Hinton v. Bond Discount Company

• Citation: 218 S.W.2d 75,214 Ark. 718
• Decision Date: 28 February 1949
• Docket Number: 4-8753
• Parties: Hinton v. Bond Discount Company
• Court: Arkansas Supreme Court

218 S.W.2d 75

214 Ark. 718

Hinton v. Bond Discount Company

No. 4-8753

Supreme Court of Arkansas

February 28, 1949

Rehearing Denied March 28, 1949.

Appeal from Little River Chancery Court; A. P. Steel, Chancellor.

Affirmed in Part and Reversed in Part.

John C. Finley, Jr., and Shaver, Stewart & Jones, for appellant.

Cecil E. Johnson, Jr., for appellee.

Holt J.

OPINION

December 5, 1944, John M. Eads and wife borrowed $ 145, -- evidenced by their note, -- from Time Auto Loan Company of Harris county, Texas, as purchase money for a Studebaker coach automobile, and as security, executed a chattel mortgage on the car to the lenders. This mortgage was not recorded. March 9, 1945, this note and mortgage were assigned to appellee, Bond Discount Company.

Thereafter, on January 15, 1945, appellee, Bond Discount Company, made an additional loan to Eads and wife in Texas for $ 669.60, taking another chattel mortgage on this same car. This mortgage also was not recorded.

On February 1, 1945, Ethel Eads applied for and received a "Certificate of Title to a Motor Vehicle" from the Texas State Highway Department as provided by the laws of that State. This certificate contained a description of the car, that it was purchased from L. D. Jones Motor Company, Nashville, Texas, that the owner was Ethel Eads, Houston, Texas, that the automobile was subject to a first mortgage lien in the amount of $ 669.60, in favor of appellee, Bond Discount Company, Houston, and that there were no other liens against said car. No mention was made of the first mortgage, supra.

Thereafter, Eads and wife, without the knowledge or consent of appellee, removed the car to Texarkana, Arkansas, and sold it. Appellant, Smith, bought the car from J. L. Ripley. Neither knew that the car had been mortgaged in Texas and were not aware of the Certificate of Title held by Ethel Eads. Appellant, Smith, later sold the car to appellant, Hinton, who was in possession of the car at the time suit was filed, and at trial.

The present suit was instituted by the "Bond Discount Company, a Corporation." It alleged in its complaint that it was a corporation, that it owned the notes and mortgages, that there was due on said notes and mortgages $ 729.80, that Hinton had possession of the car, and that its value was $ 750. It prayed that its mortgages be given full faith and credit, for the appointment of a receiver, for the sale of the car, and in the event of a deficiency, for judgment against appellants for conversion.

Appellants, in separate answers, interposed general denials and appellant, Hinton, by way of cross complaint, prayed that in the event Bond Discount Company should prevail that he "have and recover judgment herein against the defendant," W. C. Smith, in the amount of $ 734.96, purchase price of the car, and for money expended in repairs.

In short, Bond Discount Company sought foreclosure of its mortgage liens. Appellants defended primarily on the ground that they were bona fide purchasers and that there were no liens against the automobile in question enforcible in Arkansas.

The decree contained the following recitals: "That the defendants, Ervin Hinton and W. C. Smith, are jointly and severally indebted to plaintiff in the sum of six hundred thirteen and eighty/100 dollars ($ 613.80) by reason of the conversion of one 1940 Studebaker automobile having Motor No. 600336, the property of plaintiff.

"The complaint of the plaintiff as to additional items claimed is denied.

"It is further decreed that should defendant, Ervin Hinton, discharge or pay to plaintiff the judgment here rendered then he shall have judgment against his codefendant, W. C. Smith, for the full amount required to discharge plaintiff's demand.

"It is therefore considered, ordered, adjudged and decreed that plaintiff have and recover of and from the defendants, Ervin Hinton and W. C. Smith, either jointly or severally, the sum of six hundred thirteen and eighty/100 dollars ($ 613.80) and all costs of this action, and if same be not paid within 30 days, execution shall issue therefor together with all costs of this action. It is further ordered that should Ervin Hinton, defendant, pay or discharge this decree then and in such event he shall have judgment against his co-defendant, W. C. Smith, for the full sum required to discharge this decree."

Appellants appear on direct appeal, and appellee prosecutes a cross appeal from that part of the court's decree denying it recovery of $ 116 alleged due on the assignment to it of the first mortgage, supra.

For reversal, appellants first argue that appellee sued as "Bond Discount Company, a corporation" when in fact it was a partnership and therefore not a proper party plaintiff to institute this suit. This contention is untenable for the reason that in their answers appellants interposed only general denials. They made no specific denial that the status of appellee was that of a partnership and not a corporation as alleged in the appellee's complaint. The effect of their failure to make specific denial, under our statutes, was to admit the corporate status of appellee, as alleged. Arkansas Stats. (1947), § 27-1121, in part provides: ". . . that any allegation of complaint or other pleadings setting out the status of any party or parties as a corporation, partnership, firm or individual shall be taken as admitted unless specifically denied."

There was no issue of fact on this point before the trial court. "Objection that plaintiffs did not have the legal capacity to sue must be made either by demurrer or answer, and, in the absence of proper objection, will be waived." (Headnote 1), Scottish Union & National Insurance Company v. Wilson, 183 Ark. 860, 39 S.W.2d 303.

"The broad, uncontroverted rule is that the lex loci will govern as to all matters going to the basis of the right of action itself, while the lex fori controls all that is connected merely with the remedy." St. Louis-San Francisco Railway Company v. Cox, 171 Ark. 103, 283 S.W. 31.

Next appellants say: "We contend that said certificate (the Texas Certificate of Title) was inadmissible in evidence in this case. The cause of action alleged in the complaint...