Opinion ID: 1229279
Heading Depth: 1
Heading Rank: 2

Heading: Validity of Mortgage

Text: Appellant seems to suggest that, even if Bryan was not the owner of the two trucks in question, such fact would not render his mortgage and the assignment thereof invalid. There is, of course, authority for the statement made in 14 C.J.S. Chattel Mortgages § 23, pp. 615-616, which is cited by appellant, to the effect that such a mortgage, if made with the consent of the true owner, may be valid as between the parties and as against all persons having knowledge of the transaction. However, the Citizens Savings Bank was not a party to the transaction and it had no knowledge thereof. Thus, the rule stated at 14 C.J.S., supra, p. 614, is wholly applicable. It is to the effect that a chattel mortgagor can convey by mortgage only that interest which he possesses in property, and ordinarily a mortgagor cannot give a valid mortgage on property which he does not own or in which he possesses no interest. See Butin v. Rothman, 135 Colo. 477, 312 P.2d 783, 784; Standard Motor Co. v. American Loan System, Inc., 120 Colo. 311, 209 P.2d 264, 265; Hale v. Fornea, La. App., 79 So.2d 124, 126; Stanley v. Ellis, 77 Ga. App. 12, 47 S.E.2d 776, 778. For purposes of our case it is sufficient to say that a mortgage on property which the mortgagor does not own or in which he possesses no interest is not valid as against a bona fide purchaser or encumbrancer for value, irrespective of which transaction is prior in time. See Bank of Kennett v. Clayton, 241 Mo. App. 487, 245 S.W.2d 678, 683; Wasatch Livestock Loan Co. v. Lewis & Sharp, 84 Utah 347, 35 P.2d 835, 841-842; and 14 C.J.S. Chattel Mortgages § 294, p. 932. It being clear in the instant case that Bryan did not own and did not have possession of the vehicles which he purported to mortgage, and additionally that Cheyenne National Bank did not comply with the statutory requirement of delivering the certificates of title to the county clerk for appropriate notations thereon, we are compelled to hold that plaintiff became a bona fide encumbrancer for value with neither actual nor constructive notice of a prior lien. The mortgage held by defendant-Cheyenne National was therefore invalid as to such bona fide encumbrancer, and the judgment of the district court was proper. Affirmed.