Overland Auto. Co. of Dallas v. Findley , 234 S.W. 106 ( 1921 )

The appellant by its assignment of error challenges the ruling of the trial court that the chattel mortgage lien held by the plaintiff was superior and should be paid out of the proceeds of the sale of the automobile in priority to the mechanic's lien held by the appellant. The appellant predicates error upon the two grounds: (1) That under the Constitution and laws of the state a mechanic's lien for the value of material and labor furnished is superior and payable prior to a registered chattel mortgage lien on the property; and (2) that the mechanic's lien of appellant for labor and repairs is, in the evidence in this case, superior and prior in payment to the chattel mortgage of the plaintiff, because by the terms of the mortgage the mortgagor had consent of the mortgagee to procure repairs and incur expenses for the repairing of the automobile.

The first proposition is, we think, in effect, settled by the Supreme Court in the case of American Type Founders' Co. v. Nichols, 110 Tex. 4,214 S.W. 303. See Ferrell v. McCormac, 215 S.W. 559; Holt v. Swartz, 225 S.W. 856; Jesse French Piano Co. v. Elliott, 166 S.W. 29.

In the second proposition the appellant relies upon the following clause in the chattel mortgage as giving precedence of its mechanic's lien over the chattel mortgage lien:

"If I [mortgagor] fail to properly care for such property * * * the holder of the indebtedness may, at his option, declare all of said indebtedness due and take immediate possession of said property and sell the same."

Appellant argues that the term "properly care for such property" obligates the mortgagor, in order to avoid optional maturity of the debt and foreclosure by the holder of the indebtedness, to keep the automobile in repair, and that therefore the stipulation has the legal effect of an agreement or consent on the part of the mortgagee or holder of the indebtedness that the mortgagor may incur expenses for repairing the automobile and may employ any third party to work thereon and furnish the necessary material for repairs in such a manner as to create a lien for such work and material. The brief recites as authorities: 6 C.J. p. 1138, par. 90; 3 R.C.L. p. 134, par. 56; Watts v. Sweeney, 127 Ind. 116,26 N.E. 680, 22 Am. St. Rep. 615.

The principles of the authorities cited above rest entirely upon agency, express or implied, in the mortgagor to contract such liability, and upon personal estoppel of the mortgagee. So in this case, if it should appear that the mortgagor has acted under the express or implied consent of the mortgagee in doing what he did, i. e., to procure repairs to be made on the automobile by a third person and to create a mechanic's lien, then estoppel by agency or authority would apply, and in virtue of the estoppel the mortgagee's chattel mortgage lien would be postponed in favor of the mechanic's lien. Again, if the mortgagee by his conduct, in effect, authorized the repairs to be made and the mechanic's lien to attach, then personal estoppel of the mortgagee would apply and the chattel mortgage lien, in virtue of the estoppel, would be postponed next after the mechanic's lien.

But it is thought that none of these grounds arise in this case. Appellant relies upon a recital, quoted above, in the chattel mortgage, the construction and legal effect of which becomes a matter of law for the court to decide; there being no dispute about the words. The agreement is that "the mortgagor" shall "properly care for the property"; from which it is but reasonable to expect the mortgagor to personally attend to the automobile and repair it, if necessary, during the time of its use by him and the existence of the mortgage. The words "properly care for the property" would ordinarily admit of the right of the mortgagor, which he had independent of the stipulation, to get the automobile repaired, if necessary, at his own proper cost and charge by a third person, or give a mechanic's lien thereon for the repairs subject to the chattel mortgage lien. But there is not room enough in the words of the stipulation to declare that the mortgagee expressly agreed or consented that the mortgagor could get the automobile repaired, if necessary, by a third person, at the expense or credit of the mortgagee, or that the mortgagor could contract a mechanic's lien for repairs, if necessary to be made, under the usual and ordinary terms that the mechanic should have a lien upon the automobile for the work and labor expended upon it.

And next considering the stipulation in connection with the facts and circumstances of the case, it is believed that it is not shown nor disclosed that the mortgagor had implied authority or consent from the mortgagee to contract a mechanic's lien with appellant that would be superior to and take precedence over the mortgagee's lien. The real facts, that are undisputed, point only to that conclusion. The automobile was carried by the mortgagor from its usual location in Marshall, in Harrison county, to Dallas, in Dallas county, and there placed with appellant for repairs about July 10, which was less than 30 days from the date of the mortgage and before the maturity of the first installment of the note payable July 15. There is an express stipulation in the chattel mortgage for optional maturity of the debt and foreclosure "in case I [mortgagor] remove or threaten to remove said property from its usual location without the consent of the holder of the indebtedness." The statutes of the state (Rev.St. art. 5660) also forbid the removal without consent of the mortgagee. Neither the holder of the indebtedness nor the mortgagee gave consent to the mortgagor to take the automobile to Dallas, and neither of them knew or had any information about its being carried there and placed with appellant until after repairs were made, and then did not consent nor agree to such repairs. The mortgagor carried the automobile to Dallas in strict violation of the terms of the mortgage as well as the statute. The appellant required a written contract from the mortgagor for the repairs before making the same. In these circumstances it is believed that any implied consent of the mortgagee that the mortgagor might incur the liability of repairs with appellant or any other third person is not found. In making the repairs the appellant seemingly acted upon mere possession of the automobile by the mortgagor and the contract with the mortgagor personally.

The mortgagor, though in possession, is not the mortgagee's agent; and the mortgagor does not, in the absence of some authorization by the mortagee, sustain to the mortgagee any relation which authorizes him to contract any liability on his behalf or to contract a lien that shall have priority over his registered chattel mortgage. It is only "under special circumstances," as stated in the authorities, that a mechanic's lien for repairs can be made paramount and superior to a prior registered chattel mortgage lien. And in the absence of circumstances, as here, of any authorization of the mortgagee, the appellant then acted under the circumstances which charged it with notice of the prior registered chattel mortgage; and, having such constructive notice, would take only a statutory mechanic's lien. Appellant would not have an equitable lien nor any equitable ground for precedence.

It is not thought, as further argued by appellant, that the stipulation itself that "if the mortgagor failed to properly care for such property that the indebtedness might be matured," would necessarily be construed as indicating implied consent on the part of the mortgagee that the mortgagor might incur expenses for safe-keeping and employ a third person to make proper repairs of the automobile. In the case of Drummond Carriage Co. v. Mills, 54 Neb. 417, 74 N.W. 966, 40 L.R.A. 761, 69 Am. St. Rep. 719, the chattel mortgage provided that the mortgagee should, at his option, be entitled to take possession of the mortgaged property "if the said [mortgagee] shall so negligently or improperly use or care for said property as to subject the same to probable loss or material depreciation of the value thereof." The court did not hold that this clause was sufficient to show implied authority of the mortgagor from the mortgagee to procure the repairs to be made on the mortgaged buggy. The court held that the stipulation in the chattel mortgage, in connection with the evidence, did disclose that the mortgagor had at least implied authority from the mortgagee to have the repairs made. That evidence was as follows:

"It was also in evidence that the defendant in error [mortgagee] saw the buggy and rode in it frequently, and had knowledge of its being repaired by plaintiff in error, at least once when he was present and it was run into the carriage company's place of business to be repaired by it."

And even if that case is strong enough to be accepted, which we do not say, it would not rule the instant case. For if appellant relies, as it does, on a particular term of the mortgage, it would be charged with notice of all the terms of the mortgage. And looking to the terms of the mortgage, as appellant would be required to do, it is found that the chattel mortgage stipulated as follows:

"And to secure any and all other sums of money which I now owe or may owe said company for gasoline, oils, tires, parts, accessories, material, or labor furnished for said automobile prior to the payment in full of the above-described note."

Appellant would thus be informed that the mortgagee, itself operating a repair shop and garage, had already contracted to make the repairs necessary for purposes within the intention of the mortgage, and had secured the indebtedness therefor by a lien on the automobile. Also the automobile, by express terms, was not to be removed from the county. The mortgagee having already expressly contracted to make the repairs necessary for the purposes within the intention of the mortgage, and having stipulated against the removal of the automobile without its consent to any other place or county, the appellant, having constructive notice of such terms of agreement, may not reasonably have presumed or inferred that the mortgagor had any consent from the mortgagee to take the automobile, in violation of the statute and the agreement, to another county and have appellant or any other third person there make the repairs and create a mechanic's lien in precedence and in priority of the chattel mortgage lien. It is laid down in 5 Elliott on contracts, § 4838, that —

"An agreement which will defeat the purpose of the transaction should not be inferred or implied against a mortgage without very cogent evidence."

The authorities cited by appellant are not applicable and are entirely dissimilar to the instant case.

There is no pretense in the facts that the mortgagee or holder of the indebtedness, by any personal conduct or representations, was estopped from asserting priority of the chattel mortgage lien, and therefore this phase is not further discussed.

The judgment is affirmed.