Bank of Stockham v. Alter

• Decision Date: 20 February 1901
• Docket Number: 11,309
• Citation: 85 N.W. 300,61 Neb. 359
• Parties: BANK OF STOCKHAM, BERNHARD WIENS AND HERMAN WIENS AS INTERVENERS, v. ISAAC R. ALTER ET AL
• Court: Nebraska Supreme Court

85 N.W. 300

61 Neb. 359

BANK OF STOCKHAM, BERNHARD WIENS AND HERMAN WIENS AS INTERVENERS, v. ISAAC R. ALTER ET AL

No. 11,309

Supreme Court of Nebraska

February 20, 1901

ERROR from the district court for Hamilton county. Tried below before SEDGWICK, J. Affirmed.

AFFIRMED.

Lambertson & Hall and R. W. Graybill, for plaintiffs in error.

Hainer & Smith, contra.

OPINION

HOLCOMB, J.

A proceeding in error has been instituted in this court by which it is sought to reverse a judgment rendered in the district court for Hamilton county against plaintiffs in error, defendant and interveners in the trial court, and in favor of defendants in error, plaintiffs below. The action has heretofore been in this court for consideration. Alter v. Bank of Stockham, 51 Neb. 797, 71 N.W 715, and on rehearing under the same title, 53 Neb. 223. A difference of opinion exists as to the nature of the action plaintiffs insisting that it is an action in equity, and defendants that it is one at law for the conversion of personal property. A question having thus arisen as to the character of the suit, whether in equity or at law, it would seem advisable, in order to more properly and intelligently consider the assignments of error, to first determine such question. In the first opinion rendered in this court the action was held to be one for the conversion of personal property, and, therefore, an action at law, and that it should be so tried, when by either party there is presented no equitable ground for relief or defense. On rehearing, without fully deciding the question, it is stated in the fifth paragraph of the syllabus, "A district court while sitting as a court of equity is clothed with the inherent power to submit to a jury any question of fact in the case"; and in the sixth paragraph, "To maintain a civil action under our Code, it is not essential that the action be denominated either an action at law or in equity, nor that it be given any particular name. If the litigant pleads the facts, and they constitute a cause of action or defense, the courts are bound to award the relief due." Says Commissioner RAGAN, the author of the opinion (p. 236): "We are not deciding that the action of Alter & Glover is an action at law for conversion as against the Bank of Stockham, nor that it is a bill in equity seeking to have the Bank of Stockham declared a trustee and to hold the proceeds of the sale of the Wiens cattle in trust for Alter & Glover. What we do decide, and all we decide, is that from the uncontradicted evidence it appears that the mortgagor converted the mortgaged property into money and placed it in the hands of his agent, the Bank of Stockham, it then and there knowing of the existence of Alter & Glover's lien upon the cattle; and, as against the mortgagees, Wiens himself was not entitled to such proceeds; that the bank, on the evidence in this record, has no better title to the money than Wiens had, and is liable and should account to Alter & Glover for such proceeds, whether such a result will have the effect of making the action at bar one at law or in equity." The cause was reversed and remanded for further proceedings, after which the pleadings were in some particulars amended, but the issues thereunder were substantially the same as on the former trial.

The case having been fully stated in the opinions referred to, it is unnecessary here to make more than a brief allusion thereto, sufficient only to an intelligent understanding of what is said hereafter. Briefly, the plaintiffs' cause of action is based on a promissory note for $ 8,500, and mortgage given by the interveners for the purchase price, and to secure the payment thereof, of a lot of cattle purchased by the interveners from the plaintiffs; the plaintiffs alleging that the note had been only partially paid, and that during the existence of the lien of the mortgage, the interveners, with the defendant bank, which, it is alleged, held two second mortgages on the same property, subject to and with knowledge of plaintiffs' prior lien and mortgage thereon, had made certain shipments of the mortgaged property to the markets at South Omaha and sold the same on the open market, the net proceeds thereof being credited to the defendant bank and by it converted to its own use and benefit; all of which was done without the knowledge or consent of the mortgagees and in fraud and violation of their rights. An accounting is prayed, and for an ascertainment of the priorities of the several mortgages, that the plaintiffs' mortgage be adjudged a prior and first lien, and that the bank be adjudged to hold the proceeds of said sale in trust for the use and benefit of the plaintiffs, and that it be decreed to pay the same.

By the answer presented by the defendant bank and the petition of the interveners the execution of the note and mortgage to the plaintiffs was admitted, and in avoidance it was pleaded, in substance, that by fraud or mistake the weight of the cattle sold to the interveners was represented and stated to be greater than their true and actual weight, and that to the extent of such excess weight the amount mentioned in the note was without consideration, and no recovery ought to be had; and also, that in October, 1889, when the mortgaged cattle were being fed by the interveners to fit them for the market, one of the plaintiffs, in a conversation with the cashier of the defendant bank, knowing that Wiens did not have sufficient money and means to purchase the necessary feed for said cattle and that he must depend upon the said bank for such means, represented and stated that Wiens had bought the cattle on such terms as he would be able to make considerable profit, and that he could, after feeding the cattle for a short time, from time to time sell some of the best of the herd and out of the proceeds derived pay for the feed purchased and used for the fattening of the cattle, and that the plaintiffs were willing that the said Wiens should so sell a portion of the cattle and use the proceeds thereof for such purpose; that the defendant relied upon the representations and statements, and loaned said Wiens large sums of money, aggregating about $ 5,000, all of which said sums were used for the purchase of feed which was actually fed to the cattle, which would not have been loaned had it not been for the statements and representations of the plaintiff as before set forth. Such statements and acts, being pleaded as an estoppel against recovery from the defendant bank of the proceeds of the cattle sold to the extent of the amount loaned by it and used for the purpose of buying feed for such cattle.

By the foregoing a fair idea of the substance of the controversy will be obtained. As it appears to us, the pivotal point is the proper disposition of the fund arising from the sale of the mortgaged property. By the petition, as we construe it it is not sought to charge the defendant bank with the conversion of the mortgaged property, but rather have it declared a trustee of the plaintiffs as to the proceeds of the sale of the property received by it, with knowledge of plaintiffs' lien on the property sold and of their superior and prior right thereto. By virtue of their mortgage lien the plaintiffs seek to impress a trust character on the proceeds in the hands of the junior incumbrancer to an amount required to satisfy their prior claim. The defendant and the interveners, by their pleadings, in effect, admit the superior rights of the plaintiffs but for the matters pleaded by them in avoidance, which are, first, that either by fraud or mistake the original consideration as claimed and expressed in the note was greater than it should have been according to the agreement of the parties, owing to a mistake or misstatement as to the weight of the cattle sold, and that as to such excess the note was without consideration, and, second, that by reason of the agreement pleaded, notwithstanding plaintiffs' lien was prior in time, it should be subordinated to that of the defendant bank's lien for money loaned to feed the mortgaged cattle to fit them for the market. As well stated, in effect, in the...