Nohrnberg v. Boley

*54 BUDGE, J. This is an action for conversion. The facts, as disclosed by the record, are as follows: On August 10, 1920, respondent entered into negotiations with defendant M. B. Boley concerning the purchase by the latter of certain lots in the city of Twin Falls standing in the name of respondent and his wife. These negotiations culminated in a written agreement on the same day which was signed by respondent and Boley, but not by their respective wives. Respondent claims that he had purchased the lots with money derived from the sale of his business property in another state, and that they were, therefore, his separate property. Appellants, on the other hand, insist that they were community property. While the purchase price named in the written agreement above mentioned was $5,000, no money was paid when the agreement was executed, but Boley and his wife gave respondent at that time two promissory notes, one for $1,000, due on or before forty days after date, and one for $1,500, due on or before November 1, 1920, to secure which they gave a mortgage on a certain alfalfa seed crop then growing on land operated by Boley, and on which appellant Moor-man held a prior chattel mortgage to secure an indebtedness *55 of $450. Respondent filed Ms mortgage for record and placed tlie notes with appellant bank for collection. On September 1, 1920, Boley and wife executed two additional notes, one for $500, due one year after date, and one for $2,000, due two years after date, and a real estate mortgage upon the lots. At the same time, respondent and his wife executed a warranty deed to the Boleys. All of these instruments, together with an abstract of title, an assignment of an insurance policy, and a satisfaction of the chattel mortgage, were placed in escrow with appellant bank, to be delivered upon payment of the first two notes above mentioned. Boley subsequently harvested and threshed the seed, caused it to be stored in a Twin Falls warehouse, insured it, and assigned the policy to respondent as his interest appeared. Before a purchaser for the seed could be found, respondent went to California. Appellant Day also had some seed for sale, and knew that Boley was anxious to sell the seed which he had in storage, and that the respondent had a chattel mortgage against it. Day testified that shortly before respondent left for California, and while they were expecting one Wade to come from Portland to buy the seed, he was advised by respondent that they should deal with Boley in regard to purchasing the latter’s seed, and that they could buy the seed from him. Day also testified that he informed respondent that there were certain labor claims and expenses against the seed. Boley testified to substantially the same state of facts, and further testified that respondent told him to go ahead and sell the seed and do the best he could with it, and that he realized that labor liens came ahead of his mortgage. Respondent denied having had these conversations. Wade subsequently reached Twin Falls, where, after some negotiations with Boley, he purchased both the Boley and Day seed and made payment to Day, who, in turn, drew a cheek for the price of the Boley seed and gave it to Maxwell, the cashier of appellant bank, at the same time telling *56 Maxwell that there were labor bills and a thresher’s bill against the seed; that appellant Moorman had a first mortgage on the seed; that he (Day) wanted the money held until the amount of the claims could be detex'mined; that he did not want to be held liable for the distribution of the money but wanted it held until it might be determined to whom the money should be paid. Day testified that his recollection was that Maxwell stated that he would comply with this request. Day’s check was cashed and a cashier’s check issued to Maxwell for the amount. Shortly thereafter different claimants came to the bank and demanded the amounts claimed to be due them, and upon one occasion Day, Moorman, the owner of the threshing-machine, and the haulers and laborers, met in the bank and insisted that the money deposited with Maxwell .be distributed. As a result of this meeting, Maxwell gave the cashier’s check to Day and refused to have anything further to do with the matter. Day delivered the check to Moorman, who distributed the money, paying off his own chattel mortgage to his assignee, and distributing the balance among the other claimants. Respondent’s theory is that all of the appellants, and Boley and his wife* are jointly liable in conversion for the amount paid as the purchase price of the seed. The cause was tried to the court sitting without a jury. The decision was in favor of respondent and against all of the appellants, for the sum of $1,764.67, which was the amount sued fox1, less $454 due on the Moorman note and secured by the prior chattel mortgage. The Boleys have not appealed from the judgment, but the First National Bank, R. J. Day and D. B. Moorman have each separately appealed therefrom. Appellants assign and rely upon numerous assignments of error, but we will consider oxxly sxxch as in our opinion are decisive of the matters involved. So far as the liability of the appellant bank is concerned, it is not contended that it appx’opriated the proceeds of the seed to its own use otherwise than by cashing the Day check and issxxing a cashier’s check for the amount. This seems, however, to have been a convenient and proper means *57 of handling the funds and protecting them from loss, the cashier’s cheek merely representing the funds which Day had placed with the cashier to be held until the various claims were adjusted. Even if the bank held respondent’s notes for collection, it would clearly be without authority to apply to their payment any moneys which were deposited with it for other specific purposes, or to apply such a deposit in any way contrary to the instructions given at the time it was made. The bank did not become.liable in conversion by receiving the Day check and failing to apply it upon respondent’s notes. On the contrary, the Day check having been given the bank with instructions to hold the money until the conflicting claims were settled, it was the bank’s duty either to carry out the instructions or to return the check to Day, which it did with his consent. The bank’s motion for non-suit should have been sustained since no cause of action in conversion was made out against the bank, and the action as against it should therefore be dismissed. Appellants contend that the evidence affirmatively shows that the chattel mortgage was not acknowledged by defendant Boley’s wife, and is therefore void. Under the provisions of C. S., sec. 6374, “no personal property of either husband or wife, that is exempt by law from execution, shall be mortgaged by either husband or wife> without the joint concurrence of both.” It is admitted in that case that both husband and wife signed the chattel mortgage. It is provided by C. S., sec. 6375, that: “A mortgage of personal property is void as against the creditors of the mortgagor and subsequent purchasers and incumbrancers of the property in good faith and for value, unless .... 2. It is acknowledged or proven, as grants of real estate . . . .” Since appellants Day and Moorman were neither creditors of Boley and his wife, nor subsequent purchasers or encumbrancers of the property in good faith, and since they had notice of the existence of the chattel mortgage, they do not come within the classes of persons against whom a chattel mortgage must be acknowledged in order to be valid. Day *58 and Moorman are therefore not in a position to raise the question of any defect in the acknowledgment of the instrument. The chattel mortgage being good as between the immediate parties, it is good also as to them. Appellants complain of the action of the court in failing to find that respondent had waived his chattel mortgage lien, if he ever had one* by consenting to the sale of the seed by the mortgagor. If respondent gave his consent to the sale of the seed by Boley, he thereby waived his mortgage lien. (5 R. C. L. 458, 459; Bellevue State Bank v. Hailey Nat. Bank, 37 Ida. 121, 215 Pac. 126; Adams v. Caldwell Milling etc. Co., 33 Ida. 677, 680, 197 Pac. 723; Knollin v. Jones, 7 Ida. 466, 63 Pac. 638; Moore v. Jacobucci, 70 Colo. 171, 197 Pac. 1015; Luther v. Lee, 62 Mont. 174, 204 Pac. 365; United States Nat. Bank v. Great Western Sugar Co., 60 Mont. 342, 199 Pac. 245; Utah-Idaho Livestock Co. v. Blackfoot City Bank, 290 Fed. 588.) This was a material issue, upon which the court should have found, and having failed to do so, the judgment must be reversed. It is next insisted that the trial court was in error in permitting respondent to amend his amended complaint by setting out the oral agreement incorporated in the written contract for the sale of the lots, and in admitting evidence to establish such oral agreement. It is apparent that all of the terms of both the written and oral agreements were complied with by the execution and placing in escrow of documents which were designed and were sufficient to effectuate the sale of the lots, so that whether the written or the oral agreement be regarded as the contract of the parties, it was fully executed. And even though one or both of these agreements may have been void, the subsequent acts of the parties pursuant to both were not invalidated thereby. In this view of the law, we perceive no reversible error in the action of the court in permitting the amendment to be made or in admitting evidence of the oral agreement. Appellants Day and Moorman insist that the amounts claimed to be due for labor and threshing should have been deducted from the proceeds of the sale of the seed, and in *59 support of this contention they rely upon the provisions of C. S., sees. 7372 and 7373) relating to farm laborers’ liens. It is admitted, however, that no claims of lien were filed. Since laborers’ liens are entirely of a statutory creation, a person claiming the benefit of such a lien must substantially comply with the statute, an essential requirement of which is that a claim of lien shall be filed within the prescribed time. (27 Cyc. 110; 17 Cal. Jur. 81, 105.) Until the expiration of the time for filing such claim a mere inchoate right to a lien exists in favor of one who has performed lienable work, which may ripen into an enforceable lien only by the timely filing of a proper claim of lien. Moreover, even though a lien claimant perfects his lien by filing the requisite claim, his remedy for its enforcement is by civil action. It is clear) therefore, that the court did not err in holding that the amounts claimed should not be deducted from the proceeds of sale of the seed. Upon a careful examination of the record, we conclude that there are a number of material issues upon which the court failed to find. The rule is well settled that a failure to find upon all of the material issues is ground for reversal. (Wood v. Broderson, 12 Ida. 190, 85 Pac. 490; Standley v. Flint, 10 Ida. 629, 79 Pac. 815; First Nat. Bank v. Williams, 2 Ida. 670, 23 Pac. 552; Carson v. Thews, 2 Ida. 176, 9 Pac. 605.) There are other errors assigned that we do not deem of sufficient importance to discuss or determine in this opinion. The judgment against appellant bank is reversed, and the court is directed to enter up an order dismissing the complaint as against it. The judgment is reversed as to appellants Day and Moorman, and the cause is remanded with instructions to the trial court to grant a new trial. Costs are awarded to appellants. William A. Lee, C. J., concurs.