Gray v. Kappos
| Citation | 61 P.2d 613,90 Utah 300 |
| Decision Date | 22 October 1936 |
| Docket Number | 5686 |
| Court | Supreme Court of Utah |
| Parties | GRAY v. KAPPOS et al |
Rehearing Denied, January 4, 1937.
Appeal from District Court, Third District, Salt Lake County; Roger I. McDonough, Judge.
Action by L. H. Gray, agent, against John Kappos, Saron Kappos, the First Security Bank of Bingham Canyon, and others, wherein the bank filed a counterclaim and cross-complaint. From a judgment in favor of the defendants, the plaintiff appeals.
AFFIRMED.
L. I Layton, of Salt Lake City, for appellant.
Bowen & Quinney, of Salt Lake City, for respondents.
OPINION
This action had a threefold purpose; (1) Plaintiff sought to recover from the defendants John and Saron Kappos, hereinafter called the Kapposes, $ 933 alleged to be due plaintiff from those defendants as rental for a ranch near Bingham Canyon, Utah; (2) to have the claim of the lessor, plaintiff herein, declared a lien on certain sheep prior to the mortgages held by the First Security Bank of Bingham Canyon; and (3) to have the claim of the lessor adjudged prior to the rights of the defendant Chris Fergis, the purchaser of the sheep in question. The bank claimed that the mortgages it held were purchase-money mortgages, and, therefore, ahead of the lien of plaintiff.
The parties stipulated certain facts. The evidence as to the facts not stipulated is practically undisputed. The trial court found that in October, 1928, the bank loaned to the Kapposes $ 2,000 to purchase 300 sheep for which the Kapposes gave the bank their promissory note payable in six months, secured by a mortgage on the sheep. The note and mortgage were not paid when due, and were renewed in April, 1929. On August 26, 1929, the bank loaned the Kapposes money to buy additional sheep. The amount of that loan was added to the amount still due on the loan of $ 2,000. All sheep were included in a new mortgage to secure a note for $ 3,168, that being the amount due on the original loan, plus the amount loaned for the second purchase of sheep. In January, 1931, the loan amounted to $ 3,350, for which the Kapposes executed a note secured by a mortgage on the remaining sheep. On July 28, 1932, the bank loaned the Kapposes additional money with which to buy more sheep. The amount loaned was added to the amount due on the other purchases, and notes, one for $ 4,500 and one for $ 500, secured by mortgages on all the sheep, were fully executed in the bank's favor. In November, 1932, the sheep were sold to Fergis and the amount received credited on the amount that the Kapposes owed the bank.
During the summer months the sheep were grazed upon the ranch which the plaintiff had leased to the Kapposes on January 1, 1929, and which lease was in force and effect at the time the sheep were sold. The sheep were on the ranch when they were sold to Fergis. In December, and before thirty days had expired from the time of the sale to Fergis, the plaintiff brought this action to impress the sheep with a lien under section 3776, Comp. Laws Utah 1917 (now 52-3-1, R. S. Utah 1933), which section provides:
"Except as hereinafter provided, lessors shall have a lien for rent due upon all nonexempt property of the lessee brought or kept upon the leased premises so long as the lessee shall occupy said premises and for thirty days thereafter."
The bank by counterclaim and cross-complaint sought to foreclose its mortgage on the sheep.
The trial court decreed that the mortgage be foreclosed, that the amount secured thereon be applied first to the costs of sale, second to the amount due the bank of $ 3,061.12, and third, out of the remainder, if any, plaintiff should be paid the $ 933 due him for rent under the lease. From this decree plaintiff appeals. He here asserts: (1) That the mortgage which was foreclosed was not a purchase-money mortgage and that the renewals of the different mortgages were not in fact renewals; (2) that if the mortgages were renewals the lien of plaintiff is prior thereto, because the sheep were brought upon the leased premises before the mortgages were filed of record.
Section 3777, Comp. Laws Utah 1917 (now 52-3-2. R. S. 1933) provides:
"The lien provided for in this chapter shall be preferred to all other liens or claims except claims for taxes and liens of mechanics under chapter 1 of this title, mortgages for purchase money, and claims of employees for wages which are preferred by law."
Under this statute, if the mortgage foreclosed by the bank was for the purchase money for the sheep in question, then it has priority over the lien claimed by plaintiff. A purchase-money mortgage is a mortgage which is given upon the property sold to secure the balance of the purchase price remaining unpaid. It is a debt created by the purchase. Whether the mortgage is given directly to the vendor or to a third person who advances the money, the legal effect is the same. Featherstone v. Emerson, 14 Utah 12, 45 P. 713; Ely Sav. Bank v. Graham, 201 Iowa 840, 208 N.W. 312; Ladd & Tilton Bank v. Mitchell, 93 Ore. 668, 184 P. 282, 6 A. L. R. 1420; 41 C. J. 458.
The bank advanced the money to the purchaser for the purpose of purchasing the sheep. Simultaneously, as a part of the same transaction, the purchaser mortgaged the sheep so purchased to the bank for the money advanced. Originally, the mortgages were purchase-money mortgages. Neither renewing nor combining them changed their essential characteristics. They still remained purchase-money mortgages. In each case when a new note was given the prior note was retained by the bank; each subsequent note was marked or stamped as a renewal of the first note. The prior mortgage was not satisfied of record. Apparently the parties intended that the giving of a new note and mortgage was a renewal of a previous note and mortgage. Legal effect should be given to the intention of the parties in such case. Whether the taking of renewal notes is in payment of the obligation represented by the previous note is a question to be determined by ascertaining the intention of the parties as manifested by the facts and circumstances attending their transactions. Interstate Trust Co. v. Headlund, 51 Utah 543, 171 P. 515; Anglo-California Trust Co....
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