First National Bank v. Keys, 229 U.S. 179 (1913)

First National Bank of Claremore v. Keys

No. 263, 264, 302, 303

Argued April 25, 28, 1913
Decided May 26, 1913
229 U.S. 179

ERROR TO THE SUPREME COURT OF OKLAHOMA

Syllabus

Registration laws are of statutory origin, and, in each case, the applicable statute determines what instruments are to be recorded and where and what the effect is of failure to record.

An act of Congress creating a new district in the Indian Territory and establishing a clerk’s office therein, and which does not expressly so provide, does not require a chattel mortgagee to rerecord his instrument in the new clerk’s office.

Where the duty of transferring records of instruments from one clerk’s office to another newly established is placed upon the clerk, rights of persons under such instruments are not lost on account of the failure of the clerk to comply with the statute.

Even if the decision of a state court having jurisdiction of a case transferred from a federal court were subject to review here on a nonfederal question, this Court would not, in the absence of manifest error, interfere with the discretion of the trial judge in permitting or refusing an amendment.

27 Okl. 704 affirmed.

On July 20, 1906, the First National Bank of Claremore brought suit against Wat Mayes in the United States District Court in the Indian Territory, Northern District, sitting at Vinita. An attachment issued, and was levied on cattle belonging to Mayes and located on his ranch near Pryor Creek. It appeared that he had given mortgages on the herd to Vinita National Bank (1899), C. M. Keys & Company (1901), First National Bank of Vinita (1903), Citizens’ Bank (July 24, 1905), J. C. Hogan (July 27, 1905), Mary D. Mayes (August 2, 1905).

These mortgagees intervened in the attachment suit and asked that the case be transferred to the equity docket, and that the cattle be sold and the proceeds applied to the payment of their debts.

It appeared that the Bank of Claremore and the First National Bank of Vinita also had mortgages on real estate, and it was contended that, having a lien on two funds, they should be required to seek payment out of this land before receiving anything under their mortgages against the cattle. A receiver was appointed, who took charge of the property, real and personal. He sold the herd for $11,234.47. The case was then referred to a master, where all the mortgages were proved, although an attack was made on that given by Mayes to Keys & Company. It appeared that being indebted to that firm $34,800.04, he, on October 28, 1901, gave them a note therefor, due one month after date. To secure that note and any renewals thereof he, on October 29, 1901, executed a mortgage on 2,835 head of mixed cattle and their increase. The cattle were described as being located on the "mortgagor’s range, 3 miles south of Pryor Creek, I.T.," then in the Northern Judicial District of the Indian Territory. The acknowledgment recited that "Mayes executed the same for the purposes and consideration therein named," omitting "and set forth," which it was claimed was required by the provisions of § 656, Mansfield’s Digest, of force in the Indian Territory. This mortgage, thus acknowledged, was filed for record October 31, 1901, with the clerk of the United States court, ex officio recorded for the Northern District of Indian Territory at Muskogee, and was recorded November 22, 1901.

At the hearing, Mayes contended that he had shipped enough cattle to pay off the mortgage debt. It appeared, however, that in January and March, 1905, he gave two notes aggregating $15,288.69. The master found that they were renewal notes, representing the balance due on the original debt of $34,800.04, and were secured by the mortgage of October 29, 1901. He held, however, that this mortgage, while oldest in date, and while good against Mayes, was inferior to the attachment and the other mortgages because of the failure of Keys & Company to rerecord it at Vinita and transfer it to the index at Pryor Creek, in pursuance of acts of May 27, 1902, 32 Stat. 276, c. 888, and February 19, 1903, 32 Stat. 842, c. 707, successively creating recording offices at those two places. He therefore recommended that the money should be paid in the following order: First National Bank of Vinita, $3,778.19 (mortgage of January 16, 1903); First National Bank of Claremore, $4,869.10 (attachment issued July 20, 1905); Citizens’ Bank of Pryor Creek, $1,824.68 (mortgage of July 24, 1905); J. C. Hogan, $6,187.00 (mortgage of July 27, 1905); Mary D. Mayes, $1,440 (mortgage of August 2, 1905); Vinita National Bank (one of the cases by subsequent stipulation); Keys & Company, $15,808.69 (mortgage of October 28, 1901).

Under this ruling nothing would have been paid on the mortgage to Keys & Company, which had been transferred to the Stock Yards Bank. They therefore filed exceptions, which were overruled. The court, however, confirmed the report, and made the additional finding that

the mortgage of C. M. Keys & Company is an absolute fraud by reason of their failure to renew or to advise people in any way, shape, or form of the various payments that had been made and the transfers that had been made.

The court directed that the real estate should be sold and the proceeds applied in the order of priority heretofore set out. Before this was done, Keys & Company took the case to the United States Court of Appeals in the Indian Territory, and while the cause was there pending, Oklahoma was made a state, and, under the Enabling Act, 34 Stat. 276, c. 3335, 34 Stat. 1287, c. 2911, the cause was transferred to the Supreme Court of Oklahoma, which (22 Okl. 174) held that the acts of Congress did not require mortgages recorded at Muskogee to be rerecorded at Vinita, nor was the holder required to have them transferred to the index at Pryor Creek. It thereupon directed that the money should be paid to (1) the Vinita National Bank; (2) to Keys & Company,

the other creditors taking their places after them in the order decreed by the court below. Let the judgment of the court below be modified to conform to this opinion.

A motion for a rehearing was granted, and the then defendants in error urged many grounds why the judgment should be affirmed. The court rendered an elaborate supplemental opinion in which it held that the Keys mortgage was properly acknowledged; that it had not been rendered void by failure to take possession of the cattle; that there was no exception to the finding by the master, that the debt of $15,808.69 was due and secured by the mortgage; that no issue of fraud had been raised by the pleadings, "and the charge of fraud upon the merits seems to be without foundation." The court refused to make a final order of distribution, but adhered to the judgment of reversal previously made. The mandate was returned to the District Court of Craig County, Oklahoma.

Thereupon the Bank of Claremore, Citizens’ Bank, First National Bank of Vinita, J. C. Morgan, and Mrs. Mayes called the court’s attention to the fact that the supreme court had held that the issue of fraud had not been presented by the pleadings, and they asked leave to file amended answers to the intervention of Keys & Company, in which they denied the existence of any debt from Mayes to Keys & Company, averring that the mortgage was defectively acknowledged, was fraudulent in law and in fact or, if originally good, had lost its validity against creditors of Mayes because he had been permitted to retain possession of the herd.

The motions to amend were disallowed and (the Vinita National Bank, by consent, having been paid) the court entered a decree in conformity with the opinion of the supreme court, under which the proceeds of the cattle were to be applied to the payment of the mortgage of Keys & Company, transferred to the Stock Yards Bank. No distribution was made of the proceeds of the real estate. The Claremore Bank and the other plaintiffs in error again took the case to the Supreme Court of Oklahoma, which held that the district court had merely followed its ruling, and dismissed the writ of error. The case was then brought here on the ground that the construction of federal statutes and the validity of a federal judgment were involved.