The City National Bank of Kansas City v. Gunter Brothers. The City National Bank of Kansas City

• Decision Date: 06 June 1903
• Docket Number: 13,131,13,132
• Citation: 67 Kan. 227,72 P. 842
• Court: Kansas Supreme Court
• Parties: THE CITY NATIONAL BANK OF KANSAS CITY, MISSOURI, v. GUNTER BROTHERS. THE CITY NATIONAL BANK OF KANSAS CITY, MISSOURI, v. GEORGE D. FRENCH & SON

72 P. 842

67 Kan. 227

THE CITY NATIONAL BANK OF KANSAS CITY, MISSOURI, v. GUNTER BROTHERS.

THE CITY NATIONAL BANK OF KANSAS CITY, MISSOURI, v. GEORGE D. FRENCH & SON

Nos. 13,131, 13,132

Supreme Court of Kansas

June 6, 1903

Decided January, 1903.

Error from Butler district court; G. P. AIKMAN, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. PROMISSORY NOTE--Negotiability. Embodied in a promissory note was the provision: "The makers and indorsers hereby severally waive protest, demand, and notice of protest and nonpayment, in case this note is not paid at maturity, and agree to all extensions and partial payments before or after maturity without predjudice to holder." Held, that the note was not negotiable.

2. PROMISSORY NOTE--Chattel Mortgage--Defense in Replevin. When such note is secured by a mortgage on cattle and the note and mortgage are transferred by the payee to another, after which the cattle are sold by the mortgagor and the price thereof transmitted to, and received by, the original payee of the note, without notice to the purchaser of the transfer of the same, such purchaser can make the same defenses against an action of the transferee for the possession of the mortgaged cattle as he could have made if the action had been brought by the original payee and mortgagee.

Milton Moore, and Hamilton & Leydig, for plaintiff in error.

Leland & Harris, for defendants in error.

JOHNSTON C. J. All the Justices concurring.

OPINION

JOHNSTON, C. J.:

These were actions of replevin brought to recover cattle formerly owned by Ed. Noble, in Butler county, and which were sold by him to Gunter Brothers and George D. French & Son. Prior to the sales of the cattle Noble gave to the Goodloe-McClelland Commission Company a promissory note for $ 7433.88 and at the same time executed a chattel mortgage on the cattle in question to secure the payment of the debt. The following is a copy of the note: "$ 7433.88. KANSAS CITY, KAN., May 29, 1900.

"One hundred and eighty-two days after date, without grace, for value received I promise to pay to Goodloe-McClelland Commission Co., or order, seven thousand four hundred thirty-three and 88-100 dollars, at the office of Goodloe-McClelland Commission Co., Kansas City, Kan., with interest from maturity at eight per cent per annum.

"The makers and indorsers hereby severally waive protest, demand, and notice of protest and non-payment in case this note is not paid at maturity, and agree to all extensions and partial payments before or after maturity, without prejudice to holder.

(Signed) ED. NOBLE."

The mortgage given to secure the note provided that until default, or until possession should be taken by the mortgagee, the mortgagor should retain possession of the property, and also contained this further provision:

"When marketed, the consent of the second party having been first obtained, said property shall be consigned to the second party at the Kansas City stockyards, Kansas City, Kan., or Kansas City, Mo., and the proceeds applied to the payment of the above-mentioned indebtedness, the surplus being paid to the first party. If said cattle, or any part thereof, be consigned or sold elsewhere than above, then said mortgagee shall pay a commission of fifty cents per head on all the above-described cattle."

Before the maturity of the note and mortgage the same were sold and transferred to the City National Bank of Kansas City, Missouri. On August 16, 1900, Noble sold forty-two head of steers to Gunter Brothers, and on the 18th day of August, 1900, a check corresponding with the amount received for the cattle was forwarded by Noble to the commission company; but it applied the proceeds to the payment of other indebtedness, secured by another mortgage which Noble had given to that company. Noble likewise sold sixty-nine head of the cattle to George D. French & Son on November 9, 1900, and their draft for $ 2360 was forwarded to, and received by, the commission company and applied in payment of another mortgage given by Noble to the commission company.

No part of the money paid on the sales of the cattle was received by the City National Bank of Kansas City, Missouri, the holder of the note for $ 7433.88 and the mortgage given to secure the same. The bank then brought these proceedings in replevin against the purchasers of the cattle, claiming the same under its mortgage. Upon issues joined a trial was had, and the plaintiff having offered its evidence, the court sustained demurrers thereto, and gave judgment for the defendants in each case.

The principal, and perhaps the controlling, question in the cases arises on the negotiability of the note transferred from the commission company to the bank. If the note and mortgage on which the bank bases its claim are non-negotiable, the purchasers of the cattle can make the same defenses that Noble could have made as against a claim of the commission company. If he had been called upon by the commission company to account for cattle sold by him, he could have responded that he had remitted the proceeds of the sales to the company and, as it had appropriated the proceeds, it mattered not whether it had one or several chattel mortgages on the cattle sold. By the terms of the mortgage Noble was authorized either to ship the cattle to the company or, if he should sell them elsewhere, to pay to the company a commission of fifty cents per head on the cattle sold. The sale of the cattle by Noble and the receipt and appropriation of the proceeds of such sales by the commission company were substantially the same as if Noble had shipped the cattle to Kansas City and the defendants had bought them from the commission company and brought them back to Butler county.

Assuming then, that the paper was not negotiable, in the absence of evidence that the purchasers of the cattle had any notice of the assignment and transfer of the paper, the same defenses were open to them that would have been if the actions had been brought by the...