First Nat. Bank v. Thompson
| Decision Date | 12 November 1924 |
| Docket Number | (No. 4055.) |
| Citation | 265 S.W. 884 |
| Parties | FIRST NAT. BANK OF STEPHENVILLE v. THOMPSON et al. |
| Court | Texas Supreme Court |
Chandler & Pannill, and A. P. Young, all of Stephenville, for appellant.
James & Conner, of Fort Worth, for appellees.
On March 12, 1921, A. J. Thompson, R. E. Thompson, and W. B. Yeager, as partners under the trade-name of Service Filling Station, were at Stephenville, Erath county, Tex., engaged as retail dealers in automobile accessories, gasoline, oil, etc., and in selling and trading automobiles, and were the local agents for the Essex and Hudson automobiles. On the date mentioned, the Service Filling Station executed to the First National Bank of Stephenville a chattel mortgage on all of its fixtures, and all of its stock of merchandise, including a certain Essex car identified by its engine number. This mortgage was executed to secure a pre-existing indebtedness of $7,375. There was a verbal agreement between the bank and the filling station that the filling station should secure the consent of the bank before they actually made the sale of an automobile, but the record does not show that the agreement applied to any other of the mortgaged property. The stock of merchandise, including the automobiles, was exposed and offered for sale the same as before the execution of the mortgage, and the only difference in the conduct of the business of the Service Filling Station after the execution of the mortgage, as compared to the way the business was conducted before its execution, was, that before the filling station would make sale of an automobile, the bank would be consulted in regard to the deal. The mortgage was filed for record in Erath county March 25, 1921. On April 12, 1921, A. J. Thompson, one of the partners, took the Essex automobile above mentioned to Fort Worth and traded it to the Fain-Bender Motor Company of that place without consulting the bank. At the time of this trade the Fain-Bender Motor Company knew that A. J. Thompson was a member of the partnership, the trade-name of which was Service Filling Station, and that said partnership was engaged in business at Stephenville, Erath county, and that said partners were local agents at Stephenville for the Hudson and Essex automobiles. The First National Bank of Stephenville sued the Service Filling Station for its debt, and for foreclosure of its chattel mortgage, and made the Fain-Bender Motor Company a party, and alleged that it had converted the Essex automobile, and asked for judgment against it for the value of said car. The judgment of the trial court was in favor of the Fain-Bender Motor Company, which judgment was affirmed by the Court of Civil Appeals of the Fourth District (251 S. W. 818), on the ground that the chattel mortgage was void under the provisions of both articles 3970 and 5655 of the Revised Civil Statutes.
We will first consider whether the mortgage under the facts was void under the provisions of article 5655. The portion of said article relating to the case is as follows:
"Every chattel mortgage, deed of trust, or other instrument of writing, intended to operate as a mortgage of or lien upon personal property, which shall not be accompanied by an immediate delivery and be followed by an actual and continued change of possession of the property mortgaged or pledged by such instrument, shall be absolutely void as against the creditors of the mortgagor or person making same, and as against subsequent purchasers and mortgagees or lienholders in good faith, unless such instrument, or a true copy thereof, shall be forthwith deposited with and filed in the office of the county clerk of the county where the property shall then be situated. * * *"
The representative of the Fain-Bender Motor Company at Fort Worth, at the time he traded with Thompson for the Essex automobile, knew that Thompson lived at Stephenville, Erath county, and that he was the agent at that place for Essex cars, and knew that Thompson had driven the car from Stephenville to Fort Worth, and that the car was out of Erath county only temporarily, and, under these facts, the Fain-Bender Motor Company had constructive notice of the mortgage that was on record in Erath county covering the automobile that it...
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...with a statute declaring mortgages on stocks of 'goods, wares, or merchandise' to be fraudulent and void. First Nat. Bank of Stephenville v. Thompson, Tex.Com.App., 265 S.W. 884, 886; City Nat. Bank v. Morgan, Tex.Civ.App., 267 S.W. Both cases hold that a stock of automobiles for sale at re......
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