Wellens v. Beck
| Citation | 103 N.W.2d 281 |
| Decision Date | 26 May 1960 |
| Docket Number | No. 7874.,7874. |
| Parties | Ray WELLENS and Olga Wellens, Plaintiffs and Appellants, v. Clarence BECK, Al Georgeson, and Oscar Oakland, individually and/or as partners in any combination, doing business as Wellens Auto Supply, Defendants and Respondents. |
| Court | United States State Supreme Court of North Dakota |
Edward J. Murphy, Fargo, and Magnus Wefald, Hawley, Minn., for plaintiffs and appellants.
C. J. Serkland and George A. Soule, Fargo, for respondent Martha Dennis.
J. E. Hendrickson, Fargo, for First Nat. Bank & Trust Co. of Fargo, receiver, and for Oscar Oakland, respondent.
John E. Rilling, Fargo, for Clarence Beck, defendant and respondent.
This is an appeal from a judgment of the district court of Cass County. This case was before this court on a prior occasion. Wellens v. Beck et al., N.D., 84 N.W.2d 345. A complete and detailed statement of facts is set forth in the decision on the former appeal, and a mere outline of the facts will be set forth herein.
The plaintiffs and appellants had sold an automotive parts business to one Beck and one Georgeson and, as a part of the transaction, had taken notes from Beck and Georgeson in payment of the greater portion of the purchase price, together with a mortgage on the furniture, fixtures, equipment, stocks and credits of the business to secure such notes.
One of the partners soon left the business and Oakland was taken into the partnership. After a short time, the second of the original purchasers stepped out. Defendant Oakland thereupon assumed the full balance due on the promissory notes and chattel mortgage given to the Wellenses in this transaction. Within a short time after Oakland had become the sole owner of the business, the appellants Wellens took possession of the business and conducted it as their own, barring Oakland from the premises.
Thereupon an action was commenced by the appellants to foreclose the mortgage covering the assets of the business. The judgment of the trial court after the first trial was adverse to the appellants as mortgagees, and an appeal was taken to this court. On such appeal, this court held that the appellants, as mortgagees, having taken possession of the mortgaged property and having exercised dominion over it inconsistent with the rights of the mortgagors, were guilty of conversion of such property and, because of such conversion, they as mortgagees had lost their mortgage lien.
On such former appeal this court further held that, although the respondent Oakland had been induced to enter into the contract with the appellants as mortgagees by fraud, he had waived his right to recover for the deception when, after full knowledge of the mortgagees' fraud, he had entered into a new agreement with them regarding the same transaction. The respondent, by such further dealing with the appellants after knowledge of their fraud, had waived his right to a return of the consideration which he had paid on the fraudulent transaction and had waived all damages which he suffered by reason of the appellants' fraud.
In addition to holding the appellants' mortgage void as to Oakland because of their conversion of the property, this court held that the appellants' mortgage was void as to creditors of Oakland or the prior mortgagors for obligations incurred in the operation of the business. A mortgage held by the plaintiff in intervention, Martha Dennis, which had been given to secure advances made by her to the original purchasers, which advances had been credited as down-payments on the purchase price, was also declared void by this court.
This court, on such former appeal, remanded the case to the district court for the purpose of taking testimony relative to the value of the property converted by the appellants. On such remand, the trial court held that this was the only issue before the court. After hearing, a judgment was entered for $29,856.94, in favor of Oakland and against the appellants herein. This judgment included $8,300 for furniture, fixtures, and equipment and $15,000 for inventory and interest and costs. After entry of such judgment, a receiver was appointed to protect the interests of the various creditors of Oakland and the prior mortgagors.
The plaintiffs have appealed from such judgment and, on such appeal, raise two main issues:
1. Are the appellants entitled to set off the amount which is owing to them by the respondent Oakland, on the notes he has assumed to pay, against Oakland's claim for conversion against the appellants, for the value of the property converted, which has been reduced to judgment; in other words, may the appellants set off the amount which they have coming from Oakland on such notes against the judgment entered against them, and have judgment in their favor for the difference?
2. Was the evidence produced as to value of the property converted by the appellants sufficient to justify the trial court's findings as to the value of such property, for which judgment has been entered in favor of the respondent Oakland?
An additional issue was raised on oral argument with reference to the validity of an order of the district court made more than two months after the appeal in this case was perfected, which order held that the claim for exemptions which had been filed by the appellant Ray Wellens was a valid claim for exemption.
Appellants strenuously contend that their claim against the respondent Oakland was established in the first suit at $39,353.33. They further contend that, since Oakland owes them an amount greater than the amount which they owe him for conversion of the mortgaged property, they should be entitled to have the amount they have coming on the notes from respondent Oakland offset against the judgment which Oakland has against them, and have judgment in their favor for the the difference. In other words, they contend that they are entitled to offset their claim of $39,353.33 against the respondent's judgment, and that judgment should be entered in their favor for the difference.
The appellants rely on Section 35-0120 of the North Dakota Revised Code of 1943, which provides that, in an action for conversion of personal property, a defendant may show in mitigation of damages the amount due on any lien to which the plaintiff's rights were subject and which was held by the defendant. However, the question of whether appellants are entitled to the benefits of the provisions of this section, and therefore entitled to set off the amount which the respondent owes them against the amount which they as appellants owe to the respondent for conversion of the property, is not before us. A careful reading of the proceedings had in the trial court clearly shows that the appellants waived any rights which they had to an offset under the statute, if such rights ever were available to them.
Our Code specifically provides that the benefits of any statute may be waived by the party entitled thereto unless such waiver would be against public policy. Sec. 1-0228, N.D.R.C.1943.
At the start of the retrial of this case, after a pretrial conference limiting the issues for trial in the district court, the trial court stated to the parties that the only issue left for determination was a claim of the respondent Oakland against the appellants Ray Wellens and Olga Wellens for conversion of the personal property; that, upon the determination of that claim, a receiver would be appointed as requested in the pleadings of the creditors of Oakland, and such receiver would then collect and administer the amount of damages determined to be due Oakland from the Wellenses; and that, if a receiver were appointed, he would receive and determine the claims of creditors. Whether the trial court's suggestion for proposed proceedings was proper is not now important, for immediately upon such suggestion by the trial court the attorney for the appellants stated:
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