lief was denied, and an appeal is taken from LESLIE v. HARRISON NAT. BANK et al. the decision refusing the injunction.

MASON, J. The Harrison National Bank, [1] 1. Frank Leslie maintains that his having a judgment against J. F. Leslie, levied grandmother, having acquiesced in and rean execution upon the undivided one-fourth ceived the benefits of the arrangement by interest in two tracts of land, and was about which she was treated as owning a life esto sell it as his property, when his son Frank tate, was estopped to assert any other title, Leslie brought an action to enjoin the sale and therefore that his father should be reon the ground that he was the owner of the garded as having owned a one-fourth interinterest sought to be sold. Upon a trial re-est in the land when he executed the deed.

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No doubt, the heirs of Alexander Leslie terest which J. F. Leslie acquired under his could have made any agreement they saw mother's will. It claims, however, the right fit as to the disposition of the property, and, to reach also the other eighth interest, which even although not in writing, it would have J. F. Leslie derived directly from the govbeen enforced if it had been so far acted ernment, not only on the ground already upon as to take it out of the statute of stated, that the deed passed no title, but also frauds. McCullough v. Finley, 69 Kan. 705, on the theory that it was made in fraud of 77 Pac. 696. But it does not appear that creditors. No showing was made, however, any contract was made. The mother and her that J. F. Leslie was insolvent when it was sons seem to have acted upon the assump-executed. Moreover, no attack having been tion that the land was disposed of by the will. But we cannot regard the acquiescence in that view by all concerned, under a common mistake, and the innocent acceptance by the mother of the temporary fruits of the error, even for a period extending over many years, as accomplishing by estoppel a change in the equitable title to the property. The mother's election to take under the will could not have such an effect. That was a proper proceeding in any event, having no necessary connection with this land, which was not specifically referred to by the testator.

[2] 2. The bank contends that the deed executed by J. F. Leslie purported to convey only the interest arising under the will, and therefore that it conveyed nothing at all, since no title whatever was derived from that source. Considering the language of the deed in connection with the undisputed facts it is clear that the grantor intended to convey all the interest he had in the property. He supposed it to be an undivided one-fourth, subject to a life estate in his mother, when, in fact, it was a present right to an undivided one-eighth; he supposed that he derived what title he had from the will, when, in fact, he derived it from the government by operation of law. He was mistaken as to the extent and as to the exact source of his title, but knew in a general way that an interest in the land came to him through the death of his father. Since he obviously intended to dispose of all the interest he had, and since he employed words sufficient to convey even more, the deed should be interpreted as conveying that much. 13 Cyc. 656, 657; 8 R. C. L. 1060.

[3] 3. Upon the death of his mother (May 17, 1913) J. F. Leslie acquired from her an additional eighth interest in the property. As he had already executed a warranty deed to his son for a quarter interest, this newly acquired title doubtless inured to the benefit of the grantee. Gen. Stat. 1909, § 1656. But in the meantime the bank had obtained a judgment against him, the lien of which attached to his interest in the land as soon as he received it, and remained an incumbrance notwithstanding the immediate vesting of title in Frank Leslie. Bliss v. Brown, 78 Kan. 467, 96 Pac. 945.

[4] 4. It follows that the bank was entitled to sell upon execution an undivided one-eighth interest in the land, being the in

made upon it for more than nine years after the judgment was rendered, the statute of limitations had barred an action to set it aside on the ground of fraud. Donaldson v. Jacobitz, 67 Kan. 244, 72 Pac. 846. Frank Leslie was entitled to a judgment enjoining the sale of more than an eighth interest in the land. The considerations that permit the full owner of a tract to obtain an injunction against its sale as the property of some one else, apply with equal force where an effort is made to sell upon execution an interest larger than may rightfully be subjected to the payment of the judgment.

The judgment will be modified to the extent indicated, and, as so modified, affirmed. All the Justices concurring.

HALL v. KANSAS CITY TERRA COTTA
CO. et al. (No. 19850.)

(Supreme Court of Kansas. Jan. 8, 1916.)

(Syllabus by the Court.)

1. GARNISHMENT 51-PROCEEDS OF BUILDING CONTRACT.

Where a defendant corporation assigned to a bank the proceeds of a contract due and to become due for furnishing materials and labor to a building contractor, such assignment is valid as against a garnishment of the funds in the hands of the building contractor. [Ed. Note.-For other cases, see Garnishment, Cent. Dig. §§ 74, 97-101; Dec. Dig. 51.] 2. CHATTEL MORTGAGES 5-REGISTRATION -NECESSITY-GARNISHMENT.

Such an assignment is not a chattel mortgage requiring registration to be valid against writ of garnishment. the claim of another creditor proceeding by

[Ed. Note. For other cases, see Chattel Mortgages, Cent. Dig. §§ 4-13, 16; Dec. Dig. 5.]

Appeal from District Court, Montgomery County.

Action by W. C. Hall against the Kansas City Terra Cotta Company, wherein the Southwest National Bank of Kansas City, Mo., was impleaded. From a judgment for plaintiff, interpleader appeals. Reversed, with directions to render judgment for interpleader.

Ellis, Cook & Barnett, of Kansas City, Mo., and W. E. Ziegler, of Coffeyville, for appellant. A. R. Lamb and J. H. Keith, both of Coffeyville, for appellee.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

"The purpose of this assignment is to transfer to assignee the net contract price, that is to say, the sums due and to accrue upon this contract to assignor over and above necessary expenditures of like nature at the point of con

tures at point of manufacture to be made ex-
cept upon written consent of assignee.
"To avoid embarrassment to business of as-
signor and to relations of assignor with contract-
ing parties, assignor is hereby made agent of as-
signee, to receive and receipt for sums due and
payable and to become due and payable upon
the above assigned items; however, same to be
for account and use of assignee, and all sums so
collected by said assignor to be forthwith turn-
the purpose above stated.
ed over to assignee for credit in pursuance of
Provided however,
that this agency is to be subject to revocation by
assignee, and right of accounting at any and all
times is expressly reserved."

DAWSON, J. The plaintiff, W. C. Hall, commenced this action on October 12, 1912, against the Kansas City Terra Cotta Company to recover on the defendant's promissory note, and on the same day caused gar-struction-no allowances for outlays or expendinishment proceedings to be served on Albert Neville, a Coffeyville contractor. Neville, the garnishee, answered and alleged that on July 26, 1912, he had entered into a written contract with the defendant, the Kansas City Terra Cotta Company, for certain materials to be delivered to him at Coffeyville on or before September 20, 1912. Other allegations covered failure of the terra cotta company to comply in full with its contract, consequent damages to garnishee, including freight bills which he was compelled to pay for the defendant, etc. He also pleaded that on November 16, 1912, he had been notified by the Southwest National Bank of Kansas City that the claim of the terra cotta company had been assigned to it on September 16, 1912, and advising him that all the proceeds of his contract should be paid to the bank. He also prayed that the bank should be impleaded and required to set up its rights, and that he be protected.

By leave of court, the bank filed its answer and cross-petition, and by agreement of parties, and with the approval of the court, Neville, the garnishee, was permitted to pay into court a sum of money and was discharged. This action thereupon proceeded between the plaintiff and the interpleading bank.

Incorporated in the terms of the terra cotta company's note of September 16, 1912, to the bank was the following:

"Having deposited with said bank as collateral security (being the legal holder) for the payment thereof, and also for all other present or future demands or claims of any kind of the said bank against the undersigned, due or not due (give brief description or summary of collateral here), sundry contracts which the makers and indorsers hereof hereby authorize said bank, or its president or cashier, to sell without notice at public or private sale at option of said bank or its assigns (and with the right to said bank or its assigns to be the purchaser of all or any part of said collateral, or any such sale), in case of nonperformance of the promise, applying the net proceeds to the payment of the note, including interest, and accounting for the surplus, if any, and in case of deficiency, promise to pay said bank, or its order, the amount thereof forthwith after such sale, with interest as provided above; and in case of any exchange of, or additions to, the collaterals above named, the provision of this note shall extend to such new or additional collaterals. The margin of collaterals to be kept satisfactory to said bank, or in default thereof, the note to become due and payable."

The instrument purporting to assign the Neville contract to the bank professed on its face to be an "Assignment of Collateral, Contracts for Work and Material." In substance it recited that the terra cotta company was a customer of the bank, indebted to it, and contemplated further indebtedness, and to secure the payment thereof, the debtor set over to the bank certain items including the

The district court found that the terra cotta company was indebted to the bank, and that for the purpose of securing the same and to procure a further loan which was then made, the contract between Neville and the terra cotta company was assigned and delivered to the bank on September 16, 1912; that the bank did not notify Neville until about a month after this action and garnishment were begun. The court's judgment, in part, proceeds thus:

"The court further finds that said assignment, taken and considered in connection with a number of similar transactions between the said Terra Cotta Company and the bank, and their method of doing business and course of dealing, as shown by the evidence, is and was a conveyance intended to operate as a mortgage of personal property, and that it was not accompanied by a delivery to the bank of the property, nor was it followed by any actual or continued change of possession of the property covered by the conveyance. The court further finds that neither said assignment from said Terra Cotta Company to said bank, nor any copy thereof was ever filed or made of record in the office of the register of deeds of Montgomery county, Kan., or elsewhere, and that the said assignment is void as against the plaintiff, W. C. Hall."

From this judgment and its incidents the bank appeals.

[1] The general rule is that garnishment, like other proceedings in invitum, only affects the actual property, money, credits, and effects of the debtor in the hands of the garnishee, and the rule relating to bona fide holders or purchasers without notice has no application. Investment Co. v. Jones, 2 Kan. App. 638, 42 Pac. 935; Bradley v. Byerley, 3 Kan. App. 357, 42 Pac. 930; Johnson v. Brant, 38 Kan. 754, 17 Pac. 794; Lumber Co. v. Trust Co., 54 Kan. 124, 37 Pac. 983; Bank v. Bank, 80 Kan. 205, 207, 101 Pac. 1005; Mason v. Saunders, 89 Kan. 300, 131 Pac. 562. In 20 Cyc. 1012, it is said:

"Where the principal defendant has made a valid assignment of the garnishee's indebtedness, or conveyance of the property in his possession belonging to such defendant, before the service cannot be charged on account of such debt or of the summons upon the garnishee, the latter property.

"The above rule is especially applicable to bills of exchange, promissory notes, and other evidences of indebtedness, and where such paper is assigned or transferred in good faith before the

garnishment proceedings by a creditor of the payee, or of the last holder thereof, the rights of the assignee or transferee are not affected by such proceedings." Page 1013.

*

"We understand that when personal property is pledged the pledgee acquires a right thereto which is superior to any right that can thereafter be given by the pledgor or be acquired by "In the absence of statutory provision pre- a subsequent attachment issued in an action scribing the mode of assignment, no particular against him. 22 A. & E. Encycl. of L. 867, 868, mode or form is necessary to effect a valid as- and notes; Bank v. Harkness, 42 W. Va. 156 signment of property, claims, or debts so as to [24 S. E. 548, 32 L. R. A. 408]. The assigndefeat garnishment proceedings by a creditor of ment and delivery of the certificate constitutes the assignor. If the intent of the parties to ef- a delivery of the property represented thereby. fect an assignment be clearly established, that is 22 A. & E. Encycl. of L. 956. In the second sufficient, and the assignment may be in the edition of Jones on Pledges and Collateral Seform of an agreement or order or any other in-curity, § 17, it is said: A delivery of a docustrument which the parties may see fit to use for ment of title, which serves to put the pledgee that purpose. The rule is sometimes in possession of the goods, is equivalent to an broadly stated that an assignment is not com- actual delivery of them.' This question was displete so as to defeat proceedings in garnishment cussed and authorities were collected in the case until the garnishee is notified thereof; however, of Bank v. Harkness, 42 W. Va. 156 [24 S. E. this rule seems to be subject to limitations; 548, 32 L. R. A. 408]. See, also, Continental thus as between assignor and assignee, it is not Nat. Bank v. Eliot Nat. Bank (C. C.) 7 Fed. necessary to the validity of an assignment that 369. The great weight of authority seems to the garnishee be notified thereof; and the as- be that this kind of delivery is sufficient to consignment will likewise be complete as against stitute a pledge. A completed pledge has the creditors of the assignor instituting garnishment effect of depriving the pledgor of all control over proceedings after assignment and before notice the property, as far as the interest of the pledgee of the assignment to the garnishee, provided is concerned. He can neither sell nor incumber that notice of the assignment be given to the it so as to dispose of or impair the rights of garnishee in time to permit him to disclose the the pledgee therein. It seems clear that what assignment in his answer to the garnishee pro- he cannot do personally cannot be done by a cess. Pages 1016, 1017. writ of attachment. Generally, the rule has been that an attachment takes only the interest which the owner has when the writ is levied."

The district court treated the assignment of the contract between the terra cotta company and Neville as a chattel mortgage. If it were treated as a mortgage of the contract, then the possession of the contract by the bank would obviate all necessity for its regis tration. Nothing is more common than the advancement of funds to contractors and manufacturers, and while banks with proper prudence usually take more tangible security than the potential and possible future profits of the pending contracts of the borrowers, yet there is no impropriety in taking an assignment of the latter also; nor does the statute require such assignments to be recorded.

When the borrower thus assigns his contract or the possible profits of his contract in good faith, such assignments should be respected. Nor can a later garnishing creditor justly complain. The garnishment process only reaches the property, assets, and credits of the debtor, and not that of which the debtor was formerly the owner, nor that which he has lawfully assigned to a third party.

This view seems to be amply sustained by the authorities. In James Clark & Co. v.

The latter case is also pertinent on the question of the necessity for registration or other notice. It was said:

in good faith and without notice of the pledge is not important, as there is no law requiring pledges to be recorded."

"The fact that the attachment creditor acted

It is urged that the assignment of this conin which the terra cotta company mortgaged tract was only part of a larger transaction its entire plant and assets to the bank, and since such mortgage was unrecorded, it and all its incidents, including this assignment, are void against the plaintiff armed with a writ of garnishment. This view did not meet the approval of this court in Clark v. Wiss, supra, where the assignee of the book accounts prevailed against the garnisheeing creditor, notwithstanding the defects in the mortgage under which the assignee also claimed. Again, it is urged that under the assignment, the bank was only to receive whatever net profit might result from the Neville contract, and there was none such at the time of the assignment, consequently nothing was conveyed to the bank. To this there appears to be two answers: (1) Neville

Wiss & Ballard, 34 Kan. 553, 555, 9 Pac. 281, has paid a sum of money into court, which

283, it was held that:

"A debt due for goods sold and delivered, and resting for evidence on a book account, may be assigned, and such assignment is valid if made by mere delivery."

In the case at bar, the debt due from Neville to the terra cotta company for goods

sold and delivered and resting for evidence on a written contract, was assigned to the bank, and such assignment must likewise be valid though made only by mere delivery of the contract.

seems to settle the question as to whether he
owed the terra cotta company. (2) The in-
struments from the terra cotta company
which we have set out above do not justify
the interpretation that only the net profits
bank. The pertinent clause is:
of the Neville contract were assigned to the

to assignee the net contract price; that is to "The purpose of this assignment is to transfer say, the sums due and to accrue upon this contract to assignor over and above necessary expenditures of like nature at the point of construction-no allowances for outlays or expendiIn Bank v. Bank, 80 Kan. 205, 207, 101 tures at point of manufacture to be made exPac. 1005, 1006, it was said:

cept upon written consent of assignee."

The "point of construction" was Coffey- Whittredge v. Sweetser, 189 Mass. 45, 75 N. ville, and the "point of manufacture" was E. 222; Muir v. Schenck, 3 Hill (N. Y.) 228, Kansas City. The net proceeds thus included the cost of manufacture, so that the assignment fairly read covered much more than mere possible net profits. It virtually covered the value of the goods furnished, less possible charges at Coffeyville.

[2] This brings us to the concluding question, and, indeed, to the only question which presents any serious difficulty in this case. We have said that if this conveyance were treated as a chattel mortgage, the physical possession of the contract by the bank would obviate the necessity of its registration. The law is equally well settled that if it were treated as a pledge, neither registration nor notice would be necessary to enforce it. But the appellee with much force and show of authorities insists that the appellant cannot rely on these settled principles because the bank did not have exclusive control over the contract and its pertinent incidents; that the bank left the terra cotta company in control; that the bank disavowed any responsibility to carry out the contract assigned to it; that the terra cotta company afterwards changed and reduced the contract price with Neville without the knowledge and consent of the bank; that it adopted the assignor as its agent to receive and receipt for sums due and to become due under the contract, requiring it to account to the assignee for the moneys thus collected.

Does this situation create any distinction recognized by the precedents? As a chattel mortgage it undoubtedly would do so, for however binding such a mortgage would be between the parties, it would not affect third parties where the mortgage was not recorded and the mortgagee was not in exclusive possession. Swiggett v. Dodson, 38 Kan. 702, 17 Pac. 594; Boot & Shoe Co. v. Ware, 47 Kan. 483, 28 Pac. 159; Geiser v. Murray, 84 Kan. 450, 114 Pac. 1046. The same necessity as to possession applies to pledges; the pledges must secure and maintain exclusive control of the thing pledged. Raper v. Harrison, 37 Kan. 243, 245, 15 Pac. 219; Gray v. Doty, 77 Kan. 446, 448, 94 Pac. 1008; Atkinson v. Bush, 91 Kan. 860, 139 Pac. 393; 5 R. C. L. 387.

38 Am. Dec. 633; Niles v. Mathusa, 162 N. Y. 546, 57 N. E. 184; Central Trust Co. v. West India Imp. Co., 169 N. Y. 314, 62 N. E. 387; United States v. Vaughan, 3 Bin. (Pa.) 394, 5 Am. Dec. 375; Downer v. South Royalton Bank, Chamberlain et al. Claimants, 39 Vt. 25; Tingle, Adm'r, v. Fisher, 20 W. Va. 497; Bank v. Harkness, 42 W. Va. 156, 24 S. E. 548, 32 L. R. A. 408; 4 Cyc. 17, 20.

We do not think the fact that the terra cotta company was made the agent of the bank to collect the proceeds of the contract can affect the validity of the assignment. Neither can the later modification of the contract by remitting $330 of the contract price. That deduction in plain terms recognized that "this money is subject to the order of the court." Recurring to the proposition first laid down, that the garnisheeing creditor can reach only the property of the defendant in the hands of its debtor, the plaintiff could not reach or attach that which had already passed by lawful assignment, and this necessitates a reversal of the judgment with instructions to render judgment for the interpleader. All the Justices concurring.

YOUNG v. BUCK et al. (No. 19794.)* (Supreme Court of Kansas. Jan. 8, 1916.)

(Syllabus by the Court.) 1. FRAUDULENT CONVEYANCES 259-PETITION BY JUdgment Creditor-DemURRER— LACHES.

conveyed be subjected to the payment of a judgA petition, asking that lands fraudulently ment against the grantor, is not rendered demurrable by the fact that it shows two years execution of the deed and the filing of the petiand eight months to have elapsed between the tion, where it contains allegations that during all that time the action on the plaintiff's original claim was pending, although no reason is given for its not having been brought to an earlier conclusion.

[Ed. Note.-For other cases, see Fraudulent Conveyances, Cent. Dig. $$ 756, 757, 764-766, 769, 770; Dec. Dig. 259.]

2. FRAUDULENT CONVEYANCES 249-Ao

TION-LACHES-JUDGMENT CREDITOR.

several continuances were brought about by his ecute his case with due diligence, merely because consent, or by the mistake, or even misconduct, of his attorney.

Where the original demand is sued upon in due time, and an action in the nature of a credBut in our opinion the assignment was itor's bill is brought promptly upon the obtainneither a chattel mortgage nor a pledge. It ing of judgment, the plaintiff is not to be dewas simply what it purported to be an as-nied relief on the ground that he failed to prossignment of a sum or sums of money due and to become due. There was nothing about the transaction which was unusual or against public policy. This general subject is one which might well be regulated by statute, but so far it has been left free to develop in the usual course of modern business. Cameron, Hull & Co. v. Marvin, 26 Kan. 612 (Syl. pars. 4, 5); Columbia Finance & Trust Co. V. First Nat. Bank, 116 Ky. 364, 76 S. W. 156; Thayer v. Daniels, 113 Mass. 129;

[Ed. Note.-For other cases, see Fraudulent Conveyances, Cent. Dig. 88 735-737; Dec. Dig.

m249.]

Appeal from District Court, Allen County. Action by Rena Buck Young against L. D. Buck and others. Demurrers to the petition were sustained, and plaintiff appeals. Reversed and remanded, with directions.

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