First Nat. Bank v. Johnson

• Decision Date: 13 August 1927
• Docket Number: No. 4194.,4194.
• Citation: 297 S.W. 724
• Parties: FIRST NAT. BANK OF CORNING, ARK., v. JOHNSON et al.
• Court: Missouri Court of Appeals

297 S.W. 724

FIRST NAT. BANK OF CORNING, ARK., v. JOHNSON et al.

No. 4194.

Sprngfield Court of Appeals, Missouri.

August 13, 1927.

Appeal from Circuit Court, Butler County; Charles L. Ferguson, Judge.

Action to determine priority between chattel mortgage liens brought by the First National Bank of Corning, Ark., against R. W. Johnson, the State Bank of Neelyville, and another. The State Bank of Neelyville filed an answer in the nature of a bill of interpleader. From a judgment in favor of plaintiff, defendants appeal. Affirmed.

Abington, Abington & Freer, of Poplar Bluff, for appellants.

J. C. Sheppard, of Poplar Bluff, for respondent.

BRADLEY, J.

This is an action to determine the priority of chattel mortgage liens. The cause was submitted on an agreed statement of facts, and the court found in favor of plaintiff, and this appeal followed.

March 14, 1924. L. W. Guthrie gave his note to plaintiff bank for $388.29, due October 29, 1924. To secure this note Guthrie, on same date gave to plaintiff a chattel mortgage on his half interest in 40 acres of cotton to be thereafter planted on a certain described farm in Butler county. This mortgage was filed March 22, 1924. April 12, 1924, defendant R. W. Johnson gave a note to plaintiff bank for $255, due December 12, 1924. To secure this note Johnson, on same date, gave to plaintiff a chattel mortgage on his half interest in same cotton described in the Guthrie mortgage. The cotton was not planted when the Johnson mortgage was given. This last-mentioned mortgage was filed April 21, 1924. May 29, 1924, after the cotton was planted and growing, Johnson gave to defendant Lazalier another mortgage on a three-fourths interest in the cotton on the land described in the two previous mortgages. This mortgage was filed June 4, 1924.

The parties interested agreed that the cotton be gathered and the net proceeds deposited in defendant bank to be turned over to the rightful claimant. This was done, and there was deposited in defendant bank the sum of $226.77. In addition to the amount deposited, Johnson sold one load of the cotton and received therefor the sum of $38.20 and turned this sum over to defendant Lazalier. April 28, 1925, Guthrie assigned to plaintiff bank his interest, if any, in the fund deposited in defendant bank.

The controversy is between plaintiff bank and defendant Lazalier. Plaintiff bank relies on the two mortgages given to it prior to the time the cotton was planted, and defendant Lazalier relies upon the mortgage given to him by Johnson after the cotton crop was planted and growing.

It is contended by defendant Lazalier that this is an action at law, but the pleadings will not support this contention. The answer of the defendant State Bank of Neelyville is clearly in the nature of a bill of interpleader, if not in fact and form such a bill. After stating the facts relative to its possession of the $226.77 on deposit with it, defendant bank prayed relief as follows:

"Therefore, this answering defendant prays that it be allowed to bring said fund amounting to $226.77 into court, which this defendant hereby offers to do, and that the plaintiff, the First National Bank, Corning, Ark., and the codefendants R. W. Johnson and Ed Lazalier be required to litigate and cause to be determined which is entitled to receive said amount, and that upon payment of said fund into court, this answering defendant prays to be relieved and discharged of any and all liability to the plaintiff or its codefendants, and that it be discharged with its costs."

The judgment rendered, so far as concerns defendant bank, was that upon payment into court by it of the $226.77 it be discharged from further liability. We think that the cause as finally determined by the pleadings was one for the equity side of the court, and that it was so considered by the learned trial court.

The trial court prepared and filed a written opinion. This opinion, we think, covered the ground thoroughly, and we adopt it, and in addition give some further consideration.

The opinion is as follows:

"We are asked to ascertain and determine the question of priority as between the liens created, or attempted to be created, by the three chattel mortgages.

"The two chattel mortgages held by plaintiff purported to create liens upon crops which had not been planted at the time of the execution, delivery and filing of said mortgages, while the mortgage held by defendant Lazalier was executed, delivered, and filed after the crops referred to in the mortgages held by plaintiff had been planted and were growing and thus had actual existence.

"In a very few jurisdictions it seems to be the law that mortgages of crops not yet planted are void as to third parties. The vast majority of the cases, however, is opposed to this view. In some jurisdictions mortgages of future crops are specifically legalized by statute, and in jurisdictions that do not have such a statute, as in this state, the general rule is that in equity a mortgage on unplanted crops is enforceable and an equitable lien is thereby created.

"In Klebba v. Missouri Meerschaum Co. et al. (Mo. App.) 257 S. W. 174, the court says: `A mortgage on a crop of corn to be thereafter planted creates an equitable lien when the corn begins to grow.'

"Swinney v. Gouty, 83 Mo. App. 549, was an action for conversion of a crop of corn. The plaintiff claimed to own the corn as assignee of a mortgagee in a mortgage executed before the corn was planted. The defendant, with notice of the mortgage, had bought the corn. The court says: `Unquestionably a mortgage on a crop of corn to be thereafter planted only has the effect of creating an equitable lien when the crop begins to grow.' The finding of the trial court for the plaintiff was affirmed. This principle of an equitable lien is also found in Rutherford v. Stewart, 79 Mo. 216, and Keating v. Hannenkamp, 100 Mo. 161, 13 S. W. 89.

"Therefore the determination of the question whether the record of the chattel mortgages on unplanted crops or the equivalent thereof, under our statute the filing of same, constitutes constructive notice as against Lazalier, we think, disposes of this case. In Swinney v. Gouty, supra, we find this language: `There is substantial evidence that the defendant had notice of the mortgage.' It does not appear whether or not the mortgage was recorded. Again in the case of Rutherford v. Stewart, 79 Mo. 216, we find that the holder of the second mortgage, executed after the property came into existence, had actual notice of the prior chattel mortgage executed before the property came into existence. In neither of these cases nor in any Missouri case cited in the briefs filed herein or examined in our study of this case is the question of constructive notice discussed or clearly determined. Bispham's Principles of Equity (7th Ed.) p. 412, says: `Where an instrument which is entitled to be recorded is duly executed and acknowledged and is recorded in the proper territorial limits, such a registration is notice of the contents of the instrument and of all legal and equitable rights and titles...