Citizens' Nat. Bank of Jamestown v. Osborne-McMillan Elevator Co.

• Decision Date: 22 April 1911
• Citation: 21 N.D. 335,131 N.W. 266
• Parties: CITIZENS' NAT. BANK OF JAMESTOWN v. OSBORNE-McMILLAN ELEVATOR CO.
• Court: North Dakota Supreme Court

21 N.D. 335

131 N.W. 266

CITIZENS' NAT. BANK OF JAMESTOWN

v.OSBORNE-McMILLAN ELEVATOR CO.

Supreme Court of North Dakota.

April 22, 1911.

Syllabus by the Court.

A chattel mortgage in this state does not convey title to the mortgagee, but is only a lien on the property covered thereby. Hence the purchaser of property covered by a chattel mortgage takes it subject to the lien of such mortgage, and a conversion does not take place until the purchaser does some affirmative act like a tortious detention of such property from the party entitled to possession thereof under the mortgage, or an exclusion or defiance of such party's right, or the withholding of possession under claim of title inconsistent with that of the mortgagee.

Where mortgaged wheat is sold to an elevator company and no act of conversion is shown until a demand and refusal to deliver, it is error to direct a verdict for the plaintiff mortgagee suing for conversion when the only evidence of value relates to a time practically a month prior to demand and refusal. Towne v. St. Anthony & Dakota Elevator Company, 8 N. D. 200, 77 N. W. 608.

Evidence of the existence of a mortgage given prior to the mortgage held by the plaintiff on wheat in controversy without showing a default in the terms thereof or a demand for payment of the debt secured thereby and for possession of the security or that the plaintiff subsequent mortgagee had notice or knowledge of its existence is incompetent.

Appellant's right to have a directed verdict after plaintiff had rested its case was not changed by appellant thereafter submitting evidence concerning the filing and unpaid condition of first mortgage, a demand for payment, and an agreement for extension of same.

In an action by a second mortgagee of wheat against an elevator company for converting such wheat, proof of a prior mortgage thereon, duly filed and unpaid, does not constitute a defense; but, when properly brought before the court, may be shown in mitigation of damages, to the extent of the amount due on and secured by the prior mortgage.

Numerous decisions of this court to the effect that, when both parties move for a directed verdict at the close of a trial, they thereby waive the right to have the facts submitted to the jury in the absence of any request therefor, and are estopped from predicating error upon the ground that the jury was not allowed to pass upon the facts, are adhered to.

Appeal from District Court, Stutsman County; Burke, Judge.

Action by the Citizens' National Bank of Jamestown against the Osborne-McMillan Elevator Company. From a judgment for plaintiff and an order denying a new trial, defendant appeals. Reversed, and new trial granted.Lee Combs, for appellant. John Knauf, for respondent.

SPALDING, J.

This appeal was taken from a judgment of the district court in favor of the plaintiff and respondent against the defendant and appellant, and from an order of that court denying a new trial. The complaint alleges that one Peter Liegeman, to secure the payment of his promissory note held by the respondent, executed a chattel mortgage on his undivided half of the crop grown during the season of 1908 upon the N. 1/2 of section 30, in township 133 N., of range 62 W., in Stutsman county, and that during the year 1908 said Liegeman raised, harvested, and threshed as his share of said grain on said land $445 worth of wheat, oats, and barley, and delivered the same to the appellant at its elevator at Courtenay, Stutsman county, on or about the 7th of November, 1908; that such grain was at that time of the value of $445. It alleges the right to possession under the terms of the chattel mortgage referred to, a demand and refusal, and conversion of the grain by appellant to respondent's damage in the sum of $445. The answer, so far as material, denies specifically and generally the matters set forth in the complaint, concerning the mortgaging, raising, and sale of the grain by said Liegeman, and that it bought the grain so claimed to have been mortgaged, or did any act by reason of which the plaintiff was damaged in any sum. No objections appear in the record aimed at the sufficiency of either of the pleadings.

The execution, delivery, and filing of the chattel mortgage in question were duly proved, and that there was past due, on the note secured thereby, the sum of $384.60. The mortgage contained the provisions usually found in chattel mortgages in this state, regarding rights of the mortgagee to take possession, and, among others, the following: “And it is further agreed that if default be made in the payment of said debt or any part thereof, or if at any time the said mortgagee or its assigns shall deem said debt unsafe or insecure, or whenever it shall choose so to do, then it is hereby authorized * * * to remove and sell the same as provided by law for the sale of mortgaged property, and out of the proceeds of such sale to retain the amount of said debt,” etc. It is unnecessary to consider separately all the errors assigned as the determination of part of the questions disposes of all. At the conclusion of the plaintiff's case, the defendant submitted a motion to the court for the direction of a verdict in its favor. This motion was somewhat extended, but the first ground assigned was that the plaintiff had utterly failed to establish a prima facie case of conversion against the defendant. The plaintiff had shown the amount of wheat raised, and that the mortgagor had delivered it to the defendant's elevator in September, or the first part of October, 1908; that at the date of such delivery the price of wheat was 93 cents; that he sold it to the defendant in the latter part of October or the first part of November of the same year, and that the price of wheat on the day of the sale of 95 cents per bushel, and that there were 542 bushels. It was shown that a demand was made by respondent on the elevator company for the wheat on the 20th or 21st day of December, 1908, and another demand therefor some time in April, 1909, both of which were refused. It was not shown that any of the wheat had been mixed with other wheat, or that it had been shipped from the state.

[1] 1. The chattel mortgage did not transfer the title to the wheat to the respondent, but was only a lien thereon as security for the debt it described, and, being only a lien, appellant could store or purchase it, and do so subject to the lien of respondent's mortgage. Sanford v. Bell et al., 2 N. D. 6, 48 N. W. 434;Catlett v. Stokes, 21 S. D. 108, 110 N. W. 84. Having taken it subject to such lien, a conversion does not take place until some affirmative act on the part of the appellant, like tortious detention thereof from the owner or the party entitled to the possession thereof, or an exclusion or defiance of such party's right, or the withholding of possession under a claim of title inconsistent with that of the plaintiff or owner. Taugher v. N. P. R. Co., 129 N. W. 747; and, as no such act was proven until the demand and refusal to deliver, there was no proof of conversion as having taken place prior to the 20th day of December, 1908. Towne v. St. A. & D. Elev. Co., 8 N. D. 200, 77 N. W. 608.

[2] 2. The respondent having neglected to show the value of the grain as on the date of conversion, and only at the dates of delivery and sale, some weeks prior to the demand, had not made a prima facie case when it rested, and the appellant submitted its motion for a directed verdict, hence it was error to deny such motion. Towne v. Elev. Co., supra; First National Bank of Fargo v. Minneapolis & Northern Elev. Co., 11 N. D. 281, 91 N. W. 436. This rule rests upon the provisions of section 6585, R. C. 1905, which reads: “The detriment caused by the wrongful conversion of personal property is presumed to be, 1st: the value of the property at the time of the conversion, with the interest from that time; or, (2) when the action has been prosecuted with reasonable diligence, the highest market value of the property at any time between the conversion and the verdict without interest, at the option of the injured party; and (3) a fair compensation for the time and money properly expended in pursuit of the property.”

[3] 3. Another ground stated for moving for a directed verdict was that it appeared from the respondent's evidence that there existed a prior unsatisfied valid outstanding lien upon the same property, given by the same party to one Hoster, which lien was given to secure the payment of a debt which matured September 15, 1908, and in the payment of which default had occurred prior to...