Wells, Fargo & Co. v. Alturas Commercial Co.

• Decision Date: 24 January 1899
• Citation: 56 P. 165,6 Idaho 506
• Court: Idaho Supreme Court
• Parties: WELLS, FARGO & CO. v. ALTURAS COMMERCIAL COMPANY (MERCHANT & CO., INTERVENERS)

56 P. 165

6 Idaho 506

WELLS, FARGO & CO. v. ALTURAS COMMERCIAL COMPANY (MERCHANT & CO., INTERVENERS)

Supreme Court of Idaho

January 24, 1899

CHATTEL MORTGAGE-RECORDING-ACTUAL NOTICE.-A junior mortgagee, who takes his mortgage with actual notice of the existence of another mortgage upon the same property, and with the understanding that the lien of his mortgage is subject to that of such former mortgage, is not entitled to precedence on the grounds that such former mortgage was not filed of record in the proper county recorder's office prior to the time that his mortgage was filed in such office.

SAME-GOOD BETWEEN PARTIES-GOOD AGAINST JUNIOR MORTGAGEE WHO HAS ACTUAL NOTICE.-A chattel mortgage upon a stock of merchandise, under the terms of which the mortgagor retains possession and sells in the usual course of trade, applying proceeds of sale less expenses thereof to the mortgage debt, is valid as between the parties and privies thereto, and as against junior mortgages of the same kind, taken with actual notice of such former mortgage.

SAME-ESTOPPEL.-A mortgagee who takes a mortgage upon a stock of merchandise which mortgage authorizes the mortgagor to retain possession of the mortgaged chattels, and sell the same in the usual course of business, and who knows of a similar, prior existing mortgage upon the same chattels, and agrees that his mortgage lien shall be subject to the lien of such former mortgage, is estopped from questioning the validity of such former mortgage.

(Syllabus by the court.)

APPEAL from District Court, Blaine County.

Judgment foreclosing plaintiffs' mortgage entered. Judgment affirmed in part, reversed in part and cause remanded.

Brown &amp Henderson and Lyttleton Price, for Appellants.

As between the different mortgagees litigating here, it is entirely immaterial as to whether these mortgages were fraudulent as to attaching creditors or not. Such a mortgage permitting the mortgagor to remain and sell the goods is not void between the parties, but may be enforced at any time by the mortgagee. (Bank of Ukiah v. Moore, 106 Cal 673, 39 P. 1071; People's Sav. Bank v. Bates, 120 U.S. 556, 7 S.Ct. 679; Tregear v. Etiwanda W. Co., 76 Cal. 538, 9 Am. St. Rep. 245, 18 P. 658; Dodge v. Smith, 5 Kan. App. 742, 46 P. 990; Chicago Title etc. Co. v. O'Marr, 18 Mont. 568, 46 P. 810, 47 P. 4; Armstrong v. Ford, 10 Wash. 64, 38 P. 867; Wm. B. Grimes etc. Co. v. McKee, 51 Kan. 704, 33 P. 594.) Such mortgages are not void as to any subsequent purchaser who takes them with notice; and these subsequent mortgagees all had notice. For the plaintiff had a right to take possession under that clause and that possession was good against any person occupying with no better right than they themselves had. (Bank of Woodland v. Duncan, 117 Cal. 412, 49 P. 414; Park v. Parsons, 10 Utah 330, 37 P. 571; First Nat. Bank of Okosche v. Teat, 4 Okla. 454, 46 P. 474; Whittemore v. Fisher, 132 Ill. 243, 24 N.E. 636.) Effect of recording and not filing. The statute of Idaho in the Revised Statutes, page 181, requires these chattel mortgages to be recorded. It is said that in 1891 the statute was changed providing for filing and leaving the document with the recorder. But as above stated, each of the subsequent mortgagees had absolute notice. (See pp. 168, 214, 221.) No record or filing was necessary against the parties or subsequent purchasers or mortgagees having notice. (Fette v. Lane (Cal.), 37 P. 914; American Lead Pencil Co. v. Champion, 57 Kan. 352, 46 P. 696; W. B. Grimes Dry Goods Co. v. McKee, 51 Kan. 704, 33 P. 594.) Marshall Field & Co. were estopped to deny the validity of the prior mortgage which was mentioned in their mortgage and contracted to be paid therein. (Dodge v. Smith, 5 Kan. App. 742, 46 P. 991; Leland v. Collier, 34 Mich. 421.)

Kingsbury & Parsons, for Respondents.

The act of March 13, 1891, page 181, First Session Laws, requires that the mortgage be filed in the office of the county recorder, "to be kept there for the inspection of all persons interested; . . . . provided, that if the mortgagee receive and retain actual possession of the property mortgaged, he may omit the filing of his mortgage during the continuance of such actual possession." The courts have no right, no power, to extend a statute so as to dispense with any of the conditions the legislature has seen fit to impose. If we should once begin an attempt to relieve a party in cases of hardship, the law would be in danger of being frittered away and its benefits be entirely lost to the community. Statutes of a similar character in other states have been so construed as to hold parties to a strict performance of the conditions on which the validity of the mortgage depends. (Gassner v. Patterson, 23 Cal. 301, citing Chenyworth v. Daily, 7 Ind. 284; Divver v. McLaughlin, 2 Wend. 596, 20 Am. Dec. 655, and note; Clayborn v. Hill, 1 Wash. (Va.) 177, 1 Am. Dec. 452; Meyer v. Gorham, 5 Cal. 322; Dufficy v. Shields, 63 Cal. 332; Stewart v. Platt, 101 U.S. 738.) A chattel mortgage, where possession is not given, is void as against mortgagor's creditors if not put on file in the proper office. (Wallen v. Rossman, 45 Mich. 333, 7 N.W. 901; Ward v. Watson, 24 Neb. 595, 39 N.W. 615.)

A. F. Montandon, for Interveners.

Interveners had a right to follow the mortgaged goods wherever found, and if plaintiffs converted them to interveners' damage, they should account and the judgment should be affirmed. The insolvency of the Alturas Commercial Company is clearly demonstrated. Plaintiffs are liable for any prejudicial act of theirs to interveners as subsequent mortgagees. (Coffey on Chattel Mortgages, sec. 1046; Russell v. Lau, 30 Neb. 805, 47 N.W. 193.) In the light of the facts plaintiffs' mortgage is void in law and in fact as to the Simmons Hardware Company and the Standard Oil Company, defendants in this cause. (McDonald v. Swisher, 57 Kan. 205, 45 P. 593, 595.)

Action by Wells, Fargo & Co. and others against the Alturas Commercial Company and others. T. S. Merchant & Co. and others intervene. Judgment for defendants, and plaintiffs appeal. Affirmed as to certain defendants, and reversed as to others.

On September 15, 1894, the Alturas Commercial Company, a corporation doing business at Hailey, Alturas county, Idaho executed a chattel mortgage upon a stock of general merchandise, fixtures, and other chattels in said town of Hailey to the plaintiffs Wells, Fargo & Co. and Fred J Keisel & Co., the appellants here, to secure a note of that date to Wells, Fargo & Co. of $ 6,806.63, and one note of same date to Fred J. Keisel & Co. for $ 3,472.65, both notes due thirty days after said date. Said mortgage was recorded in the office of the county recorder in and for Alturas county on the eighteenth day of September, 1894, but was not filed of record in said county recorder's office until the thirty-first day of October, 1894. Said mortgage provided that the mortgagor might remain in possession of the mortgaged property, and sell same in the usual course or manner of trade, as the agent of the mortgagees, applying the proceeds of the sales, less the expense of making them, to the payment of said notes. On October 16, 1894, the Alturas Commercial Company executed another mortgage on the same chattels to the defendants Marshall Field & Co. to secure a note dated October 15, 1894, for $ 1,761.44, due thirty days after date, and in this mortgage it is recited as follows: "And after a prior lien and chattel mortgage on said stock of goods, made by said first parties on the fifteenth day of September, 1894, to Wells, Fargo & Co. and Fred J. Keisel & Co., has been satisfied, the said first party may sell, and continue to sell, said goods, wares, and merchandise in the usual course and manner of trade as the agent of said second parties, and apply the proceeds of such sales, less the expense of making them, to the payment of said note"--which mortgage was recorded in said county recorder's office October 16, 1894, but not filed of record until November 1, 1894. On October 23, 1894, said Alturas Commercial Company executed a mortgage on the same chattels to the interveners, Henry W. King & Co., Thatcher Milling & Elevator Company, and the Siegel Clothing Company, to secure notes due sixty days after said date for the sums of $ 1,058, $ 417.66, and $ 783, respectively, which mortgage recited that it was subject, "however, to valid prior rights wherever the same may be found." This mortgage provided that the mortgagor might retain said chattels, and "sell said goods, wares, etc., in the usual course of trade, as the agent of said mortgagees, and apply the proceeds thereof in payment of said notes, though neither of them may then be due; mortgagees, and each of them, to pay to mortgagors out of said proceeds, and not otherwise, the necessary expenses of making such sales." This mortgage was filed of record in said county recorder's office October 24, 1894, at 12:25 o'clock P. M. On October 23, 1894, said Alturas Commercial Company executed a mortgage upon said chattels to the intervener, the California Powder Works, a corporation, to secure a note of said date for the sum of $ 1,800, due sixty days after date, "subject to prior valid rights, wherever the same may be found," which mortgage provided that the mortgagor might remain in possession, and sell the chattels in the usual course of trade, applying the proceeds, less expenses of sale, on said note, and which mortgage was filed of record in the office of said county recorder October 24, 1894, at 12:20 o'clock P. M. On October 26, 1894, said Alturas Commercial Company executed to the intervener T. S. Merchant a chattel mortgage on said chattels to secure a note of that date for $ 740, "subject to prior valid rights,...