Scurry v. Quaker Oats Co.

• Decision Date: 07 May 1926
• Docket Number: 37279
• Citation: 208 N.W. 860,201 Iowa 1171
• Parties: CHARLES SCURRY, Appellant, v. QUAKER OATS COMPANY et al., Appellees; ELMER OSTHEIMER, Intervener, Appellant
• Court: Iowa Supreme Court

208 N.W. 860

201 Iowa 1171

CHARLES SCURRY, Appellant, v. QUAKER OATS COMPANY et al., Appellees;

ELMER OSTHEIMER, Intervener, Appellant

No. 37279

Supreme Court of Iowa, Des Moines

May 7, 1926

Appeal from Hardin District Court.--H. E. FRY, Judge.

ACTION by the mortgagee, to recover the proceeds of the sale of mortgaged personal property from the purchaser. A judgment creditor of the mortgagor's claimed the proceeds, under a garnishment of the purchaser. From a judgment in favor of the judgment creditor, the plaintiff-mortgagee appeals.

Reversed.

E. H Lundy and R. R. Bateson, for appellants.

Burnstedt & Hemingway and Aymer D. Davis, for appellees.

VERMILION J. DE GRAFF, C. J., and STEVENS and FAVILLE, JJ., concur.

OPINION

VERMILION, J.

The plaintiff and appellant, Scurry, held a chattel mortgage upon certain corn, executed by the intervener and appellant, Ostheimer, to secure the payment of a note. Ostheimer sold and delivered the corn to the defendant Quaker Oats Company. After the delivery of the corn, but before payment therefor, the appellee Stauffer-Van Avery Company, a judgment creditor of Ostheimer's, garnished the Quaker Oats Company, as a supposed debtor of Ostheimer's. The Quaker Oats Company paid the money into court. The contest is between the appellant Scurry, who claims that Ostheimer sold the corn as his agent, and that the proceeds belonged to him, and not to Ostheimer, and the appellee Stauffer-Van Avery Company, claiming that Scurry agreed that Ostheimer might sell the corn, and has no lien upon or right to the proceeds, as against its garnishment.

The action is at law, and was tried to the court without a jury. The judgment appealed from upheld the claim of the Stauffer-Van Avery Company under its garnishment.

The appellee, of course, acquired no higher or superior right to the proceeds of the corn by virtue of its garnishment than Ostheimer, its debtor, had. Bank of Hinton v. Swan, 156 Iowa 715, 137 N.W. 1032; Hamm Brew. Co. v. Flagstad, 182 Iowa 826, 166 N.W. 289; Acme H. & M. F. Co. v. Metropolitan Nat. Bank, 198 Iowa 1337, 201 N.W. 129. It is also true that by virtue of the chattel mortgage on the corn the mortgagee acquired no lien upon the proceeds. Harlan v. Ash, 84 Iowa 38, 50 N.W. 41; Hartwig v. Iles, 131 Iowa 501, 109 N.W. 18; First Nat. Bank v. Security Tr. & Sav. Bank, 191 Iowa 842, 181 N.W. 402. But we have recognized the rule that, where the mortgagee agrees that the mortgagor may sell the property and the proceeds be paid to the mortgagee, or turned over to or retained by some third party for him, or agrees that the property be sold in the name of the mortgagee, a trust will be impressed upon the proceeds in favor of the mortgagee, and against one whose claim is no greater than that of the mortgagor. Hoyt v. Clemans, 167 Iowa 330, 149 N.W. 442; Hamm Brew. Co. v. Flagstad, supra. The right of the mortgagee will, in such case, be protected in an action at law, as against the claim of a garnishing creditor of the mortgagor's; and this is true although the mortgagor has violated his agreement with the mortgagee, and sold the property in his own name. Hamm Brew. Co. v. Flagstad, supra.

It is not disputed that Scurry, the mortgagee, consented that the mortgagor should sell the corn. So far, there is no room for controversy; but at this point it is contended by plaintiff that he only consented that Ostheimer might sell the corn as his agent, and that the proceeds belonged to him, and not to Ostheimer, and that, therefore, appellee acquired no right under its garnishment. Scurry testified:

"He [Ostheimer] said that he was willing to sell it at that time, but the market would be better later; and I told him I needed the money pretty bad, but that, if he thought it would be a little better, I wouldn't push him, and to go ahead and sell it when he thought he could do the best. He said that was the only thing he had to get the money out of, to pay me with. He said he would sell the corn and bring the money to me."

Ostheimer testified, as a witness for plaintiff:

"Before the corn was sold to the Quaker Oats Company, through Mr Landon, at Hubbard, I had a talk with Mr. Scurry about paying the note, which was past due, and told him that I was not in a condition to pay it until I sold the corn; and the corn market wasn't very good. He said he needed the...