Hall v. Bryant

• Decision Date: 25 November 1959
• Docket Number: No. 6548,6548
• Citation: 66 N.M. 280,1959 NMSC 97,347 P.2d 171
• Parties: M. K. HALL, d/b/a M. K. Hall and Company, Plaintiff-Appellee, v. J. H. BRYANT, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 171

347 P.2d 171

66 N.M. 280

M. K. HALL, d/b/a M. K. Hall and Company, Plaintiff-Appellee, v. J. H. BRYANT, Defendant-Appellant.

No. 6548.

Supreme Court of New Mexico.

Nov. 25, 1959.

Fred Boone, Portales, for appellant.

James C. Compton, Portales, for appellee.

LUJAN, Chief Justice.

This action instituted by the plaintiff-appellee was predicated upon several causes of action; namely, to foreclose a chattel mortgage on a 1955 Diamond T tractor-truck and recover the unpaid balance of a promissory note secured by same; to recover the remaining balance due, upon three lease agreements, for six tires leased to defendant-appellant; to recover judgment for the entire amount of a promissory note executed by appellant for a drag-axle unit; to obtain judgment for certain sums of money appellee alleges is due for prepaid insurance premiums upon the aforesaid motor vehicle.

The trial court held that the indebtedness remaining upon the motor vehicle, and the tires leased to appellant, were secured by the chattel mortgage, and that said chattels were therefore subject to foreclosure. The trial court further granted judgment for the promissory note on the drag-axle, and, in addition thereto, granted appellee relief for express penalties, interest and attorneys' fees, as provided for by the respective legal instruments in evidence. Appellant appeals from said judgments. The district court dismissed appellee's cause of action for paid insurance premiums from which a cross appeal was taken which he chose not to perfect.

A resume of the salient facts is deemed necessary. On March 13, 1957, the appellee sold appellant a 1955 Diamond T tractor-truck, for the sum of $8,000; appellant executed a promissory note for said amount secured by a chattel mortgage on said truck. The note provided that payments were to be made at the rate of $175 per trip for each trip that the truck made, but this sum was later reduced to $150 per trip by mutual agreement. On March 6, 1957, appellee sold appellant a drag-axle taking his promissory note in the sum of $1,350, said note containing no provision for the amount of weekly payments. On September 30, October 23, and November 5, 1957, under three lease agreements, appellee leased or sold six tires to appellant for the total rental installment amount of $915.

Appellee acted as broker for appellant on all trips made with the aforesaid truck receiving a brokerage fee of $25 per load. Appellee would also rent trailers to appellant to use with said tractor-truck, receiving 20% of the gross income for each trip made by the tractor-truck. Appellee and appellant had agreed that the former would arrange all hauls and would advance expenses if necessary. The check, representing the gross receipts for each haul, would be given directly to the appellee from which the appellee would subtract the trailer rental fee, brokerage fee, advanced expenses, and the sum of $150 representing the truck payment due under the terms of their agreement; appellee would then remit the residue, if any, to appellant. The appellee would also from time to time deduct sums of money from appellant's proceeds for the payment of insurance premiums under the provisions of the chattel mortgage. Appellant alleges that, from October 29, 1957, unbeknown to appellant, appellee failed to deduct from appellant's proceeds from each haul the sum necessarily due for the truck payment, thereby placing appellant in default.

On December 27, 1957, appellee brought a replevin action for said truck, which was subsequently dismissed. On February 21, 1958, appellee executed a writ of attachment which was later quashed. At the trial of this action, appellant tendered to the trial court the sum of $1,650 representing truck payments of $150 per trip for hauls made subsequent to the dismissal of the replevin action.

The assignments of error are argued under five points, to wit:

'Point I. An action to foreclose a Chattel Mortgage is recognized as an equitable action, and all equitable principles apply thereto, and equitable defenses are available to defendant.

'Point II. Plaintiff by his conduct in failing to notify Defendant, on October 29, 1957, that he was no longer applying Defendant's money to payment of the note, secured by Chattel Mortgage, as he had been doing at all times since the execution of such note and mortgage, and instead applying such money to unsecured accounts of Defendant, and Defendant in good faith relied on Plaintiff to make payments on his secured note as Plaintiff had been doing, Plaintiff was estopped to deny payments on the said secured note and claim default in the terms of said mortgage.

'Point III. When a mortgage does not provide a time certain for payment, demand and notice must be given to the mortgagor before foreclosure.

'Point IV. A finding of fact not supported by substantial evidence cannot be sustained on appeal, and a judgment based on such a finding is itself without support.

'Point V. Clerical mistakes in judgments should be corrected by the trial court, upon motion properly made, and it is error for the court to arbitrarily refuse to do same.'

Appellant's contentions under Point I pose no particular problem for the court. The distinction between Law and Equity has long since been abolished and only one form of action, designated as a civil action, exists today; however, the court recognizes that while Law and Equity have been merged, equitable principles will apply to an equitable action. S. F. Bowser & Co. v. Hartnett, 217 Mo.App. 147, 273 S.W. 420; Consolidated Wagon & Machine Co. v. Kay, 81 Utah 595, 21 P.2d 836; McKinney v. New Rocky Grocery Co., 176 Ark. 463, 3 S.W.2d 295; Schmaling v. Johnston, 54 Nev. 293, 13 P.2d 1111; affirmed 55 Nev. 164, 27 P.2d 1059; McCormick v. Hartley, 107 Ind. 248, 6 N.E. 357; Greer v. Goesling, 54 Ariz. 488, 97 P.2d 218; Cohen v. Beaudry, City Ct., 100 N.Y.S.2d 519; Elmore Jameson Co. v. Smith, 34 Cal.App.2d 609, 93 P.2d 1063.

Appellant raises the defense of equitable estoppel under Point II. Appellee rightfully contends that equitable estoppel is an affirmative defense and must be pleaded in the answer which the appellant failed to do. However, this court has the authority to review the issue notwithstanding appellant's failure to plead same in the lower court. 1953 Comp., Sec. 21-1-1(15)(b) states:

'When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not effect the result of the trial of these issues.'

The result of trial is not affected by failure to amend the pleadings to conform to the proof actually admitted. Ruud v. American Packing & Provision Co., 9 Cir., 177 F.2d 538.

The issue as to whether or not appellee acted in good faith when he ceased to apply trip payments to the chattel mortgage was clearly raised in the trial of this action by the testimony and by motion.

An absence of pleading supporting the proof becomes immaterial when the matter is litigated without objection to the deficiency in the pleading. George v. Jensen, 49 N.M. 410, 165 P.2d 129. See also Posey v. Dove, 57 N.M. 200, 257 P.2d 541 and Holley Coal Co. v. Globe Indemnity Co., 4 Cir., 186 F.2d 291.

Where issues not within the pleadings are litigated without objection, the pleadings should be treated as amended by the trial court, or by the Supreme Court on appeal, so as to put in issue all litigated issues. Luvaul v. Holmes, 63 N.M. 193, 315 P.2d 837, 839. See also Berkstresser v. Voight, 63 N.M. 470, 321 P.2d 1115.

A careful reading of the record places some strain upon credulity in behalf of the appellee with respect to the allegation that appellant had been made aware by appellee, or his employee, that appellant was indeed in default subsequent to October 29, 1957. Were appellee's actions concerning cessation of truck payments arbitrary; were they tainted with deliberate intent; or were they simply a matter of sloppy business...