Emerson-Brantingham Implement Company v. Faulkner

• Decision Date: 05 December 1925
• Docket Number: 26,242
• Citation: 241 P. 431,119 Kan. 807
• Parties: EMERSON-BRANTINGHAM IMPLEMENT COMPANY, Appellant, v. GREGG N. FAULKNER, Appellee
• Court: Kansas Supreme Court

241 P. 431

119 Kan. 807

EMERSON-BRANTINGHAM IMPLEMENT COMPANY, Appellant, v. GREGG N. FAULKNER, Appellee

No. 26,242

Supreme Court of Kansas

December 5, 1925

Decided July, 1925.

Appeal from Marshall district court; FRED R. SMITH, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. BILLS AND NOTES--Fraud--Failure of Consideration--Sufficiency of Evidence. In an action to recover on a promissory note the evidence considered and held not sufficient to support a defense of fraud and no consideration.

2. CHATTEL MORTGAGES--Loss of Lien--Consent to Sale. Where a mortgagee knows the mortgagor is a dealer, buying to sell in regular course of business, and consents to a sale by the mortgagor, the purchaser takes free from the mortgagee's lien.

Walter T. Griffin, of Marysville, for the appellant.

C. D. Smith, of Blue Rapids, and W. W. Redmond, of Marysville, for the appellee.

OPINION

HOPKINS, J.:

The action was one by an indorsee, after maturity, to recover on a promissory (title) note. Defendant prevailed and plaintiff appeals.

The plaintiff was a corporation engaged in selling grain separators and other machinery, with a branch house in Kansas City. M. P. Robinson & Son, of Blue Rapids, were dealers in plaintiffs' machinery, buying on credit and on dealers' discount, sometimes mortgaging the articles purchased and reselling to customers, with general consent of the plaintiff. In the spring of 1921, Robinson & Son gave their dealers' order to plaintiff and procured, under its terms, a certain Geiser threshing machine, giving back a chattel mortgage which was filed in Marshall county. The order provided, "It is expressly agreed by the dealer that all proceeds of the sale of machinery herein ordered, with the accompanying security, shall be assigned and delivered to the company as collateral security to the obligation of the dealer therefor." Oral and written communications between the company and Robinson & Son authorized and ratified resale. Subsequently Robinson & Son took a written order for the thresher in question, signed by the defendant and others, following which defendant gave the note in controversy. He received delivery of a one-third interest in the thresher, subject to the provisions of his order and note, that the title should remain in the vendor until paid. The defendant, with his cotenants, received and used the thresher during the threshing season of 1921. The original note and chattel mortgage given by Robinson & Son to the plaintiff being in default, plaintiff sent its collector to Blue Rapids to make collection. Being unsuccessful, he went to the place where the thresher was located and posted notices of sale under the chattel mortgage given by Robinson & Son. About this time the collector for plaintiff received from Robinson & Son the note in controversy. Payment was demanded of the defendant, which later resulted in this action. Trial was to a jury. The execution of the note, the correctness of credits and indorsements were admitted by the pleadings. Plaintiff proved title, ownership and possession; the defense was fraud and failure of consideration. Verdict for defendant.

The defendant contends that false and fraudulent representations were made to him in the sale of the one-third interest; that Robinson & Son, in selling the thresher to him stated that it was owned by them and was free and clear of encumbrance. He also testified that in the fore part of August, 1921, he learned that the plaintiff had a mortgage on it; that he thereupon drove to Marysville (county seat) and found record of a mortgage in the office of the register of deeds; that in September or the first part of October he promised Robinson to give him a chattel mortgage on some wheat to secure his note; that later in October, the plaintiff's collector called upon him and wanted him to give a new note for the machine; that he told him they had one note and he thought that was enough. He made two payments to Robinson & Son, one of $ 26.44 August 25, 1921, and one of $ 19.50 September 19, after he learned of the chattel mortgage to plaintiff; that when plaintiff's collector called upon him and made demand for payment, he told them to go ahead and foreclose on his interest in the thresher. From which it is clear the defendant ratified and confirmed his purchase. He neither pleaded nor proved rescission, made no offer to rescind, nor made any claim for loss or damage. His own evidence showed that he used the machine as long as he had threshing to do; that he retained it long after he learned of the chattel mortgage in August; that he recognized the validity of his note and his liability thereon long after his discovery of the chattel mortgage given by Robinson &amp Son to the plaintiff. Nor was his ownership and possession disturbed. He contends...