First Nat. Bank & Trust Co. v. Stock Yards Loan Co.

• Decision Date: 31 May 1933
• Docket Number: No. 9598.,9598.
• Parties: FIRST NAT. BANK & TRUST CO. OF OKLAHOMA CITY, OKL., v. STOCK YARDS LOAN CO.
• Court: U.S. Court of Appeals — Eighth Circuit

65 F.2d 226 (1933)

FIRST NAT. BANK & TRUST CO. OF OKLAHOMA CITY, OKL., v. STOCK YARDS LOAN CO.

No. 9598.

Circuit Court of Appeals, Eighth Circuit.

April 26, 1933.

Rehearing Denied May 31, 1933.

W. F. Wilson, of Oklahoma City, Okl., and Henry S. Conrad, of Kansas City, Mo. (W. F. Wilson, Jr., R. E. Owens, and Wilson, Wilson & Owens, all of Oklahoma City, Okl., and Hale Houts, of Kansas City, Mo., on the brief), for appellant.

R. B. Caldwell, of Kansas City, Mo. (R. R. Brewster and McCune, Caldwell & Downing, all of Kansas City, Mo., on the brief), for appellee.

Before STONE, VAN VALKENBURGH, and BOOTH, Circuit Judges.

BOOTH, Circuit Judge.

This is an appeal from a judgment based upon a directed verdict at the close of plaintiff's case in an action at law brought by appellant, the First National Bank & Trust Company (hereafter called the bank) against the Stock Yards Loan Company (hereafter called the loan company). The action was for conversion of cattle owned by one Jesse C. Moore upon which the bank claimed liens under chattel mortgages. The complaint contained five counts. The first alleged the conversion of 400 white-faced cattle on or about April 23, 1929, in Pontotoc county, Okl.; the second alleged the conversion of 99 white-faced cattle on or about June 22, 1929, in Pontotoc county.

The chattel mortgage under which the bank claimed a lien on said cattle mentioned in counts 1 and 2 was executed by Moore October 18, 1927, and covered 1,095 white-faced cattle said to be located in Pontotoc county. This chattel mortgage was filed in Pontotoc county October 19, 1927. It was later renewed on April 10, 1929, covering 993 white-faced cattle, located in said Pontotoc county, and the mortgage was filed in said county April 16, 1929. The first chattel mortgage was thereupon released by the bank.

The third count alleged the conversion of 114 plain cattle on or about May 25, 1929, in Pontotoc county.

The fourth count alleged the conversion of 211 plain cattle on or about June 8, 1929, in the same county.

The fifth count alleged the conversion of 120 plain cattle on or about July 6, 1929, in the same county.

The chattel mortgage under which the bank claimed a lien on said plain cattle mentioned in counts 3, 4, and 5 was executed by Moore on January 23, 1929, and covered the following described cattle:

"1,139 head of 2, 3 & 4 year-old past steers, averaging in weight 700 lbs. or more at this time, being fed 4 lbs. of cake and 8 bales of hay to the hundred per day, branded `9' on the left shoulder, some horned and some dehorned, 60% to 65% reds, some red and white spotted and a few plain colors — 264 head bought on the market at Fort Worth, 243 from D. F. Lancaster and the remaining 632 from O. L. Unsell and others, value $57.50 each. * * *

"Now located on the Jesse C. Moore ranch 3 miles Northeast of Scullin, Pontotoc County, Oklahoma."

This mortgage was filed in said county January 24, 1929.

Prior to September 13, 1929, the bank received the proceeds of the sale of 407 cattle, and on that date a renewal mortgage was executed by Moore covering the following described cattle:

"(732) head of plain steers, two's and three's weighing about 700 lbs. each, branded `9' on left shoulder or thus `R' on left side or `O' around left hip bone. Value $43,920.00; a good grade of plain cattle, various colors, mostly reds and red and white spotted, some Jerseys and Browns on them. * * *

"Now located on the Jesse C. Moore ranch 3 miles Northeast of Scullin, Pontotoc County, Oklahoma."

This renewal mortgage was filed in said Pontotoc county September 18, 1929, and the original mortgage was thereupon released by the bank. It is to be noted that this renewal mortgage was executed after the dates of the conversions alleged in counts 3, 4, and 5.

The loan company in its answer denied the validity of the bank's chattel mortgages; denied that they covered the cattle alleged to have been converted; alleged that the bank had waived its rights under the chattel mortgages by consenting that Moore might sell the mortgaged cattle when and to whom he pleased; alleged that the cattle mentioned in the third, fourth, and fifth counts as having been converted did not come within the description contained in the chattel mortgage said to be applicable to those counts, and were not covered by said mortgage; and alleged several other defenses.

At the close of the bank's evidence, the trial court directed a verdict in favor of the defendant loan company as to all of the counts on the ground of waiver by the bank of its mortgage rights; as to counts 3, 4, and 5 on the further ground that the chattel mortgage applicable to those counts did not by the description of the property contained therein cover the cattle alleged in those counts to have been converted.

The question of waiver by the bank of its rights relative to sale of the cattle, and the question of the description of the property contained in the chattel mortgage (Exhibit E) applicable to counts 3, 4, and 5, are the two main questions presented on this appeal.

The Matter of Waiver.

The waiver relied upon by the loan company is one arising from the conduct of the bank relative to the handling and sale by Moore of cattle covered by the chattel mortgages held by the bank.

Each of the chattel mortgages contained the following provisions:

"It is expressly stipulated and agreed that said cattle above described shall remain and be kept upon the premises described above, or in same county separate and apart from all other cattle, until the full payment of the indebtedness hereinafter described, unless sooner marketed or removed by and with the written consent of the mortgagee or assigns.

"* * * Until the default herein, or until possession has been taken by the second party as aforesaid, or the representatives or assigns of second party as aforesaid the first party may retain possession of said property. When marketed, the written consent of the second party having been first obtained, said property shall be consigned to market, and the proceeds applied to the payment of the above mentioned indebtedness and the surplus, if any, being paid to the first party. The first party shall not sell or attempt to sell, except in conformity herewith or remove or attempt to remove, from its present location in the county aforesaid, any part of said property."

Jesse C. Moore lived at Sulphur, Okl., which is about 80 miles from Oklahoma City, where plaintiff bank was located. Scullin is 8 or 10 miles east of Sulphur. It is about a three-hour drive from Oklahoma City. Moore was the vice president of the Farmers' National Bank at Sulphur, and owned and operated cattle ranches near Scullin.

The Scullin ranch contained about 8,500 acres; the Buckhorn ranch about 3,090 acres. The Scullin ranch was divided into pastures, and was located in three counties, Johnston, Pontotoc, and Murray, which cornered on each other. Witherspoon pasture (about 2,000 acres) and South Davis pasture (1,000 to 1,200 acres) and West Pontotoc pasture (about 1,800 acres) lay wholly in Pontotoc county. House pasture, Feeding pasture, and Sheep pasture lay wholly in Murray county. Quarantine pasture (1,600 or 1,700 acres) lay about two-thirds in Murray county and one-third in Pontotoc county. There was no fence on the county line. Vail pasture lay mostly in Johnston county, but a small part lay in Murray county. West Meadow pasture, Hippo pasture (1,300 or 1,400 acres), Red Tank pasture (about 1,800 acres), Meadow pasture (about 2,500 acres), Jackson pasture (about 1,200 acres), and Lester pasture, lay wholly within Johnston county. The headquarters of the ranch were in Murray county. The Buckhorn ranch was also in Murray county.

Plaintiff bank had loaned money to Moore for a number of years prior to the transactions here in controversy.

It would seem from the testimony of witness Kimbrough, foreman for Moore at the time, that the cattle alleged in count 1 to have been covered by the chattel mortgage dated October 18, 1927, were part of a shipment of about 1,500 calves which Moore brought in from Texas. They arrived at Dougherty, Murray county, late in November, 1927, were branded, and were then taken to the Ball farm, which is also in Murray county. After Christmas, 1927, these cattle were shifted, and part of them were put in the Quarantine and Witherspoon pastures.

Moore testified: "When the mortgage dated October 18, 1927, was executed, I would not say the cattle were located in Pontotoc County. There were different shipments of those cattle and I could not say that all of those cattle were unloaded at Dougherty. If they were unloaded at Dougherty, there was not a steer in the load referred to in the mortgage in Pontotoc County at that time."

Teter, vice president of the plaintiff bank, who handled the business of Moore with the bank, and had supervision over the loans and checking the security he gave for the loans, testified:

"Q. Mr. Teter, when you took your mortgage, or took this mortgage that you took on the 15th 18th of October, 1927, securing or purporting to secure a note for $32,850.00 you did not know whether the cattle described in that mortgage were then in Oklahoma or Texas, did you? A. No, we only knew that they were represented to us to be there and we had confidence in our customer. We could not say; no, we did not know, no.

"Q. You did not know whether Moore owned those cattle at that time, did you? A. Well, I guess not.

"Q. And you did not know where they were, did you, if he did own them? A. It should be answered by no. I don't suppose you would have personal knowledge about the —

"The Court: That is all.

"Q. And you did not know where the cattle were, did you? A. No."

That the cattle were indiscriminately shifted from one pasture to another without regard to county lines is quite apparent from the testimony.

In May, 1928, Teter made an inspection of Moore's cattle for the bank. He found...