Opinion
No. 27916.
November 21, 1950.
APPEAL FROM THE CIRCUIT COURT, MARION COUNTY, ROY B. MERIWETHER, J.
Lewis, Rice, Tucker, Allen Chubb, John Torrey Berger, F. Wm. McCalpin, St. Louis, Carstarphen Harvey, Hannibal, for appellants.
Craig Hiller, Kahoka, Rendlen Rendlen, Hannibal, for respondent.
This action in replevin was brought in the Circuit Court of Marion County, Missouri, on January 6, 1949, by respondent Exchange Bank of Kahoka, hereinafter referred to as plaintiff, against Marshall Bash, Jr., and Missouri-Illinois Tractor and Equipment Company to recover possession of certain personal property described in plaintiff's petition, which will be referred to later. An answer was filed by Missouri-Illinois Tractor and Equipment Company, hereinafter referred to as Equipment Company, to which plaintiff filed a reply. Upon the issues joined a trial before the court without a jury resulted in a finding and judgment in favor of plaintiff for possession of "One Adams Motor Grader Model 305, Serial No. 416" which by stipulation of the parties had been converted into cash in the sum of $7500. Said sum was deposited in the registry of the court to await the decision of the court on the right of possession thereof.
Defendant Equipment Company filed a motion for a new trial and requested that the case be reopened for additional testimony. The motion and request were overruled by the court. Thereafter said defendant in due time filed notice of appeal and took the necessary steps to have the cause transferred to this court.
It appears from the evidence that some time prior to May 18, 1948, defendant Equipment Company sold to defendant Marshall Bash, Jr., an Adams Motor Grader Model 305 Serial 416 and delivered the motor grader to Bash at the time of the sale. On May 18, 1948, defendant Bash borrowed $7500 from the plaintiff Bank and executed a note in that amount payable to the order of the Bank. The note was introduced in evidence as plaintiff's Exhibit 1. It contained provisions wherein Bash, the maker, agreed to pay all expenses of collection including ten percent attorney's fee if the note should be placed in the hands of an attorney for collection. Said note was secured by a chattel mortgage executed by defendant Bash before a notary public. The mortgage was dated May 18, 1948, and filed in the office of the Recorder of Deeds of Clark County, Missouri, on May 21, 1948. The chattel mortgage was introduced in evidence as plaintiff's Exhibit 2. In said chattel mortgage defendant Bash stated that he was a resident of Clark County, Missouri, and that the chattel mortgage was given on "1-Adams Motor Grader, Model #315 1-HC W11 Tractor, Engine #U1129760, Serial #819 belonging to me or us and now located at Jackson Township being all the property of the above description located at said place."
Sometime after May 18, 1948, but before June 21, 1948, Mr. John H. Degitz, a representative of defendant Equipment Company, went to the office of the Recorder of Deeds of Clark County, where he examined the chattel mortgage which had been given to plaintiff by defendant Bash, and which had been filed in said Recorder's office. On June 21, 1948, defendant Bash executed and delivered to defendant Equipment Company a chattel mortgage in the sum of $7272.43 representing the balance of the purchase price due on the Adams Motor Grader which had been sold to him earlier in the year by the defendant Equipment Company. This last mentioned chattel mortgage was filed in the office of the Recorder of Deeds of Clark County, Missouri, on June 22, 1948, and described the property subject to the lien thereof as "1 Adams Motor Grader Model 305 Serial 416." It was introduced in evidence as plaintiff's Exhibit No. 5.
Mr. Degitz, the representative of defendant Equipment Company, testified that prior to the execution by Marshall Bash, Jr., of the last above named chattel mortgage he inquired of Bash as to whether there was any encumbrance on the equipment in question and that Bash told him "there were no mortgage or encumbrance of any kind against the Adams 305."
The evidence further shows that Mr. Degitz as representative of defendant Equipment Company, after examining the records at the office of the Recorder of Deeds of Clark County, then went to the office of plaintiff Bank where he conferred with Robert G. Hiller, the president of the bank; that during the conversation Degitz stated to Hiller that the Equipment Company's mortgage on the equipment in question was a second mortgage. There was also testimony to the effect that during the consultation between Degitz and Hiller, Degitz told Hiller that Bash had said that the Model 315 Adams Grader was in Burlington, Iowa, and that Hiller said: "I ought to do something but I am not too worried, I think it will come out all right."
It appears from the evidence that about November 22, 1948, Degitz and Hiller conferred about their respective claims against Bash and prepared a document which is referred to in the testimony as an assignment. The assignment was prepared under the joint supervision of Degitz and Hiller and was presented to Bash for his signature by Degitz and Hiller. Bash signed the assignment and it was introduced in evidence as plaintiff's Exhibit 3. It was dated November 22, 1948, and addressed to Missouri State Highway Department, Jefferson City, Missouri. The part thereof pertinent to our inquiry is as follows:
"I, the undersigned Mashall Bash, hereby direct and authorize that any and all payments due me from the State of Missouri under and by virtue of the above projects, or any other projects for which I am entitled to payment, shall be paid as follows:
"1st, to the Exchange Bank of Kahoka, of Kahoka, Missouri, until the sum of Seven Thousand Seven Hundred Thirty 00/100 Dollars ($7,730.00) shall have been paid, together with interest at the rate of 6% per annum from this date; and,
"2nd, to Missouri Illinois Tractor and Equipment Company, of 510 Withers Avenue, St. Louis, Missouri, until the sum of Five Thousand Five Hundred Seventeen 10/100 Dollars ($5,517.10) shall have been paid, together with interest at the rate of 6% per annum from this date."
The assignment made by Bash was signed by Degitz and by Hiller as witnesses. The evidence shows that Bash had been doing road work on a supplemental highway for the Missouri State Highway Department in Clark County at a place not far from his residence in Jackson Township.
It appears that shortly after the above assignment was executed by Bash defendant Equipment Company through its representatives went to Clark County, Missouri, and without notice to Bash or to the plaintiff Bank and without any legal process took possession of the Adams Motor Grader and removed it from Clark County, Missouri, to the Equipment Company's place of business in Marion County, Missouri. The defendant Equipment Company retained possession of said grader until about January 6, 1949, when plaintiff Bank located it at the place of business of the defendant Equipment Company in West Quincy, Marion County, Missouri.
The Bank had filed a suit in Clark County on the mortgage it held, but the Sheriff of Clark County had not been able to find the described property in that County and thereafter the Bank filed this action in replevin in the Circuit Court of Marion County, Missouri. The Sheriff of Marion County, Missouri, went to the place of business of the defendant Equipment Company in Marion County and took possession of the Adams Motor Grader under the writ of replevin. By agreement of all the parties the equipment was allowed to remain at the place of business of the defendant Equipment Company in West Quincy, Marion County, Missouri, and thereafter the parties agreed by stipulation in writing that the Adams Motor Grader should be sold and that the $7500, proceeds of the sale of said equipment, should be deposited in the registry of the Circuit Court of Marion County, Missouri, in lieu of the Adams Motor Grader to await the final judgment of the Circuit Court in this replevin suit. The stipulation and agreement of the parties that the motor grader should be sold, was introduced in evidence as plaintiff's Exhibit 4. Said stipulation contained the following statement of the purpose thereof: "The purpose of this stipulation is to authorize the equipment to be sold and convert it to money and in no wise change the rights of the parties in the action pending." The property in question was sold and the amount of the proceeds of the sale, namely, $7500 was deposited in court in accordance with the stipulation.
It is conceded that the chattel mortgage given by Bash to the plaintiff Bank preceded the chattel mortgage given to the defendant Equipment Company by more than a month. It is not disputed that the mortgage given to the Bank was filed in the office of the Recorder of Deeds of Clark County on May 21, 1948, which was one month before Bash executed the mortgage to the defendant Equipment Company. Notwithstanding this clear priority of the mortgage given to the Bank over the mortgage given to the defendant Equipment Company, in point of time, said defendant contends that possession of the fund deposited in court should be adjudged in its favor because the motor grader was correctly described in the mortgage to defendant Equipment Company, whereas the description given in the mortgage to the Bank was incorrect. The description of the motor grader in the mortgage to plaintiff Bank was "1 Adams Motor Grader, Model #315" followed by a description of a tractor engine, after which the description concluded: "belonging to me or us and now located at Jackson Township being all the property of the above description located at said place." It is admitted that the number 315 given in the mortgage to the Bank was incorrect and that the description of the motor grader later given in the mortgage to the Equipment Company correctly described the grader as follows: "1 Adams Motor Grader, Model 305, Serial 416."
Defendant Equipment Company bases its claim on the contention that the description in the mortgage to the Bank was false, insufficient and void for uncertainty, and that the description in the mortgage given to said defendant was correct. In making this contention, defendant fails to give proper consideration to the language in the mortgage given to the Bank wherein, referring to the property in question, Bash used the words: "belonging to me or us and now located at Jackson Township being all the property of the above description located at such place." The above quoted language is, as we view it, under all the evidence, a more important element of the description of the property involved than the model number or the serial number of the motor grader.
The evidence shows without dispute that at the time Bash executed the mortgage to the Bank he owned only one Adams Motor Grader and that it was in Jackson Township, Clark County, where he was doing road work and that he resided in that County and Township. Bash testified that the mortgage he gave to the Bank and the one he gave to the Equipment Company were both on the same machine. We are of the opinion that the trial court, in rendering judgment in favor of the plaintiff Bank, reached the only correct conclusion permissible under all the evidence. The mere fact that a mistake was made in giving the model number of the grader in the mortgage given to the Bank and the omission of the serial number cannot reasonably be held to render the description of the property insufficient and void in view of the other elements of identification in the mortgage and all the other evidence in the case.
It must be remembered that the defendant Equipment Company itself sold the motor grader in question to Bash and that said company through its representatives was thoroughly familiar with the serial and model numbers used by the Adams Motor Grader Company. The testimony of Mr. O'Dell, one of defendant Equipment Company's representatives was that when he saw the number 315 in the mortgage given to the Bank he knew that it was a mistake because he had never heard of a motor grader numbered 315 and that he knew the Adams Company never made a motor grader numbered 315.
Furthermore, the assignment prepared by Hiller, representing the Bank, and Degitz, representing the Equipment Company, which they both presented to Bash to sign, specifically provided that all payments due to Bash from the State of Missouri should be paid in the following order: "1st, to the Exchange Bank of Kahoka, of Kahoka, Missouri, until the sum of Seven Thousand Seven Hundred Thirty 00/100 Dollars ($7,730.00) shall have been paid, together with interest * * * and, 2nd, to Missouri Illinois Tractor and Equipment Company * * * until the sum of Five Thousand Five Hundred Seventeen 10/100 Dollars ($5,517.10) shall have been paid, * * *." This assignment shows clearly and positively that Degitz as the representative of the Equipment Company regarded the Bank's claim as having priority over the defendant Equipment Company's claim. We agree with the findings of facts made by the trial judge to the effect that the grader claimed by plaintiff Bank under its chattel mortgage, the grader described in the chattel mortgage given by Bash to the defendant Equipment Company, the grader involved in the present replevin suit which was taken by the Sheriff into his possession, and the grader which was by the stipulation of the parties sold and the proceeds thereof deposited in the registry of the court are all one and the same grader.
We agree with defendant Equipment Company's statement of the general rule relating to chattel mortgages which is that a description of property in such a mortgage to be sufficient against a third party must be definite enough to enable him, aided by inquiries which the instrument itself suggests, to identify the property. However, we believe that the application of that very rule to the evidence in the case at bar leads inescapably to the conclusion that the defendant Equipment Company is not entitled to prevail in this action because it failed to make the inquiries which, in the exercise of ordinary care and common prudence, it should have made. Said defendant's knowledge of and familiarity with the model and serial numbers of Adams Motor Graders, coupled with the inquiries suggested by the mortgage itself, such as the residence of the owner Bash and the location of the Adams Motor Grader in Jackson Township, should have reasonably prompted it to inquire further than it did. A very simple investigation by said defendant would have disclosed that Bash owned only one Adams Motor Grader which was located in Jackson Township, Clark County, and that it was already under mortgage to the Bank even though a mistake had been made in giving the model number in such mortgage. The general rule, supra, relied on by defendant Equipment Company did not justify said defendant in closing its eyes to information easily and readily available to it concerning the true status of the plaintiff Bank in relation to the mortgage it held on the Adams Motor Grader. In other words, the representatives of the Equipment Company could not, by closing their eyes to an important part of the description in the mortgage given to the Bank and by failing to make proper inquiry, change what was clearly intended by the mortgagor to be a second mortgage into a first mortgage.
The Equipment Company's own representatives testified that they knew when they examined the record of the chattel mortgage given to the Bank by Bash that they had never heard of an Adams Motor Grader having a model number 315 and must be held to have known that such number appearing in said mortgage was necessarily an error. This error on the face of said mortgage, which was obvious to the representatives of said defendant because of their familiarity with the model numbers of Adams Motor Graders, should have prompted them to make a further inquiry. The defendant Equipment Company did not make such further inquiry and is, therefore, not in a position to urge that its mortgage has priority over the mortgage held by the plaintiff Bank.
In none of the cases cited by defendant Equipment Company in support of its contention were the facts similar to those in the case at bar. Cases dealing with descriptions in chattel mortgages on automobiles, holding that factory serial and model numbers must be accurate in order to give notice to third persons, are not applicable to the case at bar. We know of no statute in Missouri, and said defendant has not pointed to any statute, which requires the model number and serial number of road making machinery to be registered with particularity such as is required by the rules and forms made under authority of the statutes governing the sale, transfer, etc., of automobiles. See Section 8382, R.S.Mo. 1939, Mo.R.S.A. § 8382, and Laws of Mo. 1947, Section 8382, p. 387 et seq., Mo.R.S.A. Cumulative Annual Pocket Part Section 8382. The decisions of our courts dealing with sales and transfers of automobiles are based upon statutes which require strict compliance therewith and with the rules and forms made by the Motor Vehicle Department and Director of Revenue of the State of Missouri under such statutes. Such statutes and rules were deemed necessary by the Legislature to protect the public from the evergrowing traffic in stolen automobiles. Those statutes and rules have no application to heavy and cumbersome road making machinery such as is involved in this case and which do not operate on the highways of the state as do automobiles.
The trial judge in his findings of facts went to the very heart of this case when he found and declared:
"That Degitz, who had been with the Missouri-Illinois Tractor Equipment Co. for several years testified that he had never heard of an Adams Motor Grader Model 315. He further testified that he did not read the portion of the description in plaintiff's chattel mortgage which read `belonging to me or us and now located at Jackson Township, being all of the property of the above description located at said place.'
"Defendant Missouri-Illinois Tractor Equipment Co., having through its representative, observed plaintiff's chattel mortgage on file and knowing that it described an Adams Motor Grader at Jackson Township and being experienced in road grading machinery and having never before heard of an Adams Motor Grader Model 315, was morally and legally bound to adequately investigate. Degitz claims he did, after getting information from records, make inquiry from the mortgagor Bash. Degitz' duty extended beyond being satisfied with a mere model number of which he had never heard. It was his duty, before placing a chattel mortgage on file, to inquire of some representative of the bank, which the Court finds that he did not do. Degitz' failure in this respect can be accounted for on the theory that the Missouri-Illinois Tractor Equipment Co. was not then making a new loan but merely attempting to get security for a back unsecured debt due by Bash."
Our own investigation of all the evidence in the record herein leads us to the same conclusion as that reached by the trial judge.
In Williamson v. Bank of Curryville, 69 Mo.App. 368, the question of the sufficiency of a description of certain steers was involved. The appellant therein contended that the mortgage was void for want of a sufficient description. In disposing of the appellant's contention the court said: "`That is certain which can be made certain.' * * * Wylie had no other steers like these, at the time the mortgage was given. * * * No great particularity is required if, with the mortgage in hand, one, upon inquiry, can, from the mortgage, identify the property, the description is sufficient. Burns v. Harris, 66 Ind. 536; Knapp v. Deitz, 64 Wis. 31 [24 N.W. 471]; Estes v. Springer, 47 Mo.App. 99; Campbell v. Allen, 38 Mo.App. 27; State ex rel. [Pape Bros. Moulding Co.] v. Althaus, 60 Mo.App. 122; Lafayette County Bank v. Metcalf, 29 Mo.App. 384."
In 14 C.J.S., Chattel Mortgages, § 57c, p. 664, the general rule is stated as follows: "In the absence of statutory requirements to the contrary, a description designating the subject matter as all the mortgagor's property of a certain kind in a specified locality or in his possession is generally considered sufficient as against third persons". In the same authority it is further stated that: "An accurate statement of the location and possession of the property may cure an otherwise insufficient description and is controlling." 14 C.J.S., Chattel Mortgages, § 64c, p. 673.
It will be recalled that the mortgage given to plaintiff Bank by Bash, in addition to the Adams Motor Grader, also covered one HC W11 Tractor Engine No. U11-29760 Serial No. 819. In entering its judgment the trial court ordered said tractor to be sold under the chattel mortgage and the proceeds thereof to be applied to the payment of the note in question with interest and attorneys' fees. Such sale and application of the proceeds were ordered to be made prior to the time of the application of the $7500 held in the registry of the court toward payment of the balance due on said note and any remaining amount was ordered to be delivered to the defendant Equipment Company to the extent of the amount due upon the note secured by the second chattel mortgage owned by said defendant.
We find no error in the proceedings of the trial court and the judgment should be affirmed. It is so ordered.
ANDERSON, P. J., and BENNICK, J., concur.