Farmers State Bank v. Stewart

• Citation: 454 S.W.2d 908
• Decision Date: 08 June 1970
• Docket Number: No. 54636,54636
• Parties: 7 UCC Rep.Serv. 1367 FARMERS STATE BANK, Respondent, v. W. M. STEWART d/b/a Stewart Sale Pavilion, Appellant.
• Court: United States State Supreme Court of Missouri

Page 908

454 S.W.2d 908

7 UCC Rep.Serv. 1367

FARMERS STATE BANK, Respondent, v. W. M. STEWART d/b/a Stewart Sale Pavilion, Appellant.

No. 54636.

Supreme Court of Missouri, En Banc.

June 8, 1970.

William H. Sanders, Dean F. Arnold, James Borthwick, Kansas City, for appellant; Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, of counsel.

J. B. Beavers, Cameron, for respondent.

SEILER, Judge.

This case involves a claim in conversion by plaintiff bank against defendant Stewart, who operates a sales pavilion in Cameron, where livestock is bought and sold with defendant acting as auctioneer and charging a commission on each sale. ¹ Defendants Leroy and Janice Davis borrowed $1,648 from plaintiff, giving their note and chattel mortgage, dated January 20, 1964, in return. In the Davis mortgage there was livestock as follows:

'Thirteen head of Cattle described as follows:

One Holstein Cow, age 5 years

There Whiteface Heifer calves

Four Holstein calves (2 steers, 2 heifers)

One Jersey steer

one red steer (Av. Wt. of all calves 450 Lbs.)

3 Angus Calves'

Defendants James and Mary Thompson borrowed $2,000 from plaintiff bank, giving in return their note and chattel mortgage, dated September 5, 1965, covering livestock and equipment, the livestock being described as follows:

'Nine Holstein Cows, Age 2--7 years

Tow Jersey Cows, Age 4 years'

Both mortgages were recorded in Clinton County, the place of residence of the mortgagors and location of the cattle. The mortgagors defaulted. Plaintiff bank contends some of the livestock covered under the two mortgages was wrongfully sold by the mortgagors through defendant Stewart's sales pavilion, allegedly to its damage in the sum of $675.35, for which amount plaintiff obtained judgment in the trial court against defendant Stewart, following a trial before the court without a jury. Apparently service of process was never obtained on the defendant mortgagors. Defendant Stewart appeals.

Defendant Stewart's answer denied plaintiff's allegations, except as to his operating a livestock sales pavilion. He also pleaded the Packers and Stockyards Act, 7 U.S.C.A., Secs. 201--217, ² alleging he was required thereunder to receive and sell for commission without discrimination any and all livestock consigned to him, comparing the situation to a public utility which must render service to all who apply.

The trial court made findings of fact and conclusions of law. If found defendant Stewart was operating as a market agency under the Act, that Stewart had constructive, but not actual, notice of plaintiff's lien and that the description of the livestock in the mortgages was sufficient to give notice. The court also found that what defendant Stewart did with the Davis and Thompson livestock was to receive and sell it, receive the proceeds in his name, deliver the livestock to the purchaser, deduct an inspection charge, an insurance charge and commission, and remit the balance to the seller. Both sides proceeded on the assumption that the cattle thus sold were among the animals covered by the mortgages.

The trial court also found there was evidence of negligence on the part of defendant Stewart in not making reasonable requirements of Davis and Thompson establishing their ownership and title to the livestock involved, but no such allegation was made by plaintiff in its petition, nor was a negligence issue actually tried in the trial. Respondent makes no effort to support the trial court on this issue and in our opinion, if the judgment is to be affirmed it will have to be on the conversion theory rather than on any negligence theory

The case went first to the Kansas City Court of Appeals, which reversed the judgment, but transferred the case here under Art. V, Sec. 10, 1945 Constitution, V.A.M.S. and Rule 84.05, V.A.M.S., because of the general interest and importance of the questions involved. One question posed is whether under the Packers and Stockyards Act, the defendant is absolutely immune from liability to the mortgagee for livestock sold bys him at his sale barn in the usual course of business, absent actual knowledge of the existence of the mortgage. The other question is as to the sufficiency of the description of the cattle in the two mortgages. Under the constitutional provisions, supra, the case is for final determination here, the same as if here on original appeal.

Under the Missouri authorities, which are well collected and analyzed in 'Description of the Property in a Missouri Chattel Mortgage', 1951 Wash.U.L.Q. 572, and Fisher v. Mikco Grain Co. (Mo.App.) 404 S.W.2d 752, 753--755, we hold the description of the animals contained in the two mortgages was sufficient. There was a statement of the quantity of the property mortgaged and description of physical characteristics. The cattle were referred to by number, breed, gender, age, color, and weight. Each mortgage stated that the property listed belonged to the mortgagor and was then in the possession of the mortgagor. Each mortgage gave a definite place of location of the property on a particular farm within Clinton County. Each mortgage stated that the described property was all of the property of that description located at the place named, or which was to be purchased with the proceeds of the loan and moved to the place named. Armed with this information, a third person, making the reasonable inquiries which the mortgages themselves suggest, could identify the animals referred to in the mortgages. So the descriptions were sufficient to put defendant Stewart on constructive notice and he would be guilty of conversion by selling the mortgaged property in which the plaintiff bank had an interest, unless defendant Stewart is excused or immune by virtue of the Packers and Stockyards Act.

Defendant relies mainly on Blackwell v. Laird, 236 Mo.App. 1217, 163 S.W.2d 91, where the Kansas City Court of Appeals, in 1942, ³ held that a stockyards commission merchant, operating under the Packers and Stockyards Act, was not liable in conversion where it sold livestock upon the application of a person presenting himself in possession but who turned out not to be the true owner. The court based its decision mainly on the proposition that commission merchants operating under the Act are public utilities, hence bound to render to the public the services required, and so it would be unjust to require them to sell cattle and at the same time hold them liable if the person bringing the goods were not the true owner. The court said it would follow public utility law and referred to a Missouri decision, Nanson v. Jacob, 90 Mo. 331, 6 S.W. 246, an 1887 case, holding that a common carrier is not liable in conversion where it receives and forwards goods tendered in the usual course of business, and to a Kentucky decision, Abernathy v. Wheeler, 92 Ky. 320, 17 S.W. 858, decided in 1891, holding a public warehouseman not liable in conversion for storing and selling tobacco delivered to it by a person not holding title. The Blackwell opinion also referred to Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed 735, and quoted the remark of the United States Supreme Court at 258 U.S. 516, 42 SCt. 402 that 'The act, therefore, treats the various stockyards of the country as great national public utilities to promote the flow of commerce from the ranges and farms of the West to the consumers in the East. * * *' On the strength of this statement, which would appear to be more a figure of speech than a declaration of law, the Blackwell court concluded it should apply common carrier law to the commission merchant before it. However, we do not believe the quoted portion of the United States Supreme Court opinion carried any such implication. The Supreme Court had before it the constitutionality of the Packers and Stockyards Act. The quoted remark was made in the course of demonstrating that the great stockyards of the country, particularly those which the evidence showed were controlled by the 'Big Five' packers--Swift, Armour, Cudahy, Wilson, and Morris--and which took numerous unfair advantages of shippers, were in interstate commerce and so closely associated with it as to make them subject to national regulation under the commerce clause. The question of whether stockyards were literally public utilities was not before the Supreme Court and the quoted stantement was not necessary to the decision.

In holding that the Packers and Stockyards Act provides this sort of immunity to the commission merchant or sales barn operator, the Kansas City Court of Appeals has attributed to the federal act a result not found within its terms or intent by any federal appellate court or by any state court of last resort and seems to have overlooked several significant features of the Act.

For example, in Allen C. Driver, Inc. v. Mills, 199 Md. 420, 86 A.2d 724, where the facts are almost identical with the facts in the Blackwell case, the court, in rejecting the argument advanced in Blackwell said as follows at 86 A.id 726--727: 'While it is a general principle that a public utility is under a legal obligation to render adequate and reasonably efficient service impartially and without unjust discrimination, a market agency is certainly not required to handle stolen livestock or livestock to which the title is defective. We assume that an agency could demand that any person desiring to deal with it must establish his identity and his title to the livestock which he offers for sale. We cannot assume that Congress enacted the Packers and Stockyards Act to protect the operation of stockyards for handling property that has been stolen or obtained by fraud. The Act unquestionably makes it the duty of market agencies to furnish 'upon reasonable request' without discrimination reasonable stockyard services. But to refuse to cooperate with a criminal in his crime is not 'wrongful discrimination'. Nor is a request that an agency dispose of property...