Maercklein v. Maercklein
| Decision Date | 11 August 1934 |
| Docket Number | 6254 |
| Citation | 256 N.W. 180,64 N.D. 733 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Dickey County, McKenna J.
Affirmed in part and reversed in part.
Kvello & Adams, for appellant.
Although descriptions in a chattel mortgage do not identify themselves yet they must furnish the means of identification. A description to be sufficient must point out the means whereby the precise thing mortgaged may be identified with certainty. Jones, Chattel Mortg. 5th ed. §§ 53 and 54; City Bank v. Ratkey, 79 Iowa 215, 44 N.W. 362; Willey v. Snyder, 34 Mich. 60. The record of the chattel mortgage is not constructive notice of more than it contains. 11 C.J. 538; Harney v. Wirtz, 30 N.D. 292 152 N.W. 803; Teigen v. Elevator Co. 51 N.D. 563 200 N.W. 38; Hazen v. Dwyer, 36 N.D. 346, 162 N.W. 399; Wattles v. Cobb, 60 Neb. 403, 83 N.W. 195; Walter A. Wood Mowing & Reaping Mach. Co. v. Minneapolis & N. Elevator Co. 48 Minn. 404, 51 N.W. 378; 5 R.C.L. 427; Jones, Chattel Mortg. 5th ed. § 55a; 11 C.J. 456.
A description is sufficient if it may be added by parol proof and the property covered by the mortgage, identified. 11 C.J. 456 and 463; Barker v. Chase (Vt.) 22 Am. St. Rep. 99; Dawson v. Cross, 99 Mo. 296; Richardson v. Alpina Lumber Co. 40 Mich. 203; Cass v. Gunnison, 58 Mich. 108; Stonebreaker v. Ford, 81 Mo. 523; Price v. McComas, 21 Neb. 195; Union Bank v. Hutton (Neb.) 85 N.W. 535; Moebus v. Collins, 85 N.J.L. 430, 89 A. 986; Burk v. Linkmeyer, 32 Ohio C.C. 188.
Hugo P. Remington, for respondent.
The power of one partner to bind firm property by a chattel mortgage to secure a firm debt, without the consent of his co-partners, is generally recognized. 47 C.J. 857; Union Nat. Bank v. Western Bldg. Co. 44 N.D. 336, 175 N.W. 629; First Guaranty Bank v. Rex Theatre Co. 50 N.D. 322, 195 N.W. 564; Citizens Nat. Bank v. Johnson (Iowa) 44 N.W. 551.
A mortgage upon partnership assets, given by a partner in his own name, for a partnership debt, is valid. Chapman v. Greene, 18 S.D. 505, 101 N.W. 351.
A mortgage of all the grantor's property of a certain kind in a certain locality is sufficient. 11 C.J. 461; Ashley v. Keenan (Iowa) 137 N.W. 1041; Rhutasel v. Stephens (Iowa) 27 N.W. 787; Wiley v. Shars (Neb.) 33 N.W. 418; Russel v. Winne (N.Y.) 97 Am. Dec. 755.
The burden of proof is upon the subsequent mortgagee to show that he acted in good faith, i.e., that he acquired the mortgage for value and without notice of the prior lien. Dundee Realty Co. v. Leavit, 127 N.W. 1057; Everdson v. Mayhew, 65 Cal. 167, 3 P. 641.
This is a contest between plaintiff and the defendant bank for priority of respective chattel mortgages on some sheep.
While a trial de novo was demanded there is little if any dispute as to the facts.
Plaintiff Edward Maercklein and defendant Walter H. Maercklein are brothers. Prior to 1927 defendant Maercklein and his brother-in-law, Paul Schroeter were co-partners in farming operations. Among other personal property the co-partnership owned 120 to 130 ewes. In September 1927 the co-partnership was purchasing a farm and to complete the deal borrowed one thousand dollars from the plaintiff. As evidence of the loan to the co-partnership the plaintiff took a promissory note dated September 13, 1927 and due in a year, with interest. This note was signed by defendant Maercklein only. As security for payment defendant Maercklein gave a chattel mortgage on "one hundred ewes, being all the ewes I now own, together with the increase of the same." These sheep were owned by the co-partnership and were part of the co-partnership sheep flock. They were not segregated, nor earmarked, nor pointed out to the plaintiff. This chattel mortgage was filed September 24, 1927 and is the basis of plaintiff's claim.
October 24, 1927 defendant Maercklein borrowed $ 1,050.00 from the Agricultural Credit Corporation in Minneapolis, and as security for the payment of this sum gave a chattel mortgage upon intending by this a mortgage on the sheep mortgaged to his brother. The application for the loan was prepared by F. D. McCartney, the vice president of defendant bank, and he signed the mortgage as witness.
September 10, 1928 the co-partnership, being indebted to the defendant bank, gave its note for $ 1,476.00 due January 10, 1929 and as security for payment gave a chattel mortgage on "240 head of sheep" besides some cattle and hogs. Some payments were made and on October 28, 1929 a renewal note for $ 915 was given with a chattel mortgage on "240 head of sheep of various sizes, colors and sex" to secure the same. Another renewal note was given May 2, 1931 and a chattel mortgage on "125 head of ewes, 2 bucks, 80 lambs." Other stock were also included. On May 31, 1932 another renewal note was given with a chattel mortgage on "140 ewes, 85 lambs and the increase together with other chattel property to secure the same." In each case both partners signed the notes and mortgages.
There is no dispute as to the amounts which the co-partnership owes the plaintiff and the bank.
The trial court found that the chattel mortgage given by defendant Maercklein to his brother was given with the consent of the brother-in-law, the co-partner; that it was given for partnership purposes and was in fact a partnership mortgage. The trial court further found that there were enough circumstances surrounding the whole transaction to put the defendant bank upon inquiry as to the ownership of the property described in the plaintiff's chattel mortgage, and therefore plaintiff's mortgage was superior to that of the defendant bank.
The record shows plaintiff's mortgage was executed by defendant Maercklein, with the advice and consent of his co-partner, was given upon partnership property and for partnership purposes. The money obtained was used in the purchase of a farm for the partnership. Under our statute, § 6403 of the compiled laws: "Every general partner is agent for the partnership in the transaction of its business and has authority to do whatever is necessary to carry on such business in the ordinary manner and for this purpose may bind his co-partners by an agreement in writing." Defendant Maercklein was a "general partner." His execution of the mortgage was necessary to carry on the business for which the partnership was formed. His act, therefore bound the partnership. First Guaranty Bank v. Rex Theatre Co. 50 N.D. 322, 328, 195 N.W. 564. As between the parties the description of property mortgaged as "being all the ewes I now own, together with the increase of same," is sufficient. See First State Bank v. Dahly, 54 N.D. 309, 209 N.W. 655. Hence plaintiff has a valid mortgage on the partnership property, as against any claim of either of the partners.
But when the general partner Maercklein executed the note and mortgage he did not sign the partnership name. The only signature is "Walter H. Maercklein." There is nothing in the signature on the note or on the mortgage to indicate to a third person in any way that the partnership, either by itself or through a general partner, was mortgaging the partnership property; or to indicate in any way that Maercklein was giving other than a personal obligation of his own, and securing it by a mortgage on his own individual property. Hence it is incumbent upon the plaintiff to show that the defendant bank knew, or, had it made the required investigation, would have learned that the mortgage was not what it purports to be -- an individual affair -- but was in fact the obligation of the partnership and covering partnership property.
There is no question but what the partnership executed the mortgage given to the bank. Had the bank officials examined the records in the office of the register of deeds they would not have learned that the "co-partnership" had given a chattel mortgage to plaintiff. They would have found a chattel mortgage executed by the defendant Maercklein personally upon property which he stated therein was his own. It is true the record shows that the bank knew there was a partnership existing between the defendant and his brother-in-law; but there is nothing to indicate the bank knew or should have known that the defendant Maercklein had no independent property of his own.
Plaintiff says the vice president of the bank prepared the application defendant Maercklein made to the Agricultural Credit Corporation and witnessed the execution of a...
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