that the mortgagor should remain in possession and dispose of the mortgaged property, and apply only a part of the proceeds in discharge and in payment of the mortgage indebtedness. That such a contract can be made and is binding as between the parties to the mortgage there would seem to be no doubt. First Nat. Bank v. Steers, 9 Idaho, 519, 75 Pac. 225, 108 Am. St. Rep. 174; Ryan v. Rogers, 14 Idaho, 309, 94 Pac. 427. But it is contended that such provision renders the mortgage void as to creditors, for the reason that it, in effect, permits the mortgagor to incumber and cover up his property, and under such cover apply the same to his individual use, and thereby commit a fraud upon his creditors. If, however, the possession was surrendered to the mortgagee, and the power of disposition in the ordinary course of trade taken away from the mortgagor, this argument against the validity of the mortgage would have no application. Rev. Codes, § 3406, authorizes chattel mortgages to be made upon all property, goods, or chattels. Section 3409 provides for the recording of such mortgage. The recording thus provided for is for the purpose of giving notice to all persons of the existence of such mortgage and its conditions and terms, in order that all persons dealing with the mortgagor, or with reference to the property mortgaged, may have notice of the condition and title to such property. This same section of the statute contains a proviso "that if the mortgagee receive and retain actual possession of the property mortgaged, he may omit the filing of his mortgage during the continuance of such actual possession." This statute clearly recognizes the right of a mortgagee, where possession is delivered to the mortgagee, to enforce the mortgage whether the same be filed for record or not, and makes the possession equivalent to the recording. This section of the statute was under consideration by this court in the case of First Nat. Bank v. Steers, 9 Idaho, 519, 75 Pac. 225, 108 Am. St. Rep. 174, in which the court says: "The statute, therefore, recognizes the right of the mortgagor to contract with the mortgagee, whereby the latter may have the actual possession of the property mortgaged. right as embodied in the statute we do not think the court would be justified in holding a stipulation in the mortgage invalid which authorizes the mortgagee, upon named contingencies, taking possession of the mortgaged property." If, therefore, the mortgagor and mortgagee may incorporate in the mortgage a provision which authorizes the mortgagee to take possession of the mortgaged property upon the happening of certain contingencies, there would seem to be no good reason why such agreement may not be made after the execution of the mortgage, and the possession of the mortgaged property surrendered to the mortgagee. By such agreement the parties to the mortgage are doing the very thing which they might have done in the first instance, and the mortgagee is given no greater right than would have been given him had such agreement been incorporated in the mortgage. sufficient description of the property. The This question was directly before the Supreme Court of Missouri in the case of Dobyns v. Meyer, 95 Mo. 132, 8 S. W. 251, 6 Am. St. Rep. 32, and the Court of Appeals in the case of Koppelman Furniture Co. v. Fricke, 39 Mo. App. 146. In the latter case the court cites the former and says: "The latter court, in passing on the case (Dobyns v. Meyer, 95 Mo. 132, 8 S. W. 251, 6 Am. St. Rep. 32), decided that a mortgagee, who takes possession of the mortgaged property before levy there hold the property, notwithstanding there was an agreement between the mortgagor and mortgagee that the former might sell the property in the usual course of business for his own benefit. This case settles the question adversely to the plaintiff in the case at bar; and, unless there was actual or intentional fraud in the execution of the mortgage, the judgment of the circuit court will have to be affirmed." In the case of Ryan v. Rogers, 14 Idaho, 309, 94 Pac. 427, this court had under consideration the rights of a mortgagee who took possession of a stock of goods and merchandise where the mortgage provided that the mortgagor might retain possession and dis-on by an attaching creditor, is entitled to pose of the mortgaged goods in the ordinary course of trade, and said: "In this case the mortgagee took possession of the remaining property covered by the mortgage prior to any creditors' rights initiating by reason of an attachment lien or other incumbrance on the property whereby a general creditor could bring himself within the purview of the statute and acquire a right to contest the mortgage. Neustadter Bros. v. Doust, 13 Idaho, 617, 93 Pac. 978. Possession of the remaining In the case of Cameron v. Marvin, 26 Kan. mortgaged property having been taken by the 612, this question was fully discussed by the mortgagee prior to the rights of any creditor court, in which it held: "Where the mortattaching thereto, the mortgagee would be gagee, knowingly and by acquiescence, perexempt from the application of the general mitted the mortgagor to dispose of some of rule." In that case this court held that, the mortgaged property, and to deal with all while it would, as a matter of law, be a fraud of it as though it were his own, the mortupon attaching creditors, and avoid the mortgagor depositing the proceeds of the sales of gage, where the mortgagor was permitted to the mortgaged property in the mortgagee's remain in possession of the stock of merchan- | bank, and the mortgagee permitting the mortdise, where the stock was double the value of gagor to draw the same out at different the debt, and continue to sell such stock in times, and as he might want them, by drawthe ordinary course of trade long after the ing checks thereon, held that, after the mortdebt matured, still where the possession of gagor delivered the possession of the mortsuch property was surrendered to the mortgaged property to the mortgagee, the mortgagee prior to the date attaching creditors' gages must be held valid as to all the mortrights attached, the possession of the mortgaged property so delivered." In the Camgagee would be exempted from the application of the general rule. In Jones on Mortgages, § 178, the author states the rule as follows: "If a mortgagee take possession of the mortgaged chattels before any other right or lien attaches, his title under the mortgage is good against everybody, if it was previously valid between the parties, although it be not acknowledged and recorded, or the record be ineffectual by reason of any irregularity. The subsequent delivery cures all such defects, and it also eures any defect there may be through an in eron Case it was claimed that the mortgages were void because they were never recorded, and because they contained a provision allowing the mortgagor to retain possession and sell the mortgaged property, and in that case the court held that all of the mortgages were void as to creditors because not recorded, yet, where the possession of the mortgaged property was delivered to the mortgagee prior to the rights of creditors attaching to said property, the mortgages became valid. The court says: "Did the mortgages become valid when the plaintiffs took pos possession of the mortgaged property, even under a mortgage void as to creditors, his possession cures such defect, and gives him the right to maintain such possession as security for his debt, and if this is done with the consent of the mortgagor prior to the time the general creditor secures an attachment, the mortgagee's right becomes prior to that of the attaching creditor, and the mortgage is given life and force and effect by the joint action of both the parties to such mortgage. In this case it is alleged that the mortgagee took possession of the mortgaged property under the mortgage, and not independent of the mortgage. In such case the mortgagee will be required to pursue the statutory course provided for enforcing a mortgagee's lien. Counsel for respondent also contend that the mortgagee had no right to take possession of the mortgaged property because there was no default on the part of the mortgagor. The provisions in the mortgage fixing the time and terms of payment were for the ben session of the property under them? We think we must answer this question in the affirmative." A large number of cases are cited to support this contention. In that case the principal case relied upon by counsel for respondent in this case is referred to (Blakeslee v. Rossman, 43 Wis. 116). After quoting from Jones on Chattel Mortgages (the provision heretofore referred to in this opinion) the court says: "This statement of the law is undoubtedly in accordance with the great weight of authority. It may be true that in some cases, where the mortgagee takes possession of the mortgaged property under a void mortgage without the consent of the mortgagor, such possession will not make the mortgage valid. This we think was the case in the case of Blakeslee v. Rossman, 43 Wis. 116, the leading case referred to by counsel for defendant in this case. But in all cases where there is a voluntary delivery of the possession of the property by the mortgagor to the mortgagee under the mortgage, such delivery will render the mortgage valid as to all persons not then having any spe-efit of the mortgagor, and are provisions that cific right to, or lien upon, the property, provided the mortgage was previously valid as between the parties thereto; and it must be remembered that in the present case the mortgagor voluntarily delivered the property to the mortgagees, and assisted them in making an inventory thereof." We believe the rule announced in this case is correct, and that where a chattel mortgage is valid between the parties, even though for some reason it be void as to creditors, yet if the property be delivered to the mortgagee prior to the time any specific right or lien upon the property is acquired by a creditor, the possession of such mortgagee is valid and may be maintained, and the property sold under the provisions of such mortgage. It will be perceived that the complaint in this case alleges that the mortgaged property was delivered over to the mortgagee, and the mortgagee went into possession of the same for the purpose of better securing the debt due from the mortgagor to the mortgagee; that the mortgagee was thus placed in possession of the mortgaged property, with the consent of the mortgagor, prior to the time the defendant levied upon said property under the writs of attachment placed in his hands. Under such circumstances we see no reason and are clearly of the opinion that, whether the provision in the mortgage as to the mortgagor retaining possession with power of sale rendered such mortgage void as to creditors is immaterial, and in no way affects the rights of the mortgagee. For this reason it is unnecessary to determine the effect of such provision. A general creditor has no more right to the property than the mortgagee, even though the mortgage be void as to creditors. Either may procure a lien upon such property in any method he may waive. Where the mortgage provides seem to be not alone to the benefit and advantage of the parties to the mortgage, but also to creditors of the mortgagor. From what has been said it follows that the trial court erred in sustaining the demurrer to the complaint. The judgment is reversed, and the trial court directed to overrule the demurrer to the complaint. Costs awarded to appellant. inally entered by the decedent, and procure title from the government whereby the land is conveyed "unto the heirs of" the decedent, the title vests directly in the parties who are the legal heirs of the deceased and does not inure to the benefit of the estate of the deceased, and the probate court has no jurisdiction over such property and no power or authority to order a sale of such real estate, and the administrator of the estate of the deceased entryman has no power or authority to convey any title to such property. SULLIVAN, C. J., and AILSHIE, J., con- Distribution, Dec. Dig. § 8;* Executors and [Ed. Note. For other cases, see Descent and Administrators, Dec. Dig. § 137.*] cur. (16 Idaho, 541) COUNCIL IMPROVEMENT CO. v. DRA- (Supreme Court of Idaho. May 21, 1909.) 1. JUDGMENT (§ 378*)—MOTION TO VACATE WANT OF DILIGENCE. Where a plaintiff commences his action in ejectment to quiet title to a tract of land, alleging that he has been in possession of the same for a great number of years, and thereafter, when the case is called for trial, enters into a stipulation of facts upon which he claims his title and right of possession rests, and the case is held under advisement for a period of six months, and judgment is entered against him, and more than two months after the entry of judgment he applies to the court for an order vacating the same on the ground that he has discovered other and additional facts on which he could more successfully wage his action, and claims that the newly discovered facts consist chiefly in unrecorded deeds more than 20 years old, which are not produced in evidence, and where no fraud is shown on the part of his adversary, held, that he has not proceeded with due diligence in the prosecution of his action in gathering his evidence or in preparing his case, and that he has not been taken by surprise, and that his inadvertence, mistake, or negligence is inexcusable, and that the judgment should not be vacated or set aside. [Ed. Note.-For other cases, see Judgment, Cent. Dig. § 716; Dec. Dig. § 378.*]. 2. JUDGMENT (§ 363*)-VACATING-NECESSITY OF DUE DILIGENCE. A litigant moving for relief under section 4229, Rev. Codes, on the grounds of mistake, inadvertence, surprise, or excusable neglect, must show that he has acted in good faith and exercised due diligence in the prosecution and protection of his rights such as an ordinarily prudent man would exercise under similar conditions. [Ed. Note. For other cases, see Judgment, Cent. Dig. $$ 705-711; Dec. Dig. § 363.*] 3. JUDGMENT (§ 379*)-VACATING-MERITORIOUS CAUSE OF ACTION. Where a party moves to vacate a judgment entered against him, in addition to showing that he has been taken by surprise, or that his inadvertence or neglect is excusable, he must also show that the judgment against him is probably erroneous, and that, if he was permitted to properly present his case, he would likely be able to secure a judgment more favorable to his 5. DESCENT AND DISTRIBUTION (§ 72*) RIGHTS OF HEIRS-RELINQUISHMENT. A relinquishment by an heir of the estate of a deceased person of his right, interest, and claim in and to the estate of the deceased, does not divest such heir of his title or interest in and to a homestead that has been patented to the heirs of the deceased, subsequent to the death of the original entryman. [Ed. Note.-For other cases, see Descent and Distribution, Dec. Dig. § 72.*1 6. APPEAL AND ERROR (§ 845*) MOTION TO VACATE JUDGMENT. REVIEW trial court on an agreed statement of facts, and Where a case was originally heard by the no oral evidence was introduced, and judgment was thereupon entered, and a motion was subsequently made on affidavits to vacate and set aside the judgment, and no oral evidence was introduced, the appellate court will examine the record as though the matter had never been heard or examined by the trial court, and will exercise its discretion in the matter the same as a trial court is authorized to do in such matters. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. § 3344; Dec. Dig. § 845.*] (Syllabus by the Court.) Appeal from District Court, Washington County; Ed L. Bryan, Judge. Action by the Council Improvement Company against John W. Draper. Judgment. for plaintiff, and defendant appeals. Reversed. Ezra R. Whitla, for appellant. L. L. Burtenshaw (Richards & Haga, of counsel), for respondent. AILSHIE, J. This action was commenced on March 19, 1907, by the respondent, Council Improvement Company. By the allegations and prayer of the complaint, it was Sought to both eject the appellant, John W. Draper, from the premises and to quiet respondent's title to the lands described in the complaint. The amended answer on which the case was finally tried was filed on June 22, 1907. The case came on for trial on June 25th, and on the same date, and prior to entering upon the trial, the parties filed a stipulation of facts and submitted the case to the court for decision and judgment on the facts stipulated by the parties. This stipulation traces the chain of title under which each party claims the ownership and Where the heirs of a deceased homestead right of possession of the premises, and the entryman make final proof on the lands orig. case was submitted to the court for its de*For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes interests. [Ed. Note. For other cases, see Judgment, Cent. Dig. §§ 717, 718; Dec. Dig. § 379.*] 4. DESCENT AND DISTRIBUTION (§ 8*)-EXECUTORS AND ADMINISTRATORS (§ 137*)-PROPERTY SUBJECT TO DESCENT. |