Wertheimer v. Shultice

• Decision Date: 16 December 1926
• Docket Number: No. 3-284.,3-284.
• Citation: 202 Iowa 1140,211 N.W. 568
• Parties: WERTHEIMER & DEGEN v. SHULTICE.
• Court: Iowa Supreme Court

202 Iowa 1140

211 N.W. 568

WERTHEIMER & DEGEN

v.SHULTICE.

No. 3-284.

Supreme Court of Iowa.

Dec. 16, 1926.

Appeal from District Court, Marshall County; B. F. Cummings, Judge.

Replevin by mortgagee against subsequent purchaser of cattle. From judgment on directed verdict in favor of the defendant, the plaintiff appeals. Reversed.

Evans and Faville, JJ., dissenting.Henry C. Monsky, of Omaha, Neb., F. E. Northup, of Marshalltown, and J. G. Cooper, of Toledo, for appellant.

E. N. Farber, of Marshalltown, and George D. McIlrath, of Kansas City, Mo., for appellee.

MORLING, J.

[1] I. The original petition alleged that the plaintiffs were copartners. An amendment to the petition charged collusion to defraud. A substituted petition alleged that the defendant was a corporation. Because of these matters, defendant says that plaintiffs are not the real parties in interest and have abandoned their rights under the mortgage. These claims are without merit.

[2][3] II. Defendant claims that the mortgage was executed in Nebraska, and that its validity must be determined by the laws of Nebraska. He pleads but has not proved a Nebraska statute declaring every mortgage not followed by change of possession to be absolutely void, as against subsequent purchasers in good faith, unless filed as therein required. The statute, as pleaded, has no reference to the rights of the mortgagor and mortgagee as between themselves, but to those of third persons subsequently dealing with the mortgagor (and to creditors). The property was sold for removal to and possession and enjoyment by the mortgagor in Tama county, Iowa, where the mortgagor had his domicile. Possible subsequent dealings in Iowa, concerning the property while there and with the owner living there, were in the contemplation of the parties. The intention was to create and preserve a lien that would be good under the laws of Iowa. The dealings under consideration had no reference to the Nebraska laws. We think the case is governed by the recording laws of Iowa, and not those of Nebraska. Flora v. Julesburg Motor Co., 69 Colo. 238, 193 P. 545;Stitt v. Spengel Co., 58 Colo. 559, 146 P. 770;Grady Trading Co. v. Ireland, 29 Ga. App. 172, 114 S. E. 86; 11 C. J. 531; 12 C. J. 450. See Union Securities Co. v. Adams (Wyo.) 236 P. 513.

[4][5][6][7][8] III. The description of the mortgaged property is as follows:

“The following described live stock and chattels, to wit:

Thirty-six (36) head of 2 year old dehorned Whiteface and Shorthorn steers, average weight about 768 pounds, all branded “S,” called Wiggling S, back of the left shoulder, also one thousand (1000) bushels of corn to be fed the above cattle, they being all of this description now owned or controlled by me and are to be kept on good and sufficient feed and sustenance during the life of this mortgage on my place located about 3 miles south of Garland,Iowa, in Tama county, the above-mentioned cattle being free of all incumbrance, and all natural increase of said live stock.

The above-described live stock being all of the kind now owned by me, and are in my undisputed possession, free from all liens and incumbrances, and kept on my premises on section No. as above, in township No._____, range No._____, in Tama county, Iowa, being the live stock purchased this 21st day of March, A. D. 1923, of Wertheimer & Degen.”

The mortgagor agreed to “at once put” them on full feed.

Weise resided in Tama county, Iowa, and purchased the cattle from the mortgagee at Omaha, where they were at the time, and signed the note and mortgage there. The mortgage is dated and acknowledged March 21, 1923. The mortgage was recorded in Tama county March 22, 1923. The cattle were shipped to Weise at Montour, in Tama county, and arrived there March 23, 1923. Weise did not receipt for them to the railroad company. They were reshipped the same date to Plumb Bros. at Marshalltown. The evidence tends to show that Weise sold them to Plumb, and McIlrath sold them to defendant on April 1, 1923. The only evidence on the subject of whether Plumb sold these cattle to McIlrath is McIlrath's evidence:

“I don't know whether I sold him [defendant] cattle that I obtained from Plumb Bros. or not. I bought some cattle from Plumb Bros. prior to the sale to William Shultice. * * * The cattle I sold Shultice might have been obtained from Plumb Bros.”

Plaintiff replevied the cattle October 4, 1923, in Marshall county. There is no town of Garland in Tama county. Weise lived three miles south of Garwin in Tama county. There is evidence that defendant's purchase from McIlrath was for cash. No question of the burden of proof is raised, nor that the description is insufficient as between the parties. Kusser v. Sioux City Co., 199 Iowa, 200, 200 N. W. 404.

It must be held, upon the evidence, that Weise was the owner of the cattle. Delivery to the railroad company was delivery to him. He was the owner and in possession. The mortgage to the plaintiff was good as against Weise and against trespassers and against purchasers from Weise with notice. The defendant can claim no benefit under the recording law, unless he shows that he is a purchaser or subpurchaser from Weise. It is only as “against existing creditors or subsequent purchasers without notice” that an unrecorded mortgage is invalid for want of record. Section 10015. Unless the cattle in question were sold by Plumb to McIlrath, McIlrath obtained no title, conveyed none to defendant and he has no standing to contest the mortgage for want of record. Elliott v. Washington, 137 Mo. App. 526, 119 S. W. 42;Nussbaum v. Waterman Co., 9 Ga. App. 56, 70 S. E. 259;Couch v. Holmes, 151 Ala. 503, 43 So. 858. The evidence does not show that McIlrath, and therefore defendant, did acquire his claim of title to the cattle through Plumb and Weise, and therefore defendant was not in position to invoke the recording law and to have a verdict directed in his favor.

[9][10][11] We are of the opinion, further, that the question of identity of the cattle and the sufficiency of the description was for the jury, and not for the court to determine. The plaintiffs had the right to sell the cattle to Weise at Omaha and to take back a chattel mortgage upon them for the purchase price. Except for the recording law, they were under no duty to give notice of their lien.

“Lord Kames * * * observes that when notions of property were slight, a bona fide purchase of stolen goods gave a good title against the original owner; but that in the progress of society, property acquired such stability and energy as to affect the subject wherever found, and to exclude even an honest purchaser, when the title of his vendor was discovered to be defective. It was also a principle, in the English common law, that a sale out of market-overt did not change the property against the rightful owner; * * * I know of no usage or regulation within this state, no Saxon institution of markets-overt which controls or interferes with the application of the common law. The purchase by the defendants did not therefore, of itself, and without reference to the title of the vendor, give them an indefeasible right to the goods in question.” Per Chief Justice Kent in Wheelwright v. Depeyster, 1 Johns. (N. Y.) 471, 480, 3 Am. Dec. 345, 347.

[12] The defendant is in no better position than he would have been if the sale by plaintiff to Weise had been made at the stockyards at Montour, instead of at the stockyards in Omaha, and if the agreement to keep the cattle on good and sufficient feed on Weise's place, in Tama county, had been made at Montour, instead of at Omaha. In either case, the recording law required the mortgage to be recorded only in the county of the residence of the mortgagor.

[13] If the mortgage was sufficient in contents and execution and recorded in the county of Weise's residence, it is immaterial that the defendant did not know that Weise was a prior owner of the cattle. He must deraign his title through Weise, and he is affected with notice of the instrument, executed by Weise, properly recorded in the county of Weise's residence. Except for the statute, no notice would be required. The statute does not require actual notice. It requires only constructive notice by recording. It is said in Thomas v. Kennedy, 24 Iowa, 397, 407, 95 Am. Dec. 740:

“* * * The true doctrine is that the purchaser is bound to know or take notice of the condition of the record title, up to the time of the sale. And if actual notice, on the day and at the time of sale, would have affected him, the same is true of instruments filed for record, and which become by that act constructive notice.”

In Keefe v. Cropper, 196 Iowa, 1179, 1183, 194 N. W. 305, 307, it is said:

“Did the recorded mortgage put the purchaser on inquiry? If a person is put on inquiry, he is bound to investigate. In law, he knows all that he could ascertain by an inquiry. An execution purchaser is put on inquiry by an instrument properly indexed and recorded by the recitals or matters therein that would put a reasonable person upon inquiry, and he is bound to take notice of all facts that he might have learned by pursuing the path thus indicated. Thomas v. Kennedy, 24 Iowa, 397 ;Loser v. Plainfield Sav. Bank, 149 Iowa, 672 [128 N. W. 1101, 31 L. R. A. (N. S.) 1112].”

In Loser v. Savings Bank, 149 Iowa, 672, 676, 128 N. W. 1101, 1103 (31 L. R. A. [N. S.] 1112), it is said:

“It may, however, be taken as well settled that an instrument properly made of record is notice to the world not only of the facts and claims therein expressly set forth, but also of all other material facts which an inquiry thereby reasonably suggested would have developed and that such notice is not affected or avoided by variations in names which do not mislead a subsequent purchaser, or are of such character as ought not to mislead a purchaser of ordinary prudence and intelligence. * * * ‘A purchaser is charged with notice of every fact shown by...