(8 Kan. App. 437)

LOOMIS MILLING CO. v. VAWTER. (Court of Appeals of Kansas, Northern Department, W. D. Sept. 17, 1898.) AUTHORITY OF AGENT-WARRANTY-RESTRICTIONS

-SALE-DAMAGES.

1. Authority, without restriction, to an agent to sell flour, to be manufactured for the purchaser, carries with it authority to warrant that it shall be equal, when manufactured, to certain brands made by another, and adopted as a sample, for the purpose of such sale.

2. In such case, an offer upon the part of the principal to prove a limitation upon the authority of the agent in that respect, either by special instructions or a custom of the principal, unaccompanied by a further offer to prove knowledge on the part of the purchaser, is incompetent and immaterial.

3. In such case, even if the warranty was contrary to the agent's instructions, the principal could not enforce the main contract and repudiate the warranty.

4. The measure of damages, under the evidence, is the difference of value between the flour delivered and the flour as warranted. Any advance in the price before delivery would be embraced therein.

(Syllabus by the Court.)

Error from district court, Decatur county; A. C. T. Geiger, Judge.

Action by the Loomis Milling Company against George B. Vawter. From a judgment against plaintiff for costs, it brings error. Reversed.

Plaintiff in error sued defendant in error for a balance on account of flour sold and delivered in the sum of $266.75. Defendant claimed-First, damages for breach of a warranty as to quality; and, second, a tender of $200 before suit. The cause was tried to a jury, and resulted in a general verdict for the plaintiff in the sum of $140.75. There were special findings of fact; among others, that a tender of $200 was made before suit. Judgment was entered against the plaintiff for costs in the sum of $103.75. A motion for a new trial being denied, the case is brought here on appeal, and errors are assigned as follows: (1) In the admission of incompetent and immaterial evidence; (2) in the rejection of competent and material evidence; (3) in erroneous instructions to the jury; (4) in denying plaintiff's motion for judgment on the special findings; (5) in denying motion for a new trial.

Tully Scott, for plaintiff in error. Bertram & Wilson, for defendant in error.

MAHAN, P. J. (after stating the facts). We will not consider the first assignment of error, because the rule of this court is not complied with.

The trial court erred in refusing to permit the plaintiff to cross-examine the defendant upon his testimony regarding the alleged tender. The purpose of the cross-examination, as disclosed by the record, was to show-if, indeed, it needed showing-that the alleged tender was a mere offer to compromise the claim, and was not intended nor regarded by the defendant at the time as a tender.

Under this assignment, it is next contended that the court erred in rejecting testimony in behalf of the plaintiff as to the authority of the agent of the plaintiff who made the sale to make the warranty, as claimed by the defendant. The plaintiff did not offer to prove that the defendant had any knowledge of any restrictions or limitations upon the authority of the agent. It was conceded that the agent who sold the flour was the general agent of the company, whose business it was to travel and sell the flour manufactured by the plaintiff. The plaintiff is seeking to enforce the contract so far as it inures to its benefit, and to repudiate that part of it which imposes on it a burden. The defendant had a right to assume authority upon the part of this agent to make the warranty, unless the defendant had notice of some limitation upon the agent's authority in respect thereto. An offer to prove a limitation upon his authority, without an offer to prove knowledge on the part of the defendant, would be immaterial and incompetent, and the objection thereto was properly sustained. Nor could the plaintiff enforce the contract, and at the same time repudiate the warranty. See Machine Co. v. Rheinschild, 25 Kan. 534; Manufacturing Co. v. Stark, 45 Kan. 603, 26 Pac. 8; Dayton v. Hooglund, 39 Ohio St. 671; Murray v. Brooks, 41 Iowa, 46, 47; Schuchardt v. Allens, 1 Wall. 369; Benj. Sales, §§ 625, 626. It follows from these authorities that the instructions tendered by the plaintiff respecting the authority of the agent to make the warranty were not applicable to the facts of the case, and that those given by the court were properly given.

The instruction requested by the plaintiff upon the subject of tender correctly expressed the law applicable to the case, and should have been given by the court. It follows, necessarily, that the instruction given by the court is inapplicable to the facts of the case, and tended to mislead the jury. It clearly appears from the evidence of the defendant respecting the alleged tender that he did not contemplate making a tender. He contemplated, and did make, an offer to compromise, with the knowledge that it was to be submitted to the plaintiff for its acceptance or rejection.

The special findings of fact were not sufficiently comprehensive to warrant the court in rendering a judgment for the plaintiff for any definite sum. The motion did not ask for a judgment for any definite sum, but for a judgment generally for the plaintiff. There was evidence, undisputed, of some damage. None of the questions of fact submitted to the jury and passed upon by it related to the true measure of damages applicable to the facts of the case. The defendant testified, in respect to the damages sustained by the breach of warranty, that a certain number of 100pound sacks of different brands were not as good, as warranted to be; that the damage upon those sacks which were returned to him by customers was upon some 30 cents per 100pound sacks, and upon other brands 25 cents

per 100-pound sacks. But the evidence does not disclose, and the jury did not find, how many sacks of either kind were returned, but answered interrogatories in respect thereto, "We do not know," which is equivalent to saying that the evidence did not disclose. This is true. Allowing the defendant the full amount claimed by him in his testimony upon all the flour of the brands which he testified was not as good as warranted, it would amount to but $99, leaving a balance of $169.75 due upon the account. The jury seem to have allowed some damage on account of an advance in the market. The flour was delivered so that the defendant had the benefit of the advance, if there was one.

The rule of damages is the difference between the actual value and what its value would have been at the delivery if it had conformed to the warranty. Hence any advance in price between the date of contract and delivery would be covered by the general damages. The loss by any advance after the delivery was not within the issues joined, and hence not a proper element for damage in the case. Benj. Sales (Benn. 4th Am. Ed.) 903, and note thereto; Suth. Dam. (2d Ed.) 670. The trial court should have sustained the motion for a new trial. The judgment is reversed, and the cause remanded, with directions to award the plaintiff a new trial.

(8 Kan. App. 323)

TAYLOR et al. v. RIGGS et al. (Court of Appeals of Kansas, Northern Department, E. D. April 26, 1839.) ESTOPPEL - VOLUNTARY ASSIGNMENT - - CO-PARTNERSHIP-DISTRIBUTION OF ASSETSRIGHTS OF CREDITORS.

1. Plaintiffs, who hold a chattel mortgage on the co-partnership property of Riggs Bros., made expressly subject to prior mortgages of some of the defendants, by their petition ask to enforce the lien thereby created, to marshal the assets of the copartnership, and therein attempt to defeat the prior liens by allegations and proof of a want of consideration therefor, and an intent upon the part of Riggs Bros., in making them to defraud the plaintiffs and other creditors, participated in by the prior mortgagees. Held, that by the recitals of their mortgage they are estopped from so doing; that they cannot so enlarge the scope of the contract which they accept and seek to enforce.

2. This rule of law applies to some of the defendants who, by their answers, are in the same attitude in the case.

3. Riggs Bros. made 14 mortgages upon their stock of goods. They were at the time insolvent. These mortgages were made directly to the creditor without the intervention of a trustee, to secure a debt, reserving the right of possession until default in payment, with the right of redemption. Held, that they did not constitute a voluntary assignment for the benefit of creditors under the statute.

4. Creditors of a co-partnership, whose claims are not reduced to judgment, but are admitted by the record to be valid claims, and who are made defendants to a petition to marshal the assets of such co-partnership, have a right to participate in the distribution of such assets where it appears that the partnership and the co-partners individually are insolvent, and that

all their assets are involved in the suit, and in the custody of the court, through its receiver; and for this purpose may, by their answer, attack for fraud chattel mortgages given by the co-partners to other creditors, which are sought to be enforced in such proceeding.

(Syllabus by the Court.)

Error from district court, Jackson county; Louis A. Myers, Judge.

Action by Frank C. Taylor and others against Charles A. Riggs and others. Judgment for defendants, and plaintiffs bring error. Reversed in part.

Taylor Bros. & Co. began this action in the nature of a creditors' bill to marshal the assets of the co-partnership of Riggs Bros. They claim a specific lien upon the property mortgaged, under a mortgage given them by Riggs Bros., which was made expressly subject to the mortgages of M. C. Stewart, the First National Bank of Holton, C. J. Hamble, and J. B. Riggs. They allege in their petition that these prior mortgages are made without consideration, for the purpose of hindering, delaying, and defrauding them and other creditors of Riggs Bros., and ask to have them so declared, and that they have a prior lien under their mortgage. Z. T. Lindsay and the W. W. Kendall Boot & Shoe Company, defendants below, were judgment creditors of the co-partnership, and had caused execution to be levied on the property before this suit was begun. B. F. Richardson, Wingate, Stone & Wells Mercantile Company, Charles P. Kellogg & Co., Englehart, Winning & Davidson Mercantile Company, Jansen & Freyschlag, and the Queen City Glove Company, who were creditors of the copartnership, were made defendants. Mortgages had been made to each of them, and filed in the order in which their names are herein recited as in point of time. In their answers each of the last-named creditors except Charles P. Kellogg & Co. made claim under their mortgages, which contain recitals making them expressly subject to the prior mortgages above named. They likewise, in their answers, attack the validity of these prior mortgages. Charles P. Kellogg & Co. make no claim under their mortgage, but are in the attitude of simple contract creditors alleging fraud upon the part. of mortgagees, alleging that they took their mortgages with the express understanding that they should be withheld from record fraudulently, that Riggs Bros. might have a credit to which they were not entitled, and that they were thereby induced to sell to Riggs Bros. large amounts of goods, and by reason thereof they are entitled to subrogation to these prior mortgages. At the beginning of the suit, upon the application of the plaintiffs Lindsay and the Kendall Company, an injunction restraining the disposition of the goods was allowed, and a receiver appointed, who took charge of them. These mortgages recite and admit the indebtedness of Riggs Bros. to the several creditors. By the answers, as well as the petition, judgment for the amount due to each of them is prayed, and was recovered upon the final hearing of the

avoid it, and acquire a larger lien than contracted for, although the mortgage be invalid as against the mortgagor." The contract limits the security granted, and it is not within the power of one party to enlarge its scope. This view is supported by the authorities without division practically, and rests on elementary principles. There is nothing in any of these mortgages, nor in all of them, from which can be inferred an intent to make an assignment, either in fact or in law. They are mortgages creating liens only. They are given to secure debts with preferences, subject to redemption by payment. They reserve the ultimate title and property to the mortgagors. The defendants, who likewise claim under their mortgages, containing like recitals, are in the same condition, and the court rightfully held them estopped thereby to attack the good faith of those to which theirs were made expressly subject. The only plaintiffs in error named in the proceedings are Taylor Bros. & Co., who were plaintiffs below, Charles P. Kellogg & Co., Englehart, Winning & Davidson Mercantile Company, the Wingate, Stone & Wells Mercantile Company.; so that the only parties complaining of the judgment below, aside from the plaintiffs Taylor Bros., are those named in the first conclusion of law, which is to the effect that they were not entitled to be heard upon their answers to show that the prior mortgages of Stewart, Riggs, Hamble, and the bank were void, because they had no judgment upon their claims. There is no doubt that the holding of the court upon this proposition was in accord with the general rule under the old chancery doctrine respecting creditors' bills. Our supreme court follows and approves this rule, and applies it to our Code practice. See Tennent v. Battey, 18 Kan. 324; Bank v. Chatten (Kan. Sup.) 52 Pac. 893; Harrison v. Shaffer (Kan. Sup.) 55 Pac. 884. In such cases the course was to dismiss the bill because it did not disclose facts to give the court of equity jurisdiction. In this case the court retained jurisdiction, adjudicated the rights of the parties respecting the property, and rendered personal judgment in behalf of each of the creditors against the co-partners. There are exceptions to this rule, well recognized by courts in jurisdictions where the old chancery practice prevails, notably the supreme court of the United States and the circuit courts of appeal. It seems to us the facts of this case bring it within one of the well-recognized exceptions.

It is not necessary for us to decide whether the cause of action upon the claims of these creditors for money was improperly joined with the action in behalf of all the creditors to set aside and cancel these prior mortgages as fraudulent, and to marshal the assets of this co-partnership, because the question was not presented to the court below, either by demurrer or answer, and was, therefore, if any such misjoinder existed, waived under the provisions of the Code.

However, see

Harris v. Avery, 5 Kan. 148-151, upon the question of joinder. That an adequate remedy by the ordinary proceeding at law did not exist to these creditors is plain. The copartnership was, by the acts of the co-partners, determined. They were insolvent. All their assets, firm and personal, were covered by these prior mortgages, were in the possession of the mortgagees, and were being disposed of by sale, and scattered beyond their reach irrevocably. Their claims against Riggs Bros. were expressly admitted, not only by the mortgages, but by the pleadings in the case. Being parties, they were concluded by the judgment, and left without remedy. That they had a right to participate in the partnership assets would seem to be without a doubt, and, if the mortgages which they sought to attack were tainted with fraud, as they allege in their answers, they gave the holders no right of priority-in fact, no right whatever against these bona fide creditors. They were entitled to judgment against the co-partners by the confession of all parties.

It has been held by the courts of the United States that cases founded upon these facts constitute an exception to the rule requiring a judgment at law and execution returned "No property" as a prerequisite to the creditors' right to attack fraudulent conveyances. Talley v. Curtain, 4 C. C. A. 177, 54 Fed. 43; Towns v. Smith, 115 Ind. 480, 16 N. E. 811; Sage v. Railroad Co., 125 U. S. 376, 8 Sup. Ct. 887; Case v. Beauregard, 101 U. S. 691; Oelrichs v. Spain, 15 Wall. 228; and Albany & R. Iron & Steel Co. v. Southern Agricultural Works, 76 Ga. 135. It is true that the court adjudged that the receiver was wrongfully appointed, that the injunction was wrongfully granted, and did vacate the orders therefor, and adjudged costs against the plaintiffs, except the costs and expenses of the receiver, which were adjudged to be paid from the funds in court. Section 254 of the Code provides that "a receiver may be appointed in an action by a creditor to subject any property or fund to his claim on the application of the plaintiff or any party whose right to or interest in the property or fund. or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured." If the court had jurisdiction to marshal the assets of this co-partnership, the averments of the answers, as well as of the petition, justified an injunction under section 248 of the Code. We are of the opinion that the facts in this case bring it clearly within the exception to the general rule above, stated, and that, the court having jurisdiction of the case and of the parties, it was its duty to determine all their rights; that these creditors had a proper standing in the court to impeach the validity of these prior mortgages, which stood in the way of their just participation in the assets of their co-partnership debtors; and the court erred in rejecting the evidence in support of the allegations of fraud

and want of consideration, and erred in holding that their answers did not contain facts sufficient to constitute a cause of action against their co-defendants who held these prior mortgages, which they averred were without consideration, fraudulent and void.

We do not deem it necessary at this time to determine the question whether the facts alleged in the answer of Charles P. Kellogg & Co. would entitled them to be subrogated to the lien of these prior mortgages, as that question may not arise in a subsequent trial of the case. The judgment of the district court, so far as it affects the interest of the defendants Charles P. Kellogg & Co., Englehart, Winning & Davidson Mercantile Company, and Wingate, Stone & Wells Mercantile Company, will be reversed, and the case remanded, with directions to award to the above-named plaintiffs in error a new trial upon the issues made between them and other parties to the case.

CRUMLY v. FULLER.

(Court of Appeals of Kansas, Northern Department, W. D. Nov. 19, 1898.) EXEMPTIONS-PROCEEDS OF LIFE POLICY. The proceeds of a life policy after payment to the beneficiary on the death of insured are not exempt from payment of the debts of the beneficiary by legal process under Laws 1895, c. 163, providing that such policy shall be free from the claims of creditors of the person or persons named in the said policy.

Error from district court, Thomas county; C. W. Smith, Judge.

Action by W. F. Fuller against Ike W. Crumly, administrator of Nancy C. Mason. Judgment for plaintiff. Defendant brings error. Affirmed.

W. C. Don Carlos, for plaintiff in error. W. S. Willcoxson, for defendant in error.

PER CURIAM. This action was instituted by the defendant in error, W. F. Fuller, receiver, against Ike W. Crumly, as administrator of the estate of Nancy C. Mason, to subject money arising from the proceeds of a beneficiary life insurance certificate upon the life of Reuben J. Mason, her husband, to the payment of the debts of Nancy C. Mason, the beneficiary. Reuben J. Mason, in his lifetime, was a member of a beneficiary association, in which he held a certificate of insurance for the sum of $2,000, payable to his wife. The insured died on the 16th day of October, 1895. Thereafter Nancy C. Mason collected the amount of the beneficiary insurance certificate, and deposited the same in a bank. Afterwards she died, and Crumly was appointed as administrator of her estate. A trial was had upon an agreed statement of facts. The findings and judgment were for plaintiff. The defendant presents the case to this court for review, and alleges error in the proceedings of the trial court. The only question present

ed by the record is whether the proceeds of a beneficiary life insurance certificate in the hands of the beneficiary are exempt from the payment of the debts of the beneficiary, under the provisions of chapter 163, Sess. Laws 1895. This question was very carefully considered in the case of Reighart v. Harris, 6 Kan. App. 339, 51 Pac. 788, and decided adversely to the contention of the plaintiff in error. Upon the authority of that case the judgment herein must be affirmed.

MARIETTA v. STANDARD OIL CO. (Court of Appeals of Kansas, Northern Department, W. D. Feb. 8, 1898.)

PROCEEDING IN ERROR-TIME OF TAKING.

Under section 595, c. 95, Gen. St. 1897, a proceeding in error to review an order discharging or modifying an attachment or a temporary injunction can only be instituted within 30 days from the discharge or modification complained of.

(Syllabus by the Court.)

Error from district court, Decatur county; A. C. T. Geiger, Judge.

Action by H. R. Marietta against W. K. Hayes. On application of the Standard Oil Company a restraining order issued in the case was dissolved, and plaintiff brings error. Dismissed.

Tully Scott, for plaintiff in error. Bertram & Wilson, for defendant in error.

WELLS, J. This proceeding in error was instituted to reverse an order of the district court of Decatur county dissolving a restraining order previously made by the judge of said court, and the only question necessary to be considered by this court is, does the record show such a case as entitles the plaintiff in error to a review? The facts of the case are substantially as follows: On November 25, 1896, H. R. Marietta began a suit in the district court of Decatur county against W. K. Hayes upon a promissory note, and caused an attachment to issue, which was levied on property of said defendant. On December 18, 1896, this attachment was dissolved, and the property attached ordered to be restored to the defendant. On December 19, 1896, the judge of said court issued a restraining order commanding the sheriff to keep and retain the money in his hands under said order of attachment until the further and final order of said court. On March 6, 1897, on the application of the Standard Oil Company, who had a judgment against said defendant, W. K. Hayes, said restraining order was dissolved. This order is now sought to be reversed by these proceedings in error, which were instituted in this court on February 8, 1898. Under section 595, c. 95, Gen. St. 1897, a proceeding in error to review an order discharging or modifying an attachment or a temporary injunction can only be instituted within 30 days from the discharge or modification