Frick Co. v. Oats

• Decision Date: 12 March 1908
• Citation: 94 P. 682,20 Okla. 473,1908 OK 33
• Parties: FRICK CO. v. OATS et al.
• Court: Oklahoma Supreme Court

94 P. 682

20 Okla. 473, 1908 OK 33

FRICK CO. v. OATS et al.

Supreme Court of Oklahoma

March 12, 1908

Syllabus by the Court.

In an action of replevin, the right of a creditor to the possession of the property in controversy, who holds a chattel mortgage on his debtor's property, good as between the parties but void as to other creditors, because not filed as required by law, but who has taken possession of the mortgaged property, after condition broken, as security for the debt with the consent of the mortgagor, is superior, under section 3578, Wilson's Rev. & Ann. St. Okl. 1903, to that of a subsequent execution creditor who has levied upon the same. Greenville National Bank v. Evans-Snyder-Buell Co., 9 Okl. 353, 60 P. 249, is overruled.

This court possesses the power under the enabling act and the Constitution of the state to overrule an erroneous decision of the Supreme Court of the territory of Oklahoma.

Error from District Court, Woods County; J. L. Pancoast, Judge.

Action by the Frick Company against D. C. Oats and W. W. Parsons. Judgment for defendants, and plaintiff brings error. Reversed and remanded.

A. H Noah, for plaintiff in error.

Cowgill & Dunn, for defendants in error.

TURNER J.

This is an action of replevin brought by the plaintiff in error plaintiff below, against defendant in error, defendants below, in the district court of Woods county on October 22, 1901, to recover possession, among other things, of a traction engine, an Eclipse thresher, a wind stacker, a sawmill, etc., of the total value of $1,200. On the same day an order of delivery was duly issued and plaintiffs placed in possession of the property, which he has since retained. It seems that on July 10, 1899, one Richard Pearson, being indebted to plaintiff in the sum of about $2,000, made, executed, and delivered to plaintiff a chattel mortgage on the property in controversy, which was never filed as required by law; that said Pearson in August, 1901, after condition broken, turned said property over to plaintiff, who took possession thereof under said mortgage as security for said indebtedness; that while in the possession of said property defendants, who were sheriff and deputy sheriff, respectively, of Woods county, Okl., on October 5, 1901, levied certain executions issued out of a justice of the peace court on said property, and took possession thereof, whereupon plaintiff brought this suit. There was a trial to a jury, and a verdict for defendants, a motion for a new trial, which was overruled, and exceptions taken, a petition in error and case-made duly filed in this court, and the case is now before us on appeal.

The questions we are asked to determine are: Is the verdict sustained by the evidence? Is the verdict contrary to law? If in an action of replevin the right of the creditor to the possession of the property in controversy, who holds a chattel mortgage of his debtor's property, which is void as to other creditors of the debtor because it was not filed, but who has taken possession of the mortgaged property, after conditions broken, as security for the debt, with the consent of the mortgagor, is superior to that of a subsequent execution creditor who has levied upon the same property, then the verdict is not sustained by sufficient evidence, is contrary to law, and the judgment of the trial court should be reversed, otherwise not. Let us see how this is. In Greenville National Bank v. Evans-Snyder-Buell Co., 9 Okl. 393, 60 P. 261, the court says: "At common law the mortgagee held possession of the property as well as the legal title. If the mortgagor was permitted to retain possession, the conveyance was presumptively fraudulent. The rule at common law has been changed by nearly all of the Western states, so that the legal title to the property remains in the mortgagor, and where the mortgage or statute so provides, the mortgagor may remain in possession, and as a general rule, if the mortgagor remains in possession, the mortgage must be filed, or the mortgagee will not be protected against the creditors of the mortgagor; but, if the mortgagee is in possession of the property, the most of the states protect his rights under his mortgage against the mortgagor's creditors." Cobbey on Chattel Mortgages, speaking of unfiled chattel mortgages (volume 1, § 498), says: "If the mortgagee takes possession of the mortgaged property before any other right or lien attaches, his title under the mortgage is good against everybody, if it was previously valid between the parties" -and authorities cited. Again, in the same section we find: "Where a creditor who holds a mortgage of his debtor's property, which is void as to other creditors of the debtor because it was not filed, takes possession of the mortgaged property, with the consent of the debtor, as security for the debt, he may still, as against other creditors, hold the property as pledgee. *** If a mortgagee takes possession of the mortgaged chattels before any other right or lien attaches, his title under the mortgage is good against everybody, if it was previously valid between the parties, although it be not acknowledged and recorded, or the record be ineffectual by reason of some irregularity. The subsequent delivery cures all such defects, and the mortgagee's right of possession is good against the world ***"-citing numerous authorities. First National Bank v. Damm, 63 Wis. 249, 23 N.W. 497. Hammon on Chattel Mortgages, p. 82, says: "If the mortgagee takes possession of the mortgaged property with the consent of the mortgagor before any other right or lien attaches, it will cure the invalidity arising from omission to record the instrument"-citing authorities. The same author on page 225 says: "As between the parties to the contract recordation is therefore unnecessary. Either party may enforce his rights without regard to whether the instrument has been recorded"-citing a number of authorities. That this doctrine is sustained by an overwhelming weight of authority there can be no question, and it would seem that in all the states unfiled chattel mortgages, executed in good faith and good as between the parties on the point in question, stand on a common footing. That such mortgages are good as between the parties has always been held in Arkansas, and such is also the rule in Oklahoma. Strahorn-Hutton-Evans Com. Co. v. Florer & Bannerman, 7 Okl. 499, 54 P. 710. In Evans-Snyder-Buell Co. v. McFadden, 105 F. 293, 44 C. C. A. 496, 58 L. R. A. 900, the court said: "Prior to the adoption of the chapter concerning mortgages as the law in the Indian Territory, it has been decided by the Supreme Court of Arkansas in Main v. Alexander, 9 Ark. 112, 47 Am. Dec. 732, that by force of Mansfield's Digest, §§ 4742, 4743, a mortgage on personal property executed in that state was good as between the parties thereto, though not acknowledged and recorded; but that it constitutes no lien upon the mortgaged property as against strangers. ***" See, also, Hannah v. Carrington, 18 Ark. 105; Jackoway v. Gault, 20 Ark. 190, 73 Am. Dec. 494; Carroll v. Duval, 22 Ark. 142; Jarratt v. McDaniel, 32 Ark. 602; Haglin v. Rogers, 37 Ark. 496; Watson v. Thompson, 49 Ark. 84-281, 4 S.W. 62.

But it is contended in the case at bar that section 3578 Wilson's Rev. & Ann. St. Okl. 1903, which reads as follows: "A mortgage on personal property is void as against creditors of the mortgagor, subsequent purchasers, and incumbrancers of the property in good faith, for value, unless the original, or an authenticated copy thereof, be filed by depositing the same in the office of the register of deeds of the county where the property mortgaged, or any part thereof, is at the time situated ***"-renders the chattel mortgage under consideration absolutely void as against the execution creditors in this case. To sustain this contention defendants in error rely on the case of Greenville National Bank v. Evans-Snyder-Buell Company, supra, where the opinion construing this statute, and seeming to establish a contrary rule (same page), reads as follows: "These rules, however, may be changed or modified to any extent by statute. The statutes of nearly all the states, like those of Kansas, provide that 'every mortgage, or conveyance intended to operate as a mortgage, of personal property, which shall not be accompanied by an immediate delivery, and be followed by an actual or continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage or a true copy thereof shall be forthwith deposited in the office of the register of deeds in the county where the property shall then be situated.' Oklahoma has gone one step further, and ignored the question of possession of the mortgagee. The fact that the mortgagee is in possession, if the mortgage is not properly filed, will not protect the mortgagee against attaching creditors of the mortgagor. The statute in positive terms provides that 'a mortgage of personal property is void against creditors of the mortgagor and subsequent purchasers and incumbrancers of the property in good faith for value, unless the original, or an authenticated copy thereof, be filed by depositing the same in the office of the register of deeds of the county where the property mortgaged, or any part thereof, is at the time situated.' From this section it will be seen that possession alone will not suffice." The section thus construed by the learned court in that case was in force in Dakota when the states of North and South Dakota were formed and was adopted by each of them when organized, and put in force and was operative in the territory of Oklahoma December 25,...