First Nat. Bank v. McElroy

• Court: Texas Court of Appeals
• Writing for the Court: Levy
• Citation: First Nat. Bank v. McElroy, 112 S.W. 801, 51 Tex. Civ.App. 284 (Tex. App. 1908)
• Decision Date: 11 June 1908
• Parties: FIRST NAT. BANK OF PORTALES, N. M., et al. v. McELROY.

112 S.W. 801

FIRST NAT. BANK OF PORTALES, N. M., et al. v. McELROY.

Court of Civil Appeals of Texas.

June 11, 1908.

Rehearing Denied October 8, 1908.

Appeal from District Court, Midland County; James L. Shepherd, Judge.

Action by John F. McElroy against R. Conley and others. From a judgment for plaintiff, all defendants, excepting Conley, appeal. Reversed and remanded in part and affirmed in part.

S. J. Isaacks, for appellants First Nat. Bank of Portales, N. M., and Midland Nat. Bank of Midland, Tex. Douthit & Littler, for appellants First Nat. Bank of Lubbock, Tex., and Harry M. Reed. Royal G. Smith, for appellant City Nat. Bank of Colorado, Tex. Camp & Caldwell, for appellee.

LEVY, J.

By his petition the appellee sought a judgment against R. Conley on certain notes executed to him by Conley, with a foreclosure of two chattel mortgages given upon certain cattle to secure the notes. A recovery in the petition was sought against the appellant Reed for conversion of some of the cattle, on the allegation that he purchased some of the cattle having notice of appellee's lien. The petition further alleged that on or about July 27, 1905, Conley delivered to the appellee the possession of all of said cattle, to be held by appellee under and by virtue of his chattel mortgage, and which actual possession he has held, open, and notorious, in the county where the cattle were situated. All the other appellants were made parties to the suit, and it was alleged in the petition that they were subsequent mortgagees, having at the time constructive notice of appellee's lien on the cattle. The appellant Reed answered by a general denial, and specially that the purchase by him of some of the cattle for the sum of $504 was without notice, actual or constructive, of appellee's liens, and further answered that the said sum of $504 was applied to part payment of a lien of the First National Bank of Lubbock on said cattle to secure the repayment to it of money advanced by the said bank to Conley for the purchase of these very cattle. The appellants the City National Bank of Colorado, Tex., the First National Bank of Portales, N. M., the First National Bank of Lubbock, and the Midland National Bank of Midland, Tex., each pleaded, respectively, existing liens upon said cattle taken at the time without notice, either actual or constructive, of the alleged liens held by the appellee, and each prayed that its said lien be declared superior to those of appellee. A trial was had before the court without a jury, and judgment was rendered by the court in favor of the appellee, decreeing a foreclosure in his favor of his said liens upon said cattle, and adjudging the liens of all the other appellant banks to be junior and inferior liens by reason of constructive notice of the liens of appellee, and adjudging a personal judgment for $315 in favor of the appellee against the appellant Harry M. Reed. All of the defendants in the suit, except R. Conley, have appealed to this court from the judgment so rendered. The trial court filed his findings of fact and conclusions of law, and the same are in the record, with no complaint by appellants as to the same. There is no statement of facts in the record, except these findings. The findings of the court are adopted by this court.

The first assignment of error assails the first paragraph of the court's conclusions of law. Looking to the court's findings of fact as are involved in the first assignment of error, it was established in the case that on October 21, 1902, Conley executed to the appellee a chattel mortgage on certain cattle, and that on August 21, 1902, Conley executed to Robison a chattel mortgage on certain cattle (which mortgage the appellee acquired by transfer), and that both of these chattel mortgages were filed with and registered by the county clerk of Martin county, Tex., "in the chattel mortgage register for Terry county" kept by him in Martin county, on October 22, 1902, and August 21, 1902, respectively; that at the time of the execution and registration of the chattel mortgages Terry county was an unorganized county attached to Martin county for judicial purposes; that the mortgagor, Conley, resided, and the mortgaged cattle were situate, in Terry county; that appellant Reed was a subsequent purchaser of some of the mortgaged cattle from Conley, and that all the other appellants were subsequent mortgagees of the said cattle mortgaged to the appellee; that Terry county became legally organized as a county government under the statute providing for such organization on June 28, 1904; that this suit was instituted August 4, 1905. The court entered the conclusion of law that, the depositing and registering of appellee's chattel mortgages in Martin county was constructive notice to all the appellants, and that their interest in the cattle was subordinate to and subject to the appellee's prior mortgage claim. It is contended by the appellants, in effect, that the court erred in this conclusion of law because the unorganized county of Terry was attached to Martin county by legislative acts for the definite and specified purpose of "judicial purposes" only, and the mortgaged cattle were situate in, and the mortgagor resided in, Terry county, and that, therefore, the registration of the appellee's mortgages on the personal property in Martin county, being neither permitted nor required by law, would not constitute legal or constructive notice to the appellants of the appellee's lien on the cattle.

It is provided by article 3328, Rev. St. 1895, that all chattel mortgages or liens upon personal property which shall not be accompanied by an immediate delivery and be followed by 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 the same, and as against subsequent purchasers and mortgagees or lienholders in good faith, unless such instruments 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; or if the mortgagor, or person making the same, be a resident of this state, then of the county of which he shall at the time be a resident. The cases have so applied this statute that, in the absence of actual transfer of possession, a chattel mortgage must be registered as required by law, in order to be valid against subsequent purchasers, creditors, and lienholders in good faith. Brothers v. Mundell et al., 60 Tex. 240; Lewis v. Bell (Tex. Civ. App.) 40 S. W. 747; Smeltser v. Baker, 6 Tex. Civ. App. 751, 26 S. W. 905. But the registration of the chattel mortgages in Terry county, where the property was situated at the time, could not be accomplished under this statute, because at that time Terry county was unorganized for the purposes of county government of its own, and it was without means of doing things necessary to protect public or private interests within its borders. The effect of article 789, Rev. St. 1895, is to prescribe that, until the county becomes legally organized for purposes of its own county government, it shall not be considered a subdivision of the state during the time, capable of performing legal and political functions. However, it is within the power of the Legislature to make provision for registration of deeds and mortgages relative to real and personal property situated in unorganized counties, and to designate the proper place for registration of such instruments. Whether the Legislature has made such designation for Terry county is the question in hand. The authority for registration of chattel mortgages on personal property situated in Terry county then must be sought from some specific provision of law. There does not appear any express general provision of law for the registration of mortgages on personal property situated in unorganized counties which have never been legally organized for county government. There is a provision, however, found in article 784, Rev. St. 1895, applicable to counties that have once been legally organized, and that have thereafter lost their county organization. By article 4641, Rev. St. 1895, it is provided that all deeds, conveyances, and mortgages, or deeds of trust or written contracts relating to real estate situated in an unorganized county, shall be recorded in the county to which such unorganized county is attached for judicial purposes. But this article mentioned could not be held to include chattel mortgages on personalty, because by its very terms it is limited to and applicable only to instruments conveying or affecting an interest in real estate. Referring, though, to the several acts of the Legislature relating and pertaining to Terry county, some provision may be found designating the place for registration. Terry county was established and its boundaries defined by Acts 1876, p. 238, c. 144. By the same act, in section 6, it was attached to the parent county, Young, "for judicial, surveying and all other purposes." By Acts 1881, p. 12, c. 18, in creating the Thirty-Fourth judicial district Terry county was attached to Throckmorton county "for judicial purposes." By Acts 1883, p. 63, c. 67, in rearranging the...