Walker v. Farmers' Bank of Kendrick
| Decision Date | 01 August 1925 |
| Citation | 238 P. 968,41 Idaho 279 |
| Parties | G. F. WALKER, as Trustee of the Estate of ELBERT KUYKENDALL, Bankrupt, Appellant, v. FARMERS BANK OF KENDRICK, a Corporation, Respondent |
| Court | Idaho Supreme Court |
CHATTEL MORTGAGE-MANNER OF DISCHARGE-EFFECT OF FAILURE TO FOLLOW STATUTORY PROCEDURE - RENEWAL OF MORTGAGE DEBT-FAILURE TO RECORD RENEWAL MORTGAGE-EFFECT.
1. C S., secs. 6366, 6367, prescribe how the lien of a chattel mortgage may be discharged. The execution and delivery of a renewal note and mortgage upon the same property, accompanied by the return to the mortgagor of the original note and a duplicate of the original mortgage marked "paid," the original mortgage not being otherwise satisfied or released of record in compliance with the statute, does not discharge the lien of the original mortgage.
2. The renewal of the evidence of a debt does not, in the absence of an agreement between the parties, constitute in law a payment of the debt.
3. Where mortgage indebtedness is extended by the giving of a renewal note and mortgage and the surrender of the original note, the debt and the lien are the substance of the transaction, the notes and mortgages being in themselves merely evidence of the agreement between the parties.
4. A renewal chattel mortgage upon the same property as the original mortgage, but which is not filed for record, is void as to creditors of the mortgagor.
APPEAL from the District Court of the Second Judicial District, for Latah County. Hon. Edgar C. Steele, Judge.
Action for conversion of chattels by mortgagee. Judgment for defendant. Affirmed.
Judgment affirmed, with costs to the respondent.
There never was any question, even prior to the adoption of the Uniform Negotiable Instruments Act, but that the giving of a new promissory note in lieu of an existing one was a payment of such note if such was the intention of the parties. By this act it is provided what shall discharge such instruments. (C. S., sec. 7986.)
When a promissory note is given in the place of one already existing, the old note is marked "paid"--in other words, "canceled"--by the holder, and then by the holder delivered and surrendered to the maker, it is a payment of the old note, and not a renewal, and there is no further liability of the maker upon the old note. (Fidelity State Bank v. Miller, 29 Idaho 778, 162 P 244; Childs v. Pellett, 102 Mich. 558, 61 N.W. 55; Christofferson v. Howe, 57 Minn. 67, 58 N.W. 830; French v. French, 84 Iowa 655, 68 N.W. 1100, 15 L R. A. 300, 309; Larkin v. Hardenbrook, 90 N.Y. 333, 334, 43 Am. Rep. 176.)
A. H. Oversmith, for Respondent.
A prior note is not canceled or released by the giving of a new note and mortgage for the indebtedness unless there is an agreement between the parties to that effect. (Willows v. Rosenstein, 5 Idaho 305, 48 P. 1067; Vollmer v. Reid's Estate, 10 Idaho 196, 77 P. 325; Philadelphia & Reading Coal & Iron Co. v. Willinger, 137 Md. 46, 111 A. 132, 12 A. L. R. 1542; White v. Stevenson, 144 Cal. 104, 77 P. 828; Swift v. Kraemer, 13 Cal. 526, 73 Am. Dec. 603; State v. Lone Wolf, 63 Okla. 166, 163 P. 532; 3 Randolph on Commercial Paper, par. 1571; 2 Daniels on Negotiable Instruments, pars. 1272-1275; Griffin v. Long, 96 Ark. 268, 131 S.W. 672, 35 L. R. A., N. S., 855; Montgomery Bank & Trust Co. v. Jackson, 190 Ala. 411, 67 So. 235; Peden v. Birkle, 27 Colo. App. 323, 148 P. 913; Corydon Deposit Bank v. McClure, 33 Ky. L. 679, 110 S.W. 856, 121 S.W. 446; Kelley v. York, 183 Ind. 628, 109 N.E. 772; Reynolds v. Schade, 131 Mo.App. 1, 109 S.W. 629; Claridge v. Evans, 137 Wis. 218, 118 N.W. 198, 25 L. R. A., N. S., 144; Western Loan & Savings Bank v. Kendrick State Bank, 13 Idaho 331, 90 P. 112.)
The taking of a new note and mortgage does not release prior indebtedness even where additional security is taken and different rate of interest and attorney's fees are provided in the new note. (Vollmer v. Reid's Estate, 10 Idaho 196, 77 P. 325.)
Wm. E. Lee, J., took no part.
--Elbert Kuykendall was indebted to respondent bank in the sum of $ 2,800 on February 19, 1920, and on that date made and delivered to the bank his promissory note for said sum and a chattel mortgage to secure the same was executed in due form by him and his wife to the bank covering personal property, the subject of this action. This mortgage was duly filed for record in the county in which the property was situated and in which Kuykendall lived. The due date of the note and mortgage was October 1, 1920. On October 28, 1920, there was unpaid upon the principal and interest of said note and mortgage the sum of $ 1,761.25.
On October 29, 1920, the bank also held Kuykendall's note given to the Craig Store for $ 415, and on that date a new note for $ 2,176.25, in place of the other two, was made and delivered to the bank by Kuykendall and his wife, and a new mortgage, covering the same property that was covered by the former mortgage, was duly executed, acknowledged and delivered to the bank as security for the payment of the new note. Thereupon the original note and duplicate copy of the original mortgage were marked paid by the bank and delivered to Kuykendall; but the subsequent mortgage was not placed on file for record in the recorder's office at that time nor at all. No further payments were made upon said indebtedness.
On March 15, 1921, Kuykendall filed his petition in bankruptcy and was duly adjudged a bankrupt. On April 4, 1921, his creditors elected George F. Walker, the plaintiff herein, trustee of the estate. On or about March 31, 1921, the bank received and took possession of said property described in each of said mortgages and sold the same for $ 900, applying the proceeds on said indebtedness. This action was brought by the trustee against the bank for conversion.
The only question in the case is whether or not the bank had a chattel mortgage lien on this property, valid against the creditors at the time it took possession of and sold the same. It is the contention of the appellant that the first mortgage was discharged by payment and that the subsequent mortgage, never having been filed for record, was void as against the creditors.
The court found that the indebtedness which was secured by the prior mortgage had not been paid except $ 623.75 of the principal and the interest up to October 29, 1920; that said chattel mortgage and the debt secured by the same had not been released by operation of law or by any act or intent on the part of the respondent, and was in full force and effect at the time the said Kuykendall was adjudged a bankrupt and at the time the appellant was appointed trustee of the estate.
Appellant contends that the evidence conclusively shows payment of the original note and mortgage. He relies mainly upon the case of Fidelity State Bank v. Miller, 29 Idaho 777, 162 P 244. We do not think that case in point, for the decision in the Miller case is upon the theory that it was expressly agreed between the bank and Miller that the old note and mortgage should not be renewed by the execution of the new note and mortgage, but that the old note should be paid and the mortgage satisfied, and the new paper should be taken as evidencing a new and original obligation. By the decision in that case the supreme court meant simply to...
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