Smith v. Johns

• Decision Date: 03 February 1925
• Citation: 113 Or. 351,232 P. 786
• Parties: SMITH ET AL. v. JOHNS ET AL.
• Court: Oregon Supreme Court

232 P. 786

113 Or. 351

SMITH ET AL. v. JOHNS ET AL.

Supreme Court of Oregon

February 3, 1925

Department No. 2.

Appeal from Circuit Court, Klamath County; D. V. Kuykendall, Judge.

Suit by Walter C. Smith and Halbert E. Smith, copartners doing business as Smith Bros., against W. H. Johns, the Montague Banking Campany, and another. From a decree denying relief prayed for by plaintiffs, and granting relief sought by the second named defendant, plaintiffs appeal. Affirmed.

This is an attempt, by a suit in equity, to rescind an alleged voidable contract for the sale of cattle, and to cancel certain written instruments evidencing the transaction involved, to establish a lien, and to enjoin the defendants from taking possession of the cattle.

Defendant A. W. Kite filed an answer and disclaimer. Defendant W. H Johns denied the charges of fraud and pleaded authority to sell the cattle. Johns averred the transfer, to defendant the Montague Banking Company, of the notes, the chattel mortgage and the conditional sales contract involved herein, and, in his own behalf, assented to a rescission of the contract. The banking company denied plaintiffs' averment of fraud and alleged the right and authority of Johns to sell the cattle. The company prayed that the conditional sales contract be declared a chattel mortgage, and sought its foreclosure together with the foreclosure of a separate chattel mortgage given by plaintiffs on a portion of the cattle.

From a decree denying plaintiffs' prayer for rescission and cancellation, and granting the relief prayed for by the defendant banking company, the plaintiffs appeal.

J. H Carnahan, of Klamath Falls, for appellants.

R. C. Groesbeck, of Klamath Falls (B. K. Collier, of Yreka, Cal., on the brief), for respondents.

BROWN J. (after stating the facts as above).

The plaintiffs assert, in effect, that the contract of sale is tainted with fraud because at the time of its execution the cattle were mortgaged, and, further, that certain of the cattle were not as represented, in that they were not suitable for dairy purposes.

In January, 1921, defendant W. H. Johns, by occupation a dairyman, was the owner of a herd of dairy cows and a number of beef cattle, which he had previously acquired while residing at Granada, Siskiyou county, Cal., and on which, as partial security for an indebtedness to defendant the Montague Banking Company of Montague, Cal., he had executed two chattel mortgages in favor of that company. In the fall of 1920, and with the consent of the banking company, Johns shipped the cattle to Klamath county, Or., establishing a dairy on what is known in the record as the Libby place, situate near Merrill, Klamath county, where he thereafter kept his herd. He thereupon executed another chattel mortgage in favor of the banking company, which was recorded in that county.

The plaintiffs are farmers residing in the vicinity of Merrill. They commenced negotiations for the purchase of these cattle from Johns on January 6, 1921. Prior to the execution of the contract, one of the plaintiffs visited the Libby place and inspected the cattle. On January 10, 1921, following this visit, plaintiffs purchased 16 head of beef cattle, giving in payment therefor their promissory note for $786.65, secured by a chattel mortgage on the cattle. Plaintiffs likewise contracted with Johns for the purchase of the dairy herd, and executed promissory notes aggregating $3,117.50, in payment therefor. On the same day, this conditional sales contract for the sale of the dairy herd was reduced to writing and signed by the parties, and Johns executed to the plaintiffs a bill of sale for 32 head of dairy cows, 9 calves, 1 bull, 1 cream separator, and 4 milk cans, which bill of sale represented the property to be free of all incumbrances, and that the seller was the owner of the property transferred. Both writings were placed in escrow with a bank at Merrill, the bill of sale to be delivered to plaintiffs when they had paid the promissory notes made and delivered to Johns for the purchase price of the dairy herd. Immediately following this transaction, Johns indorsed and transferred the above-mentioned notes to the Montague Banking Company, in satisfaction of his own notes held by that company, and which had been secured by chattel mortgage upon the cattle sold by Johns to plaintiffs.

The representatives of the bank testified that, at the time Johns shipped the cattle from California to Oregon, they authorized him to sell the cattle; that the bank had confirmed the sale made by Johns to the plaintiffs, and that the sale was made with their permission; that they had no lien against the cattle on account of Johns' obligations; and that the notes for which the cattle were held as security prior to their sale to plaintiffs had been paid by Johns.

Of course, under many conditions the existence of an incumbrance on property constitutes ground for the rescission of a sale thereof, or for damages. But the evidence contained in this record does not disclose that kind of a case.

Were we to concede that Johns deceived the plaintiffs in the matter of his ownership of the cattle, there is no testimony showing or tending to show that the plaintiffs sustained any injury thereby. When this suit was instituted, the cattle belonged to the plaintiffs, subject only to the contract and obligations entered into by themselves.

It is a well-established rule of law that--

"Fraud without resulting in pecuniary damage is not a ground for the exercise of remediable jurisdiction, equitable or legal." 2 Pomeroy's Equity Jurisprudence (3d Ed.) § 898.

Without injury there is no basis for a damage suit. The oft-expressed formula that a litigant cannot recover damages unless he has suffered some injury was approved by this court in Martin v. Moreland, 93 Or. 61, 174 P. 722, 180 P. 933.

"The rule is often stated that five things are essential elements of a fraud or deceit sufficient to warrant

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