First Nat. Bank of Osakis v. Flynn

• Decision Date: 10 November 1933
• Docket Number: No. 29534.,29534.
• Citation: 250 N.W. 806,190 Minn. 102
• Parties: FIRST NAT. BANK OF OSAKIS v. FLYNN et al.
• Court: Minnesota Supreme Court

250 N.W. 806

190 Minn. 102

FIRST NAT. BANK OF OSAKIS v. FLYNN et al.

No. 29534.

Supreme Court of Minnesota.

November 10, 1933.

Appeal from District Court, Douglas County; Carroll A. Nye, Judge.

Action by the First National Bank of Osakis, a corporation, against Charles H. Flynn and others. From an order denying an alternative motion for judgment notwithstanding verdict for defendants or a new trial, plaintiff appeals.

Order reversed for new trial.

F. H. Borchert, of Osakis, and Constant Larson, of Alexandria, for appellant.

Leach & Swore, of Alexandria, for respondents.

STONE, Justice.

Replevin for certain motor repair shop machinery and equipment. The verdict was for defendants, and plaintiff appeals from the order denying its alternative motion for judgment notwithstanding or a new trial.

Defendant Flynn Motor Company appears to be only a nominal party. The real controversy being between plaintiff and defendant Charles H. Flynn, the latter will be referred to for convenience as though he were the only defendant. He claims under a real estate mortgage and its foreclosure. Plaintiff takes position upon a later chattel mortgage in terms covering the property in question. The issues submitted to the jury were: (1) Whether the property had become part of the realty as fixtures and remained so until after plaintiff's mortgage was given in 1926; and (2) Whether plaintiff had waived its right to claim under the chattel mortgage because of the abortive levy on the property hereinafter considered. In March, 1932 plaintiff procured judgment for $1,194.32 on the then past-due debt secured by its chattel mortgage. Execution issued, and the property in issue was levied upon. But defendant speedily served a notice of claim thereto. Plaintiff did not secure the sheriff against that claim by bond as permitted by statute, and the levy was thereupon released and the goods not sold.

1. The court instructed the jury that, while there was no waiver as matter of law, the levy, notwithstanding its release, "is a fact which you may take into consideration along with all of the other evidence in the case to determine whether or not by making the levy and then releasing it the bank thereby intended to waive any further lien on the property by virtue of the chattel mortgage. If it once determined to do that and the parties acted upon that assumption, then the bank could not later on change its attitude and assert its claim under the mortgage." There being no other fact to suggest waiver, it was error to submit the issue to the jury if the levy itself was not evidence of waiver. Such an error is prejudicial, and requires a new trial. Bowers v. Chicago, Milwaukee & St. Paul Ry. Co., 141 Minn. 385, 170 N. W. 226; General Elec. Co. v. Florida & Southern Dredging Co., 183 Minn. 178, 235 N. W. 876.

2. On the question generally whether such a levy by a chattel mortgagee upon the mortgaged property is an election of remedies and a waiver of rights under the mortgage, there is divergence of authority. Among the cases for the affirmative are Evans v. Warren, 122 Mass. 303; Whitney v. Farrar, 51 Me. 418; Libby v. Cushman, 29 Me. 429; Haynes v. Sanborn, 45 N. H. 429; Dyckman v. Sevatson, 39 Minn. 132, 39 N. W. 73; Cox v. Harris, 64 Ark. 213, 41 S. W. 426, 62 Am. St. Rep. 187; Dix v. Smith, 9 Okl. 124, 60 P. 303, 50 L. R. A. 714. The negative view is taken in Byram v. Stout, 127 Ind. 195, 26 N. E. 687; Barchard v. Kohn, 157 Ill. 579, 41 N. E. 902, 29 L. R. A. 803; Howard v. Parks, 1 Tex. Civ. App. 603, 21 S. W. 269; J. I. Case Threshing Mach. Co. v. Rice, 152 Wis. 8, 139 N. W. 445.

In Dyckman v. Sevatson, 39 Minn. 132, 39 N. W. 73, the general proposition is laid down, and it is correct, that "one who has voluntarily chosen and carried into effect an appropriate legal remedy, with knowledge of the facts, and of his rights, will not, in general, be allowed to afterwards resort to an inconsistent remedy, involving a contradiction of the grounds upon which he before proceeded." In that case the facts before the court were somewhat anomalous. The record was ambiguous, in that, while the involved property had been attached as that of the mortgagor, "it did not appear that anything further was done with this property in that action, nor how it was freed from the custody of the sheriff under the attachment." It was disclosed that somehow or other the property had gotten back into the possession of the debtor and his assigns, but as far as the record disclosed, it may have been sold under the attachment by the sheriff. But, if it be assumed that it was not, and that it was released before sale, our present view is that, while the general rule applied was and is correct, it had no application to the facts last assumed, for the reason that plaintiff had not finally "chosen, and carried into effect, an appropriate remedy."

With us the mortgagee of chattels has the legal title. But there remains in the mortgagor a very real interest in the nature of an equity of redemption which is subject to attachment or levy. Mason's Minn. Statutes 1927, §§ 8358 and 9431. It is argued that the divergence of authority already noted is due to the fact that, in the states where a levy by a mortgagee upon the mortgaged chattels is held a waiver, it is because there, as here, he has the legal title, and the levy amounts to an election that the title, notwithstanding the mortgage, remains in the mortgagor or his assigns. In those states where the negative view is taken, it is said by counsel that the mortgagee has only a lien on the property, the legal title remaining in the mortgagor.

There is another view, which in our judgment requires decision as matter of law, that in this case the abortive levy was neither waiver nor evidence of waiver. Plain it is that, while plaintiff instituted a procedure which, carried to conclusion, would have constituted waiver, that procedure was stopped far short of its usual conclusion. It was abandoned upon the assertion of defendant's claim, so it was not a final choice of remedy. There is no suggestion that defendant changed his position because of the levy or that he was otherwise prejudiced thereby. In Kremer v. Lewis, 137 Minn. 368, 163 N. W. 732, it was held that the commencement of an action for damages upon a complaint that did not constitute a cause of action for fraud, and which was dismissed by the plaintiff, did not destroy his right of action for a recovery of the purchase price of property which he claimed he had been induced to purchase by the fraud. Here again is a lack of harmony of decision. Some of the cases on both sides are cited in the Kremer Case. But we are now definitely in line with the view that mere commencement of an action or proceeding which, if carried to its usual conclusion, would constitute an election, will not have that effect, assuming that the adverse party has not changed his position or been otherwise prejudiced. Holland Furnace Co. v. Jefferson, 173 Minn. 121, 216 N. W. 795 (mere filing of a mechanic's lien claim without attempted enforcement not an election); Ross v. Amiret Farmers Elevator Co., 178 Minn. 93, 226 N. W. 417 (action on contract for agreed price of goods not bar to action for the conversion of the same goods). See, also, Fitzgerald v. Harbor Lighterage Co., 244 N. Y. 132, 155 N. E. 74 (election inoperative when the remedy first selected is one denied by law. Choice not final until allowed).

The purpose of the doctrine of election of remedies is not to prevent recourse to any remedy but to prevent double redress for a single wrong. That the final and determinative character of the choice must appear in order to constitute election is undoubted. Marcus v. National Council of K. and L. of Security, 127 Minn. 196, 149 N. W. 197....