Kearney Milling & Elevator Co. v. Union Pac. Ry. Co.

• Decision Date: 13 April 1896
• Parties: KEARNEY MILLING & ELEVATOR CO. v. UNION PAC. RY. CO. (CITIZENS' STATE BANK, INTERVENER). ELM CREEK ELEVATOR CO. v. UNION PAC. RY. CO. (CITIZENS' STATE BANK, INTERVENER).
• Court: Iowa Supreme Court

97 Iowa 719

66 N.W. 1059

KEARNEY MILLING & ELEVATOR CO.

v.UNION PAC. RY. CO. (CITIZENS' STATE BANK, INTERVENER).

ELM CREEK ELEVATOR CO.

v.UNION PAC. RY. CO. (CITIZENS' STATE BANK, INTERVENER).

Supreme Court of Iowa.

April 13, 1896.

Appeal from district court, Pottawattamie county; A. B. Thornell, Judge.

Action at law to recover the possession of certain car loads of grain. The Citizens' State Bank intervened in each case, and claimed to be the owner of the grain. By agreement of the parties the two actions were tried together, as one. After the evidence had been submitted, a motion for a verdict for the intervener in each case was sustained, and verdicts were returned and judgments rendered in accordance with that ruling. The plaintiffs appeal. Affirmed.

Kinne, J., dissenting.

Sims & Bainbridge, for appellants.

Harl & McCabe, for appellees.

ROBINSON, J.

In November, 1891, the Brown Bros. Grain Company, a corporation, was engaged in the business of buying and shipping grain, and had its principal places of business at Council Bluffs and Omaha. About the 12th day of that month the plaintiffs sold to the company several car loads of wheat and rye. The grain so sold was delivered to the Union Pacific Railway Company, at stations in Nebraska, to be transported to Council Bluffs, and there delivered to the purchaser. Bills of lading, in which the grain company was named as consignee, were issued by the railway company, and delivered to the plaintiffs. They were forwarded by mail to the consignee, and drafts on it for the price of the grain were drawn, and forwarded through banks for collection. The bills of lading were delivered by the consignee to the intervener in exchange for other bills of lading, to be held as collateral security for the payment of two promissory notes made by the consignee to the intervener, for the aggregate sum of $12,000. The drafts drawn by the plaintiffs were not paid, and on or about the 18th day of November, learning that the grain company was insolvent, and that the grain was still in the cars, and in the actual possession of the railway company, the plaintiffs notified it not to deliver the grain to the consignee. A few days later these actions were commenced. The grain was obtained by means of them, and sold by the plaintiffs without any notice of any kind to the grain company or to the intervener. The first petition filed in each case alleged that the plaintiff therein named was the absolute and unqualified owner of the property sought to be recovered. In January, 1892, the intervener filed a petition of intervention in each case, alleging that it was entitled to the grain in controversy, to be held as collateral security for the payment of the indebtedness on account of which the bills of lading had been delivered to it. In February, 1893, the plaintiffs filed to the petition of intervention their answer, in which they alleged that before the grain reached Council Bluffs they learned that the consignee was insolvent, and was disposing of its property for the purpose of defrauding its creditors, and was intending to get possession of the grain, if possible, and transfer it, with the intent to cheat and defraud the plaintiffs out of the purchase price; that the plaintiffs elected to rescind the sale by stopping the grain in transitu; and that they did so stop it, and obtained possession of it by the process of replevin. In December of the same year the plaintiffs filed amended and substituted answers, in which were set out more fully the matters pleaded in the original answers. In February, 1894, the plaintiffs filed amended and substituted petitions, in which they alleged the sale of the grain in question to the grain company; that while the grain was in transit they learned that the purchaser was insolvent and unable to pay for the grain, and that, thereupon, they notified the railway company not to deliver the grain to the consignee, and elected to stop it and regain possession of it, for the purpose of asserting and regaining their lien thereon for the unpaid purchase price; that the consignee was in fact insolvent and unable to pay for the grain, but that the plaintiffs had no knowledge of the insolvency and inability to pay for the grain until after it had been shipped; that by reason of the facts stated the plaintiffs became entitled to the immediate possession of the grain. At the same time they filed second substituted answers to the petition of intervention, and filed amendments thereto a few days later. In these the most of the statements of the first and second answers are repeated, in substance; and it is alleged, further, that the intervener had full knowledge of the condition and fraudulent intent of the grain company, and received the bills of lading to aid it in delaying, hindering, and defrauding its creditors, and that the transfer of the bills of lading to the intervener was without consideration. The averments of the substituted petition in regard to the election of the plaintiffs to stop the grain in transit, for the purpose of securing the payment of the purchase price, are, in substance, repeated, and a lien upon the grain paramount to any right thereto of the intervener is alleged. In its replies to the final answers to the petition of intervention, the intervener alleges that, for reasons stated, the plaintiffs are estopped to assert any right to or interest in the grain adverse to it; that they elected to and did rescind the contract of sale, and cannot now assert a lien on the grain by virtue of a stoppage in transitu. The motion for a verdict in each case was based upon two grounds, of which the first was, in substance, that the plaintiffs had elected to rescind the sale, and therefore could not enforce a lien for the purchase price; and the second was that the title acquired by the intervener through the transfer of the bills of lading had not been impeached. The claim of the appellee in regard to the matters included in the first ground of the motion are that the plaintiffs, as against the grain company, had the right to select either of two remedies, to wit: (1) To rescind the contract of sale, and recover the grain, as its absolute and unqualified owners; or (2) to stop the grain in transit, and enforce their vendors' lien for the purchaseprice. It is further claimed that these remedies are so inconsistent that an election to pursue one terminates the right to resort to the other, and that the plaintiffs made an irrevocable election to rescind the sale; therefore, that they cannot enforce a vendors' lien in this action. The appellants deny that they had a choice of remedies, and insist that the change in their claims of interest in the property were permissible under their right to amend the pleadings.

1. The rule in regard to the election of remedies is stated in Thompson v. Howard, 31 Mich. 312, as follows: “A man may not take two contradictory positions, and where he has a right to choose one of two modes of redress, and the two are so inconsistent that the assertion of one involves the negation or repudiation of the other, his deliberate and settled choice of one, with knowledge, or means of knowledge, of such facts as would authorize a resort to each, will preclude him thereafter from going back and electing again.” “Any decisive act of the party, with knowledge of his rights and of the fact, determines his election, in the case of conflicting and inconsistent remedies.” Washburn v. Insurance Co., 114 Mass. 175;Sanger v. Wood, 3 Johns. Ch. 421;Rodermund v. Clark, 46 N. Y. 354;Sloan v. Holcomb, 29 Mich. 160;Crompton v. Beach (Conn.) 25 Atl. 448;Crook v. Bank (Wis.) 52 N. W. 1133;O'Donald v. Constant, 82 Ind. 213; Bish. Cont. §§ 678-680, 683; 6 Am. & Eng. Enc. Law, 250; Heinze v. Marx (Tex. Civ. App.) 23 S. W. 704;Thomas v. Joslin, 36 Minn. 1, 29 N. W. 344;Morris v. Rexford, 18 N. Y. 552. In Connihan v. Thompson, 111 Mass. 272, it was said: “The defense of waiver by election arises when the remedies are inconsistent, as where one action is founded on an affirmance, and the other on a disaffirmance, of a voidable contract, or sale of property. In such cases any decisive act of affirmance or disaffirmance, if done with knowledge of the fact, determines the legal rights of the parties once for all.” Where a vendor elects to rescind the sale of goods on the ground of a fraud, and recovers possession of them by an act of replevin, he cannot afterwards, on failing to obtain adequate relief in that action, claim of the assignee of the insolvent purchaser as for goods sold. One theory is totally at variance with the other. “If one elects between two inconsistent remedies, the right to pursue the other is forever lost.” Farwell v. Myers, 59 Mich. 182, 26 N. W. 328. A contract of sale obtained by fraud is not void, but voidable, and the contract “continues until the party defrauded has determined his election by avoiding it, and, when once rightfully determined, it is determined forever”; and the bringing of an action to recover the property sold is such an election. Powers v. Benedict, 88 N. Y. 609. A party cannot both affirm and rescind a contract, and the commencement of an action, with full knowledge of the facts, is an election which is final, and the discontinuance of the action is immaterial. “When it becomes necessary to choose between inconsistent rights and remedies, the election will be final, and cannot be reconsidered, even when no injury has been done by the choice, or would result from setting it aside.” Terry v. Munger (N. Y. App.) 24 N. E. 272; 2 Herm. Estop. §§ 1045-1051. In Bulkley v. Morgan, 46 Conn. 393, it appeared that one Brennan had purchased goods of the plaintiff by fraud, which would have authorized him to rescind the sale and reclaim the goods. With knowledge of the fraud, he commenced an action for the value of the goods, and attached them to secure his claim. He afterwards discovered that his action was...