Opinion of the Court. anything, they were entitled to recover the full amount of their debts. It also appears that Hamilton had no property in the State of Iowa, subject to execution, other than this stock of goods; and that the portion of the stock not taken on the attachment was appropriated in satisfaction of a prior mortgage. These mortgagees had no other security. The case, therefore, narrows itself to the question whether these chattel mortgages were valid. They were executed respectively July 4 and July 5, 1882, and were filed for record on those days. The first (and the two were similar) was in the usual form of chattel mortgages, and, for the consideration of $346.62, conveyed to plaintiffs "all my stock of dry goods and groceries, notions, boots and shoes, book accounts, notes and merchandise of every description, now in my store in Knoxville, Marion County, Iowa, and to include all goods and merchandise which may hereafter be brought into said store," with the usual warranty of title, and to be void on condition that Hamilton should pay the plaintiffs three notes, dated July 4, 1882; one for $100, due September 4, 1882; one for $100, due October 4, 1882; and one for $104.62, due November 4, 1882, with interest. The mortgage further stipulated: "And I, the said George W. Hamilton, do hereby covenant and agree to and with the said Sperry, Watt & Garver that, in case of default made in the payment of the above promissory notes, or in case of my attempting to dispose of or remove from said county of Marion, the aforesaid goods and chattels, or any part thereof, or whenever the said mortgagee or his assigns shall choose so to do, then and in that case it shall be lawful for the said mortgagee or his assigns, by himself or agent, to take immediate possession of said goods or chattels wherever found." Then followed the usual power of sale, a provision for attorney's fees in case the mortgage should be foreclosed by suit, and that if anything remained after paying plaintiffs' claim it should be returned to IIamilton. The other mortgage, executed the next day, was for $89.54, as evidenced by a promissory note for that amount, dated July 5 and due July 28, 1882, with interest. These claims of the mortgagees were for goods sold during the six months prior to the execu Opinion of the Court. tion of the mortgages. It appears that in the fore part of that year Hamilton had had a partner named Douglas, and the first mortgage was for goods bought by that firm; and the second for goods bought by Hamilton alone, after he had purchased Douglas's interest in the partnership. It is contended that these mortgages should be considered as executed simultaneously, and parts of one transaction, and as equivalent to a general assignment for the benefit of creditors, and that, having preferences in them, they are void under the state law respecting assignments. But this contention is clearly untenable. The instruments, on their faces, are mortgages given to secure debts not yet due. The mortgagor had no thought of closing out his business. He expected to continue in it, and hoped out of the profits thereof to pay this indebtedness coming due in the future. He had, on June 26, given a prior mortgage to secure another creditor; and on July 6, the day after the execution of the last mortgage in controversy, when another creditor demanded security, he declined to give it without including in the mortgage all his other creditors, and did execute such a mortgage. So that if we could ignore the form of the several instruments, the only one which by any pretence could be called an assignment for the benefit of creditors was the one executed on the 6th day of July, an instrument not contemplated at the time these mortgages were given, and one forced upon him by the subsequent demands of another creditor. Obviously these instruments were, in the intent of the parties, what upon their face they appear to be, simply conveyances for security-chattel mortgages. The other contention is, that the court erred in refusing to give this instruction: "1. If the jury find from the evidence that the mortgagor in the chattel mortgages in evidence in this case was left in possession of the stock of goods mortgaged, with no provision for the application of the entire proceed of sales to the payment of debts secured by the mortgages, but with the privilege, express or implied, of continuing the business of buying and selling as before the making of the mortgages and applying a portion of the proceeds of sale to his own use, then Opinion of the Court. such mortgages are fraudulent and void in law as to creditors." In its charge the court thus stated the question: "The issue submitted to you is this: Were the mortgages of plaintiffs executed in good faith and for the purposes of securing a bona fide indebtedness due to them from George W. Hamilton at the time, or were the same executed by Hamilton and received by the plaintiffs for the purpose of defrauding creditors of George W. Hamilton." It further instructed the jury that the insolvency of Hamilton, if proved, would not of itself avoid the mortgages; and that he had the right to prefer any of his creditors. And upon the question of fraud it gave this instruction: "In determining the question of fraud in the execution of mortgages you should take into consideration all the evidence that has been introduced bearing upon that question. Fraud is never presumed, but must be proved by the party alleging the same, and in determining whether or not there was fraud in any transaction you should consider all the circumstances of the case, and while the debtor retaining possession or the fact of the insolvency of the mortgagor do not, as a matter of law, determine the transaction to be fraudulent, yet in determining the question of fact you may consider the insolvency of the mortgagor, if he was insolvent, the fact of his retaining possession of the goods mortgaged, if he did so retain them, and what agreement, if any, was made between the parties with reference to the disposition that should be made of the goods so in his possession; and from all the evidence and circumstances in the case you will determine whether the transactions between the plaintiffs and Hamilton were in good faith, or whether they were designed and intended by the parties to defraud the other creditors of Hamilton." clearly no foundaThere is no reser On the face of the instruments there is tion for the instruction which was refused. vation of interest to the mortgagor. On the contrary, the express provision is that if he defaults in payment, if he attempts to dispose of or remove from the county the mortgaged property, or any part of it, and whenever the mortgagee Opinion of the Court. shall see fit, the latter may take immediate possession. While from the fact that the property mortgaged is a stock of goods in a store, possession of which is left with the mortgagor, there may be an implication that sales at retail by him were contemplated; yet express authority is given to the mortgagee to take possession at the first sale, and before the maturity of any one of the secured notes. So that upon the face of the mortgages there is nothing to suggest or justify the instruction. The mortgagor was put upon the stand as a witness for the plaintiffs in error, and testified as follows: "At the time I executed the first mortgage to Sperry, Watt & Garver it was understood between Mr. Ayers" (he being the attorney of the mortgagees)" and me that I was to go on selling goods in the ordinary way, and that I would be able to pay out. I was to use the money received from the sale of goods and use some of the money to buy goods, and I was to pay out of the proceeds the running expenses of the establishment and to take out whatever was needed for the support of myself and family, and to use the money in buying goods as I saw proper in carrying on the business, filling up the stock, and all that, and the money deposited in the bank that I did not need for the other purpose was to be applied on the payment of the debt." This testimony was repeated by him in different words, but disclosing no additional facts; and it is upon this statement of the understanding between him and the attorney of the mortgagees that this instruction was based. He did not in fact use any of the proceeds of the sales made by him for his own support, although his possession was not disturbed by the attachment until after the 13th of August, 1882, but used the entire proceeds in buying some additional goods for the store and in paying his debts. Perhaps this is only material on the question of good faith, and does not detract from the damaging effect, if any there be, of the understanding between the parties at the time of the execution of the mortgage. So the question is presented, whether, as a matter of law, a mortgage given by a merchant on his stock of goods to secure debts not yet due, which upon its face has no imperfections, contains no reservations for the benefit of the mortgagor, and is appar Opinion of the Court. ently only for the security of the mortgagee, and gives him full power to take possession on default in payment, or on any misconduct of the mortgagor, or whenever he pleases, is in validated by the fact of a parol understanding, at the time of its execution, that the mortgagor may use the proceeds of his daily sales to support himself, and to keep up the stock by purchases, applying only the surplus, but all of that, to the payment of the mortgage debt; or whether such an understanding is simply to be taken into consideration, together with the other circumstances, as bearing upon the question of the good faith of the parties. The contention of the plaintiff in error is in support of the first alternative of this question, and he relies mainly on the cases of Bank of Leavenworth v. Hunt, 11 Wall. 391; Robinson v. Elliott, 22 Wall. 513, and Means v. Dowd, 128 U. S. 273. While there are some points of similarity between each of those cases and this, and while there are observations in the opinions filed in them pertinent and correct with reference to the special facts which, if disconnected from those facts and applied here, might seem authoritative, yet there are clear and sufficient reasons why neither the decisions nor the opinions should control this case. In Bank of Leavenworth v. Hunt, the validity of a chattel mortgage was in question. But it had not been filed in the office of the register of deeds, as required by the statutes of Kansas, and under those statutes was, therefore, void as against creditors. It was said in the opinion that it was void for another reason, and that was, that the mortgagors were permitted to remain in possession and to continue to sell the goods as before the mortgage. But as appears from the statement of facts, these sales were not made with a view of appropriating the surplus proceeds to the payment of the mortgage debt, but for the sole benefit of the mortgagors. In Robinson v. Elliott, a case coming from Indiana, the objection to the chattel mortgage appeared on the face of the instrument, in that it permitted the mortgagor not only to retain possession, but to sell and buy as theretofore, with no stipulation for the application of the surplus proceeds to the payment of the mortgage debt, the only stipulation being that |