Ayre v. Hixson , 53 Or. 19 ( 1908 )

Mr. Justice Eakin

delivered the opinion of the court.

1. At the outset plaintiff contends that because the defendants Brasfield Bros, joined with Hixson & Ames in the original answer, and therefore could make no defense not common to all the defendants so answering, they cannot now by their several answers avail themselves of the defense that they were innocent purchasers. At the time the complaint was amended, defendants, by consent of the court, reserved the right to move against or to answer the same at a subsequent time. This was prior to the taking of any evidence; and in filing their answer to the amended complaint they were not bound to adhere to the defenses of the original answer, nor were they precluded by the several answers from making any defense otherwise available to them.

2. The first contention of the defendants Brasfield Bros, is that there is no evidence before the court that any of the mortgages were recorded, and that the burden is upon plaintiff to prove notice thereof. At the trial the original mortgages were identified and offered in evidence. On the back of these is certified the time when they were received, and a reference to the book and page in which they were recorded, .but such certificate was not identified or offered in evidence. Section 5357, B. & C. Comp., is expressly made applicable to chattel mortgages by Section 5634, 'B. & C. Comp., and provides that the county clerk shall certify on every conveyance recorded, the time when received and the place of record; and every conveyance shall be considered recorded at that time. Such a certificate would be evidence of the time and place of record, if offered in evidence; but not being identified or offered, it is not before the court. This certificate is no part of the mortgage identified by the witness nor is it part of the “conveyance duly acknowledged,” which is made competent evidence without further proof by Section 5355, B. & C. Comp., but is an independent instrument executed at a different time and by a different person. In Drexel v. Murphy, 59 Neb. 210 (80 N. W. 813), it was held that a certified copy of a chattel mortgage offered in evidence was not an offer of the indorsement thereon of the filing. To the same effect is Fuller v. Brownell, 48 Neb. 145 (67 N. W. 6). Therefore, the certificate of record indorsed on the mortgage is not before the court as evidence of such record.

3. The defendants also objected to the mortgage of February 12, 1907, for the reason that it is not recorded as provided by Section 5631, B. & C. Comp., viz., that it is recorded in the record of mortgages of real property, but not indexed in. the general index of chattel mortgages. That section provides that chattel mortgages shall be recorded in a book kept exclusively for that purpose, and a general index thereof kept by the recorder; but if the instrument is “intended to operate as a mortgage of real property, as well as a mortgage of personal property, such instrument may be recorded in the records of mortgages of real property, and such county clerk or recorder of conveyances . in whose office the same is recorded, shall index the same in the general index of mortgages of personal property or chattel mortgages as well as in the general index of mortgages of real property, and the same need not be recorded in the records of mortgages of personal property.” Section 5633, B. & C. Comp., provides that every mortgage of personal property alone or with real property, if not accompanied by immediate delivery and continued change of possession, or which shall not be recorded as provided in Section 5631, shall be void against subsequent purchasers in good faith for a valuable consideration. When a mortgage is intended as a mortgage of both real and personal property, only when it is recorded in the record of mortgages of real property and indexed in the general index of chattel mortgages is the mortgagee excused from having it recorded in the book of chattel mortgages. The general index of chattel mortgages is the only means provided by Section 5631 by which third parties may find a chattel mortgage recorded only in the record of mortgages of real property. Therefore, by the terms of the statute the indexing in such a case is a part of the recording, and that mortgage was not at the time of the purchase by Brasfield Bros, so recorded as to be constructive notice thereof.

4. However, defendants Brasfield Bros., as a defense to the mortgages set out in the complaint, which are prior to their purchase, affirmatively allege in their answer that at the time of their purchase they “had no knowledge or notice, either actual or constructive, that plaintiff had or claimed any mortgage or other claim or lien upon or against said sheep, or any thereof, and that said defendants were and are innocent purchasers for value of said sheep.” This is a necessary allegation under the provisions of Section 5633, B. & C. Comp., above mentioned, and the burden is upon defendants to prove it.

5. It is said in Haines v. Connell, 48 Or. 469, 474 (87 Pac. 265: 88 Pac. 872: 120 Am. St. Rep. 835), that the denial of the averments of the complaint did not entitle defendants to make the defense of a bona fide purchaser. That was affirmative matter which they were required to plead in their answer, notwithstanding the allegations of the complaint. It is also so held in Rhodes v. McGarry, 19 Or. 222 (23 Pac. 971); Jennings v. Lentz, 50 Or. 483 (93 Pac. 327), and in many other cases in this court. In Laurent v. Lanning, 32 Or. 11 (51 Pac. 80), it is held necessary for the attaching creditor to show that plaintiffs’ “mortgage was unrecorded at the time he in good faith acquired the judgment; that is to say, in order to advance his equity above that of the plaintiffs, he must show plaintiffs’ laches in not complying with the terms of the statute under which he claims superior right, and this imposes upon him the duty of showing the want of record.” Among the decisions of other states there is a want of uniformity upon this point. The following, however, support this view: Wyse v. Dandridge, 35 Miss. 672 (72 Am. Dec. 149); Fowler v. Merrill, 11 How. 375 (13 L. Ed. 736); Diemer V. Guernsey, 112 Iowa, 393 (83 N. W. 1047); Wright v. Larson, 51 Minn. 321 (53 N. W. 712: 38 Am. Rep. 504); Ransom v. Schmela, 13 Neb. 73 (12 N. W. 926). Therefore, the burden is upon the defendants claiming to be purchasers without notice of the prior liens of plaintiff to prove such want of notice, either actual or constructive. The answer alleges want of notice, and there is some evidence tending to show that the purchase was made without actual notice, but not that it was without constructive notice. The defendant Geo. Brasfield testified that the 1905 mortgage was recorded, and there is no evidence that it or the two prior ones were not duly recorded.

6. As to the question of actual notice to defendants Brasfield Bros., Oxman testified that he had had a conversation with the defendant Geo. Brasfield, some time in September, before the delivery of the sheep, near the Stockman’s Saloon down on Front street, in which conversation Geo. Brasfield, referring to the purchase of the sheep, said that he had a written contract for such purchase, on which money had been paid, saying, “I says to him, ‘Mr. Ayre has this stuff mortgaged for more than it is worth.’ ” Oxman further testified that he had a second conversation with' him after the delivery of the sheep, in the fore part of October at the corner of Maine street on Washington, across from the Geyser Grand Hotel, when he again called Geo. Brasfield’s attention to the mortgage, and the latter said that he had hired an attorney to look it up, and that there was no mortgage given on the property he bought; and Geo. Brasfield admits that he had such a conversation with Oxman near Griswold’s store on the 23d of October, after the delivery of the sheep and payment therefor.

7. Defendant Ames says that at the time Brasfield Bros, bought the sheep he told the defendant Jim Bras-field that Ayre had some mortgages on the yearlings. We think the conclusion is unavoidable that Brasfield Bros, had notice when they purchased the sheep, and before they paid for them, that Ayre had mortgages upon all or upon some of them. This was sufficient to have put them on inquiry, which would have led to a disclosure of all the facts in relation thereto. Therefore the defendants Brasfield Bros, are not. purchasers in good faith within the provisions of Section 5633, B. & C. Comp.

8. The mortgage of 1901 was upon the sheep described and their increase. The mortgage of 1903 does not include any sheep. The mortgage of October 14, 1905, includes the increase of 1,032 yearling ewes, described in the lease of that date, also all sheep belonging to the mortgagors upon which the mortgagee has no lien. This recognizes that" there were other sheep mortgaged to Ayre. It does not in terms include the increase of the sheep mentioned in the last description; that is, it includes all sheep then in defendants’ possession, and the increase thereof, except the increase of those accumulated from the 1,000 head leased in 1903. The mortgage of 1907 covers all sheep owned by the defendants, and the increase thereof, and includes all the sheep purchased by the defendants Brasfield Bros. Ames, in his testimony, says that none of the sheep described in the 1901 mortgage were included in the sale to Brasfield Bros. But this cannot be true, as the increase of the sheep included in the mortgage of 1901 for the year 1902 was 400 lambs, and for 1903, 500 lambs, and it is reasonable to suppose that this increase prospered as well as the others. He says that they sheared 2,200 or 2,300 sheep in the spring of 1904, which included 1,000 head leased in October, 1903. Therefore, more than half of the sheep in defendants’ possession in the spring of 1904 were owned' by defendants and were included in the mortgage of 1901; and the conclusion is unavoidable that a large proportion of the sheep sold to Brasfield Bros, must have been the increase of the original stock of 1901 and of the 1,032 sheep leased in October, 1905, and, therefore, included in the mortgages of 1901 and 1905, and that all were included in the mortgage of 1907.

9. Plaintiffs contend that the mortgage of 1905 includes the increase of all sheep mentioned therein, on the theory that the offspring of female animals belongs to the owner of "the mother. This is true in most states where the chattel mortgage transfers the title to the mortgagee. Northwestern Bank v. Freeman, 171 U. S. 620 (19 Sup. Ct. 36: 43 L. Ed. 307); Jones, Chattel Mtgs. (5 ed.) 149. With the exception of the State of Texas, we believe that all the courts so holding, do so on the theory that the mortgagee holds the title to the mortgaged property. In Texas the mortgage does not .transfer the title, but is only a lien upon the property. The court in that State holds that, as between the parties at least, the lien will also include the increase, even when not especially mentioned. Bank v. Mortgage Co., 86 Tex. 636 (26 S. W. 488). But, under the rule that the offspring belongs to the owner of the mother, the increase in Oregon belongs to the mortgagor, unless the increase is also mortgaged, as he is the owner of the mother. This is the holding in Shoobert v. De Motta, 112 Cal. 215 (44 Pac. 487: 53 Am. Rep. 207); First Nat. Bank v. Erreca, 116 Cal. 81 (47 Pac. 926: 58 Am. Rep. 133), and Battle Creek Bank v. First. Nat. Bank, 62 Neb. 825 (88 N. W. 145: 56 L. R. A. 124), where the mortgage is only a lien.

10. In Oregon a chattel mortgage does not transfer the title to the mortgaged property, but is only a lien thereon (Chapman v. State, 5 Or. 432; Knowles v. Herbert, 11 Or. 54, 240: 4 Pac. 126), and unless the mortgage in terms includes the increase it is not subject to the mortgage lien.

11. These mortgages are security not only for the payment of the notes therein mentioned, but also for the fulfillment of the covenants of the respective leases, which would include the care of the sheep for which the advances were made. The wool of some of the sheep was probably not covered by the mortgage or by the terms of the lease; that is, the wool from such of the increase as was not included in the mortgage. The wool from all the sheep owned by the defendants having been delivered to Ayre, the proceeds of the unincumbered portion thereof and the price of the sheep sold to him could well be applied by Ayre to the payment of advances regardless of the terms of the mortgages or leases, and Brasfield' Bros. have no ground for complaint.

12. Defendants urge that to enable plaintiff to foreclose his mortgages he must identify the property included therein. The rule is that to create a lien on personal property by chattel mortgage, the property must be identified at the time of the execution of the instrument. This is the point involved in Gregory & Co. v. N. P. L. Co., 15 Or. 447 (17 Pac. 143), and Lee v. Cole and Struble, 17 Or. 559 (21 Pac. 819), relied upon by defendants, but not the difficulty here.

13. The property when mortgaged was identified; and the question now is, whether plaintiff can or is required to identify sheep properly mortgaged with which the mortgagor in possession has commingled some of his own sheep. It is a question of confusion of goods. The remedies of the parties owning portions of the property so commingled depend upon the circumstances of the commingling; namely, whether by consent of the owners, by mistake or accident, or whether it was the result of willful, careless, or fraudulent conduct. In the first two cases, as between the owners, neither of them will lose his property, but each will be treated as a tenant in common in proportion to his interest.

14. But where willful or wrongful, the commingler or wrongdoer forfeits his interests unless he can identify his goods. Jones, Chat. Mtg. (5 ed.) § 481; 6 Am. & Eng. Enc. Law (2 ed.), 592; Ilfield v. Ziegler, 40 Colo. 401 (91 Pac. 825); Fuller v. Paige, 26 Ill. 358 (79 Am. Dec. 379); Kreuzer v. Cooney, 45 Md. 582; Horne v. Hanson, 68 N. H. 201 (44 Atl. 292); Root v. Bonnema, 22 Wis. 539; The Idaho. 93 U. S. 575 (23 L. Ed. 978); Alley v. Adams, 44 Ala. 609; Willard v. Rice, 11 Metc. (Mass.), 493 (45 Am. Dec. 226). See, also, extended note to Pulcifer v. Page, 54 Am. Dec., at page 591.

15. If it were, possible to ascertain the relative proportion of the sheep which belonged to the mortgagor (and mortgagee, respectively, each might take his proportionate share of the whole; but from the testimony of the mortgagors this is not possible, as they could not even approximate the number of sheep not covered by the mortgage, and it is their fault that there is confusion, and they must suffer the loss. Jones, Chat. Mtg. § 481.

16. This works no hardship on Hixson & Ames, as only sufficient property can be taken to pay their debts to Ayre.

17. As we have found that Brasfield Bros, purchased with notice of the mortgages, they are in no better position than the mortgagors, and the mortgagee may take the entire property from such purchasers. Jones, Chat. Mtg. § 481; Iifield v. Ziegler, 40 Colo. 401 (91 Pac. 825); Adams v. Wildes, 107 Mass. 123; Kreuzer v. Cooney, 45 Md. 582; Horne v. Hanson, 68 N. H. 201 (44 Atl. 292); Fuller v. Paige, 26 Ill. 358 (79 Am. Dec. 379).

Therefore, the decree of the lower court is affirmed.

Affirmed.