Henderson v. Allis-Chalmers Manufacturing Co.

• Decision Date: 11 May 1944
• Docket Number: 7115
• Citation: 149 P.2d 133,65 Idaho 570
• Parties: L. E. HENDERSON, Respondent, v. ALLIS-CHALMERS MANUFACTURING COMPANY, a corporation, Appellant
• Court: Idaho Supreme Court

149 P.2d 133

65 Idaho 570

L. E. HENDERSON, Respondent, v. ALLIS-CHALMERS MANUFACTURING COMPANY, a corporation, Appellant

No. 7115

Supreme Court of Idaho

May 11, 1944

65 Idaho 570 at 578.

Original Opinion of October 12, 1943, Reported at 65 Idaho 570. [Copyrighted Material Omitted] [Copyrighted Material Omitted]

Givens J. Holden, C. J., dissenting and concurring. Ailshie, J. Budge, J., concurring specially. Dunlap, Justice, concurs in the conclusions herein expressed.

OPINION

GIVENS; PER CURIAM

ON REHEARING

Appellant and respondent both petitioned for a rehearing, which was granted, respondent seeking clarification of the opinion to the effect that the new trial be confined to the ninth cause of action, appellant that the new trial be on all five extant causes of action.

Appellant may not complain that at its insistence the trial court compelled respondent to segregate his suit into separate causes of action.

Appellant's objection to respondent's own testimony of the value of contracts of employment which he testified he was prevented from obtaining because these mortgages had not been released should not have been sustained.

Appellant's exception to the statement in the opinion that "As pointed out, however, in Jones v. Fidelity Loan & Trust Co., 7 S.D. 122, 63 N.W. 553, the Kansas statute [construed and followed in Thomas v. Reynolds, 29 Kan. 304, 32 P. St. Rep. 216] did not give the cause of action to anyone but the mortgagor" is well taken, the Kansas statute being, in this particular, identical with ours. Section 44-815, I. C. A., does not indicate that the effect upon the mortgagor's credit is not encompassed within the purpose of the statute.

"The object of the statute is obvious. The record of the mortgage is constructive notice to the world of the existence of the debt and incumbrance. When this is paid, the statute has provided for satisfaction on the record, so that the world may also know the fact of payment. Unsatisfied mortgages of record tend to affect the pecuniary standing and credit of the mortgagor in business circles. In view of these considerations, the reasonableness of the statute requiring the mortgagee to acknowledge payment of the debt in as public a manner as the mortgagor had acknowledged its existence, is apparent." (Deeter v. Crossley, 26 Iowa 180.)

The above holding was approved in Livingston v. Cudd, 121 Ala. 316, 25 So. 805, amplifying the same by quoting with approval from Gay v. Rogers, 109 Ala. 624, 20 So. 37, as follows:

"When the lien or mortgage has been wholly or partially satisfied by payments, fairness and justice to him demand that his credit be restored. The mortgagee having published to the world the existence of his lien or claim, when it has been removed, he owes, independent of the statute, a moral duty to his debtor, to give the same publicity to the fact that the property of the debtor is no longer incumbered. The statute makes it a legal duty to perform a moral duty, and imposes a penalty if he fails to discharge this duty. (Scott v. Field, 75 Ala. 422.)"

The wording of the statute permitting a recovery by a mortgagor, his grantee, or heirs was to cover all possible contingencies and to authorize the recovery by any person who was injured in any particular by the failure to release the mortgage, thus covering not only the matter of the title, but also damages that might, as indicated in the cases above, be occasioned by injury to financial standing. Kansas has evidently adopted the narrower construction and confined recovery to the owner of the property who was injured by failure of the mortgagee to clear the title. The statute is salutary and designed to protect the mortgagor from the neglect of the mortgagee, who, after the mortgage is paid, has no more right or interest in the property and may not be particularly concerned with whether or not the title is cleared, and the legislature evidently considered the statute advisable protection. Hence, despite the misstatement as to the Kansas holding and our high regard for that court, our former conclusion commends itself and prevails.

We adhere to our holding that the demand herein was sufficient to have its adequacy passed on by the jury.

Mrs. Carney, stenographer in appellant's Pocatello office, testified that according to custom she sent to the home office (where the mortgages were kept) requests for releases, illustrated by defendant's exhibit 9 for identification:

"SECURITY ORDER

Br. No. A-798390

Name L. E. Henderson

Branch Pocatello

State or Province Idaho

XX Claim Paid.

Send out securities as

checked.

Deliver undersigned paper as checked.

-- Chattel Mortgage

-- Contract of Conditional Sale

-- Real Estate Mortgage

-- Trust Deed

-- Notes

--

XX Release

-- Assignment To

Date February 1, 1940 Signed E. L. Bjornlie"

That pursuant thereto releases were returned with covering memoranda as exhibit 8 for identification:

"ALLIS-CHALMERS MANUFACTURING CO.

(Letter enclosing documents)

B. R. No. 798390

Milwaukee, Wis. 2-5-40

Name L. E. Henderson

Pocatello Branch

Complying with yours of 2-1-40 We attach hereto the instruments checked below:

x

Chattel Mortgage

Notes No.

Real Estate Mortgage

Contract of

Conditional Sale

Trust Deed

x

Release

Assignment to . . .

. . . .

M. Nicholas

Remarks: "

She testified that thereupon she enclosed these releases with letters (three copies of which were admitted as defendant's exhibits 7, 11, and 15) and mailed them to respondent.

The court sustained respondent's objections to the above inter-office requests and return memoranda, exhibits 8, 9, 12, 13, 16, 17, 18, 19, for identification, covering the four mortgages in question.

In enacting chapter 106, 1939 Session Laws, page 175, ^[1] the legislature apparently intended to broaden the scope of admissibility of records made in the regular course of business. (Freeman v. Mutual Life Ins. Co. of New York, 342 Pa. 404, 21 A.2d 81, 135 A. L. R. 1249; Skoller v. Short, 35 N. Y. S. (2d) 68; Reed v. Order of United Commercial Travelers, 123 F.2d 252; Cottrell v. Prudential Ins. Co. of America, 23 N. Y. S. (2d) 335; 120 A. L. R. 1133.

The statute under which respondent sues is penal and to be strictly construed. (Harding v. Home Investment etc. Co., 49 Ida. 64, 286 P. 920.)

While the issue of whether valid releases were sent was clearly before the jury and the jury by general verdict may have determined either that no releases were sent or that invalid releases were sent, we cannot say the rejection of these memoranda and their consequent non-consideration by the jury may not have affected the result prejudicially to appellant. Therefore, these memoranda should have been admitted, limited, like the copies of the letters, by instruction 12, supra.

The rejected exhibits concern the first four causes of action, recovery on which is, of course, a condition precedent to recovery on the ninth. A new trial should be granted on all five causes of action.

PER CURIAM. -- In view of the various and divergent opinions entertained by the Justices, the following judgment on this appeal is ordered;

The judgment is reversed and a new trial is granted in the first four causes of action and also in the ninth cause of action. Upon new trial, exhibits 8, 9, 12, 13, 16, 17, 18, and 19 should be admitted, as limited and restricted by instruction 12. The cause is remanded for further proceedings in accordance herewith. No costs awarded.

CONCUR BY: HOLDEN (In Part); AILSHIE; BUDGE

AILSHIE, J.

I still adhere to the views expressed by me on the original hearing. I accordingly concur in reversing the judgment.

I am unable, however, to agree with Mr. Justice Givens in his construction of the provisions of sec. 44-815, I. C. A. I think the right of action, for damages and penalty, accrues only to the holder of the legal title at the time the demand for satisfaction of mortgage is made, whether that be the mortgagor, his grantee, or his heirs.

Our statute (sec. 44-815) is in every substantial respect the same as the Kansas statute, which was under construction in Thomas v. Reynolds, 29 Kan. 216, 219, 32 P. Sts. Rep., with the single exception that their statute limited the recovery to $ 100; whereas, our statute extends the right of recovery to "all damages which he or they may sustain by reason of such refusal, and shall also forfeit to him or them the sum of $ 100.00." In Thomas v. Reynolds, supra, Mr. Justice Brewer, subsequently a Justice of the Supreme Court of the United States, made the following comment on the Kansas statute:

"By this it appears that the penalty goes to the mortgagor, or his grantee or heirs. It could not go to the grantee if it was a purely personal right of the mortgagor, and was not a right running with the land. If it is a right running with the land, the purpose of the statute is obviously a protection to the land, and not the securing of a personal right of the mortgagor. In other words, the purpose of the statute is, as claimed by counsel for plaintiffs in error, to remove all clouds from the title of real estate, and not simply to furnish record evidence of the mortgagor's solvency, by proof that he had paid the particular debt secured."

The reasoning of Justice Brewer seems to me to be clear, logical and sound and a very reasonable construction of the statute.

On the other hand, it seems to me that the reasoning of the Alabama court, in Gay v. Rogers, cited by Mr. Justice Givens, both unsound and illogical. As illustration, they say: (20 So. 37, 40)

"There is no law which requires a mortgagee to have his mortgage recorded . . . The mortgagee having published to the world the existence of his lien or claim, . . ....