Franklin Bond & Inv. Co. v. McFadden

One Lewis Evans- was the purchaser of a truck, a chattel mortgage of which he executed. to the Horsch Motor Co., covering twelve notes and which was. the same day assigned to the Franklin Bond & Investment Co.

In 1923, the truck became disabled and was abandoned by Evans; but the last five notes covered by the ¡chattel mortgage being, unpaid at maturity were taken up by five new ones dated one year later than the original notes and were made payable to the Bond Co. instead of the Motor Co. C. R. McFadden purchased the broken down truck from Evans in June, 1923, a bill of sale' being made out in August. The truck was practically rebuilt by McFadden at an expense of $579.39, Evans having knowledge at the time that McFadden was placing such heavy expenses on the truck, but not disclosing to him the existence of its mortgage until the rebuilding bad been completed.

The Bond Co., after repairs had been made by McFadden filed a petition in replevin in the Licking Common Pleas, seized the truck and within a short time sold it. • McFadden set up a novation and a cross petition based upon fraud and estoppel on part of the Bond Co. for remaining silent while knowing that McFadden was rebuilding the truck and expending large sums of money in doing so.

The lower courts took the view that there was in law no affidavit of replevin, therefore no replevin proceeding; that the chattel mortgage was void because the notes secured had been extinguished by the new notes entirely different, and because the mortgage had not been refiled. It was held that possession was in McFadden by reason of having purchased the truck and having a lien thereon. The jury had submitted to it the question of the value of the truck.

The Bond Co. filed .the case on a motion to certify, and McFadden, in the Supreme Court, against the motion, contends:

The notes secured by the mortgage had been superseded and extinguished at the time he bought the truck and rebuilt it; therefore there was no existing mortgage under the rule that a mortgage is only an incident to the notes which it secures. The last set of five notes are claimed to be different that the original five in that they had different dates of execution; different and extended maturity dates; different rates of interest and different payees. This, it is urged, constituted novation, and the new notes cancelled and extinguished the old.

It is claimed that there was no affidavit in replevin; that the alleged, affidavit was sworn to before the attorney for the Bond Co. as notary public;-and that a valid writ of replevin could not be. issued thereon and' the taking of the truck out of ■ McFadden’s possession was a nullity. It is further claimed that “the making of an affidavit in replevin; before ' the attorney' for the plaintiff' as notary, renders the affidavit void; and a writ based upon such an affidavit must be dismissed.

It is .further - contended'that, since in the eyes of the law, the truck had never left McFadden’s possession, he was' entitled-to. the protection of the chattel mortgage statute applying to subsequent purchasers' in good'faith; and upon the f expiration of the time fot refiling as provided in' 8565 GC., the- lien of a delinquent mortgage will be void as a'g.a'inst a purchaser in good faith who becomes Such purchaser prior, to the laches of the' mortgagee. ■ , ‘ -