The Federal Land Bank of Spokane v. McCloud

• Decision Date: 14 February 1933
• Docket Number: 5787
• Citation: The Federal Land Bank of Spokane v. McCloud, 20 P.2d 201, 52 Idaho 694 (Idaho 1933)
• Court: Idaho Supreme Court
• Parties: THE FEDERAL LAND BANK OF SPOKANE, a Corporation, Appellant, v. A. F. MCCLOUD and LULU S. MCCLOUD, Husband and Wife, and JAS. H. SHIELDS, Jr., and JAMES GANNON, Partners Doing Business Under the Trade Name and Style of BUHL SEED & GRAIN CO., Respondents

20 P.2d 201

52 Idaho 694

THE FEDERAL LAND BANK OF SPOKANE, a Corporation, Appellant, v. A. F. MCCLOUD and LULU S. MCCLOUD, Husband and Wife, and JAS. H. SHIELDS, Jr., and JAMES GANNON, Partners Doing Business Under the Trade Name and Style of BUHL SEED & GRAIN CO., Respondents

No. 5787

Supreme Court of Idaho

February 14, 1933

VENDOR AND PURCHASER - LAND CONTRACT - CROPS, TITLE TO - CONSTRUCTION-SALES-DUTIES OF PURCHASER-CONVERSION.

1. Land contract created tenancy in common between vendor and purchaser in crops raised.

2. Contract provision reserving in vendor title to grain raised until delivery to vendor of vendor's portion of grain and other crops held not to show that vendor had no title to any part of other crops.

3. Under land contract, vendor could sue purchasers or any person to whom they attempted to sell crops to recover vendor's share of crops or value thereof, and was not limited to action for damages.

4. Seller can convey no greater title than he has, though buyer has no notice (I. C. A., sec. 62-207).

5. One buying personal property must at his peril ascertain ownership, and if he buys from one without authority to sell his taking possession constitutes conversion (I. C. A., sec 62-207).

APPEAL from the District Court of the Fourth Judicial District, for Gooding County. Hon. D. H. Sutphen, Judge.

Action to recover share of crops. Judgment for defendants. Reversed.

Reversed and remanded, with instructions. Costs awarded to appellant. Petition for rehearing denied.

Bissell & Bird and Dana E. Brinck, for Appellant.

Under the terms of the contract (Exhibit A) appellant and McCloud became co-owners of all crops produced upon the land described in such contract, because McCloud agreed to deliver to appellant a share of the crops. (Devereaux Mtg. Co v. Walker, 46 Idaho 431, 268 P. 37, 38; Albrethsen v. Clements, 48 Idaho 80, 279 P. 1097; Roberts v. Bean, 50 Idaho 680, 299 P. 1081; Nicholas v. Security State Bank, 132 Wash. 239, 231 P. 805; C. S., sec. 5328.)

One selling personal property, other than negotiable securities, can convey no greater title than he himself has; the buyer must ascertain the true ownership at his peril, and if he buy of one not having the right to sell, he is guilty of conversion, and must respond to the lawful owner. ( Klundt v. Bachtold, 110 Wash. 594, 188 P. 924; Waterford Irr. Dist. v. Turlock Irr. Dist., 50 Cal.App. 213, 194 P. 757, 759; Tuttle v. Campbell, 74 Mich. 652, 42 N.W. 384, 16 Am. St. 652; 7 R. C. L. 886, sec. 82.)

Frank L. Stephan, for Respondents Shields and Gannon, and E. D. Reynolds, for Respondents A. F. and Lulu S. McCloud.

Under the provisions of a contract of sale, where the vendee agrees to turn over to the vendor each year a portion of the crops or the proceeds thereof, such a contract is executory, and there exists no tenancy in common or co-ownership between the vendor and vendee in the crops. (Moen v. Lillestal, 5 N.D. 327, 65 N.W. 694; Lynch v. Sprague Roller Mills, 51 Wash. 535, 99 P. 578; Yakoobian v. Johnson, 102 Cal.App. 10, 282 P. 522; First Nat. Bank v. Andreas, 92 Cal.App. 62, 267 P. 937.)

Upon the sale of land as between the vendor and the purchaser, the title to the crops follows the land into the hands of the purchaser, unless there is a specific reservation of title in the vendor. (39 Cyc. 1627; Lynch v. Sprague Roller Mills, 51 Wash. 535, 99 P. 578; Wilson v. White, 161 Cal. 453, 119 P. 895.)

Failure to inquire of a mortgagor as to prior encumbrances, in the absence of a showing of bad faith, is not sufficient to charge a person with notice, nor is a showing of knowledge that a chattel was once encumbered at some time previous sufficient. (11 Cor. Jur. 522, sec. 199; Wilkerson v. Thorp, 128 Cal. 221, 60 P. 679, at 681; Brande v. A. L. Babcock Hardware Co., 35 Mont. 256, 88 P. 949, 119 Am. St. 858; Griffin v. Minnesota Sugar Co., 162 Minn. 240, 202 N.W. 445.)

Failure to record a chattel mortgage where the mortgagor retains possession of the property reinstates the common-law presumption of fraud as against subsequent bona fide purchasers. (11 Cor. Jur. 566, sec. 266; C. S., sec. 5434; Millick v. Stevens, 44 Idaho 347, 257 P. 30.)

BUDGE, C. J. Givens and Holder, JJ., and Koelsch, D. J., concur. MORGAN, J., Dissenting.

OPINION

BUDGE, C. J.

This action was brought by appellant to recover from respondents certain specific crops or their value in case delivery could not be had. From the record it appears that on October 15, 1926, appellant and respondents, A. F. McCloud and Lulu S. McCloud, entered into a written contract whereby the former agreed to sell to the latter certain real property in Gooding county, at a price fixed therein. Title to the land remained in appellant at all times herein, although provision was made in the contract whereby title might be transferred to the purchasers at the end of four years from date of the contract. The following provisions, among others, were contained in the contract:

"The parties of the second part (McClouds) . . . . further covenant and agree to turn over to the party of the first part (appellant) each year on account of said purchase price one-half (1/2) of all grain and other crops raised on all of the above described land, except for the year 1927, and for that year one-third (1/3) of said crops. The proceeds from the sale of the grain and other crops so turned over to the party of the first part shall be applied, first, to the payment of interest; and second, to the payment of the principal . . . . The parties of the second part further covenant and agree to deliver the grain and other crops hereinbefore covenanted to be turned over to the party of the first part, in the elevator or other place at Wendell, Idaho, or at some other convenient point, as the party of the first part shall direct, within a reasonable time after threshing and harvesting the same, and free from all expense or charge to the party of the first part, said grain and other crops to be delivered in the name of the party of the first part. If any of the alfalfa or clover grown on said land shall be cut for hay, the same shall be stacked on said land and divided by such agent of the party of the first part.

"It is further covenanted and agreed that, until the delivery of the grain and other crops to the party of the first part as aforesaid, during the continuance of this contract, the legal title to, and ownership and possession of all of the grain raised during each and every year shall be and remain in the party of the first part."

The McClouds went into possession and farmed the premises thereafter. Certain hay, clover seed and alfalfa seed raised upon the premises in 1930 were not divided. McCloud sold the hay and delivered the clover and alfalfa seed to respondents Shields and Gannon, at the latter's warehouse, and took a warehouse receipt therefor in his own name. Appellant thereupon commenced this action, the complaint alleging facts substantially as above set forth, and praying judgment for the division and delivery to it of its share of the crops in question, and in the event that the same could not be divided or delivered, that it have judgment against McCloud and wife for the value of its share, and further, that in the event Shields and Gannon have appropriated any portion of appellant's share of such crops, it be given judgment against them for the value of the crops so appropriated.

Shields and Gannon answered, denying generally the allegations of the complaint, and alleging affirmatively the delivery of the seed to them and the issuance of warehouse receipt therefor; the pledge of the warehouse receipt by McCloud as security for the repayment of $ 1,471.70 advanced by them to McCloud; their subsequent purchase of the seed from McCloud; and that such transactions were made in good faith and without knowledge or notice, actual or constructive, that appellant owned or claimed any interest in said seed. McCloud and wife answered denying generally the allegations of the complaint.

Upon the issues so framed, the cause was tried by the court, a jury being waived. At the close of plaintiff's evidence and at the close of all the evidence motions for nonsuit made by Shields and Gannon were denied. However, the trial court in its conclusions concluded that their motion for nonsuit should be granted. Findings of fact and conclusions of law were made and filed and judgment was entered dismissing the action, from which judgment this appeal is taken.

Appellant specifies five assignments of error. The controlling question raised thereby is whether or not the crops in question were owned by appellant and the McClouds as tenants in common under the terms of the contract above referred to. In support of its contention that a tenancy in common in the crop was created by the contract, appellant relies principally upon the case of Devereaux Mortgage Co. v. Walker, 46 Idaho 431, 268 P. 37, 38, which involved the interpretation and construction of language similar to that of the contract here in question. In that case the language was contained in a lease, creating the relationship of landlord and tenant, while the relationship of vendor and purchaser was created by the contract of sale here. The trial court held that the difference in the relationships distinguished the two cases and that the rule applied in the former was not applicable to the latter. We are unable to see any logical distinction calling for the application of a different rule, especially in view of the remarks of the court in Lynch v. Sprague Roller Mills, 51 Wash. 535, 99 P. 578, 580, namely:

" . . . . the construction which courts have uniformly placed on contracts between landlord and tenant is a safe rule to follow in construing...