Farmers State Bank v. Home State Bank
| Decision Date | 20 July 1921 |
| Docket Number | 21719 |
| Citation | 184 N.W. 170,106 Neb. 711 |
| Parties | FARMERS STATE BANK, APPELLEE, v. HOME STATE BANK, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Richardson county: JOHN B. RAPER JUDGE. Affirmed.
AFFIRMED.
Dort Cain & Dort, for appellant.
Lambert & Armstrong, contra.
Heard before MORRISSEY, C.J., FLANSBURG and ROSE, JJ., DICKSON and TROUP, District Judges.
In October, 1919, W. D. Elmore purchased from W. H. Powers 26 head of steers at the agreed price of $ 3,570.25, and purchased from J. D. Roliff 20 head, for which he agreed to pay $ 2,551.25, and gave them his notes secured by mortgages on the cattle. Powers sold his note and mortgage to the appellee, Farmers State Bank of Stella, and Roliff sold his to the Bank of Steinauer. Neither mortgage was placed on record. The cattle were fed by Elmore at Humboldt until the last days of December, and were then shipped by him to Kansas City and sold for $ 7,150. The appellant bank received of the proceeds $ 7,100, which it placed to the credit of Elmore. During December Elmore became indebted to the appellant bank in the sum of $ 1,190.91, and about the 23d of December gave the bank his note and secured it by a chattel mortgage on the cattle purchased from Powers and Roliff, it being agreed that the cattle should be shipped and the proceeds deposited in the appellant bank, and out of the proceeds Elmore's indebtedness to the bank would be paid; the bank, however agreed that it would first pay the mortgage debt against the cattle. The note given by Elmore to the appellant bank was to take up certain checks given principally for feed, which the bank had carried as cash items and overdrafts, and was taken more as a matter of form than as security, the bank seemingly relying on the assurance of Elmore that he would be able to take care of his indebtedness to the bank out of the proceeds of the cattle when sold, as he had done on other occasions. There was an unusual delay in getting cars, and in the mean time the price of cattle dropped from $ 2 to $ 3 a hundred pounds, an unexpected happening, and the proceeds were insufficient to pay the purchase-price mortgages and Elmore's indebtedness to the appellant bank.
The real question involved is whether the appellant bank, when it took its mortgage on the cattle, had knowledge of the existence of the purchase-price mortgages, or notice of facts sufficient to impute notice to it of them. If it had, the judgment of the lower court is right.
There is little, if any, controversy as to what was said at the time of giving the mortgage to the appellant bank. Elmore, responding to the question, "Did you tell them how much you owed on the cattle?" answered, No, sir." Being asked the further question, "Anything said about your having given a mortgage on the cattle?" he said, "Nothing, only the time I signed that mortgage, I told him the paper on the cattle must be paid first, whichever I said." And again, on rebuttal, referring to the chattel mortgage note, he said: "When I went to give them the note, they drew out the note, before I seen (signed) it, I says to them, I says, now, boys, these cattle have got to be settled for first." Glenn D. Jenkins, one of the officers of the appellant bank, referring to the conversation with Elmore at the time of the giving of the bank's mortgage, said: "Well, there was nothing said except as he went to sign the note, he said to us, he says, now of course there is a mortgage against those and that will have to be paid, but there will be plenty of money." Otto Kotouc, another officer of appellant bank, when asked, "What did Elmore say relative to there being a first mortgage on these cattle at that time (referring to the time of giving of the note)?" answered, "Just as we were drawing up the note, why he said that there was a mortgage against the cattle, and of course that would have to be paid first." J. M. Wright, cashier of the appellee bank, testified that, at the time he went to Humboldt to take up with the appellant bank the matter of the payment of the check given by Elmore in settlement of the Powers note, Mr. Linn, an officer of the appellant bank, said: "He knew there was a mortgage on the cattle, but did not know where it was at." These questions and answers fairly reflect the evidence on the question of the bank's knowledge of the existence of the purchase-price mortgages on the cattle.
As showing the agreement between Elmore and the appellant bank concerning the payment of the mortgage indebtedness on the cattle, Glenn D. Jenkins, an officer of the bank, testified on cross-examination as follows: " ...
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