Smith & Ricker v. Hill Bros.
| Citation | 134 P. 243,17 N.M. 415,1913 -NMSC- 004 |
| Parties | SMITH & RICKER v. HILL BROS. ET AL. |
| Decision Date | 14 January 1913 |
| Court | New Mexico Supreme Court |
Rehearing Withdrawn June 16, 1913.
Syllabus by the Court.
A purchase-money mortgage of chattels creates a superior lien to a prior general mortgage of the same property.
Privies in estate are bound by estoppel by misrepresentation only when they take the property either without value or with notice of the estoppel. See Words and Phrases "Privity," vol. 6, pp. 5606-5611; vol. 8, p. 7764.
Quære--whether a chattel mortgage purporting to operate in præsenti by a person without title is within the terms of the recording statute, section 2361, Comp. Laws 1897.
An investigator may rely upon the truth of recitals contained in a record where they are specific.
The negligence of the holder of an equity arising out of estoppel by misrepresentation may disturb what would otherwise be the order of priority, and postpone his equity to that of a junior holder of an equity in the same property.
The acquisition of an equity in property under such circumstances that the true owner is estopped to assert title gives superiority to such equity over a prior equity in the same property in favor of a person not entitled to assert such estoppel.
Appeal from District Court, Torrance County; E. L. Medler, Judge.
Action by Smith & Ricker against Hill Bros. and others. From a decree for plaintiffs, defendants appeal. Reversed and remanded.
Marron & Wood, of Albuquerque, for appellants.
E. W Dobson, of Albuquerque (Gilmore & Brown, of Kansas City, Mo of counsel) for appellees.
On the 19th day of March, 1910, the appellants Hill Bros. and the appellant Blas Duran entered into a contract for the sale of some sheep, which is as follows:
"Duran, New Mexico, Mch. 19, 1910.
This agreement, made this 19th day of March, 1910, between Blas Duran, of Duran, N. M., and Hill Bros., of Duran, N. M witnesseth: That Blas Duran, in consideration of the sum of five hundred dollars to him cash in hand, agrees to sell and deliver to Hill Brothers at Blas Duran's ranch in Torrance county, N. M., on the 10th day of April, 1910, about four thousand seven hundred head of muttons, possibly a few more or less. That Hill Bros. agree to pay to Blas Duran a sum of money equal to four dollars and eighty-five cents per head for each such mutton delivered, less the sum of five hundred dollars above set forth, and no muttons to be refused to cut out of the herd except those lame, blind, or the appearance of being sick.
[Signed] Blas Duran. [L. S.]
On the 31st day of March, 1910, and before the delivery of the sheep specified in the contract, George W. Hill, one of the members of the firm of Hill Bros., called on the appellees at Kansas City, and applied for a loan of $8,000, offering as security a chattel mortgage on 4,700 head of sheep, which he represented that he had bought of Blas Duran in December previous, and that they were in his possession on his ranch in Torrance county. The appellees made the loan and accepted a chattel mortgage on the sheep, which described the property as follows:
The mortgage also recited the following: "For the purpose of obtaining the money at this time loaned by said second parties and the benefit of future transactions the first parties state that the first parties are the absolute owners of all the above described property, that the same is free from any incumbrance, and that all of the same is now in possession of the said first parties * * * at the location as stated above." The appellees required of Hill an affidavit, which he made and attached to the mortgage as follows: "G. W. Hill, the mortgagor above mentioned, being sworn, says that the said mortgagors are the legal and absolute owners of the chattels above described, and that the same are now in possession and under their control, and the same are now located as hereinbefore recited and set forth, and that they have full power to sell or mortgage the same and give clear title."
On the 9th of April following, the appellant Duran delivered to Hill Bros. 4,624 wethers, being the sheep referred to and described in the contract of March 19th. The balance due on these sheep, at the contract price, after deducting the $500 referred to in the contract, was $21,925.40, and for this sum Hill Bros. gave their check to Duran when they received the sheep, and Duran deposited the check on the same day in the Duran Bank & Trust Company, where he kept a deposit. The cashier of the bank, Holloway, received the check and made a deposit slip for the amount, which he marked "Sub. to collection." Hill Bros. had previously told Holloway that they had made arrangements with the appellees for the money to pay for the sheep, and the money would be furnished as soon as the check and bill of sale executed by Duran could be sent to the appellees at Kansas City. Holloway accordingly took Duran's bill of sale for the sheep, and drew a chattel mortgage on the same sheep to the appellees, which Hill Bros. executed. He then sent the bill of sale and chattel mortgage, accompanied by a draft attached, to the appellees at Kansas City. The appellees returned the papers to Holloway, objecting that the mortgage was not properly drawn, and accompanied their letter with a chattel mortgage drawn by them, covering the same sheep, for execution by Hill Bros. This second mortgage was executed by Hill Bros. and returned to the appellees at Kansas City but was again rejected by them. The appellees do not found their rights in this case upon either of these two mortgages last mentioned, but rely upon the chattel mortgage executed on the 31st day of March in Kansas City, mentioned above. The draft not being paid, and there being no money to take care of the check, it was returned by Holloway to Duran on the 23d of April, together with the bill of sale of the sheep to Hill Bros., which Duran had delivered on April 9th. Duran immediately sought out Hill Bros., and demanded either the payment of the amount due him or the return of the sheep. They assured him that he was safe, and asked for a few days' time, saying they would get the money, and on the 2d day of May they paid Duran $2,000 on account, which was deposited to his credit in the Duran Bank by Hill Bros., and not paid to Duran directly.
On the 7th of May Duran declined to wait any longer unless some kind of a paper was given him restoring the sheep unqualifiedly to his possession. Hill Bros. promised to give him such a paper, and Holloway, at Hill Bros.' request, drew up a chattel mortgage and a note securing the balance due of the purchase price to Duran, and the chattel mortgage was sent by Holloway for record, and the note was placed in Duran's private box in the bank. Duran testified that he never knew the purport of the chattel mortgage, but was led to believe, and did believe, that the paper was in the nature of an admission that he was still the owner and entitled to the possession of the property. Duran is a Mexican, and does not speak or understand English.
After about one month's further delay, the money not being forthcoming, he consulted an attorney and learned, as he testified, that the paper above referred to was a mortgage of the sheep. He repudiated the transaction as soon as he learned the contents of the mortgage, and delivered the note and mortgage back to Hill Bros., and demanded a formal instrument restoring possession to him of his sheep, and an actual physical turning back. This was agreed to by Hill Bros., and on the 28th day of June they executed the following instrument:
"Duran, New Mexico, June 28th, 1910.
Whereas, we, Hill Brothers, of Duran, New Mexico, a partnership, composed of Geo. W., Luther E., and P. G. Hill, on March 19th, 1910, contracted with Blas Duran by instrument in writing to purchase of him about 4,700 head of muttons, same to be paid for in cash on delivery; and whereas, possession of said muttons was delivered to us on April 9th, 1910, with the understanding that they should be paid for at once in cash; and whereas, we have sheared the said sheep since that date, and their wool is now stored in the freight depot at Duran, New Mexico, and whereas, we have never paid the said Blas Duran for said sheep, except $2,500, and there is still due from us $20,095.40, which we are unable to pay, and he having demanded of us that we immediately pay the same or return to him the possession of said sheep and wool: We do therefore hereby release and surrender possession of said sheep and wool to the said Blas Duran, and direct and authorize any and all persons in charge or possession of the same to return said sheep and wool to him to that end that he may assert such rights in them as he may have under the circumstances above set forth. Witnesseth our hands at Duran, aforesaid, this 28th day of June, 1910.
This was a formal surrender of possession, by direction to the herders in charge of the sheep in the field. At the time possession was surrendered to Duran of the sheep, he gave to Hill Bros. an agreement to sell the sheep and wool to them at any time within 40 days thereafter, upon payment of the balance due upon the original agreed price and interest. After the delivery of the...
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