Greer v. Newland
| Decision Date | 01 July 1904 |
| Docket Number | 13,677 |
| Parties | J. E. GREER et al. v. J. W. NEWLAND et al |
| Court | Kansas Supreme Court |
For former opinion, see 77 P. 98.
Judgment reversed and cause remanded.
SYLLABUS BY THE COURT.
1. CHATTEL MORTGAGE--Commission Merchants, without Notice Held Not Liable on Implied Contract. A commission merchant who receives mortgaged cattle sent to him for sale without the knowledge or consent of the mortgagee, and in violation of the terms of the mortgage, and who sells them and pays the proceeds, less his commission, to the consignor, without notice of the mortgage, does not derive such a benefit from the transaction as to authorize the mortgagee to waive the tort and recover in an action upon an implied contract.
2. CHATEL MORTGAGE--Record Held Not to Impart Constructive Notice. The filing of a chattel mortgage for record does not impart constructive notice to a commission merchant to whom the mortgaged property is sent for sale and who sells it and pays the proceeds, less his commission, to his consignor.
This case involves the question whether commission merchants who receive mortgaged personal property sent to them for sale without the knowledge or consent of the mortgagee, and in violation of the terms of the mortgage, and who sell it and pay the proceeds, less their commission, to the consignor, without actual notice of the mortgage, which is properly of record, are liable to the mortgagee in an action upon an implied contract, the tort being waived. Upon a former hearing it was held that they derived no such benefit from the act of conversion as to make them liable in assumpsit by reason thereof, but that, under the authority of Brown v. Campbell, 44 Kan. 237, 24 P. 492, 21 Am. St. Rep. 274, the record operated to give them constructive notice of the mortgage, and that this had the same effect as actual notice, and rendered them liable as upon contract for their failure to pay the proceeds of the property to the real owner. A grave doubt as to the correctness of this view of the effect of the record led to the granting of a rehearing.
Upon fuller consideration, we are convinced that all that is said in the case cited regarding the notice imparted by the record of the mortgage is dictum. The action was for conversion, the facts being substantially the same as in this case. There, as here, the consignor was an apparent stranger, whose possession was not clearly accounted for. It was held:
"As the mortgage was properly on file in the office of the register of deeds, and valid, the commission merchant or broker was bound to take notice of the same and of the rights of the mortgagee, and that by selling and delivering the property to others he had made himself liable to the mortgagee as for a conversion of the property."
The weight of authority sustains the statement made in volume 4 of the Cyclopedia of Law and Procedure, at page 1055, which applies to a factor:
"An auctioneer who sells property for one who has no title and pays over to his principal the proceeds is liable to the real owner for the conversion, even though such auctioneer acts in good faith, and without knowledge of the defect of title."
(See, also, 3 A. & E. Encycl. of L., 2d ed., 497, and cases cited; Flannery v. Harley, 117 Ga. 483, 43 S.E. 765; Miller v. Wilson, 98 id. 567, 25 S.E. 578, 58 Am. St. Rep. 319; Johnson v. Martin, 87 Minn. 370, 92 N.W. 221, 59 L. R. A. 733, 94 Am. St. Rep. 706; Dolliff v. Robbins, 83 id. 498, 86 N.W. 772, 85 Am. St. Rep. 466; Moore v. Hill , 38 F. 330.)
(To the contrary, see 12 A. & E. Encycl. of L., 2d ed., 691.)
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