Strahorn-Hutton-Evans Com'n Co. v. Florer

• Decision Date: 30 July 1898
• Citation: 54 P. 710,7 Okla. 499,1898 OK 91
• Parties: STRAHORN-HUTTON-EVANS COMMISSION CO. v. FLORER et al.
• Court: Oklahoma Supreme Court

54 P. 710

7 Okla. 499, 1898 OK 91

STRAHORN-HUTTON-EVANS COMMISSION CO. v. FLORER et al.

Supreme Court of Oklahoma

July 30, 1898

Syllabus by the Court.

1. A mortgage of personal property is valid as between the parties thereto, and as to subsequent purchasers, who have actual notice or knowledge of said mortgage, notwithstanding said mortgage is attested by only one subscribing witness.

2. A compliance with section 3275 of our statute, which provided "that a mortgage of personal property must be signed by the mortgagor in the presence of two persons, who must sign the same is witnesses thereto," is only an essential requisite in order that such mortgage may be entitled to be filed in the office of the register of deeds of the proper county, for the purpose of operating as a constructive notice to creditors of the mortgagor and subsequent purchases and incumbrancers of the property, in good faith, for value. But a person who has actual notice or knowledge of an antecedent mortgage is not a purchaser of the property in good faith for value, within the meaning of the statute, who can take advantage of the fact that the execution of such mortgage was only attested by one subscribing witness.

3. In an action in replevin, involving the recovery of certain personal property alleged to have been wrongfully detained by the agents of a subsequent purchaser of the property in controversy, and where it was sought to be shown by the plaintiff that the subsequent purchaser had actual notice, at the time of the transaction by which it acquired possession of the property in controversy, that the plaintiff had a mortgage on such property, held, that it was error to exclude such testimony, from the consideration of the jury. Further held, that it was error for the court to direct the jury to return a verdict for the defendants.

Error from district court; Pawnee county; before Justice A. G. C Bierer.

Replevin by the Strahon-Hutton-Evans Commission Company against Florer & Bannerman. Judgment for defendants, and plaintiff brings error. Reversed.

This was an action in replevin, brought by the plaintiff in error in the district court of Pawnee county, on the 29th day of August, 1896, to recover possession of 112 head of cattle, of the value of $1,314, alleged to have been unlawfully detained by the defendants. The plaintiff in error based its right of action to recover upon a certain mortgage executed by one J H. Stokes on the 10th day of April, 1896. It appears that on the 16th day of April, 1896, Stokes borrowed of the plaintiff $7,000, and executed three notes therefore, and to secure the same executed a chattel mortgage on 700 head of cattle located in Stokes' pasture, which is known as the "Hampton Pasture," and were described as "wintered Arkansas cattle," 400 steers 3 years old and over, 50 steers 1 and 2 years old, 125 cows, 125 heifers; all branded with a peculiar character, described as the "Flying --Z" brand, on the right side of the animal. It appears that said chattle mortgage was filed in the office of the register of deeds of Kay county, Okl. T., on the 11th day of April, 1896. It further appears that said mortgage was signed by Stokes, the mortgagor, and attested by one A. R. Holcomb, the only witness to said instrument. It was acknowledged before one James Ratcliffe, notary public; said Stokes having also made an affidavit before the notary public at that time, stating that he was the sole owner of the property, and that the same as free and clear from all liens or claims. It further appears that prior to the commencement of this action said Stokes had become indebted to the Citizens' National Bank, of Independence, Kan., in a large sum of money, and for the purpose of making payment on said indebtendness he sold and delivered to saidbank, through one D. F. Wallace, its agent and employé, the cattle in controversy. The price agreed upon was $15 per head, the aggregate amount to be credited on the indebtedness of Stokes to said bank. After receiving the cattle, Wallace turned then over to said Florer & Bannerman, defendants in error, to be by them held for the bank; and at the time of the commencement of this action said Florer & Bannerman were in the actual possession of the property, holding the same for said bank. It further appears that the plaintiff in error never had possession of any of the cattle in controversy. The cause was tried on the issues presented by the petition of the plaintiff and a general denial of the defendants. Upon the trial of the cause the plaintiff offered in evidence a certified copy of said chattel mortgage. The defendants objected to the introduction of the mortgage for the reason that it was not executed in conformity with the laws of this territory, being signed only in the presence of one witness. The objection was sustained by the court, to which ruling the plaintiff excepted, and as signs it as one of the errors in this court. It also appears that on the trial one A. G. Stick, president of the Citizens' National Bank, was called as a witness in behalf of the plaintiff, and was asked whether he did not have actual notice, at the time of the transaction by which the bank acquired possession of the cattle in controversy, that the plaintiff in error had a mortgage on them. The court sustained an objection to this question. The plaintiff sought to show that the bank had actual notice of the execution of said chattel mortgage from Stokes to the plaintiff. After hearing the evidence of both parties, the court, upon motion of counsel for defendants in error, directed the jury to return a verdict in favor of the defendants, which was accordingly done; to which a the plaintiff excepted. The plaintiff filed a motion for new trial, which was overruled, and an exception saved by the plaintiff. Judgment was rendered by the court in favor of the defendants for costs, to which the plaintiffexcepted, and brings the case to this court on appeal.

Botsford, Deatherage & Young and Asp, Shartel & Cottingham, for plaintiff in error.

J. B. Ziegler, for defendants in error.

HAINER, J. (after stating the facts).

The defendants to this action, Florer & Bannerman, are merely nominal parties. The Citizens' National Bank, of Independence, Kan., is the real party in interest. The theory of the defendants was that the chattel mortgage executed by Stokes was void was against the bank, because the said mortgage was attested by only one subscribing witness, and for the further reason that the mortgage was filed in Kay county, Okl., and hence was no notice to the bank, as a subsequent purchaser of the property, in good faith, for value, even if it were valid. The plaintiff at the trial offered to introduce the chattel mortgage, for the purpose of showing that the bank had constructive notice of the mortgage property. The court excluded the mortgage upon two grounds "(1) Because the mortgagewas not executed in conformity with the statute of this territory, being attested by only one subscribing witness; and (2) because there was no law entitling a mortgage made in the Osage Nation to record." The plaintiff at the trial also attempted to show by one A. C. Stich, the president of the bank, who was called was a witness, that he had actual notice and knowledge, at the time of the transaction by which the bank secured possession of the property, that the plaintiff had a mortgage upon said property. This witness was asked if he was not present at the time of the execution of this mortgage by Stokes to the plaintiff in error. The court excluded the testimony on the theory that "actual notice is not notice at all when not accompanied by possession." We think the plaintiff had the right to show that the bank had actual notice of the mortgage, and to exclude this testimony was manifestly erroneous. It is a well-settled principle of law that notice is the equivalent of knowledge, and may be divided into two classes, constructive and actual. Constructive notice is that imparted by the record, and is a matter of statute. Actual notice exists when knowledge is actually brought home to the party to be affected thereby. It also includes implied notice, which is notice to the authorized agent of the party sought to be bound by the notice. The filing of a chattel mortgage for record, and the recording thereof, are but constructive notice of its existence; and, if the party had notice of its existence; otherwise than by its record, the full purpose of the recording act is attained. Cobbey on Chattel Mortgages (section 611) says: "A subsequent purchaser in good faith can always take advantage of the failure to record the chattel mortgage. A subsequent purchaser in good faith, for value, is one who, after the mortgage is claimed to have been made, but before it is recorded, buys the property covered thereby, paying a valuable consideration therefor, and without knowledge of the existence of the mortgage." The following provisions of our statute are applicable to this case. Section 3275 provides: "A mortgage of personal property must be signed by the mortgagor in the presence of two persons, who must sign the same as witnesses thereto, and no...