Peterson v. Wolff

• Decision Date: 04 June 1938
• Docket Number: No. 6527.,6527.
• Citation: 68 N.D. 354,280 N.W. 187
• Parties: PETERSON v. WOLFF.
• Court: North Dakota Supreme Court

68 N.D. 354

280 N.W. 187

PETERSON

v.WOLFF.

No. 6527.

Supreme Court of North Dakota.

June 4, 1938.

Syllabus by the Court.

1. In a case tried to the court without a jury, where the statement of the case and specifications of error are sufficient to justify a trial de novo on appeal to the Supreme Court, it is unnecessary to move for a new trial in the court below in order to secure a review of the sufficiency of the evidence.

2. Foreclosure of a chattel mortgage by action must be commenced within a reasonable time after the mortgagee takes possession of the property under the terms of the mortgage. A mortgagee who delays foreclosure an unreasonable time after taking possession, and in the meantime treats such property as his own, converts the property.

3. Proof of demand and refusal is merely evidence of conversion, and if conversion has actually taken place, it may be otherwise shown.

4. Conversion by a person holding a chattel mortgage of a substantial part of the mortgaged property extinguishes the lien upon the property converted.

5. Where a mortgagor sets up as a defense to an action to foreclose a chattel mortgage that all of the mortgaged property has been converted by the mortgagee, and it appears from evidence introduced at the trial that part of the mortgaged property was destroyed without the fault of either party, part of it is unaccounted for, and a substantial part has been converted by the mortgagee, the mortgagee is entitled to a judgment for the amount of the debt, and a decree for foreclosure on the property unaccounted for.

Appeal from District Court, Dunn County; Harvey J. Miller, Judge.

Suit to foreclose a chattel mortgage by Maurice Peterson against Otto Wolff. Judgment for plaintiff, and defendant appeals.

Remanded, with directions.G. R. Brainard and C. H. Starke, both of Dickinson, for appellant.

Floyd B. Sperry, of Golden Valley, for respondent.

MORRIS, Judge.

This case comes to us for a trial de novo upon an appeal by the defendant from a judgment for the foreclosure of a chattel mortgage. The court entered judgment for the amount found due on the note secured by the mortgage and adjudged that the plaintiff be entitled to the possession of all of the property described in the chattel mortgage, and that the same be sold by the sheriff pursuant to law, and the proceeds applied upon the debt, and that in event there be a deficiency that the plaintiff have judgment against the defendant therefor.

[1] The appellant made a motion for a new trial in the court below in which he challenged the sufficiency of the evidence. The trial court denied the motion, and in his memorandum opinion reviewed the evidence and held it to be sufficient to sustain the judgment. The appellant sought to appeal from both the judgment and from the order denying his motion for a new trial. The notice of appeal was not filed within sixty days from the entry of the order as required by sections 7820 and 7821, Compiled Laws N.D. 1913. The respondent challenges the validity of the appeal from the order and moves for its dismissal on the ground that the notice of appeal was filed too late. The respondent's position upon this point is well taken, and the appeal from the order is dismissed.

[2] The respondent next urges that, no valid appeal being taken from the order denying the motion for a new trial, the order denying the motion is conclusive as to all matters passed upon by the trial court in denying the motion, except errors appearing upon the judgment roll, and cites Hedderich v. Hedderich, 18 N.D. 488, 123 N.W. 276, and Blackstead v. Kent, 63 N.D. 246, 247 N.W. 607. He argues that on the appeal from the judgment alone we cannot review the sufficiency of the evidence. In this the respondent is mistaken. The appellant has demanded a trial de novo in this court. The statement of the case and the specifications of error are sufficient to justify such trial. The motion for a new trial in the court below was not necessary in order to permit this court to review the evidence. State ex rel. Board of Railroad Commissioners v. Burt State Bank, 66 N.D. 529, 267 N.W. 337;State ex rel. Berndt v. Templeton, 21 N.D. 470, 130 N.W. 1009; chapter 208, Session Laws, N.D. 1933. The fact that a motion for new trial was made and denied by the trial court does not limit the scope of review upon a trial de novo in the Supreme Court upon appeal from the judgment. The question of the sufficiency of the evidence is properly before us.

The record discloses that the property described in the chattel mortgage may for the purposes of the consideration of this case be divided into three classes. First, household goods which were destroyed by fire without the fault of either the mortgagor or the mortgagee, and which were not in existence at the time of the trial. Second, property described in the mortgage not shown to have come into the possession of the plaintiff or to have been destroyed and described as follows: 1 galvanized water tank; 28 logs; 10 tons Lignite coal; 100 blocks of log wood; 1 large cross-cut saw; 1 buck saw; 2 pair ice tongs; 1 scythe; 1 snow scoop; 1 shovel; 2 axes; 75 lbs. Gold Dust; 1 Ford Light Delivery Truck No. 4513126. Third, a number of items consisting of the major portion of the equipment used by the defendant in operating a butcher shop and which the plaintiff took into his possession in March 1933. The complaint described all of the property set forth in the mortgage including that which was burned, that which was unaccounted for, and that which came into the possession of the plaintiff. The defendant in his answer alleges that the plaintiff:

“Converted the above described property to his own use and benefit to the damage to the defendant in the sum of $4510.75.

That as a result of such conversion of the property described in the plaintiff's complaint, the said plaintiff has lost his lien by virtue of the mortgage which he seeks to foreclose.”

We will first consider whether or not the plaintiff converted the butcher shop equipment that came into his possession and the effect upon the mortgage lien.

The defendant at one time owned both the building and the butcher shop equipment. In January, 1933, the plaintiff obtained a sheriff's deed to the lots and building. At that time the defendant was operating the shop, and the plaintiff's son, Harold Peterson, was assisting the defendant. The following March, Harold Peterson took over the operation of the shop for his father, and shortly thereafter the defendant left. The evidence is in dispute concerning the circumstances under which the defendant left the shop. He contends that he was forced out by the Petersons. They assert that he became discouraged because the shop was not making money and was heavily incumbered, and that he took his coat, some small tools such as steel and saws, and walked out. The evidence is undisputed, however, that the plaintiff took exclusive possession of the butcher shop and all of the equipment in it at that time. The son testified that after the defendant walked out, he put a new lock on the shop so that the defendant could not get in. The plaintiff's son continued to operate the shop for the plaintiff, who furnished only some small tools, such as knives and saws. The plaintiffs ceased to operate the shop in June, 1934. He later rented the building for use as a grocery store, which is now being operated therein. Much of the equipment is still in the building. The Stimpson scale, cash register, adding machine, and stove are being used by the present tenants with the permission of the plaintiff. The plaintiff took the refrigerator apart and moved it into the icehouse on the back of the lot. An icebox is stored in a shed back of the main building. All of the shop equipment is still on the premises, except a cleaver which some one borrowed and failed to return, and an ice chute which was accidentally broken and destroyed. The plaintiff took 137 fence posts out to his farm, whether for use or storage the record does not disclose. Other fence posts are described in the mortgage. The plaintiff testified that these were sold and did not come into his possession. By whom they were sold or what became of the proceeds does not appear.

The testimony is in direct conflict as to whether the defendant demanded possession of the property after he walked out of the shop. The plaintiff testifies that about three months after the defendant left the shop, he came out to the plaintiff's farm in the company of two other men and asked for possession of the property, and the plaintiff told him he could have it, and that he should store it in a good place and take out insurance on it. The men who were with him advised him to leave the property where it was, and he decided to do so. The defendant, on the other hand, testified that, on the occasion referred to, he demanded the property and the plaintiff refused to give it to him. He also testified that he never gave the plaintiff authority to take and use the equipment.

It also appears that since 1933 the property has been assessed for taxes in the plaintiff's name, although the plaintiff denies that he ever listed the property with the assessor.

In this state a chattel mortgage does not vest title in the mortgagee either upon the execution of the instrument or upon default. The title of the mortgagor is divested only by foreclosure in the manner prescribed by statute. Foreclosure may be by action, or, if the mortgage contains a power of sale, it may be by advertisement. Section 8123, Compiled Laws N.D.1913 et seq. In this case, although the mortgage contains a power of sale, foreclosure is sought by action. Section 6721, Compiled Laws N.D.1913, provides that conversion by a person holding a lien on personal property extinguishes the lien on the property converted. Thus it develops that if the plaintiff converted the property on which he held the chattel mortgage, his mortgage lien was extinguished...