Smith v. First Nat. Bank

• Decision Date: 09 March 1909
• Citation: 104 P. 1080,23 Okla. 411,1909 OK 66
• Parties: SMITH et al. v. FIRST NAT. BANK OF CADIZ, OHIO.
• Court: Oklahoma Supreme Court

104 P. 1080

23 Okla. 411, 1909 OK 66

SMITH et al. v. FIRST NAT. BANK OF CADIZ, OHIO.

Supreme Court of Oklahoma

March 9, 1909

Rehearing Denied July 13, 1909.

Syllabus by the Court.

The assignment of a note before maturity to a bona fide holder carried with it a chattel mortgage executed as security therefor, and the assignee alone could thereafter discharge the mortgage lien; payment of the indebtedness to the original mortgagee by a purchaser of the mortgaged property being insufficient, though the latter had no notice of the assignment.

A clause in a mortgage, which provides that, "If said cattle or any part thereof be consigned to, or sold by, any person except said Tamblyn & Tamblyn, then said mortgagees shall be paid the proceeds of said sale, and its commission of 50 cents per head on all the above-described cattle so sold," did not authorize the mortgagor to sell the cattle to others than the mortgagees, and pay the proceeds of the sale to Tamblyn & Tamblyn, after the note secured by such mortgage had been assigned by them to some one else.

Appeal from the United States Court for the Southern District of the Indian Territory, Sitting at Ardmore; Hosea Townsend, Judge.

Chattel mortgage foreclosure by the First National Bank of Cadiz Ohio, against W. R. Smith, W. N. Taliaferro, and others. Judgment for plaintiff, and Taliaferro appeals. Affirmed.

Williams and Dunn, JJ., dissenting.

Cruce Cruce & Bleakmore, for appellant.

I. P Ryland and W. A. Ledbetter, for appellee.

KANE C.J.

This was a suit in equity commenced by the First National Bank of Cadiz, Ohio, the appellee, to foreclose a chattel mortgage upon 103 head of cattle, of the value of $3,000. It seems that on the 18th day of June, 1901, W. R. Smith, H. P. Wiggs and Ed Sacra executed their promissory note for $4,430.40, due six months after date, to Tamblyn & Tamblyn, commission merchants, and of even date therewith made, executed, and delivered their chattel mortgage on 230 head of cattle to secure payment of same. On the 1st day of July, 1901, Tamblyn & Tamblyn indorsed and delivered the note to Annabel Abell, a broker of Kansas City, Mo. On the 8th day of July, 1901, Annabel Abell, without indorsement, sold and delivered said note to the appellee herein. Subsequently, and before the maturity of the note, the mortgagors sold 103 head of the cattle covered by the chattel mortgage to the appellant, W. N. Taliaferro, who took possession of the same, and sent the purchase price, which amounted to $3,000, to Tamblyn & Tamblyn, the original mortgagees. Taliaferro, at the time he purchased and took possession of said cattle, had no actual knowledge that the note had been assigned, but was assured by the mortgagees that they still held the same. The appellee, plaintiff below, claimed that the assignment of the note operated to transfer the mortgage, and that Taliaferro, the appellant, took the cattle subject to this lien. Taliaferro filed his separate answer, admitting the execution and transfer of the note, but claiming that he was an innocent purchaser for value. His answer contained the following paragraphs:

"Second. Defendant states that under the terms of the mortgage described in plaintiff's complaint codefendants Smith, Sacra, and Wiggs had permission from the mortgagees to ship said cattle to the said Tamblyn & Tamblyn, or to sell them to any other person, and pay the proceeds thereof to the said mortgagees.

"Third. Defendant states that the note sued on was never, by the said Tamblyn & Tamblyn, assigned or transferred to the plaintiff, but that, on or about the 1st day of July, 1901, the said Tamblyn & Tamblyn sold the said note to one Annabel Abell, in Kansas City, Mo.; that at the time said note was sold to the said Annabel Abell she was cognizant of the fact that the mortgagors had been granted permission to sell and dispose of said property; that she had, for a number of years, been engaged as a broker in Kansas City, Mo., and was acquainted with the custom prevailing in the said Kansas City among such commission men, concerning the right of cattle men, or the owners of cattle, to dispose of said cattle upon which mortgages existed, in favor of such commission firms; that under and by virtue of such custom, which was known to the said Abell and the plaintiff herein, cattle men, who had executed notes to the commission firms in Kansas City, and had executed mortgages on cattle to secure said loans, had permission of the mortgagees either to ship such cattle to such mortgagees to be by them sold, and the proceeds applied to such indebtedness, or themselves to sell such cattle to whom such mortgagors so desired, and discharge such indebtedness by paying such commission firms, in addition to such indebtedness, equal to 50 cents per head on all cattle included in such mortgage or mortgages.

"Fourth. Defendant states that at the time said Tamblyn & Tamblyn sold said note to Annabel C. Abell it was expressly understood and agreed and contracted for, between the parties thereto, that the said Tamblyn & Tamblyn should carry out the agreement they had originally made with the said mortgagors, and that the said Tamblyn & Tamblyn would act as the agents of the said Annabel C. Abell, or of any purchaser to whom she might sell such note, in and about the collection of the same, and would themselves sell said cattle, or permit the mortgagors to sell the same, and pay the proceeds to the said Tamblyn & Tamblyn, who should themselves pay the money to the said Annabel C. Abell, or any subsequent purchaser of said note.

"Fifth. Defendant says that the said Annabel C. Abell sold said note to the plaintiff on or about the 8th day of July, 1901, and at the time she sold said note she advised the plaintiff that the mortgagors had permission to sell such cattle, and that the said cattle would be sold by the said mortgagors at or before the maturity of said note.

"Sixth. Defendant states that said Annabel C. Abell did not indorse said note to the plaintiff, but that the plaintiff was advised, at the time of said purchase, that the mortgagee authorized the mortgagors to sell and convey the title to said cattle, and was advised that the mortgagors would exercise such right, and would themselves sell and dispose of said property, and that the plaintiff consented that the mortgagors might sell such property, and assumed the risk that said mortgagors and the said Tamblyn & Tamblyn would pay the proceeds of such cattle to the plaintiff.

"Seventh. Defendant states that at the time he purchased the cattle of his codefendants, he had no knowledge that said note had ever been sold, but that the said Tamblyn & Tamblyn and his codefendants assured him that Tamblyn & Tamblyn still owned such note; that the said Tamblyn & Tamblyn in express terms authorized the mortgagors to sell said property to this defendant, and relying upon which authority, this defendant purchased said cattle for the sum of $3,000, and paid the same to the said Tamblyn & Tamblyn."

The answer contained the further allegation that under the custom long prevailing among commission merchants in Kansas City where the note was made payable, and where it was negotiated, such commission merchants, when they loaned money to cattle men in the South and West secured by mortgage, granted to the mortgagors the right either to ship the cattle to the mortgagees, to be sold and the money applied to the satisfaction of the loan, or else to sell the cattle themselves and apply the money to the discharge of the loan; that the appellee was cognizant of this custom when he purchased the cattle, and therefore bound thereby. The...