Bank of Denver v. Legler

• Court: Colorado Supreme Court
• Writing for the Court: KNAUSS; SUTTON, C. J., and DAY
• Citation: Bank of Denver v. Legler, 350 P.2d 1059, 142 Colo. 333 (Colo. 1960)
• Decision Date: 04 April 1960
• Docket Number: No. 18636,18636
• Parties: DANK OF DENVER, a Banking Corporation, Plaintiff in Error, v. George LEGLER, Defendant in Error.

Page 1059

350 P.2d 1059

142 Colo. 333

DANK OF DENVER, a Banking Corporation, Plaintiff in Error, v. George LEGLER, Defendant in Error.

No. 18636.

Supreme Court of Colorado, In Department.

April 4, 1960.

Rehearing Denied April 25, 1960.

S. F. Davis, Harold Potashnik, Denver, for plaintiff in error.

Albert V. Witham, Jack R. Viders, Denver, for defendant in error.

KNAUSS, Justice.

This action involves the right to possession of certain service station equipment as between contending chattel mortgagees. The facts, briefly stated, appear as follows: Prior to March 13, 1956, defendant in error George Legler was the owner of a service station located at 2200 West 29th Avenue in Denver, known as Legler Chevron Service Station. Several days prior to that date he had entered into negotiations with J. H. Morrow, Marvin G. Kelly and A. C. Ihle for the sale of the station for a total purchase price of $5,500.

Morrow and his associates applied to the plaintiff in error Bank of Denver for a loan to enable them to acquire the service station, and after an inspection and appraisal by a representative of the bank, Morrow was advised that a loan of $4,000 would be made upon the security of the property and equipment involved, together with other property which Morrow and his associates then owned. On March 13, 1956, Morrow, Kelly and Ihle executed and delivered to the Bank of Denver their note and chattel mortgage to secure the sum of $4,647, covering the property they proposed to purchase from Legler, as well as the other property mentioned. This chattel mortgage was filed for record on March 21, 1956. On March 16, 1956, Legler sold and transferred the service station and equipment to Morrow, Kelly and Ihle, by bill of sale, receiving in return therefor a cashier's check of the Bank of Denver for $4,000 and a note for $1,500, representing the balance of the purchase price, payable within three years at the rate of $500 per annum, and secured by a chattel mortgage on the property transferred. Legler did not file his chattel mortgage for record until more than a year after its execution. Default having occurred as to both chattel mortgages, Legler and the Bank instituted separate actions for possession of the mortgaged property. The action in which the Bank was plaintiff and Legler and others defendants, was tried to a jury resulting in a directed verdict and judgment in favor of Legler. A like judgment followed in the consolidated case brought by Legler. The Bank is here by writ of error seeking reversal.

It is clear that at the time Morrow, Kelly and Ihle executed and delivered their chattel mortgage to the Bank they had no title to the property of Legler which they purported to mortgage. Legler was under no obligation to sell, no contract had been made, and no earnest money paid. The Bank had made no contact with Legler, and so far as the record reveals Legler had no knowledge of the dealings between the purchasers and the Bank, nor of the circumstances under which the Bank proposed to make the loan to Morrow and his associates. There is nothing in the record to suggest that Legler waived any of his rights, or that he consented to subordinate his interest in the property to that of the Bank. There was in fact no contact at all between the Bank and Legler, other than that a representative of the Bank, who did not identify himself as such, called at Legler's establishment, asked to be allowed to look over the equipment, was told to 'help himself.'

It is the contention of counsel for the Bank that the mortgage executed by Morrow, Kelly and Ihle, filed for record almost a year prior to the filing of the Legler mortgage, established a superior right over any title or interest of Legler; that while perhaps of questionable validity at the time it was executed, because of lack of title in the...