Gooding Milling & Elevator Co. v. Lincoln County State Bank

• Decision Date: 16 September 1912
• Citation: 126 P. 772,22 Idaho 468
• Parties: GOODING MILLING & ELEVATOR CO., Appellant, v. LINCOLN COUNTY STATE BANK et al., Respondents
• Court: Idaho Supreme Court

126 P. 772

22 Idaho 468

GOODING MILLING & ELEVATOR CO., Appellant, v. LINCOLN COUNTY STATE BANK et al., Respondents

Supreme Court of Idaho

September 16, 1912

CHATTEL MORTGAGE-FORECLOSURE AND SALE OF CHATTEL MORTGAGE-RESTRAINING SALE OF MORTGAGED PROPERTY-MORTGAGE OF COMMUNITY AND SEPARATE PROPERTY-ESTOPPEL.

(Syllabus by the court.)

1. Facts of this case examined, and held sufficient to support a finding by the trial court that certain bakery supplies purchased by a married woman and by her mortgaged, were at the time of the execution of the mortgage the separate property of the wife and not the community property of husband and wife.

2. Where a junior mortgagee has notice at the time of taking a mortgage that a senior mortgage exists on the same property which was executed by the wife alone, and that the wife claimed the property as her separate property, and that the husband admitted and declared that the property was the separate property of the wife, and at the time of the execution of the junior mortgage the junior mortgagee understood that he was taking a second mortgage on the property; held, that the junior mortgagee is estopped from questioning the validity of the senior mortgage or contending that the property mortgaged was community property instead of the separate property of the wife.

3. Where property was purchased by a married woman in a foreign state, and under the laws of that state such property became her separate property, and the property is thereafter brought into the state of Idaho, it will continue to be the separate property of the wife.

APPEAL from the District Court of the Fourth Judicial District for Lincoln County. Hon. Edward A. Walters, Judge.

Action to enjoin the sale of certain personal property on notice and sale before the sheriff. Judgment for defendant, and plaintiff appealed. Affirmed.

Judgment affirmed, with costs in favor of respondent.

W. G Bissell and O. R. Baum, for Appellant.

As a rule, property purchased with money borrowed by either spouse during the existence of the community is community property. (N. & P. Hypotheek Bank v. Rauch, 7 Idaho 152, 61 P 516.)

It is presumed to remain community property until the respondent bank has, by a fair preponderance of evidence, established its separate character, and the burden is upon it so to do. (Addams v. Knowlton, 22 Cal. 283; Weeb v. Peet, 7 La. Ann. 92; Huntington v. Legros, 18 La. Ann. 126; Block v. Melville, 22 La. Ann. 147.)

The proof introduced to establish the separate nature of the property should be closely scrutinized, bearing in mind the facility with which frauds may be accomplished by pretense of gift between husband and wife. (Lake v. Lake, 18 Nev. 361, 4 P. 724, 7 P. 74; Davis v. Zimmerman, 40 Mich. 27.)

A junior mortgagee is never estopped from setting up the invalidity of a senior mortgage unless the junior mortgage contains a stipulation recognizing the priority of the senior mortgage. (Old National Bank v. Heckman, 148 Ind. 490, 47 N.E. 953; Hart v. Hayden, 79 Ky. 346.)

E. K. Walsh and Sutphen & Sutphen, for Respondents.

Property acquired in a foreign jurisdiction, which is there the property of one of the spouses, maintains its separate character when brought into a state having community property laws. (Brookman v. Durkee, 46 Wash. 578, 123 Am. St. 944, 90 P. 914, 12 L. R. A., N. S., 921, 13 Ann. Cas. 839; In re Burrows' Estate, 136 Cal. 113, 68 P. 488; Kreamer v. Kreamer, 52 Cal. 302; 10 Current Law, p. 8; La Salle v. Woolery, 14 Wash. 70, 53 Am. St. 855, 44 P. 115, 32 L. R. A. 75.)

Gifts of the wife's earnings (if still the husband's), or of any personal property of the husband, are favored in equity so long as creditors be not prejudiced. (Schouler on Domestic Relations, secs. 189-293.)

The appellant, at the time it took its mortgage from Katherine Holmes and A. A. Holmes, was bound to take notice of the prior recorded mortgage given by the wife alone on the same property. (Schields v. Ruddy, 3 Idaho 148, 28 P. 405 (2 Idaho 884); Zimpleman v. Robb, 53 Tex. 274; Wells, Fargo & Co. v. Alturas Com. Co., 6 Idaho 506, 56 P. 165; 6 Cyc. 1064; 21 Cyc. 1669, note 64.)

A second mortgagee is always estopped to set up the invalidity of a prior mortgage whose defects may be and are waived by the mortgagor. (Pritchett v. Mitchell, 17 Kan. 355, 22 Am. Rep. 287; Green v. Kemp, 13 Mass. 515, 7 Am. Dec. 169; Hardin v. Hyde, 40 Barb. (N. Y.) 435; 2 Hilliard on Mortgages, pp. 396, 397.)

AILSHIE, J. Stewart, C. J., and Sullivan, J., concur.

OPINION

AILSHIE, J.

This is an appeal from an order and decree dissolving a temporary injunction and ordering the sale of certain property held by the sheriff under affidavit and notice on foreclosure of personal property. A motion has been made in this court to dismiss the appeal, and this motion is based upon a showing that no supersedeas bond was given and that the property involved has been sold by the sheriff in accordance with the order and decree of the court. The writer is of the opinion that the motion is well taken and that the appeal should be dismissed (Wilson v. Boise City, 7 Idaho 69, 60 P. 84; Roberts v. Kartzke, 18 Idaho 552, 111 P. 1), but my associates are not of like opinion, and for that reason the motion is denied.

This controversy arose over the validity of two chattel mortgages. The respondent, the Lincoln County State Bank, commenced its proceedings before the sheriff on affidavit and notice for foreclosure of a mortgage on certain chattels owned by Katherine Holmes. Prior to the sale by the sheriff, the appellant, the Gooding Milling & Elevator Co., commenced this action against the bank and the sheriff and others to enjoin and restrain the sale on the ground that the appellant had a superior lien on the property to that held by the Lincoln County State Bank. It appears that in the latter part of 1909, Katherine Holmes went from Boise to Gooding, and took with her a letter from F. H. Parsons, cashier of the Bank of Idaho, addressed to F. R. Gooding, and recommending Mrs. Holmes as an honest, reliable and straightforward woman, who was desirous of entering into business in the town of Gooding. Upon the recommendation of Gooding, she and her husband procured some money and credit from the Gooding State Bank. About the 4th of February, 1910, Mrs. Holmes purchased from a firm in Chicago an oven and certain other supplies commonly used and necessary in carrying on the bakery business. These supplies were shipped directly from Chicago to Mrs. Holmes in Gooding, Idaho. It appears from the invoice that she paid $ 78 cash and gave her notes for the balance of $ 180. Her husband seems not to have been known in this transaction. On the 9th of May, 1910, Mrs. Holmes individually leased from Fred R. Reed a building in the town of Gooding for the purpose of occupying and using it as a bakery, and individually signed and executed the lease. She thereafter secured credit and purchased supplies from the milling company as she needed them in her business.

Business ran along this way for a short time, when she transferred her account from the Gooding State Bank to the Lincoln County State Bank, and on June 13, 1910, Mrs. Holmes individually borrowed from the Lincoln County State Bank, one of the respondents herein, the sum of $ 400, and executed her promissory note in favor of the bank for that sum. On the same day she individually executed a mortgage in favor of the Lincoln County State Bank upon certain personal property consisting of her ovens and bakery supplies, to secure the payment of this $ 400 note. At that time she represented to the bank that the property was her individual and separate property, and her husband also at the same time advised the officers of the bank that this property was his wife's separate property and that she was running the business on her own account. Business ran on and she made payments from time to time until she had paid about half of this indebtedness. On the 19th of November, 1910, she and her husband jointly executed a mortgage upon the same property in favor of the appellant herein, the Gooding...