Wertheimer Degen v. Shultice

211 N.W. 568, 202 Iowa 1140

• Court: Supreme Court of Iowa
• Decided: December 16, 1926
• Status: Published

Opinions

MorliNg, J.

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.

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 *° 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 he 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 Pac. 545) ; Stitt v. Spengel House F. Co., 58 Colo. 559 (146 Pac. 770); Grady Trading Co. v. Ireland, 29 Ga. App. 172 (114 S. E. 86) ; 11 Corpus Juris 531; 12 Corpus Juris 450. See Union Sec. Co. v. Adams, 33 Wyo. 45 (236 Pac. 513).

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 (1,000) 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, the mortgagor, resided in Tama County, Iowa, and purchased the cattle from the mortgagees 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 Brothers at Marshalltown. . The evidence tends to show that Weise sold them to Plumb, and Mcllrath sold them to defendant on April 1, 1923. The only evidence on the subject of whether Plumb sold these cattle to Mcllrath is Mcllrath’s evidence:

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

Plaintiffs replevined 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 Mcllrath 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 H. & M. Co., 199 Iowa 200.

It must be held, upon the evidence, that Weise was the OAvner of the cattle. Delivery to the railroad company Avas delivery to him. He was the owner, and in possession. The mortgage to the plaintiffs Avas 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 AA'ithout notice” that an unrecorded mortgage is invalid for want of record. Section 10015, Code of 1924. Unless the cattle in question were sold by Plumb to Mcllrath, Mcllrath obtained no title, and 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 Mcllrath, 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 Mav and to have a verdict directed in his favor.

We are of the opinion further that the question of identity of the cattle and of 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 Karnes * * * 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, 478 ( 3 Am. Dec. 345, 347).

The defendant is in no better position than he would have been if the sale by plaintiffs 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. 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:

* * 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 instru ments filed for record, and which become by that act constructive notice. ’ ’

In Keefe v. Cropper, 196 Iowa 1179, 1183, 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.”

In Loser v. Plainfield Sav. Bank, 149 Iowa 672, 676, 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 hot 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 the records, and is presumed to know every other fact which examination suggested by the record would have disclosed. ’ * * * 1 Whatever is sufficient to put a purchaser on a chain of inquiry is sufficient to charge him with whatever an ordinary diligent search would have disclosed.’ ”

In 2 Pomeroy’s Equity Jurisprudence (4th Ed.), Section 594, it is said:

“ * * * notice may, I think, be correctly defined as the information concerning a fact actually communicated to a party by an authorized person, or actually derived by him from a proper source, or else presumed by law to have been acquired by him, which information is regarded as equivalent in its legal effects to full knowledge of the fact, .and to which the law attributes the same consequences as would be imputed to knowledge. * * * Although an actual knowledge is not necessarily assumed to result, yet, in many instances, as will be seen, the party is not permitted to show this fact, but the same consequences follow with respect to his rights and interests as though he had obtained real knowledge. * * Notice is either actual or constructive; but the legal effect of each kind, when established, is exactly the same. ’ ’

In Grandison v. National Bank, 145 C. C. A. 620, 629 (231 Fed. 800, 809), quoting from Coder v. McPherson, 82 C. C. A. 99 (152 Fed. 951), it is said:

“ ‘Notice of facts which would incite a man of ordinary prudence to an inquiry under similar circumstances is notice of all the facts which a reasonably diligent inquiry would disclose. ’ * * * No principle of law is better settled or more universally accepted. ’ ’

The rule governing the sufficiency of the description in a chattel mortgage laid down in Smith & Co. v. McLean, 24 Iowa 322, 332, and later cases, is: ■

“That description which will enable third persons, aided by inquiries which the instrument itself indicates and directs, to identify the property * *

Defendant’s contention is that he had the right to rely upon every statement in the description; that “a misstatement in an essential element of the description that is misleading or confusing is always fatal. * * * The chattel mortgage definitely stated that the cattle were then located on a certain farm. That was where it stated they could be found. The cattle levied upon not only were not on that farm at that time, but they never were there. * * * The property levied upon never was in ‘the undisputed possession, free from all liens and incumbrances,’ of Mr. Weise. * *' He never for one moment ever had any such possession. * x‘ * while the cattle were in the hands of the railroad company, the said company had a lien upon them for their freight, and the shippers at any rate had the right to stop the shipment in transit for any good cause. * * * If we take out of the description what they concede to be misdescriptions as to the cattle levied upon, then the mortgage is entirely insufficient. It would be absolutely impossible for anyone to locate the cattle from anything remaining.” .

The description gives the age, breed, sex, average weight, and brand of the cattle, and states that they were dehorned. This, of course, while correct as far as it goes, would not be sufficient: but the entire description must be considered. Packers Nat. Bank v. Chicago, M. & St. P. R. Co., 114 Iowa 621. Errors in description are not necessarily fatal.

“Tbe correct part of the description in this mortgage-is sufficient, and, even without the actual notice had by the plaintiff, the false part of the statement will be rejected, and the mortgage held good. Frick v. Fritz, 115 Iowa 438, 445.

See, also, King v. Howell, 94 Iowa 208; Jones v. Workman, 65 Wis. 269 (27 N. W. 158). Erroneous location may be rejected as surplusage. Idem.; Spaulding v. Mozier, 57 Ill. 148; 11 Corpus Juris 465, and cases post. If the description is misleading, the record is not notice. Packers Nat. Bank v. Chicago, M. & St. P. R. Co., 114 Iowa 621, and cases below. The description in the mortgage on its face is sufficient in law. Whether, on the facts, it is sufficient to put the purchaser on inquiry may, in the further progress of the case, be a question for the jury. Livingston v. Stevens, 122 Iowa 62; Packers Nat. Bank v. Chicago, M. & St. P. R. Co., 114 Iowa 621; Frick v. Fritz, 115 Iowa 488; Peterson v. Foli, 67 Iowa 402. The question here is whether the cattle could have been identified from the description contained in the mortgage, and that, we think, on the record, is a question of fact. Idem.; Peterson v. Foli, 67 Iowa 402; Nusshaum v. Waterman & Co., 9 Ga. App. 56 (70 S. E. 259). The mortgage bears at the head the words, ‘ ‘ The Stock Yards National Bank, South Omaha, Nebraska.” The mortgagor is stated to be Fred Weise, of Tama County, Iowa. The instrument provides for talcing possession by the mortgagee if the mortgagor attempts to remove the property from Tama County, and for foreclosure sale in Tama County, Iowa, or South Omaha, Nebraska. It recites that the cattle are "the live stock purchased this 21st day of March, A. D. 1923, of Wertheimer & Degen.” The mortgage covers not merely the cattle, but 1,000 bushels of com, “to be fed the above cattle. ’ ’ The mortgage states that:

“The cattle 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.”

This is, on its face, promissory and prospective, and not a statement of the existing location of the cattle. We think that the jury would be warranted in holding, on these statements, ■that one examining the record vrould be put upon notice that the cattle wrere purchased at the date of the mortgage, to be taken to Weise’s place and there fed, and that they were not on Weise’s place when purchased and mortgaged back. The cattle purchased by defendant conformed to the specific description thus given. They were the cattle purchased of the plaintiff. They were the only cattle that Weise had, conforming to that description. While the statement of location is important, it is not essential; and, if the property is otherwise sufficiently described, the location may be omitted, or, if erroneously given, may be rejected as surplusage. Cases above and below cited; King v. Howell, 94 Iowa 208; Wells v. Wilcox, 68 Iowa 708; Brock v. Barr, 70 Iowa 399; State Bank of Dayton v. Felt, 99 Iowa 532; Shellhammer v. Jones, 87 Iowa 520; 5 Ruling Case Law 424; 11 Corpus Juris 465, 468, et seq; Adams v. Hill & George, 10 Kans. 627; Crescent Coal & M. Co. v. Raymond, 57 Ill. App. 197; City Nat. Bank v. Goodloe-McClelland Com. Co., 93 Mo. App. 123. The defendant’s contention reduces itself to the claim that the naming of the town ‘ ‘ Garland, ’ ’ instead of ‘ ‘ Garwin, ’ ’ and the statement “above-described live stock * * * -are in my undisputed possession free from all liens and incumbrances and kept on my premises, ’ ’ etc., are, as matter of law, misleading.

It is a matter of public knowledge that there is no town of “Garland” in Tama County, and that there is a town of “Gar-win” there. If the location had been “my place located in Tama County,” we think that, on that point, no question of its sufficiency would be raised. The property was delivered to Weise, and was in his possession when it was delivered to the railroad company. The statement that it was free of incumbrance would not mislead the searcher, nor ivas it incorrect at the time the mortgage was signed, nor did the description become misleading or substantially incorrect from the fact that the railroad corn-il any might have acquired a lien for carrying charges. The first paragraph of the description states that the cattle, being all of this description then owned by him, ‘ ‘ are to be kept on good and sufficient feed * * on my place.” A following and separate paragraph states:

“The above described live stock being all of the kind now owned by me and are in my undisputed possession * * * and kept on my premises on Section No. as above, in Township No. -, Range No. --.”

The section, township, and range numbers are not filled out. The paragraph states that the cattle are owned by Weise, and are all of the kind owned by him; that they are in his possession; that they are kept on his premises "as above;” and that they are the live stock purchased that day of the mortgagees. We are of the opinion that the jury might say that the searcher might readily conclude that this paragraph was merely a form, which had not been filled, and which, taken together with the preceding paragraph, showed, not that the cattle were then on a place not described, but that they were to be kept on th'e mortgagor’s place; and that he would be in no wise misled by the apparent conflict in the mere grammatical tense.

It does not seem to be seriously disputed that, if the cattle had been, for however brief a time, and whether at noon- or midnight, onWeise’s place, the description would have been fulfilled. If the cattle had been unloaded at night at Montour, and driven by way of Weise’s farm, and kept there long enough to be fed and watered, and driven on to Marshalltown, the description would have technically fulfilled the demand of defendant’s contention. The inquirer would not be assisted by the temporary presence of the cattle on Weise’s place, nor would his search or inquiry have been abbreviated thereby. To sum up, the description contained the following particulars: (1) The physical details of age, breed, average weight, brand, sex, and dehorning of the cattle. (2) Date of purchase and name of seller. (3) That they were bought to be fed, — i. e., feeders. (4) That they were owned and controlled by Weise, and were in his possession. (5) That they were bought to be kept and fed on Weise’s place. (6) That they were all of that description owned or controlled by Weise. In these details, the description was correct. A purchaser from Weise would surely be put upon inquiry, and inquiry would have developed these facts and identified the cattle. The statement that Weise’s place was south of Garland, instead of Garwin, and that, in an unfilled and incomplete paragraph,- it was stated that they were "kept” on Weise’s premises, it seems to us the jury might well say could not have misled. We are of the opinion that the instrument cannot be held, as matter of law, to have been calculated to puzzle and mislead the searcher, and that the case should have been submitted to the- jury. In addition to the authorities cited, see Chattanooga St. Bank v. Citizens’ St. Bank, 39 Okla. 255 (134 Pac. 954) ; Central Nat. Bank v. Brecheisen, 65 Kan. 807 (70 Pac. 895); Trower Bros. Co. v. Hamilton, 179 Mo. 205 (77 S. W. 1081); Iowa St. Nat. Bank v. Taylor, 98 Iowa 631 ; Hayes v. First St. Bank, 5 Neb. Unof. 298 (98 N. W. 423); Joslyn v. Moose River Lbr. Co., 83 Vt. 49 (74 Atl. 385).

No estoppel or fraud- is proven. We are not anticipating what the plaintiffs or the defendant may show on a full and 'more formal hearing.

The judgment is — Reversed.

De Graff, C. J., and SteveNS, VermilioN, and Albert, JJ., concur. ■ Evans and Faville, JJ., dissent.