I. S. Chapman & Co. v. Ulery

PULLEN, P. J.

For some time prior to June 10, 1926, Howard E. Ulery and his wife were the owners of a citrus grove near Pomona. Three promissory notes were executed by them, one in June, 1926, one in May, 1927, and one in May, 1928, each payable one year from date, aggregating $500, in favor of I. S. Chapman & Company, and at the same time as security for the repayment thereof, executed chattel mortgages upon the fruit growing and to be grown on the lands of the promisors.

Each of the crop mortgages given by Ulery to I. S. Chapman

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Company as security for the three promissory notes, provided that Howard E. Ulery should take care of the crops and “ . . . harvest, pick, gather and box and deliver immediately into the possession of a marketing association, packing house or other buyer, such quantity of said citrus crop as will when sold produce enough proceeds ... to pay off . . . said promissory note . . . ”.

In addition to the usual provisions found in a promissory note, it was specified in each of these notes that in the event said ranch should become enqumbered, the principal and interest of the notes should immediately become due and payable.

In September, 1928, Mr. and Mrs. Ulery executed to respondent Taylor Milling Company a promissory note for $3,500 secured by a deed of trust upon the orchard property. Ulery, a member of, and shipper through the Pomona Fruit Growers Exchange, gave to Taylor Milling Company an assignment of the proceeds from the crops grown during the season of 1930-31, which assignment was duly accepted

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by the exchange. In January, 1932, Ulery again assigned to Taylor Milling Company the entire proceeds to be derived from the 1931-32 crop, which assignment was likewise accepted by the exchange. The proceeds from these crops were not paid over to Taylor Milling Company, but are now held awaiting a determination as to who, between I. S. Chapman & Company claiming under its chattel mortgages, and Taylor Milling Company by an assignment, is entitled thereto.

On December 13, 1932, and after the execution of the above notes and crop mortgages, Mr. and Mrs. Ulery conveyed the ranch to Taylor Milling Company in satisfaction of the deed of trust hereinbefore referred to. Demand was made by I. S. Chapman & Company upon the Pomona Fruit Growers Exchange for the proceeds from the sale of the fruit grown upon the ranch by virtue of its crop mortgages, and it claims to be entitled thereto either upon the ground that Ulery and Pomona Fruit Growers Exchange were acting as its agents in the removal and marketing of the crops, or that the removal of the crops by Ulery and the exchange were tortious, and therefore the lien of I. S. Chapman & Company on the fruit when removed from the ranch attached to the proceeds as the substituted security under the mortgages.