First Nat. Bank of Alex v. Southland Prod. Co.

• Decision Date: 18 March 1941
• Docket Number: Case Number: 27261,Case Number: 27260
• Citation: 189 Okla. 9,112 P.2d 1087,1941 OK 87
• Parties: FIRST NAT. BANK OF ALEX, OKLA., et al. v. SOUTHLAND PRODUCTION CO. et al. (two cases)
• Court: Oklahoma Supreme Court

1941 OK 87

112 P.2d 1087

189 Okla. 9

FIRST NAT. BANK OF ALEX, OKLA., et al. v. SOUTHLAND PRODUCTION CO. et al.

(two cases)

Case Number: 27260

Case Number: 27261

Supreme Court of Oklahoma

Decided: March 18, 1941

Syllabus

¶0 1. PRINCIPAL AND AGENT--Proper scope of agency.

Generally, a person may do through the agency of another whatever he is empowered to do in his own proper person.

2. FRAUDULENT CONVEYANCES--CHATTEL MORTGAGES--hVendee of personalty held agent or intermediary of vendor in executing mortgage to vendor's creditor and mortgage is valid as against other creditors.

Where an owner of personal property who is indebted to several persons, executes, without fraud, a bill of sale therefor to another, and at the same time directs the vendee to execute a chattel mortgage thereon to a creditor of said owner for the purpose of securing said creditor for funds already advanced to said owner, and no consideration passes from the vendee to the owner nor from the mortgagee to the vendee, held, that said vendee is an agent or intermediary of said owner for the purpose of the execution of said mortgage and that the same is valid and binding as against other creditors of said owner whose claims had accrued prior to the date of execution of said mortgage.

3. TAXATION--Lien of United States for motor fuel taxes superior to lien for labor used in manufacture of petroleum products.

The lien of the United States Government for motor fuel taxes due for refining and marketing crude petroleum and its products is superior to the lien for labor in the manufacturing of the products upon which the taxes of the government become due.

4. APPEAL AND ERROR--Causes considered on theory not presented below when public interest and welfare so requireConstitutionality of statute.

Where public interest and welfare is involved, a cause may be considered in an appellate court on a theory not presented in the trial tribunal. Thus a question relating to the constitutionality of a statute may, when the public interest and welfare requires, be considered for the first time on appeal.

5. STATUTES--Subjects and titles--Section of law broadened by amendment.

A particular section of the law may be broadened by amendment so as to bring within its provisions matter which could have been within it originally without contravention of the provisions of section 57, art. 5, of the Oklahoma State Constitution.

Appeal from District Court, Oklahoma County; R. P. Hill, Judge.

Action by Southland Production Company against the Olympic Refining Company for money judgment, and the First National Bank of Alex and L. O. Carter against Stanley B. Rogers, sheriff, in replevin. Various parties intervened. Two cases consolidated. From the judgment, the bank and Carter appeal, with cross-appeal by various interveners. Reversed, with directions.

Spielman, Cantrell & McCloud, of Oklahoma City, for plaintiffs in error.

William C. Lewis and George E. Massey, Jr., both of Oklahoma City, for appellee and cross-petitioner United States.

C. D. Cund, Thomas H. Owen, and Albert D. Lynn, all of Oklahoma City, for appellee and cross-petitioner Oklahoma Tax Commission.

Gordon Fuller, of Oklahoma City, and Frank Field, of Washington, D. C., for appellees and cross-petitioners Jack B. White and T. H. White.

Roddie & Beckett, of Oklahoma City, for defendants in error and cross-petitioners O. T. McNeil and others.

OSBORN, J.

¶1 This is an appeal from a judgment of the district court of Oklahoma county in causes No. 88307 and No. 88320, consolidated for trial in that court.

¶2 In cause No. 88307, the Southland Production Company, an express trust, through its trustees, hereinafter referred to as plaintiff, sued the Olympic Refining Company for a balance due on an open account in the sum of $943.18. Plaintiff petitioned the court for appointment of a receiver. The receiver was appointed and took charge of certain property of defendant.

¶3 It appears that defendant Olympic Refining Company, located at Oklahoma City, was engaged in the business of refining and marketing crude petroleum and its products. Certain motor fuel taxes were due the State of Oklahoma and to the United States Government. The Oklahoma Tax Commission and the Collector of Internal Revenue of the United States had issued tax warrants which were levied upon certain tank cars of oil involved in this action, and under said warrants the sheriff of Oklahoma county took possession of said cars of oil.

¶4 The First National Bank of Alex and L. O. Carter instituted a replevin action in the district court, which is cause No. 88320, against the sheriff for recovery of possession of the cars of oil and oil products herein involved. The bank and Carter also intervened in cause No. 88307, and for convenience will be hereinafter referred to as interveners. The trial court entered an order requiring the sheriff to deliver possession of the cars of oil to the receiver of defendant Olympic Refining Company, which order was issued over the protest of the First National Bank of Alex and L. O. Carter.

¶5 Other parties intervened in the action, including the State of Oklahoma and the United States claiming taxes for motor fuel sales, and laborers seeking to establish and foreclose laborers' liens.

¶6 The interveners, First National Bank of Alex and L. O. Carter, contended that there was a sale of the property involved herein by defendant Olympic Refining Company to Carter and a mortgage executed by him to the First National Bank of Alex, and as a result of said transaction the bank had a lien upon the property superior to the liens of the other parties asserting claims against the Olympic Refining Company. The trial court held that the sale was void and as a consequence the mortgage to the bank was likewise ineffective, and that the bank was only a general creditor of the Olympic Refining Company. Joined in a cross-appeal are the Oklahoma Tax Commission and the United States, and various labor claimants appealing only from the order of payment of the various claims. The contentions of the First National Bank of Alex and L. O. Carter will be considered first. The circumstances under which they lay claim to the property involved herein are as follows:

¶7 The Olympic Refining Company was handling most of its sales of its products through L. O. Carter, an individual doing business at Tulsa, Okla., as L. O. Carter Company. The Olympic Company did its banking business with the First National Bank of Alex, Okla. Its affairs were practically all handled by Leslie Cole, the manager of the company. The manager would draw up invoices of carloads of its refined products and attach a draft drawn upon L. O. Carter, and deposit same in the First National Bank of Alex to the credit of the Olympic Refining Company. The Alex Bank would then send the drafts with invoices to the First National Bank at Tulsa for collection from L. O. Carter. When Cole of the Olympic Company deposited these drafts with the Alex Bank, that bank would immediately give the Olympic Company credit on its checking account for the amount. The Alex Bank would allow these drafts to remain in the Tulsa Bank until Carter took them up, which usually was only when Carter sold the products which were represented by the draft and invoice. As a result, there accumulated an advancement by the Alex Bank to the Olympic Company of over $11,000. This practice had existed from July to September, 1935.

¶8 It appears that about the middle of September the cashier of the bank, Mr. Grady Harris, became aware that the bank had advanced more money to the refining company than banking regulations permitted. Said cashier met Leslie Cole, the manager of the company, and L. O. Carter, on September 23, 1935, for the purpose of effecting some arrangement to relieve the condition occasioned by nonpayment of the drafts. It is shown that the manager of the refining company offered to give a chattel mortgage to the bank on certain carloads of oil which it owned which were upon the freight yards in Oklahoma City. This was unsatisfactory to the bank because it would not result in reducing the amount of the advancements from the bank to the company, which were already excessive. It was finally agreed between the three parties that Carter would buy all of the products of the refining company and would in turn give his promissory notes and chattel mortgage to the bank upon the carloads of oil hereinabove referred to as security for the payment thereof. The amount of said notes was $4,949.61, and of said amount $3,122.79 was credited to the account of the refining company, thereby reducing its indebtedness to, the bank in said amount, and the sum of $1,823.82 was loaned from the bank to the refining company for the purpose of paying taxes then due the Oklahoma Tax Commission. It does not appear that any consideration was paid by Carter to the refining company nor did he receive any portion of the proceeds of the notes hereinabove referred to. The good faith of the transactions related is not questioned, legal fraud only being relied on to assert invalidity.

¶9 The trial court found, and it is argued here, that the sale to Carter was violative of the provisions of section 10008, O. S. 1931, 24 Okla. St. Ann. §6, which is as follows:

"Every transfer of personal property ,other than a thing in action, and every lien thereon, other than a mortgage, when allowed by law, is conclusively presumed, if made by a person having at the time the possession or control of the property, and not accompanied by an immediate delivery, and followed by an actual change of possession of the things transferred, to be fraudulent and therefore void, against those who are his creditors while he remains in possession, and the successors in interest of such creditors, and against any person on whom his estate devolves in trust for the benefit of others than himself, and against purchasers or encumbrancers in good faith subsequent to the transfer."

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