McInerney & Conway Finance Corporation v. Smith

• Citation: 295 P. 273,42 Wyo. 380
• Decision Date: 14 January 1931
• Docket Number: 1647
• Parties: McINERNEY & CONWAY FINANCE CORPORATION v. SMITH
• Court: United States State Supreme Court of Wyoming

295 P. 273

42 Wyo. 380

McINERNEY & CONWAY FINANCE CORPORATION v. SMITH

No. 1647

Supreme Court of Wyoming

January 14, 1931

APPEAL from District Court, Laramie County; SAM M. THOMPSON, Judge.

Action by the McInerney & Conway Finance Corporation against Floyd Smith, in a justice's court. From a judgment for plaintiff in the District Court, on appeal from a judgment in favor of plaintiff, in the justice court, defendant appeals.

Affirmed.

For the appellant there was a brief by Kinkead & Pearson, of Cheyenne, Wyoming, and oral argument by Mr. Allan A. Pearson.

Plaintiff having failed to reply, or otherwise plead to defendant's counterclaim, said counterclaim must be taken as true, and judgment should have been rendered accordingly. 5671 C. S.; 2468 C. S.; Kearney Stone Works Co. v. McPherson, 5 Wyo. 178, 24 R. C. L. 878; Magpie Co. v. Sherman, 21 N.W. 770; Walton v. Spinner, 15 Wyo. 297; Barnett v. Danah, 17 Wyo. 476. A conversion of defendant's automobile being admitted, plaintiff is laible for the reasonable value thereof. The mortgage contained a power of sale. After commencement of suit upon the note, plaintiff attached the automobile, and sold it at private sale, while the mortgage was in full force and effect, at an inadequate price, which was unlawful. 4700 C S.; Brice v. Walker, (Cal. ) 194 P. 721; Hawkins v. Fuller, (Okla.) 240 P. 549. Plaintiff's action was a conversion. Strehlow v. McLeod, (N. D.) 117 N.W. 525. A chattel mortgage does not pass title, but creates a lien. Robinson Merc. Co. v. Davis, 26 Wyo. 484. Plaintiff had no title. Cheesman v. Fenton, 13 Wyo 436. The sale of the automobile was a conversion thereof, and defendant should have been given judgment on his counterclaim for the value thereof. Force v. Peterson Mach. Co., (N D.) 116 N.W. 84; Continental Gin Co. v. DeBord, (Okla.) 1236 P. 159; Springer v. Jenkins, (Ore.) 84 P. 479; Swank v. Elwart, 105 P. 901; Perryman v. Abston, Wynne & Co., (Ark.) 261 S.W. 622; Drummond v. Trickey, (Me.) 108 A. 72; N.W. Port Huron Co. v. Iverson, (S. D.) 117 N.W. 372; Marchard v. Ronaghan, (Ida.) 72 P. 731; Unfired v. Libert, (Ida.) 119 P. 885; Nettleton v. Evans, (Wash.) 121 P. 54; Rein v. Callaway, (Ida.) 65 P. 63; Natl. Bank of Commerce v. Jackson, (Okla.) 170 P. 474. A mortgagee of personal property selling at private sale under a power, is accountable for its reasonable value regardless of the price he receives. Marsh v. Elba Bank & Trust Co., (Ala.) 87 So. 604; Henderson v. Fisher, (Cal.) 176 P. 63, 64; Aultman v. Forest, (Colo.) 130 P. 1086, 1088; Zadek v. Burnett, (Ala.) 57 So. 447, 450; Kelly v. McCarty, (Kan.) 88 P. 882; Lipsohn v. Goldstein, (Mass.) 98 N.E. 703. A mortgagee taking property and failing to sell it is chargeable with its market value at the time of conversion. Perryman v. Abston Wynn & Co., (Ark.) 261 S.W. 622. And mortgagor is entitled to credit on the note for reasonable value of the property. Bank v. Wheny, (Kan.) 169 P. 1146. If the value exceeds the debt, mortgagee must account for excess. Rentz v. Crosby, (So. C.) 94 S.W. 1053. Some authorities hold that such conversion serves to extinguish the entire debt. Force v. Peterson Mach. Co., (N. D.) 116 N.W. 84; Garrett v. Lourie, (Ida.) 267 P. 1078; North West Port Huron v. Iverson, (S. D.) 117 N.W. 372; Wilson Motor Co. v. Dunn, (Okla.) 264 P. 194; Rein v. Callaway, (Ida.) 65 P. 63. Sec. 4707 indicates that without foreclosure there can be no deficiency.

For the respondent there was a brief by John F. Delaney, of Cheyenne, Wyoming, and oral argument by Mr. Delaney.

Defendant did not perfect his appeal within the time prescribed by statute, the provisions of which must be strictly followed. Italian Swiss Colony v. Bartagnoli, 9 Wyo. 204, 2 R. C. L. 100-104. It is a jurisdictional requirement. 2 Ency. P. & P. 345; Elliott's App. Prac. Sec. 524; State v. Dist. Court, 33 Wyo. 288. Allegations of damage are not taken as true for failure to controvert them. 5671 C. S., 5698 C. S. There was no proof of damages; defendant waived an answer to his counterclaim by entering upon the trial, and proceeding the same as if the pleading had been filed. The case was tried de novo in the District Court. 6536 C. S. A mortgage of personal property is something more than mere security. It passes title which becomes absolute on default. Jones Chat. Mort. 5th Ed. Sec. 70, 11 C. J. 398, 399, 549. A mortgagee may sell after forfeiture and possession without formal foreclosure. Jones Chat. Mort. 707. Ordinarily foreclosure in accordance with the terms of the mortgage, or in the manner prescribed by law, is necessary to determine mortgagor's title. 11 C. J. 694, 699. Surrender of possession by mortgagor amounts to a foreclosure. Finance Corp. v. Credit Co., 283 P. 1100. Possession should be taken by replevin. Schlessinger v. Cook, 9 Wyo. 257. An agreement between parties to private sale would be valid. Harbor-Longmire Co. v. Reid, (Okla.) 254 P. 29. A counterclaim must be restricted to a cause of action in existence, which was not the case here. Strehlow v. McLeod, (N. D.) 117 N.W. 525, 34 Cyc. 670; 6485 C. S., 4699 C. S. is not mandatory. In some states, the mortgagor has the right to redeem until the mortgage has been legally foreclosed. Port Huron Co. v. Iverson, 117 N.W. 372; Swank v. Elwart, 105 P. 904. But such is not the rule in this state. The costs charged to defendant were incurred by reason of his counterclaim upon which an adverse judgment was rendered, and it was proper to tax costs against him. Therefore, under 5920 C. S. the taxation of costs are discretionary.

BLUME, Justice. KIMBALL, Ch. J., and RINER, J., concur.

OPINION

BLUME, Justice.

On December 28, 1927, the McInerney and Conway Finance Corporation, hereinafter referred to as the plaintiff, commenced an action before a justice of the peace, aided by attachment, against one Floyd Smith, hereinafter referred to as the defendant, seeking to recover the sum of $ 153.75 on a promissory note of $ 138.75 given by the defendant on October 29, 1927. No pleadings were filed by the plaintiff when the action was commenced, and the cause of action appeared only from the affidavit of attachment. On January 5, 1928, the defendant filed an answer and counterclaim. In the counterclaim it was alleged that defendant, on October 29, 1927, purchased from the plaintiff, through its agent, O. C. Martin, a Ford roadster of the reasonable value of $ 125; that on the 17th day of December, 1927, the corporation, by its agent O. C. Martin, "did wrongfully take from said defendant and convert to its own use said car, and that it does now and has at all times since that date wrongfully held said car and wrongfully withheld it from the possession of this defendant; that by reason of said conversion, this defendant has been damaged in the sum of $ 125, which is the fair and reasonable value of said automobile." The parties appeared before the justice of the peace on January 11, 1928, and the record of the justice recites that the corporation then formally pleaded its cause of action, alleging among other things the execution of the note of the defendant and that it was secured by a chattel mortgage on the Ford roadster above mentioned; "that since the commencement of this suit, plaintiff acting under authority given it in said mortgage, took said car into possession, sold same at private sale for $ 25.00 and has credited the amount on said note; that there is now due and owing to plaintiff from defendant $ 113.75." The case was tried to a jury, who disagreed. It was then tried before the justice, who rendered judgment for plaintiff. Upon appeal to the District Court, a motion to dismiss was overruled, and from that ruling the case was brought to this court. That appeal was dismissed. McInerney & Conway Finance Corporation v. Smith, 39 Wyo. 191, 270 P. 664. The case was then tried in the District Court, and this resulted, on January 27, 1930, in a judgment of $ 102.30 in favor of the plaintiff. From this judgment the defendant has appealed to this court. A few other facts will be mentioned later on in the opinion.

1. When the case came on for trial in the District Court, the defendant filed a motion for judgment upon its counterclaim on the theory that no reply thereto had been filed. The court overruled the motion and error is predicated thereon. This point was not raised until the case was tried in the District Court. The record in the case is in a peculiar condition. Plaintiff did not plead in the justice court, at least formally, until January 11, 1928, and if that pleading is to be taken as plaintiff's petition, then the defendant failed to answer it, and the counterclaim, which is an integral part of defendant's pleading, could not be considered. Defendant's counsel probably thought that plaintiff pleaded sufficiently when it filed the affidavit for attachment in the case on December 28, 1927, and if we assume with them that this is true, then we find the situation to be this: Plaintiff pleaded his cause of action on December 28, 1927; on January 5, 1928, defendant filed his answer and counterclaim, alleging in the latter that the plaintiff converted his Ford roadster. Thereafter, and on January 11, 1928, the plaintiff pleaded among other things that it took possession of the roadster under authority given it in the chattel mortgage already mentioned, and sold it at private sale. While this allegation was not a specific denial of the conversion, it stated a rightful possession and sale--the exact contrary of the allegation of the defendant--and under the circumstances of the case, and in view of the fact that the objection now considered was made for the first time in the District Court, we cannot see how we can regard this allegation otherwise than as a reply to the...