Aultman & Taylor Machinery Co. v. Kennedy

Decision Date03 October 1901
Citation87 N.W. 435,114 Iowa 444
PartiesTHE AULTMAN & TAYLOR MACHINERY CO. v. JAMES KENNEDY, Defendant, RED RIVER VALLEY NATIONAL BANK OF FARGO, N. D., Intervener, Appellee
CourtIowa Supreme Court

Appeal from Des Moines District Court.--HON. JAMES D. SMYTHE, Judge.

ACTION at law, aided by attachment. The intervener claimed the property attached under certain mortgages executed by defendant in the state of North Dakota. There was a trial to the court, resulting in a judgment finding intervener entitled to the possession of the property, and plaintiff appeals.

Affirmed.

Dodge & Dodge and Stutsman & Stutsman for appellant.

L Monte Cowles and C. L. Poor for appellee.

OPINION

DEEMER, J.

James Kennedy is a resident of North Dakota. On and prior to August 4, 1898, he was temporarily engaged in work at or near Burlington, in this state, in which he was using horses mules, wagons, scrapers, plows, etc. During the night of August 4th Kennedy packed his entire outfit on board the cars, to be shipped out of the state. Hearing of his purpose, plaintiff, a creditor, commenced an attachment suit, and levied on the property hitherto described. On the 14th day of March, 1898, Kennedy, who, as we have said, was a resident of North Dakota, executed a chattel mortgage covering certain personal property then in Cass county, in that state (that being the place of his residence), and the property attached in this case, which was temporarily in this state, to the Red River National Bank intervener. This mortgage was filed for record with the register of Cass county, and duly recorded as required by the laws of the state where executed. The district court found that plaintiff had actual notice of intervener's mortgage before it made its levy, and that conclusion must be accepted as a verity, in view of the conflict in the evidence on this proposition. The mortgage was not recorded in this state, but was recorded in the county and state where the mortgagor resided. Part of the property covered thereby was in the county where the mortgage was recorded, and part of it was temporarily in this state. It must be conceded that the recording of the mortgage in North Dakota did not, according to the great weight of authority, give constructive notice to purchasers or attaching creditors of property situated in this state at the time the mortgage was executed. Langworthy v. Little, 12 Cush. 109; Ames Iron Works v. Warren, 76 Ind. 512 (40 Am. Rep. 258); Green v. Van Buskirk, 7 Wall. 139 (19 L.Ed. 109); Hervey v. Locomotive Works, 93 U.S. 664 (23 L.Ed. 1003); Golden v. Cockril, 1 Kan. 259; Clark v. Tarbell, 58 N.H. 88. Had the property been in the state of North Dakota when the mortgage was executed, and had the mortgage been duly recorded according to the laws of that state, a subsequent removal of the property to this state would not have defeated the mortgagee's lien. Smith v. McLean, 24 Iowa 322; Simms v. McKee, 25 Iowa 341; Fisher v. Friedman, 47 Iowa 443.

As the property was not in Dakota when the mortgage was executed and recorded, plaintiff was not bound to search the records of that state to discover if there were any liens thereon; and as the mortgage was not recorded in this state, it had no constructive notice thereof. The district court found that it had actual notice of the mortgage before it levied its attachment, and for that reason, as we understand it, rendered judgment in favor of intervener. This conclusion is said to be erroneous, for the reason that the mortgage was invalid under the laws of North Dakota, where executed, and where it was to be performed; and, as it was invalid there, it was and is invalid everywhere. As a general rule, the lex loci contractus governs the validity and effect of a voluntarily executed conveyance or transfer of personal property; and, if the instrument be invalid where made, it will not be sustained elsewhere. Black v. Zacharie, 3 HOW 483 (11 L.Ed. 690); Kerr v. Urie, 86 Md. 72 (37 A. 789); Marvin Safe Co. v. Norton, 48 N.J.L. 410 (7 A. 418). Appellant seeks to invoke this rule, and pleads the statutes of North Dakota, which provide, in substance, that a mortgage is void, as against creditors of the mortgagor and subsequent purchasers in good faith for value, unless the original or an authenticated copy is filed in the office of the register of deeds where the property mortgaged, or any part thereof is at such time situated. It will be noticed that an unrecorded mortgage is not declared invalid as between the parties. As to them it is undoubtedly valid. Our own statute is somewhat similar to this one, and it is universally held that such a mortgage is not invalid. Allen v. McCalla, 25 Iowa 464, and cases cited under section 2906 of the Code. The rule that the validity, interpretation, and effect of a contract are to be governed by the lex loci contractus applies only to the rights and obligations of the parties to the contract. The question in this case is not the validity of the contract between the parties. It must be conceded to be good, no matter what the locus of the property at the time the mortgage was executed. The recordation required by the statute was to preserve the lien as against third parties, and the real question is one of priority between lienholders, which must be determined by the law of the place where the property lies, and where the court sits which is to decide the case. Harrison v. Sterry, 5 Cranch 289 (3 L.Ed. 104). The legislature of North Dakota probably had the right to regulate contracts made between citizens residing within its own jurisdiction, but it had no right to fix the priorities of non-resident creditors in property located in another jurisdiction. In other words, it could declare a mortgage executed within its own jurisdiction invalid as between the parties, but it could not fix the priorities of creditors in property located in another jurisdiction, in contests arising in another forum. As between Kennedy and the Red River Valley National Bank, the mortgage on property temporarily within the jurisdiction of this state was valid. There was nothing in the contract contra bonos mores, and no reason exists for not enforcing it in this state, unless it be contrary to our laws. True, the legal situs of the property was the lex situs of the owner, but according to the law of that situs the mortgage was valid between the parties. The controversy here is not between the mortgagor and mortgagee, but between the mortgagee and a creditor who attached the property in this state. In such a case the law of the actual situs of the property controls, because of the effect given to it as the lex fori. Minor, Conflict of Laws, section 14. All questions pertaining to the nature and extent of the remedy are governed by the lex fori. Lewis v. Bush, 30 Minn. 244 (15 N.W. 113). In Marvin Safe Co. v. Norton, 48 N.J.L. 410 (7 A. 418), a contract for the sale of personal property was made and performed in Pennsylvania. The property was immediately transported to New Jersey, and afterward sold to a bona fide purchaser. Reservation of title in a conditional sale is by the law of Pennsylvania invalid as against creditors and bona fide purchasers. By the law of New Jersey such a reservation was valid, although no record was made of the contract. In a suit by the original vendor to recover the property, the purchaser from the conditional vendee set up in defense the law of Pennsylvania. It was held that, his contract of purchase having been made in New Jersey, its legal effect and the purchaser's right under it were determinable by the law of that state, by which law he acquired only such title as his immediate vendor had when the property was brought into it and...

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