Geo. A. Hormel Co. v. First Nat. Bank
| Citation | 212 N.W. 738,171 Minn. 65 |
| Decision Date | 08 April 1927 |
| Docket Number | No. 25580.,No. 25578.,No. 25581.,No. 25579.,25578.,25579.,25580.,25581. |
| Parties | GEO. A. HORMEL CO. v. FIRST NAT. BANK OF LE ROY et al. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Mower County; Norman E. Peterson, Judge.
Actions by the George A. Hormel Company against the First National Bank of Le Roy and another, consolidated for trial and decided together on appeal. Judgment directed for plaintiff. From orders denying motions for amended findings or for a new trial, defendants appeal. Affirmed.
Smith & Callahan and H. Stanley Hanson, all of Minneapolis, and Arthur W. Wright and Martin A. Nelson, both of Austin, for appellants.
Catherwood & Nicholsen and Sasse & French, all of Austin, for respondent.
Plaintiff is a Minnesota corporation engaged in the packing business at the city of Austin. In July, 1921, plaintiff discovered that R. J. Thomson, then assistant comptroller of the company, had embezzled $1,187,000 of its funds during the preceding five years. He was arrested, admitted his thefts, and is serving a term in the state prison therefor. He had borrowed money from defendant First National Bank and also from defendant First State Bank. As collateral security for these loans he had deposited with the First National Bank 45 shares of the preferred capital stock issued by plaintiff and certain other securities, and with the First State Bank 48 shares of such capital stock and certain other securities.
Plaintiff brought an action in replevin against each of these banks to recover the securities so deposited by Thomson, claiming to be the owner thereof. The banks rebonded and retained the securities. The actions and subsequent proceedings were nominally separate as to each bank, but were the same in all respects and the actions were tried together and the appeals of both banks are submitted upon the same record and briefs. Consequently, there is no need to distinguish between them in this opinion, and for convenience and brevity the terms "bank" and "defendant," as used hereinafter, may be understood as applying to both.
In an amended answer, defendant set forth the facts giving it a lien on the securities deposited by Thomson, and asked that its lien be adjudged superior to plaintiff's claim, be foreclosed, the securities sold, and the proceeds thereof applied on its loan to Thomson. Plaintiff with the permission of the court dismissed its complaint and cause of action in replevin. But as defendant had asked for affirmative relief, plaintiff could not dismiss the action and the questions in respect to defendant's counterclaim remained to be determined. The court permitted plaintiff to interpose an amended reply to the amended answer, in which plaintiff alleged that the shares of capital stock pledged by Thomson were owned by him and stood in his name on plaintiff's stock book; that he was indebted to plaintiff in a sum exceeding $1,000,000 for which plaintiff had obtained judgment; and that plaintiff had a first lien upon the stock for such indebtedness. Plaintiff asked for judgment decreeing that it had a first lien on the stock, and that the lien be foreclosed and the stock sold and the proceeds thereof applied in reduction of its judgment against Thomson. By this reply plaintiff abandoned all claim of title to the securities held by the bank and relied solely upon the lien given by section 7463, G. S. 1923, to a corporation upon its capital stock for indebtedness due from the stockholder. Previous to dismissing its complaint and cause of action in replevin plaintiff brought another action, designated in the record as the equity action, against both the bank and Thomson, in which it set forth the facts giving it a lien upon its capital stock under the statute for the indebtedness due from Thomson and asked that this lien be declared superior to the lien of the bank and be foreclosed and the stock sold and the proceeds applied in reduction of the judgment against Thomson. The facts set forth and the relief asked in this complaint were substantially the same as in the amended reply in the replevin action. The court consolidated the actions for trial and they were tried together as one. The court made extended findings setting forth the facts in detail and directed that judgment be entered decreeing that plaintiff had a first lien on the capital stock, that it be sold and the proceeds applied in reduction of the judgment against Thomson. Defendant made a motion for amended findings or for a new trial in each case and appealed from the orders denying these motions.
The stock in controversy was issued to Thomson and stood in his name on the stock book. That the statute gives a corporation a first lien upon its capital stock for all indebtedness due from the stockholder is no longer open to question and is not disputed. Dorr v. Life Insurance Clearing Co., 71 Minn. 38, 73 N. W. 635, 70 Am. St. Rep. 309; United States & C. L. Co. v. Sullivan, 113 Minn. 27, 128 N. W. 1112, Ann. Cas. 1912A, 51; Benson v. Saffert-Gugisberg Cement Co., 159 Minn. 54, 198 N. W. 297; Benson v. Saffert-Gugisberg Cement Co., 161 Minn. 269, 201 N. W. 424. The question to be determined is whether plaintiff has lost the right to assert and enforce this lien as against defendant.
Defendant contends that it was beyond the power of the court to permit plaintiff to interpose a reply in the replevin action in which it alleged that Thomson was the owner of the stock and that plaintiff had a lien upon it, for the reason that such allegations were inconsistent with and a departure from the complaint. The reply was clearly a departure from the complaint. But the complaint and the cause of action asserted therein had been dismissed and abandoned, and only the issues tendered by defendant's counterclaim remained to be determined. This, in effect, reversed the position of the parties. In prosecuting its counterclaim, defendant occupied the position of a plaintiff, and in defending against the counterclaim plaintiff occupied the position of a defendant. A similar situation was presented in Griffith v. Dowd, 133 Minn. 305, 158 N. W. 420, and in Farmers' State Bank v. Hammond (Minn.) 212 N. W. 593, filed February 25, 1927. While the facts set forth in the reply would have been a departure from the complaint if that pleading had remained in the case, they were admissible as a defense to the counterclaim asserted by defendant in its answer. Plaintiff could allege and prove any facts which would defeat that counterclaim. Several cases give expression to that principle, although not similar in their facts. Townsend v. Minneapolis Cold Storage & Freezer Co., 46 Minn. 121, 48 N. W. 682; Trainor v. Worman, 34 Minn. 237, 25 N. W. 401; School District No. 73 v. Wrabeck, 31 Minn. 77, 16 N. W. 493; Niebels v. Howland, 97 Minn. 209, 106 N. W. 337. Whether plaintiff could make use of the new matter in the reply as a basis for affirmative relief, or only as a defense to the counterclaim, as intimated in some of the cases, it is not necessary to determine, for plaintiff's claim to affirmative relief is presented and asserted in the equity action and does not depend upon this reply.
Defendant also contends that permitting this reply to be interposed changed the action from one at law to one in equity and thereby wrongfully deprived defendant of the right to a jury trial. But the cause of action at law had been dismissed and no jury question remained. Both the counterclaim and the defense to it were equitable in their nature. And defendant, having chosen to pursue an equitable remedy instead of permitting the action to be dismissed, cannot complain because plaintiff interposed an equitable defense to its claim for affirmative relief.
Defendant also contends that plaintiff, by bringing the action in replevin, made an election of remedies which barred it from thereafter asserting its statutory lien.
The doctrine of election of remedies applies only where a party has a choice between two or more coexistent and inconsistent remedies for the enforcement of a given right or the redress of a given wrong. It does not apply where he has different remedies for the enforcement of different and distinct rights or the redress of different and distinct wrongs.
See also, 9 R. C. L. 956; 7 Ency. Pl. & Pr. 263.
It is stated as a general rule that, where a party with full knowledge of all the facts and of his rights resulting therefrom makes a deliberate choice between two appropriate coexisting but inconsistent remedies, he is bound by the election so made. Dyckman v. Sevatson, 39 Minn. 132, 39 N. W. 73; Johnson v. Town of Clontarf, 98 Minn. 281, 108 N. W. 521; Aho v. Republic I. & S. Co., 104 Minn. 322, 116 N. W. 590; 5 Standard Ency. of Proc. 80.
To constitute an election within the rule, the remedy sought to be enforced must be an existing remedy open to the party. An attempt to pursue a particular remedy which fails or is abandoned because the party either did not possess that remedy or had lost the right to enforce it does not bar him from pursuing another inconsistent remedy, in the absence of facts constituting an estoppel in pais. Mohler v. Chamber of Commerce, 130 Minn. 288, 153 N.W. 617; International Realty & I. Corp. v. Vanderpoel, 127 Minn. 89, 148 N. W. 895; In re Van Norman, 41 Minn. 494, 43 N. W. 334; Freeman v. Fehr, 132 Minn. 384, 157 N. W. 587; Virtue v. Creamery Package Mfg. Co., 123 Minn. 17,...
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