Johnston v. Robuck

• Decision Date: 27 January 1898
• Citation: 104 Iowa 523,73 N.W. 1062
• Parties: JOHNSTON ET AL. v. ROBUCK ET AL (WATKINS, INTERVENER).
• Court: Iowa Supreme Court

104 Iowa 523

73 N.W. 1062

JOHNSTON ET AL.

v.ROBUCK ET AL (WATKINS, INTERVENER).

Supreme Court of Iowa.

Jan. 27, 1898.

Appeal from district court, Marion county; A. W. Wilkinson, Judge.

Action against defendants for the value of a stock of goods alleged to have been converted. Decree for defendants, and plaintiffs appeal. Affirmed.Earle & Prouty and S. C. Johnston, for appellants.

L. N. Hayes, for appellees.

LADD, J.

The firm of Johnston & Son, consisting of Joseph and O. P. Johnston, were engaged in the general mercantile business at Knoxville, and on June 14, 1895, executed a chattel mortgage on their stock of goods to Henry Watkins and William Robuck, securing the payment of a note of $5,400 to the former, payable June 14, 1896, and a note to the latter of $3,200, due September 14, 1896. Thereafter, though on the same day, the firm executed a second mortgage to William Robuck, securing the payment of a note of $332 due September 14, 1896, and another note of $4,559.36, signed by Johnston & Frush, which had matured January 6, 1894. The notes referred to represented debts of Johnston & Son, except the last, which Joseph Johnston, a member of the firm of Johnston & Frush, had assumed and agreed to pay. On the following day, Johnston & Son gave a third mortgage to other creditors, securing the payment of divers sums, aggregating $1,740.49. On June 19, 1895, Robuck, with the consent of Watkins, placed the second mortgage in the hands of his codefendant Amos, sheriff of Marion county, with instructions to foreclose. Amos therefore took possession of the entire stock of goods, and advertised it for sale July 8th. Two days before the day fixed for the sale, he was served with a written notice by Johnston & Son and O. P. Johnston, warning him not to sell, and not to pay the Johnston & Frush note out of the proceeds, if he did sell, and demanding immediate possession of the goods. The property, however, was offered for sale at public auction; but, as there were no bidders, the sheriff proceeded to sell at retail. This action was brought for the value of the stock of goods, basing the claim for damages on two grounds: (1) That, as the Johnston & Frush note did not represent an indebtedness of Johnston & Son, the mortgage securing its payment was without consideration and void, and, the $332 note not being due, the foreclosure proceedings were premature; (2) the mortgage, by its terms, conferred no authority to sell at retail. The defendants justified their action in foreclosing on several grounds, and asked, in their counterclaim, that a decree of foreclosure be entered. Watkins and the creditors of the third mortgage intervened, praying that the money held by or due from defendants be applied on their mortgages. After a jury had been impaneled for the trial of the case, the court, on his own motion, discharged it, and transferred the cause to the equity side of the calendar, and there heard it.

1. It may be conceded that, unless the petition failed to state a cause of action, the court erred in ordering the issues at law to be tried in equity. Under section 3435 of the Code, on motion, issues cognizable in equity may be transferred to the equity side, but not the issues at law, and no motion is required to have these tried separately in the proper form. It is said in Byers v. Rodabaugh, 17 Iowa, 53, “that the right to have an action transferred from one docket to another arises only where the plaintiff has brought his action by the wrong proceedings; that is, where he has brought his action by ordinary, when he should have adopted equitable, proceedings, and e converso.” Morris v. Merritt, 52 Iowa, 496, 3 N. W. 504, is in point. Referring to this section, Beck, J., says “that issues exclusively cognizable in equity shall be tried as equitable proceedings; i. e. by the court without a jury. Other issues, not cognizable in equity, are to be tried as issues at law; i. e. by a jury. This is the obvious meaning of the section. In actions at law, therefore, when equitable issues are presented they are triable as in chancery. Pure issues at law, which are not cognizable as in equity, are to be tried to a jury.” Where the issues are mixed, the procedure seems to be somewhat controlled by statute. For this reason, defenses at law to an equitable action must be determined by the chancellor. Ryman v. Lynch, 76 Iowa, 587, 41 N. W. 320;Frost v. Clark, 82 Iowa, 298, 48 N. W. 82;Wilkinson v. Pritchard (Iowa) 61 N. W. 965;Leach v. Kundson (Iowa) 66 N. W. 913;Gatch v. Garretson (Iowa) 69 N. W. 550;Evans v. McConnell (Iowa) 63 N. W. 570. Going to trial does not waive the error of the court in changing the form of action. Rabb v. Albright, 93 Iowa, 50, 61 N. W. 402. Undoubtedly, the ordinary rule is to hear the equitable issues first. But, where a trial at law will practically settle all matters in controversy, it ought to be first had. Morris v. Merritt, supra.

2. We inquire, then, whether a cause of action is stated in the petition. Each mortgage is set out, and contains this clause: “And I, the said Johnston & Son, do hereby covenant and agree to and with the said Wm. H. Robuck that in case of default made in the payment of the above-mentioned promissory note, or in case of my attempting to dispose of the same other than in the ordinary course of trade, or remove from said county of Marion the aforesaid goods and chattels, or any part thereof, then in that case it shall be lawful for the said mortgagee or his assigns, by himself or agent, to take immediate possession of said goods and chattels, wherever found,--the possession of these presents being his sufficient authority therefor,--and to sell the same at private sale or public auction, or so much thereof as shall be sufficient to pay the amount due or to become due, as the case may be, with all reasonable costs and attorney's fees pertaining to the taking, keeping, advertising, and selling of said property.” So that on the happening of one of the three contingencies the mortgagee might proceed to foreclose, but until then he acquired no such right, and the taking of possession and sale prior to that time would amount to a conversion. Edwards v. Cottrell, 43 Iowa, 194;Howery v. Hoover (Iowa) 66 N. W. 772;Gravel v. Clough, 81 Iowa, 272, 46 N. W. 1092;Colby v. W. W. Kimball Co. (Iowa) 68 N. W. 787;Eslow v. Mitchell, 26 Mich. 500.

3. The second mortgage was signed by Johnston & Son and O. P. Johnston. The note of Johnston & Frush represented the individual debt of Joseph Johnston, and not that of the firm, or of the other member thereof. Time for payment of the note was not extended. Appellants argue that it was to be, and for this reason the mortgage was invalid. That issue is not raised by the pleadings. An existing indebtedness is ampleconsideration, as between the parties, for the execution of a mortgage securing its payment. Jones, Chat. Mortg. § 81; Kranert v....