14 N.M. 164 | N.M. | 1907
OPINION OF THE COURT.
(After stating the facts.) The assignments of error are principally to the effect that a verdict should upon the testimony have been directed for the defendant. Specifying the former, it is urged first, that no right of action accrued because the sale of the cattle by Staring to Schuster did not amount to a breach of any condition of the bill of sale; second, that no right to maintain replevin accrued on Kitchen’s bill of sale until he was damnified by the payment of some part of the debt secured by it; third, tfyat the bill of sale was void not having been acknowledged or recorded or witnessed as required by law; fourth, that there was no demand before suit brought; and fifth, that the testimony was insufficient to carry to Schuster any legal notice of the Kitchen bill of sale. There is also a sixth assignment of error dealing with an alleged-error of the court in the rejection of certain testimony offered by the defendants. These will ba considered seriatim.
“After condition broken, the mortgagee or his assignee may proceed to sell the mortgaged property, or so much thereof-as shall be necessary to satisfy the mortgage and costs of sale; having' first .given notice of the time and place of sale, by written or printed handbills, posted up in at least four public places in the precinct in which the property is to be sold, at least ten days previous to the day of sale.” ,
This rule that the maturity of the obligation is not the sole consideration which determines the right to posses-ion is equally applicable to cases of suretyship. This is illustrated by Sidener v. Bible, 43 Ind. 430, where the mortgagee in an indemnity mortgage was held entitled to possession upon breach of a condition as to the mortgagor’s attempting fraud, notwithstanding there had been no default, and the surety had not been called upon to pay; in Mattingly v. Paul, 88 Ind. 95, where the surety was awarded possession although he had paid nothing; and in Stonebaker v. Ford, 81 Mo. 532, where it is said that a surety in the absence of a pi-ovision in the mortgage authorizing it is not entitled to possession until he has been called upon to pay. As we have seen, however, there is in this case an express provision that on breach of condition as to the sale of the property the mortgagee might “proceed to sell”, and consequently might take possession or sue for it as a preliminary to sale. We are as above pointed out concerned in this ease simply with his right to possession in order to sell, not with the disposition of the proceeds of such sale. In the present case, therefore, we deem it unnecessary to decide whether such sale following such possession takes place in advance of th« maturity of the obligation secured or after it. In Lewis v. D’Arcy, 71 Ill. 650, it was indicated that such sale would follow at once. On the other hand in Bank v. Taylor, 67 Ia. 576, influenced somewhat by the terms of tha mortgage, it was held “that while the instrument authorized the holder to take possession of the mortgaged property before the maturity of the debt if he deemed himself insecure that did not empower him to sell it until after maturity.” Nor are we concerned in the present case with the disposition of the proceeds of such sale except to indicate that these would of course in equity belong to the mortgagor’s creditor in case he has not been paid; or if he has been-paid by the mortgagee then by way of reimbursement to the latter, with any balance either of proceeds or chattels, to the mortgagor.
The proper rule governing constructive notice is in our judgment stated in United States v. Detroit Co., 200 U. S. 321, 323, where it is said: “When a person has not actual notice he ought not to be treated as if he had notice unless the circumstances are such as to enable the court to say, not only that he might have acquired, but also that he ought to have acquired it but tor his gross negligence in the conduct of the business in question. 'The question then, when it is sought to affect a purchaser with constructive notice, is not whether he had means of obtaining -the knowledge in question, but whether not obtaining was an act of gross or culpable negligence.”
The record shows that Staring applied to Schuster to sell him the cattle in controversy about June 31, 1904. but on account of the suspicions of the nephew who was interested with him in the trade, Schuster postponed the trade, meanwhile writing to one Kuchenbecker enquiring as to whether there was a mortgage on the cattle. The reply of the latter dated June 34th, states that Staring had given a mortgage on certain cattle in order to raise money to buy other cattle “purchased in Arizona” but adds that the writer does not know whether the cattle he purchased after he obtained the money were included in the mortgage. He adds that in his opinion Schuster would rim no lisk in buying as Staring no doubt “will likely use the money you pay him to pay off the mortgage here.” Schuster thereafter purchased the cattle. We very much doubt if this letter was any evidence of notice to Schuster. Even if it could be assumed that the cattle mentioned as purchased in Arizona referred to the cattle here involved Kuchen-becker’s statement simply disclaims knowledge on the subject. Were the judgment below dependent upon this testimony alone we would find it hard to sustain, under the rule in United States v. Detroit Co. supra. In addition to this, however, there was the testimony of at least two witnesses as to alleged admissions of actual notice by Schuster. The witness Chisum testified that on July 9th., which was within a day or two after the payment of the purchase money by Schuster and the delivery of the cattle to him, the latter enquired in the presence of witness, of one Bean, who was working for Staring, “whether the latter had brought those papers back from Gallup, the papers that Kitchen had mn the cattle,” and Bean thereupon replied that “he had not got back yet but would be back and bring the papers and fix it up all right”. He further testified that in the' following January Schuster told him that 'Tie had no show to lose his case because Mr. Kitchen didn’t have his papers on record”. Schuster in his testimony denied that the conversation was as testified to by Chisum and said that all he asked Mr. Bean on that occasion was whether Mr. Staring had com? back from Gallup and that Mr. Bean, said no.
The witness Roberts testified to a conversation with Schuster in March 1905 when the latter stated in talking about the present case that “he knew that Mr. Kitchen had a mortgage on those cattle that he (Schuster) bought from Staring, but that Mr. Staring promised to come down and pay that mortgage off and get the papers”. Schuster in his testimony admitted a conversation with Roberts but denied that in it he told Roberts that Staring had promised he would come down and pay oif the mortgage to Kitchen. Another witness Raymus testified that in a conversation with Schuster on July 17 or 18,1904, the latter stated that he paid Staring the money and Staring said that he was coming to town to pay the money over to Mr. Kitchen. This conversation was not denied by Schuster, except in so far as it involved his statement that he never knew that Kitchen had any interest in these cattle at the date of this conversation.
We consider this testimony sufficient to warrant the jury in the belief that Schuster had actual knowledge of the Kitchen mortgage and that he bought from Staring relying upon the suggestion of his friend Kuchenbecker that Staring would probably use the money received from him to pay the mortgage off. The jury evidently believed that Schuster had trusted Staring to his peril and the latter having disappeared, Schuster should bear the burden.
It is finally said, however, that the court erred in refusing to admit evidence of a mortgage on other cattle made-to Kitchen by Staring on May 5, 1904, to indemnify him against the same Morris indebtedness. It is urged that this was admissible for two reasons: first as establishing want of consideration for the later mortgage securing the same indebtedness being the mortgage forming the basis of this suit, and second in explanation of the alleged admission of Schuster to Chisum, Robert's and Ray-mus last referred to.
We are also of opinion that proof of this other mortgage was admissible in explanation of the Kuehenbecker letter.
For the reason last stated we are of opinion that the judgment should be reversed, and it is so ordered.