National Live Stock Bank of Chicago, Illinois v. First National Bank of Geneseo, Illinois

• Decision Date: 03 December 1906
• Docket Number: No. 33,33
• Citation: 203 U.S. 296,27 S.Ct. 79,51 L.Ed. 192
• Parties: NATIONAL LIVE STOCK BANK OF CHICAGO, ILLINOIS, Plff. in Err., v. FIRST NATIONAL BANK OF GENESEO, ILLINOIS
• Court: U.S. Supreme Court

203 U.S. 296

27 S.Ct. 79

51 L.Ed. 192

NATIONAL LIVE STOCK BANK OF CHICAGO, ILLINOIS, Plff. in Err.,

v FIRST NATIONAL BANK OF GENESEO, ILLINOIS.

No. 33.

Argued October 17, 18, 1906.

Decided December 3, 1906.

Messrs

This is an action of replevin, brought by the plaintiff in error against the defendant in error, in the district court of Woodward county, in the then territory of Oklahoma, to recover possession of certain cattle, once belonging to one W. B. Grimes, and by him mortgaged. The trial resulted in a judgment for the defendant, which was affirmed by the supreme court of the territory, and the plaintiff has brought the case here by writ of error.

The action has been twice tried. The first trial ended in a judgment for the plaintiff. Upon appeal to the supreme court of the territory it was reversed and the case remanded, and a second trial had, resulting in the judgment for defendant now under review. Upon the second appeal to the supreme court of the territory a brief opinion was given, in which it was stated that upon appeal from the first judgment the court had 'promulgated an opinion, in which it made a full statement and findings of facts and enunciated the law as applied thereto, reversed the judgment of the lower court, and remanded the case, directing a new trial. 13 Okla. 719, 76 Pac. 130.' The court also stated in its opinion on the second appeal that it had been agreed upon between the parties in the trial court that a jury should be waived and the case submitted on the record as made on the first trial, and that 'no new question is raised on this appeal. The record is the same as stated in our former opinion, and we are fully satisfied with the law as therein declared. The judgment of the lower court is hereby affirmed at the cost of the appellant.' [(Okla.) 79 Pac. 1134.]

The following facts were found by the supreme court on the first appeal, and were adopted by it as the facts for review on the second appeal:

One W. B. Grimes, who at the time was a resident of Clark county, in Kansas, executed at that place, on the 27th day of June, 1900, and delivered to Siegel-Sanders Live Stock Commission Company, his negotiable promissory note for $11,111.23, due November 1, 1900, with interest from maturity at the rate of 8 per cent per annum. To secure the payment of this note he executed and delivered a chattel mortgage to the payee of the note on 526 cattle then in the county, and the mortgage was duly filed in the office of the register of deeds of Clark county on July 12, 1900. The note was then indorsed and delivered by the payee to the Geneseo Bank, the defendant in error. It does not appear that there was any separate assignment of the mortgage. No record of any assignment was ever made in the register's office of Clark county, Kansas. On the 24th day of November, 1900, although the Siegel-Sanders Company had already sold and delivered the note for $11,111.23 to the Geneseo Bank, the defendant in error, yet, notwithstanding such sale, the president of that company, Frank Siegel, without any authority, filed in the office of the register of deeds a pretended release of the mortgage, in which payment of the above debt was acknowledged.

On the 25th day of February, 1901, the Chicago Cattle Loan Company caused its agent to examine the records of Clark county as to chattel mortgages against Grimes, and upon this examination he found the record clear, except as to a mortgage executed by Grimes to the Siegel-Sanders Live Stock Company, October 24, 1900, and by it assigned to the Chicago Cattle Loan Company, and True so reported to the lastnamed company.

On April 17, 1901, Grimes executed two other notes to the Siegel-Sanders Company for $7,694.70 each, due October 27, 1901. These notes were probably renewals of notes previously given. To secure the payment of these two notes Grimes at the same time executed and delivered a chattel mortgage to the Siegel-Sanders Company on the cattle in question and other cattle. The two notes thus given were then sold by that company to the plaintiff in error for the amount named in the notes, and the plaintiff believed at the time it bought these notes that the mortgage securing them was the first lien on the cattle, and it secured this information through its agent, who personally examined the record.

It is further stated in the finding that there was practteally no dispute as to the facts, and that the trial court expressly found that both parties to this action acted in good faith.

The release of the first mortgage, signed by the president of the Live Stock Commission Company and filed in the office of the register of deeds, as above stated, on November 24, 1900, was not acknowledged.

After the execution of these various instruments, and between the 25th of April and the 1st of May, 1901, without the knowledge or consent of either of the banks, parties to this suit, Grimes, the original owner of the battle, moved them from the state of Kansas to the county of Woodward, in the territory of Oklahoma, at which latter place, between the 19th and 20th of May, 1901, they were seized and taken possession of by the Geneseo Bank, the defendant. The plaintiff, within one year from the filing of the first mortgage, dated June, 27, 1900, in the office of the register of deeds of Clark county, Kansas, commenced this suit in replevin in the district court of Woodward county, Oklahoma, to recover possession of the cattle, claiming under the mortgage which was executed and delivered to the Siegel Sanders Company on April 17, 1901, and by it sold to plaintiff;

while the defendant claimed under the mortgage dated June 27, 1900, a pretended release of which had been filed as already stated, but after the assignment to defendant.

Upon these facts, as found by the supreme court of Oklahoma, judgment was rendered for the defendant in error.

Silas H. Strawn, Frederick S. Winston, John Barton Payne, Ralph M. Shaw, Blackburn Esterline, and Earle W. Evans

for plaintiff in error.

[Argument of Counsel from pages 300-301 intentionally omitted] Messrs. James S. Botsford, B. F. Deatherage, and O. G. Young for defendant in error.

[Argument of Counsel from pages 301-304 intentionally omitted] Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court:

The defendant in error, at the outset, objects to the jurisdiction of this court on the ground that the plaintiff should have brought the case here by appeal instead of by writ of error, because the case was tried without a jury, and therefore the writ of error was improper. There is nothing in this objection, as in actions at law coming from the territory of Oklahoma it has been held that the proper way to review the judgments of the supreme court of that territory was by writ of error. Comstock v. Eagleton, 196 U. S. 99, 49 L. ed. 402, 25 Sup. Ct. Rep. 210; Oklahoma City v. McMaster, 196 U. S. 529, 49 L. ed. 587, 25 Sup. Ct. Rep. 324; Guss v. Nelson, 200 U. S. 298, 50 L. ed. 489, 26 Sup. Ct. Rep. 260.

Further objection is made that the court below found no facts upon which a review can be had in this court. The foregoing statement disposes of this objection also, and shows it to be untenable.

On the merits, the question arises which of these two parties shall sustain the loss occasioned by the improper act of the president of the Live Stock Commission Company in signing this pretended release, and acknowledging the payment of the $11,000 note, as above stated? The plaintiff in error contends that the defendant bank should bear the loss because of its failure to record or file the assignment to it of the first mortgage, securing the $11,000 mote. The defendant opposes this view and insists that, being the holder and the owner of the $11,000 note, secured by a first mortgage duly executed on the 27th of June, 1900, and duly filed in the register's office, it has the prior right to the cattle, and that the statutes of Kansas do not require that it should file or record the assignment to it of the note and mortgage, and its claim should not therefore be postponed.

The note executed by Grimes for eleven thousand and some odd dollars was negotiable, and the chattel mortgage was given at that time to secure the payment of the note. The indorsement of the note and its delivery before maturity to the defendant by the payee of the note transferred its ownership to the defendant bank. This transfer also transferred, by operation of law, the ownership of the mortgage, which was collateral to the note. Such a mortgage has no separate existence, and when the note is paid the mortgage expires, as it cannot survive the debt which the note represents. Carpenter v. Longan, 16 Wall. 271, 21 L. ed. 313; Burhans v. Hutcheson, 25 Kan. 625, 37 Am. Rep. 274; Mutual Ben. L. Ins. Co. v. Huntington, 57 Kan. 744, 48 Pac. 19; Swift v. Bank of Washington, 52 C. C. A. 339, 114 Fed. 643.

The mortgage, therefore, is a prior lien upon the cattle, as security...