Sparkman v. First State Bank

• Decision Date: 04 October 1922
• Docket Number: (No. 352-3105.)
• Citation: 244 S.W. 127
• Parties: SPARKMAN v. FIRST STATE BANK OF HANDLEY.
• Court: Texas Supreme Court

244 S.W. 127

SPARKMAN v. FIRST STATE BANK OF HANDLEY.

(No. 352-3105.)

Commission of Appeals of Texas, Section B.

October 4, 1922.

Certified Questions from Court of Civil Appeals of Second Supreme Judicial District.

Suit by the First State Bank of Handley against C. M. Sparkman. Judgment for plaintiff, and defendant appealed, and Court of Civil Appeals (245 S. W. ___) certified questions. Questions answered.

C. M. McFarland, of Wichita Falls, for appellant.

Bradley, Burns & Hiner and A. W. Christian, all of Fort Worth, for appellee.

McCLENDON, P. J.

This case is presented upon certified questions from the Court of Civil Appeals of the Second District. The statement and questions certified follow:

"This suit originated in the county court of Tarrant county for civil cases. The First State Bank of Handley, hereinafter called the Bank, sued C. M. Sparkman and A. D. Dickinson on a note in the sum of $150, alleged to have been executed in favor of the Bank by Sparkman and Dickinson. Plaintiff alleged that a verbal chattel mortgage had been given by the defendant, Sparkman, to plaintiff on a span of mules then owned and in the possession of Sparkman, and that Sparkman agreed to keep said mules in Tarrant county until said note was paid; that said Sparkman removed said mules from Tarrant county without the consent of plaintiff; that the note was past due and unpaid, etc. It was alleged that Dickinson signed said note as surety. Wherefore it prayed for a judgment for its debt, and for a foreclosure of its alleged chattel mortgage. By supplemental petition, plaintiff alleged that defendant, Sparkman, in order to secure the loan, agreed to give a written mortgage on said span of mules, that he had said mules mortgaged to secure a loan at another bank, and that he used this money to take up the other mortgage; that at said time defendant, Sparkman, claimed that he was in a hurry, and desired to have the money to go at once and pay off the other note and mortgage, and instructed plaintiff to draw up said mortgage according to the agreed terms, which plaintiff did, and that he would return at once and execute the mortgage. Plaintiff further alleged that, after the defendants had signed the note, and upon the promise of said Sparkman to execute the written mortgage, the Bank permitted defendant to take the proceeds of the note with him for the purpose of paying off the mortgage at the other bank; that subsequently Sparkman failed and refused to sign a written mortgage; that the Bank would not have loaned him the money except for his promise to execute a written mortgage, and relied on Sparkman's fulfilling his promise. Hence the Bank pleaded that it had an equitable mortgage on said mules. The jurisdiction of the county court was evidenced by a plea that the mules alleged to have been covered by the mortgage, verbal or equitable, were of the value of $300.

"The judgment of the court, the cause having been tried without the aid of a jury, was for plaintiff, both for its debt and for a foreclosure of its mortgage lien. The wording of the judgment would support either theory advanced by plaintiff in its two counts: (1) That a naked verbal mortgage was given by defendant, Sparkman; (2) that he promised to give a written mortgage, and the Bank extended the loan relying on such promise, and hence that it had an equitable mortgage. From this judgment defendant, Sparkman, appealed. The judgment of the trial court was affirmed, as shown by opinion of this court accompanying this certificate. Appellant in due time filed his motion for rehearing, which was overruled February 16, 1918. Appellant then filed his motion for leave to file a second motion for rehearing, and to certify. These motions were both granted by this court, and the judgment overruling appellant's first motion for rehearing was set aside.

"The evidence discloses that Sparkman was at the time of the transaction mentioned a married man, and owned no other horses or mules except the two alleged to have been mortgaged. The evidence further shows that the cashier of the appellee wrote up a mortgage for appellant to sign, and that he thought appellant had signed it until after the latter had left the bank with the note, in order to get the signature of the other defendant, Dickinson; that the Bank required both the personal security given by Dickinson's signature and the mortgage in order to make the loan; that later Dickinson returned with the note, signed by him and Sparkman, and got the money thereon, and that same was used to pay off the note at the other bank; that later the cashier of the appellee wrote Sparkman several letters asking him to come in and sign the mortgage, but that the latter would not do so. Dickinson testified that Sparkman told him, when the former came to the latter to secure his signature to the note, that he had given a mortgage on his mules to the Bank to secure the note. Sparkman's testimony contradicts the other two witnesses in certain respects, but we believe the evidence is sufficient to sustain the conclusion that Sparkman did give a verbal mortgage on the mules, or promised to give a written mortgage thereon, and that the Bank let him have the money, relying on such promise.

"The question involved in this case is one of some importance to the citizenship of our state, and of interest to the profession, and we deem it advisable to certify to your honors the following questions:

"First. Is a verbal mortgage on chattels valid as between the parties, where it is not given to secure part of the purchase price of such chattel?

"Second. If the first question be answered in the affirmative, would the fact that the chattel attempted to be mortgaged by parol was exempt property affect the validity of the mortgage?

"Third. Would an equitable mortgage be established by the fact that the Bank had made the loan to Sparkman relying on his promise to execute a written mortgage?"

At common law a valid mortgage of personalty could be made without writing, and this seems to be the uniform holding in the American courts, except where there has been some statutory regulation to the contrary. Jones on Chattel Mortgages (3d Ed.) § 2; 5 A. & E. Enc. of Law (2d Ed.) p. 654; 1 Cobbey on Chattel Mortgages, §§ 13 to 15, inclusive; 11 Corpus Juris, p. 405, § 9, and page 454, § 73; McCoy v. Lassiter, 95 N. C. 91; Mower v. McCarthy, 79 Vt. 142, 64 Atl. 578, 7 L. R. A. (N. S.) 418, 118 Am. St. Rep. 942. A collation of authorities in support of this proposition may be found in the above citations to Corpus Juris, American & English Encyclopedia of Law, and 7 L. R. A. (N. S.).

We have no statute in this state which in any way modifies this common-law rule in so far as it concerns the rights of the original parties to the mortgage agreement.

Paschal's Dig. art. 3876, which has been carried into our present R. S. art. 3969, renders fraudulent as to creditors any reservation or limitation of use in goods and chattels where the possession remains in another, unless declared by will or by instrument in...