Garris v. Commercial Credit Company

I agree with his Honor, Judge Johnson, in directing a verdict in favor of the Commercial Credit Company, upon the ground that the description of the mortgaged property, in the mortgage of Hartzog, was too indefinite to constitute constructive notice by recording.

The contest is really between the Commercial Credit Company and Hartzog as to the priority of their respective mortgages. The question between them is not so much one of constructive notice by the recordation, as it is of the propriety of recording Hartzog's mortgage at all.

It appears that one Asendorf was a dealer in automobiles, doing business both at Orangeburg and Denmark, but having his residence at Denmark, in Bamberg County, selling Chrysler cars.

On December 12, 1925, he purchased from certain parties in Columbia, representing the Commercial Credit Company, a new Chrysler Car, and executed what is termed a "trust receipt" for it, practically a chattel mortgage as it will be considered. In the receipt, the car was thus described:

"One motor vehicle — make Chrysler, 4 Model Coach. * * * (giving motor and serial numbers)."

This instrument was recorded in Orangeburg County on December 24, 1925, but not in Bamberg County, where the purchaser lived, although doing business also in Orangeburg County.

On January 7, 1926, he purchased from the same parties a new Chrysler car, and executed a similar instrument. In it the car was thus described:

"One motor vehicle — make Chrysler 4, Model Touring. * * * (giving motor and serial numbers)."

This instrument was recorded in Richland County, but not in Bamberg County where the purchaser lived, on January 18, 1926.

There were three other new Chrysler cars involved in the dealings between the parties, about the same time. This litigation does not concern them; it appears to concern only the two cars above described.

On January 12, 1926, Asendorf gave his note to Hartzog for $4,000.00, whether for a past or present consideration does not appear, and gave as security, as Hartzog alleges in his answer, a mortgage upon "two of the automobiles described in the complaint"; the complaint describes three; which two are not indicated, but I will assume that Hartzog intended to refer to the two above described. In the mortgage given to Hartzog, this is a description of the property claimed to have been mortgaged: "Three new Chrysler automobiles at Denmark and Orangeburg, S.C." It appears that Hartzog makes no claim to the third automobile described in the complaint.

Thereafter, on or about February 16, 1926, the Commercial Credit Company seized and took possession of the cars in question.

Asendorf later went into bankruptcy, and the plaintiff, as trustee under the bankrupt law, brought this action against the Credit Company, and J.A. Hartzog, as having some claim to the cars, for the value of the cars, $4,704.

The Commercial Credit Company answered asserting its right to the cars under the trust receipts referred to, and the defendant Hartzog, in the nature of a cross complaint against the Commercial Credit Company, in his answer claimed the cars under his chattel mortgage and damages for a conversion of them. To this answer of Hartzog, the company replied.

The case was tried before his Honor, Judge Johnson, and a jury, and at the close of the evidence, each of the parties moved for the direction of a verdict. The motion of the Commercial Credit Company was granted; the other motions were refused. From the judgment entered upon the directed verdict in favor of the company, Hartzog has appealed.

His Honor, Judge Johnson, granted the motion of the Commercial Credit Company upon the ground "that the Hartzog mortgage is so indefinite in its description that it really is not a chattel mortgage." The correctness of that conclusion is really the only point in the appeal; as to it, I think that his Honor was entirely right.

As I have indicated above, the question is not so much one of constructive notice as of the validity of the chattel mortgage held by Hartzog; there is no claim on the part of the Commercial Credit Company that Hartzog was bound by constructive notice of its mortgage, for it is conceded that it was not recorded in the proper county, or that it was a subsequent creditor to Hartzog's mortgage, for it became a creditor before it was executed. Its contention is that Hartzog, by reason of the indefiniteness of the description of the cars, had no mortgage at all. If this be true, the Commercial Credit Company, with a perfectly valid mortgage, though unrecorded, has priority over that which does not amount to a mortgage at all.

I think that it is erroneous to base a decision upon the matter of estoppel — to insist that the Commercial Credit Company cannot recover for the reason that it was negligent in not having its papers recorded. This is to assume that Hartzog held a valid mortgage.

Considering the business in which Asendorf was engaged, the purchase and resale of new Chrysler cars at Denmark and at Orangeburg, I cannot conceive of anything more indefinite than the description in Hartzog's mortgage, "three new Chrysler cars at Denmark and Orangeburg, S.C." The three cars could not possibly have been at Denmark andOrangeburg at the same time, one of them must have been at one place and the other two at the other, and, if so, which were at one place and which at the other no one could possibly tell.

Suppose Asendorf had had only two new Chrysler cars, one at Denmark and the other at Orangeburg, and the mortgage had described them as two cars at Denmark and Orangeburg, how would it have been possible to tell which was at one place and which at the other? This part of the description would have utterly failed for that reason, and that which was left, "new Chrysler" cars, would have applied to any of a dozen of that description on hand.

The law expects a mortgagee to use the means of identification at hand, and is not overexacting when he has done that. For this reason mortgages upon bales of cotton, or cotton to be grown, have been sustained, for no other identification than the year and the place cultivated is available.Brown v. Hughes, 94 S.C. 140, 77 S.E., 730; Robinsonv. Saxon Mills, 124 S.C. 421, 117 S.E., 424; KimbrellCo. v. Mills Young Co., 100 S.C. 443, 84 S.E., 996;People's Bank of Rock Hill v. People's Bank of Anderson,122 S.C. 476, 115 S.E., 736.

There is no chattel that can be more easily and properly described than an automobile: its make, style, number of seats, open or closed, serial number, motor number, cylinders, cylinder number, color, etc.

The general rule as stated in 11 C.J., 456, § 77, is: "It is obvious that a chattel mortgage must describe the property mortgaged. It is necessary that it contain some statement concerning the property which will serve to distinguish it from other property of the same kind."

In 5 R.C.L., 427, it is said: "It may be said to be the general rule, however, that such a mortgage is not good as against creditors of the mortgagor or others acquiring adverse rights, unless it furnishes the data for separating the mortgaged property from the mass of articles. If it leaves the designation of the specific property mentioned therein specified exclusively in the minds of the parties it fails to meet the purposes and requirements of the law and is void for indefiniteness."

In 11 C.J., 463, it is said: "When the rights of third persons become involved the greater weight of authority supports the rule that a mortgage of a specific number of chattels out of a larger number or of specific quantity out of a larger mass which does not furnish data for the reparation of the mortgaged chattels is, when there is no separation or delivery, void for uncertainty."

See, also, Iowa Automobile Supply Co. v. Tapley,186 Iowa, 1341, 171 N.W., 710; Commercial Sav. Bank v.Brooklyn Lumber Grain Co., 178 Iowa, 1206,160 N.W., 817; Northwestern Nat. Bank v. Freeman, 171 U.S. 620,19 S.Ct., 36, 43 L.Ed., 307; 5 R.C.L., 427; Ormsby v.Nolan, 69 Iowa, 130, 28 N.W., 569; Note, 14 Am. St. Rep., 242; Bank v. Gamble, 148 S.C. 49, 145 S.E., 627.

There is a principle well recognized that, if the description is sufficient to put a third person upon the inquiry which pursued would enable him to identify the property intended to be mortgaged with reasonable certainty, it will be deemed sufficient.

In this case there is no assurance that either Asendorf or Hartzog, if applied to, could have had any other idea than that Asendorf meant to mortgage three cars — which ones they could not say, or they might differ.