Rein v. Callaway

• Citation: 7 Idaho 634,65 P. 63
• Parties: REIN v. CALLAWAY
• Decision Date: 18 May 1901
• Court: United States State Supreme Court of Idaho

65 P. 63

7 Idaho 634

REIN v. CALLAWAY

Supreme Court of Idaho

May 18, 1901

DEMURRER TO COMPLAINT-TWO METHODS OF FORECLOSING CHATTEL MORTGAGE.-Section 4520 of the Revised Statutes, provides inter alia, that there shall be but one action for the recovery of any debt secured by mortgage upon personal property, while section 3390 of the Revised Statutes provides that a chattel mortgage may be foreclosed by notice and sale as in subsequent sections provided, or by an action in the district court. The Revised Statutes thus provides two methods, or proceedings, for the foreclosure of a chattel mortgage, and those methods are exclusive.

SALE OF MORTGAGED PROPERTY BY MORTGAGEE NOT AUTHORIZED-Under our law the mortgagor cannot legally authorize the mortgagee by provision in the mortgage to take possession of the mort- gaged property, and sell the same in case payment is not made when due. The power to so foreclose a chattel mortgage, cannot be lawfully exercised by the mortgagee. A chattel mortgage cannot be foreclosed in that manner.

CANNOT MAINTAIN ACTION.-If a mortgagee seizes the mortgaged personal property, and sells it at private sale, under a stipulation in the mortgage authorizing him to do so, he cannot maintain an action for the balance due on the mortgage debt.

SAME.-A mortgagee, who by his own illegal acts disposes of the mortgaged personal property, cannot maintain an action for any balance due on the mortgage debt.

MORTGAGED PROPERTY, PRIMARY SECURITY.-Under the law of the state, the mortgaged personal property becomes the primary security for the debt, and the personal obligation of the mortgagor a secondary one.

MORTGAGOR PERSONALLY LIABLE, WHEN.-The mortgagor is personally liable only after foreclosure and sale of the mortgaged property and then only for the balance due on the debt, unless it be shown that the mortgaged property has become valueless without the fault of the mortgagor.

(Syllabus by the court.)

APPEAL from District Court, Elmore County.

Reversed and remanded, with instructions. Costs of this appeal awarded to appellant.

Wyman &amp Wyman, for Appellant.

In the case of Brown v. Bryan, 5 Idaho 145, 51 P. 995, this court after full hearing decided that a power of sale in a mortgage cannot be exercised but that the mortgage must be foreclosed as provided by law. This decision is as applicable to chattel as to realty mortgages. A mortgagee cannot waive his security and sue upon the debt. (First Nat. Bank of Lewiston v. Williams, 2 Idaho 670, 23 P. 552; Barbieri v. Ramelli, 84 Cal. 154, 23 P. 1086.) The relation between the mortgagee and the mortgagor is a peculiar one in those states, like Idaho where the security must first be exhausted. The mortgaged property in such states becomes the primary security and the personal obligation of the mortgagor the secondary one. This is clear from the mere statement of the rule, since the mortgagee must follow his security before he can pursue the debtor. The latter is personally liable only after foreclosure and then only to the amount shown to be due by the return by the sheriff. (Biddel v. Brizzolara, 64 Cal. 354 (362), 30 P. 609; Brown v. Willis, 67 Cal. 235, 7 P. 682; Porter v. Muller, 65 Cal. 512, 4 P. 531.) It is both interesting and instructive to note, too, that if the mortgagee by affirmative act deprived himself of the security he cannot sue upon the note. (Hibernia Sav. etc. Soc. v. Thornton, 109 Cal. 427, 42 P. 447, 50 Am. St. Rep. 52.)

Brown & Cahalan, for Respondent.

The parties may agree that the mortgagee may sell the property at private sale although the statute provides that a sale under a chattel mortgage shall be made after public notice for a specified time, and such agreement may be made subsequent to execution of mortgage, as well as in the mortgage itself. (Jones on Chattel Mortgages, 775a; Reynolds v. Smith, 28 Kan. 810.) Statutory provisions regulating foreclosure sales of mortgaged chattels upon default do not exclude sales under powers with reasonable stipulations agreed upon by the parties, unless the statutory provisions are expressly made exclusive. (Jones on Chattel Mortgages, sec. 789; Denny v. Van Dusen, 27 Kan. 437-440.) A stipulation in a chattel mortgage, that on default the mortgagor may take possession of the property and dispose of the same, is a valid agreement. (Scott v. Davis, 4 Kan. App. 488, 44 P. 1003; Flim v. Ferry, 127 Cal. 648, 60 P. 435, Jones on Chattel Mortgages, secs. 790-793; Tootle v. Taylor, 64 Iowa 629, 21 N.W. 115; Bryan v. Robert, 1 Strob. Eq. (S. C.), 334, 342; Redlands Hotel v. Richards, 125 Cal. 569, 58 P. 152; Case v. Baughton, 11 Wend. 106; Ballou v. Cunningham, 60 Barb. 426; Blumberg v. Birch, 99 Cal. 416, 34 P. 102, 37 Am. St. Rep. 67.) The mode of ascertaining the deficiency is not essential. (Toby v. Oregon P. R. R. Co., 98 Cal. 490, 33 P. 552; Advance Thresher Co. v. Whiteside, 3 Idaho 64, 26 P. 660.)

SULLIVAN, J. Quarles, C. J., concurs. Stockslager, J., did not sit in the case, and took no part in the decision.

OPINION

SULLIVAN, J.

This action was brought to recover a deficiency alleged to be due after applying the proceeds of a sale of mortgaged chattel property in part payment of the debt secured by such mortgage. Among other facts, the complaint alleges: On April 20, 1895, the defendant, Callaway, being indebted to the plaintiff in the sum of $ 1,700, executed and delivered to him his promissory note for that sum, and, to secure payment of the same, gave a chattel mortgage upon thirty-three sacks of wool. This mortgage contained the following provision: "It is hereby specifically agreed and understood that at any time after the maturity of this note the mortgagee, his attorneys and agents, may take possession and control of said wool, and may at once, without notice, sell and dispose of the same for the highest price obtainable at Mountain Home or other available market, and shall deduct from the proceeds the costs and expenses of said sale, and the balance shall be credited upon the note hereinafter set forth." It is also alleged that on the first day of July, 1895, acting under the above-quoted power contained in said mortgage, the plaintiff seized the mortgaged property, and thereafter sold the same at private sale for $ 855.18, which sum was applied in part payment of said note. This action was brought to recover judgment for the balance due thereon. The complaint also asks for a reformation of said promissory note, but no point is made so far as the reformation of the note is concerned. A demurrer was interposed to the complaint, and overruled by the court. The defendant elected to stand on his demurrer. Judgment was entered against him, and this appeal is from the judgment, on the judgment-roll alone.

The only error assigned is the action of the court in overruling the demurrer. It appears from the record that the mortgaged property was taken from the appellant by the...