Lankford v. First National Bank of Lawton

McNEILL, J. On the 4th day of January, 1913, one Garrett executed a chattel mortgage on certain personal property located in Comanche county to the Bank of Lawton" to secure an indebtedness to the bank. The mortgage was not acknowledged, but was witnessed by two witnesses, to wit, Frank T. Blair and M. A. Wert. Thereafter, on April 25 and 28, 1913, respectively, Garrett executed two chattel mortgages to the First National Bank of Lawton on a black horse named Dick, which horse was included in the mortgage to the Bank of Lawton. The note due the Bank of Lawton was not paid, and one McOalmant, acting as the agent of. the Bank of Lawton, took this horse under the mortgage, whereupon the First National Bank instituted a replevin action to recover possession of said horse by virtue of its mortgage. Thereafter the affairs of the Bank of Lawton passed into the hands and control of the Bank Commissioner of the state, and the latter was substituted as a party defendant in the proceedings. The case was tried on an agreed statement of facts. The only question involved, was the effect to be given to the purported mortgage executed to the Bank of Lawton. It was stipulated and agreed that the two witnesses to the mortgage executed to the Bank of Law-ton were both stockholders, and one of them also a director, in the bank at the time of witnessing the mortgage. It was agreed that, at the time the First National Bank took its mortgage, it did hot examine the records in the office of the register of deeds and did not have actual knowledge of the mortgage to the Bank of Lawton. The mortgage of the Bank of Lawton was filed for record on the 6th day of January, 1913, in the office of the register of deeds. It will be first necessary to determine whether this is a valid mortgage. Does the fact that the same is witnessed by two interested persons make if void? Section 4036, Rev. Laws 1910, is as follows: “A mortgage, of personal property must be signed by the mortgagor. Such signature may either be attested by acknowledgment-before any person authorized to táke acknowledgments of deeds, or it may be signed and validated by the signature of two persons not interested therein. Mortgages signed in the presence of two witnesses or acknowledged before an officer, as herein provided, shall be duly admitted of record.” It is the interpretation of this statute *161 that is decisive of the issues in the case at bar. The defendant in error contends that the portion of the statute wherein it provides “that the same may be signed and validated by the signature of two persons not interested therein” refers to the execution of the instrument, and the execution is not complete nor the instrument valid until signed and subscribed by two persons as witnesses not interested therein. It will be noticed that the first portion of the section refers to how a chattel mortgage may be executed, and the second portion refers to the attestation. The second sentence therein is: “Such signature may either be attested by,” etc. It then provides that the same may be by acknowledgment or signed and validated by the signature of two persons not interested therein. The word “either” means one of two- ways, as defined in the case of Aldrich v. Bay State Const. Co., 186 Mass. 489, 72 N. E. 53. wherein the court said: “In the use of the word ‘either’ one or the other of two is meant. ‘Common definitions of the word are ‘one or two’; ‘the one or the other.’ But the word, when used in a connection which implies a choice of action on the part of the person using it, indicates that the option is in the person who is to do the act involving the choice.” It must be apparent that the Legislature when it used the language “may either be attested,” and then provided two methods for the attestation, was referring to the attestation of the instrument, and provided that the same might be attested in two ways: First, the attestation would be valid if the instrument was acknowledged before a person who is authorized to take acknowledgments of deeds; second, the attestation was valid when the instrument was signed and validated by the signature of two persons not interested. The words “signed and validated,” as used in said sentence, must refer to the sentence which it is a portion of, and refers to the attestation of the instrument, and not the execution thereof. In construing and interpreting statutes, one of -the cardinal rules is to look to the origin of the statutes and the different acts of the Legislature to find the intent of the lawmakers. If we look to the origin of the statute relating to chattel mortgages in Oklahoma, we find the statutes of 1893 have two sections which we think are material in determining the intent of the Legislature in the instant case. Section 3263, Statutes of 1893, provides: “A mortgage of personal property may be made in substantially the following form.” The form of the mortgage is then set out, but no mention is made of witnesses, nor are blanks left indicating that any are required, nor does it make provision for the same being acknowledged. This section of the statute has been carried forward into the different statutes of Oklahoma, and is now section 4025, Rev. Laws 1910. At no time has the Legislature ever attempted. to change this form or amend the section, but have seen fit to readopt it and permit it to stand in its original form. This section of the statute is substantially the same as the statute of South Dakota wherein, in dealing with chattel mortgages, was provided a form for chattel mortgage. If we look to the statute of 1893, among the sections provided for the filing of chattel mortgages, and the effect to be given them when filed as constructive notice, we find section 3275 of the Statutes of 1893, which is as follows: “A mortgage of personal property must be signed by the mortgagor in the-presence of two persons, who must sign the same as witnesses thereto, and no further proof or acknowledgment is required to admit it to be filed.” This section was copied exactly from the statutes of South Dakota, and being section 4384 of the Comp. Laws of Dakota (1887). In construing said statute, the Supreme Court of South Dakota, in the case of Walter A. Wood Mowing & Reaping Mach. Co. v. Lee, 4 S. D. 495, 57 N. W. 238, stated as follows: “A mortgage of personal property is valid as between the parties thereto, and as to subsequent purchasers and incumbrancers having actual notice of such mortgage, though it may not be attested by any subscribing witness.” “A compliance with the conditions prescribed in section 4384. Comp. Laws, that ‘a mortgage of personal property must be signed in the presence of two persons who must sign the same as witnesses thereto,’ is only required in order that such mortgage may be entitled to be filed in the office of register of deeds of the proper county, and operate as constructive notice to' creditors, subsequent purchasers, and incumbrancers who have no actual notice of such mortgage.” And while section 3275 of the Statutes of 1893 was still in force and effect in Oklahoma Territory, and was carried forward into Wilson’s Ann. Statutes of 1903, the- territorial Supreme Court of Oklahoma, in construing that section, held that a mortgage not attested by two witnesses was valid as between the parties, and that the witnesses to the same were only an essential requisite that the mortgage might be entitled to be filed for record, and be constructive notice to subsequent purchasers and incumbrancers. Strahorn Hutton-Evans Comm. Co. v. Florer *162 & Bannerman, 7 Okla. 499, 54 Pac. 710; Hess v. Trigg, 8 Okla. 286, 57 Pac. 159. Before this section was amended, the territorial Supreme Court held that a person interested in a chattel mortgage was not disqualified from being attesting witness to the mortgage. Farmers’ State Bank v. Spencer, 12 Okla. 597, 73 Pac. 297. After this construction had been placed upon this section of the statute both by the Supreme Court of South Dakota and by the territorial Supreme Court of Oklahoma, the Legislature of 1907-8 proceeded to amend section 3275 of the Laws of 1893, but made no attempt whatever to amend section 3263 of the Laws of 1893, which gave the form of the mortgage; but the Legislature referred to the fact that it was amending section 3275 of the Laws of 1893, and, as amended, we now have section 4036 in its present form, so it could not be said that the Legislature was attempting to amend the form of mortgage, or to provide that the same was invalid unless acknowledged or subscribed by two disinterested witnesses, but it was amending only that portion of the section of the statute which refers to the attestation of the instrument that was an essential requisite only for the purpose of being entitled to be filed for record. It was. no doubt, the intention of the Legislature to remedy the evil they thought existed by reason of a person interested in a’1 chattel mortgage being a subscribing witness to the same, and in doing so it provided that the witnesses must be disinterested. It appears that this is the first time this identical question has been presented to this court, although this court has, in the cases of Gibson v. Linthicum, 50 Okla. 181, 150 Pac. 908, Dabney v. Hathaway, 51 Okla. 658, 152 Pac. 77, and Merchants’ Nat. Bank of Sallisaw v. Frazier, 60 Okla. 156, 159 Pac. 647, held that a mortgage not witnessed was valid as between the parties. In the case of Blevins v. Graham, decided May 13, 1919, 72 Oklahoma, 182 Pac. 247. this court held that a chattel mortgage not Witnessed or acknowledged was valid as between the parties, and if a subsequent purchaser or incumbrancer had actual notice, that he would take subject to the prior mortgage; but from a reading of this opinion it does not appear that this question was argued or presented to the court, nor did the court in these opinions attempt to interpret this section of the statute. By giving to this statute its fair interpretation and considering the words “signed and validated” in connection with the sentence of which they are a part, which provides that the attestation may either be by acknowledgment or by the signature of two-witnesses, the same must be construed to refer to the attestation of the instrument, and not to the execution of the same. Also, looking to the former statutes and to ascertain the intent of the Legislature as to the evils and mischiefs it desired to remedy, it must be said that the evil it was attempting to remedy was not one relating to the execution of the mortgage, but the Legislature only changed the requisites to entitle chattel mortgages to be filed for record. After reaching said conclusion it follows that the chattel mortgage in the instant case was a valid and subsisting mortgage as between the parties. The question then arises: The mortgage being attested by two persons who were interested therein, but said fact not appearing upon the face of the mortgage, was the same entitled to be recorded, it being admitted that the witnesses were stockholders and one a director in the bank? There are two different rules laid down in 1 Corpus Juris, pp. 772 and 773: First. “Where the statute requires an instrument to be acknowledged or proved be- ! fore it is entitled to registration, the record of an instrument which appears on its face to have been defectively acknowledged or proved will not impart constructive notice to subsequent creditors and purchasers in good faith.” Second. “According to the weight of authority, where an instrument bearing a certificate of acknowledgment or proof which is regular on its face is presented to the recording officer, it becomes his duty to record it, and the record thereof will operate as constructive notice, notwithstanding there be a hidden or latent defect in the acknowledgment ; but there are authorities in which a contrary view has been asserted.” The case at bar, under the agreed statement of facts, comes within the second classification. The Supreme Court of this state, in the case of Ardmore Nat. Bank v. Briggs Machinery & Supply Co., 20 Okla. 427, 94 Pac. 533, 23 L. R. A. (N. S.) 1074, 129 Am. St. Rep. 747, 16 Ann. Cas. 133, speaking through Justice Kane, stated as follows: “The acknowledgment of a deed of. trust executed by a corporation grantor to secure payment of certain promissory notes is a ministerial act. Where such an instrument is acknowledged before a notary- public, who was at the time a director and treasurer of the grantor corporation, and also indebted for unpaid subscriptions to its stock, which facts were known to the grantor, but there was nothing on the face of the instrument or acknowledgment indicating such relationship. the deed of trust was entitled to registration, and the registry thereof was notice to subsequent purchasers, incumbrancers, or lienors.” *163 While the above ease arose and was governed by the laws of Indian Territory, still the principle involved is the same, and as laid down by Corpus Juris, to wit: “Where the attestation ■ of the instrument is regular on its face, and the same is presented to the recording officer, it becomes his duty to file the same, and the record thereof operates as constructive notice.” Other leading cases in support of this position are: Fair et al. v. Citizens’ State Bank of Sterling, 70 Kan. 612, 79 Pac. 144, 67 L. R. A. 851; Blanton v. Bostic, 126 N. C. 418, 35 S. E. 1035; Boswell v. First Nat. Bank of Laramie, 16 Wyo. 161, 92 Pac. 624, 93 Pac. 661; Bank of Benson v. Hove, 45 Minn. 40, 47 N. W. 449. The cases supporting this theory and those to the contrary are all grouped in the notes to 1 Corpus Juris, 773. The courts that are in accord with the Supreme Court of Oklahoma have adopted the rule that, where an instrument has been acknowledged or attested, which acknowledgment or attestation is regular upon its face, but the officer who takes the acknowledgment or witnesses who attest the same are disqualified by reason of their interest therein, but said fact does not appear upon the face of the instrument, the recording or filing of the instrument for record is voidable, and not void, and the same imparts constructive notice to every one until the recording of the same is canceled or set aside; and the same will support an action by the mortgagor therein to have the same canceled of record by reason of the interest of the witnesses, or the person who has taken the acknowledgment. but until the same is canceled or proceedings brought to cancel the same it is of the same binding force and effect as if said defect did not. exist, and is constructive notice to all subsequent purchasers or incum-brancers. The courts holding to the contrary hold that the recording of said instrument, although regular on its face, is void, and is not notice. The decisions of our court being in accord' with the weight of authorities of the differ-. ent states, we see no reason why the same should be disturbed at this time or our former opinion not followed. It therefore follows : First. That the chattel mortgage of the Bank of Lawton was valid as between the parties. Second. From the fact that the same was witnessed by two persons who were interested in the subject-matter, but such disqualification did not appear upon the face of the instrument, the same was entitled to be recorded. Third. The same, having been recorded, was constructive notice to subsequent purchasers and mortgagees. FcfUrth. That the disqualification of the witnesses made the recording of the instrument voidable, and not void, and the same is constructive notice until set aside by proper proceeding for that purpose. For the reasons above stated, the judgment of the district court is reversed and remanded, with directions to restore the property to the Bank of Lawton, and, in case the same cannot be restored, to render judgment for the value of the property, which was agreed to be $100. RAINEY, KANE, HARRISON, PITCH-FORD, and HIGGINS, JJ., concur.