P.R. Sinclair Coal Co. v. Missouri-Hydraulic Mining Co.

• Decision Date: 25 November 1918
• Docket Number: No. 2264.,2264.
• Citation: 207 S.W. 266
• Parties: P.R. SINCLAIR COAL CO. v. MISSOURI-HYDRAULIC MINING CO. et al.
• Court: Missouri Court of Appeals

207 S.W. 266

P.R. SINCLAIR COAL CO. v. MISSOURI-HYDRAULIC MINING CO. et al.

No. 2264.

Springfield Court of Appeals. Missouri.

November 25, 1918.

On Motion for Rehearing, January 2, 1919.

Appeal from Circuit Court, Lawrence County; Charles L. Henson, Judge.

Action by the P. R. Sinclair Coal Company against the Missouri-Hydraulic Mining Company and another. From an order granting defendants a new trial, plaintiff appeals. Reversed and remanded, with directions, conditionally.

James A. Potter and I. V. McPherson, both of Aurora, for appellant.

John L. McNatt, of Aurora, for respondents.

BRADLEY, J.

This is an action to recover for the conversion of certain personal property used in connection with a mining enterprise. Upon trial below, before the court and a jury, plaintiff recovered. The trial court sustained a motion for a new trial, and plaintiff appealed.

Plaintiff claims title by virtue of a chattel mortgage given November 6, 1916, which plaintiff attempted to foreclose. Defendant claims its right of possession by virtue of a lease dated December 6, 1916. The Scottish Zinc Mining Company, a corporation, was engaged in mining at Aurora, Mo., beginning its mining business in the year 1915. It appears that this company was at all times hard pressed for money to meet its pay roll and other obligations. Plaintiff furnished coal to it at different times, and at the time plaintiff took its mortgage the Scottish Zinc Mining Company owed plaintiff about $900 for coal. Plaintiff was reluctant to furnish more coal, but finally consented to furnish $300 worth more on condition that it be secured for the coal it had furnished up to that date, and for the additional coal to be furnished. In pursuance of this agreement plaintiff took a demand note for $1,200, secured by a chattel mortgage on the property now in dispute. This mortgage was recorded November 8, 1916. December 6th, thereafter, the Scottish Zinc Mining Company sublet its mining lease, and leased all its other properties, including the property conveyed in the mortgage to defendant Tooker, and he assigned to defendant Missouri-Hydraulic Mining Company the sublease and lease of the other property therewith which was for the duration of the original lease which expired in 1925. The defendant mining company, with Tooker as a stockholder and general manager, took possession of all the properties mentioned in the sublease and lease and began operating the mine. On May 12, 1917, plaintiff, having previously advertised under its mortgage, sold the property therein described and purchased at the sale. Immediately after the sale plaintiff began to take down and move from the mine the property sold under its mortgage. Defendants threatened the agents of the plaintiff with prosecution for trespass if they persisted in removing the property, and notified plaintiff that they claimed the property under the leases mentioned. The result was this suit for conversion.

There are several grounds set up in the motion for a new trial, but the trial court sustained the motion on the ground that it should have given the peremptory instruction requested by the defendants at the close of the case. This conclusion was reached, as appears from the record on the ground that there was no substantial evidence of express or implied authority emanating from the Scottish Zinc Mining Company to Its president which would authorize him to execute the mortgage in question. While the trial court placed its ruling in granting the new trial on the ground that there was no express or implied authority for the execution of the mortgage, there are other features touching the validity of the mortgage which, if true, would defeat plaintiff as much so as the lack of authority to execute the mortgage. The defendants sought to defeat recovery principally on four grounds: (1) That the mortgage was not sealed, and was defectively acknowledged, and was therefore void as to a third party; (2) that there was no authority, express or implied, authorizing the president of the Scottish Zinc Mining Company to execute the mortgage; (3) that the plaintiff did not have the possession of the property described in the mortgage at the time of the sale, and therefore the sale was void and passed no title; (4) that plaintiff's note was a demand note, and no demand had been made, and therefore its attempt to foreclose was premature.

1. There is no point made on the mortgage proper except that it did not bear the seal of the corporation. The acknowledgment on the mortgage is as follows:

"State of Missouri, County of Lawrence—ss.: On this 6th day of November, 1916, before me appeared John McEwen to me personally known, who, being by me duly sworn, did say that he is president of the Scottish Zinc Mining Company, a corporation, of the state of Missouri; and that said instrument was signed in behalf of said corporation and said John McEwen acknowledged said instrument as the free act and deed of said corporation. In witness whereof, I have hereto set my hand and affixed my official seal at my office in Aurora, Mo., the day and year first above written."

Then follows the signature, etc., of the notary.

The point made is that the acknowledgment is not in compliance with section 2799, R. S. 1909, with reference to acknowledgments by a corporation, in that it is not stated therein that the mortgage was executed by authority of its board of directors. That part of section 2799, R. S. 1909, prescribing the form that may be used in the acknowledgment of deeds and mortgages by corporations was enacted in 1883. Laws 1883, p. 20. The courts in construing this feature of section 2799 have construed it to mean that the form prescribed and set out therein is permissive and not mandatory. According to the holding of our Supreme Court an acknowledgment by a corporation which would have been good under the statute as it existed prior to the adoption of our present statute will be good under the present statute. Strother Bros. v. Barrow, 246 Mo. 241, 151 S. W. 960, is to our mind decisive on the question of the validity of the mortgage as affected by the omission of the clause mentioned. In that case the validity of a deed of assignment was challenged on the ground that this clause was omitted from the acknowledgment. In discussing that feature the Supreme Court said:

"A mere glance shows that the certificate of acknowledgment does not conform to the form the statutes say `may be used' in acknowledging corporate deeds. It. S. 1909, § 2799. But he has read that statute to little purpose who concludes that the statutory form is necessary to a good acknowledgment. The language of the section in that particular is not mandatory, but permissive. It does not say the form must or shall be used, but that it `may be used.' In the exposition of that statute it has been held that the acknowledgment to a corporate deed, if good before the statute was passed, would be good after it was passed. Huse v. Ames, 104 Mo. loc. cit. 102, 103, 15 S. W. 965. We look, then, to all related statutes and to the exposition given them by appellate courts. There are cognate sections prescribing how a corporation may hold and can convey real estate, and what the certificate of acknowledgment must show. Comparing the mandatory requirements of section 2799 with sections 2790 and 3001—all strictly in pari materia—it will be seen that the certificate of acknowledgment complies substantially with the requirements of those sections."

It is true that the corporate seal was on the deed in question in Strother v. Barrow, supra, but the absence of the seal does not affect the validity of a chattel mortgage of a corporation, as we shall presently notice. Defendants rely on Center Creek Mining Co. v. Coyne, 164 Mo. App. 492, 147 S. W. 148, to support their contention that the mortgage is void as to defendants, third parties, because of the defective acknowledgment, but a reading of that case discloses that not only was the clause that the instrument was executed by the direction of the hoard of directors absent, but it did not appear from the acknowledgment that the instrument there under consideration was executed on behalf of the corporation.

The mortgage In question in the case at bar did not have the corporate seal thereon. This does not alter the situation, because the corporate seal is not necessary to the validity of a chattel mortgage executed by a corporation. The only effect that a seal has on a chattel mortgage executed by a corporation is that it makes the instrument prima facie evidence of what it purports to be, while, in the absence of the seal, proof otherwise than by the instrument itself is required to establish the execution thereof. Jones on Chattel Mortgages (5th Ed.) § 102; Strop v. Hughes, 123 Mo. App. 547, 101 S. W. 146.

2. There was no direct evidence that McEwen, the president of the Scottish Zinc Mining Company, had been given express authority by the board of directors of that company to execute the mortgage to the plaintiff. The record shows that the Scottish Zinc Mining Company was more shadow than substance; that its board of directors consisted of McEwen, who executed, on its behalf, plaintiff's mortgage, George Fletcher, and one Clark. McEwen lived in Aurora, Mo., Fletcher in....