Harrison v. South Carthage Min. Co.

• Decision Date: 02 June 1902
• Citation: 68 S.W. 963,95 Mo. App. 80
• Court: Missouri Court of Appeals
• Parties: HARRISON et al. v. SOUTH CARTHAGE MIN. CO. et al.<SMALL><SUP>1</SUP></SMALL>

68 S.W. 963

95 Mo. App. 80

HARRISON et al. v. SOUTH CARTHAGE MIN. CO. et al.¹

Court of Appeals at Kansas City, Missouri.

June 2, 1902.

CHATTEL MORTGAGE—RECORD—SUBSEQUENT CREDITORS.

Under Rev. St. 1899, § 3404, providing that no chattel mortgage shall be "valid against any other person than the parties thereto unless possession of the mortgaged property be delivered to the mortgagee or unless the mortgage be acknowledged and recorded," a chattel mortgage withheld from record until after a subsequent creditor has extended credit to the mortgagor is void as to such creditor, and the reasons for withholding the mortgage from record are wholly immaterial.

Appeal from circuit court, Jasper county; J. D. Perkins, Judge.

Action by Harrison & Calhoun against the South Carthage Mining Company, defendant, and Isaac Perkins, garnishee. From a judgment discharging the garnishee, plaintiffs appeal. Reversed.

H. T. Harrison and Green & Calkins, for appellants. McReynolds & Halliburton, for respondent.

ELLISON, J.

Plaintiffs obtained judgment against defendant on an account for coal sold to it. They had execution issued, and the garnishee herein garnished. On trial of the garnishment, the judgment was for the garnishee.

The facts necessary to state are these: The garnishee, as agent for his daughter, on February 27, 1900, loaned $1,000 to the defendant, and on that day took a chattel mortgage of defendant to secure its payment. By neglect, the mortgage was not filed for record until May 15th thereafter. In the interim between the time of giving the mortgage and filing it for record, the plaintiffs sold the goods to defendant, without knowledge of the unrecorded mortgage, supposing defendant's property to be free of incumbrance. The question presented is whether, in such circumstances, the mortgage is valid as to plaintiffs. We are of the opinion that it is not. The question was considered by us in the recent case of Landis v. McDonald, 88 Mo. App. 335; and we there held that under our statute (section 3404, Rev. St. 1899) declaring that no chattel mortgage should be "valid against any other person than the parties thereto unless possession of the mortgaged property be delivered to the mortgagee * * * or unless the mortgage be acknowledged and recorded," a mortgage withheld from record until after a subsequent creditor extended credit to the mortgagor was void as to such creditor. The same construction is given to a like statute in the states of New York, New Jersey, Michigan, Mississippi, and North Dakota (Karst v. Gane, 136 N. Y. 316, 32 N. E. 1073; Thompson v. Van Vechten, 27 N. Y. 568; Parshall v. Eggert, 54 N. Y. 18, 22; Stewart v. Beale, 7 Hun, 416; Button Co. v. Spielman, 50 N. J. Eq. 120, 24 Atl. 571; Roe v. Meding, 53 N. J. Eq. 350, 33 Atl. 394; Cutler v. Steele, 85 Mich. 627, 630, 631, 48 N. W. 631; Root & Co. v. Harl, 62 Mich. 420, 29 N. W. 29; Crippen v. Fletcher, 56 Mich. 386, 23 N. W. 56; Hilliard v. Cagle, 46 Miss. 336; Bank v. Oium, 3 N. D. 200, 54 N. W. 1034, 44 Am. St. Rep. 533), and, we think, has met the approval of the supreme court of this state, as shown by the following quotation from Root & Co. v. Harl, just cited: "We have no doubt that, under our statute [similar to that of Missouri], any creditors have a right to avoid an unrecorded mortgage, who have, during its absence from record, done anything material which they may be fairly considered to have done on the basis of its nonexistence." State v. O'Neill, 151 Mo. 67, 86, 52 S. W. 240. See, also, Barton v. Sitlington, 128 Mo., loc. cit. 175, 30 S. W. 514. We further held that it was not necessary for such subsequent creditor to show affirmatively that he was deceived or misled, for the reason that the statute makes no such condition, and that it will be so assumed. Cutler v. Steele, 85 Mich. 627, 630, 631, 48 N. W. 631; Root & Co. v. Harl, 62 Mich. 420, 29 N. W. 29; Crippen v. Fletcher, 56 Mich. 386, 23 N. W. 56; Hilliard v. Cagle, 46 Miss. 336; Williams v. Kirk, 68 Mo. App. 462, and authorities supra. We further held that it was not necessary for the creditor to show that the mortgage was withheld by fraudulent intent, or that it was withheld by agreement. This upon the ground that the statute does not make such matters conditions of avoidance. The statute does not say that the mortgage shall be invalid if by agreement it is not recorded, nor does the statute say that it is invalid if it was withheld from record with intention to defraud. The statute has been enacted in its present form to avoid all such questions. It is the fact of not recording which avoids the deed. A creditor extending credit during the period the mortgage is withheld is as much harmed by the good-natured, well-intended indolence and carelessness of the mortgagee as he would be by a fraudulent agreement not to record it. A person is presumed to intend the natural consequence of his act. State v. O'Neill, 151 Mo. 67, 85, 87, 52 S. W. 240; Bank v. Buck, 123 Mo. 141, 27 S. W. 341; Reed v. Pelletier, 28 Mo. 177. It will be noted that the cases cited above from the courts of New York and New Jersey go further than the rule recognized in this state will permit. Those cases hold that, if the mortgage is not recorded immediately (i. e., in a reasonable time from its execution), it is void as to creditors, prior or subsequent, and that it is void even as to a prior creditor, although recorded before such creditor becomes entitled to lay hold of the property. Such is not the case with us; for here, although the mortgage is not recorded when it should be, and therefore void as to prior creditors (Knoop v. Distilling Co., 102 Mo. 157, 14 S. W. 822; Collins v. Wilhoit, 35 Mo. App. 585; and Id., 108 Mo. 457, 18 S. W. 839), yet if it is recorded before such prior creditor obtains some specific right therein by attachment, execution, or other lien, it becomes valid against such creditor (Greeley v. Reading, 74 Mo. 309; Drug Co. v. Self, 77 Mo. App. 284; Coke Co. v. Stevens, 74 Mo. App. 39). See, also, Dobyns v. Meyer, 95 Mo. 132, 8 S. W. 251, 6 Am. St. Rep. 32; McIntosh v. Smiley, 32 Mo. App. 125; Id., 107 Mo. 377, 17 S. W. 979. Our courts have proceeded on the theory that a subsequent mortgage could not possibly have caused the prior creditor to extend credit. We need not say what would be decided in case it were shown that, though a prior creditor, he extended the time of the credit, or refrained from taking steps to secure himself, or was otherwise injuriously affected by the withholding of the mortgage from record. The New York and New Jersey cases also refuse to allow the fact of the creditors' notice of the unrecorded mortgage to affect the question. We have stated in the cases decided by us that the subsequent creditor extended the credit without notice of the unrecorded mortgage. We so stated for the reason that such happened to be the fact in the cases where the statement was made. But we do not mean to be understood as affirming or denying (since the question is not here involved) that notice should have any controlling effect in arriving at a conclusion. Collins v. Wilhoit, 108 Mo. 451, 18 S. W. 839; Bevans v. Bolton, 31 Mo. 437. In Landis v. McDonald we cited some of the cases from our supreme court involving the question of what effect withholding deeds to real estate from record would have on creditors. It...