Nation v. Planters' & Mechanics' Bank
| Decision Date | 14 November 1911 |
| Citation | 119 P. 977,29 Okla. 819,1911 OK 415 |
| Parties | NATION v. PLANTERS' & MECHANICS' BANK. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
One who takes a conveyance, absolute or conditional, which recites that it is second or subordinate to some other mortgage or lien, is not the purchaser of the entire thing conveyed thereby. He purchases only the surplus or residuum after satisfying the other incumbrances, and is estopped to deny the existence of the prior mortgage or the validity of the lien, although it be not acknowledged, recorded, or filed as required by the statutes.
A claim or demand on an implied contract is not allowable to a defendant as a set-off in an action brought by a plaintiff sounding in tort for the conversion of goods by the defendant.
Error from Oklahoma County Court; Sam Hooker, Judge.
Action by W. E. Nation against the Planters' & Mechanics' Bank. Judgment for defendant, and plaintiff brings error. Affirmed.
W. A Smith, for plaintiff in error.
John H Wright, for defendant in error.
This case presents error from the county court of Oklahoma county having been begun on January 16, 1908, by W. E. Nation, as plaintiff, against the defendant in error, to recover $350 damages for the value of two black mares alleged to have been converted by the defendant. The plaintiff claimed to own or have a special interest in the property by virtue of a certain chattel mortgage on the animals executed October 5 1907, by one W. H. West, and filed for record October 11, 1907. He alleged that, while his mortgage was still unsatisfied, on or about the 1st of January, 1908, he found the animals mentioned at a sales stable, and learned that the defendant was advertising said property for sale under a chattel mortgage which it claimed to hold on the same. Thereupon plaintiff caused a notice to be served on the bank that he claimed a first lien on the property, and that he would hold the bank liable for conversion if it should sell the same. The bank proceeded, however, and sold the mares, taking the proceeds therefor. The defendant answered, alleging it held a prior mortgage covering the same property; that its mortgage bore the date of July 11, 1907, having been given by said West and one Phillips. Defendant also filed a cross-petition, asking judgment against the plaintiff, and alleging that he had converted to his use two certain mules on which the defendant claimed a first mortgage, bearing the date of June 24, 1907. The case was tried to the court without a jury, which made certain findings of fact and conclusions of law finding against plaintiff on its cause of action, and rejecting the defendant's demands set forth in its cross-petition on the ground that it was not a proper set-off to plaintiff's petition. The mortgage given on the mares to the plaintiff contained in its body the statement that the same was "subject to the prior mortgage on same property for $1,300." Plaintiff filed his mortgage of record prior to any filing of the mortgage of the defendant, and claims that he had no actual knowledge of the clause above quoted. The court found from the evidence that the mortgage to the bank was included in the sum of $1,300 mentioned. Counsel for plaintiff insists that, under these facts, plaintiff should have recovered; that the fact that his mortgage was filed of record first, and that he lacked actual knowledge of this particular clause in his mortgage, relieved him of being chargeable therewith; and that, even though knowledge thereof might have been imputed to him, still it was insufficient to render his mortgage subject to the claims included in the $1,300. With counsel's contention in this regard we are unable to agree. The doctrine of notice whether applied to mortgages of real or personal property is the same.
No distinction is made in the application of the doctrine between the two classes. Jones on Mortgages (5th Ed.) § 308; Wade on Notice (2d Ed.) § 77. This court in the recent case of Creek Land & Imp. Co. v. Davis, 28 Okl. 579, 115 P. 468, held that the words "subject to contract" in the following line, "$235.00 (subject to contract) in hand paid," was sufficient without actual knowledge thereof to put a prudent man on inquiry which, if prosecuted with ordinary diligence, would have led to actual notice of the rights of the parties claiming under the said contract, and held a subsequent grantee bound by the notice therein given. Text-writers and courts without dissent seem to accept as the correct rule the doctrine that where one who takes a conveyance absolute or conditional reciting that it is second or subordinate to some other mortgage or lien is not the purchaser of the entire thing conveyed hereby, but that he purchases only the surplus or residuum after satisfying the other incumbrances, and that he is estopped to deny the existence of a prior mortgage or the validity of the lien, although it be not acknowledged, recorded, or filed as required by the statutes. 2 Cobbey on Chattel Mortgages, § 1039; 5 Am. & Eng. Ency. Law, 1015, and authorities cited under notes 3 and 4; 6 Cyc. 1076, and authorities cited under note 35; Tolbert v. Horton et al., 31 Minn. 518, 18 N.W. 647; Eaton v. Tuson, 145 Mass. 218, 13 N.E. 488; Pecker et al. v. Silsby, 123 Mass. 108; Young et al. v. Evans-Snyder-Buel Commission Co., 158 Mo. 395, 59 S.W. 113; Ghio v. Byrne et al., 59 Ark. 280, 27 S.W. 243; Flory v. Comstock, 61 Mich. 522, 28 N.W. 701; First Nat. Bank of Corning v. Reid et al., 122 Iowa, 280, 98 N.W. 107; Citizens' Coal & Coke Co. v. Stanley, 6 Colo. App. 181, 40 P. 693; Wells Fargo & Co. v. Alturas Commercial Co., 6 Idaho, 506, 56 P. 165; Clapp Bros. & Co. v. Halliday Bros., 48 Ark. 258, 2 S.W. 853.
The remaining proposition in the case is presented by the cross-petition of the defendant, wherein it brings for review in a cross-petition in error the action of the court in rejecting its set-off involved in its charge that plaintiff had converted a team of mules to which defendant had a prior claim. It will thus be noticed that the claims of both parties grow out of an alleged conversion of personal property and the question presented for our consideration is May one conversion be set off against another? Under our Code, any cause of action arising on contract, whether for a liquidated or unliquidated demand, may constitute a set-off, and be pleaded as such in any action founded upon contract. Challiss v. Wylie, 35 Kan. 506, 11 P. 438. And it appears to be settled that, whenever one party commits a tort against the estate of another with the intention of benefiting his own estate, the law will at the election of the party injured imply a...
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