Yale Oil Corporation v. Sedlacek

• Decision Date: 12 April 1935
• Docket Number: 7371.
• Parties: YALE OIL CORPORATION v. SEDLACEK et al.
• Court: Montana Supreme Court

43 P.2d 887

99 Mont. 411

YALE OIL CORPORATION v. SEDLACEK et al.

No. 7371.

Supreme Court of Montana

April 12, 1935

Appeal from District Court, Dawson County; Frank P. Leiper, Judge.

Suit by the Yale Oil Corporation against Ladislav Sedlacek and others. From a judgment granting plaintiff partial relief plaintiff appeals.

Affirmed.

P. F Leonard, of Miles City, and S. C. Ford, of Helena, for appellant.

Hildebrand & Warren, of Glendive, and Nilles, Oehlert & Nilles, of Fargo, N. D., for respondents.

MATTHEWS Justice.

For a period of years up to and including 1931, the defendant Ladislav Sedlacek was engaged in a general implement automobile, oil, and gas business at Richey Mont., which business he conducted under the name of the Richey Auto Company. During the years from 1927 to 1931, Sedlacek acted as the local dealer for the defendant Minneapolis-Moline Power Implement Company and its predecessor Minneapolis Threshing Machine Company, selling farm machinery, extras and supplies under contract in writing. These contracts for the years 1927, 1928, and 1929 are entitled "Dealer's Commission Agreement," and provide: "That the title to all machinery, extras and supplies of the Company shipped to, or held by, the Dealer, and the title to the proceeds of the same when sold, whether such proceeds be cash, notes or other property, shall be and remain in the Company, subject to no offset or counterclaim whatsoever." The contracts for the years 1930 and 1931 are entitled "Dealer's Contract," and contain the following provisions "The property in, title to and ownership of said farm implements, and of all other farm implements hereafter ordered, and of the proceeds of resales thereof, whether in cash, notes, book accounts or other proceeds, shall be and remain in the Company *** until all payments hereunder *** shall have been fully made in cash. Any notes taken by the Company shall not be deemed payment in whole or in part, but simply an evidence of debt." These contracts were not filed in the office of the county clerk; each party retained a copy.

Machinery and implements, to be sold by the Richey Auto Company in compliance with these contracts, were shipped to Richey on orders transmitted on blanks furnished by the company, which orders, when accepted, became contracts between the dealer and the company. These contracts contain the same provision respecting title as do the "Dealer's Contracts" of 1930 and 1931, quoted above, and provide, further, that, "if the Dealer suspends payment, becomes insolvent *** executes a chattel mortgage, *** said Company may, at its option, declare all indebtedness to it, due and payable forthwith and take possession of any Minneapolis-Moline goods then in his possession *** and dispose of the same." On the shipment of goods pursuant to such orders, the bill of lading was sent to the Richey bank with instruction to deliver it on the dealer's paying the draft for the amount of the freight, and executing notes forwarded to the bank by the company for the dealer's signature for the purchase price of such goods.

During the period mentioned the company issued a large number of nonnegotiable commission certificates, each providing that after payment in full of a note described is received "in cash" by the company, the company will pay a certain amount to the dealer. These certificates declare, "Provided that this certificate is issued and accepted subject to each and all of the provisions, terms and conditions set out and contained in a certain Dealer's Contract made by the *** Dealer and the undersigned for the season of, ***" giving the year in which the note of a customer of the dealer was taken.

During the period above mentioned, Sedlacek, operating as the Richey Auto Company, was agent for, and handled the products of, the plaintiff Yale Oil Corporation, and had become rather heavily indebted to it. During the latter part of 1929 and the fore part of 1930 he assigned, or attempted to assign, some thirty to forty commission certificates to the plaintiff as collateral security for his debt. The plaintiff advised the implement company of the fact, and requested information concerning the certificates, and was advised that they were not assignable; that they were payable only after the notes given in making the sale to which they referred were paid, and that even then the amount due the dealer was "at all times subject to any general debt, liability or obligation owed or to become due the company." The company reserves the right by virtue of the Dealer's Contract referred to on the face of each certificate. This information was imparted in a letter of date June 11, 1930, and was again referred to in a letter of July 18, 1930.

On September 4, 1930, counsel for the plaintiff secured from Sedlacek and his wife a mortgage on their real property, already mortgaged to the First National Bank of Richey, and a mortgage on all the fixtures, furniture, tools, and appliances used in their business.

On September 23, 1930, the credit manager of the plaintiff corporation secured from Sedlacek two chattel mortgages covering the stock of machinery, implements, and supplies. These mortgages were filed with the county clerk. All of the above mortgages were given as security for the payment of a demand note for $5,307.05.

On or about June 1, 1931, the defendant Minneapolis-Moline Power Implement Company took into its possession and disposed of all of the property described in the chattel mortgages of September 23, 1930. Thereafter, plaintiff brought suit against Ladislav Sedlacek and Hazel Sedlacek, his wife, the Minneapolis-Moline Power Implement Company, and the First State Bank of Richey, charging the implement company with conversion of the property seized, demanding an accounting between the company and Sedlacek on the commission certificates, and an accounting between the bank and Sedlacek to determine the amount due on the bank mortgage; for judgment against the implement company in the sum of $4,000, alleged to be the value of the property taken; for judgment against the Sedlaceks for the amount due the plaintiff; and for the foreclosure of all of the mortgages held by the plaintiff.

Issue was joined; the cause was tried by the court without a jury, and, on the evidence adduced, the court by an "order" entered, made elaborate and painstaking findings of fact and conclusions of law, on which it based its judgment as follows: The bank is awarded judgment against the Sedlaceks in the sum of $4,351.71. The plaintiff is awarded judgment against the Sedlaceks in the sum of $5,613.87. The court found, on competent evidence, that Sedlacek was indebted to the company in an amount in excess of the value of the property repossessed and any amount to which he might be entitled on the commission certificates held by him and by the plaintiff; that the plaintiff was not a bona fide mortgagee of the property repossessed by the company, and therefore awarded the latter its costs against the plaintiff. Foreclosure of the bank's real estate mortgage was decreed as a first mortgage lien against the property described, and plaintiff's real estate mortgage is foreclosed subject to the prior lien of the bank's mortgage. Decree of foreclosure of plaintiff's chattel mortgage on Sedlacek's fixtures, furniture, tools, and equipment was entered. Foreclosure of plaintiff's two mortgages on machinery, implements, and supplies therefor was denied. The judgment declares that "except as herein provided, the action of the plaintiff shall be, and is hereby, dismissed." Thus it appears that, as to the conversion feature of the action, the judgment is in favor of the Minneapolis-Moline Power Implement Company and against the plaintiff. From this part of the judgment the plaintiff has appealed.

The first question raised is as to the title to the property seized and disposed of...