Navajo Live Stock & Trading Co. v. Gallup State Bank.

• Decision Date: 17 January 1920
• Docket Number: No. 2329.,2329.
• Citation: 189 P. 1108,26 N.M. 153
• Court: New Mexico Supreme Court
• Parties: NAVAJO LIVE STOCK & TRADING CO.v.GALLUP STATE BANK.

26 N.M. 153

189 P. 1108

NAVAJO LIVE STOCK & TRADING CO.

v.GALLUP STATE BANK.

No. 2329.

Supreme Court of New Mexico.

Jan. 17, 1920.Rehearing Denied June 8, 1920.

Syllabus by the Court.

The pledgee of negotiable promissory notes of the assignee and chattel mortgage securing the same is entitled to recover of the parties to such collateral notes the whole amount of their face, holding any surplus for the benefit of the persons who are entitled to it; there being no equities existing between the maker of the notes and the original payee.

The pledgee of property has the control of it for the time being, and he represents not only his own interests, but that of the pledgor, in taking any proper action for the preservation of it and the collection and care of its proceeds.

Where proceeds are taken by the pledgee of promissory notes and a chattel mortgage regularly assigned securing said notes held by the pledgee as collateral security to foreclose the mortgage, the maker of the notes and the mortgagor attempting to redeem, in order to exercise the right, were required to pay or tender all that was justly or equitably due under the mortgage, together with interest, if any due, and the expenses and costs directly and reasonably incurred by the pledgee in attempting to foreclose the same; the mortgage providing that the mortgagor upon default should pay such costs, expenses, and attorney's fee, and a tender of the amount due in order to effect redemption should have included such costs, expenses, and attorney's fee.

Whoever has the affirmative of the issue, as determined by the pleadings, or, where there are no pleadings, by the nature of the investigation, has the burden of proof. It never shifts from that party either in civil or criminal cases.

Appeal from District Court, Bernalillo County; H. F. Raynolds, Judge.

Action by the Navajo Live Stock & Trading Company against the Gallup State Bank. Judgment for defendant, and plaintiff appeals. Affirmed.

The pledgee of negotiable promissory notes of the assignee and chattel mortgage securing the same is entitled to recover of the parties to such collateral notes the whole amount of their face, holding any surplus for the benefit of the persons who are entitled to it; there being no equities existing between the maker of the notes and the original payee.

H. B. Jamison, of Albuquerque, for appellant.

W. A. Keleher, of Albuquerque, and H. C. Denny, of Gallup, for appellee.

ROBERTS, J.

On February 28, 1916, the Navajo Live Stock & Trading Company, appellant herein, executed and delivered to Emma Franklin its two demand notes for $17,500, which notes were secured by a chattel mortgage on all the live stock owned by said corporation. Emma Franklin owned practically all of the capital stock of the corporation. Thereafter the corporation borrowed $20,000 from the Gallup State Bank, appellee herein, which notes were not payable until some time after November 25, 1916. To secure the payment of these notes Emma Franklin assigned and transferred to the Gallup State Bank, as collateral security, the two $17,500 notes executed to her by the corporation and the chattel mortgage securing the same.

While not found by the court, it is possibly true, as shown by the evidence, that on or about November 8, 1916, the Gallup State Bank was apprised that some one was making away with a portion of the live stock, attempting to drive it out of the state, and expenses were incurred by the bank in preserving and protecting the property.

On November 16th Emma Franklin notified the Gallup State Bank that there was danger of the dissipation of the property covered by the chattel mortgage, and demanded that the bank take steps to enforce the same. On the 18th of November the bank made a demand upon the corporation for the payment of the two notes, and demanded possession of the live stock secured by the mortgage. The corporation admitted in writing the violation of the terms of the mortgage, and delivered possession of the property covered thereby to the bank. On November 25th Charles Chadwick & Co. purchased from Emma Franklin all her stock in the corporation, and thereupon paid to Emma Franklin $35,000 and interest, called for by the two demand notes, paid to the Gallup State Bank $11,000 and interest for the balance due on note executed to it by the corporation, and demanded a return of the mortgaged property. The bank refused to return the property until it should be paid the sum of $250 attorney's fee which it had incurred in the steps taken to foreclose the mortgage, and $205 expenses incurred in taking possession of the property. The Navajo Live Stock & Trading Company, in order to secure possession of the mortgaged property, paid the bank under protest the sum of $455 covering said items, and this suit was instituted in the district court of McKinley county to recover said sum so paid. The case was tried to the court, findings of fact were made, and conclusions of law stated, upon which judgment was rendered for the appellee.

The court found that the $250 demanded by appellee as attorney's fee was a reasonable fee for the services rendered by appellee's attorney in the proceedings taken to foreclose the mortgage, and that the $205 was a necessary expense incurred in taking possession of the property and caring for the same; that it was justly owing to appellee at the time of the redemption.

The judgment is attacked upon several grounds, which will be considered in the order presented in appellant's brief.

First. It is argued that at the time the money was paid under protest the Navajo Live Stock & Trading Company, through Charles Chadwick & Co., had paid Emma Franklin, pledgor, every dollar demanded by her as due upon the collateral notes, as it had a right to do if it paid the bank the amount due on the principal notes, as it did, and that then to compel the corporation to pay the pledgee money due to Emma Franklin was illegal and unjustified, and that the bank's...