Yale Oil Corp. v. Sedlacek Et Al‪.‬

Conversion ? Sales ? Conditional Sale Contracts ? Taking Mortgage With Knowledge That Chattel Covered by Such Contract ? Mortgagee not Bona Fide Purchaser ? Notice ? Constructive Notice ? Promissory Notes ? When not Payment of Debt. Conditional Sale Contracts ? Taking of Promissory Note Does not Discharge Debt in Absence of Agreement Otherwise nor Release Reserved Title. 1. The giving of a promissory note does not discharge the debt for which it is given, in the absence of an agreement that it shall so operate, either in express words or by such conduct of the parties as to show an understanding to that effect or which estops the creditor from claiming the contrary; hence where shipments of goods were made under conditional sale contracts, reserving title in the seller, acceptance of promissory notes simply as evidence of the debt did not release the reserved title to the goods. Same ? Failure to File ? Invalidity as to Bona Fide Purchasers, Mortgagees or Attaching Creditors. 2. Where conditional sale contracts covering farm machinery were not filed with the county clerk as required by Chapter 145, Laws of 1925, amending section 7594, Revised Codes 1921, they were void as to bona fide purchasers, mortgagees or attaching creditors. Same ? Who "Bona Fide Purchaser" Within Meaning of Above Rule. 3. A "bona fide purchaser" within the meaning of the above section is one who at the time of his purchase advances a new consideration, surrenders some security or does some other act which leaves him in a worse position if his purchase should be set aside, and who purchases in the honest belief that his vendor had a right to sell, and without notice, actual or constructive, of any adverse rights, interests or equities of others in and to the property sold. Same ? Rights of Mortgagee of Personalty Covered by Conditional Sale Contract ? How Determinable. 4. The rights of a mortgagee of farm machinery covered by conditional sale contracts are determinable under the last above rule as to who constitutes a bona fide purchaser, he being deemed a purchaser. - Page 412 Conversion ? Property Covered by Conditional Sale Contract ? Mortgagee not Bona Fide Purchaser. 5. In an action in conversion of machinery covered by conditional sale contracts by one who knew that the contracts existed and that the seller retained title until full payment was made but nevertheless took mortgages thereon, evidence held to sustain the finding of the trial court that plaintiff was not a bona fide mortgagee, within the meaning of section 7594, supra, as amended, and therefore not entitled to recover against the seller of the machinery which had been seized and disposed of at the time plaintiff acquired its mortgages. Notice ? What Constitutes Constructive Notice. 6. One who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact has constructive notice of the fact itself, in all cases in which, by prosecuting such inquiry, he might have learned such fact; and whatever is notice enough to excite attention and put a party on his guard and call for inquiry is notice of everything to which such inquiry might have led. Sales ? Chattel Mortgages ? Pre-existing Debt a Valuable Consideration ? When Insufficient to Support Claim of Mortgagee That He is Bona Fide Purchaser. 7. While a pre-existing debt constitutes a valuable consideration for a sale or a chattel mortgage, it is not such a consideration as will support the claim of a mortgagee that he is a bona fide purchaser within the meaning of section 7594, Revised Codes 1921, as amended, unless the creditor has granted an extension of time for the payment of such a debt, or has in some way altered his condition for the worse.