Self Motor Co. v. First State Bank of Crowell

• Decision Date: 10 November 1920
• Docket Number: (No. 1706.)
• Citation: 226 S.W. 428
• Parties: SELF MOTOR CO. v. FIRST STATE BANK OF CROWELL et al.
• Court: Texas Court of Appeals

Page 428

226 S.W. 428

SELF MOTOR CO. v. FIRST STATE BANK OF CROWELL et al.

(No. 1706.)

Court of Civil Appeals of Texas. Amarillo.

November 10, 1920.

Rehearing Denied December 15, 1920.

Appeal from District Court, Foard County; J. A. Nabers, Judge.

Action by the First State Bank of Crowell against the Self Motor Company, a firm, and R. L. Kincaid. From a judgment for plaintiff, and a judgment over in favor of the individual defendant against the firm, the firm appeals. Reformed, and as reformed affirmed.

M. M. Hankins and Marshall & Perkins, all of Quanah, for appellant.

G. W. Walthall, of Crowell, for appellee First State Bank of Crowell.

Robt. Cole, of Crowell, for appellee Kincaid.

HUFF, C. J.

The appellee bank sued the appellant, Self Motor Company, a partnership composed of J. H., J. C., R. W., and J. D. Self, and R. L. Kincaid, on a promissory note for $609, with interest and attorney's fees, executed by R. L. Kincaid and S. H. Williams, payable to the Self Motor Company or order, dated August 8, 1919, due on or before October 8, 1919, which was indorsed before maturity by the Self Motor Company to appellee bank.

It is alleged in the petition that Kincaid and Williams executed a chattel mortgage to secure payment of the note on a certain motortruck, but that Williams had absconded with the truck and was then a fugitive from justice and insolvent; that his residence was unknown. Williams therefore was not made a party defendant or a foreclosure of the mortgage sought. Kincaid by his answer alleged that the note sued on was given in part payment of the truck described in the mortgage and sold by appellant to said Williams. He denied that he bought the truck or was in any way interested in its purchase, but alleged that he signed the note solely as surety for Williams, with the express agreement that appellant would retain a chattel mortgage on the truck for his protection, and that appellant represented to him at the time he signed the note that it had taken a mortgage on the truck, and that, "if he signed any mortgage on said truck, as alleged by plaintiff, his signature was procured without his knowledge or consent by the fraud of Self Motor Company and with full knowledge on the part of Self Motor Company that this defendant had not purchased said truck from them and that they had sold said truck to S. H. Williams alone." He further alleged that Williams had absconded from the county and had taken the truck with him; that appellant transferred the note and mortgage to the bank and paid the bank 25 cents to have the mortgage filed for record, and that the bank failed to file the mortgage for record until the 27th day of August, 1919, long after Williams had left with the truck and gotten beyond the reach of the court of Foard county; "that both the plaintiff and defendant Self Motor Company were guilty of negligence in withholding said mortgage from registration, and thereby rendered the sole consideration for which this defendant signed said note worthless and of no effect; that if said mortgage had been promptly filed, as required by law, and as said Self Motor Company in effect agreed they would, this defendant could have and would have apprehended said S. H. Williams and recovered possession of the said truck and subjected it to the payment of said note in case Self Motor Company refused so to do;" that he learned on the same day that Williams absconded that he was leaving, and he then went to appellants and inquired for the mortgage, and that appellants could not find it; that it was not then filed for record. "This defendant concluded that no mortgage had been retained on said truck and gave up his efforts." He prayed that plaintiff take nothing against him and in the alternative that he have judgment against appellant for any sum that he might be compelled to pay.

The motor company answered by general denial, and alleged that the note was given by Kincaid and Williams as a part of the purchase price of the truck which was in fact sold to them jointly, and that the mortgage was executed jointly, and that Kincaid was in fact a principal, and not a surety.

Upon trial the note and mortgage were introduced in evidence, which were both executed and signed by Kincaid and Williams, the mortgage showing to have been recorded August 27, 1919. It is provided in the mortgage that, if attempt be made to remove the property from the county without the written consent of the mortgagee, it should be lawful for the mortgagee or its assigns to take possession of the property, whether in the county or state, and to sell, etc., to pay the note. Kincaid testified that Williams absconded and left the county, taking the mortgaged truck with him, about two weeks after the execution of the note and mortgage. He further testified that he was not interested in the purchase of the truck in any way; that he signed the note solely as surety for Williams and upon the express agreement with appellant that it would take a mortgage on the truck. He did not know why or how he happened to sign the mortgage, testifying, "I just signed whatever they said sign." He further testified that on the day Williams left he learned that he was leaving and was taking the truck with him, and that he then went to appellant and asked where the mortgage was, and they could not find it, and that he went to the clerk's office, and that it was not recorded, and "I told them I was satisfied they hadn't taken any mortgage; they told me they knew they had taken a mortgage," and that he then saw his lawyer and "didn't worry any more about it."

The jury found that Kincaid did not know that he was signing the mortgage when he signed it; that the truck was sold to Williams alone, and that Kincaid executed the note as surety; that the Self Motor Company was negligent in the matter of recording the mortgage or in the matter of enforcing their rights under the same, so as to get the truck back when Williams had gone off with it; that but for such negligence the truck could have been recovered. The trial court rendered judgment in favor of the plaintiff for the amount due upon the note sued upon against the defendant Kincaid and the appellant herein, and also in favor of the defendant Kincaid over against the appellant, a partnership, giving the names of the individual partners, for any amount that he might pay plaintiff on the judgment against him.

The first, second, and third assignments are presented together, under which it is asserted by proposition:

"A surety who executes a promissory note, with the agreement that the payee will take from the principal maker of the note a chattel mortgage as security, is not released from his liability as such surety by reason of the payee's failure to file such mortgage for record, unless such security is lost by reason of the failure of the payee to so file the mortgage. And such surety is not released from his liability as such where the security given by the mortgagee is lost by reason of the principal maker of the note, without permission of the payee, absconding from the country and taking the property with him so that it cannot be found."

The assignments are also urged as propositions, which in effect assert: (1) That there is no evidence that Williams removed himself and the truck out of the jurisdiction of the court because the mortgage was not filed, and that it could have been recovered after he did abscond if it had been filed; (2) there was no issue by the pleadings that the motor company was negligent in the matter of not recovering the truck after it had been removed; (3) the verdict of the jury finding negligence is not supported by the evidence, setting out wherein the evidence is insufficient.

The record indisputably shows that the Self Motor Company required Williams to execute a chattel mortgage on the truck to secure the note, as it contracted with Kincaid it would do.

The fact that the chattel mortgage was not filed for registration, as between the parties, the mortgagor and mortgagee, did not render it nonenforceable or invalid. It was only void as to creditors of the person making it and as against subsequent purchasers or mortgagees, or lienholders in good faith. Article 5655, R. C. S.; Keller v. Smalley, 63 Tex. at page 519; Tips v. Gay, 146 S. W. 306; Stewart v. Miller, 144 S. W. 343; Ranck v. Howard, 3 Tex. Civ. App. 507, 22 S. W. 773; Parker v. American Exchange Bank, 27 S. W. 1071; Phelps,...