Nelson v. Forbes & Sons

• Decision Date: 26 May 1924
• Docket Number: 7
• Citation: 261 S.W. 910,164 Ark. 460
• Parties: NELSON v. FORBES & SONS
• Court: Arkansas Supreme Court

261 S.W. 910

164 Ark. 460

NELSON v. FORBES & SONS

No. 7

Supreme Court of Arkansas

May 26, 1924

Appeal from Sebastian Circuit Court, Fort Smith District; John E Tatum, Judge; reversed.

Judgment reversed and cause remanded.

George W. Johnson and G. L. Grant, for appellant.

The court erred in admitting testimony as to whether or not appellee had personal knowledge of the existence of the mortgage. The mortgage was executed and filed according to the statutes of Oklahoma (1921), §§ 7650, 7651 7655. The lien of a mortgage in another State is not displaced by the wrongful removal of the property from that State to this. 73 Ark. 16. It was error to permit Smith to testify that Bromley was his tenant in 1920. Bromley held under a deed from Smith which contained no reservation of the rent, and Smith could not by parol testimony attach a condition or reservation that did not appear in the deed itself. See 122 P. 544; 10 Ark. 9; 51 Ark. 218. The cotton was not delivered to Smith prior to the execution of the mortgage, but was still in the possession of Bromley. 47 Ark 210.

Holland & Holland, for appellee.

The question of whether or not the cotton was delivered to Smith prior to the execution of the mortgage was one of fact to be decided by the jury. 103 Ark. 545. There being sufficient evidence to sustain this finding, it should stand. 67 Ark. 531; 74 Ark. 478; 97 Ark. 486; 153 Ark. 614. Where the relation of landlord and tenant exists, it is immaterial that the landlord was not in fact the owner of the land as regards his claim to the statutory lien. 16 R. C. L. p. 985, § 488. Upon default in contracts of sale, the relation of landlord and tenant relates back to the time fixed for payment by agreement. 95 Ark. 32. The rent was to be paid as part of the consideration, and it was proper to prove this by parol evidence. 150 Ark. 430. A vendor may make a conditional sale and give the vendee an option to hold as purchaser or as tenant. 48 Ark. 416. The mortgage was improperly acknowledged. The witnesses were children of Bromley, and had an interest therein. 5 R. C. L. p. 393, § 13; see note 9 also. The recording of such a mortgage gave no notice to a stranger. 20 Ark. 190; 9 Ark. 112; 1 R. C. L. p. 265, § 32.

OPINION

SMITH, J.

Appellant Nelson brought this action against appellees Forbes & Sons to recover twelve bales of cotton which had been mortgaged to him in the State of Oklahoma by W. M. Bromley. The cotton was brought into this State and sold to appellees at Hackett, Arkansas, by Z. R. Smith, to whom it had been turned over by Bromley in payment of an alleged rent note.

Smith had contracted to sell Bromley the land on which the cotton was grown, and on November 11, 1919, executed a deed to Bromley for the recited consideration of $ 7,500 cash in hand paid. This deed was not then delivered, but was placed in escrow until Bromley could raise a cash payment which was required. Before the delivery of the deed Smith rented the land to Bromley for a thousand dollars for the year 1920, and took a note for that amount, dated January 27, 1920, and due November 15 of that year. It was understood, however, when the deed was delivered, that the thousand dollars, when paid, should be treated as a payment of purchase money.

Bromley entered into possession of the land and cultivated it for the year 1920, and the twelve bales of cotton involved in this litigation were a part of the crop grown that year. All the cotton was sold by Bromley except the twelve bales, which were not sold because the price was not satisfactory, and the cotton was stored in a barn at Bromley's house.

The mortgage from Bromley to Nelson was dated August 2, 1921, and one of the disputed questions of fact in the case is whether the cotton so stored had been delivered to Smith prior to the execution and delivery of the mortgage, and the conflict in the testimony makes a question for the jury whether there had been a delivery to Smith prior to August 5, the date the mortgage was filed. Had that been done, this, of course, would be decisive of the case, as the title to the cotton would have passed to Smith upon its delivery to him. It is insisted, however, that the testimony shows that no delivery of the cotton to Smith had ever been made until after the execution of the mortgage, and that Bromley was in possession of it for himself, holding it to be sold when the market price advanced.

Finally, in January, 1922, Smith took the cotton out of Oklahoma and sold it to appellees in this State. This was after the mortgage had been executed, and the suit was brought to recover the cotton under the mortgage.

When Will Forbes, one of the appellees, was on the stand the court permitted counsel for appellees, over appellant's objection, to ask him if he knew of the mortgage when he bought the cotton, and he answered that he did not. This was an improper question, but we think no prejudice could have resulted from the action of the court in permitting it to be asked. The witness answered that he knew nothing of the mortgage, and there was no attempt to charge him with notice, but the instructions did not submit this question, and, under the instructions given, the jury could not have regarded the question as of any importance.

Appellant asked an instruction numbered 1 which presented his theory of the case. It reads as follows: "If you find, by a preponderance of the evidence in this case, that Smith sold the land to Bromley and conveyed the title to same, and that, after doing so, Bromley grew the cotton on the land and then mortgaged the cotton to the plaintiff to secure an indebtedness which he, Bromley, owed to the plaintiff, and the plaintiff had his mortgage recorded in LeFlore County, and that the cotton, at the time of the execution of the mortgage, was in LeFlore County, Oklahoma, and that thereafter Bromley disposed of the cotton to Smith, or that Smith removed it from LeFlore County, Oklahoma, to Sebastian County, Arkansas, and the indebtedness secured by the mortgage is yet unpaid, then the plaintiff is entitled to the possession of the cotton, and your verdict should be for him."

The court did not give the instruction as asked, but gave it after adding the following proviso: "Unless you further find that Smith reserved the rent, and that the bales of cotton in controversy were turned over to Smith as rent, then and in that event defendant Forbes would take a title free from the mortgage of plaintiff Nelson, and you should find for defendant Forbes."

In the case of F. E. Creelman Lumber Co. v. Lesh, 73 Ark. 16, 83 S.W. 320, this court said: "In Hall v. Pillow this court held that the lien of a mortgage in another State was not displaced by the wrongful removal of the property from that State to this. 31 Ark. 32. The authorities generally hold that a chattel mortgage, good according to the laws of the place where the mortgage is executed and recorded and the property is then situated, will be good, by comity, in any State to which the property may be afterward removed by the mortgagor, unless there is some statute in such State to the contrary. This, too, as against an innocent purchaser for value from the mortgagor. In some cases it is said the rule obtains, even though the property may have been removed with the consent of the mortgagee. Shapard v. Hynes, 104 F. 449; Alferitz v. Ingalls, 83 F. 964, and authorities cited in both cases. See also authorities cited at p. 1061, Pingrey, Chattel Mortg., § 435; Jones, Chat. Mort. 260."

It was proper therefore for the court to instruct the jury that, if the mortgage was valid under the laws of Oklahoma, and had been properly recorded, it would be enforced in this State, even as against an innocent purchaser for value; but the instruction ignored the contention of the defendants that the cotton had been delivered to Smith before the mortgage was executed, which, as we have said, is one of the questions of fact that cannot be treated as undisputed.

We think, however, that the modification of the instruction was erroneous. The undisputed evidence shows that, after the rent note was taken, the deed was delivered. Thereupon the character of Bromley's possession was changed from that of tenant to...