Madson v. Rutten

• Decision Date: 23 October 1907
• Citation: 113 N.W. 872,16 N.D. 281
• Court: North Dakota Supreme Court

113 N.W. 872

16 N.D. 281

A. O. MADSON v. HERMAN RUTTEN, SHERIFF OF RAMSEY COUNTY, NORTH DAKOTA

Supreme Court of North Dakota

October 23, 1907

Action by A. O. Madson against Herman Rutten, as sheriff, for refusal to make a levy under a warrant of attachment. Judgment for plaintiff, and defendant appeals.

Reversed and a new trial ordered.

Judgment reversed, and a new trial ordered.

B. D Townsend, for appellant.

Creditors can assail the validity of the mortgage only while the property mortgaged was the mortgagor's. Sullivan et al. v. Miller, 13 N.E. 772; Wolcott v Ashenfelter, 23 P. 780; Parker v. American Ex. Bank, 27 S.W. 1071; Barton v. Sitlington, 30 S.W. 514; Gregory v. Whedon, 1 N.W. 309; Ayers, et al. v. Sundback, 58 N.W. 4; Blakeslee v. Rossman, 43 Wis. 116; Read v. Wilson, 22 Ill. 377; Cameron v. Marvin, 26 Kan. 612; 11 Cobbey Chat. Mortgages, Secs. 765, 770, 773, 774, 941; Jones on Chattel Mortgages, sections 178, 333, 345, 350.

Burke & Middaugh and Murphy & Duggan, for respondent.

Commingling of goods subject to mortgage with those not so subject, by mortgagee, makes all subject to attachment. Graham v. Plate, 40 Cal. 593; Tufts v. McClintock, 28 Me. 295; Root v. Bonema, 22 Wis. 539; Jenkins v. Steanka, 19 Wis. 126; Williams v. Morrison, 28 F. 873; 6 Am. & Eng. Enc. Law (2d. Ed.) 596; Daumel v. Gorman, 6 Cal. 43; Robinson v. Holt, 39 N.H. 557; Wilson v. Lane, 33 N.H. 466; Lewis v. Whittemore, 5 N.H. 364.

There is no error in admission of evidence where there is no prejudice. Vidger v. Grt. No. Ry. Co., 107 N.W. 1083, 15 N.D. 501.

OPINION

FISK, J.

This appeal is from a judgment rendered by the district court of Ramsey county pursuant to a verdict directed in respondent's favor. The action was brought to recover damages on account of appellant's refusal to make a levy under a warrant of attachment upon certain personal property claimed to be the property of one John H. Jones, who was defendant in an action commenced by this respondent in the district court of Grand Forks county, in which action such warrant of attachment was issued. The principal question involved is as to whether Jones, in so far as his creditors were concerned, was the owner of this merchandise (being a stock of confectionery) at the time the warrant of attachment came into the hands of the appellant. At the close of plaintiff's case in chief, defendant moved for a directed verdict in his favor, which motion was denied, and at the close of all the evidence plaintiff moved for a directed verdict in his favor, which motion was granted. Numerous assignments of error are set forth in appellant's brief, but it will be unnecessary to consider them separately. They relate to the court's refusal to grant appellant's motion for a directed verdict, the granting of respondent's motion, and the rulings of the trial court on the admissibility of certain evidence.

Whether it was error to deny appellant's motion for a directed verdict it is unnecessary for us to decide, as such ruling, if error, was waived by appellant by thereafter submitting evidence and by not renewing such motion at the close of all the evidence. Bowman v. Eppinger, 1 N.D. 21, 44 N.W. 1000; Colby v. McDermont, 6 N.D. 495, 71 N.W. 772; Tetrault v. O'Connor, 8 N.D. 15, 76 N.W. 225; Bank v. Bank, 9 N.D. 319, 83 N.W. 221; Ward v. McQueen, 13 N.D. 153, 100 N.W. 253.

Was it error to grant plaintiff's motion for a directed verdict? Appellant's counsel earnestly insist that this question must be answered in the affirmative, for two reasons. He contends (1) that there was no evidence showing that Jones, the defendant in the attachment suit, owned any of the property in question at the time the warrant of attachment came into the hands of appellant; and (2) that whatever title Jones theretofore possessed in the property had vested in one S. L. Wineman prior to the date on which such warrant of attachment was placed in appellant's hands by virtue of the foreclosure sale thereof pursuant to the power of sale contained in a certain chattel mortgage executed by said Jones upon the property on March 11, 1901. It is contended by respondent's counsel that this mortgage was void upon its face as to creditors, because by its terms it covered a stock of merchandise and authorized the mortgagor to remain in possession of and to sell the same in the ordinary course of business, at retail, without accounting for and applying upon the indebtedness secured by the mortgage the net receipts from such sales; and they also contend that this mortgage did not include renewals of stock and hence that such mortgage did not cover the property in controversy. It is necessary to a full understanding of the questions involved to briefly refer to the facts. As stated in appellant's brief: "On the 11th day of March, 1901, Louise Roble sold a certain stock of cigars and confectionery to John H. Jones. In part payment of the purchase price, Jones executed and delivered to Roble 48 promissory notes, each for the sum of $ 25, one of which notes was due and payable on the 10th day of each month, commencing May 10, 1901. To secure the payment of said notes, Jones mortgaged said stock of merchandise to Roble on said 11th day of March, 1901. By the terms of such mortgage, Jones was permitted to remain in possession of said stock of goods and sell the same in the ordinary course of business at retail, 'for which purpose, and which purpose only, said second party does make and constitute said first party her agent to sell and dispose of the stock above described in the store where the same is now situated, at retail, and to keep an accurate account of such sales, and to pay over to said second party on the 10th day of each and every month, beginning with the 10th day of May, 1901, the sum of $ 25, with interest thereon,' etc. The mortgage contained a provision that, if said stock of merchandise should be reduced in value to an amount less than $ 1,800, the same should constitute a default. The stock became reduced in value to $ 1,050, and on January 26, 1902, the mortgagee took possession of the same and foreclosed the mortgage, the sale taking place on February 8, 1902. At the time the foreclosure sale was taking place, fourteen wholesale firms claiming to be creditors of Jones caused to be distributed among some of the bidders at the sale a notice stating that the mortgage aforesaid was void as against creditors because of its provision permitting the mortgagor to sell and dispose of the merchandise, and warning all persons not to become purchasers at said sale. Notwithstanding such notice, the sale proceeded and the property was purchased by S. L. Wineman for the sum of $ 1,500. No action or proceedings of any kind was taken by any creditor or other person prior to the time of such foreclosure sale by which any person sought to acquire a lien upon said stock, or in any manner challenge the validity of the mortgage." After the foreclosure sale all of the persons having claims against Jones assigned them to respondent. On February 13, 1902, respondent commenced an action in the district court of Grand Forks county against Jones to recover the amount of said claim, which aggregated $ 760.98. In that action a warrant of attachment was duly issued and delivered to appellant on February 14, 1902, for service. It is appellant's refusal to levy said warrant upon the property in question which is the subject of this action.

Was the evidence sufficient to show ownership of the property or any portion thereof in Jones on the date such warrant was placed in appellant's hands? If so, it was defendant's duty to levy said warrant of attachment. We think the evidence was amply sufficient to show such fact, unless Jones was divested of his ownership by the foreclosure sale to Wineman, and this calls in question the validity of such foreclosure sale, and whether all the property transferred to Wineman at the foreclosure sale was covered by the mortgage. Respondent's counsel contend that the mortgage was void as to the creditors of Jones, and that as a necessary consequence the foreclosure sale was also void, and did not operate to divest Jones of his ownership in the property as against them. Appellant's counsel contend, first, that such mortgage was valid; and, second, that, even though it were void as to creditors of Jones, still it was valid as between the parties, and the taking possession of the property by the mortgagee and the foreclosure and sale thereof under the mortgage pursuant to the power of sale contained therein, before being attacked by creditors operated to divest the mortgagor of ownership and transfer the title to the purchaser, and that the only remedy, if any left to the creditors of the mortgagor, was to pursue the proceeds of such sale. The authorities relied upon to support this argument are Sullivan v. Miller, 106 N.Y. 635, 13 N.E. 772; Wolcott v. Ashenfelter, 5 N.M. 442, 23 P. 780, 8 L. R. A. 691; Parker v. Bank (Tex. Civ. App.) 27 S.W. 1071; Barton v. Sitlington, 128 Mo. 164, 30 S.W. 514; Gregory v. Whedon, 8 Neb. 373, 1 N.W. 309; Ayers v. Sundback, 5 S.D. 31, 58 N.W. 4; Blakeslee v. Rossman, 43 Wis. 116; Read v. Wilson, 22 Ill. 377, 74 Am. Dec. 159; Cameron v. Marvin, 26 Kan. 612; Francisco v. Ryan, 54 Ohio St. 307, 43 N.E. 1045, 56 Am. St. Rep. 711; Kay v. Noll, 20 Neb. 380, 30 N.W. 269; Smith v. Roever, 55 Mo.App. 448; Mallmann v. Harris, 65 Mo.App. 127; 2 Cobbey, Chattel Mortgages, sections 765, 770, 773, 774, 941; Jones, Chattel Mortgages, sections 178, 333, 345, 350. Most of these cases merely announce the rule that where, after the execution of a mortgage, which is void as to creditors, the parties thereto make a new agreement under which possession of the mortgaged property is turned over to the...