Rolette State Bank v. Minnekota Elevator Co.

• Decision Date: 24 September 1923
• Citation: Rolette State Bank v. Minnekota Elevator Co., 50 N.D. 141, 195 N.W. 6 (N.D. 1923)
• Parties: ROLETTE STATE BANK v. MINNEKOTA ELEVATOR CO.
• Court: North Dakota Supreme Court

50 N.D. 141

195 N.W. 6

ROLETTE STATE BANK

v.MINNEKOTA ELEVATOR CO.

Supreme Court of North Dakota.

July 26, 1923.

Rehearing Denied Sept. 24, 1923.

Syllabus by the Court.

A purchaser of property covered by a chattel mortgage takes it subject to the lien thereof, and the exercise by him of dominion over the property inconsistent with and in defiance of the rights of the mortgagee therein, constitutes a conversion.

Where a mortgagee of personal property consents to a sale thereof, on condition that the purchaser pay the purchase price to the extent of his mortgage claim to him, the mortgagee does not thereby waive his lien; and where the purchaser fails to comply with the condition, denies the lien, and claims to hold the property discharged from the mortgage, the mortgagee may maintain an action for conversion against him.

A demand, followed by a refusal to deliver personal property, is but evidence of conversion; and where obviously such demand would be unavailing, none need be made before bringing an action for conversion. More v. Burger et al., 15 N. D. 345, 107 N. W. 200.

The measure of damages for the wrongful conversion of personal property is either (1) the value of the property at the time of conversion with interest from that time; or (2) if the action has been prosecuted with reasonable diligence, the highest market value of the property at any time between the conversion and the verdict without interest, at the option of the injured party; and (3) a fair compensation for the time and money properly expended in pursuit of the property. Section 7168, Comp. Laws 1913.

Under the provisions of article 24, chapter 42, of the Political Code, as amended, the lien of a county for seed grain and feed furnished, is cast only on the crop produced from such seed and feed.

Section 7624, Comp. Laws 1913, providing, “Upon retiring for deliberation, the jury may take with them all papers which have been received as evidence in the cause except depositions or copies of such papers as ought not in the opinion of the court to be taken from the person having them in possession,” is permissive only, and not mandatory; and except in case of an abuse of discretion, the action of the trial court in not sending papers received in evidence out with the jury will not be held erroneous.

Appeal from District Court, Rolette County; A. G. Burr, Judge.

Action by the Rolette State Bank against the Minnekota Elevator Company. From a judgment for plaintiff, and an order denying its motion for a judgment non obstante or for a new trial, defendant appeals. Affirmed.

F. B. Lambert, of Minot, for appellant.

Verret & Stormon, of Rolla, for respondent.

A. G. Divet, of Fargo, amicus curiæ.

NUESSLE, J.

This action is for damages on account of the conversion of certain grain. The plaintiff in its complaint sets out and alleges that it was the owner of a certain chattel mortgage covering grain raised by its debtor Goode; that it was entitled to possession thereof by virtue of such mortgage lien for the purpose of foreclosing; that the defendant wrongfully converted the said grain, and plaintiff claims damages on account thereof. The defendant, answering, denies the mortgage lien of the plaintiff; denies that the plaintiff has been damaged by any act of the defendant; alleges that plaintiff is estopped from asserting any claim against the defendant; and alleges that the right of the plaintiff, if any, to the grain by reason of the alleged mortgage lien is second and subsequent to the lien of the county of Rolette, and that the plaintiff was not, therefore, injured by any act of the defendant in connection with said grain. On the issues as thus made, the case was tried to a jury, and a verdict returned for the plaintiff, and judgment entered thereon. At the close of the plaintiff's case, and again at the close of the whole case, the defendant moved for a directed verdict. Subsequent to the return of the verdict, the defendant moved in the alternative for judgment, notwithstanding the verdict or for a new trial, which motion was denied. This appeal is from the order denying said motion, and from the judgment.

The defendant and appellant predicate error on this appeal on account of the rulings of the court during the course of the trial; on account of the trial court's refusal to give certain requested instructions, and its giving of certain other instructions; on account of the trial court's not permitting the jury, when they retired to deliberate on their verdict, to take with them certain papers which had been received in evidence; and by reason of the trial court's denial of the defendant's motion for judgment non obstante or for a new trial.

There is little dispute as to the facts. It appears that one Goode gave a chattel mortgage for $2,000 on his crop for the year 1921 to the plaintiff bank. In 1920 Goode had obtained seed and feed from the county of Rolette, and the county had perfected a lien on account of such seed and feed so furnished. In September, 1921, Goode hauled at least a portion of the mortgaged grain to the defendant's elevator. The plaintiff was endeavoring to realize on its mortgage. The county of Rolette was likewise endeavoring to collect on account of seed and feed furnished in 1920. Goode, the sheriff of Rolette county, and the agent of the plaintiff, met at the defendant's elevator, with the agent in charge thereof, and made arrangements as to what should be done with the grain in controversy. It was there agreed that the grain upon which the plaintiff had a mortgage should be purchased by the defendant, and that the plaintiff should waive its mortgage as against the grain, excepting as to the amount of $400, which amount should be paid to the plaintiff by the defendant from the proceeds of the grain bought by it. This was on September 3, 1921. Subsequently the defendant bought the grain, but paid the money directly to Goode. Plaintiff was not paid. A demand was made on defendant for the grain in April, 1922, which was refused, and plaintiff brought this action in conversion.

The only matter of fact in dispute among the parties is as to what the arrangement was with reference as to how and to whom the purchase price of the grain should be paid. The plaintiff's contention is that the agreement was that the defendant should pay the $400 direct to it. The defendant's contention is that the agreement was that the purchase price of the grain should be paid to Goode, and that Goode should pay the plaintiff. This question was left to the jury, and they found that the plaintiff's version was the correct one.

The plaintiff's contention is that when the defendant purchased the grain, and paid therefor, contrary to the arrangement as agreed upon, and thereafter denied plaintiff's claim of lien, that it thereby converted the same; that although a demand was subsequently made and refused that such demand and refusal were not necessary to establish such conversion; that the conversion took place at the time the grain was disposed of, contrary to such agreement, irrespective of any subsequent demand. On the other hand, the defendant contends that there was no conversion; that if the plaintiff has any cause of action that it is merely one on contract for the amount that the plaintiff was to have; that if there was any conversion, that it was as of the date of demand and refusal, and the value of the grain at that time is not shown; that by its conduct, the plaintiff is estopped to assert any claim to the grain as against defendant; furthermore, that the county of Rolette had perfected its seed lien against Goode for the year 1920 in an amount greater than the value of the grain alleged to have been converted, and that the same is still unpaid; that such lien is a continuing lien as against any and all crops of every description grown by Goode during the year 1920 and subsequent years, prior and superior to the lien of the plaintiff's or any other mortgage, and though the grain in question has been disposed of contrary to the agreement, that the plaintiff suffered no injury thereby, for the reason that on account of the county's continuing lien the plaintiff's interest by virtue of the mortgage was of no value.

It will thus be seen that the questions raised by the contentions of the various parties resolve themselves into: First, as to whether there was a conversion; second, whether a demand and refusal was necessary; and third, whether under the circumstances as disclosed, the defendant can establish the alleged lien of Rolette county as a defense in this particular case. Whether the court erred in its rulings, either as to the admission of evidence or in denying the defendant's motion, or in giving or refusing to give instructions, will depend on the answers to these questions.

[1] There is no doubt but that the holder of a chattel mortgage may maintain an action in conversion against one who wrongfully asserts a right to the property mortgaged in defiance of the right of the mortgagee. That is conceded. In this case the plaintiff had waived its lien excepting as to the sum of $400, but did claim a lien to that extent. The defendant knew of this claim of the plaintiff. It was agreed that the defendant might buy the grain on condition, and that condition was that the proceeds to the extent of the lien should be by the defendant paid to the plaintiff. The defendant did buy the grain, but contrary to the agreement it paid the money to Goode, the mortgagor, and thereafter denied the lien of plaintiff's mortgage. It seems to us that this was such an exercise of dominion over the property inconsistent with, and in defiance of, the rights of the plaintiff as to constitute a conversion. Taugher v. Northern Pacific Ry. Co., 21 N. D. 111, 129 N. W. 747;Citizens' National Bank v. Osborne-McMillan Elevator Co., 21 N. D. 335, 131 N. W. 266. See, also, note, 24 Am. St. Rep. 795.

[2] There was no waiver of its lien as to the $400 on...