138 N.E. 512 | Ind. Ct. App. | 1923
Action by appellant against appellee in replevin, the complaint being in the usual form of such actions. There was an answer in denial and also a second paragraph of affirmative answer, 1. to which appellant filed a reply in denial. The affirmative answer was unnecessary. Thompson v. Sweetser (1873),
Appellee was a business man in the city of Shelbyville, Indiana, and one Hendrickson was a dealer in automobiles with the sole right to sell Grant automobiles in Shelby county. He had been engaged in that business for about three years prior to August 31, 1921, and thereafter for about three months. Appellee knew that said Hendrickson was in the business of selling Grant automobiles at retail, and on August 30, 1921, *111 had a conversation with him concerning the purchase of a car. At the suggestion of Hendrickson, appellee went to Indianapolis with him to the salesroom of the Melvin company which appellee understood to be state distributor of Grant automobiles, appellee being introduced as a person interested in the purchase of a Grant automobile. Appellee had about made up his mind to purchase the car here involved and so stated to the Melvin company, but deferred finally closing the sale until he could return home and see his wife. Appellee suggested that Hendrickson drive the car to Shelbyville but the Melvin company objected unless the car was actually sold. That night Hendrickson and appellee reached an agreement by which appellee purchased the car, and the next morning, August 31, 1921, he paid Hendrickson in full $300 cash, $400 by note, and his old car. Appellee did not return to Indianapolis for the car, but sent a party with Hendrickson. Upon arriving in Indianapolis, Hendrickson purchased the car from the Melvin company placing a chattel mortgage thereon to appellant to obtain a part of the purchase price. This mortgage was recorded September 10, 1921, in the recorder's office of Shelby county. Hendrickson drove the car to Shelbyville and delivered it to appellee, who had no knowledge of the fact that a mortgage had been placed thereon. At the time of the execution of such mortgage, appellant was fully informed that Hendrickson was the sole agent in Shelbyville for the Grant automobiles, selling them at retail, that he had a salesroom located in Shelbyville for that purpose, and that he was buying new Grant automobiles and taking them to Shelbyville and selling them at retail. The mortgage executed by Hendrickson to appellant, which was in form a dealer's mortgage, provided that the mortgagor Hendrickson should not remove the auto, "from the salesroom, city and county *112 wherein said property is now situated without the written consent of the mortgagee."
Appellant, in this action, seeks to replevy said automobile, basing its right of possession on the terms of said mortgage.
The principle which must govern in this case is thus stated in Huddy, Automobiles (6th ed.) p. 1100: "A mortgage given on machines, when it is within the contemplation of the parties that the mortgagor shall have the right to expose them for sale in the ordinary course of business, may be void. Thus, if one loans a dealer money with which to purchase cars for sale and a chattel mortgage is given for his security, a purchaser of a machine from the dealer will generally acquire a good title as against the mortgagee." To sustain this principle the author cites CaseThreshing Machine Co. v. Lipper (1916), 181 S.W. (Tex. Civ. App.) 236; Border Nat. Bank v. Coupland (1917), 240 Fed. 355, 153 C.C.A. 281; Cudd v. Rodgers (1918),
In the Cudd case, the action was to recover an automobile, and the facts involved were very much the same as in the instant case. Johnston was a vendor of cars and had no money. He purchased six cars and Cudd loaned him the money to pay for the same, taking a mortgage on the cars. Johnston's practice was to sell the cars and he sold one to Crim and it was from that person appellee bought the car. It was contended by appellee that appellant authorized the sale and disposal of the automobile to him or to any one else to whom it could be sold, and that therefore appellant was estopped from asserting his lien as against the purchaser, and the court, holding that there could be no recovery, states that, "No argument is needed to prove that if a mortgagee permits his mortgagor to engage in trade, *113 and to sell the incumbered property to whoever comes to buy, then the buyer takes his goods free from the lien of the mortgage."
In the O'Neil case, it was held that where a bill of sale covering an automobile was given by a dealer to the one who had lent him money to enable him to secure the car from the freight office, and the automobile was left for sale with the dealer, the bill of sale was void as to the buyer of the car from the dealer, and unless she had some notice of the lender's title, other than that offered by the record of the bill of sale, she took good title as against the lender. The court says that this case is not essentially different from the case of Boice v. Finance Guaranty Corp. (1920),
In Lasswell v. Henderson (1910), 144 Mo. App. 396, 128 S.W. 789, it was held that where a mortgagee of personal property permits a mortgagor to remain in possession thereof and dispose of the mortgaged property in the ordinary course of business for his own use and benefit, such conduct upon his part renders the mortgage fraudulent as to creditors or subsequent purchasers.
Without citing other authorities, we may safely say that it is well established in other states that where it appears, either on the face of the mortgage or by parol, that the mortgagee 2, 3. of personal property has given the mortgagor unlimited power to dispose of the property mortgaged for the use of the mortgagor, such mortgage is void as to creditors and *115
purchasers. This principle must be of controlling force whether the property offered for sale by a retail dealer is subject to a chattel mortgage, or is delivered to him under the terms of a conditional sale. In Indiana, it is well established that one who delivers property to a retail dealer for the purpose of sale by the latter, cannot, as against an innocent purchaser for value, assert title to the property so sold. Winchester Wagon Works,etc., Co. v. Carman (1887),
In harmony with these authorities, we hold that appellant's mortgage as against appellee was void. Having reached this conclusion, we do not need to discuss other errors presented.
Judgment affirmed.