Hudson v. Kootenai Fox Farms Co.

• Decision Date: 08 December 1928
• Docket Number: 5069
• Citation: 47 Idaho 58,272 P. 704
• Parties: HARLEY M. HUDSON, Respondent, v. KOOTENAI FOX FARMS COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

272 P. 704

47 Idaho 58

HARLEY M. HUDSON, Respondent, v. KOOTENAI FOX FARMS COMPANY, a Corporation, Appellant

No. 5069

Supreme Court of Idaho

December 8, 1928

PLEADING-CROSS-COMPLAINT-WHEN AVAILABLE-CORPORATIONS-FORECLOSURE OF MORTGAGE-DEFENSES-NECESSITY OF PLEADING WANT OF AUTHORITY - WAIVER - CHATTEL MORTGAGE - AFTER-ACQUIRED PROPERTY-TRIAL-EQUITABLE CAUSE OF ACTION-LEGAL DEFENSE.

1. In action to foreclose mortgages it was proper under C. S 6699, to file cross-complaint seeking damages arising out of trespass or injury to property covered by mortgages.

2. Cross-complaint is restricted to matters which are related to, or dependent on, contract or transaction on which main case is founded, or affect property to which action relates.

3. In foreclosure action against corporation in which want of authority of defendant's officers to execute instruments was not specially pleaded, but such failure was waived by plaintiff voluntarily assuming burden of proving such authority, exclusion of evidence offered by defendant to prove want of authority held error.

4. Want of authority of officers of corporation executing mortgages is matter of defense and must be specially pleaded by defendant corporation in foreclosure action.

5. In foreclosure action against corporation, plaintiff, by voluntarily assuming burden of proving authority of defendant's officers to execute instruments and proceeding on theory that such authority of officers was in issue, held to have waived objection that such defense was not specially pleaded.

6. Chattel mortgage may be made to cover future acquired property of mortgagor when intention to that effect clearly appears from face of instrument, and it will be enforced in equity against mortgagor and all others except purchasers for value without notice.

7. Where plaintiff's cause of action was equitable and defendant's cross-complaint involved issues at law proper rule of procedure is for court to hear and dispose of equitable cause before proceeding to try issues at law.

APPEAL from the District Court of the Eighth Judicial District, for Kootenai County. Hon. A. H. Featherstone, Judge.

Action to foreclose mortgages on real and personal property. Judgment for plaintiff. Reversed and remanded.

Cause remanded. Costs to appellant.

James F. Ailshie, Edward H. Berg and E. H. Hillman, for Appellant.

Cross-complaint of defendant was proper and should not have been stricken. (C. S., sec. 6699; Wollan v. McKay, 24 Idaho 691 135 P. 832; Willman v. Friedman, 4 Idaho 209, 95 Am St. 59, 38 P. 937; Miller v. Hunt, 6 Idaho 523, 57 P. 315; Tage v. Tage, 36 Idaho 472, 475, 211 P. 548; Sandstrom v. Smith, 12 Idaho 446, 86 P. 416; Penninger L. Co. v. Clark, 22 Idaho 397, 404, 126 P. 524; McHard v. Williams, 8 S.D. 381, 59 Am. St. 766, 66 N.W. 930; Hanson v. Skogman, 14 N.D. 445, 105 N.W. 90; Kneeland v. Pennell, 49 Misc. 94, 96 N.Y.S. 403; Fort Worth Lead & Zinc Co. v. Robinson, 89 Okla. 221, 215 P. 205-208; Guy Harris Buick Co. v. Bryant, 108 Okla. 117, 233 P. 752.)

A motion to strike cross-complaint having been overruled by the court, a similar motion could not be entertained by another judge of the same court. (C. S., sec. 6506, 6507; Dellwo v. Petersen, 34 Idaho 697, 203 P. 472; Adams v. Lockwood etc. Co., 30 Kan. 373, 2 P. 626; Ford v. Doyle, 44 Cal. 635; Reed v. Allison, 54 Cal. 489; Bowers v. Cherokee Bob, 46 Cal. 279; Hitchcock v. McElrath, 69 Cal. 634, 11 P. 487; State v. Evans, 74 N.C. 324; 2 Freeman on Judgments, sec. 669.)

Lynn W. Culp, for Respondent.

Cross-complaint of appellant was improper and should have been stricken. (C. S. sec. 6699; Kansas Loan & Investment Co. v. Hutto, 48 Kan. 166, 29 P. 558; Krausse v. Greenfield, 61 Ore. 502, Ann. Cas. 1914B, 115, 123 P. 392; Greene v. Hereford, 12 Ariz. 85, 95 P. 105; Osmers v. Furey, 32 Mont. 581, 81 P. 345; LeClare v. Thibault, 41 Ore. 601, 69 P. 552; Morrison v. Bernot, 58 Wash. 302, 108 P. 772; Brisley v. Mahaffey, 64 Okla. 319, 167 P. 984; Stolze v. Torrison, 118 Wis. 315, 95 N.W. 114; Roney v. Halvorsen, 29 N.D. 13, 149 N.W. 688; First Guaranty Bank v. Rex Theatre Co., 50 N.D. 322, 195 N.W. 564; Chamberlain v. Townsend, 72 Ore. 207, 142 P. 782; Eyers v. Burbank Co., 97 Wash. 220, 166 P. 656; McLane v. Kelly, 72 Minn. 395, 75 N.W. 601.)

Respondent was not precluded by C. S., secs. 6506 and 6507, from moving against the cross-complaint at the trial. (Riggs v. Pursell, 74 N.Y. 370.)

As between the corporation and the mortgagee, a chattel mortgage given upon chattels to be afterwards acquired, is valid and binding. (Dover Lumber Co. v. Case, 31 Idaho 276, 170 P. 108.)

The plaintiff's cause of action was unquestionably one in equity, being an action to foreclose a mortgage. The pretended cross-complaint was one at law, in tort, for trespass and negligence.

"Where an action at law is brought and an equitable defense is interposed by a cross-complaint, and also in an action cognizable in equity where a cross-action at law is interposed, the proper rule of procedure for the court is to hear and dispose of the equitable cause of action before proceeding to try the issue at law." (Penninger Lateral Co., Ltd., v. Clark, 22 Idaho 397, 126 P. 524.)

BUDGE, J. Wm. E. Lee, C. J., Givens, J., and Hartson, D. J., concur. TAYLOR, J., Concurring in Part and Dissenting in Part.

OPINION

BUDGE, J.

Respondent brought this action to foreclose two mortgages, covering real and personal property, given by appellant corporation to secure moneys advanced to it. Respondent was the president of the corporation when the moneys were advanced, and one Leonard the secretary. After admission of service of the complaint by the secretary and a pretended waiver by him of the right of the corporation to appear and answer, a decree of foreclosure was entered in favor of respondent, upon submission of his proof, and he took immediate possession of the real and personal property covered by the mortgages, excluding from the management thereof the caretaker and manager of the corporation. Thereafter, upon motion, the judgment in favor of respondent was vacated and the execution recalled. An amended complaint was filed by respondent, to which an answer was filed by appellant corporation, as well as a cross-complaint seeking damages against respondent for alleged injuries suffered to the property by reason of respondent's taking possession thereof and excluding from the management the regular caretaker of the corporation. A demurrer to the cross-complaint and a motion to strike the same were denied, but some time thereafter, when the case was called for trial before another judge, the cross-complaint was stricken. The case then proceeded to trial, and a decree was subsequently entered in favor of respondent, from which this appeal is prosecuted.

It is insisted that the court erred in striking appellant's cross-complaint from the files. C. S., sec. 6699, provides:

"Whenever the defendant seeks affirmative relief against any party, relating to or depending upon the contract or transaction upon which the action is brought, or affecting the property to which the action relates, he may, in addition to his answer, file at the same time, or by permission of the court subsequently, a cross-complaint . . . ."

The damages sought to be recovered under the cross-complaint are such as are alleged to have arisen out of a trespass or injury to the property covered by the mortgages; and the question is, whether the filing of the cross-complaint was proper under the facts of this case.

A cross-complaint is restricted to matters which are related to or depend upon the contract or transaction upon which the main case is founded or affect the property to which the action relates. (Hunter v. Porter, 10 Idaho 72, 77 P. 434.) The alleged trespass forming the basis of appellant's cause of action, as set forth in its cross-complaint, was the ousting of the corporation's caretaker and manager from the supervision and care of the animals covered by the chattel mortgage and the resultant loss therefrom, which is alleged to have occurred following entry of the void judgment and decree of foreclosure; and would seem to fall within the provisions of C. S., sec. 6699, permitting the filing of a cross-complaint "whenever the defendant seeks affirmative relief against any party . . . . affecting the property to which the action relates . . . . "

The filing of the cross-complaint resulted in two interrelated and consolidated proceedings, in which the plaintiff was seeking to recover the amount alleged to be due him and in which the defendant was seeking to recover any damages sustained to the property affected by the action. There were, therefore, three chief ends to be served,--to determine the amount due the plaintiff, if any; to decide whether the defendant was entitled to damages by reason of the alleged wrongful acts of plaintiff; and to obtain a complete determination between the parties of all the matters in dispute. "The court, having acquired jurisdiction of the parties and the subject matter, will proceed to determine all questions involved. 'The court may determine any controversy between parties before it when it can be done without prejudice to the rights of others, or by saving their rights.' (Rev. Stats., sec. 4113, now C. S., sec. 6657.) The purpose of the code is not only to simplify proceedings but to avoid, as far as may be, a multiplicity of suits." Willman v. Friedman, 4 Idaho 209, 299, 95 Am. St. 59, 38 P. 937, wherein it was held that upon a suit to recover the purchase price of property, a counterclaim or cross-complaint may be set up for damages caused on account of a wrongful attachment issued and levied to secure such purchase price. See, also, Waugenheim v. Graham, 39 Cal....