Citizens' Nat. Bank v. Elk Mfg. Co., 1372-5531.

• Decision Date: 28 June 1930
• Docket Number: No. 1372-5531.,1372-5531.
• Citation: 29 S.W.2d 1062
• Parties: CITIZENS' NAT. BANK OF ABILENE et al. v. ELK MFG. CO.
• Court: Texas Supreme Court

29 S.W.2d 1062

CITIZENS' NAT. BANK OF ABILENE et al. v. ELK MFG. CO.

No. 1372-5531.

Commission of Appeals of Texas, Section A.

June 28, 1930.

Error to Court of Civil Appeals of Eleventh Supreme Judicial District.

Action by the Elk Manufacturing Company against the Citizens' National Bank of Abilene and others. Judgment against the plaintiff was reversed and remanded by the Court of Civil Appeals [18 S.W.(2d) 747], and the defendants bring error.

Judgment of the Court of Civil Appeals reversed, and judgment of the trial court affirmed.

Wagstaff, Harwell, Wagstaff & Douthit, of Abilene, and O. L. Parish, of Ballinger, for plaintiffs in error.

Scarborough, Ely, Brown & King, Dallas Scarborough, and Scarborough & Wilson, all of Abilene, for defendant in error.

SHARP, J.

For a partial statement of the material facts of this case, we quote the following statement from the opinion of the Court of Civil Appeals:

"Plaintiff sold to one G. B. Brown certain pieces of machinery known as burr extractors, which were placed by Brown in cotton gins owned by him at Tuscola, Taylor county, and Anson, Jones county. The contracts for the purchase of these burr extractors both provided, in substance, that until the purchase price therefor was paid in full the title and ownership thereof should remain in the seller, and that, in case of default in any payment, the owner and holder of the notes executed on the date of the sale should be entitled to declare all sums then unpaid due and payable and should have authority to take possession of said property. These contracts were entered into in the spring and summer of 1926. The machinery was delivered and installed in the two cotton gins. Thereafter, and on the 1st day of December, 1926, Brown executed to J. O. Shelton trustee for the Citizens' National Bank of Abilene, a deed of trust to the lands upon which these cotton gins were situated. The deed of trust was to lands only, and did not mention any machinery or fixtures.

"This deed of trust was executed for the purpose of securing the bank in the payment of a note then executed in the sum of more than $24,000, and recited that that note was given in lieu of the balance of $15,938.13, on a prior note of Brown's to the bank, which prior note was fully described in a deed of trust dated March 21, 1925, and duly recorded. The $24,000 note also included the sum of about $7,200 advanced by the bank to Brown for the purpose of paying off certain indebtedness owing by Brown to the Murray Company. The deed of trust was properly placed of record.

"Thereafter, the conditional sales contract between plaintiff and Brown was filed and registered as a chattel mortgage. During the year 1927 Brown filed a petition in bankruptcy in the United States District Court for the Northern District of Texas, at Abilene, and was by that court duly adjudged a bankrupt; his estate passing into the hands of the trustee in bankruptcy for administration. In due time the defendant bank filed its claim in bankruptcy and sought a foreclosure of its deed of trust lien. The claim was allowed and the property sold. At the sale the bank and defendant H. Gieske became the purchasers, and a deed was made to them by the trustee.

"At the time of the foreclosure the plaintiff asserted a lien on the burr extractors which it had sold to Brown. By reason of the fact that the referee in bankruptcy was disqualified to pass on the priority of the liens as between the plaintiff and the defendants, it was agreed by all parties that the plaintiff would have a right to bring suit in the district court of Taylor county to establish the validity of its lien, if it had a lien; and it was further agreed that if its lien was established it would be foreclosed on the respective pieces of machinery sold by it to Brown, and that, should it prevail, a reasonable rental value should be paid for the use of the machinery during the ginning seasons of 1927 and 1928. The sale of the property through the bankrupt court by reason of the facts above stated was made without prejudice to the rights of plaintiff to establish its lien in the state court.

"The instant suit is a consolidation of two suits brought by the plaintiff, the one concerning the Tuscola property and the other the Anson property. By its suit plaintiff is seeking to establish its title to, and right to possession of, the particular machinery sold by it to Brown, and is claiming rents for the use of the machinery. Alternatively, plaintiff is suing for damages for the conversion thereof by the defendants. The case was tried before the court without the aid of a jury and judgment was entered for the defendants. No findings of fact or conclusions of law appear in the record." 18 S.W.(2d) 747.

The undisputed facts show that G. B. Brown executed a deed of trust dated December 1, 1926, to J. O. Shelton, trustee for the Citizens' National Bank of Abilene, and gave a lien upon certain lots or tracts of land described as follows: Lots Nos. 12, 13, and 14, in block 46, in the town of Tuscola, Taylor county, Tex.; a part of block No. 169, and lots Nos. 5 and 6 in block No. 170, in the town of Anson, Jones county, Tex., together with all and singular the rights and appurtenances thereto in any wise belonging. That a deed of trust lien was given upon the foregoing property to secure the payment of a certain indebtedness due the Citizens' National Bank of Abilene in the sum of $24,265. 10; that this amount represented a note executed by G. B. Brown of that date and was given in lien and extension of a certain indebtedness in the sum of $7,171.48, due by G. B. Brown to the Murray Company, as evidenced by certain notes theretofore executed by the said Brown to the said Murray Company, and the further sum of $15,938.13, evidenced by a note executed by Brown payable to the bank. It was further admitted that Brown was the owner of the lots above described and had been the owner thereof since the 14th day of May, 1923, and that the bank, at the time Brown executed the deed of trust to Shelton, trustee, for the bank, advanced that amount of money to take up the indebtedness that the said Brown owed the said Murray Company for gin machinery; that the deed of trust dated the 1st day of December, 1926, above described, was recorded in Taylor county on the 2d day of December, 1926; that the said G. B. Brown owned two gins, one located in the town of Tuscola, in Taylor county, and one in the town of Anson, Jones county; that G. B. Brown gave an order to the Elk Manufacturing Company, dated April 24, 1926, for one Elk Burr Extractor and executed therefor two notes, each for the sum of $1,100, one due December 1, 1926, and the other due December 1, 1927. The order contained the following:

"Said machinery, upon its receipt will be located at or near Anson in the county of Jones, State of Texas.

"It is the condition of this sale and purchase that until the purchase price is paid in full, together with the interest and any cost incurred in the collection thereof, that the title and ownership of said property shall be and remain in the Elk Manufacturing Company."

That G. B. Brown gave an order for machinery to the Elk Manufacturing Company, dated June 17, 1926, for one Elk burr extractor, and executed therefor two notes, one for the sum of $850, due January 1, 1927, and one for the sum of $850, due January 1, 1928, and containing the same stipulations as are contained in the foregoing order, which have already been set out, except that this machinery will be located at or near Tuscola, in Taylor county, Tex. It was further agreed that the foregoing deed of trust was filed for record in Jones county on December 6, 1926, and that on or about the 1st of August, 1927, G. B. Brown filed a petition in bankruptcy in the federal court at Abilene and was adjudged a bankrupt; that at that time Brown had not conveyed the title to the property above described and same passed to the trustee in bankruptcy and charged with whatever liens that were against it. In due time the foregoing mortgage was foreclosed in said court and deed executed by the trustee in bankruptcy and approved by the court to the property, and same was conveyed to the Citizens' National Bank and to H. Gieske.

The testimony further tends to show that G. B. Brown had been in the ginning business for thirty-five or forty years and was the owner of several gins; that the burr extractors involved in this suit were put in the gins to improve the service, and most of the gins in this country had begun to install them; that the burr extractors were very heavy and weighed something like 9,000 pounds, and that a platform about twenty or thirty feet across the center of the building was built to take care of this machinery and cleaning system. They were heavy machines and required substantial support. There was testimony to the effect that the machines, or part of them, were nailed or screwed to the platform; that there was also another equipment that carried the refuse out of the gin, which was connected with the burr extractor, and the hulls from the extractor went through a chute or conveyor out of the building; that this machine stands on a platform which goes down and connects with the floor and is held up by heavy pieces of timber of some kind. The burr extractor is driven from the line shaft which is connected with the engine. When the extractor was installed an additional wheel for belts was made. This machine operates from a pulley from a counter shaft under the platform; that it is operated with a belt on a pulley, which operates with two belts, one on each end of the machine.

The agent of the Elk Manufacturing Company testified substantially as follows: "This burr extractor works on each side of this cleaner. You take a gin and install this burr extractor, you would have to raise this 19 inches. You have to build a platform; these cleaners are supported by a platform. This machine comes...