Hudson v. Carlson

• Decision Date: 02 January 1918
• Citation: Hudson v. Carlson, 31 Idaho 196, 170 P. 100 (Idaho 1918)
• Parties: H. M. HUDSON, Respondent, v. CHARLES CARLSON, Appellant
• Court: Idaho Supreme Court

170 P. 100

31 Idaho 196

H. M. HUDSON, Respondent, v. CHARLES CARLSON, Appellant

Supreme Court of Idaho

January 2, 1918

FORECLOSURE OF CHATTEL MORTGAGE-DEMAND OF PROPERTY-PRINCIPAL AND AGENT-ESTOPPEL-NEGOTIABLE INSTRUMENTS-NOTICE OF DISHONOR.

1 Secs. 3414 and 3415, Rev. Codes, as amended, relating to the foreclosure of chattel mortgages, do not require the mortgagee to make a demand upon the mortgagor to turn over the property peaceably before placing his affidavit in the hands of the proper officer if the mortgagor cannot be found within the county where the mortgage is being foreclosed.

2. The authority which a principal holds an agent out as possessing or which he permits the agent to represent that he possesses governs mutual rights and liabilities as between the principal and third persons, and the principal is estopped to deny such authority.

3. Held, that the evidence in this case shows respondent to have complied with the requirements of secs. 3561 and 3562, Rev Codes, relating to notice of dishonor of commercial paper, and proof having been made of the mailing of such notice as prescribed by law, it is immaterial whether or not it was received by the person to whom it was addressed.

[As to sufficiency of service of notice of dishonor, see note in 38 Am.Dec. 607]

APPEAL from the District Court of the Eighth Judicial District, for Kootenai County. Hon. R. N. Dunn, Judge.

Action on promissory notes. Judgment for plaintiff affirmed.

Judgment affirmed. Costs awarded to respondent.

James H. Frazier, for Appellant.

Costs and attorney's fees cannot be recovered unless demand is made upon the mortgagor for the possession of mortgaged property before the foreclosure proceedings and an allegation showing such demand be made in the complaint. (Tappin v. McCabe, 27 Idaho 402, 149 P. 460.)

No general authority in Nelson to assent to the extension of time of payment was shown and the burden of showing such fact rests upon the party asserting the same. (2 Corpus Juris, 925.)

A mere allegation that one party represented another without any allegation of his authority to do so is insufficient. (Perrin v. Whipple, 64 Misc. 289, 118 N.Y.S. 551; affirmed, 135 A.D. 127, 119 N.Y. 990.)

The facts did not justify the court in holding that due notice or any notice had been given the indorser, Carlson. (Ankeny v. Henry, 1 Idaho 229; 7 Cyc. 826 (B).)

Appellant cannot be held for neglect and laches on the part of respondent in not taking an opportune time to foreclose said mortgage and to give due notice of any deficiency to appellant if he expected to hold him as a guarantor through indorsement. (Keyes v. Fenstermaker, 24 Cal. 329.)

An indorser of a note is discharged by an agreement of the holder to extend the time of payment, unless such agreement is made with the assent of the party secondarily liable. (7 Cyc. 822.)

Lynn W. Culp, for Respondent.

The principal is bound by all the acts of his agent within the scope or apparent scope of that agent's authority. (31 Cyc. 1189; 2 Am. & Eng. Ency. of Law, 2 ed., 837; 2 Corpus Juris, 419.)

Ratification will be implied and the principle of estoppel invoked where the principal has received the benefit of the transaction. (2 Corpus Juris, 493.)

BUDGE, C. J. RICE, J., concur in the conclusion. MORGAN, J., Dissenting.

OPINION

BUDGE, C. J.

This is an action on certain promissory notes. It is unnecessary to recite the pleadings; such portions as are material will be referred to in the course of the opinion.

On August 7, 1913, one Heumann made and delivered to appellant 39 promissory notes for $ 35 each and one for $ 56, maturing consecutively at the end of each week thereafter, the last note falling due on May 11, 1914. The notes bore interest at the rate of eight per cent per annum. To secure the same a chattel mortgage was given on certain personal property used in connection with the City Bakery in Coeur d'Alene. Thirty-two of the notes were paid and on or about September 14, 1914, appellant sold the remaining notes to respondent, indorsing them in blank, and assigned the mortgage. On October 19, 1914, Heumann was adjudged a bankrupt; the bankruptcy court rejected the property described in the mortgage as being fully covered by the same and as not of sufficient value to leave any equity therein in favor of the bankrupt's estate. On December 9, 1914, respondent having made a proper affidavit, notice of sale was given by one Keller, constable for Coeur d'Alene precinct, the sale to take place on December 15, 1914, at which time all of the property which could be found and which possessed any value whatever was sold for the sum of $ 197, the costs of this sale, in the sum of $ 10.50, were deducted and the balance of $ 186.50 was applied upon the notes. On July 12, 1915, respondent commenced this action against appellant to recover the sum of $ 154.55, the balance then due upon the notes, including principal and interest, and for $ 75 attorney fees. A demurrer was interposed to the second amended complaint, which is the one here in issue, and was overruled; whereupon appellant answered. A jury was waived and the cause was tried by the court which found the facts in favor of, and entered judgment for, respondent. This appeal is from the judgment.

The specifications of error are somewhat lengthy but it will be unnecessary to consider them in detail. The material points sought to be raised by appellant are that the complaint does not state facts sufficient to constitute a cause of action and in particular as to attorney fees, "for the reason that sec. 3414 of the Revised Codes of Idaho, as amended by 1909 Session Laws, page 149, provides that before attorney's fees can be recovered in the foreclosure of a chattel mortgage, an affidavit signed by the mortgagee must be presented to the mortgagor with a demand that the property be turned over or the claim paid"; that an extension of time was granted by respondent to Heumann without the knowledge or consent of appellant, and in this connection that there is no evidence to show that Oscar Nelson, Fred Nelson or Edith Carlson were agents of appellant or made any arrangement with respondent to grant the extension of time, and that therefore appellant, as indorser, is released from liability on the notes; and that no notice of demand and non-payment was given to appellant.

Attention has been called to the decision of this court in Tappin v. McCabe, 27 Idaho 402, 149 P. 460, construing sec. 3413, Rev. Codes, as amended by Session Laws 1909, page 149, wherein it was held that: "An action cannot be maintained against an officer for his neglect or refusal to take into his possession, upon an affidavit and notice, personal property under a chattel mortgage, unless it is alleged in the complaint and proven upon the trial that the mortgagee has exhausted his statutory remedy, if he elects to avail himself of such statutory remedy, wherein it is expressly provided that he is required, under an affidavit, to demand the possession of the chattels covered by the chattel mortgage for the purpose of selling the same to satisfy or apply upon an indebtedness due from the mortgagor, and that he has been unable to secure the possession of said chattels peaceably."

It will be readily seen, however, that the latter case is not in point here. Appellant is relying not upon sec. 3413, supra, but upon sec. 3414, and that said section, as amended, contains the following proviso: "Provided, however, That if the mortgagor cannot be found within the county wherein the mortgage is being foreclosed, the general notice of sale directed in the next section is sufficient service upon the mortgagor of both said affidavit and notice." The next section therein referred to is sec. 3415, Rev. Codes, amended at the same Session, page 150, to read as follows: "Sec. 3415. The person or officer having such affidavit must take the property into his possession and give notice of sale in the same manner and for the same length of time as is required in the case of the sale of like property on execution, and the sale must be conducted in the same manner." It is apparent from a reading of these two sections that it was not the intention of the legislature to require the mortgagee to make a demand upon the mortgagor to turn over the property peaceably before placing his affidavit in the hands of the proper officer "if the mortgagor cannot be found within the county wherein the mortgage is being foreclosed."

Furthermore, Tappin v. McCabe, supra, does not hold that a sale actually conducted by a sheriff or constable in the absence of a demand or an attempt to take possession of the property peaceably by the mortgagee would be invalid. The question before this court in the McCabe case was: Can the sheriff be held liable in damages for his refusal and neglect to foreclose by notice and sale where no demand has been made by the mortgagee and there has been no attempt by him to take possession of the property peaceably? It was held that under such circumstances the sheriff was not liable.

As to the contention that respondent granted Heumann an extension of time without the knowledge or consent of appellant, it is only necessary to say, and this in answer to appellant's further contention as to the want of agency in Edith Carlson, his wife, and Oscar Nelson, his brother-in-law, that under the evidence Edith Carlson was clearly acting as appellant's agent; he had left the notes with her and she had made repeated efforts to collect them; she called in her brother, ...