Fette v. Lane

California Supreme Court Sep 21, 1894 No. No. 18,264Published

Before: Haynes

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Holding. The court affirmed a judgment in favor of a prior mortgagee, holding that the defendant, a subsequent mortgagee with notice of the prior lien, was liable for the proceeds of the crop sale because the total proceeds exceeded the combined secured debts of both parties.

Issues

Whether the evidence supported the trial court's findings regarding the existence of an agreement between the parties and the defendant's knowledge of the prior mortgage.
Whether the defendant's sale and appropriation of the crop proceeds constituted a conversion of the plaintiff's interest.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The finding that defendant had knowledge of plaintiff’s mortgage before he made any advances or expenditures on account of the mortgaged property is justified by the evidence.”

“An unrecorded instrument is valid as between the parties thereto and those who have notice thereof.”

Synopsis

Mortgage on Crops—Notice of Prior Mortgage.—Plaintiff took a mortgage on certain crops as security for a loan, and subsequently defendant took a mortgage on the same crop for seed furnished, and to secure future advances. Plaintiff’s mortgage was not recorded. Held, that a finding, on conflicting evidence, that defendant had notice of plaintiff’s mortgage before making the advances on the second mortgage, would not be disturbed.

Chattel Mortgage.—An Unrecorded Mortgage of Personal property is valid against a subsequent mortgagee with notice.1

Mortgage of Crops—Prior Unrecorded Mortgage.—Where defendant’s second mortgage for seed furnished was made before he had notice of plaintiff’s prior unrecorded mortgage on the same crops, defendant has a prior lien to the extent of the seed furnished, but cannot enforce against the plaintiff liens for advances furnished the mortgagor after notice of the first mortgage.

Mortgage of Crops.—In an Action by the First Mortgagee of crops to recover the amount of his lien from a second mortgagee, who has sold them, one of the mortgagors may testify as to a statement by plaintiff that it was understood that the crops should be sent to defendant subject to plaintiff’s lien, in order to rebut an allegation that plaintiff had surrendered his lien.

Mortgage of Crops.—A Finding That Barley Subject to Mortgages to plaintiff and defendant was to be stored by defendant in plaintiff’s name, that he stored it in his own name, that plaintiff’s demand of enough to secure his claim was not complied with, and that the barley was sold by defendant, and the proceeds retained by him, shows a conversion of the barley.

HAYNES, C. This action was tried by the court. The findings, briefly stated, disclose the following facts: On March 31, 1892, O ’Brien and Smith were indebted to plaintiff in the sum of $564, and on that day executed to him their promissory note for that sum, payable August 1, 1892, with interest, and on the same day executed to the plaintiff a “crop mortgage” to secure the same, upon a crop of barley then growing on lands therein described. Prior to that time O’Brien and Smith .procured from defendant the seed for said crop, amounting to three hundred and thirty sacks, under an agreement to return two sacks of barley for each sack of seed; and on May 21, 1892, O ’Brien and Smith executed to defendant a crop mortgage on the same crop previously mortgaged to plaintiff to secure to defendant the return of said two sacks for each one só furnished, and for the payment of such sums of money as defendant might advance to them, not exceeding $100. This mortgage further provided that the mortgagors were to care for and protect the crop while growing, and, when fit for harvesting, to harvest, thresh, clean and sack the same, and deliver it to the mortgagee, to be by him held and disposed of for the payment of the moneys thereby secured; and in default of either of said acts the mortgagee was authorized to enter and take possession and harvest, thresh and sack the same, and all expenses so incurred, including hauling, storing and delivery, were to be secured by the mortgage, and first paid; and for all these purposes the mortgagee was constituted the -attorney in fact of the mortgagors, with power to sell and dispose of the same at such times and for such sums as he might deem proper. This mortgage was duly recorded on the day of its execution, but the prior mortgage to plaintiff was not recorded. It was further found by the court that, after the execution of the mortgage to the defendant, but before any advances or expenditures were made thereunder, the defendant was informed of the prior mortgage to the plaintiff; that, subsequent to the execution of said mortgage to defendant, and prior to the harvesting of the crop, it was agreed between plaintiff and defendant that when the crop should be harvested and sacked the whole of it should [815]be shipped to defendant at Stockton, and be by him stored in the name of the plaintiff, and held for the satisfaction of plaintiff’s said claim; that with the consent of O’Brien and Smith the whole of the crop, amounting to four thousand five hundred and twenty-five sacks, was shipped to defendant, who stored the same in his own name; that thereafter plaintiff demanded that defendant turn over to him so much thereof as was necessary to secure the note held by plaintiff, but defendant refused to do so, and thereafter sold at private sale the whole thereof, amounting to $3,468.77, and received and appropriated the whole thereof to his own use; that no proceedings were taken to foreclose said mortgage, nor any notice of sale given; that the money so received by defendant was largely in excess of the sums due under both said mortgages and all sums expended in harvesting the barley, and that no part of plaintiff’s note against O’Brien and Smith had been paid. One or two other facts found by the court will be noticed in another connection. Upon these findings judgment was entered for plaintiff for the amount due on said note, and the defendant appeals therefrom, and from an' order denying his motion for a new trial.

Fette v. Lane

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