Stokes v. Kirk, 14126.

• Decision Date: 17 January 1938
• Docket Number: 14126.
• Citation: 101 Colo. 591,75 P.2d 1041
• Parties: STOKES v. KIRK.
• Court: Colorado Supreme Court

75 P.2d 1041

101 Colo. 591

STOKES v. KIRK.

No. 14126.

Supreme Court of Colorado, En Banc.

January 17, 1938

Rehearing Denied Feb. 7, 1938.

Error to District Court, City and County of Denver; Otto Bock Judge.

Action in replevin by Charles M. Kirk against Ruth C. Stokes to obtain possession of certain live stock which had been taken possession of by the defendant under chattel mortgages wherein the plaintiff claimed a superior right to the live stock by virtue of his previously executed chattel mortgage. To review a judgment for the plaintiff after the defendant's demurrers were overruled, the defendant brings error.

Affirmed.

HOLLAND J., dissenting.

Harry C. Davis, Stanley T. Wallbank, and Edward Z Klahr, all of Denver, for plaintiff in error.

Bartels, Blood & Bancroft and Arthur H. Laws, all of Denver, for defendant in error.

Frank L. Grant, of Denver, amicus curiae.

KNOUS Justice.

This is a replevin action and was previously Before this court as Stokes v. Kirk, the decision being reported in 97 Colo. 96, 47 P.2d 686. The parties were the holders of successive chattel mortgages on certain live stock executed by the same mortgagor. Kirk's mortgage was recorded prior to the mortgages of Stokes. Claiming default, Stokes took possession of all of the chattels under her mortgages. Kirk then demanded possession of the mortgage property from Stokes, asserting a superior right thereto by virtue of his chattel mortgage. The demand being refused, this action was instituted. Upon trial judgment was rendered in favor of Kirk which was brought here for review and a reversal ordered. The remittitur, inter alia, provided:

'It is therefore ordered and adjudged that the judgment of said District Court be, and the same is hereby, reversed, annulled and altogether held for naught, and that this cause be remanded to said District Court for further proceedings according to law.'

After this remittitur had been lodged in the lower court, Stokes moved for judgment, which motion was denied. She then filed a petition in this court for an 'extension of opinion' asking that we direct the trial court forthwith to enter judgment in her favor. The petition was denied. Thereafter the trial court permitted Kirk to file an amended complaint, amended reply, and a supplemental amended complaint. After unsuccessfully moving to strike these pleadings, Stokes demurred thereto. These demurrers were overruled by the lower court and Stokes, having elected to stand thereon, judgment was entered in accordance with the prayer of the complaint in favor of Kirk and the matter comes here in that condition.

Stokes asserts that the lower court, upon the cause being remanded, should have entered judgment in her favor without further proceedings, and that it erred in permitting Kirk to file the pleadings mentioned and in not sustaining her demurrers thereto.

It is our conclusion that the court was within its discretion in permitting Kirk to file his amended and supplemental pleadings and that Stokes' demurrers to the latter were properly overruled. Under this view it will not be necessary for us to discuss the propriety of the court's action in allowing the particular amendments to the complaint and replication here involved. In our former decision we held that the lien of the Stokes' mortgages, junior in point of recording, was superior to the lien of the Kirk mortgage upon the day the replevin suit was instituted by reason of the failure of Kirk to file or record the statement required by section 8, chapter 32, C.S.A. '35, and to properly extend his mortgage in accordance with section 13 of said chapter. In other words, it simply was determined that Kirk, by reason of his failure to comply with the sections of our chattel mortgage law mentioned, had, as against the junior mortgages, lost the prior lien first enjoyed by him and that under these circumstances the junior mortgagee was entitled to possession of the chattel property. The original validity of none of the mortgages was involved and the sole question decided was as to the priority of the liens of these encumbrances as between the parties. It was not, and could not, therein have been adjudged that any of the involved mortgages were invalid as between the respective mortgagees and the mortgagor.

The amended supplemental complaint, in substance, alleged that since the institution of this suit and during the pendency thereof, the indebtedness secured by the chattel mortgages of Stokes, the lien of which this court held was superior to the lien of the Kirk mortgage, had been satisfied and paid in full to Stokes by the original mortgagor whereby said mortgages were extinguished and released and all rights of Stokes thereunder terminated. The demurrer, of course, admitted the truth of these allegations. It is to be observed that in Colorado, if a chattel mortgage provides, as did the mortgages here, that the mortgagor may retain possession of the mortgage property, the mortgagee is invested with legal title only, but on default the right of possession of the mortgagor is forfeited to and vests in the mortgagee for the purpose of sale, subject only to the right of redemption by mortgagor pending sale or for an accounting of the proceeds thereof. McCormick v. First Nat. Bank, 88 Colo. 599, 299 P. 7; International Harvester Co. v. Lawrence Inv. Co., 95 Colo. 523, 37 P.2d 529; 10 Am.Jur. 862, § 223.

Under our opinion rendered when the case was formerly here, it was this limited possession to which Stokes was entitled on the day the replevin suit was instituted. With the attending circumstances as to possession present, she accepted payment and satisfaction of the whole amount due under her note, payment of which was secured by the chattel mortgages. Where the debt represented by a chattel mortgage is paid or discharged, the title or interest transferred by the mortgage is extinguished and with the extinguishment of the mortgage the right of the mortgagee to possession terminates. 11 C.J. p. 674, § 442.

Likewise on payment of the debt secured by a first mortgage, a second mortgage on the same property becomes eo instanti a prior lien and the holder of the second mortgage is entitled to the possession of...