Hess-Herrington, Inc. v. State Exchange Bank of Yates Center

• Decision Date: 07 March 1942
• Docket Number: 35431.
• Citation: 155 Kan. 118,122 P.2d 739
• Parties: HESS-HARRINGTON, Inc., v. STATE EXCHANGE BANK OF YATES CENTER.
• Court: Kansas Supreme Court

122 P.2d 739

155 Kan. 118

HESS-HARRINGTON, Inc., v. STATE EXCHANGE BANK OF YATES CENTER.

No. 35431.

Supreme Court of Kansas

March 7, 1942

Syllabus by the Court.

Even though recorded copy of chattel mortgage was not an exact copy of the original, it was sufficient to constitute "notice" where the difference pertained to matters other than the body of the mortgage creating the lien. Gen.St.1935, 58-301.

In replevin action by nonresident chattel mortgagee against resident chattel mortgagee to recover possession of mortgaged automobile, evidence sustained finding that nonresident chattel mortgagee consented to mortgager's bringing the automobile to Kansas, as regards priority of the resident's subsequent mortgage.

Generally where a chattel mortgage has been properly filed and thereby priority of lien is preserved, upon removal of the mortgaged property to another state, it is not necessary in order to preserve the lien that the mortgage be filed in the state to which removal has been made, but such rule is not applicable if the chattel mortgagee knows of or consents to the removal. Gen.St.1935, 58-301.

Where courts of state recognize as a valid lien a chattel mortgage given in a sister state on property then in sister state but which was thereafter removed to local state, there has been accorded to the sister state the full measure of courtesy contemplated by the "comity rule", but the rule does not require holding that, where removal was done with the original mortgagee's consent and mortgage has not been filed locally, a subsequent mortgagee is chargeable with notice which the original mortgagee could, and in good conscience should, have given.

Where after Chattel mortgage covering automobile was properly filed in sister state where automobile was located at time mortgage was given, the automobile with mortgagee's consent was removed to Kansas where mortgagor gave another chattel mortgage to bank which did not have notice of the prior chattel mortgage which was not recorded in Kansas, the lien of bank's mortgage was superior to lien created by the mortgage given in sister state. Gen.St.1935; 58-301.

The statute declaring it unlawful to create lien by chattel mortgage on exempt property without joint consent of both husband and wife does not require the wife to sign mortgage on husband's exempt property, but joint consent may be shown by testimony, and therefore chattel mortgage covering husband's automobile was valid although not signed by wife where she consented to the transaction. Gen.St.1935 58-312, 60-3504.

1. The general rule is that where a chattel mortgage has been properly filed and thereby priority of lien is preserved upon the removal of the mortgaged property to another state, it is not necessary in order to preserve the lien that the mortgage be filed in the state to which removal has been made.

2. The above rule is subject to a well recognized exception, and that is it is not applicable if the mortgagee knows of or consents to the removal.

3. When the courts of this state recognize as a valid lien a chattel mortgage given in a sister state on property then there, but which was thereafter removed to this state, there has been accorded to the sister state the full measure of courtesy contemplated by the rule of comity, but to hold the rule applies where the removal was done with the mortgagee's consent and that the mortgage need not be filed locally and that a subsequent mortgagee is chargeable with notice which the mortgagee could, and in good conscience should, have given him, is beyond the spirit of the rule.

4. Under the provisions of G.S.1935, 58-312, that it shall be unlawful to create any lien by chattel mortgage on property exempt by law to resident heads of families "without the joint consent of both husband and wife", the written consent of the one not vested with the legal title is not absolutely essential, but such joint consent may be shown by testimony.

Appeal from District Court, Woodson County; Wallace H. Anderson, Judge.

Action in replevin by Hess-Harrington, Incorporated, against the State Exchange Bank of Yates Center, Kansas. From an adverse judgment, plaintiff appeals.

Guy Lamer and DeWitt M. Stiles, both of Iola, for appellant.

E. E. Lamb and W. E. Hogueland, both of Yates Center, for appellee.

THIELE Justice.

This was an action in replevin to recover possession of a Buick automobile, and from a judgment denying it relief the plaintiff appeals. In our consideration of the appeal we shall refer to plaintiff as the corporation, to the defendant as the bank, to the automobile as the car, and to each of the several chattel mortgages as mortgage.

Before stating the issues disclosed by the pleadings, we note the following facts which either were alleged in the pleadings or shown by the evidence, and which are not in dispute.

The corporation was engaged in business in Kansas City, Mo., loaning money on automobiles. On April 4, 1939, one H. S. Moncrieff, who was not made a party to the action, and who was then a resident of Kansas City, Mo., purchased the car and to provide funds for its purchase executed and delivered to the corporation his promissory note secured by a mortgage on the car. This mortgage was duly filed in the office of the recorder of Jackson County, Mo., on April 6, 1939. This mortgage described Moncrieff as a resident of Jackson County, Mo., and it contained, among others, the usual provisions that if default be made in payment or if the mortgagor removed the property from the county, or if the mortgagee deemed itself insecure, the mortgagee might take the property into its possession.

In August, 1939, Moncrieff moved to Yates Center, in Woodson County, Kan., where he became engaged in the retail shoe business. On June 3, 1940, he applied to the bank for a loan on his car, representing it was free of encumbrance. The bank searched the records of Woodson County and finding no mortgages against the car, made Moncrieff a loan secured by a mortgage on the car, the mortgage being duly filed in the office of the Register of Deeds of Woodson County on June 18, 1940.

About October 4, 1940, Moncrieff was in arrears to the corporation and at its request he went to Kansas City and on that date he executed a new note for the balance then due, and a new mortgage in which he was described as a resident of Woodson County, Kan. This mortgage was duly filed in Woodson County on November 9, 1940. When the new note and mortgage were delivered, the old note was not cancelled or delivered to Moncrieff and the old mortgage was not released of record.

None of the above notes and mortgages was signed by Mrs. Moncrieff. At some date not fixed in the testimony as abstracted, Moncrieff, accompanied by his wife, drove the car to the bank and informed its cashier he could not pay his note and he wanted to leave the car to take care of the mortgage to the bank. At that time he turned over the key to the car and the bank took the car to a garage.

Such other facts as are necessary to note are referred to later.

On February 18, 1941, the corporation commenced its action against the bank, the petition alleging execution, delivery and filing of the mortgage made to it by Moncrieff on April 4, 1939, default thereon and by reason of its special ownership, it was entitled to possession; that the bank had taken and was in possession of the car under some claim, the exact nature of which was not known to the corporation but any such claim was inferior to the right and claim of the corporation. The prayer was for recovery of possession of the car.

So far as need be noticed, the bank's answer alleged the corporation knew that in ...