
    BOWYER et al. v. BEARDON et al.
    (No. 681—4585.)
    (Commission of Appeals of Texas, Section B.
    Feb. 23, 1927.)
    1. Chattel mortgages <3=»I2, 17 — Tenant may mortgage his unplanted crop and landlord may mortgage his portion thereof under rental contract.
    Chattel mortgage may be executed on definite property, not at the time, in existence, but which is in contemplation ,of both parties, and a tenant may mortgage unplanted crop, and landlord may mortgage portion of same crop which under rental contract is to become his absolutely.
    2. Chattel mortgages <®=>If — In absence of contrary statute, any personalty capable of being sold maybe mortgaged; “chattel” (Rev. St. 1925, arts. 569, 579, 5506).
    General rule', in absence of contrary statute, is that any personal property capable of being sold may be mortgaged, word “chattel” being of no special significance when applied to mortgage of chattels but includes every species of property which is not real estate or a freehold, and Rev. St. 1925, arts. 569, 570, 5506, are not to contrary.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Chattel.]
    3. Chattel mortgages <®=I7 — Purchaser of land held entitled to mortgage his right to receive rents under oral crop-sharing contract.
    ■ Purchaser, uhder general warranty deed, of land rented under oral crop-sharing contract, held entitled to mortgage his right to receive rents, whether such rents were payable in crops or in cash, or partly in each.
    4. Chattel mortgages &wkey;>17 — As regards right to mortgage, purchaser is not necessarily owner of rentals for-crop year merely because of ownership of land when crops are harvested and rentals become due.
    As regards right to mortgage, purchaser is not necessarily owner of rents for crop year merely because he is owner of land when crops are harvested and rentals become due, since crops may be segregated from land by any definite act showing such intention, thereafter becoming personalty, and as such assignable at will, but, in absence of such segregation, ■rentals go with land.
    5. Vendor and purchaser &wkey;>23l(l7) — Registration of .chattel mortgage on crop rents is constructive notice to subsequent purchasers of lien on rentals.
    Registration of chattel mortgage on crop ■rents constitutes segregation of crops and rentals from land so as to make them personalty, subject to chattel mortgage and registration, and is constructive notice to subsequent purchasers of land of lien on rentals.
    6. Frauds, statute of <&wkey;>56(6) — Verbal agreement Of vendor, reserving crop rents thereafter becoming due, does not involve statute.
    Owner of land under rental to another may, on sale of land, reserve by verbal agreement rentals thereafter to become due, and such reservation is a segregation by mutual agreement of rentals from the land, which does not involve statute in any way.
    7. Landlord and tenant <&wkey;57(l) — Landlord may assign crop rents.
    Landlord’s right to collect crop rent may be assigned, regardless of whether rent is payable in money or by specific portion of crop to be raised.
    8. Chattel mortgages <&wkey;>2l5 — Purchaser could not, by purchasing prior vendor’s note secured by lien on crop rents, keep lien alive as against such vendor’s oral reservation of rents on sale to purchaser’s vendor.
    Where T. sold land to B. by general warranty deed, verbally reserving crop rents for current year, and B. resold land to M,, without reservation as to rents or notice to M. that T. had reserved rents, held that M., who received actual notice of T’s reservation of rent in time to have stopped payment on his check given for purchase price, could not, by purchasing note executed by T., secured by lion on crop rents, keep such lien alive against T.’s oral reservation of such rents on sale to B.
    Certified Questions from Court of Civil Appeals of Eleventh Supreme Judicial District.
    Action by R. W. BeardOn and others against W. McD. Bowyer and others. Judgment for plaintiff, and named defendant and a certain other defendant appeal to the Court of Civil Appeals, which certified questions to
    Supreme Court.
    Certified questions answered.
    Stinson, Coombes & Brooks, of Abilene, for appellants.
    Thomas & Rope, of Anson, for appellees..
   SPEER, J.

The Chief Justice of the Court of Civil Appeals for the Eleventh District has certified to us the following questions:

“1. On December 11, 1923, Fred Herndon, the then owner of the land, conveyed the same to Lee and Castles, same having been previously rented to Jack Lantrip for the crop year of 1924 by verbal contract.
“2. Lee and Castles recognized Lantrip as their tenant, and by verbal agreement between them the rental contract was slightly amended, and, after being so amended, it was in effect a rental contract between Lee and Castles and Jack Lantrip, by the terms of which .Lantrip was to h,ave exclusive possession and use of the land for the crop year 1924, and to plant, raise, and pick, and have ginned and baled, a cotton crop thereon, and to plant, raise, and harvest a crop of feedstuffs, and to pay as rental one-fourth of the cotton or proceeds thereof, and $3 per acre for the feedstuffs, after it had been harvested, but' not later than October 1, 1924. The rental contract was not a contract of ‘a cropper on the shares.’
“3. On April 12, 1924, Lee and Castles sola and conveyed the land to G. W. Thompson by .deed with terms of general warránty for $7,750, of which $2,700 was cash and the remainder evidenced by Thompson’s purchase-money notes, the first for $500, and due January 1, 1925, and in which deed, in addition to the Vendor’s lien retained against the land to secure the payment of said notes, a lien was retained on the 1924 crop rentals for the payment of the note due January 1, 1925, and interest on the entire series of notes.
' “4. On June 26, 1924, G. W. Thompson executed to the First National Bank of Anson, which was forthwith filed for registration, a chattel mortgage on ‘rents to be due me in 1924 on my place now worked by Jack Lantrip and boys,’ to secure note dated June 26, 1924, due October 15, 1924, for $128, ‘as well as to secure the payment of all other indebtedness now due and owing said bank and all indebtedness hereafter to become due and owing said bank.’ Thompson then owed the bank two other notes, one dated March 15, 1924, due October 15, 1924, for $158.56, and one dated April 23, 1924, due November 1, 1924, for $210, and thereafter he executed to said bank another note, dated August 6, 1924, due October 6, 1924, fqr $102.
“5. On August 11, 1924, O. W. Thompson sold and conveyed the land by terms of general warranty to R. W. Beardon, subject to the unpaid purchase-money notes mentioned in the deed from Lee and Castles. No mention is made in the deed of the reservation of any rents. By verhal agreement, however, between Thompson and Beardon, of even date with the deed, Thompson reserved the 1924 crop rentals, but W. McD. Bowyer, the subsequent purchaser of the land from Beardon, had no notice or knowledge of such reservation, except that mentioned in paragraph 7 hereinafter stated. The feed crops were then laid by but not harvested, and the cotton had not then been picked. No agreement had yet been made with the tenant dividing the crops.
“6. On August 20, 1924, R. W. Beardon, by terms of general warranty, sold and conveyed the land to W. McD. Bowyer, subject to the unpaid purchase-money notes mentioned in the deed from Lee and Castles to Thompson. This deed contained no reservation of rents, nor did Beardon verbally reserve the same.
“7. After the deed to W. McD. Bowyer had been delivered, and he had accepted the same, and had given Beardon a check for the cash payment, and Beardon had accepted such check for such cash payment, but before the check had been paid at the bank, Bowyer had actual notice of the chattel mortgage held by the bank, and of the verbal reservation made by Thompson mentioned in paragraph 5, supra. We find the evidence on this issue is sufficient to support the finding of the jury that Bowyer bad notice in time to have stopped payment on the check.
“8. On October 3, 1924, the First National Bank transferred and assigned its four notes and the chattel mortgage to R. W. Beardon.
“9. When the' cotton was picked, ginned, and baled, and the feedstuffs harvested, Lan-trip, the tenant, paid the rents to W. McD. Bowyer, the then owner of the land.
“10. Beardon, as the assignee of the bank, brought suit on the notes and chattel mortgage against Thompson, the maker of the notes, for the principal, interest, and attorney’s fees of the notes, and against Thompson, Bowyer, and Lantrip for foreclosure of the chattel mortgage lien against the crop rentals, alleging that Bowyer and Lantrip had converted the same, and sought to hold them liable for such rentals to the extent of the debt. Bowyer filed a cross-action against plaintiff Beardon and his codefendant Thompson, claiming the crop rentals, and Thompson filed a cross-action, seeking to have the rents applied to plaintiff’s debt, and that he have judgment for the overplus under his verbal reservation. Bowyer pleaded in the alternative, if he was not the owner of such rents as the owner of the land, that he had purchased the $500 note, due January 1, 1925, mentioned in the deed from Lee- and Castles to Thompson, and in which deed the lien was reserved on the crop rentals for the year 1924 to secure the s^me, and that, having purchased said land subject to said note, he was entitled to purchase said note for his own protection, and to have the rents applied to the payment thereof, prior to the chattel mortgage lien, and that the lien, being reserved in the deed, forming a link in the chain of title, all subsequent purchasers had constructive notice thereof, and that the bank had actual notice of such' lien when it took such chattel mortgage. Bowyer undertook to prove the facts of this alternative plea, and of notice to the bank but the trial court refused 'to admit such proof, and Bowyer reserved lps bills of exception.
“The jury returned the following special verdict:
“Special issue No. 1: Did John St. C. Bow-yer, while acting as agent for defendant William McD. Bowyer, in the negotiation of the Beardon-Bowyer land deal in question, have actual notice that defendant G-. W. Thompson claimed the rents by reservation on the land in question at the’time the said John St. O. Bowyer made arrangements to borrow the money that was paid in consideration of the deed from Beardon to said land? Answer ‘Yes’ or ‘No.’ Answer: ‘Yes.’
“Special issue No. 2: Did John St. O. Bow-yer, while acting as agent for defendant William McD. Bowyer, in the negotiation of the Beardon-Bowyer land deal in question, have actual notice that defendant G-. W. Thompson claimed the rents by reservation on the land in question at the time the, said John St. O. Bowyer made arrangements to borrow the money that was paid in consideration of the deed from Beardon to said land in time to have stopped the payment for said land? Answer ‘Yes’ or ‘No.’ Answer: ‘Yes.’
“11. Judgment was rendered in favor of Beardon against Thompson for the principal, interest, and attorney's fees of the notes, and for foreclosure of the chattel mortgage against all parties, and in favor of Thompson for the overplus in such rents, after the payment of such notes, and Bowyer and Lantrip were held for the conversion of said crop rentals, and Bowyer denied any recovery on his cross-action.
“12. An appeal was duly prosecuted to this court by Bowyer and Lantrip, and, on the original hearing, this court affirmed the judgment of the trial court.
“13. Appellants filed in due time and form their motion for rehearing, and requested in said motion, and by separate motion, that a hearing on said motion for rehearing be stayed, and the questions involved be certified to the Supreme Court for adjudication — the decision of this court on the original hearing on the controlling questions in the case being in conflict with the decision of the Third Court of Civil Appeals, as will be hereinafter pointed out.
“14. This case being one in which the decision in this court is made final and conclusive by statute, appellants have brought themselves clearly within the provisions of article 1855 of our Revised Civil Statutes of 1925, and. we have granted their request to certify the points in which the decision of this court is in conflict with the decision of the Third Court of Civil Appeals, and we also certify the points hereinafter stated, because we deem it advisable to do so, and- of sufficient importance to the jurisprudence of the state to require it.
“Questions Certified.
“Question No. 1: The relation of landlord and tenant existing between Lee and Castles and Lantrip, under a contract, by the terms .-of which Lantrip was to have exclusive possession and use of the land, for the crop year of .1924, .and to plant, raise, and pick, and have -ginned and baled, a crop of cotton thereon, and to plán.t, raise and' harvest a crop of feedstuffs, -and to” pay as rental one-fourth of the cotton or of the proceeds of the cotton and seed, when picked, .ginned, baled, and sold and $3 for the feedstuffs when harvested, but not later than October 1, and Thompson having subsequently purchased the land from Lee and Castles, was his chattel mortgage to the bank, dated June '26, 1924, on the rents to be due on said land for the crop year of 1924, before the feedstuffs was harvested .and before the cotton was picked, ginned, or baled, invalid because he was not then the owner of such crop rentals, as held by the Honorable Court of Civil Appeals of the Third Supreme Judicial District of Texas in the cases of Williams v. King, 206 S. W. 106, and Brod v. Guess, 211 S. W. 299, or was said mortgage valid as held in Sanger Bros. v. Hunsucker et al. (Tex. Civ. App.) 212 S. W. page 514?
“Question No. 2: Bowyer, being the owner of the land at the time the feedstuffs were harvested, and the cotton picked, ginned, and baled, and when the crop rentals were due, was he, by virtue of being then the owner of. the land, also the owner of such crop rentals?
“Question No. 3: In view of conflict between Fifth and Third districts in cases Doke v. Ry. Co. (Tex. Civ. App.) 126 S. W. 1196, and Railway v. Doke (Tex. Civ. App.) 152 S. W. 1174, did Thompson, the owner of the land, under the facts related in question No. 1, have such an interest in the crop' rentals thereafter to become due that he could mortgage the same, and was such mortgage subject to the registration laws of this state, and was such interest an interest in real estate, or was it personal property?
“Question No. 4: Did the registration of the chattel mortgage ftom Thompson to the bank ^constitute constructive notice to subsequent .purchasers of the land of the lien of said mortgage on .the 1924 crop rentals?
“Question No. 5: May the owner of land, under the facts stated, when he sells the land to another, reserve by verbal agreement the crop rentals thereafter to become due, and before the crop or its proceeds had been divided, or an agreement had been reached with the tenant dividing the same, as the facts in this case show Thompson attempting to do when he sold to Beardon?
“Question No. 6: Is the right to collect crop rentals, under the facts stated, such a right as may be assigned, and, if so, does the first as-signee acquire the better right without respect to notice?
“Question No. 7: Could appellant MeD. Bow-yer, under the facts stated, keep the lien retained in the deed to Thompson on the crop rentals alive by having the $500 note transferred to said appellant, or would the transfer of the $500 to appellant McD. Bowyer constitute the transaction a payment? On this question, we refer to Tiffany on Real Property, pages 2482-2504, 2505, and 2612; Smith v. Cooley (Tex. Civ. App.) 164 S. W. 1050, where a distinction is drawn between those cases where the owner of the land acquires the lien and those where the lienholder acquires the premises. As incidentally bearing on this question’ is called attention to York v. Robbins (Tex. Com. App.) 255 S. W. 720, loc. cit. 723; Silliman v. Gammage, 55 Tex. 365; West v. McCelvey Loan & Investment Co. (Tex. Civ. App.) 229 S. W. 913.”

Question 1 is predicated upon the assumption that there is a conflict between the. holding in the Williams-King and Brod-Guess Cases on the one hand and Sanger Bros-I-Iunsucker on the other. The holdings in these cases, however, are not necessarily, or at all, in conflict. In Williams-King and Brod-Guess the cases appear to be those of ordinary landlord and tenant, where the landlord had no interest in any specific part of the crops to be produced. Indeed, in the Brod-Guess Case it appears by the terms of the written contract the tenants were required to gather and sell the crops and to deposit the portion of the cash proceeds representing the rent in bank to the credit of the owner. While in Sanger Bros. v. Hunsucker, the relation of the parties appears to be that of crop sharing, in which the owner of course has a fixed interest in a specific part of the crops raised. In such a case he is as much the owner of his share as the tenant is owner of his share. We know of no reason why either may not execute a chattel mortgage upon his definite interest in such specific property. It is now too late to question the' rule in this state that one may execute a chattel mortgage upon definite property, although such property is not at the-time in existence, but is in contemplation of both parties. So. Tex. Imp., etc., Co. v. Anahuac, etc., Co. (Tex. Com. App.) 280 S. W. 521. The rule has often been applied to unplanted crops, and there is no reason for any distinction between the respective rights of landlord and tenant in such respect. It necessarily follows, if the tenant may mortgage his unplanted crop, the landlord likewise may mortgage a portion of the same crop, which under the terms of a rental contract is to become his absolutely.

But the distinguishing of the cases discussed, on the facts, is of no importance to the present inquiry. As will be apparent from an examination of the authorities, the difficulty in those cases of chattel mortgage upon crops to be planted and the like has not been one of the legality of the subject-matter, but rather one of describing or identifying any property at all. The general rule is that, in the absence of statutory provision to the contrary, any personal property which is capable of being sold may be the subject of,a mortgage. The word “chattel” is of no special significance when applied to a mortgage of chattels. “It is a very comprehensive term in our law, and includes every species of property which is not real estate or a freehold” — a definition borrowed from 2 Kent’s Commentary, 340; Gilcrist Transp. Co. v. Phoenix Ins. Co. (C. C. A.) 170 F. 279.

Our statutes not only do not provide to the contrary, but they indicate a very broad policy, as evidenced by a liberal right of assignment (articles 569, 570, Rev. Civ. Stat. of 1925), and especially article 5506 (5671), concerning liens providing:

“Nothing in this title shall be construed or considered as in any manner impairing or affecting the right of parties to create liens by special contract or agreement, nor shall it in any manner affect or impair other liens arising at common law or in equity, or by any statute of this state, or any other lien not treated of under this title.”

The decisions are equally liberal in this respect. Richardson v. Washington, 88 Tex. 344, 31 S. W. 614; McMenamy, etc., Co. v. Dawley, 183 Mo. App. 1, 165 S. W. 831.

Now, under the facts certified, whether Thompson was to be paid his rentals in cotton or cash, or partly in cotton and partly in cash, the right to receive such payment in any event is property subject to sale and assignment, and likewise subject to chattel mortgage. This being true, we think question No. 1 should be answered that the mortgage was valid.

In answer to question 2, it must be held that Bowyer was not necessarily the owner of the rents for 1924, merely because he was the owner of the land when such crops were harvested and the rentals became due. It is well settled that crops may be segregated from the land by any definite act showing such intention, thereafter'becoming personalty, and as such assignable at will. In the absence of such segregation, by the owner, such rentals do go with the land.

What we have said under question 1 answers question 3. Of course, if Thompson, the owner of the land at the time, had such property in the crop rentals that he could mortgage the same, then such mortgage and its registration were valid. His act in executing this instrument amounted to a segregation of the crops and rentals from the land so as to make them personalty subject to chattel mortgage and registration, and, answering 4, this would constitute constructive notice to subsequent purchasers of the land of the lien on such rentals.

To question 5 we answer the owner of land under rental to another may, upon sale of such land, reserve by verbal agreement the rentals thereafter to become due. This is a segregation by mutual agreement of the rentals from the land. Such segregation does not involve the statute of frauds in any way. Every chattel mortgage or sale of a growing crop is upheld on this theory.

We have already stated that crop rentals may be assigned, but it does not follow that the first assignee' acquires the better right without respect to notice. But this is academic. It has no controlling effect in this case. As we understand the. certificate, it is not a question of assignment of the rentals-to become due. Of course a pure assignment may be executed by the owner of the land, whether the same be for money rentals or a specific portion of the crop to be raised. This, right to make an assignment by analogy includes the right to mortgage.

Finally, any answer we might give to question 7 is probably immaterial; nevertheless, the appellee, W. McD. Bowyer, under the facts stated in the certificate, could not, by purchasing the $500 note executed by Thompson in the purchase of the land, and secured by a lien upon the crop rentals for 1924, keep alive such lien as against Thompson’s oral, reservation of such rents in his sale to Bear-don. We base this statement upon the fact shown in the certificate that, after Bowyer had received the deed to the land and had given Beardon a check for the cash payment,, but before the check had been paid, he (Bow-yer) had actual notice of the verbai reservation made by Thompson, in time to enable him to have stopped payment if he had so de- -. sired.' He thus assented to such reservation,., and knew he was not to get the 1924 rentals.’

So that we recommend the questions certified be answered as above shown.

OURETON, O. J. The opinion of the Commission of Appeals answering certified .questions is adopted, and ordered certified to the Court of Civil Appeals. 
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