Cook v. Western Field Seeds, Inc.

• Citation: 429 P.2d 407,91 Idaho 675
• Decision Date: 19 June 1967
• Docket Number: No. 9698,9698
• Parties: T. L. COOK, Plaintiff-Respondent, v. WESTERN FIELD SEEDS, INC., a corp., Melvin R. Stolquist, Anne E. Stolquist and Norris E. Stolquist, individually and as Trustees of Western Field Seeds, Inc., a defunct corp., and Union Seed Co., Defendants, Union Seed Co., Defendant-Appellant.
• Court: United States State Supreme Court of Idaho

Page 407

429 P.2d 407

91 Idaho 675

T. L. COOK, Plaintiff-Respondent, v. WESTERN FIELD SEEDS, INC., a corp., Melvin R. Stolquist, Anne E. Stolquist and Norris E. Stolquist, individually and as Trustees of Western Field Seeds, Inc., a defunct corp., and Union Seed Co., Defendants, Union Seed Co., Defendant-Appellant.

No. 9698.

Supreme Court of Idaho.

June 19, 1967.

Schiller, Young & Williams, Nampa, and Richards, Haga & Eberle, Boise, for appellant.

Gigray, Boyd & Downen, Caldwell, for respondent.

McQUADE, Justice.

The real parties concerned in this appeal are Union Seed Co., appellant, and T. L. Cook, respondent.

On January 23, 1961, Western Field Seeds, Inc., purchased approximately 80,000 pounds of alfalfa seed from respondent. Part payment was made at the time of sale; for the balance, Western gave respondent its note, maturing on August 1, 1961, secured by two mortgages: one covering machinery and equipment supposedly located in Western's seed-processing plant at Caldwell, Idaho, and the other on the seed itself. A few days later, Western sold the seed to appellant.

Western did not honor its note and respondent brought a successful action to foreclose the mortgage covering Western's machinery and equipment, but the foreclosure sale recovered a relatively insignificant sum. Then on December 27, 1961, responddnt, claiming ownership under the seed mortgage, demanded that appellant return the seed or pay respondent its value at the date of appellant's purchase. After this demand was refused, respondent brought an action against appellant for conversion of the seed. Appellant denied actual knowledge of the seed mortgage at the time when it had purchased the seed, and argued affirmatively that respondent had waived his seed mortgage. The trial court entered judgment for respondent, finding that at the time of appellant's purchase, the seed mortgage was recorded as required by law, thereby affording constructive notice thereof. This is an appeal from that judgment.

Included among appellant's assignments of error is its contention that the trial court should have found respondent waived his mortgage on the seed by certain statements made to one Sewell Erskine. Appellant's argument is correct, this Court decides, and requires reversal; appellant's other points thus need not be considered. The facts pertinent to waiver are hereinafter presented.

During January 1961, Melvin R. Stolquist, the president and managing officer of Western Field Seeds, Inc., traveled from Western's place of business in Caldwell, Idaho, to Sunnyside, Washington, where respondent had several farms and his own 250 ton seed warehouse, and there negotiated with respondent for sale of the seed which is the subject matter of the present controversy.

On January 23, 1961, respondent contracted to sell to Western, through Stolquist, 80,000 pounds of Ranger Alfalfa Blue Tag seed at thirty cents per pound, for a total price of $24,000. Stolquist, as Western's president, made a down payment by check in the amount of $5,600 and gave Western's promissory note due August 1, 1961, for the $18,400 balance. As security for the note's payment, Stolquist and his wife, Western's secretary, executed two chattel mortgages on behalf of Western. One of these mortgages covered various items of machinery and equipment, valued at $86,000 in an appraisal which Stolquist showed respondent and his attorney. The other mortgage was upon the seed itself.

Sometime between the 23rd and 25th of January, 1961, the seed was loaded on a railroad car at Sunnyside, Washington, and on January 25, 1961, Stolquist had an order bill of lading issued by the railroad. The bill of lading was consigned to Western's order and stated that the seed was 'TO BE DIVERTED AT CALDWELL IDA(HO).'

During the morning of January 26, 1961, Stolquist, then in Boise, Idaho, telephoned Luther Bice, appellant's manager, and inquired whether he was interested in purchasing the seed on behalf of appellant. Bice said yes, and Stolquist immediately drove to appellant's office in Nampa, Idaho, arriving there perhpas one-half hour after the phone conversation.

As the trial court found,

'during the morning hours of January 26, 1961, * * * Union Seed Company (appellant), * * * agreed to buy the seed from defendant, Western Field Seeds, Inc., at 26cents per pound, provided that the title of Wester Field Seeds, Inc., to the seed be free and clear of incumbrances.'

Stolquist told Bice that the seed itself was not incumbered, but Bice and his attorney, James E. Schiller, thought it best to investigate further since, as Bice testified, appellant's prior dealings with Stolquist had not been 'satisfactory.'

Additionally the trial court found that during the morning of January 26, 1961, Schiller telephoned Sewell Erskine, manager of the Albert Dickinson Company, a Sunnyside, Washington, seed enterprise with no interest in the present controversy, and asked him to inquire of respondent, whom he had known 'very well' for ten years, whether the seed itself was mortgaged. Erskine immediately went to respondent's home, four miles from Erskine's office, and put the question to him. The discussion that followed is a subject of conflicting evidence. Erskine's testimony contains the following:

'A * * * It told him (respondent) that I had a call from a lawyer-friend of mine in Nampa and there was a question about Stolquist, if he had the right to sell the seed that he was dealing on, and I wanted to find out if Stolquist was free to sell the seed and if Mr. Cook (respondent) had any lien on it, he said he did not have a lien on it, he said, 'I have taken a mortgage on all his real property, ¹ and the machinery, and everything, and I feel that I am amply covered,' and I said, 'Mr. Cook, do you know exactly what you have covered-do you know what these mortgages cover?' and 'Do you know the property is there to back these mortgages up?' I said, 'I know Mr. Stolquist and I will try to warn you that I didn't think that the mortgages he held were worth the paper they were written on really.'

'Q What did Mr. Cook say, if anything?

'A He said they (apparently respondent Cook and his attorney) had an appraisal and they felt that they were amply secured.

'Q Did you indicate to him who was going to purchase this (the seed respondent had sold to Western)?

'A At the time I went out there I thought our (Albert Dickinson) company was possibly interested in it and for that reason I wanted to be doubly sure, but I learned at a later date that we were not involved.

'Q * * * did he (respondent) inform you that there was a mortgage on this seed?

'A He informed me that he had a mortgage on the real property but no mortgage on the seed and he said that he felt he was amply covered * * *.

'Q * * * After you had your conversation with Mr. Cook on or near the 26th of January, 1961, did you ever see him later?

'A Very often.

'Q Did you ever have a conversation with him concerning this particular seed?

'A * * * at a later date, he informed me that he had taken a mortgage on this seed, and I told him, 'Tom, you told me once you didn't have a mortgage on it,' and that it about all there was to the conversation.

'Q And when you went out on this date (January 26, 1961) you did not disclose to Mr. Cook that you were there with reference to an inquiry, you didn't know who was interested in this seed, is that correct?

'A At that time I thought our (Albert Dickinson) company was interested.

'Q But you did not know that this was for Union Seed Company?

'A No.

'Q. And you made no disclosure to him (Cook) they (appellant) were contemplating the purchase of this seed?

'A I made the disclosure people were interested and they asked me to check.

'Q But who it was you didn't know?

'A I intimated to him that it was our company.

'Q At this conversation with Mr. Cook on or about the 26th of January, 1961, did you disclose to Mr. Cook that a purchase of this seed-this Stolquist seed-Western Field Seeds-this particular car of seed was being contemplated in Nampa, Idaho?

'A Yes.

'Q Could it possibly be that Mr. Cook told you that he had a mortgage on this seed and you didn't understand it?

'A I asked him repeatedly and he said, no, that he had a mortgage on the other property.'

Erskine had 'been in the seed business continuously since 1940.' He supervised the Albert Dickinson Company's purchases of seed, primarily alfalfa, which annually totaled from three to six million pounds. Erskine is a past-president of the Pacific Seed Association to which 'all the main seed companies of the area (seven Western states) belong, practically,' he testified, and past-president of the Washington Seed Association. 'He is considered reputable and honest, any trade or business we have done with Mr. Erskin (sic) has been satisfactory,' testified Stanley E. Lenuson, manager of Allied Seeds Company in Caldwell, Idaho. And in response to the question: 'what kind of a person is he?', respondent testified,

'Well, he always paid up, when he said he would give me so much he would give it to me and there were no questions asked.'

Respondent recalled Erskine's visit and their discussion about the seed mortgage. He insisted, however, that he had told Erskine the seed itself was mortgaged. Respondent's stepson, who testified that he had overheard the discussion from inside respondent's house, some thirty feet from the outdoor conversation, corroborated respondent's testimony.

The trial court found,

'That plaintiff told Erskine that he had no lien or mortgage on the seed; that Stolquist was free to sell same and that he was otherwise secured on the transaction with Stolquist.'

This finding, which has elicited no objection from respondent, is corroborated by the testimony of attorney Schiller who said that Erskine had telephoned him between 2:30 and 5:00 o'clock p.m. on January 26, 1961, and 'informed me just almost word for word what he testified here * * *.' It is also...