Stockmen's Nat'l Bank of Casper v. Lukis Candy Co.

• Decision Date: 12 June 1934
• Docket Number: 1843
• Citation: 33 P.2d 254,47 Wyo. 127
• Parties: THE STOCKMEN'S NAT'L BANK OF CASPER v. THE LUKIS CANDY COMPANY, ET AL; DENVER SODA FOUNTAIN COMPANY, ET AL, INTERVENERS
• Court: Wyoming Supreme Court

33 P.2d 254

47 Wyo. 127

THE STOCKMEN'S NAT'L BANK OF CASPER v. THE LUKIS CANDY COMPANY, ET AL; DENVER SODA FOUNTAIN COMPANY, ET AL, INTERVENERS

No. 1843

Supreme Court of Wyoming

June 12, 1934

APPEAL from the District Court of Natrona County; VOLNEY J. TIDBALL Judge.

Action by The Stockmen's National Bank of Casper against The Lukis Candy Company and The Princess Confectionery Company to foreclose two chattel mortgages, and for the appointment of a receiver, in which Denver Soda Fountain Company, Pete Thomas and National Store Fixture Company intervened. From a judgment for plaintiff and each of the interveners for their respective claims, awarding plaintiff a prior lien and interveners liens of equal priority as between themselves but inferior to the lien of plaintiff, the two interveners first named appeal. The material facts are stated in the opinion.

Modified and Affirmed.

For the appealing interveners, the cause was submitted on the brief of S.E. Phelps, of Casper. No brief was filed on behalf of the respondents.

The court erred in permitting plaintiff to amend its petition during the trial by inserting new dates to correspond to the date and maturity of another note. The amendment changed plaintiff's cause of action. 49 C. J. 503-507; 89-1063 R. S. 1931. No showing was made that amendatory facts were known to plaintiff prior to the application. U. S. F. & G. Company v. Parker, 20 Wyo. 29; Demple v. Carroll, 21 Wyo. 447; 49 C. J. 480-503. The acknowledgments on the chattel mortgages were taken by a disqualified notary and were void. Bank v. Bank, 11 Wyo. 32; 16 Wyo. 161; Harney v. Montgomery, 29 Wyo. 362. They were witnessed by a disqualified person. Donovan v. Company (N. D.) 80 N.W. 772; Conradt v. Leeper, 13 Wyo. 485. The court erred in refusing to give intervener a priority of lien under its contract with The Lukis Candy Company and The Princess Company, for the reason that its mortgages were not constructive notice, and the lien of intervener thereby became superior to plaintiff's lien. As against creditors and subsequent mortgagees a chattel mortgage takes effect only from the time it is filed, and if it is not entitled to be filed, it is not notice. Yund v. Bank, 14 Wyoming 81; 5 R. C. L. 393; 11 C. J. 540 and cases cited. A chattel mortgage bearing a void acknowledgment is not entitled to be filed. An acknowledgment taken by one of the interested parties is void. Bank v. Bank, 11 Wyo. 32; Boswell v. Bank, 16 Wyo. 161; Harney v. Montgomery, supra. Authorities in support of this principle may be multiplied almost indefinitely for the reason that it is a universal principle and does not depend on statutory prohibition. The rule rises out of the fact that it is against public policy that one may take an acknowledgment who is an interested party. As to the question of notice, we cite Bank v. Bank, 8 Wyo. 235; Yund v. Bank, supra, and cases cited therein, also Sections 4692-4696, C. S. 1920. And as affecting priority of liens. Section 71-113, R. S. 1931. Appellant therefore contends that plaintiff's Exhibits 1 and 3 are void as against the liens claimed by interveners under their contracts. Sections 4687 and 4696, C. S. 1931, 5 R. C. L. 349. It was contended at the trial that plaintiff's cashier was not disqualified to take the acknowledgment because of the provisions of Section 4516, C. S. 1920, which attempts to legalize such acknowledgments. As to this, we say, that it was beyond the power of the legislature to enact the provision and it is therefore unconstitutional: (a) Because it makes a classification among notaries public and among those engaged in the banking business as to being corporate or non-corporate for the purpose of this section, and makes lawful that which was universally deemed unlawful before. See Wyoming decisions, supra. It attempts to create an unlawful classification. Standard Cattle Company v. Baird, 8 Wyo. 144; McGarvey v. Swan, 17 Wyo. 120; State v. LeBarron, 24 Wyo. 525. Laws must be of general and uniform operation. Article I, Section 34, Article III, Section 27, Constitution; 6 R. C. L. 372; Connolly v. Company (U. S.) 46 L.Ed. 679; Christoph v. City (Wis.) 237 N.W. 134; Pasadena v. Simpson (Cal.) 27 P. 604; Ex parte Gardner (Kan.) 113 P. 1054. (b) The statute attempting to legalize such acknowledgments confers special privileges and makes a distinct and uncalled for discrimination between persons of the same class. Article I, Section 34, Constitution, Fourteenth Amendment--United States Constitution. The point is ably discussed in McGarvey v. Swan, supra, and in State v. LeBarron, supra. See also Moffitt v. City (Colo.) 133 P. 754; City of Tacoma v. Krech (Wash.) 46 P. 255. (c) The statute violates the principle of public policy. Southern Iron Company v. Vayles (Ga.) 41 L. R. A. (N. S.) 375; Bank v. Bank, supra; Boswell v. Bank, supra; Harney v. Montgomery, supra. Plaintiff's petition failed to state facts sufficient to constitute a cause of action as to priority of liens. 11 C. J. 723; 5649 C. S. 1920; 49 C. J. 46, 132. The judgment is not supported by the petition. 33 C. J. 1133, 1139, 1144; State v. District Court, 33 Wyoming 281. Plaintiff having acquired possession of the property unlawfully is liable for conversion. 26 R. C. L. 1098; 21 Ency. P. & P. 1014; Hunt v. Bank (Ore.) 202 P. 564; Mier v. Company (Calif.) 206 P. 83; Show v. Palmer (Cal.) 224 P. 106. Plaintiff acquired possession of various items of property that are not included in either mortgage, and as to such property there was an unlawful conversion. The clerk issued the summons prior to the filing of the petition or praecipe; the action was not therefore commenced. Sections 5620, 5621, C. S.; Lobell v. Company, 19 Wyo. 170; Re Big Laramie River, 23 Wyo. 75, 27 Wyo. 88; Reynolds v. Stansbury, 20 Ohio 344. The service of summons was void and conferred no jurisdiction. 50 C. J. 484. The issue in this case turned upon the priority of lien as between plaintiff and interveners. All of the issues between the plaintiff and interveners should have been passed upon and determined by the judgment, and this the court failed to do. 33 C. J. 1135, 1136; Rankin v. Thickett (Kan. ) 89 P. 698. A mortgage may be valid between the parties to it, and yet void as against creditors, if it was intended to hinder, delay or defraud. Carroll v. Anderson, 30 Wyo. 217; Hasbrouck v. La Febre, 23 Wyo. 367; Ryan v. Rogers (Ida.) 94 P. 427; 11 C. J. 571-580; In re Baumgartner, 55 F.2d 1041. Under the provisions of Section 89-4803, R. S. 1931, interveners are entitled to a judgment against plaintiff for the principal and interest on its note against defendants up to the value of the property converted. Snowball v. Maney Bros., 39 Wyo. 84; Slane v. Curtis, 41 Wyo. 402.

KIMBALL, Chief Justice. BLUME and RINER, JJ., concur.

OPINION

KIMBALL, Chief Justice.

Respondent, the Stockmen's National Bank of Casper, was plaintiff; appellants, Pete Thomas and Denver Soda Fountain Company, were interpleaders, in an action brought by plaintiff against the Lukis Candy Company and the Princess Confectionery Company, corporations, defendants. Hereinafter the parties will be referred to as plaintiff, interveners and defendants; the defendants, when separately mentioned, as the Lukis Company and the Princess Company. Plaintiff, as mortgagee, claimed a first lien on property of defendants by virtue of a chattel mortgage executed by the Lukis Company on May 29, 1924, to secure a debt evidenced by a promissory note of the same date for $ 5,550 due November 25, 1924. Plaintiff held another chattel mortgage executed September 22, 1924, by the defendant Princess Company to secure the same debt evidenced by a promissory note for $ 5,905.10, due March 20, 1925. The petition alleges that this latter note and mortgage were given "as additional security" for the note of the Lukis Company. The two defendant corporations had the same officers, were engaged in the same business, and apparently their interests are identical.

The plaintiff's petition asked a decree establishing a first and prior lien in its favor against the property described in each of the mentioned mortgages; for appointment of a receiver, and for foreclosure.

Three parties claiming liens on the mortgaged property were permitted to intervene, and filed separate petitions. The petition of one intervener was dismissed with prejudice during the trial. The questions in the case arise on the claims of the two remaining interveners as opposed to the claim of the plaintiff. The defendants defaulted by failing to answer the plaintiff's and interveners' petitions.

The claim of one of the interveners is based on a written contract dated February 6, 1924, between him and the two defendants, whereby the intervener sold all his interest in each of defendants to the defendants who, as part of the consideration, agreed to pay $ 1500 evidenced by a promissory note payable to intervener on or before August 5, 1924. The writing recites that intervener "shall have and is hereby given an equitable lien upon all of the property and rights" of defendants to secure the fulfillment of the contract. The contract, with an attached affidavit reciting that the contract was in full force, was recorded in the Miscellaneous records of the county clerk on February 19, 1924. The claim of the other intervener is based on a similar contract of the same date and recorded at the same time. While the interveners' claims were set forth in separate pleadings, it will be unnecessary hereinafter to mention them separately as they have the same standing as opposed to the claim of the plaintiff.

The district court found that plaintiff's mortgage, dated May 29, 1924, was a valid and subsisting lien superior and prior to the liens of the interveners;...