Lindig v. Johnson City State Bank

• Citation: 41 S.W.2d 222
• Decision Date: 22 July 1931
• Docket Number: No. 1276-5731.,1276-5731.
• Parties: LINDIG v. JOHNSON CITY STATE BANK.
• Court: Supreme Court of Texas

41 S.W.2d 222

LINDIG v. JOHNSON CITY STATE BANK.

No. 1276-5731.

Commission of Appeals of Texas, Section B.

July 22, 1931.

Error to Court of Civil Appeals of Fourth Supreme Judicial District.

Action by the Johnson City State Bank against Charles Lindig. To review judgment of Court of Civil Appeals, 26 S.W.(2d) 658, reversing judgment for defendant, defendant brings error.

Judgment of Court of Civil Appeals reversed, and judgment of district court affirmed.

N. T. Stubbs, of Johnson City, for plaintiff in error.

H. H. Sagebiel, of Fredericksburg, for defendant in error.

RYAN, J.

1. On June 1, 1923, Otto Burrer bought 425 head of goats from Harry Beck and Herman Lindig, in payment for which he executed his promissory note for $1,288.90, payable five months after that date, with 8 per cent. annual interest and 10 per cent. attorney's collection fee in case of default in payment. Said note provides: "This note is secured by 425 goats including mohair."

Said note was acquired by Charles Lindig (father-in-law and father respectively of the payees) soon after its execution, for value, and Burrer made payments to him from time to time, until the indebtedness was reduced to approximately $400 and about 160 goats remained on hand, the others having died or been sold.

In the fall, close to December, of 1926, Charles Lindig, with Burrer's consent, took possession of the remaining goats, sold them for $640, applied the proceeds to payment of the balance due on said note and set aside the excess as a special fund which he tendered into court to be disposed of as the court should decide.

2. To secure an antecedent debt to the Johnson City State Bank of approximately $4,000 (evidenced by their notes all dated June 1, 1926, and due October 1, 1926), Burrer and wife, on June 3, 1926, executed chattel mortgage on 30 head of cattle, 5 horses, 3 mules, and 150 goats, and their increase.

Burrer testified, without contradiction, that everything he owed the bank was so owing prior to June 3, 1926, when he executed the mortgage, that he obtained no money from the bank after that date; he testified also that the goats described in the bank's mortgage were bought by him from Herman Lindig and Harry Beck, on credit.

Burrer further testified that he told the bank's cashier when he executed the mortgage that he could not give the bank a first lien on the goats because Charles Lindig had such a mortgage, but the cashier said that made no difference and he could mortgage them again.

This was denied by the cashier who further testified that Burrer offered the goats as additional security to get more time on his indebtedness.

3. The bank filed suit in the district court of Blanco county against Burrer and wife, and on October 19, 1926, obtained judgment by default against them for the amount of its debt, interest, and attorney's fee, with foreclosure of its lien on the personal property described in said chattel mortgage and of a second mortgage lien on certain real estate therein described. At the bank's request it was ordered that no order of sale or execution should issue on said judgment until on or after December 1, 1926.

On December 8, 1926, order of sale issued, and under it the sheriff of Blanco county levied on and sold all the property described in the judgment, except the goats, which the sheriff reported could not be found in Blanco county. The proceeds of such sales were credited on the judgment.

4. This suit was filed on August 8, 1928, in the district court of Gillespie county, by the bank against Charles Lindig, to recover the value of the goats, on the allegation that said Lindig, without the bank's knowledge and consent, took exclusive possession thereof and converted the same to his own use and benefit, although said goats were subject to the bank's lien and claim for the unsatisfied balance due on the judgment against Burrer and wife; it appears from the recitals in the petition that such unsatisfied balance due is in excess of the value of the goats.

5. The defendant, Lindig, by special answer, alleged execution and delivery of the lien and note dated June 1, 1923, by Burrer to Harry Beck and Herman Lindig, his ownership thereof, for a valuable consideration paid by him to the payees of said note, on or about June 15, 1923, the various payments made by Burrer thereon until on or about October 30, 1926, when there remained unpaid thereon the sum of $400.44 which Burrer was unable to pay, whereupon Burrer turned over the remaining goats, 160 in number, to defendant, who sold them at the reasonable market value of $4 per head, and applied the proceeds of such sale to the balance due him by Burrer, and tendered into court the balance remaining, subject to the court's orders.

6. The trial court submitted to a jury two issues, viz.: "First: Did the plaintiff, Johnson City State Bank, at the time it first secured its chattel mortgage lien on the goats in question, have knowledge of the fact that Charles Lindig held a lien against said goats to secure the note held by him and introduced in evidence?" which was answered "Yes"; and "Second: What was the market value of the goats in question in Blanco County, Texas, in December, 1926?" which the jury answered "$4.00 per head."

The court therefore found that plaintiff bank has a valid lien on the goats in controversy, but the defendant has a valid prior lien thereon of which the plaintiff had notice, and rendered judgment in favor of defendant for $400.44, to be first deducted from $640 (value of all the goats) and in favor of the plaintiff bank against defendant for the balance, amounting to $239.56, with 6 per cent. annual interest from December 1, 1926, and all costs incurred.

7. On appeal by the bank, the Court of Civil Appeals reversed said judgment and rendered judgment in favor of the bank for $600, with interest and all costs of suit. 26 S.W.(2d) 658.

Opinion.

Beck and Lindig and their assignee, Charles Lindig, had a valid chattel mortgage lien on the goats in controversy, as between them and Burrer, although not filed and registered under the Chattel Mortgage Act. S. A. Brewing Ass'n v. Arctic Mfg. Co., 81 Tex. 99, 16 S. W. 797; Keller v. Smalley, 63 Tex. 519; Sparkman v. First State Bank, 112 Tex. 33, 244 S. W. 127; Snyder v. First National Bank (Tex. Civ. App.) 32 S. W. 162; Stewart Lumber Co. v. Miller Lumber Co. (Tex. Civ. App.) 144 S. W. 343.

It is contended by the bank that under article 5489, Rev. Stat., such chattel mortgage is void as to it, because not registered as required of chattel mortgages.

That article is as follows: "All reservation of the title to or property in chattels, as security for the purchase money thereof, shall be held to be chattel mortgages, and shall, when possession is delivered to the vendee, be void as to creditors and bona fide purchasers, unless such reservations be in writing and registered as required of chattel mortgages. Nothing in this law shall be construed to contravene the landlord and tenant law."

Under article 5490, Rev. Stat., every chattel mortgage upon personal property not accompanied by an immediate delivery followed by an actual and continued change of possession of the mortgaged property shall be absolutely void as against creditors of the mortgagor and as against subsequent purchasers and mortgagees or lienholders in good faith, unless forthwith deposited and filed in the proper county clerk's office.

In construing the latter article, Judge West, in Brothers v. Mundell, 60 Tex. 240, said that a distinction exists between "creditors" on the one hand and "subsequent purchasers and mortgagees in good...