Smith v. Consolidated Wagon & Machine Co.

• Decision Date: 23 February 1917
• Citation: 163 P. 609,30 Idaho 148
• Parties: L. M. SMITH, Respondent, v. CONSOLIDATED WAGON & MACHINE COMPANY, a Corporation, and H. C. VAN AUSDELN, as Sheriff of Twin Falls County, Idaho, Appellants
• Court: Idaho Supreme Court

163 P. 609

30 Idaho 148

L. M. SMITH, Respondent, v. CONSOLIDATED WAGON & MACHINE COMPANY, a Corporation, and H. C. VAN AUSDELN, as Sheriff of Twin Falls County, Idaho, Appellants

Supreme Court of Idaho

February 23, 1917

CHATTEL MORTGAGES-NOTICE-COMITY BETWEEN STATES.

1. By reason of comity between states, if personal property situated in a given state is there mortgaged by the owner and the mortgage is duly executed and recorded as by the local law required so as to create a valid lien, and if the property is thereafter removed into another state and is there sold to a purchaser without knowledge of the encumbrance, such purchaser takes title subject to the lien of the mortgage although it has not been recorded in the latter state, and this is particularly true when the removal is accomplished without the knowledge or consent of the mortgagee.

2. In order to invoke the doctrine of comity between states with respect to contracts, it is incumbent upon a party claiming such a benefit to show that his is such a contract as is contemplated by the doctrine. He must produce proof that the contract in behalf of which he seeks to invoke this rule is a foreign contract contemplated by the rule.

[As to enforcement of chattel mortgage in foreign state to which the goods had been removed by the mortgagor, see note in Ann.Cas 1914B, 1252]

APPEAL from the District Court of the Fourth Judicial District, for Twin Falls County. Hon. Chas. O. Stockslager, Judge.

Suit to enjoin sale of mortgaged property. Judgment for plaintiff. Affirmed.

Judgment of the trial court affirmed. Costs awarded to respondent.

James H. Wise, for Appellants.

Under sec. 3419, Rev. Codes, the sale or transfer by Ewing to Smith is void and the mortgagor, Ewing, is guilty of larceny. ( Studebaker Bros. Co. v. Mau, 13 Wyo. 358, 110 Am St. 1001, 80 P. 151.)

A creditor of the mortgagor attaching the property of a purchaser of it must look to the title. The purchaser or creditor is bound to inquire at the former residence of the owner for encumbrances there recorded. (Jones on Chat. Mort 260A; Smith v. McLean, 24 Iowa 322; Feurt v. Rowell, 62 Mo. 524; Kanaga v. Taylor, 7 Ohio St. 134, 70 Am. Dec. 62; Cool v. Roche, 20 Neb. 550, 31 N.W. 367; Lathe v. Schoff, 60 N.H. 34; Hornthal v. Burwell, 109 N.C. 10, 26 Am. St. 556, 13 S.E. 721, 13 L. R. A. 740.)

The law of the palce of contract, when this is also the place where the property is, governs as to the nature, validity, construction and effect of a mortgage, which will be enforced in another state, as a matter of comity, although not executed or recorded according to the requirements of the law of the latter state. (Jones on Chat. Mort., 5th ed., sec. 299; Blyth & Fargo Co. v. Houtz, 24 Utah 62, 66 P. 611; Handley v. Harris, 48 Kan. 606, 30 Am. St. 322, 29 P. 1145, 17 L. R. A. 703; Ramsey v. Glenn, 33 Kan. 271, 6 P. 265; Douglas v. Douglas, 22 Idaho 336, 125 P. 796.)

H. C. Hazel, for Respondent.

Where a chattel mortgage is not filed for record as required by sec. 3408, Rev. Codes, a subsequent purchaser of the property is not bound by the mortgage unless he is shown to have had actual notice of the same. (Cowden v. Finney, 9 Idaho 619, 75 P. 765; Cowden v. Mills, 9 Idaho 626, 75 P. 766.)

This being an appeal from the judgment and no motion for a new trial having been made, this case is brought within the rule that where there is substantial evidence to support the verdict or substantial conflict in the evidence, the supreme court is prohibited from setting aside such judgment. ( Buster v. Fletcher, 22 Idaho 172, 182, 125 P. 226; State v. Silva, 21 Idaho 247, 256, 120 P. 835; Eaves v. Sheppard, 17 Idaho 268, 272, 134 Am. St. 256, 105 P. 407; Gassen v. Hendrick, 74 Cal. 444, 16 P. 242.)

MORGAN, J. Budge, C. J., and Rice, J., concur.

OPINION

MORGAN, J.

On May 21, 1913, D. J. Ewing and his wife, who resided in Salt Lake City, Utah, made, executed and delivered to appellant, Consolidated Wagon & Machine Company, a Utah corporation, a mortgage on a certain mare to secure the payment of $ 155, being the purchase price of a wagon and harness. The mortgage was duly witnessed and it was provided therein, among other things, that the mare should remain in possession of the mortgagors.

On or about September 3, 1913, Ewing, who had theretofore, without the knowledge or consent of appellant corporation, removed with the mortgaged property to Twin Falls county, Idaho, traded and disposed of it, for a valuable consideration, to respondent, who had no knowledge of the mortgage. Thereafter the attorney for appellant corporation commenced proceedings, by affidavit and notice to the sheriff of Twin Falls county, to foreclose its mortgage. The sheriff took the mare into his possession and gave notice of sale, as by law provided, whereupon this action was commenced to procure an injunction restraining appellants from proceeding with the sale.

The case was tried to a jury, sitting in an advisory capacity, which returned its verdict in favor of the plaintiff. Findings of fact and conclusions of law were made and judgment was thereupon entered decreeing that appellants be perpetually enjoined from selling, disposing of or otherwise interfering with the property and that possession thereof be restored to respondent. This appeal is from the judgment.

It appears from the record that the mortgage was accompanied by the affidavit of Ewing and his wife, subscribed and sworn to on May 21, 1913, to the effect that it was made in good faith for the purpose of securing the amount named therein and without any design to delay or defraud their creditors. A like affidavit was, on August 8, 1913, made for and on behalf of appellant corporation by Grant Hampton, its secretary and treasurer. The mortgage was filed for record in Salt Lake county, Utah, on August 12, 1913, and never has been filed or recorded in Idaho.

The question presented by this appeal is: Does this mortgage constitute a lien upon the property which is enforceable against respondent?

The great weight of judicial opinion is that, by reason of comity between states, if personal property, situated in a given state is there mortgaged by the owner and the mortgage is duly executed and recorded as by the local law required so as to create a valid lien, and if the property is thereafter removed into another state and is there sold to a purchaser without knowledge of the encumbrance, such purchaser takes title subject to the lien of the mortgage although it has not been recorded in the latter state, and this is particularly true when the removal is accomplished without the knowledge or consent of the mortgagee. (6 Cyc. 1089; Jones on Chattel Mortgages, 5th ed., sec. 260a; 5 R. C. L. 399, sec. 21; Shapard v. Hynes, 104 F. 449, 45 C. C. A. 271, 52 L. R. A. 675; Kanaga v. Taylor, 7 Ohio St. 134, 70 Am. Dec. 62; Ord Nat. Bank v. Massey, 48 Kan. 762, 30 P. 124, 17 L. R. A. 127; Handley v. Harris, 48 Kan. 606, 30 Am. St. 322, 29 P. 1145, 17 L.R.A. 703; Hornthal v. Burwell, 109 N.C. 10, 26 Am. St. 556, 13 S.E. 721, 13 L. R. A. 740; Smith v. McLean 24 Iowa 322; Keenan v. Stimson, 32 Minn. 377, 20 N.W. 364.)

The law by which the validity of the lien of this mortgage must be tested is sec. 150, Complied Laws of Utah (1907), and is...