Howell v. Walker

• Decision Date: 16 February 1914
• Citation: 164 S.W. 746,111 Ark. 362
• Parties: HOWELL v. WALKER
• Court: Arkansas Supreme Court

164 S.W. 746

111 Ark. 362

HOWELL v. WALKER

Supreme Court of Arkansas

February 16, 1914

Appeal from St. Francis Chancery Court; Edward D. Robertson Chancellor; reversed.

Decree reversed.

J. W Story, for appellants.

1. In a foreclosure proceeding against personal property to enforce the collection of an account, the circuit court has no jurisdiction unless the mortgagee has complied with the statute requiring the delivery to the mortgagor of a verified statement of his account, etc. Kirby's Dig., § 5415; 92 Ark. 313; 65 Ark. 316. The cause should, therefore, have been dismissed as to the proceeding to foreclose the mortgage executed to secure the Beck company account, for want of jurisdiction.

2. The J. W. Beck Company and Walker, its assignee, are estopped by the statement of account rendered February 1, 1911, by the Beck Company to Howell. 28 Ark. 447.

3. The complaint in so far as it sought to foreclose the trust deed of December 8, 1909, should have been dismissed, because neither Prewett, the holder of the legal title to the property, nor Grobmyer, the beneficiary therein, was made a party to the action. Jones on Chattel Mortgages, § 503; 75 Ala. 245; Story's Equity Pleading, § 118; 64 Miss. 25; 3 Ark. 382; 86 Ala. 199.

4. The mortgage from Howell to the J. W. Beck Company was intended to secure the debt created by the mortgagor during the year 1909, and it can not be construed as intended to secure any account made subsequent to that year. 50 Ark. 259; 30 Ark 745; 38 Ark. 285; 1 Jones on Mortgages, § 377; 32 Ark 601.

R. J. Williams, M. B. Norfleet and Carmichael, Brooks, Powers & Rector, for appellees.

1. The chancery court had jurisdiction.

(a) To construe section 5415 of Kirby's Digest as applying to actions in equity would make it violative of article 7, section 15, Constitution; 44 Ark. 377; 57 Ark. 528; 80 Ark. 145; 93 Ark. 389; 95 Ark. 618; Id. 399.

(b) The statement of the account was not a prerequisite in this case because the mortgagor was disposing of and attempting to dispose of the mortgaged property. 73 Mo. 151; 96 Mo.App. 510; 21 Neb. 50; 36 N.J.Eq. 169; 21 Wend. 509; 73 F. 292; 21 F. 755; 99 U.S. 28; 26 Am. Dec. 75; 62 Tex. 642.

(c) The plaintiffs actually complied with the provisions of the statute by delivery of a copy of the account to the mortgagor, as is shown by the proof.

2. Because J. W. Beck Company furnished Howell with a copy of the account for the year 1910, it is not thereby estopped to claim in this suit that he is indebted to it on the 1909 account, nor is its assignee estopped.

3. Prewett, the trustee in the deed of trust, was not a necessary party. Kirby's Dig., § 5999.

4. The mortgage given by Howell to the J. W. Beck Company was intended to secure, and did secure, any debt which accrued subsequent to its execution and prior to the time the books of said company showed a final settlement between the parties. 50 Ark. 256; 55 Ark. 569; 66 Ark. 393; 32 Ark. 598; 33 Ark. 73; Elliott on Contracts, §§ 4641-4644.

Same counsel in a supplemental brief say:

1. The mortgage and deed of trust expressly covered the increase of the animals conveyed, and the court's refusal to foreclose appellees' lien thereon was error. 32 Ark. 478; 94 Tenn. 210; 17 L. R. A. (N. S.) 203, and note; 106 Ia. 78; 79 Miss. 646; 86 Tex. 636; 54 Am. Rep. 576; 36 Mon. 402; 112 Cal. 215; 67 Md. 573; 69 Ia. 504.

2. One of the mules covered by the deed of trust proved defective, and the vendor of the mule replaced it with a good one, thereby substituting the security by mutual consent.

The court erred in refusing to foreclose the lien on this substituted security. 6 Cyc. 1035.

J. W. Story, for appellant, in reply.

In the face of the statute, Kirby's Dig., § 5397, a mortgage or deed of trust can not by express terms be extended to or made to cover the increase or offspring of animals subject thereto. The statute is plain, unequivocal, leaves no doubt as to the Legislature's meaning, makes no exceptions, needs no construction. 93 Ark. 45; 74 Ark. 304; 53 Ark. 422; 31 Ark. 558; 51 Ark. 258.

OPINION

MCCULLOCH, C. J.

Appellants J. O. Howell and W. H. Howell executed a chattel mortgage to the J. W. Beck Company on March 27, 1909, to secure a debt of $ 375, evidenced by a note, and future advances, to be evidenced by book account, and on February 3, 1911, they executed a mortgage, on the same property, to the Fussell-Graham-Alderson Company, to secure an existing debt and future advances.

Appellee George P. Walker became the owner of the claim of the J. W Beck Company under the mortgage through purchase from the trustees in bankruptcy, the J. W. Beck Company having been declared a bankrupt and the estate placed in the hands of trustees.

This suit involves a controversy between the rival claimants under the two mortgages.

Appellee Walker filed his complaint in equity to foreclose the mortgage, asserting a lien under the mortgage to the J. W. Beck Company, and the Fussell-Graham-Alderson Company was made a party as junior lienor.

Said appellee also seeks, in the same suit, to foreclose another mortgage executed by the Howells to J. M. Prewett, trustee, to secure a note of $ 385 executed by them to one Grobmyer, which note was transferred to the J. W. Beck Company, and, in turn, became the property of appellee Walker by purchase from the trustee in bankruptcy.

The unpaid part of the book account of the J. W. Beck Company against the Howells, or the greater part thereof, was for supplies furnished during the year 1910, and the principal controversy is over that part of the account for supplies furnished after the year 1909. It is contended that the debt incurred subsequent to the year 1909 does not constitute a lien under the mortgage.

The recital of the mortgage with respect to the debt secured thereby reads as follows:

"Whereas, the said party of the first part is now indebted to the party of the second part in the sum of $ 375, as evidenced by his promissory note dated March 27, 1909, and whereas the said second party undertakes and is to furnish the said party of the first part during the year 1909 with supplies, provisions and such other articles of goods, wares and merchandise and moneys as they may see proper and for all indebtedness that may accrue and remain due and unpaid after the said year 1909 until final settlement of said account to be evidenced by the books of the party of the second part. Now, if said first party shall well and truly pay to said second party whatever may be due them with the costs of executing this trust on or before the 15th day of October, 1909, then this deed shall be null and void; but in case any default shall be made in the payment of said indebtedness as herein set forth, or in case of death of the first party, or should the first party prior to the said 15th day of October, 1909, sell, or attempt to sell, ship, remove, abandon, or otherwise dispose of the property herein conveyed or any part thereof, without the written consent of said second party, then, in either event, the said second party, or either of them, or their heirs, assigns, or legal representatives of either of them, are authorized, empowered and directed to take possession of the above described and bargained property, on demand, without process of law, or so much thereof as will pay off, satisfy and discharge said indebtedness, and to sell the same to the highest bidder for cash."

Is this language in the mortgage sufficient to embrace an account for supplies furnished after the year 1909?

The universal rule is that a mortgage securing future advances is valid. Some of the authorities go to the extent of holding that there need be no specification of the debt, either as to amount or period of time within which the debt is to be created in order to make the security valid, it being sufficient if the language of the mortgage fairly reflects the fact that the parties intended to create a security for indebtedness to be incurred in the future; in other words, that a continuing security for future indebtedness without limit is valid. Jones on Chattel Mortgages, §§ 94 and 95; 1 Jones on Mortgages, § 367; Robinson v. Williams, 22 N.Y. 380; Hyland v. Habich, 150 Mass. 112, 22 N.E. 765.

In the Massachusetts case cited above the court had under consideration a mortgage which was given to secure "the sum of all indebtedness the said Matthew Hyland may now be under to said Edward Habich, and also the price or value of all such wares, goods or merchandise as may be purchased by or consigned to said Hyland, and all notes and obligations given or to be given therefor." The court said: "The language of the condition in the mortgage impliedly gave the mortgagee a right to sell goods to said Hyland for an indefinite time upon the faith of this security. It was like an ordinary continuing guaranty of payment for goods to be sold, except that, instead of a personal undertaking to pay as a guarantor, it was a transfer of the estate as security for the payment. The mortgagee had the same right to sell, trusting to the security, and there were the same limitations upon his right, as if the mortgagor had given merely a personal continuing guaranty. He had an implied authority from the owner of the mortgaged estate, which was subject to revocation at any time, and which would be revoked by the death of the owner."

This court has had occasion to go no further than merely to hold that a mortgage to secure future advances is sufficient "if the mortgage contains a general description sufficient to embrace the liability intended to be secured, and to put a person examining the record upon inquiry, and to direct him to the proper source for more minute and particular information of the amount of...