Arkansas City Bank v. Swift & Co.

Martin, C. J. 1. Common law pressumed to prevail. I. What code or system of laws must furnish a rule of decision as between these parties as to this property, is the first question suggested. The Territory of Missouri was carved out of the vast expanse known as Louisiana, which was ceded to the United States by France in 1803 and which had been alternately under the sovereignty of France and Spain. The country known as the Indian Territory and Oklahoma was part of the Missouri Territory, and therefore the common law was extended over in 1816 by the act of the territorial Legislature, and so the former laws, whether of France or Spain, were abrogated. It may be that when the State of Missouri was admitted into the Union with its western boundary extending only as far as “a meridian line passing through' thWmiddle of the mouth of the Kansas River where the same empties into the Missouri,” the territorial laws ceased to operate in the outlying region west of that meridian (St. Louis & S. F. Rly. Co. v. O’Loughlin, 49 Fed. Rep. 440); but this is not entirely clear. O’Ferrall v. Simplot, 4 Iowa, 381, 399, 400. However this may be, the act of Congress of March 1, 1889, established a court for the Indian Territory having jurisdiction in all civil cases between citizens of the United States, residents of the Indian Territory, or between citizens of the United States or of any state or territory therein and any citizen of or person or persons residing or found in the Indian Territory, when the value of the thing in controversy or [466] damages or money claimed should amount to $100 or more ; the code of procedure to conform as near as might be to that existing in the State of Arkansas (25 U. S. Stat. at Large, 783); and in Pyeatt v. Powell, 51 Fed. Rep. 551, it was held that in an action in the federal court established by that act the rule of decision, in the absence of statute, or of proof of the laws, rules or customs prevailing in the Territory, is the common law. It is true that the court says the lex fori is applicable, and that in the Federal courts, in the absence of statutes repealing or modifying it, the common law is the rule of decision and guide of action ; and from this the learned counsel for the defendant argue that a Kansas court should presume, in the absence of proof to the contrary, that the law of the place where these cattle were kept was the same as our own, and that the court below was justified in applying the law of the forum. This position cannot be maintained. In this State the rights of a chattel mortgagee not in possession, as to° subsequent purchasers and mortgagees in good faith, depend upon our statute, which makes registration a necessity. But we must take judicial notice of the fact that no such statute could have existed in.the Indian Territory when this transaction took place, for no legislative body, except Congress, existed having any control in that region from the admission of Missouri into the Union in 1820 until the Organic Act of Oklahoma Territory, which took effect May 2, 1890. 26 U. S. Stat. at Large, 81. In saying this we do not take into account the acts and doings of the legislative bodies organized or constituted by the Indians to prescribe rules for their own government, for these do not extend to citizens of the United States having no relation to the several tribes. There could be no registry act as to [467] chattel mortgages in. a country having no legislative body; and we think that since the act of Congress of March 1, 1889, establishing for the Indian Territory a court which administers the common law, it is the duty of this Court, when there is no showing to the contrary, to recognize that system as in force there. In McKennon v. Winn, 1 Ok. 327, the Supreme Court of Oklahoma decided that the common law prevailed in that Territory at the time of its first settlement, April 22, 1889, and until the adoption of its Organic Act. See also, First National Bank v. Kinner, 1 Utah, 100, 106, 107; Thomas v. The U. P. R. R. Co., 1 id. 232, 234; Thompson v. Rainwater, 49 Fed. Rep. 406. II. In Pyeatt v. Powell, supra, Judge Sanbokn, delivering the opinion of the United States Circuit Court of Appeals, thus succinctly states the principle that must control this case upon this point: í! The rule of the common law is that a mortgage of personal property, unaccompanied with possession, is prima facie void as to creditors of the mortgagor ; yet the presumption of fraud arising from that circumstance may be rebutted by explanations showing the transaction to be fair and honest, and giving a reasonable account of the retention of possession.” 2. Common law rule as to chattel mortgages. And it was accordingly held that a chattel mortgage executed in good faith at Coffeyville, Kansas, July 18, 1888, upon certain mares and colts in the Indian Territory, was valid notwithstanding the mortgagor retained possession and the mortgage was not recorded anywhere; and the rule so stated and its application in that case are well supported by the authorities therein cited and by others. The same rule applies to subsequent purchasers and mortgagees as to creditors. The evidence in this case tended to show that the transaction be [468] tween the Bank and the firms of Beach & Feagans and Warren & Irby was fair and honest; and it was error for the Court to take the case from the jury, since our registry act is inapplicable to chattels owned and held in other states and territories where the common law prevails. III. The chattel mortgage was not strengthened by the absolute bills of sale upon the same property; because it was fully understood that the transfer was intended only as a security for the indebtedness of Beach & Feagans, and that whatever surplus should remain of the mortgaged property or of the proceeds of the same after the satisfaction of the indebtedness should belong to them, and therefore the papers taken together constituted only a chattel mortgage. We think, however, that there was some evidence tending to show the possession of the cattle by the Bank, and that the Court erred in taking that question from the jury- The judgment will therefore be reversed, and the case remanded for a new trial. All the Justices concurring.