State Bank of Lushton v. O. S. Kelley Co.

• Decision Date: 18 March 1896
• Citation: 66 N.W. 619,47 Neb. 678
• Parties: STATE BANK OF LUSHTON v. O. S. KELLEY CO.
• Court: Nebraska Supreme Court

47 Neb. 678

66 N.W. 619

STATE BANK OF LUSHTON

v.O. S. KELLEY CO.

Supreme Court of Nebraska.

March 18, 1896.

Syllabus by the Court.

1. Evidence that two farmers, purchasing a threshing machine, paid for the same with their joint and several notes, secured by a chattel mortgage on the machine purchased, and jointly took possession of and used the machine in threshing grain for others, will not support a finding that the threshing machine was partnership property, nor that a copartnership relation existed between the farmers. Such evidence warrants, rather, the conclusion that the farmers were joint owners, or tenants in common, of the machine.

2. In such case the machine company neglectedto file its mortgage, or a copy thereof, in the county where the farmers resided. Subsequently one of the farmers mortgaged the machine to a bank to secure a pre-existing debt which he owed it. The bank had no knowledge of the mortgage of the machine company, took possession of the machine under its chattel mortgage, and the machine company replevied it. Held, (1) that the mortgage made by the farmer invested the bank with a lien on whatever interest he had in the machine; (2) that the bank was a mortgagee in good faith, within the meaning of section 14, c. 32, Comp. St.

3. A mortgagee in good faith, within the meaning of section 14, c. 32, Comp. St., is one who takes his mortgage to secure a debt actually and justly owing to him, without notice, actual or constructive, of other existing claims against the mortgaged property.

Error to district court, York county; Bates, Judge.

Replevin by the O. S. Kelley Company against the State Bank of Lushton. There was a judgment for plaintiff, and defendant brings error. Reversed.

George B. France, for plaintiff in error.

Sedgwick & Power, for defendant in error.

RAGAN, C.

On the 8th day of May, 1891, Peter Peters and John Peters, by their order or contract in writing, purchased a threshing machine of the O. S. Kelley Company. The machine was to be delivered to them not later than the 20th of July of that year, and they were to pay for the same $585. Part of this payment was to be made in cash, on delivery of the machine, and the remainder to be evidenced by their notes secured by a chattel mortgage on the machine. The machine was delivered on the 23d of July, cash payment made, and John and Peter executed their joint and several promissory notes to the Kelley Company for the remainder of the purchase price of the machine, and at the same time executed to the Kelley Company a chattel mortgage on the machine to secure the payment of their notes. By mistake this mortgage was filed in the office of the county clerk of York county, although the mortgagors resided in Hamilton county. On the 13th day of October, 1891, Peter Peters mortgaged the threshing machine to the State Bank of Lushton to secure a debt which he then, and had for some time, owed the bank. The bank subsequently took possession of the threshing machine under its chattel mortgage, and was proceeding to foreclose the same when the Kelley Company, by this action, replevied the threshing machine from the bank. The action was tried to a jury in the district court of York county, a verdict and judgment rendered for the Kelley Company, and the bank prosecutes to this court a petition in error.

1. On the trial the district court, at the request of the Kelley Company, instructed the jury as follows: “The jury are instructed that the law is that partnership effects cannot be released from liability for the unpaid debts of the partnership without the consent of every member of the firm. The corpus of partnership effects is joint property, and neither partner separately has anything in that corpus, but the interest of each is only his share of what remains after the partnership accounts are taken. In this case, if you believe from the evidence that Peter Peters and John Peters purchased of the plaintiff in this case the power and separator described in the plaintiff's petition, in partnership, to be used and operated by them in threshing, and as a part of the transaction the said Peter Peters and John Peters executed and delivered to the plaintiff the notes and mortgage described in the petition and put in evidence by the plaintiff in this case, to secure the payment of the purchase price of the said outfit, then the plaintiff in this case would have the first lien upon the property in question to the amount unpaid upon said mortgage, and the said Peter Peters would have no right to execute a mortgage upon the said threshing outfit to secure his individual indebtedness, to the prejudice of the plaintiff in this case; and any mortgage so given by the said Peter Peters to secure his individual indebtedness would be subject to the mortgage of this plaintiff, regardless of whether plaintiff's mortgage was ever filed in the office of the clerk of the county or not.” The first assignment of error argued is directed to the giving of this instruction. The evidence shows that John and Peter Peters were farmers and brothers, residing in Hamilton county, at the time they purchased the threshing machine and executed the notes and mortgage to the Kelley Company; that Peter Peters and a son of John Peters accompanied the machine from place to place, and used it in threshing grain. Whatever may be said of this instruction as an abstract proposition of law, we think it had no place in this case. It submitted to the jury the question as to whether John and Peter were copartners, and there is no evidence whatever in the record which would justify the jury in making such a finding. Counsel for the defendant in error assume that, because John and Peter jointly purchased and jointly owned this property, therefore a partnership relation existed...