Degenhart v. Cartier

• Decision Date: 24 September 1920
• Docket Number: No. 4172.,4172.
• Citation: 58 Mont. 245
• Parties: DEGENHART v. CARTIER ET AL.
• Court: Montana Supreme Court

58 Mont. 245

DEGENHART

v.CARTIER ET AL.

No. 4172.

Supreme Court of Montana.

July 6, 1920.

On Motion for Rehearing, Sept. 24, 1920

Appeal from District Court, Granite County; George B. Winston, Judge.

Action by Lee C. Degenhart against George A. Cartier and others. Judgment for plaintiff, and defendants appeal. Reversed and remanded, with directions.

Wingfield L. Brown and R. Lewis Brown, both of Philipsburg, for appellants.

S. P. Wilson, of Deer Lodge, and J. J. McDonald, of Philipsburg, for respondent.

MATTHEWS, J.

The complaint in this action has been before this court on the question of its sufficiency. Degenhart v. Cartier et al., 52 Mont. 102, 157 Pac. 637. The action was brought to recover the sum of $1,012.80, with interest--it being alleged in the complaint that plaintiff had theretofore commenced an action against defendant Cartier, and caused a writ of attachment to be issued therein and placed in the hands of the sheriff for service; that the only property possessed by Cartier, and not exempt from execution, was certain live stock, of the value of $1,600, subject to a chattel mortgage to the defendant Power to secure a note for $1,000; and that, in compliance with section 5766, Revised Codes, plaintiff deposited the amount due on the mortgage with the county treasurer, payable to Power. The complaint then alleges that before the sheriff could reach the property, and before the levy of the writ, learning of the commencement of the action, defendants caused a second chattel mortgage for the sum of $675, made by Cartier to Power, to be filed, and thereafter, on the day following the levy, served written notice on the sheriff that Power claimed a lien on the property by virtue of the second mortgage. The complaint further alleges that the sheriff did release the property from the attachment, and thereupon the defendant Power demanded and received from the county treasurer the moneys which had been deposited, and that Power thereupon satisfied the mortgage of record. The complaint then alleges that thereafter the defendants caused other and further incumbrances and mortgages to be given and placed on the property, and caused the said property to be sold and disposed of, and to come into the hands of innocent purchasers; that the Cartiers are insolvent, and that Power had kept the money so received from the county treasurer. The complaint concludes with the allegation:

“That the acts and things above mentioned as done by the defendants were wrongfully done, for the single purpose of preventing, as they did prevent, the plaintiff from proceeding with the attachment or getting back his deposit, to his damage in the sum of $1,012.80,” the amount so deposited with the county treasurer.

This court, having determined that the complaint did state a cause of action, remanded the cause, with direction to overrule the demurrer, and thereafter the defendant Power, and defendants Cartier and wife, filed separate answers, setting up all of the transactions leading up to the commencement of this action at length. Much of this matter was irrelevant or surplusage, and was by the court stricken from the separate answers. Certain allegations in the answers, which may have been material to the issues, were also stricken; but, as these matters do not affect the conclusion herein reached, the court's rulings thereon will not be considered. The proof substantiates the allegations of the complaint, except in certain very important particulars, which will be hereafter noted.

1. In the case of Degenhart v. Cartier et al., supra, it is held that, by depositing the amount due on a chattel mortgage in the manner provided by law, an attaching creditor does not pay the debt nor discharge the mortgage, but is subrogated to the rights of the mortgagee, and that, if his attachment should fail, he still has recourse to the property for the amount paid to the mortgagee. The opinion, written with the complaint alone before the court, holds that “the theory underlying the whole complaint is * * * that the defendants could not lawfully destroy the right of recourse as against the mortgaged property for the amount so paid, thus obtained by the plaintiff; that they did destroy it when, under the circumstances stated, Power certified of record that the chattel mortgage had been fully paid, satisfied, and discharged, and in so doing committed a wrongful act, redressible in damages,” is substantially correct. However, among the “circumstances stated” in the complaint is the allegation that by their conduct the defendants caused the property to be sold and to pass into the hands of an innocent purchaser. To be an innocent purchaser, the vendee must, in good faith, pay a valuable consideration without notice of outstanding legal or equitable rights. Tate v. Kramer, 1 Tex. Civ. App. 427, 23 S. W. 255.

The testimony of the vendee, Greenheck, clearly negatives the allegation that he was an innocent purchaser; he had been attempting to purchase the cattle for some months; he knew of the mortgage and the commencement of the attachment suit, of the deposit by plaintiff and its withdrawal by Power, and of the dismissal of the suit and the return of the cattle by Cartier, and purchased the cattle some three weeks later. The witness testified that in the meantime he had had a conversation with Degenhart, and, while the court did not permit him, when a witness for the defense, to relate the conversation, on cross-examination as a witness for the plaintiff it developed that the witness had in that conversation said to Degenhart:

“You had better hold onto the cattle, and he said that Durfee told him that Power had to give him a thousand dollars.”

Degenhart, called in rebuttal, did not deny that such a conversation took place.

On the former appeal, this court, speaking of the plaintiff's right of recoupment against the property, said:

“As that right is a property right, he cannot be justly deprived of it by any one, let alone the debtor, who has paid nothing, or the mortgagee, to whose claim against the property he has, in legal effect, succeeded. In our opinion, therefore, to destroy that right, as the complaint alleges it was...