Okla. State Bank of Enid v. Buckner

• Decision Date: 26 June 1923
• Docket Number: Case Number: 11146
• Citation: 1923 OK 425,90 Okla. 109,217 P. 189
• Parties: OKLAHOMA STATE BANK OF ENID v. BUCKNER, Trustee.
• Court: Oklahoma Supreme Court

1923 OK 425

217 P. 189

90 Okla. 109

OKLAHOMA STATE BANK OF ENID v. BUCKNER, Trustee.

Case Number: 11146

Supreme Court of Oklahoma

Decided: June 26, 1923

Syllabus

¶0 1. Conversion--Petition--Sufficiency.

A general demurrer to a petition in an action for conversion, which avers facts showing that the plaintiff has a general or special property in the chattels alleged to have been converted, the right of possession thereof at the time of the conversion, and that the defendant has converted the same to his own use, is properly overruled.

2. Bankruptcy -- Chattel Mortgages -- Mortgagee in Possession--Priority over Rights of Trustee in Bankruptcy.

Where a mortgagee who holds a chattel mortgage on its debtor's property, good as between the parties, but void as to other creditors, because not filed as required by law, takes possession of the mortgaged property after condition broken, as security for the debt, with the consent of the mortgagor, and prior to the filing of a petition in bankruptcy against the mortgagor, held, the right of the mortgagee to the possession of the property is superior to that of the trustee in bankruptcy.

3. Chattel Mortgages -- Irregular Foreclosure--Action for Damages.

If the mortgagee in a chattel mortgage takes possession of the chattels after condition broken, and with the consent of the mortgagor, but unlawfully disposes of such property, the mortgagor may treat such action as a conversion of the property by the mortgagee and recover his damages; the measure of his damages in such case being the excess in value of the property at the time of the conversion, over the mortgaged debt.

4. Bankruptcy--Interests of Estate--Right of Action by Trustee.

A trustee in bankruptcy has a right under the bankrupt law to sue for and recover any interest in the bankrupt's estate as it existed at the time of filing the petition in bankruptcy.

5. Chattel Mortgages--Action Against Mortgagee for Conversions--Right to Recover.

In an action for unlawful conversion of mortgaged chattels by the mortgagee, if it appears from the uncontradicted evidence that the value of said chattels is less than the mortgage lien, it is error to render judgment for the plaintiff.

Error from District Court, Garfield County; J. C. Robberts, Judge.

Action by George W. Buckner, as trustee of the General Wayne Cigar Company, a bankrupt, against the Oklahoma State Bank of Enid, a corporation. Judgment for plaintiff, and defendant brings error. Reversed and remanded, with directions.

Dyer & Keim, for plaintiff in error.

McKeever & Moore and W. J. Otjen, for defendant in error.

MASON, J.

¶1 This is an action for damages instituted by the defendant in error, hereinafter called the plaintiff, against the plaintiff in error, hereinafter called the defendant, for the wrongful conversion of certain property of the General Wayne Cigar Company, a bankrupt.

¶2 The material allegations of the petition are as follows: That, on the 31st day of March, 1917, an involuntary petition in bankruptcy was filed in the District Court of the United States for the Western District of Oklahoma, against the said General Wayne Cigar Company, a corporation; that thereafter said General Wayne Cigar Company was adjudged to be a bankrupt; that the plaintiff herein was regularly appointed as trustee of the estate of said bankrupt, and was by the referee in bankruptcy directed and ordered to institute this action; that claims have been presented and allowed against the bankrupt and there are no funds of said estate in the hands of the trustee to pay same; that, on the 7th day of October, 1916, the General Wayne Cigar Company, at that time being insolvent, which insolvency was fully known to the defendant herein, with the intent and design to cheat, defraud, hinder, and delay the creditors of said bankrupt, executed and delivered to the defendant, the Oklahoma State Bank of Enid, its promissory note for $ 1,050, due on demand; and to secure the payment of said note, a chattel mortgage was executed and delivered on the 10th day of October, 1916, upon the stock and fixtures of the bankrupt of a value of $ 4,500; that said chattel mortgage provided that the mortgagor should remain in possession of the mortgaged property and sell the same in due course of trade without accounting to the mortgagee for said sale, and said mortgagor did remain in possession of the mortgaged property and sell the same in the usual course of business without accounting therefor until the defendant took and converted said property; that in furtherance of said design and intent to cheat, defraud, hinder, and delay the creditors of said bankrupt, the defendant concealed and withheld from filing said pretended chattel mortgage until the 3d day of February, 1917; that thereafter, in pursuance of said intent and design to cheat, defraud, hinder, and delay, the defendant did, between the time of the filing of said chattel mortgage and the filing of the bankruptcy petition, on the 31st day of March, 1917, appropriate and convert all the property of the bankrupt to its own use, and without the knowledge or consent of the creditors of said bankrupt; that, at the time of the conversion of said property, same was reasonably of the value of $ 4,500.

¶3 Plaintiff further alleges that, on behalf of the creditors of said bankrupt, he has demanded of the defendant a return of said property, or the value thereof, and said defendant fails and refuses to return the same or its value. The plaintiff prays judgment in the sum of $ 4,500 with interest and costs.

¶4 The defendant demurred to the plaintiff's petition, which was overruled by the court, to which the defendant excepted, and thereafter filed a general denial.

¶5 The case was tried to the court without the intervention of a jury, and, at the close of the evidence in the case, the court made special findings of fact and conclusions of law and rendered judgment for the plaintiff, to which the defendant excepted.

¶6 The defendant in proper time moved for a new trial, which the court overruled, and the defendant excepted and perfected this appeal.

¶7 Counsel for plaintiff in error contend in their brief that the plaintiff tried this case in the lower court under a double theory; First, that the plaintiff was attempting to avoid a preference; second, that the plaintiff was attempting to recover damages for the wrongful conversion of the property of the bankrupt.

¶8 A large portion of the brief of the plaintiff in error is devoted to the first theory, but the defendant in error, in his brief, denies that the case was tried under that theory, and claims that the case was tried under the second theory alone, and for that reason we will confine our discussion thereto.

¶9 It is first contended by the defendant that the petition is not sufficient, and that the court erred in overruling the demurrer interposed to it, but we think this contention not sound, for the reason that said petition avers facts showing "that the plaintiff has a general or special property in the chattels alleged to have been converted, the right of possession thereof at the time of conversion, and that the defendant has converted the same to its own use," which are all the necessary allegations to constitute a good petition for the recovery of damages for conversion. Wire v. Slocum et al., 80 Okla. 111, 194 P. 1061.

¶10 In McCracken v. Cline, 55 Okla. 37, 154 P. 1174, it is said:

"The petition in an action for the conversion of personal

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