Pacific States Securities Corp. v. Austin

• Decision Date: 06 February 1928
• Docket Number: 20935.
• Citation: 263 P. 732,146 Wash. 492
• Parties: PACIFIC STATES SECURITIES CORPORATION v. AUSTIN et al.
• Court: Washington Supreme Court

263 P. 732

146 Wash. 492

PACIFIC STATES SECURITIES CORPORATION v. AUSTIN et al.

No. 20935.

Supreme Court of Washington

February 6, 1928

Department 2.

Appeal from Superior Court, Thurston County; Wilson, Judge.

Action by the Pacific States Securities Corporation against John A Austin and C. F. Klopfenstein, as administrator of the estate of John H. Murray, deceased. From a judgment in favor of defendant last named, plaintiff appeals. Affirmed.

Frank P. Christensen, of Olympia, for appellant.

Thos L. O'Leary, of Olympia, for respondent.

HOLCOMB J.

On January 10, 1925, defendant Austin was the owner of a truck and trailer, which he on that day mortgaged to one Raynor for a certain sum of money, and subsequently Raynor assigned the note and chattel mortgage to appellant. This chattle mortgage was a renewal or substitution of another chattel mortgage on the same property for a larger sum of money, which in turn was also a renewal or substitution for still another chattel mortgage for a still larger sum of money upon the same truck and trailer. In addition to the amounts due on the chattel mortgage, appellant had paid out certain sums of money in order to protect the property which had been mortgaged by Austin.

Subsequent to the execution of the chattel mortgage sued on here respondent, as administrator of the estate of John H. Murray deceased, obtained a judgment against Austin in the sum of $10,000, in the superior court for Thurston county, on June 14, 1926, on which there remained unpaid at the time of the judgment in this case a sum in excess of $9,000. Respondent sued out a writ of execution on his judgment against Austin, and caused the sheriff to levy thereunder upon the truck and trailer mentioned herein. and thereafter, in order to prevent a multiplicity of actions, it was stipulated that appellant should bring an action upon its alleged chattel mortgage and debt, for the foreclosure and collection thereof, and the rights of both parties hereto might be determined by the court. Austin, by answer, admitted the allegations of appellant's complaint, and confessed judgment in the full amount prayed for. Issues were joined between appellant and respondent and the court, after hearing the testimony, found that the interest of respondent was superior to that of appellant. The court also found that the indebtedness mentioned in the complaint of appellant had been paid in full by a bill of sale, executed by Austin to one Johnson, on August 27, 1925 (Johnson at the time of the execution thereof as well as at the time of the trial of the action being president and active manager of appellant), and that, with the knowledge and consent of the directors of appellant, he took the bill of sale in payment of all indebtedness theretofore existing between appellant and Austin and wife. Findings, conclusions, and judgment were thereupon entered, holding and adjudging that the respondent has an interest in the truck and trailer superior to that of appellant.

The indebtedness owing by Austin to appellant originated on July 26, 1921, when he purchased the truck and trailer, at that time executing his promissory note in the sum of $2,976 for the balance owing on the purchase price. He then also executed a chattel mortgage to secure the same. That mortgage was originally payable to the American Automobile Company, and was by it assigned to appellant, who filed the same for record with the county auditor of Thurston county within the time allowed by law, which mortgage is still unsatisfied of record, and which note was still in the possession of appellant at the time of the trial of this case.

On July 18, 1922, the indebtedness for this truck and trailer was refinanced; Austin giving appellant a new note and mortgage on that date for the remainder due, $1,866. This mortgage was also duly filed for record with the county auditor, and has never been satisfied. That note was also in the possession of appellant at the time of this trial.

On January 10, 1925, the indebtedness was again refinanced by the execution by Austin of a new note and mortgage for the remaining debt of $682. This mortgage was likewise duly filed for record, and has never been satisfied, and the note therefor was still in the possession of appellant, not marked 'paid,' at the time of this trial. This last note and mortgage are those in suit herein.

On August 27, 1925, Austin, with the knowledge and consent of the directors of appellant, executed a bill of sale to the truck and trailer, and also to a donkey, engine and certain logging equipment, to Johnson, president of appellant which bill of sale recited a consideration of $1,500 and represented the total indebtedness owed by Austin both to appellant and to Johnson personally. The indebtedness to appellant was $682, and interest and other items which appellant had been compelled to pay out; and the indebtedness to Johnson was about an equal amount for moneys payable to him from Austin. At the time of the execution of the bill of sale, Austin was delinquent in all his payments to appellant, and appellant was insisting upon foreclosure of its chattel mortgage. Johnson therefore procured Austin to make the new arrangement, refinancing the transaction, and with the full approval of the directors of his corporation. The bill of sale mentioned is an ordinary bill of sale, which was, on the day of its execution, filed for record with the county auditor of Thurston county at the request of appellant.

The trial court found that the indebtedness mentioned in and complaint of appellant had been fully paid by the bill of sale executed by Austin to Johnson; that the bill of sale was a chattel mortgage though executed in the form of a bill of sale; and that, as such chattel mortgage, it was fatally defective as to respondent, because it lacked the affidavit of good faith required by law. For these reasons it held that the interest of respondent in the truck and trailer, arising out of his levy thereon by virtue of his execution against Austin, was superior to appellant's therein. From such findings and judgment, this appeal is prosecuted.

At the outset, we find that the finding of the trial court that the bill of sale was taken as...