Court Opinion

ID: 3817562
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:53:39.744778+00
Date Added: 2024-06-11T07:39:26.825949
License: Public Domain

I am unable to agree with the decision of the majority of my associates as to the priority of the claim of L.O. Carter and the First National Bank of Alex upon the tanks of oil in question. *Page 23 
The method selected in the foregoing opinion to extricate the sale of the oil from Olympic Refining Company to L.O. Carter from the class of transfers of personal property declared by section 10008, O. S. 1931 (24 Okla. St. Ann. § 6) to be void as to creditors is by determining that said sale was not a sale "within the meaning of that term as used" in said section. I do not find the term "sale" in the provisions of said section and will not agree that it applies only to a "sale" as distinguished from the broader and more comprehensive term "transfer." The real necessity of holding that there was no sale in the present case, however, was to arrive at the conclusion that what for all intents and purposes appeared to be a valid transfer of title from Olympic Refining Company to Carter was not that at all, even as between the two parties themselves; but that the bill of sale executed and delivered by Olympic to Carter pursuant to the purported sale was ineffective to divest Olympic of the title because no consideration passed from Carter to Olympic. The formulation of this hypothesis enabled the writer of the majority opinion to construe the mortgage from Carter to the First National Bank of Alex to be in reality a mortgage from Olympic Refining Company made through an intermediary or agent, and thereupon to conclude that same was a mortgage allowed by section 10012, O. S. 1931 (24 Okla. St. Ann. § 11) or "a mortgage . . . allowed by law," relieving the entire transaction from invalidity as to creditors under section 10008, supra.
The majority opinion recognizes that its conclusions are based upon a view of the evidence contrary to that entertained by the trial court. In my opinion, however, the judgment of the trial court cannot be said to be contrary to the evidence, and, under our rule of appellate review, must therefore be affirmed.
First, I will deal with the majority's general conclusion that the arrangements made at the meeting of Harris, Cole, and Carter on September 23, 1935, constituted only one, instead of two transactions; and that "the whole purpose of the transaction was to give to the bank which had advanced the money for the operation of the business a certain priority over the other creditors of the refining company. . . ." As I see it, such a conclusion is not only contrary to the evidence of what the parties actually did, but it is an unwarranted conjecture as to what they intended to do. All that was actually done was that Olympic Refining Company sold the oil to Carter, transferring title thereto by a bill of sale executed and delivered to said purchaser on behalf of Olympic by its manager, Cole; and Carter paid for same with his notes and a mortgage on the oil purchased. Since Olympic owed the bank, and the latter desired said indebtedness reduced, the notes and mortgage were executed to the bank rather than to Olympic. The reason that the latter was done was not to give the bank "priority over other creditors of Olympic Refining Company," but to terminate its status as a creditor of said company to the extent of $3,122.79, the major portion of the oil's purchase price. The undisputed evidence was that what the bank needed was not more or better security for money it had advanced to Olympic, but a reduction of said amount in order to comply with banking regulations. This, and the incorrectness of the quotation from the majority opinion, is further established by the undisputed evidence that after Harris realized the position the bank was in, and just previous to the meeting of the parties on September 23rd, he refused Olympic's offer made by Cole, its manager, to give the bank a mortgage on the oil in question.
Nor do I find anything in the circumstances of the situation to support the theory of the majority opinion. Here, all that happened was that a bank found one of its customers indebted to it in excess of the limit allowed for such an indebtedness by banking regulations. It thereupon called upon the debtor to reduce said indebtedness. After a conference concerning the matter it was found that the only possible or feasible way the debtor had of raising the money to pay *Page 24 
the bank and reduce the indebtedness was by selling its assets consisting of oil. I am unable to see that because a sale is made necessary by such circumstances, they, in themselves, are sufficient to constitute the purchaser the agent of either the seller or the bank; nor that such a conclusion is warranted from the additional circumstance that the consideration for the property sold is used in part to reduce said indebtedness and in part to secure further credit.
To support its view that the two transactions were only one, the majority opinion holds that there was no valid sale of the oil from Olympic to Carter, nor mortgage of it from Carter to the bank, because there was no competent evidence to show that Carter gave any consideration to Olympic Refining Company or received any from the bank. The evidence is undisputed that Carter executed his notes secured by a mortgage on the oil in the sum he agreed to pay for it. I have never understood that notes secured by a mortgage do not constitute good consideration, and such is not the law. Nor is it material that the notes and mortgage were executed and delivered to the bank rather than to Olympic. Can it be said that a consideration passes from a vendor to his vendee any less where the vendee, at the vendor's request, executes and delivers notes and a mortgage to the vendor's bank to obtain for said vendor cash or credits, than where he executes and delivers them directly to the vendor so that the latter may himself procure the same result by assignment to the bank? And if by so doing the vendee procures ownership of the goods purchased, can it be said that there was no consideration for the mortgage merely because the mortgagee named therein gave to him directly nothing in return therefor? Obviously, both of these questions must be answered in the negative, and they demonstrate one of the material distinctions between the present case and Iowa National Bank v. Citizens' National Bank of Woonsocket, R.I., et al.,70 Okla. 1, 172 P. 924, the only precedent which the majority opinion cites for the view therein adopted. In the cited case, Paxson, the purported vendee and mortgagor, neither gave anything nor received anything for himself by the bill of sale and mortgages to which he was a nominal party. In this case, however, Olympic transferred to Carter, as between itself and him, not just an empty paper title to the oil in question, but all of the rights of ownership in it that said company had, including the right to take possession of it and sell it. The evidence establishes, however, that said transfer of ownership was not accompanied by such delivery or change of possession as is required by section 10008, supra, to prevent it from being fraudulent as to creditors. The majority opinion does not assert, nor in my opinion can it be successfully asserted, that the trial court's judgment is contrary to law or to the evidence on this vital point. This being true, and being unable to agree with the majority opinion that said judgment is contrary to the evidence on the matters which comprise its foundation, I think the trial court's conclusion as to the transfer from Olympic Refining Company to L.O. Carter should have been sustained.
In my opinion, the application of the rule announced by the majority to fact situations like the one herein presented is not only unwarranted but exceedingly dangerous. I recognize that it is perfectly legal for a debtor to give one of his creditors preference over the others, but the majority opinion approves of a procedure by which he may very easily do more. By a transaction difficult, if not impossible, to establish as anything less than a sale, a debtor may place his personal property completely beyond the reach of his creditors. Thereafter, if it suits his purpose, he may claim and easily prove that he had divested himself of title to the property; or, on the other hand, if it serves his purpose better to claim that he has only mortgaged it, he may also do that, under the decision of the majority. *Page 25 
For the foregoing reasons, I respectfully dissent to that portion of the majority opinion upholding the claim of First National Bank of Alex, Okla., as a valid and subsisting first lien upon the oil involved herein.
I am authorized to announce that Mr. Justice RILEY concurs in the foregoing views.