Barber v. Reina Nash Motor Co.

• Decision Date: 08 September 1953
• Docket Number: 2601,Nos. 2600,s. 2600
• Parties: BARBER, v. REINA NASH MOTOR CO. et al. (two cases).
• Court: Wyoming Supreme Court

Page 928

260 P.2d 928

72 Wyo. 65

BARBER, v. REINA NASH MOTOR CO. et al. (two cases).

Nos. 2600, 2601.

Supreme Court of Wyoming.

Sept. 8, 1953.

Mahoney & Wilkerson, J. F. Mahoney, Casper, for appellants.

Donald E. Chapin, Casper, for Universal C. I. T. Credit Corp.

BLUME, Chief Justice.

These are cases involving the right to certain automobiles in controversy in this case which were awarded to the Universal C.I.T. Credit Corporation, intervener herein, and from the order to that effect the plaintiff, Otis Barber, and the receiver appointed in the case have appealed to this court.

The plaintiff commenced the action against the Reina Nash Motor Company, defendant herein, on May 27, 1952. He alleged in his petition the following facts to wit: That heretofore and on April 23, 1952, plaintiff loaned to defendant, Reina Nash Motor Company, the sum of $17,000 secured by a chattel mortgage; that subsequent to the execution of the note and mortgage, the defendant, Reina Nash Motor Company, caused to be paid certain obligations then owing on motor vehicles thereby vesting unencumbered title to these vehicles in the defendant but that notwithstanding such payment certain parties repossessed and took possession of these vehicles illegally and without cause, thereby jeopardizing and endangering plaintiff's security under the chattel mortgage as aforesaid; that at the time of making the loan to the defendant, the latter represented to the plaintiff that the proceeds thereof would be used to satisfy all then outstanding obligations of the company and that the loan would be amply sufficient to satisfy all its obligations, but thereafter between the date of the loan and the filing of this petition numerous creditors have made claims on the defendant and in some cases have filed attachment and garnishment proceedings against corporate assets, including assets which the plaintiff claims as assets securing his loan; that the manager of said corporation has disappeared since May 20, 1952, and due thereto the corporation premises have been closed; that the corporate liabilities of the defendant are in the neighborhood of $65,000; that the defendant is insolvent resulting from misappropriation of the corporation's funds by some of the officers of the corporation; that the appointment of a receiver by the court is necessary for the purpose of conserving and marshalling the assets of the corporation and determining the claims against it, ratably pay said claims and determine what fraudulent acts and wrongdoings exist. Plaintiff accordingly prayed that the claim of plaintiff against defendant corporation be adjudged to be a first and prior claim on all assets of the corporation; that the receiver wind up the business of the defendant corporation; that he receive proof of the claims against it; that he carry out any further functions proper in the case of a receiver.

The chattel mortgage mentioned in plaintiff's petition was on the appliances and all the equipment located on the premises owned by the defendant, but did not cover any automobiles.

On May 27, 1952, after the filing of the petition of the plaintiff, the court entered an order appointing Jack D. Emery of Casper as receiver of the defendant to take charge of the property of the defendant including books and records, chattels and assets and directing that the receiver should be vested with the usual power and rights of receivers appointed by the court. The receiver accordingly took possession of the property.

On June 10, 1952, the Universal C.I.T. Credit Corporation filed a petition to intervene in the action. Leave to intervene was granted by the court on June 16, 1952. Thereafter on June 18, 1952, the intervener filed its petition setting out three causes of action. This appeal involves only the second cause of action. In that cause of action, the intervener alleged that for a valuable consideration, the defendant executed to the intervener eighteen chattel mortgages in various amounts, the first being executed on February 20, 1952, and the last on May 16, 1952; that these mortgages were filed of record in Natrona County, Wyoming, on May 27, 1952, prior to the appointment of the receiver in this action, and that thereafter titles to these automobiles were issued to the defendant herein in accordance with the motor vehicle laws of the State of Wyoming, reflecting on the face thereof the lien of the intervener; that no payment has been made on the mortgages although the demand has been made upon the defendant as well as the receiver and failure to pay the mortgages authorizes the intervener to take possession of the chattels involved in these mortgages. The intervener accordingly prayed that the receiver deliver the possession of the automobiles covered by these mortgages.

Plaintiff answering the second cause of action of the intervener admitted that the latter advanced funds to the defendant Reina Nash Motor Company for some of the automobiles but denied that to be true as to others; plaintiff admitted that the mortgages were filed as alleged by the intervener and denied that they were filed prior to the appointment of the receiver in the action. On July 22, 1952, the receiver appeared in the action and answered the second cause of action of the intervener in like manner as the plaintiff herein.

By agreement of the parties and the order of the court, the automobiles involved in the second cause of action of the intervener were sold and the money was deposited in court awaiting a determination of the court as to who should receive the amount realized from the sale of the chattels.

On August 18, 1952, the court heard the evidence in the contest between the intervener on the one hand and the plaintiff and the receiver on the other in connection with the second cause of action of the intervener. The court found that some thirteen chattel mortgages executed by the defendant to the intervener were valid and subsisting chattel mortgages and directed that the receiver pay to the intervener the sum of $10,000 realized from the sale of the chattels covered by these chattel mortgages. An order to that effect was entered by the court dated the 15th day of September 1952, and the plaintiff and the receiver have appealed as above mentioned to this court.

Testimony taken in the case is comparatively brief. It appears therefrom that the chattel mortgages involved in the second cause of action of the intervener were executed on the dates heretofore mentioned and were filed on May 27, 1952, at about 10:30 in the forenoon of that date. The receiver herein was appointed on May 27, 1952, the exact time not appearing. The evidence further shows that the loan was made as plaintiff alleged, but that the value of the chattels included in plaintiff's mortgage is not great enough to pay the $17,000 loaned to the defendant, but falls short of paying the indebtedness due the plaintiff in the sum of about $5,000. By inference it may be gathered that the defendant corporation is in fact insolvent. The receiver introduced no evidence in the case but stated to the court before the close of the hearing above mentioned that he appeared for the purpose of representing all of the creditors, including attachment creditors, who have filed claims in this matter and that he had filed his answer to the intervener's petition for the purpose of challenging the validity of the intervener's mortgages.

The questions of law which we must determine are as to whether or not the chattel mortgages of the intervener, in so far as involved herein, are valid, first as against the plaintiff and attaching creditors herein, and second as against the receiver. The authorities are in hopeless conflict, and since the questions involved are comparatively new in this state, and no adequate annotation has been found, we have deemed it advisable, not only in order to obtain a comprehensive view of the points before us but also that the solution of future cases may be easier, to make a somewhat more critical analysis of the cases on the subject than is usually found. We might have avoided such critical analysis on the first point here involved, and relied largely on the texts on the subject, except for the fact, as will be noted hereafter, that it will shed considerable light on, and enable us to more easily determine, the second--which is the most important point in the case. Certain matters in connection with chattel mortgages considered in other cases need not be determined. Thus we shall assume that the mortgages involved herein were duly executed; that has not been questioned in the arguments of counsel herein. There is sufficient testimony herein that neither the plaintiff nor the receiver had notice of the chattel mortgages of the intervener. Furthermore, it is not necessary herein to distinguish between cases in which the chattel mortgagees took possession of the chattels and the cases in which the chattel mortgage was filed, and we shall assume that possession is equivalent to filing or recording the mortgage, and vice versa, although it is doubtless true that taking possession may cure defects which could not be cured by filing. Martin v. Holloway, 16 Idaho 513, 102 P. 3, 25 L.R.A.,N.S., 110; Garner v. Wright, 52 Ark. 385, 12 S.W. 785, 6 L.R.A. 715; Security First Nat. Bank of Los Angeles v. Sartori, 34 Cal.App.2d 408, 93 P.2d 863; American Nat. Bank of Sapulpa v. Harris, 10 Cir., 84 F.2d 181. Furthermore, while the plaintiff himself took a chattel mortgage on certain appliances and equipment these chattels are not sufficient to pay the indebtedness due him, and he claims to be a general creditor of the insolvent corporation to the extent of about $5,000, and we shall not question that any more than has been done by counsel in the case.

The statutes applicable herein are as follows:

Section 59-105, W.C.S., 1945, provides: 'Every mortgage, bond, conveyance or other instrument intended to operate as a...