Citizens State Bank of Dalhart v. Farmers Union Livestock Co-op. Co.

• Decision Date: 08 May 1948
• Docket Number: 37034.
• Citation: 165 Kan. 96,193 P.2d 636
• Parties: CITIZENS STATE BANK OF DALHART v. FARMERS UNION LIVESTOCK COOPERATIVE CO.
• Court: Kansas Supreme Court

193 P.2d 636

165 Kan. 96

CITIZENS STATE BANK OF DALHART v. FARMERS UNION LIVESTOCK COOPERATIVE CO.

No. 37034.

Supreme Court of Kansas

May 8, 1948

Appeal from District Court, Sedgwick County, Division No. 1; Ross McCormick, Judge.

Action by Citizens State Bank of Dalhart against Farmers Union Livestock Cooperative Company for alleged wrongful conversion of mortgaged cattle. From order overruling plaintiff's demurrer to portion of defendant's answer, the plaintiff appeals.

Reversed with directions.

HOCH WEDELL and BURCH, JJ., dissenting.

Syllabus by the Court

1. In enacting our statute (G.S.1935, 58-301) pertaining to the recording of chattel mortgages and the notice such record imparts to subsequent purchasers and others the legislature was dealing with the question of recording mortgages in Kansas.

2. A resident of Dallam county, Texas, of which Dalhart is the county seat, executed a mortgage for the purchase price of cattle, in which mortgage the cattle were described as being situated in Meade county, Kansas, and branded with certain brands. It appears the cattle were not in Meade county nor branded with the brands described therein at the time the mortgage was executed, but that soon thereafter they were brought to Meade county and branded and the mortgage duly recorded in Meade county. The mortgage was not recorded in Texas. Held, these facts did not prevent the mortgage from being valid after the cattle were brought to Meade county Kansas, and branded and the mortgage there recorded.

3. The fact that one brands his cattle with a brand which is not recorded with our state brand commissioner does not affect his title to the cattle, nor does it invalidate a mortgage on the cattle which is otherwise valid.

4. The Federal Packers and Stockyards Act, 42 Stat. 159, 7 U.S.C.A §§ 181-229, was not intended to abrogate or disturb state laws respecting valid chattel mortgages on livestock delivered to a market agency at a stockyards operating in conformity to the act.

Daniel H. Moyer, of Wichita, (Chas. G. Yankey, Harvey C. Osborne, John G. Sears, Jr., and Dwight S. Wallace, all of Wichita, on the brief), for appellant.

Paul R. Kitch, of Wichita, and C. G. Myers, of Chicago, Ill. (Howard T. Fleeson, Homer V. Gooing and Wayne Coulson, all of Wichita, and C. F. Snerly, of Chicago, Ill., of counsel), for appellee.

HARVEY Chief Justice.

This was an action for the alleged wrongful conversion of mortgaged cattle. The appeal is from an order overruling plaintiff's demurrer to portions of defendant's answer.

In plaintiff's petition it was alleged (1) that plaintiff is a banking corporation organized and existing under the laws of Texas, with its place of business and post office address at Dalhart, Texas; (2) that defendant is a corporation organized under the laws of Missouri and authorized to do business in Kansas and has its principal place of business and registered office at Wichita; (3) that on July 26, 1945, plaintiff extended a loan to one J. E. Jones in the amount of $9888.88, evidenced by a note of that date due December 1, 1945; that to secure the note J. E. Jones, a single man and a non-resident of Kansas, executed his chattel mortgage on 215 head of cattle, 'now located and situated in the County of Meade, State of Kansas,' being 80 head of steers, yearlings and two year olds: 45 cows, four to eight years old, and 60 calves by their sides, being the same cattle purchased from Ray Barr; that the steers were branded 'C' on the right hip, the cows and calves were branded 'V' on the left shoulder or 'C' on the left hip, and the mortgage stipulated that it was given to secure the payment of the note, which represented the purchase price of the cattle. The mortgage contained the condition, among others, 'That so long as the possession of said property is permitted to remain with mortgagor the same shall not be sold, mortgaged or removed from the place above named without the written consent of the bank.'

It was further alleged that about October 8, 1945, defendant purchased from J. E. Jones approximately 208 head of the cattle covered by the chattel mortgage, and that at a later date, unknown to plaintiff, defendant sold the cattle to persons, firms or corporations, the names of which were unknown to plaintiff, and paid J. E. Jones, the sum of $10,727.00 for the cattle it purchased, which was their fair and reasonable value; that the cattle were clearly branded and easily identified as cattle covered by the mortgage; that the cattle were sold by Jones to defendant and were resold by defendant without the knowledge or consent of plaintiff; that due and proper demand has been made upon defendant for the payment to plaintiff by defendant of the loss sustained by plaintiff by reason of the unlawful sale of the cattle covered by plaintiff's mortgage, and that defendant has failed and neglected to pay the same, by reason of which fact defendant is indebted to plaintiff in the amount of the note with interest. The chattel mortgage was duly filed for record in the office of the register of deeds of Meade county, Kansas, on August 4, 1945, at 9:20 o'clock a. m.

Defendant filed an answer in which it admitted the allegations of paragraphs 1 and 2 of plaintiff's petition and generally denied each and other allegations in plaintiff's petition. Defendant further alleged (paragraph 4) that if the note and mortgage were executed and recorded with the register of deeds in Meade county, Kansas, as alleged in plaintiff's petition, such instruments were void insofar as the rights of an innocent third person, not a party thereto, are concerned, and as to such innocent third party the alleged registration would not impart constructive notice of their existence for one or several of the following reasons (set out in subparagraphs a to d). We copy the portion of the answer to which the demurrer was directed: '(c) That at the time said mortgages were purported to have been executed and acknowledged, the cattle and live stock purported to be described therein were not within the State of Kansas and were not within Meade County, Kansas, or at the place at which they were purported to be described therein.

'(d) That in said purported mortgages the plaintiff attempts to describe and identify the live stock by brands and that the brands used to describe said live stock were not owned by or recorded in the name of the plaintiff or the said J. E. Jones with the proper officials of the State of Kansas, and that neither the plaintiff nor the said J. E. Jones owned said brands or had the lawful right in any way to use said brands upon live stock or to use said brands in the description of live stock, and that neither the plaintiff nor the said J. E. Jones was the recorded owner of said brands or otherwise had lawful right to use said brands in the State of Kansas. (Amended by adding:)

'At the time said mortgage was executed the brands referred to therein had not been placed on said cattle but such brands as were later placed on said cattle were placed there at the direction of the plaintiff in Meade County, Kansas.'

The answer continues:

'Further answering plaintiff's petition, this defendant alleges and states that the Union Stock Yards located at Wichita, Kansas, is a stockyards as defined by Title III of the Packers and Stockyards Act of 1921 as amended, and which is Section 202, Title 7 U.S.C.A. and Section 302 of 42 Statutes 163.

'That the defendant, Farmers Union Livestock Cooperative Company is a market agency, buying and selling live stock on commission at the said Union Stock Yards, Wichita, Kansas, and registered with and licensed by the Secretary of Agriculture of the United States of America, to engage in such business as a market agency at said Union Stock Yards, Wichita, Kansas, in buying and selling live stock on commission pursuant to the terms and conditions of said Packers and Stockyards Act of 1921, as amended and the lawful rules and regulations of the Secretary of Agriculture.

'That this defendant in the conduct of its said business as a market agency at the Union Stock Yards, Wichita, Kansas, as aforesaid, is required to receive and sell, without discrimination, all live stock consigned and shipped to it for sale at the said Union Stock Yards, Wichita, Kansas, and which live stock has been raised, conditioned, produced and shipped from a large number of different states of the Union; that this defendant is required to serve all applying for its services, without discrimination, and at rates and charges determined, fixed and approved by the Secretary of Agriculture of the United States of America, pursuant to the said Packers and Stockyards Act; that this defendant can no longer select those whom it will serve and those whom it will not serve, but is required to serve all those applying for its services.

'That if at any time this defendant as a market agency received and sold any live stock shipped and consigned to it for sale by J. E. Jones, and if the plaintiff had any interest in any such live stock, which this defendant denies, that this defendant received and sold said live stock acting as a market agency, without notice or knowledge of any kind that the plaintiff claimed any right or interest in said live stock, or any knowledge that anyone had an interest in said live stock other than the shipper and consignor, J. E. Jones; that the defendant, Farmers Union Livestock Cooperative Company, performed its duties as required by the Packers and Stockyards Act, the lawful rules of the Secretary of Agriculture, and immediately accounted to the shipper and consignor, the said J. E. Jones, for the full amount of the net proceeds of said live stock, and that this defendant never knew or had any

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