Bank of Roberts v. Olaveson

• Decision Date: 03 November 1923
• Citation: 221 P. 560,38 Idaho 223
• Parties: THE BANK OF ROBERTS, a Corporation, Respondent, v. CHRIS OLAVESON, BERTHA OLAVESON, JAMES OLAVESON and JOAN OLAVESON, Defendants; MENAN MILLING COMPANY, LTD., a Corporation, and E. M. STAKER, Appellants
• Court: Idaho Supreme Court

221 P. 560

38 Idaho 223

THE BANK OF ROBERTS, a Corporation, Respondent, v. CHRIS OLAVESON, BERTHA OLAVESON, JAMES OLAVESON and JOAN OLAVESON, Defendants;

MENAN MILLING COMPANY, LTD., a Corporation, and E. M. STAKER, Appellants

Supreme Court of Idaho

November 3, 1923

CHATTEL MORTGAGES-ACTION TO FORECLOSE-PRIORITY-JOINDER OF CAUSES OF ACTION-MISJOINDER OF PARTIES-NOTICE-LANDLORD AND TENANT-CANCELATION OF LEASE-CONVERSION.

1. Under the provisions of C. S., sec. 6646, any person may be made a party defendant to an action who has or claims an interest in the controversy adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of the question involved therein.

2. In an action to foreclose a chattel mortgage, it is always proper, and in most instances necessary, to make parties all who have or claim an interest in the property, as a buyer from the mortgagor.

3. In an action to foreclose a chattel mortgage the mortgagor and every other person having an interest in the mortgaged property should be made defendants so that their rights may be determined and that their claims and equities in the property may be cut off.

4. Where a chattel mortgage covered certain crops and the mortgagor sold the crop to a milling company which paid the proceeds thereof to the holder of a second chattel mortgage with notice thereof, and the same were applied thereon, it was proper, in an action to foreclose the first mortgage, to join therewith a cause of action in conversion against the milling company and the holder of the second mortgage.

5. Where a lessor permits a lessee to remain in possession of demised premises, to live thereon and to cultivate the premises after an agreement between them to cancel the existing lease, and the lessee gives a crop mortgage to a third person on crops to be grown on such premises, of which mortgage the lessor has notice, and the lessor thereafter leases the premises to the mortgagor under a new lease and takes a second chattel mortgage on the crops to secure payment of the rent, the lien of the first mortgage is prior and the lessor, by his acts and conduct, is estopped to question the validity thereof.

6. Evidence held sufficient to establish fact that first lease had not been canceled prior to execution, delivery and recording of respondent's chattel mortgage.

APPEAL from the District Court of the Ninth Judicial District, for Jefferson County. Hon. James G. Gwinn, Judge.

Action to foreclose chattel mortgage. Judgment for plaintiff. Affirmed.

Judgment of the trial court sustained. Costs awarded to respondent.

W. H Holden and F. A. McCall, for Appellant E. M. Staker.

C. W Poole, for Appellant Menan Milling Co., Ltd.

An action in conversion cannot be united with an action against a trustee. (First Nat. Bank v. City National Bank of Wellington (Okl.), 175 P. 253; Benson v. Battey, 70 Kan. 288, 3 Ann. Cas. 283, 78 P. 844; Beal v. United Properties Co. of California, 46 Cal.App. 287, 189 P. 346.)

An action upon a contract cannot be united with an action against a trustee. (Bram v. Christopher, 27 Cal.App. 741, 151 P. 172.)

An action upon a contract cannot be united with an action in conversion. (Stark v. Wellman, 96 Cal. 400, 31 P. 259; C. S., sec. 6688.)

Causes of action cannot be united unless they affect all the parties to the action. (C. S., sec. 6688; Benson v. Battey, supra; Beane v. Givens, 5 Idaho 754, 51 P. 987.)

In order to create a valid lien on crops to be grown, the mortgagor must, at the time the mortgage is given, have owned or had some interest in the lands on which the crops were grown. (5 R. C. L., sec. 32, pp. 407, 408; 11 C. J. 444; Windham & Co. v. Stephenson, 156 Ala. 341, 130 Am. St. 102, 47 So. 280, 19 L. R. A., N. S., 910; McMaster v. Emerson, 109 Iowa 284, 80 N.W. 389; Brown v. Bolt, 116 Mich. 52, 74 N.W. 295; Paden v. Bellinger, 87 Ala. 575, 6 So. 351.)

The filing of the crop mortgage given by the Olavesons, to the plaintiff, imparted no notice to defendant Staker. (Harris v. Reed, 21 Idaho 364, 121 P. 780; Mackey v. Cole, 79 Wis. 426, 24 Am. St. 728, 48 N.W. 520; 5 R. C. L. 413; Isbell v. Slette, 52 Mont. 156, 155 P. 503.)

Otto E. McCutcheon and O. E. McCutcheon, for Respondent.

All persons who acquire interests in the property from the mortgagor are proper and usually necessary parties. (Mittenthal v. Heigel (Tex. Civ. App.), 31 S.W. 87; 7 Cyc. 97.)

"Persons who have wrongfully converted the mortgaged property to their own use are proper parties." (McDaniel v. Chinski, 23 Tex. Civ. App. 504, 57 S.W. 922.)

Any person having an interest in the mortgage, whether named as mortgagee or not, should be joined as a party in the foreclosure suit. (Chapman v. Hunt, 14 N.J. Eq. 149; 11 C. J. 722, sec. 540, 541; Bollen v. Wilson Creek etc. Co., 90 Wash. 400, 156 P. 404; German American Bank v. Seattle Grain Co., 89 Wash. 376, 154 P. 443; Brown v. Gatewood (Tex.), 150 S.W. 950; Dungeness Logging Co. v. Oregon & W. Ry. Co., 65 Wash. 631, 118 P. 825; Morrison v. Elzy, 190 Ill.App. 374.)

The validity of respondent's mortgages is settled and sustained by our statute. (C. S., sec. 6373.)

It is immaterial whether the mortgagor had at the time of giving the mortgage an interest in the land upon which such crops were to be grown, provided the land was properly described and the year in which the crops were to be grown was stated. (Smith v. Lafayette & Bro., 29 Okla. 671, 119 P. 979; Iverson v. Soo Elevator Co., 22 S.D. 638, 119 N.W. 1006.)

The same in Minnesota without the aid of a statute. (Hogan v. Atlantic Elevator Co., 66 Minn. 344, 69 N.W. 1; Ludlum v. Rothschild, 41 Minn. 218, 43 N.W. 137.)

Staker had actual knowledge of plaintiff's mortgage. Actual notice is sufficient even without the aid of a record. (Littel v. Brayton etc. Co., 70 Colo. 286, 201 P. 34.)

BUDGE, C. J. McCarthy, Dunn and Wm. E. Lee, JJ., concur.

OPINION

BUDGE, C. J.

This action is one to foreclose a chattel mortgage. The facts as they appear from the record, are as follows: On November 24 1916, E. M. Staker, by instrument in writing, leased certain premises owned by him to C. C. Olaveson for a term of five years at agreed annual cash rentals as stipulated therein. The lease provided that the lessee should, on the first day of April of each year, make, execute and deliver to the lessor a note and chattel mortgage upon the crops to be grown on the demised premises to secure the payment of the rent for that year. This lease was never recorded. In 1918, on account of the premises being flooded by high water, no crops were raised. An oral agreement was made at this time between Olaveson and Staker that the lease then existing should be canceled and that later a new lease should be made. Olaveson resided upon the premises during the years 1918 and 1919 and in the fall of 1918 plowed up part of the land. On January 14, 1919, Chris Olaveson and his wife, and James Olaveson and Joan Olaveson, his wife, made, executed and delivered to the Bank of Roberts their note for $ 1,185, which was secured by a mortgage on certain personal property and also upon all of the crops to be grown upon the Staker farm in that year. All of the proceeds of this loan, with the exception of $ 191.25, which was deposited to the checking account of C. C. Olaveson, was used to take up certain obligations of the Olavesons then owing to the bank. The chattel mortgage was filed for record on January 21, 1919. On March 13, 1919, a new lease in writing was entered into between C. C. Olaveson and E. M. Staker, covering the same premises and having the same proviso as the former lease as to the giving of a chattel mortgage on the crop to be grown on the premises to secure the payment of rent for each year but increasing the rental and giving the lessor the privilege of selling the premises. This lease was never recorded, but in accordance with its terms, on March 13, 1919, the same day the lease was executed, Olaveson made, executed and delivered his note for $ 1,200 in favor of Staker and also a chattel mortgage upon the crops to be grown upon the premises in 1919 to secure the payment of the rent for that year, which mortgage was duly filed for record on March 14, 1919. The wheat raised upon the premises was sold to Menan Milling Co., Ltd., for the sum of $ 1,087, payment therefor being made to Olaveson and Staker jointly on September 18, 1919. One thousand dollars of this amount was applied upon the note given to secure the rent and $ 87 upon a bill for groceries contracted by Olaveson at Staker's store. Subsequently this action was commenced by respondent to foreclose its chattel mortgage, to have the same declared superior to the chattel mortgage given to Staker and to recover from Staker and the Menan Milling Company, Ltd., the proceeds of the wheat sold as aforesaid. The four Olavesons were made parties to the action and upon their failure to appear and answer their default was duly entered. The appellants, Menan Milling Co., Ltd., and E. M. Staker, appeared by demurrer which was sustained. The complaint being amended they thereupon answered, the former denying its liability and the latter asserting the superiority of his mortgage over that of respondent. Upon the issues thus framed the cause was tried to the court and a jury. At the close of all of the testimony a motion for judgment was made by respondent, which the court granted and thereupon discharged the jury. Thereupon findings of fact and conclusions of law were made by the trial court and judgment entered in favor of respondent, declaring its mortgage superior to that of appellant, Staker, decreeing its foreclosure and ordering sale of the remaining mortgaged chattels. The decree also provided that, if upon such sale the proceeds...