Kelly v. Baird
| Decision Date | 05 January 1934 |
| Docket Number | No. 6217.,6217. |
| Citation | 252 N.W. 70,64 N.D. 346 |
| Parties | KELLY v. BAIRD et al. |
| Court | North Dakota Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court.
(1) To constitute a valid pledge under sections 6727 and 6772, Compiled Laws 1913, a transfer of possession of personal property into the hands of the pledgee is essential; and, to retain the pledge, he must retain the property.
(2) Extraneous evidence, including parol evidence, is admissible to explain the nature and purpose of an instrument purporting to pledge or incumber personal property for payment of a debt, where the delivery of possession is an element of the transaction which serves to determine its character.
(3) An instrument in the form of a note providing that a certain chattel is deposited as collateral security for payment of a debt, and containing a power of sale upon default in payment, will be determined a chattel mortgage rather than a pledge, where the parties intended that the maker have and retain possession of the property. The power to sell on default implies the power to seize and possess for such purpose.
(4) The lien of a mortgagee in an unfiled chattel mortgage, is superior to that of a creditor of the mortgagor who subsequently procures a judgment and levies on the property under execution, where the judgment creditor fails to establish that he is a creditor in good faith, and for value, as contemplated by section 6758, Compiled Laws 1913.
(5) Where a deputy sheriff disregards a valid third party claim to property seized by him under execution, and proceeds with the sale and sells the property, both the sheriff and the deputy sheriff are liable in conversion to the claimant.
(6) One whose interest in personal property which has been converted is special and limited is entitled to recover such an amount only as will compensate him for the loss of, or damage to, that interest. Following Fargo Loan Agency v. Larson, 53 N. D. 621, 207 N. W. 1003.
Appeal from District Court, Burleigh County; Fred Jansonius, Judge.
Action by J. L. Kelly against L. R. Baird, as receiver of the Menoken Farmers' State Bank, a corporation, and others. From a judgment for plaintiff, and from an order denying defendants' motion for judgment notwithstanding the findings, or for a new trial, defendants appeal.
Case remanded, with directions to modify the judgment.
Zuger & Tillotson, of Bismarck, for appellants.
L. J. Wehe, of Bismarck, for respondent.
Plaintiff brings this action to recover damages for the conversion of a certain automobile, concerning which he holds a purchase price contract. Plaintiff in his complaint sets out the execution and delivery of the contract, also copy of the same, and assignment of the contract to him. He also alleges that the defendants, with knowledge of his contract rights, made a levy under execution on a certain judgment, sold the automobile under such execution at public auction to one of the defendants, and thereby appropriated the property, to plaintiff's damage.
To this complaint a demurrer was filed, alleging that the complaint does not state a cause of action against the defendants. The demurrer was overruled, whereupon the defendants interposed separate answers to the complaint. All of the answers are substantially to the same effect, deny that plaintiff had any right or interest in the automobile, and allege that one of the defendants, L. R. Baird, as receiver of the Menoken Farmers' State Bank, secured a special lien on the property by virtue of a levy under execution on a certain judgment, and that at a sale thereunder he acquired ownership and possession of the property as the highest bidder.
While the action was pending, and on or about March 6, 1930, the defendant Rollin Welch, sheriff, died. Subsequently, on motion of the plaintiff, one Melvin Welch, as administrator of the estate of said Rollin Welch, deceased, was substituted as party defendant, and as such administrator answered the complaint.
On stipulation of the parties, the case was tried to the court without a jury. The trial court made findings and order in favor of the plaintiff, for damages, against all of the defendants. Thereafter the defendants made a motion for judgment notwithstanding the findings, or for a new trial. The motion was denied, and judgment was entered on the findings. All of the defendants appeal from the decision and judgment of the trial court, and from the order of the court denying defendants' motion notwithstanding the findings or for a new trial. Insufficiency of the evidence is also included in the specifications of error, and defendants request a review of the entire record.
On this appeal, defendants predicate error: That the court erred in overruling the demurrer to the complaint; that the court erred in denying the motion of the defendants for judgment and decision in lieu of a motion for a directed verdict against the plaintiff for a dismissal of the action, made at the close of the plaintiff's case, and also made at the close of all the evidence in the case; that the court erred in denying defendants' motion for judgment notwithstanding the findings, or for a new trial; and that the evidence is insufficient to sustain the findings and judgment.
The material facts in the record disclose that on December 15, 1928, one Louis Olsen purchased of the Copelin Motor Company of Bismarck, N. D., the model A Ford coupé involved in this action, for the consideration of $590, entering into a written contract with the seller, which contract reads as follows:
“Bismarck, N. Dak. 12/15/1928.
Nov. 1, 1929 after date, without grace, I promise to pay to the order of Copelin Motor Company $590.00 the sum of Five Hundred Ninety and no/100 dollars for value received at our office with interest, payable after date at the rate of 9 per cent per annum until paid, having deposited and pledged, as collateral security for the payment of the principal and interest hereof, the following described property: Model A Coupe #695592.
In case of non-payment of this note at maturity, the owner and holder hereof, or assigns, are hereby authorized to sell, assign and deliver the whole or any part of said property, at public or private sale or broker's board, at his or their option at any time or times thereafter, without demand of payment hereof or notice of intention to sell, or of the time and place of sale, to the undersigned; and, after deducting all costs and expenses of collection, sale and delivery, to apply the residue of the proceeds of such sale or sales to the payment hereof, principal and interest. In case of any surplus, the same shall be paid to the undersigned; and in case of any deficiency, the undersigned shall still remain liable therefor. At any such sale, the then owner and holder hereof shall have the right to become purchaser of all or any part of the property, freed and discharged of any right or equity of redemption. In case of public sale, the same shall be had only after ten days' notice.
The makers, endorsers and guarantors hereof hereby jointly and severally waive presentation for payment, notice of dishonor, protest and notice of protest.
Louis Olsen.
Witness: F. A. Copelin”
On the reverse side of this instrument, the following notations and indorsements appear:
“File No. 1700 (Document No. 111,361)
Payable to J. L. Kelly, Copelin Motor Co.
By F. A. Copelin
12/20/28-Paid $210.00.
Filed for record October 5, 1929, at 11 A. M.
Fred Swenson, Register of Deeds of Burleigh Co., N. D.
By Mabel Engeseth, Deputy.”
The evidence proves further that part of the consideration passing from Olsen to the Copelin Motor Company was a certain model T Ford car of the agreed price of $210. This item appears indorsed as a payment on the contract. The possession of the coupé was immediately delivered to Olsen, and was retained and used by him at all times until levied upon under execution.
Subsequently, on June 21, 1929, the defendant L. R. Baird, as receiver of the Menoken Farmers' State Bank, secured a judgment against said Louis Olsen in the district court of Burleigh county, in the sum of $1,924.90. This judgment is founded upon an indebtedness owing from Olsen to Baird, as receiver of said bank. Thereafter, and on August 24, 1929, the judgment creditor caused an executionto be issued out of said court on the judgment. On September 4, 1929, the defendant Albin Hedstrom, as deputy sheriff, armed with the execution, went to the farm home of said Louis Olsen, located in the same county, for the purpose of levying upon such personal property of the judgment debtor as he might find. Before he had actually made a levy, or seized any property, he met Olsen, apprised him of the execution, and of his mission. Olsen then informed the deputy sheriff, Hedstrom, that he did not own the Ford coupé, that he bought it of the Copelin Motor Company, had not fully paid for it, and that the Copelin Motor Company had the title to or mortgage on the same to secure payment of the purchase price.
Apparently Hedstrom did not heed the information given, or make further inquiry or investigation, but immediately levied upon and seized the coupé, together with other personal property.
On October 14, 1929, the property so levied upon, including the said automobile, was sold at public auction under the execution, pursuant to notice, and the coupé was sold to the judgment creditor as the highest bidder, for the sum of $400.
At the outset we are confronted with the question whether or not plaintiff had a continuing special interest in the coupé, by virtue of the written contract, copy of which is hereinbefore set out in full. Defendants contend that he has no interest, and did not have at the time of the levy made under the execution. They assert that the contract is specifically a pledge only, and that the pledgee's special interest or lien, if any, was lost when the car was delivered into the possession of the pledgor Olsen. On the other hand, plaintiff...
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Croak v. Witteman
... ... transferee does not become a bona fide purchaser unless he ... surrenders valuable rights or changes his position to his ... detriment. See Kelly v. Baird, 64 N.D. [73 N.D. 601] 346, 252 ... N.W. 70. This rule is applicable to the transfer of trust ... property. The exception applies where ... ...