Weatherly v. Hochfeld

• Decision Date: 08 April 1930
• Citation: 133 Or. 136,286 P. 588
• Parties: WEATHERLY v. HOCHFELD.
• Court: Oregon Supreme Court

286 P. 588

133 Or. 136

WEATHERLY v. HOCHFELD.

Supreme Court of Oregon

April 8, 1930

Department 2.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Action by Elizabeth Weatherly, formerly Elizabeth Heimbach against Nubie Hochfeld, doing business as Hochfeld Bros. Judgment for plaintiff, and defendant appeals.

Affirmed.

Stephen W. Matthieu, of Portland (John F. Logan, of Portland, on the brief), for appellant.

Elton Watkins, of Portland (Johnston Wilson, of Portland, on the brief), for respondent.

BELT J.

This is an action before the court without a jury to recover damages for conversion of certain personal property. In June, 1926 the plaintiff, who was engaged in the millinery business in the city of Portland, sold the same together with certain furniture and fixtures used in connection therewith to Clare Guttridge, Elva Guttridge and Lillian Blackwell, at an agreed price of $6,500. A payment of $2,500 was made on the purchase price and the balance, namely $4,000, was evidenced by four promissory notes to secure the payment of which a chattel mortgage in favor of the plaintiff was executed, covering the furniture and fixtures. Soon after the sale, the purchasers contemplating carrying on the millinery business, caused to be organized a corporation called "The Elizabeth Shoppe Inc.," and the property was transferred to it subject to the mortgage which the company assumed and agreed to pay. The chattel mortgage was duly recorded in Multnomah county, June 30, 1926, being the date of the sale and prior to the organization of the corporation in which these three young women were officers. The business was conducted for approximately one year, but did not prosper. On default in payment of interest on the notes, plaintiff, in March, 1927 commenced an action thereon. In December of that year, a settlement was reached whereby, upon payment to the plaintiff of $2,250, the makers of the notes were released from all personal liability. It was expressly stipulated, however, that the plaintiff mortgagee "reserves the right and privilege of collecting any balance remaining unpaid to her on account of said notes * * * by proceeding in any manner against the personal property described in the chattel mortgage or against any other parties responsible therefor." Upon such settlement, the court allowed a motion for voluntary nonsuit and dismissed the action without prejudice. About ten days prior to the action on the notes, The Elizabeth Shoppe, Inc., which had become seriously involved financially, was evicted for failure to pay rent. The furniture and fixtures, without knowledge or consent of the mortgagee, were stored with the Rudie Wilhelm Transfer Company at its warehouse in the city of Portland. While the goods were thus in storage, a creditor of The Elizabeth Shoppe, Inc., commenced an action against it, and caused the personal property in question to be attached. Judgment having been obtained, the property, on execution, was sold to the defendant for $127, which was the highest and best bid. Upon learning of this execution sale, plaintiff notified defendant of her claim of lien and made demand upon him to return the property in order that she might foreclose the chattel mortgage. Upon his refusal so to do, this action was commenced. Judgment for $1,250 was rendered in favor of the plaintiff, and defendant thereupon appealed.

Defendant makes the following contentions: (1) That plaintiff, in bringing an action on the notes, waived her security under the chattel mortgage; (2) that there was an abandonment of the mortgage security when plaintiff released the makers of the notes in consideration of a payment of $2,250; (3) that plaintiff elected to bring an action on the notes and cannot now invoke an inconsistent remedy by suing to foreclose the mortgage; (4) that plaintiff is guilty of laches and is estopped by reason of her conduct to attack defendant's rights acquired by virtue of the execution sale; (5) that defendant is an innocent purchaser for value and without actual or constructive notice of the alleged chattel mortgage lien; and (6) that defendant is subrogated to the rights of the warehouse company on its lien for storage of the furniture and fixtures, since he paid such charges to the warehouse company. It is noteworthy, however, that, in defendant's motion for nonsuit and directed verdict, the sole reason assigned was that there was a waiver of the mortgage lien. We look with disfavor upon contentions made here which were not presented to the trial court for consideration. This is a court of review.

Did plaintiff, in bringing an action on the notes, waive the security under the chattel mortgage? At common law the mortgagee had the concurrent remedies of suing in equity to foreclose the mortgage, and of bringing an action at law on the debt. 42 C.J. 84. As stated in Jones on Mortgages (8th Ed.) § 1565: "Where there is no prohibition by statute the mortgagee may pursue all his remedies concurrently or successively. He may at the same time sue the mortgagor in an action at law on the note * * * and may maintain * * * a bill in equity to foreclose the mortgage."

In what way is the common-law rule affected by our statute? Section 429, Or. L. provides: "During the pendency of an action at law for the recovery of a debt secured by any lien mentioned in section 422, a suit cannot be maintained for the foreclosure of such lien, nor thereafter, unless judgment be given in such action that the plaintiff recover such debt or some part thereof, and an execution thereon against the property of the defendant in the judgment is returned unsatisfied in whole or in part."

It is certain that no suit could be maintained to foreclose the mortgage during the pendency of the action. If the action was, however, prosecuted to judgment and execution returned unsatisfied in whole or in part, the mortgagee could then look to his specific lien. In bringing an action at law and obtaining judgment, a general lien may be acquired on all of the property of the judgment creditor not exempt from execution. By so acting, can it be said that he thereby waives his specific lien of the chattel mortgage? The whole doctrine of waiver is based upon the theory that the respective liens are essentially different and cannot coexist. Stein v. McAuley, 147 Iowa, 630, 125 N.W 336, 27 L. R. A. (N. S.) 692, 140 Am. St....