Minneapolis Threshing Mach. Co. v. Calhoun

• Decision Date: 09 September 1916
• Docket Number: 3912
• Citation: 159 N.W. 127,37 S.D. 542
• Parties: MINNEAPOLIS THRESHING MACHINE COMPANY, Appellant, v. M. W. CALHOUN et al., Defendant, and Giles E. Pettigrew, garnishee, and the First National Bank of Flandreau, S. D., Respondents.
• Court: South Dakota Supreme Court

37 S.D. 542, 159 N.W. 127 (1916)

MINNEAPOLIS THRESHING MACHINE COMPANY,

Appellant,

v. M. W. CALHOUN et al.,

Defendant, and

Giles E. Pettigrew, garnishee,

and the First National Bank of Flandreau, S. D.,

Respondents.

South Dakota Supreme Court

Appeal from Circuit Court, Moody County, SD

Hon. Joseph W. Jones, Judge

#3912--Affirmed

Frederick A. Warren, John T. Grigsby, Joseph A. Hosp

Attorneys for Appellant.

Geo. Rice, Lewis Benson

Attorneys for Respondents.

Opinion filed September 9, 1916

POLLEY, P. J.

Just prior to the commencement of this action, the defendant Calhoun was the owner of a considerable amount of personal property, all of which was mortgaged to various parties to secure the payment of debts owing to them by said Calhoun. In order that said indebtedness might be paid, an agreement was entered into between the said Calhoun and said mortgage creditors, whereby the said property was to be sold and the proceeds thereof applied in payment of said debts. It was agreed that the said Calhoun should advertise all of said property for sale at public auction, and that one Giles E. Pettigrew should act as clerk of said sale, should collect the proceeds thereof, and apply the same in payment of said mortgage debts. A sale was had in the manner agreed upon, and the said Pettigrew realized a sufficient amount of cash to pay and satisfy all of said mortgages. Under the terms of the said agreement, all of said mortgage creditors placed the evidences of their indebtedness with the First National Bank of Flandreau, where the same were to be paid by Pettigrew; but before said arrangement could be carried out plaintiff, a judgment creditor of Calhoun, commenced this action against Calhoun, and garnisheed the proceeds of said sale in the hands of Pettigrew. The mortgagees were impleaded as defendants herein, and the proceeds of said sale were brought into court, to be awarded by the court to the party, or parties, entitled thereto. Upon the trial, the court found in favor of the mortgagees, and entered judgment accordingly. From such judgment, and an order overruling a motion for a new trial, plaintiff appeals.

That the chattel mortgages involved were in all respects legal and binding upon the parties hereto is not questioned, and that the proceedings to dispose of the mortgaged property and pay the indebtedness secured by said mortgages was free from any fraud or concealment is admitted; but it is the contention of appellant that, when the mortgagees consented to a sale of the mortgaged property in the manner shown herein, they waived their lien thereon and accepted the mere personal promise of the mortgagor in lieu thereof, and left the fund derived from the sale subject to levy by the judgment creditors of the mortgagor. That the consent of a mortgagee to the sale of mortgage chattels amounts to a waiver of the lien thereon, so that such property will pass into the hands of a purchaser free from the lien of the mortgage is unquestionably the law. And it is generally held that the consent of the mortgagee that the mortgagor may sell the mortgaged property, given upon the agreement of the mortgagor that he will apply the proceeds of such sale on the mortgage debt, amounts to a substitution of the personal promise of the mortgagor in lieu of the mortgaged security, and that the proceeds of such sale, while in the hands of the mortgagor, are subject to levy by the mortgagor's judgment creditors. White Mt. Bank v. West, 46 Me. 15; Maier v. Freeman, 112 Cal. 8, 44 Pac. 357, 53 Am. St. Rep. 151; Smith v. Bank, 99 Iowa, 282, 61, N.W. 378, 68 N.W. 690; Smith v. Clark, 100...