cided herewith) 143 Fed. 43, differing only in the location and present ownership of the right of way strip in controversy.

The motion to dismiss the appeal is overruled, and the decree of the Circuit Court is affirmed, in conformity with the opinion in the case referred to.

BANK OF AMERICA et al. v. WAGGONER et al.

(Circuit Court of Appeals, Fifth Circuit. January 30, 1906.)

No. 1,455.

1. CHATTEL MORTGAGES-FORECLOSURE-PRIORITY OF LIEN-EVIDENCE.

In an action to foreclose the lien of a chattel mortgage, which had been wrongfully used by the debtor to secure notes discounted by plaintiff and defendant banks, evidence held to sustain a finding that the claim of plaintiff bank to a lien fixed by the mortgage was prior in time, and therefore superior in right to that of defendant bank.

2. SAME DESCRIPTION-Cattle.

A chattel mortgage on certain cattle described them as 50 head of registered Hereford cows and heifers, four head of registered Hereford bulls, all located on the mortgagor's farm, about 15 miles from V. in W. county, Tex. A sheriff's return on a writ of sequestration in the proceedings to foreclose the mortgage alleged that the sheriff had taken into his possession the property described, pointed out by the mortgagor as the property described in the mortgage, to wit, 35 head of Hereford cows and heifers, 1 two-year old bull, and 18 head of calves, and a bill of sale taken by defendants described the cattle as 65 head registered Hereford cattle, consisting of cows, calves, heifers, and bulls of all ages, located in the seller's pasture at his home at Doans and Vernon, in W. county, Tex. Held, that the mortgage was not void for want of a sufficient description of the cattle.

[Ed. Note. For cases in point, see vol. 9, Cent. Dig. Chattel Mortgages, § 90.]

3. SAME-REGISTRATION-ACTS OF CLERK.

Where a chattel mortgage securing a negotiable note was duly filed in the office of the clerk as required by Sayles' Civ. St. 1888-89 Tex. art. 3190b, § 2, the rights of an assignee of the note and mortgage could not be affected either by any subsequent act of the mortgagor or mortgagee or by the clerk's failure to make the proper entries in his records or to keep the paper in its proper place.

Appeal from the Circuit Court of the United States for the Northern District of Texas.

J. H. Barwise, Jr., A. L. Matlock, Geo. E. Miller, and F. E. Dycus, for appellants.

W. O. Davis and Sam J. Hunter, for appellees.

Before PARDEE, MCCORMICK, and SHELBY, Circuit Judges.

McCORMICK, Circuit Judge. The National Bank of Commerce brought suit in the state court against J. W. Coffee on a promissory note dated the 5th day of April, 1900, and payable the 5th day of November, 1900, in the sum of $7,500, and on a chattel mortgage given on certain live stock, embracing cattle and horses, to secure

the same, sued out a writ of sequestration, and caused the property to be taken into the custody of the sheriff. The defendant did not replevy, and the court ordered the property sold. Before the sale was made the appellees made affidavit and bond as claimants of the cattle, which were surrendered to them. The proceeds of the sale of the property were deposited in the court. On application of the defendant, the Bank of America of New York was made a party, and on its petition the case was removed into the Circuit Court. Whereupon the pleadings were recast to meet the equity practice, and R. C. Neal, W. T. Waggoner, and Robert Houssels were made parties, and such proceedings were had that the suit came to final hearing, when the court passed its decree giving judgment in favor of the appellants, respectively, against R. C. Neal and J. W. Coffee, for the amounts of the notes held by them, and decreed in favor of the National Bank of Commerce a foreclosure of the chattel mortgage as to all the personal property described in the mortgage, except that which had been released to Waggoner and Houssels on their claimants' affidavit and bond. As to these claimants, the court found that they were innocent purchasers for value without notice of the lien of the chattel mortgage, and decreed in their favor accordingly, in terms not requiring further specification to understand the question which we pass upon on this appeal. The National Bank of Commerce and the Bank of America each separately appealed, and each have submitted assignments of error, the substance of which are that the court erred in adjudging that the appellees were innocent purchasers of the cattle for value without notice of the lien of the chattel mortgage. The Bank of America submits a further assignment, that the court erred in holding that the National Bank of Commerce had a prior and superior right to the proceeds of the property that had been sold.

The proof shows that for a number of years before April 5, 1900, R. C. Neal had been engaged in business at Vernon, in Wilbarger county, Tex., as president and active manager of the Merchants' & Cattlemen's Bank, and as a dealer in Hereford, or "white-faced," cattle. He had also a pasture on Red river, 10 or 15 miles north of Vernon, in Wilbarger county, in which he had cattle and other stock in charge. of J. W. Coffee. Before April 5, 1900, the Merchants' & Cattlemen's Bank was reorganized and became the Waggoner National Bank, having a capital stock of $50,000, of which W. T. Waggoner held $10,000, Robert Houssels $3,000, and R. C. Neal over $30,000. Houssels resided in Vernon and was engaged in other business there during all the time of Neal's residence and operations there. Waggoner resided at Decatur, in Wise county, but the extent and nature of his business was such that he was from time to time at Vernon and well acquainted with Neal and with Neal's business activities. In 1900 Neal's pasture embraced a section and a half of land, 960 acres, and immediately adjoining it J. W. Coffee owned a farm on which he resided, having some stock of his own, and extended his care over Neal's pasture and the stock therein. While conditions were thus, Coffee, at the request of Neal, made and delivered to Neal the promis

sory note and the chattel mortgage on which the Bank of Commerce herein sues. His execution of the mortgage was acknowledged by Coffee before the proper officer, and on April 11, 1900, it was placed in the hands of the clerk of the county court of Wilbarger county and an authenticated copy thereof was then placed on file and kept there by the clerk. On April 24th Neal applied in person to the National Bank of Commerce at Kansas City, Mo., for a loan of $10,000, and offered as collateral certain shares of stock in the Waggoner National Bank of the face value of $4,000, which he represented were worth more than par, and the note of J. W. Coffee (on which this suit was brought), "which he said was perfectly good, and was well secured by chattel mortgage on cattle." Relying on these representations, the bank accepted the collateral tendered and made the loan. In July, 1899, at the request of R. C. Neal, the Bank of America discounted for him a note of J. W. Coffee dated November 3, 1898, for $15,900, due May 3, 1900. It was dated Vernon, Tex., and made payable to the Merchants' & Cattlemen's Bank, and was indorsed by that bank and by R. C. Neal. As collateral security for the payment of this note, Neal gave the bank, at the time the transaction was completed, a mortgage made by the maker of the note, and bearing the same date, in favor of the same payee and covering certain cattle and horses. therein described. The proceeds of the discount were sent to R. C. Neal. On April 16, 1900, the bank received from Neal the following letter:

"Vernon, Texas, April 11th, 1900.

"Wm. H. Perkins, Esq., Pt. Bank of America, N. Y.-Dear Sir: My discount of $15,900 will be due in the early part of May, and I want to pay $8.400 and have you carry $7,500 for another six months. The note and mortgage I inclose for your approval. I will also pay the interest on the $7,500.00 from the time the note matures until due. I will say that the eattle in the mortgage are easily worth $10,000.00, to say nothing of the horses. Please let me hear from you, and I trust you will be able to favor me. If this is satisfactory, say how much I shall send you to square the interest and the balance of the $15,000.00. I figure it will be $8,625.00, if note matures May 5th. Thanking you in advance for the favor, I am,

"Yours truly,

To which the bank replied:

R. C. Neal."

New York, April 16th, 1900. "R. C. Neal, Esq., Vernon, Texas-Dear Sir: We are in receipt of your favor of the 11th instant, with note of J. W. Coffee $7,500 and accompanying collateral, chattel mortgage, J. W. Coffee to yourself. We will, as requested, discount this note on May 6th in part renewal of note $15.900 due at that time. The discount on the $7,500 note from May 6th to maturity, November 8th, 186 days, at six per cent. per annum, will amount to $232.50. Please send us in addition $1.50 to cover the required revenue stamps which you have not affixed to the note.

"Yours respectfully,

Thereafter Neal wrote as follows:

W. H. Perkins, President."

"Vernon, Texas, May 3rd, 1900.

"W. H. Perkins, Esq., President, The Bank of America, New York CityDear Sir: I herewith hand you draft on the National City Bank of New York City for $8,634.00, covering your favor of April 16th.

"Yours very truly,

"Enclosure."

R. C. Neal.

To which the bank replied:

"New York, 7th May, 1900. "R. C. Neal, Esq., Vernon, Texas-Dear Sir: We are to-day discounting note J. W. Coffee $7,500.00, and applying proceeds on note $15,900.00, due this day, which find enclosed, stamped paid. The balance of said note was paid by check $8634.00, received in letter May 3rd, signed by you as president, which we presume was a mistake. Please confirm our action with reference to check $8634.00. W. M. Bennett, Cashier, by W. B. Husted."

"Yours respectfully,

To which Neal replied:

"Vernon, Texas, May 11th, 1900.

"The Bank of America, New York-Gentlemen: Your favor of the 7th to hand. I hereby confirm your action with regard to check $8634. The latter should have been signed straight R. C. Neal and check of 8634 applied as per your letter.

"Yours very truly,

R. C. Neal."

The evidence shows that the notes held, respectively, by the co-appellants and the chattel mortgage were executed by the defendant J. W. Coffee, and that the notes are identical in terms, and that the chattel mortgage sent to the Bank of America is identical in its terms with the copy on file with the clerk of the county court. To us it seems clear that as between the co-appellants, even if their equities are otherwise equal, the claim of the National Bank of Commerce to the lien fixed by the chattel mortgage is prior in time, and therefore superior in right to the claim of the Bank of America, and that the Circuit Court did not err in so holding.

We do not understand that the appellees attack either the execution of the chattel mortgage or its due registration. They do contend, first, that the animals claimed by them are not sufficiently described in the chattel mortgage to fix a lien on them against subsequent purchasers. for value without actual notice of the mortgage; second, that at the time of the giving of the mortgage the mortgagor was not the owner of these cattle, but that R. C. Neal, from whom the appellees bought, was the owner, and that therefore the registration of the mortgage did not charge them with notice or put them on such inquiry as would reasonably bring notice to them. The chattel mortgage made by J. W. Coffee describes the cattle thus:

"50 head of registered Hereford cows and heifers; 4 head of registered Hereford bulls - all located on my farm about fifteen miles north of Vernon, in Wilbarger county, Texas."

The sheriff's return on the writ of sequestration, so far as it touches these cattle, is as follows:

"Came to hand the 2nd day of November, 1900, and executed the 3rd day of November, 1900, by taking into my possession the following described property, pointed out by J. W. Coffee as the property described within, to wit, 35 head of Hereford cows and heifers and 1 two yr. old bull and eighteen head of calves."

In the bill of sale taken by the appellees we find this description: "65 head of registered Hereford cattle, consisting of cows, calves, heifers and bulls, of all ages, located in my pasture and at my home, at Doans & Vernon, in Wilbarger county, Texas."

On the hearing it was agreed "that reference shall be made to the return of the sheriff for the number of cattle there were." Waggoner testifies that, when he made the purchase, he knew that the cattle he was buying were out on the section of land he had bought from Neal, and that Mr. J. W. Coffee was looking after them, and that about two weeks after he bought them he saw Coffee and asked him if he would hold the cattle for the appellees at the same price, and, being answered "Yes," left them "right there in Coffee's keeping." He had known that Neal had such a lot of cattle; had seen them a few months before he bought. He says that such cattle are not marketable cattle, and testifying about them he designates them by their most conspicuous flesh mark as "white-faced," or "bald-faced," cattle, as do also the witnesses Coffee and Houssels. We think the appellees' first contention is not sound.

The proof shows that from April until September 22, 1900, Neal was speculating in cotton futures and was losing. In the early part of September he approached Waggoner and mentioned lightly that he would be obliged to have some money and asked a loan, but the matter passed off at that time, and a couple of weeks later Neal again approached Waggoner and told him that he needed $25,000 more than he had, and that he could not get it from anybody else, and urged Waggoner to make him the loan. Waggoner said he did not have the money in hand, and they bandied the subject back and forth for several hours immediately preceding the departure of a local train on which Waggoner was to leave Vernon, but Waggoner refused to do anything, got on the train, and thought he was rid of Neal. Before the train left Neal saw Robert Houssels and asked him to sign a note for $25,000. Houssels said he would not do it; it was too much money. Then Neal said he had made arrangements with Waggoner and that he had to get some money, and that he was going to make a deed to his home an some land and some white-faced cattle, that he had the deed made, and that he was going down to take it to Waggoner, and under that representation Houssels signed the note; the name of the payee then being in blank. Neal got on the leaving train and followed Waggoner to Oklaunion and begged him into signing the note. The note is in words and figures as follows:

"$25,000.00.

"The Waggoner National Bank of Vernon.

Vernon, Texas, Sept. 22, 1900. "Ninety days after date, we, I or either of us promise to pay to the order of National Bank of Commerce, at the Waggoner National Bank, Vernon, Texas, the sum of twenty-five thousand & no/100 dollars, for value received, negotiable and payable without defalcation or discount, with interest at the rate of 10 per cent. per annum from maturity until paid, and if sued upon or placed in the hands of an attorney for collection, I agree to pay all cost of suit, together with 10 per cent. on principal and interest, as attorneys' fees. "[Signed] R. C. Neal, "W. T. Waggoner, "Robt. Houssels."

Robert Houssels had signed at Vernon, R. C. Neal had signed before Robert Houssels, and space was left between these signatures for the signature of W. T. Waggoner. W. T. Waggoner, while being examined as a witness, was asked: