directly the instrumentality through which a It appears from the evidence in substance conversion of mortgaged property is brought that J. M. Mullins and Davis McMackin were about is liable for the conversion. [Ed. Note. For other cases, see

partners in business under the firm name of

Chattel Mortgages, Cent. Dig. $ 305; Dec. Dig. $ 170.*) Dallas Electrical Construction Company in 8. CHATTEL MOBTGAGES (8204*)-RECORDING

the city of Dallas. W. G. Nunn, of Ladonia, OF MORTGAGE - PERSONS AFFECTED - PUB- Tex., an acquaintance of some years of CHASER OF MORTGAGED NOTES.

both Mullins and McMackin, upon their re Rev. Civ. St. 1911, art. 5661, provides quest, indorsed their note for $100 in order that all persons shall be charged with notice of a chattel mortgage duly registered "and of to enable them to negotiate same at bank, the rights of the mortgagee, his assignee or which was done. Nunn, as indorser, was representative thereunder, and article 5659 | later compelled to pay same by reason of the provides for discharging of mortgage by ac- default of Mullins and McMackin. Subseknowledging satisfaction of the debt upon the registry book. Held, that the failure of the quent to the circumstances related above, purchaser of chattel mortgage notes to have Mullins sold McMackin his interest in the the assignment of the notes to him recorded Dallas Electrical Construction Company. In would not prevent persons purchasing, the property from being charged by the registra- payment of part or all of the purchase price, tion with notice of the mortgage and of his Mullins accepted McMackin's 18 promissory rights thereunder.

notes, each for $75, secured in payment by [Ed. Note. For other cases, see Chattel chattel mortgage on the property, for the Mortgages, Cent. Dig. $ 451; Dec. Dig. 204.*] value of which this suit was brought. The 9. CHATTEL MORTGAGES ($ 225*)—RIGHTS OF mortgage was registered as directed by statASSIGNEE-CONVERSION OF PROPERTY.

An assignee of notes secured by a record- ute, and recites the transaction to be for the ed chattel mortgage was not negligent in per- purposes we have just stated, and subrogates mitting the property to remain in the posses: by its terms all purchasers of the notes to sion of one who he knew had purchased it from the mortgagor, so as to prevent him from the benefits of the mortgage. After the sale recovering for its conversion by sale, in view by Mullins to McMackin, in order to enable of Rev. Civ. St. 1911, art. 5665, making chat- Mullins to borrow $500 from the Guaranty tel mortgages void against subsequent purchasers, etc., unless registered,

where the property State Bank & Trust Company, Nunn signed remains in mortgagor's possession.

a note for that amount jointly with Mullins. [Ed. Note.-For other

see Chattel The bank accepted the note. To secure the Mortgages, Cent. Dig. 88 468–470; Dec. Dig. bank in the payment of the $500 note and 8 225.*)

Nunn in his indorsement thereof, as well as 10. CHATTEL MORTGAGES ($ 229*) – CONVER- the repayment to him of the amount paid out


on the $100 note, Mullins transferred the 18 Where the value of property covered by McMackin notes to the bank. McMackin a recorded chattel mortgage exceeds the amount of the debt, the judgment, in an action paid off sufficient of the mortgage notes to by a mortgagee for conversion, should be for reduce the $500 note to $271, when payments the debt and, if the debt exceeds the value of ceased. Thereupon Nunn was compelled to the property, should be for such value.

take over the balance, which he did, and [Ed. Note. For other see Chattel whereupon the bank transferred him the unMortgages, Cent. Dig. $$ 479-483; Dec. Dig. 8 paid mortgage notes. Nunn attempted to col229.*]

lect the amount due him by Mullins and McAppeal from Dallas County Court; W. F. Mackin but was unable to do so. In the Whitehurst, Judge.

meanwhile, for some reason and in manner Action by W. G. Nunn against Padgitt not made clear by the record, Mullins reBros. and others. From a judgment for de- purchased from McMackin the business of fendants, plaintiff appeals. Reversed and the Dallas Electrical Construction Company rendered.

and operated same for about one month, Wood & Wood, of Dallas, for appellant. when he sold a portion of the tools, impleAlex F. Weisberg, J. Hart Willis, and Spence, ments, etc., to one of the appellees, Mrs. Knight, Baker & Harris, all of Dallas, for Amelia Wunderlich; such portion being corappellees.

ered by the mortgage securing the payment

of the 18 notes given by McMackin to MulRASBURY, J. Appellant sued appellees lins, transferred by Mullins to the bank and for the value of certain personal property al- by the bank transferred to Nunn. Mrs. Wunleged to have been converted by appellees and derlich paid $260 for the property sold her upon which appellant, at the time of such by Mullins, and the transfer was by bill of conversion, had a mortgage lien properly sale warranting title free of liens, etc. On registered to secure an indebtedness due him. the same day she purchased the property, The appellees in effect urged as a defense Mrs. Wunderlich, in consideration of the to the suit that they used proper diligence note of Frank Courtney and Emil Wunderto ascertain the existence of the lien and lich, her son, for $260, due one year from failed to do so, and hence were innocent date with 8 per cent interest, conveyed the purchasers, and further that they never took same property to them and as security for actual possession of the property; and hence payment of the note retained a lien of mortthere was no conversion of same.

gage against the property so conveyed. By *For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes


the terms of the conveyance Courtney and also, in his right of redemption, a property Wunderlich are required to remove the prop- which is or may be valuable, and which he erty to 126 Bryan street, to keep it insured may lawfully sell in recognition of the right with loss payable to Mrs. Wunderlich, not of the mortgagee. Such a sale is therefore to remove same from its location without no conversion of the mortgagee's interest, but her consent, and to keep same in good con- a sale in denial of the mortgagee's right dition and repair, and provided for the usual would be a conversion in him, and perhaps conditions of forfeiture and seizure in case in the purchaser also. It would certainly of default in payment of the note, etc. Be be a conversion in the purchaser if he took fore buying the property, both Mrs. Wunder the property on a purchase of the whole inlich and her attorney inquired particularly terest and persisted in a denial of the mortof Mullins, who was then in possession of gagee's right afterwards.” Also: “One who the property by virtue of his repurchase from buys property must, at his peril, ascertain McMackin, if there was any lien or incum- the ownership; and, if he buys of one who brance against the property and if any other has no authority to sell, his taking possesperson had any interest therein, and he as- sion in denial of the owner's right is a consured them that no liens existed and he was version.” See, also, McCown et al. v. Kitchsole owner thereof. Mrs. Wunderlich and en, 52 S. W. 801; Scaling v. First Nationher son, Emil Wunderlich, testified that they al Bank, etc., 39 Tex. Civ. App. 154, 87 S. inquired of the county clerk concerning a W. 715; Buffalo Pitts Co. v. Stringfellowmortgage against the property, and that Hume Hardware Co., 129 S. W. 1161. they were informed none was of record. The [3] Mullins, by his sale of the notes to same parties also testified that, while Mrs. Nunn, became, after his purchase of the Wunderlich took a conveyance from Mullins property from McMackin, in effect a mortto herself and in turn conveyed to Emil Wun- gagor in possession and had no right of derlich and Frank Courtney, she was not in course to sell in denial of the mortgage, and fact buying the property for her own use the result under the cases cited and the unbut for her son and Courtney and took such disputed evidence is that either Mrs. Wunmethod, under advice of counsel, as the derlich or Emil Wunderlich, her son, and best plan of securing herself in the payment Frank Courtney bought and held before and of the money advanced to them, which was upon trial the mortgaged property in denial in fact only a loan. Appellant, Nunn, be of Nunn's mortgage. fore filing suit, attempted to locate the mort- [4] Incidental to a discussion of the quesgaged property, but was unable to do so. It tion of who in fact converted the property, was developed upon trial of the case that we divert long enough to say that the denial same was in possession of Emil Wunderlich by Mullins of the existence of the mortgage in storage. The witness Boettiger testified is without force as a defense to Nunn's right the same was of the value of $295. Mrs. to recover in case of conversion. To hold Wunderlich paid Mullins $260 therefor. that mortgages registered under statutory diNunn's debt after this suit was filed was re rection can be ignored by third persons upon duced to $274.16 by payments received from the assurance of those in possession of the some bankrupt proceeding, presumably property that such mortgages do not in fact against either McMackin or Mullins. The exist would be to utterly destroy the very essentials of the facts here stated are un- purpose of the requirement instead of susdisputed. Upon trial before jury there was taining it. a verdict against appellant followed by judg- [5] Nor do we think that the testimony of ment, from which he has appealed.

Mrs. Wunderlich and her son that the county The appellant has filed two assignments clerk advised them that there of error; the first attacking the charge of mortgage upon the property entitled to any the court, and the second challenging the ight We do not deny the truth the sufficiency of the evidence to sustain the testimony. Such information, we conclude, verdict and judgment. We think the criti- was given at the county clerk's office. The cism of the charge by appellant correct, but information was incorrect, however, since the we forego a discussion thereof for the reason mortgage was in fact registered there and that we think the cause should be reversed an inspection of the record would have and judgment here rendered for appellant shown as much. We do not understand that on the grounds urged in the second as- it is the right of the public to rely upon the signment.

clerk as to what the records of his office [1, 2] As applicable to the undisputed facts do or do not disclose, but that it is the right in this case, it was said in Western Mortgage of the public to inspect such records and & Investment Co., Ltd., v. Shelton, 8 Tex. themselves ascertain their contents, and that Civ. App. 550, 29 S. W. 494, quoting from an the public will be bound by the records alone eminent authority (Cooley's Second Ed. on as they actually exist. We then come to the Torts, 527): “When the mortgagor of chattels question of whether appellee Mrs. Wunderis left in possession, he has not only such a lich (her son and Courtney not being parties special property as will enable him to main to the suit) under the evidence bought the tain trover against a wrongdoer, but he has / property, and, if she did, whether it was in



recognition or denial of the mortgage, and, if that Nunn was negligent in not placing upon zhe did not purchase the property, whether the the record an assignment of the notes, so as facts stated in law constitute conversion. to give Mrs. Wunderlich notice thereof, and That she did not buy or incumber the prop-in permitting Mullins to remain in possession erty in recognition of the mortgage is not thereof after repurchasing same from Nodenied.

Mackin. We have said that, while Mrs. [6] To establish that she did not do so in Wunderlich may have acted in good faith in denial thereof, so as to constitute conversion, the purchase of the property or in loaning the claim is made that the form of convey- money thereon, she did so subject to or with ance to her was not what it purported to be, full knowledge of the prior mortgage, whichto wit, a sale, but simply a vehicle to give ever theory of the transaction may be Mrs. Wunderlich security of greater dignity adopted. and was unaccompanied by actual physical [8] Nor does the failure of Nunn to place asportation of the property. Waiving any upon the record an assignment of the notes question of Mrs. Wunderlich's right to deny, affect the notice imported by the registration in an equitable proceeding, her own solemn of the mortgage. Article 5661, R. S. 1911, declaration that she was the owner of the provides that, when chattel mortgages are property, we nevertheless believe the proposi- registered as was the one in this controversy, tion unsound. Mrs. Wunderlich agreed to ad- "all persons shall be thereby charged with vance the money with which to purchase the notice thereof, and of the rights of the mortproperty only on condition that Mullins first gagee, his assignee or representative thereconveyed it to her that she might in turn under." Article 5659, R. S. 1911, provides convey it to her son and Courtney and by that the only way by which satisfaction of such method secure what she considered mortgages may be entered of record, and as security of a greater dignity for the money corollary relied upon by those subsequently she was advancing, but which, however con- dealing with the property, is by acknowledg. sidered, is but what our statute denominates ing satisfaction of the debt upon the book a chattel mortgage; and it was by her direc- containing the registry of the mortgage. No tion and with her knowledge that the proper- such satisfaction was shown on trial in this ty was so purchased and incumbered and controversy. then delivered to her son and Courtney. To [9] In like manner do we think the claim hold that such acts do not establish conver- that Nunn was negligent in permitting the sion would, in our opinion, result iu great property to remain in possession of Mullins injustice to parties acquiring evidences of untenable. Even though he was aware that debt secured by chattel mortgages duly regis- the title to the property had passed back tered. As illustrative of the point, second into the possession of Mullins, there was no mortgages would and could acquire the dig- legal right in Nunn to prevent it, since Mulnity of first mortgages, since it is here urged lins had the right to purchase and McMackin exactly that Mrs. Wunderlich is in effect but the right to sell subject to the existing lien. a mortgagee, and to which we agree.

The statutory provisions relating to chattel [7] The true rule, it seems to us, is that mortgages contemplate the existence of val. whosoever directly indirectly is the id and enforceable mortgages where the propinstrumentality through which the conver- erty is permitted to remain in the possession sion is accomplished is liable for the con- of the mortgagor and directs that in all such version, when such conversion is made cases the mortgage shall be void against with either actual or constructive notice creditors, subsequent purchasers, and mortof the pre-existing debt and mortgage. gagees or lienholders, unless such mortgage Constructive notice in this proceeding is not or lien shall be registered in the manner prodenied, and, that being true, appellee took vided by the other provisions of the act. the property as her own or as security for Article 5655, R. S. 1911. As we have said, her debt at her peril, and, if by such taking the mortgage in this controversy was so reg. it was lost or destroyed, she is liable for the istered. value thereof. We are not to be understood, [10] The undisputed evidence shows the of course, as holding that second mortgages value of the property converted by Mrs. cannot be accepted without constituting con- Wunderlich to be $295. Nunn's debt is undisversion, but that such second mortgagor puted and is $274.16. The rule is that, when cannot under guise of a purchase sell to an- the converted property exceeds the amount of other, who in turn wastes or destroys same, the debt, the judgment shall be for the debt, and then defend, in a suit for conversion, on and, when the debt exceeds the value of the the ground that he was but a second mort property, it shall be for such value. In the gagor and, not having actually laid hands on application of that rule the judgment of the the property, is not liable. But it is further trial court is reversed, and judgment here urged that, Mrs. Wunderlich having bought rendered for appellant against Mrs. Wunder. the property or loaned money thereon in good lich for the amount of his debt. faith, she should be protected for the reason Reversed and rendered.


the second part agree to pay party of the CRANDALL V. SCOTT et al.

first part $25.00 per month for each and (Court of Civil Appeals of Texas. Amarillo. every month between now and the 1st day Dec. 6, 1913.)

of March, 1912, as evidenced by their fifteen 1. MONOPOLIES (S 12*) VALIDITY ANTI- promissory notes, each for the sum of $25.00, TRUST LAW-"TRUST.' The Anti-Trust Act (Rev. Civ. St. 1911, to the order of party of the first part, this

due at intervals of one month, and payable art. 7796) defines a “trust” as a combination of capital, skill, or acts by two or more per day executed by parties of the second part ; sons, or association of persons, to create or and, that party of the first part in consideracarry out restrictions in the free pursuit of tion thereof warrants to the parties of the any legal business, or to abstain from engaging in or continuing business. Plaintiff and two second part that no show business besides other concerns, who conducted a moving pic- the Majestic, the Deandi and the Grand shall ture business in the town, made an agreement open in Amarillo, Potter county, Texas, beby which the others gave notes to plaintiff in fore March 1st, 1912, and that if a showconsideration of plaintiff stopping business and agreeing that no showhouse except the two house, other than the above mentioned three owned by the makers should open in the town does open in said Amarillo within said time, before a certain time, and that if a showhouse the floor space of which equals 2860 square of a certain standard should open within the time and run for six months, all of the notes feet, the assets and expense of installation of maturing after the opening of the house should which equals $1000.00, and which runs as a be void, and that if a showhouse should open showhouse steadily for a period of six and run for less than such period, the notes should be void for the time it was conducted. months, then all said notes maturing after Held, that the contract was in violation of the the opening of said showhouse shall become Anti-Trust Act and void.

null and void, and be canceled thereby. That [Ed. Note. For other cases, see Monopolies, party of the first part further agrees that Cent. Dig. $ 10; Dec. Dig. $ 12.*

should a showhouse of the same, less or moro For other definitions, see Words and Phrases, vol. 8, pp. 7116–7119, 7822.)

assets and expense of installation and floor 2. MONOPOLIES ($ 12*)-ILLEGAL CONTRACTS, space or the Grand Opera House open in ANTI-TRUST STATUTES.

vaudeville and picture within said Amarillo A combination in violation of the anti- within said time, and run less than six trust statute (Rev. Civ. St. 1911, art. 7796) is months, then that for all the time such lastvoid, irrespective of the common-law, distinc named 'shows shall so run, the notes covering tion between restrictions on trade which are reasonable and those which are unreasonable. that period shall be null and void and cancel

[Ed. Note.-For other cases, see Monopolies, i ed thereby. Parties of the second part agree Cent. Dig. § 10; Dec. Dig. 12.*]

that neither of them will be directly or in3. APPEAL AND ERROR (§ 173*) – PRESENTA directly interested in the opening or running TION BELOW.

Notwithstanding failure of defendants' nor will they encourage the opening or runpleadings to attack the validity of the contract, ning of any showhouse other than the three under which the notes sued on were executed, above named in said Amarillo within said the appellate court will consider the validity time, and it is mutually agreed and underof the contract, where it is apparent upon the stood that if they do either, then that such record that it is void.

[Ed. Note.-For other cases, see Appeal and occurrence will in no wise invalidate any Error, Cent. Dig. $$ 1079–1089, 1091-1093, of said notes, nor in any wise relieve any 1095–1098, 1101-1120; Dec. Dig. § 173.*]

party thereto from liability thereon. Signed Error to Potter County Court; W. M. Je in duplicate this

day of Nov. 1910. ter, Judge.

Percy Crandall, Party of the First Part. W. Action by Percy Crandall against C. R. G. Underwood, C. R. Scott, J. W. McQueen, Scott and others. Judgment for defendants, Parties of the Second Part." and plaintiff brings error. Affirmed.

It will be seen that the contract is someS. E. Fish, of Amarillo, for plaintiff in er

what ambiguous upon the face of it, whereror. Hugh L. Umphres, of Amarillo, for de in it reads that “the party of the first part fendants in error.

warrants to the parties of the sec

ond part that no showhouse besides the MaHENDRICKS, J. The plaintiff in error, jestic, the Deandi and the Grand shall open Percy Crandall, sued in the county court of in Amarillo, Potter County, Texas, before Potter county, Tex., the defendants in error, March 1st, 1912”—ambiguous for the reaC. R. Scott, W. G. Underwood, and J. W. Mc-son that from the pleadings and the eviQueen, on 10 promissory notes, executed by dence in the case it was evidently the intenthe defendants in error, in favor of the plain- tion of the contract that the Grand should tiff in error, and which were a part of and not open nor continue open to the period based upon the following contract:

named, but, on the other hand, should be clos"Sta of Texas, County of Potter. This ed. We make this explanation for the reamemorandum of an agreement this day en- son that this ambiguity is eliminated from tered into by and between Percy Crandall, the case by the pleadings of both parties, as party of the first part, and J. W. McQueen, well as the undisputed evidence in the case. C. R. Scott and W. G. Underwood, parties of the cause was tried in the county court the second part, witnesseth, that parties of without the assistance of a jury and judg

•For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

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ment rendered against the notes as obliga- , trust statute which we think applicable to tions; upon what specific ground, however, the propositions involved are as follows: "A we are not advised.

'trust is a combination of capital, skill or Among other grounds of resistance in this acts by two or more persons, firms court to a reversal of this cause, the defend- or association of persons, or either two or ants in error assert the proposition that the more of them for either, any and all of the contract between the parties, and set out following purposes: First.

* To creherein, is in violation of what is commonly ate or carry out restrictions in the free purcalled the "Anti-Trust Statute" of the state. suit of any business authorized or permitted At the time of the execution of this contract by the laws of this state.

Seventh. and of the notes by Crandall, the plaintiff To abstain from engaging in or continuing in error, the defendants in error, Underwood, business, * * partially or entirely withScott, and McQueen, were the proprietors of in the state of Texas, or any portion therea moving picture show in Amarillo, Tex., of.” Rev. Civ. St. 1911, art. 7796. known and designated as the Majestic, and The case of Gates v. Hooper, decided by at the same time one Charles Stolp was the the Supreme Court of this state, 90 Tex. 563, proprietor of another moving picture show, 39 S. W. 1079, in a case where a merchant known as the “Deandi.” The plaintiff in er- sold to another his stock of goods and good ror, Crandall, was the owner and conducted will, agreeing to abstain from the same a moving picture show in said city, designat- business in the same town for a certain ed as the “Texas Grand,” which were the period of time, held that, "in order to conthree places of amusement of that character stitute a trust within the meaning of the at that time in said city.

statute," the combination of capital, skill, or O. R. Scott, one of the defendants in er-acts by two or more means a union or asror, testified as follows: "About the 14th sociation of such persons and the united coday of November, 1910, the contract intro-operation of such agencies. In that case the duced in evidence was entered into by those mere sale by one party of his business and signing the same. At the same time a sim- good will to another party for a valuable ilar contract was made between Percy Cran- consideration, where the seller agreed to dall on one part and Charles H. Stolp (the abstain from business in a certain town for owner of the Deandi) on the other part. a certain period of time, was not such union Each of the contracting parties in the two and co-operation as constituted a "combinacontracts knew of the two contracts, and tion" within the purview of the Anti-Trust Stolp knew of our contract that has been | Act. The abstention from business necesintroduced, and the Majestic and Deandi sarily resulted from the sale of the "good people had joined their efforts to get Percy will”; otherwise the transfer of the "good Crandall to close his show, the consumma- will” would have been nugatory; or, as the tion of their efforts being that he did close Supreme Court put it, “The seller was, by on the basis set forth in said contracts with the terms of the contract, restrained from the Majestic and the Deandi, and the said doing the thing which, if done, would have Underwood McQueen and myself executed defeated in part the effectiveness of the the notes previously introduced in evidence sale." However, in this case, we have a and shown to be signed by us in pursuance different character of contract and different of the contract introduced in evidence in this acts, more far-reaching in their consequencsuit so as to close Mr. Crandall's place. es, manifested here. It is noted, first, that

After the execution of these instru- there are three rival businesses in Amarillo; ments, the Texas Grand, Mr. Crandall's two of them joined together to put the third show, closed and remained closed, and for out of business and a consummation of their several months there were no other show-efforts results in the execution of the notes, houses running in Amarillo in vaudeville or the abstention from business, a warrant upon moving pictures, except the Majestic, run the part of one of the parties that no "showby the defendants in this suit, and the De- house" besides the Majestic and the Deandi andi, run by Mr. Stolp. During this time shall open in Amarillo before a certain time; as the notes became due they were paid and further agree that if a showhouse of off.” The witness then testified in regard certain standard should open in said Amarilto the opening and establishment of another lo within said time and run as such steadily moving picture show in Amarillo as a de- for a period of six months, then all of said fense with reference to another provision of notes maturing after the installation and the contract, which we think unnecessary opening of said showhouse shall become pull to mention or discuss.

and void, and, agreeing further, that if a The testimony of Scott, relating to these "showhouse of the same, less or more assets matters, is undisputed, and it is to be par- and expenses of installation and floor space ticularly noted that the joinder of the efforts or the Grand Opera House, open in vaudeof the proprietors of the Majestic and the ville and pictures within said Amarillo withDeandi and the consummation of said coin said time and run less than six months," operation produced the contract and the then for the period of time conducted the notes in question.

notes covering the same period are void. It [1] The particular provisions of the anti- I is noted that the other parties agree that

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