Sledge & Norfleet Co. v. Hughes

• Decision Date: 22 January 1923
• Docket Number: 96
• Parties: SLEDGE & NORFLEET COMPANY v. HUGHES. J. T. FARGASON COMPANY v. LOVEWELL
• Court: Arkansas Supreme Court

247 S.W. 1077

156 Ark. 481

SLEDGE & NORFLEET COMPANY v. HUGHES.

J. T. FARGASON COMPANY v. LOVEWELL

No. 96

Supreme Court of Arkansas

January 22, 1923

Appeal from St. Francis Chancery Court; A. L. Hutchins, Chancellor affirmed.

Decree affirmed.

Mann & Mann, for appellants.

The conversion of the cotton having occurred in the State of Tennessee, the lien created under the laws of Arkansas did not apply. 16 R. C. L. 505; 82 Miss. 740; 75 Miss. 150; 24 Cyc. 1259; Jones on Liens, vol. 1, p. 74, sec. 111. The general rule is that the statutes of a State have no extraterritorial effect. 16 R. C. L. 989.

Moore Smith, Moore & Trieber and Jas. R. McDowell, for appellants.

The landlord's lien statute has no effect beyond the limits of the State. 75 Miss. 150; 21 So. 663; 73 Miss. 434; 16 So 910; 73 Miss. 410; 19 So. 210; 16 R. C. L. 989; 19 Am. & Eng Enc. of Law, 24; 24 Cyc. 1259; 2 Underhill on Landlord & Tenant, 1446; Jones on Liens, p. 103, sec. 111; 37 Ala. 85. There was no conversion of the cotton by appellant in Arkansas. 48 Am. Dec. 754.

R. D. Smith and C. W. Norton, for appellee Hughes.

The landlord's lien for rent comes into existence with the coming of the crop into existence, and exists uninterruptedly thereafter as a presently vested right and species of property. 25 Ark. 417; 25 Ark. 609; 27 Ark. 1; 95 Ark. 32; 139 Ark. 318; 213 S.W. 741. Actual knowledge is not necessary to constitute notice; the purchaser is put on notice by any facts such as would put a man of ordinary prudence upon inquiry that would lead to a knowledge of the landlord's lien. 69 Ark. 306; 63 S.W. 47; 56 Ark. 478; 72 Ark. 132; 78 S.W. 746. A lien created by contract is not lost by the subsequent removal of the property to another State, although the law of that State with reference to the preservation of liens is not complied with. Wharton, Conflict of Laws 717; 173 F. 478; 109 N.C. 10; 13 S.E. 721; 13 L. R. A. 740; 29 F. 156; 10 So. 846.

Randolph & Randolph, for appellee Lovewell.

MCCULLOCH, C. J. HART and SMITH, JJ., concur.

OPINION

MCCULLOCH, C. J.

In each of the cases under consideration the appellees sued in the chancery court to recover the proceeds of cotton grown during the year 1920, on which they asserted liens as landlords: and in each case the appellant, defendant below, is a Tennessee corporation doing business in the city of Memphis, and the cotton in controversy in each case was shipped by a common carrier from the State of Arkansas, where the cotton was grown, to the appellant at its place of business in Memphis. The similarity of the facts in the two cases brings them within the operation of the same controlling principles and justifies the disposal of them in one opinion.

The facts of the first case mentioned in the caption, as found by the chancery court, in accordance with the preponderance of the testimony, are as follows:

Appellee, Mrs. C. A. Hughes, owns a plantation in St. Francis County, and rented it for the year 1920 to Tucker & Friar, a copartnership, for a stipulated rental price of $ 7,500, to be paid in money. In the early part of the same year the tenants, Tucker & Friar, executed a mortgage to appellant, Sledge & Norfleet Company, on all of the crops produced by them, including those grown on the farm of appellee, which were specifically described in the mortgage. The mortgage was executed to secure notes aggregating $ 50,000, and further advances of money to be made during the year. The mortgage contained a stipulation that the mortgagors should, during the harvesting season of 1920-21, ship to appellant, as commission merchants, all of the cotton described in the mortgage. Pursuant to the stipulation in the mortgage, Tucker & Friar shipped their crops of cotton to appellant by common carrier, including 152 bales grown on the farm of appellee, the proceeds of which were to be credited to their account. In addition to this, Tucker & Friar shipped 47 bales, to be applied on the rent, to appellee, which were so applied, leaving a balance unpaid, which appellant subsequently refused to pay out of the remainder of the proceeds. The court rendered a decree in favor of appellee against appellant for the recovery of $ 4,573.26, the balance of the rent.

In the other case the appellees rented a farm in Mississippi County to W. W. Driver for a series of years, including the year 1920, the rental price per annum being about $ 29,000, the amount of the decree in favor of the appellees against appellant. During the year 1919, Driver mortgaged the crop to appellant and shipped his cotton to appellant, pursuant to a stipulation in the mortgage, and the rent was paid out of the proceeds. Appellant carried over a large debt balance against Driver, and made further advances during the year 1920, but no mortgage was given on the crop produced that year. The testimony establishes the fact, however, that it was verbally agreed between Driver and appellant that the cotton should be shipped to appellant as during the previous year. It was shipped to appellant by common carrier, and was sold and the proceeds applied on Driver's debt to appellant, leaving a large balance. Appellant refused to pay the rent out of the proceeds of the cotton.

In each of the cases the testimony supports the finding that the appellant knew, when it received the cotton, that it had been grown on the farm of appellees, and that the rent had not been paid. There was testimony, at any rate, to show that the appellant in each case was cognizant of facts sufficient to afford notice of a lien on the crop.

The contention of appellant is that the cotton was received in Memphis and that the conversion occurred there, and they invoke the rule announced by some of the authorities that a statutory lien has no extraterritorial force so as to create liability for conversion in another State.

If the conversion took place in Tennessee, the law of that State must govern the question of liability. Security Bank & Trust Co. v. Bond, 132 Ark. 592, 201 S.W. 820; Wilson-Ward Co. v. Farmers' Bank, 153 Ark. 368, 240 S.W. 1082.

In an unpublished opinion of the Supreme Court of Tennessee, recently delivered (Kirk v. Bailey-BallPumphrey Co.) which has been brought to our attention by counsel, the court declared the law of that State to be that the statutory landlord's lien of another State (Arkansas) has no extraterritorial effect and cannot be enforced against cotton removed to the State of Tennessee.

The opinions in those cases are not in conflict with the decisions in F. E. Creelman Lumber Co. v Lesh, 73 Ark. 16, 83 S.W. 320, and Wray Bros. v. H. A. White Auto Co., 155 Ark. 153, 244 S.W. 18, nor with the reasoning of the opinions therein, for in the latter cases we held that the lien of a chattel mortgage given and recorded in another State in accordance with the laws of that State should, even against an innocent purchaser for value, be enforced here by comity when the mortgaged chattel has been removed to this State without the consent of the mortgagee. In the one class of cases...