Bank of Black Rock v. Decker

Riddick, J., (after stating the facts.) This is an action brought by the Bank of Black Rock against George W. Decker, in which the bank alleged that he had converted to his own use certain lumber owned by it. The lumber in.question was at one time the property of the Heckart Lumber Company, a partnership firm, engaged in manufacturing and selling lumber at Black Rock, Arkansas. This firm borrowed money from the bank, and, in order to secure payment of the same, the firm, on the 21st of January, 1893, executed to the bank what the cashier of the bank terms a bill of sale for the lumber. The instrument in question is set out in the statement of facts, and we think that, in legal effect, it was only a mortgage. A month or two after the execution of the mortgage to the bank, the lumber company sold this lumber to the appellee, Decker, and it was shipped in his name, and disposed of by him. The right of the bank to recover in this action rests upon the mortgage executed to it by the lumber company. This mortgage was not filed for record until in December, 1893, long aftér the lumber had been sold to Decker, and disposed of by him. The bank, to obviate the necessity of record notice to Decker, undertook to show that the lumber had been delivered to it before the sale to Decker, and was in its possession at the time Decker removed it. There is no conflict in the evidence on this point. The lumber was stacked in square piles upon the yard of the lumber company near other piles of lumber owned by the company. The cashier of the bank and John Heckart, a member of the lumber company, went to the lumber, and Heckart formally delivered possession of the lumber, and the cashier “took possession by walking around it.” “I did not,” he said, “scale it, or place any marks or notice on it to indicate our ownership, nor do anything but walk around it.” After this constructive delivery of the lumber, the bank exercised no further control over it. It was permitted to remain upon the yards of the company for several months, without notice or mark of any kind to indicate or show the claim of the bank, and apparently, if not actually, in the control and ownership of the lumber company. Afterwards it was sold by the lumber company to Decker, or shipped by them in his name, and the proceeds paid to him. Under these circumstances , we are of the opinion that the bank did not have such possession of the lumber as to supply the place of record notice to third parties. The bank should either have recorded its mortgage, and thus given notice of its lien, or it should have taken and retained actual possession of the lumber, in order that subsequent purchasers might not be misled. This was not done. As actual possession of the lumber was not taken and retained by the bank, the constructive delivery and possession taken by walking around the pile of lumber amounted to nothing, so far as the rights of subsequent purchasers were concerned. Steele v. Benham, 84 N. Y. 634; Anderson v. Brenneman, 44 Mich. 198; Jones, Chattel Mort. (4 Ed.), §§ 186, 187, and cases cited. As the bank did not have possession of the lumber, and as its mortgage was not recorded until after the transfer to Decker, the mortgage did not affect him. The mortgage, as to him, was no lien upon the property, and the transfer of the lumber to him cut off all rights of the bank in such lumber. Dodd v. Parker, 40 Ark. 536; Martin v. Ogden, 41 id. 186. Counsel for appellant have presented to us several interesting questions concerning the rulings of the presiding judge upon the trial in the circuit court, but it is not material to discuss or decide those questions. It is not denied that Decker purchased the lumber from the lumber company, and paid for it. He testified that he knew nothing of the bank's claim to the lumber until after his purchase. The undisputed facts, as we see them, show that, as against Decker, the bank had no lien, and no right of action. The circuit judge would have been justified in directing a verdict for him, and the judgment in his favor seems clearly in accordance with the law and evidence, and must be affirmed.