Megown v. Fuller ( 1928 )

ON PETITION FOR REHEARING A petition for rehearing has been filed. The petition and brief in support thereof contain nothing that causes us to doubt the correctness of our decision as announced in our former opinion (266 P. 124), and in denying a rehearing it will be useless to enlarge on the reasons that caused us to hold that the plaintiff was prejudiced by the ruling of the trial court striking from the evidence the released chattel mortgages.

Our statement of the facts is conceded to be correct, except the statement that, "one cow branded CF and with the T6 brand vented, was produced for inspection at the trial." A witness testified that he saw this animal at the court house, but it now appears that we were in error in saying that the animal was produced at the trial. The witness was referring to another time — a former term of court. This error, of course, would not affect our view on the matters in controversy in this court.

We stated that the giving of the new notes and mortgages in this case was an example of the common practice of banks in handling slow loans on chattel security. Counsel doubts very much whether this court can take judicial notice of the custom of banks in such a matter. We did not use the word "custom" and did not suppose our language would be interpreted as an intimation that we were taking judicial notice of a custom. The criticized phrase is merely a part of our description of a transaction for renewal of an indebtedness, and whether the method pursued — the giving of new notes and mortgage and cancellation of the old — was the customary method or not, we are of the opinion that for the purposes of this case, so far as disclosed by the record, the transaction should be treated as a renewal. Counsel says that the custom with which he is familiar is that banks retain the old notes and mortgages and do not discharge the mortgage of record. The books, however, are full of cases showing that a secured indebtedness is frequently renewed by the method followed in the case at bar, and we do not recall any case in which the bank has claimed the right to retain the old notes and to keep both the old and new mortgages of record.

Counsel is apprehensive that our opinion has the effect of holding that a chattel mortgage can never be discharged of record until the entire mortgage indebtedness is paid. It is hardly necessary to say that our opinion has no such effect. We expressly stated that the effect of a release must depend largely on the right that is claimed by virtue of it. The point decided in this case is the effect under the facts of the releases on the rights of the mortgagee and the defendants in an action by the former against the latter for conversion of a part of the mortgaged property while subject to the mortgage lien.

Rehearing denied.

BLUME, C.J., and RINER, J., concur.