Arens v. Scheele

• Decision Date: 30 October 1941
• Docket Number: 6879
• Citation: 63 Idaho 189,119 P.2d 261
• Parties: A. E. ARENS, doing business under the name and style of NAMPA TRACTOR COMPANY, Respondent, v. CARL A. SCHEELE, Appellant
• Court: Idaho Supreme Court

119 P.2d 261

63 Idaho 189

A. E. ARENS, doing business under the name and style of NAMPA TRACTOR COMPANY, Respondent, v. CARL A. SCHEELE, Appellant

No. 6879

Supreme Court of Idaho

October 30, 1941

Rehearing denied December 9, 1941.

PRINCIPAL AND AGENT - CHATTEL MORTGAGES - FORECLOSURE - METHODS OF-DEFICIENCY JUDGMENT-CONVERSION.

1. Where chattel mortgagee's agents removed mortgaged property from mortgagor's farm during his absence to mortgagee's place of business, acts of agents were in scope of their agency and were the acts of their principal the chattel mortgagee.

2. Under statute, a mortgagee has option to foreclose his chattel mortgage by action in district court or by notice and sale, and if he elects to foreclose by notice and sale he may demand and receive possession of mortgaged property if it can be taken peacefully, but if it cannot be so taken or if he elects to do so without taking possession of property mortgagee can have sheriff of county or constable of precinct wherein property is located take possession of property and sell it in manner prescribed by law. (I. C. A. sec. 44-1009.)

3. A mortgagee who elects to avail himself of the services of the sheriff to foreclose a chattel mortgage by notice and sale must place his affidavit and notice in the hands of the sheriff of the county wherein the mortgaged property is located. (I. C. A. secs. 44-1009, 44-1010.)

4. A stipulation in a chattel mortgage authorizing mortgagee on the happening of a certain contingency to take possession of the mortgaged property is valid.

5. The statutory provisions requiring a chattel mortgage to be foreclosed in county wherein mortgaged property is located and for service of affidavit and notice on mortgagor if he can be found or on person having possession of mortgaged property if he cannot be found, are for mortgagor's protection by giving him personally or through his agent notice of foreclosure or in case he has transferred property to another for protection of transferee by giving him such notice. (I. C. A. secs. 44-1011, 44-1012.)

6. Under the statutory provisions requiring chattel mortgage to be foreclosed in county wherein mortgaged property is located, and for service of affidavit and notice on mortgagor if he can be found, or on person having possession of mortgaged property if he cannot be found, removal of property from county by mortgagee in order to thwart giving mortgagor notice of foreclosure or resulting in that, renders foreclosure void. (I. C. A. secs. 44-1011, 44-1012.)

7. The statutory provision relating to summary foreclosure of chattel mortgages must be strictly followed. (I. C. A. sec 44-1010.)

8. A chattel mortgagee who sells or procures the sale of mortgaged property without complying with statute relating to summary foreclosure of chattel mortgages cannot maintain an action for deficiency judgment. (I. C. A. sec. 44-1010.)

9. A chattel mortgagee cannot lawfully seize mortgaged chattels in any other manner than that provided by statute relating to foreclosure of chattel mortgages, and if he sells such chattels in any other manner than directed by statute he becomes liable to the mortgagor for conversion. (I. C. A sec. 44-1010.)

10. Where chattel mortgagee's agent removed mortgaged property from mortgagor's farm in another county to mortgagee's place of business during mortgagor's absence from farm, and mortgagee elected to foreclose by notice and sale, and sheriff's return disclosed that affidavit and notice of foreclosure were served on mortgagee's agent in charge of the property, and that notices of sale were posted in the county of mortgagee's residence which was not same as county of mortgagor's residence and that sale took place in such county, statutes relating to foreclosure of chattel mortgages were not complied with, and mortgagee was not entitled to a deficiency judgment against mortgagor. (I. C. A. secs. 44-1009 to 44-1014.)

The foregoing syllabus is by West Publishing Company, that following is by author of opinion.

I. The act of an agent, within the scope of his agency, is the act of his principal.

II. A mortgagee has option to foreclose his chattel mortgage by action in district court, or by notice and sale. If he elects to foreclose by notice and sale he may demand and receive possession of the mortgaged property, if it can be taken peaceably. If it cannot be so taken, or if he elects to do so without taking possession of the property, he can have the sheriff of the county, or constable of the precinct wherein the property is located, take possession of it and sell it in the manner prescribed by law.

III. A mortgagee who elects to avail himself of the services of a sheriff, to foreclose his chattel mortgage, must place his affidavit and notice in the hands of the sheriff of the county wherein the mortgaged property is located.

IV. A stipulation in a chattel mortgage authorizing the mortgagee, upon the happening of a certain contingency, to take possession of the mortgaged property, is not prohibited by law, and is valid.

V. The statutory provisions requiring a chattel mortgage to be foreclosed in the county wherein the mortgaged property is located, and for service of the affidavit and notice, are for the protection of the mortgagor and his assigns, if any, and removal of the property from the county, by the mortgagee, in order to thwart the purposes of said provisions, or resulting in that, renders the foreclosure proceedings void.

VI. The statutory provisions relative to summary foreclosure of chattel mortgages must be strictly followed. If the property is sold by, or through the acts or procurement of the mortgagee, without compliance with the statutes, he cannot maintain an action for a deficiency judgment.

VII. A mortgagee cannot lawfully seize mortgaged chattels in any other manner than that provided by 44-1010, and if he sells such chattels in any other manner than that directed by statute, he becomes liable to the mortgagor for conversion.

Rehearing denied December 9, 1941.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Thomas E. Buckner, Judge.

Action to recover deficiency remaining unpaid after applying proceeds of sale of property covered by chattel mortgages. Defendant answered, and counter-claimed for damages for conversion of the property. Judgment for plaintiff. Reversed.

Reversed and remanded. Costs awarded to appellant.

Frank F. Kibler and Ariel L. Crowley, for Appellant.

Any deviation whatever from the statutory mode of foreclosure of chattel mortgages by notice and sale will bar recovery of a deficiency judgment. (Garrett v. Soucie, 46 Idaho 289, 267 P. 1078; Advance Rumley etc. vs. Ayres, 47 Idaho 514, 277 P. 20; Standlee vs. Hawley, 51 Idaho 129, 4 P.2d 145; First National Bank vs. Poling, 42 Idaho 636, 248 P. 19; Brockman vs. Caviness, 61 Idaho 254, 100 P.2d 946.)

When a mortgagee obtains possession either with or without affidavit he must sell the property at a sale conducted by himself; he cannot then commit the matter into the hands of the Sheriff. (Gandiago vs. Finch, 46 Idaho 657, 270 P. 621 (666); Tappin vs. McCabe, 27 Idaho 402, 149 P. 460.)

The statute does not contemplate recovery of deficiency judgment after foreclosure where the service is constructive. (Section 44-1011 I. C. A.; Section 44-1012 I. C. A.; Foore vs. Simon Piano Co., 18 Idaho 167, 108 P. 1038; Larsen vs. Roberts, On Rehearing, 32 Idaho 591, 177 P. 941.)

F. A. Hagelin and Dunlap & Dunlap, for Respondent.

A stipulation in a mortgage which authorizes a mortgagee upon named contingencies to take possession of the mortgaged property, is valid. (Blackfoot City Bank v. Clement, 39 Idaho 195, 226 P. 1079; Martin v. Halloway, 16 Idaho 513, 102 P. 3; First Nat'l Bank of St. Anthony v. Steers, 9 Idaho 519, 75 P. 225.)

The statutory provision providing the mortgagee with the right to obtain peaceable possession does not deprive the mortgagee of the right to require the proper officer to foreclose in any case if he desires the services of such officer. (Hudson v. Carlson, 31 Idaho 196, 204, 170 P. 100.)

A mortgagee taking peaceable possession of mortgaged personal property is not debarred from thereafter foreclosing his mortgage by a sheriff under Secs. 44-1010, 44-1011 and 44-1012, I. C. A. (First Nat'l Bank of St. Anthony v. Steers, 9 Idaho 519, 75 P. 225; O'Neill v. Whitcomb, 3 Idaho 624, 32 P. 1133; Hudson v. Carlson, 31 Idaho 196, 170 P. 100; Edmission v. Drumm-Flato Commission Co. (Okla.) 73 P. 958; Harper v. Jordan (Cal.) 61 P. 84; First Nat'l Bank of Pocatello v. Poling, 42 Idaho 636, 248 P. 19.)

MORGAN, J. Budge, C.J., and Givens, Holden and Ailshie, JJ., concur.

OPINION

MORGAN, J.

September 20, 1935, appellant executed and delivered to respondent two promissory notes, one due October 1, 1936, for $ 320 and the other due October 1, 1937, for $ 320.49. To secure payment of said notes, he executed and delivered to respondent a chattel mortgage on a tractor, a two-way gang plow and a disk harrow. July 14, 1936, appellant executed and delivered to respondent three promissory notes, one for $ 236, due August 15, 1936, another for $ 237, due October 1, 1936, and the other for $ 237, due October 1, 1937. To secure the payment of these three notes, appellant executed and delivered to respondent a chattel mortgage on a combined harvester. Each of the five notes bore interest at the rate of 8% per annum.

September 11, 1937, respondent made affidavit wherein he alleged the execution and delivery of the notes to him and that those secured by the mortgage on the tractor, the plow and the disk had not been paid. He also alleged the execution and delivery of the notes secured by the mortgage on the combined...