Herl v. State Bank of Parsons

• Decision Date: 12 June 1965
• Docket Number: No. 44014,44014
• Citation: 195 Kan. 35,403 P.2d 110
• Parties: Celestine HERL and Edna Herl, Appellants, v. The STATE BANK OF PARSONS, Parsons, Kansas, a Banking Corporation, Appellee, and J. J. Flynn, Jr., and North River Insurance Co., a Corporation, Defendants.
• Court: Kansas Supreme Court

Page 110

403 P.2d 110

195 Kan. 35

Celestine HERL and Edna Herl, Appellants, v. The STATE BANK OF PARSONS, Parsons, Kansas, a Banking Corporation, Appellee and J. J. Flynn, Jr., and North River Insurance Co., a Corporation, Defendants.

No. 44014.

Supreme Court of Kansas.

June 12, 1965.

Rehearing Denied July 9, 1965.

Syllabus by the Court

1. One who stands by and watches his property sold at a public sale without protest and cashes a money order for the full amount of the sale price cannot later claim conversion of the property by reason of the sale.

2. The conditions under which a motion for summary judgment may be adjudicated are considered and applied.

3. Where a mortgagee seeks to recover possession of personal property by a replevin action for the purpose of foreclosing a chattel mortgage, a default judgment in the replevin action in favor of the mortgagee is res judicata as to the right to possession of the property and the right to sell the property under the provisions of the mortgage.

4. Matters pertaining to accounting for the proceeds from a mortgage foreclosure sale may be raised by a defendant in a replevin action for possession under the facts set out in the opinion but where they are not raised by the pleadings and could not have been litigated under the facts constituting the cause of action under the first suit the replevin judgment is not res judicata.

Ernest J. Rice, Topeka, argued the cause, and Robert Pennington, Chanute, Harold E. Doherty and James E. Benfer, Topeka, were with him on the briefs, for appellants.

Jack L. Goodrich, Parsons, argued the cause and was on the briefs, for appellee.

HATCHER, Commissioner:

This was an action to recover damages for the wrongful conversion of personal property. A motion for summary judgment was sustained by the trial court on the pleadings, exhibits and an affidavit filed by the defendant.

The petition commingled three separate cause of action. Damages, both actual and punitive, were requested for (1) conversion of mortgaged property where possession of the property was obtained by a replevin action and sold at public sale before answer date, (2) conversion of plaintiffs' property sold at the public sale which was not covered by the mortgage and (3) wrongfully preventing plaintiffs from harvesting growing crops.

The first cause presents the chief controversy. We will avoid considerable confusion if we summarily dispose of causes two and three before considering the issues of fact and law raised by the former.

The trial court did not rule separately on the claims but simply sustained the motion for summary judgment addressed to the action as a whole.

It should also be explained at this point that the amended petition which we are considering named an officer of the defendant bank and the bank's surety on the replevin bond as parties defendant. These parties were taken out of the case by a demurrer. No appeal was taken therefrom and the State Bank of Parsons was left as the only party defendant.

First considering appellants' claim that the appellee wrongfuly sold property not covered by the mortgage in question, we find it to be without merit. The appellee did sell three cows, several calves and some miscellaneous dairy equipment at the public sale which were not covered by the mortgage. There is a dispute as to how this property got to the public sale and under whose instructions it was sold. However, it is not disputed that the appellants did attend the sale; they stood by and watched this property sold in the normal course of a public sale without protest, and accepted and cashed the bank's money order for the full amount of the sale price.

We are forced to conclude that the appellants did acquiesce in the sale of such non-mortgaged property and, having accepted the proceeds of the sale with full knowledge of all the facts and circumstances, are bound by the results thereof. (Hazel v. Lyden, 51 Kan. 233, 32 P. 898. See, also, Citizens' Nat. Bank of Chickasha v. Lehrling (Standard Commission Co.), 113 Kan. 545, 215 P. 828; Westhusin v. Landowners Oil Ass'n, 143 Kan. 404, 55 P.2d 406; Pelischek v. Voshell, 181 Kan. 712, 313 P.2d 1105.)

Considering appellants' claim as set out in the amended petition to the effect that appellee wrongfully prevented appellants from harvesting certain corn and maize, it appears the alleged claim has been abandoned. The issue is not presented in the statement of points on which appellants intend to rely, neither is it covered in appellants' brief.

The only questions left for our consideration are the propriety of the sale of the mortgaged property and the propriety of the accounting.

The facts which will determine the validity of the summary judgment must be gleaned from the pleadings, the exhibits and the affidavit submitted in support of the motion for summary judgment.

On the hearing of a motion for summary judgment there should be not attempt to resolve conflicting questions of fact. The party who moves for a summary judgment has the burden of establishing without a doubt that there is no genuine issue of fact (Warner v. First National Bank of Minneapolis, 8 Cir., 236 F.2d 853, certiorari denied, 352 U.S. 927, 77 S.Ct. 226, 1 L.Ed.2d 162). Any doubt as to the existence of such an issue is resolved against the movant (Zampos v. United States Smelting, Refining and Min. Co., 10 Cir., 206 F.2d 171). The pleadings are to be liberally construed in favor of the party opposing the motion (Purity Cheese Co. v. Frank Ryser Co., 7 Cir., 153 F.2d 88). He is to be given the benefit of all reasonable inferences to be drawn from the evidentiary matter and all facts asserted by the party opposing the motion and supported by affidavits or other evidentiary material must be taken as true. These and other rules applicable to the consideration of a motion for summary judgment will be found in 3 Barron & Holtzoff, Federal Practice & Procedure, § 1231, et seq.

The facts which we must accept as true may be summarized.

On May 5, 1961, plaintiffs mortgaged certain property, consisting of cows and heifers, to the defendant to secure a note in the amount of $4,600 due on January 5, 1962. The mortgage contained the following provision:

'* * * if the said mortgagee shall at any time in good faith deem said debt insecure or fear waste of said property, then, and in either such case the mortgagee may take possession of the said property or any part thereof. Upon taking possession of said property, the said mortgagee, or his legal representatives may proceed to sell the same or any part there of at public or private sale, and after satisfying the necessary costs, charges and expenses incurred in connection with such sale, including attorney's fees, the balance of proceeds realized from said sale shall be paid on the debt and interest secured hereby, and thereafter they shall pay over the surplus, if any, to said mortgagor. * * *'

On November 20, 1961, the defendant filed a replevin action alleging itself to be insecure and seeking judgment for possession of the mortgaged property on the strength of its chattel mortgage. A writ of replevin was issued and possession of the mortgaged animals was taken from plaintiffs and given to defendant on the 24th day of November, 1961. The answer date in the replevin action was fixed as December 20, 1961.

The plaintiffs in the action being considered never appeared in the replevin action although they were personally served with summons.

On or about December 16, 1961, at a duly published sale the defendant sold all the mortgaged animals.

Following the sale the bank made an accounting to plaintiffs, the defendants in the replevin action, and delivered to them the bank's money order for $388.33, the amount of the sale price less the balance due on the mortgage and expenses. The accounting was refused and the money order was not cashed.

On December 21, 1961, the bank took a default judgment in the replevin action in which it was awarded possession of the mortgaged property and the replevin bond was released.

Sometime in the fall of 1963, the date not being disclosed by the record, the plaintiffs brought the present action for conversion.

In addition to the facts hereto stated the petition alleged:

'That at the time of the filing of said replevin action, the said note and chattel mortgage were not due and the statement and affidavit of THE STATE BANK OF PARSONS and J. J. FLYNN, JR. to the effect that it deemed itself insecure was untrue and not made in good faith, but made for the purpose of fraudulently appropriating and converting to its own use and to the loss and detriment of plaintiffs plaintiffs' property, as more specifically alleged hereinafter.'

The prayer was for actual damages in the amount of $14,200.00 and punitive damages in the amount of $30,000.00. It will be understood that commingled with the claim for damages for conversion of the mortgaged property was also the claim for conversion of the property that was not mortgaged and also damages for wrongful prevention of harvesting of crops. It cannot be determined just what is claimed as the value of the mortgaged property. However, plaintiffs do not contend that the sale did not produce the full value of the mortgaged chattels.

Although the appellants state several points on which they rely for reversal, they reduce their argument to a simple contention in their brief:

'* * * It is appellants' position that the sale held prior to the answer date by appellee amounted to a conversion of appellants' property covered by the chattel mortgage. * * *'

The appellants have with commendable frankness made a further concession which materially simplifies the issue to be determined. They stated:

'Appellant freely admits that insofar as the replevin action itself is concerned there was subsequent to the premature sale a journal entry filed which decreed that the plaintiff in that case, the State Bank of Parsons, be...