lief was denied, and an appeal is taken from LESLIE v. HARRISON NAT. BANK et al. the decision refusing the injunction. (No. 19784.) (Supreme Court of Kansas. Jan. 8, 1916.) (Syllabus by the Court.) 1. ESTOPPEL 90-EQUITABLE ESTOPPELPUBLIC LAND-WILLS. On June 18, 1878, Alexander Leslie (father of the judgment debtor, and grandfather of the plaintiff in the injunction action) made a will which, without describing any specific property, gave a life interest in all the estate, Where a settler upon public land of the both real and personal, of which he should United States died, leaving a will giving a life die seised, to his wife, with a remainder in estate in all his property to his wife, with a re-equal shares to their four sons, one of whom mainder to their children, and the widow enjoyed during her life all the rents and profits of the land, which was patented to the heirs, she and the children supposing that title had passed in accordance with the terms of the will, no estoppel thereby arose such as to vest an equitable title to the fee in the children, subject to a life interest in the mother. [Ed. Note.-For other cases, see Estoppel, Cent. Dig. §§ 242-244, 248-256; Dec. Dig. 90.] was J. F. Leslie. At the time of making the will both tracts referred to were government land, occupied by the testator with a view to acquiring title under the pre-emption and timber culture acts. He died July 2, 1878. The widow elected to take under the will. Patents were issued on one tract in 1880, and on the other in 1890, to the heirs of Alexander Leslie, who were his widow and the four sons named in his will. The will, of course, did not affect the title A grantor who, in fact, owns an undivided to the land, which by virtue of the federal one-eighth interest in a tract of land derived law passed to the heirs as grantees of the from the government, but who supposes that he owns an undivided one-fourth interest subject government. Byerly v. Eadie, 95 Kan. 400, to a life estate derived from a will, passes all 148 Pac. 757; Buxton v. Traver, 130 U. S. the title he has by a deed describing the prop-232, 9 Sup. Ct. 509, 32 L. Ed. 920. No queserty conveyed as a one-fourth interest arising under the will; the warranty clause containing tion is made regarding this proposition, but an exception as to the life estate. 2. DEEDS 114-PROPERTY CONVEYED-INTEREST OF GRANTOR MISTAKE AS TO EX TENT. [Ed. Note.-For other cases, see Deeds, Cent. 3. JUDGMENT 782-LIENS-GIFT OF LAND. - [Ed. Note. For other cases, see Judgment, Cent. Dig. § 1351; Dec. Dig. 782.] 1. EXECUTION 171 SALE INJUNCTION -OWNER OF UNDIVIDED INTEREST IN LAND. An owner of an undivided one-fourth interest in land, one eighth interest being subject to the payment of a judgment against his grantor, and the other eighth not, is entitled to an injunction against the sale of more than an undivided one-eighth interest in the land under an execution issued on such judgment. [Ed. Note.-For other cases, see Execution, Cent. Dig. 88 497-518; Dec. Dig. 171; Judgment, Cent. Dig. §§ 794, 795, 813, 825.] Appeal from District Court, Reno County. Action by Frank Leslie against the Harrison National Bank and another. From a judgment for defendants, plaintiff appeals. Modified and affirmed. C. M. Williams, of Hutchinson, for appellant. Fairchild & Lewis, of Hutchinson, for appellees. MASON, J. The Harrison National Bank, having a judgment against J. F. Leslie, levied an execution upon the undivided one-fourth interest in two tracts of land, and was about to sell it as his property, when his son Frank Leslie brought an action to enjoin the sale on the ground that he was the owner of the interest sought to be sold. Upon a trial re Frank Leslie maintains that the conduct of the heirs produced the same result as though they had entered into an effective agreement with each other that the land should be held in accordance with the terms of the will. Oral evidence was introduced by Frank Leslie to the effect that they all understood that each son owned an undivided one-fourth interest, subject to a life estate in their mother, and that she enjoyed all the rents and profits until her death. On August 2, 1904, J. F. Leslie (his wife joining) executed to his son Frank Leslie, for a recited consideration of $1 and love and affection, a general warranty deed in which the property conveyed was thus described: "Our undivided one-fourth interest in and to the east one-half of section thirty (30), in townwest of the 6th P. M., being the interest arising ship twenty-two (22) south, of range nine (9) under the will of Alexander Leslie, deceased, the father of John F. Leslie." The warranty clause contained an exception as to the life interest of Elizabeth Leslie. The bank sued J. F. Leslie July 21, 1901. Its judgment was rendered September 16, 1904. Elizabeth Leslie died May 17, 1913, leaving all her property in equal shares to the four sons already referred to. The execution levied upon the real estate in question was issued October 20, 1913. [1] 1. Frank Leslie maintains that his grandmother, having acquiesced in and received the benefits of the arrangement by which she was treated as owning a life estate, was estopped to assert any other title, and therefore that his father should be regarded as having owned a one-fourth interest in the land when he executed the deed. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes No doubt, the heirs of Alexander Leslie could have made any agreement they saw fit as to the disposition of the property, and, even although not in writing, it would have been enforced if it had been so far acted upon as to take it out of the statute of frauds. McCullough v. Finley, 69 Kan. 705, 77 Pac. 696. But it does not appear that any contract was made. The mother and her sons seem to have acted upon the assumption 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, 95 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 terest which J. F. Leslie acquired under his mother's will. It claims, however, the right to reach also the other eighth interest, which J. F. Leslie derived directly from the government, not only on the ground already stated, that the deed passed no title, but also on the theory that it was made in fraud of creditors. No showing was made, however, that J. F. Leslie was insolvent when it was executed. Moreover, no attack having been 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 Action by W. C. Hall against the Kansas Ellis, Cook & Barnett, of Kansas City, Mo., For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 1 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 garnishment 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 par ties, 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: "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 construction-no allowances for outlays or expenditures at point of manufacture to be made except upon written consent of assignee. "To avoid embarrassment to business of assignor and to relations of assignor with contracting parties, assignor is hereby made agent of aspayable and to become due and payable upon signee, to receive and receipt for sums due and 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 turned over to assignee for credit in pursuance of the purpose above stated. 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." 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. "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 [1] The general rule is that garnishment, or its assigns (and with the right to said bank like other proceedings in invitum, only affects or its assigns to be the purchaser of all or any part of said collateral, or any such sale), in the actual property, money, credits, and efcase of nonperformance of the promise, applying fects of the debtor in the hands of the garthe net proceeds to the payment of the note, nishee, and the rule relating to bona fide including interest, and accounting for the sur-holders or purchasers without notice has no plus, if any, and in case of deficiency, promise to pay said bank, or its order, the amount there- application. Investment Co. v. Jones, 2 Kan. of forthwith after such sale, with interest as App. 638, 42 Pac. 935; Bradley v. Byerley, 3 provided above; and in case of any exchange of, Kan. App. 357, 42 Pac. 930; Johnson v. or additions to, the collaterals above named, the provision of this note shall extend to such new Brant, 38 Kan. 754, 17 Pac. 794; Lumber Co. or additional collaterals. The margin of col- v. Trust Co., 54 Kan. 124, 37 Pac. 983; Bank laterals to be kept satisfactory to said bank, or v. Bank, 80 Kan. 205, 207, 101 Pac. 1005; in default thereof, the note to become due and Mason v. Saunders, 89 Kan. 300, 131 Pac. payable." 562. In 20 Cyc. 1012, it is said: 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 "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 of the summons upon the garnishee, the latter cannot be charged on account of such debt or 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. Wiss & Ballard, 34 Kan. 553, 555, 9 Pac. 281, 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. 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 tract was only part of a larger transaction has paid a sum of money into court, which there appears to be two answers: (1) Neville 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 expendi In 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 concur ring. 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-DEMURRERLACHES. 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. 249-Ao [Ed. Note.-For other cases, see Fraudulent Conveyances, Cent. Dig. $$ 756, 757, 764-766, 769, 770; Dec. Dig. 259.] 2. FRAUDULENT CONVEYANCES TION-LACHES JUDGMENT CREDITOR. Where the original demand is sued upon in due time, and an action in the nature of a creditor's bill is brought promptly upon the obtaining of judgment, the plaintiff is not to be deas-nied relief on the ground that he failed to prosseveral 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. [Ed. Note.-For other cases, see Fraudulent Conveyances, Cent. Dig. 88 735-737; Dec. Dig. But in our opinion the assignment was neither a chattel mortgage nor a pledge. It was simply what it purported to be an signment 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. Came- Appeal from District Court, Allen County. ron, Hull & Co. v. Marvin, 26 Kan. 612 (Syl. Action by Rena Buck Young against L. D. pars. 4, 5); Columbia Finance & Trust Co. Buck and others. Demurrers to the petition v. First Nat. Bank, 116 Ky. 364, 76 S. W. were sustained, and plaintiff appeals. Re156; Thayer v. Daniels, 113 Mass. 129; | versed and remanded, with directions. 249.] For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |