Goldstein v. Prien

THE COURT.

This is an appeal by defendant Prien from a judgment declaring null and void a chattel mortgage recorded by him on certain hotel directory boards and bus schedule boards purchased by plaintiffs-respondents from the executor of the estate of Henry A. Douglas, deceased, together with the directory advertisement business in which deceased had used them, and perpetually enjoining appellant from selling said boards. The facts are undisputed.

On March 3, 1953, appellant loaned Henry A. Douglas $10,000 for which he received a note and the chattel mortgage mentioned above. Prior to the execution of the chattel mortgage the intention to do so was recorded and published in accordance with section 3440.1 of the Civil Code, but the

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mortgage itself was not recorded at the time it was executed as required by section 2957 of the Civil Code. The mortgage was still unrecorded when Douglas died on April 24, 1953, and when his executor qualified in May, 1953. The recordation took place on June 3, 1953, only. On June 22, 1953, appellant presented to the executor his claim on the note which was allowed. The copy of the note mentioned that the note was secured by a chattel mortgage (unspecified) of the same date, but copy of the mortgage was not filed with the claim or a description given as prescribed by section 706 of the Probate Code, and it is conceded that the claim has been allowed as an unsecured one only. The estate has at all times been insolvent. On August 1, 1953, the executor sold the directory advertising business for $20,100 to respondents inclusive of the boards on which appellant had recorded the mortgage. The sale was confirmed on August 17, 1953. On the same day appellant’s attorney notified respondents of the claimed mortgage lien. The attorney had so informed the executor on June 17, 1953.

It is and was the position of plaintiffs-respondents that because of the three months’ delay in recordation the chattel mortgage under section 2957 of the Civil Code was void as to creditors existing prior to the recording; that said invalidity was extended to the executor of an insolvent estate as trustee for creditors by section 579 of the Probate Code and that as purchasers from said executor they obtained the chattels free of the mortgage irrespective of whether they had notice of the mortgage or not. Appellant mainly contends that even if the mortgage was void as to creditors it was not void as to the executor to whom section 579 of the Probate Code gave a right of action only in a situation not present in this case and certainly not as to respondents who were not creditors but purchasers with notice as to whom the mortgage is valid under section 2973 of the Civil Code. We have concluded that the position of plaintiffs was correctly sustained.