Fred C. Silverthorn & Sons v. Pacific Finance Corp.

The Pacific Finance Corporation took two chattel mortgages upon a dairy herd owned by one Raymond, the first of which was dated December 19, 1929, and the second April 21, 1930. Neither mortgage contained an affidavit of good faith on the part of the mortgagor, as required by section 2957 of the Civil Code. On those dates and for some years prior thereto the mortgagor was indebted to this plaintiff on account of hay and grain sold and purchased. This indebtedness to plaintiff gradually increased until February 27, 1931, at whieli time Raymond executed and delivered to plaintiff a note secured by a chattel mortgage covering the same herd of cattle. It is conceded that the plaintiff had actual notice of the existence of these prior mortgages for some sixty or ninety days before taking its mortgage. All three mortgages were recorded immediately after their execution. Before the plaintiff’s mortgage became due, the Pacific Finance Corporation commenced foreclosure of its mortgages by reason of defaults in payments and also commenced an action in claim and delivery and took possession of the dairy herd in question. The cattle were sold at a mortgage sale for their reasonable value and…