Sunny South Lumber Co. v. Neimeyer Lumber Co.

JRiddick, J., (after stating' the facts.) We are of the opinion that the circuit court did not err in holding' that the Neimeyer Lumber Company had a valid lien upon the property mortgaged to it by Gates & Son. This property had been purchased by Gates & Son from Byrne & Company under an agreement that the title should remain in Byrne & Comp'any until the purchase money was fully paid. Afterwards the Neimeyer Company furnished the money to pay a considerable portion of the purchase price, and to secure itself received from Gates & Son a mortgage upon the property. Although the purchase price had not been paid in full, and the-title to the property was still in Byrne & Company, yet. Gates & Son acquired by their contract of purchase an interest in the property which they could sell or convey, and the mortgage was valid against them. Nattin v. Riley, 54 Ark. 30; McRae v. Merrifield, 48 Ark. 160; Benjamin on Sales (Bennett’s Ed.), 283. If, upon the failure of Gates & Son to make payments as required by the contract of purchase, Byrne & Company had retaken possession of the property, as. provided in the contract, the rights of Gates & Son and of the Neimeyer Company would have been ended. But. Byrne & Company did not take possession of the property, and the failure of Gates & Son to pay an instalment note at its maturity did not of itself operate as a forfeiture of their interests in the property or of the-rights of the Neimeyer Company under their mortgage.. Nattin v. Riley, 54 Ark. 30; Ames Iron Works v. Rea, 56 ib. 450. Byrne & Company did not desire to take possession of the property, but were endeavoring to aid. Gates & Son in finding a purchaser for the property. They also promised the Neimeyer & Company that, in the event Gates & Son were unable to pay off the remainder of the purchase money, the Neimeyer Company-should be permitted to pay the same, and so protect their mortgage interest. Afterwards the Sunny South Company purchased the interest of both Byrne & Com-panjr and Gates & Son in this property. While there is conflict in the evidence, we think that it is shown by a preponderance thereof that the payment of the debt of Gates & Son to the Neimeyer Company was a part of the consideration to be paid by the Sunny South Company to Gates & Son for the property. . when foreign cor-J£in?bus-state.m The appellant company, having purchased the interest of Gates & Son, and agreed as a part of the consideration thereof to pay the debt of the Neimeyer Company secured by a mortgage upon the property purchased, and having made in effect the same promise to Byrne & Company to induce them to part with their interest, cannot, after having obtained possession of the property in that way, be permitted to dispute the validity of the mortgage, on the ground that Gates & Son had forfeited their interest in the property by failing to .pay the purchase money. Neither can it do so on the ground that this mortgage was not properly acknowledged and recorded, nor for the reason that the Nei-meyer Company had failed to appoint- an agent in this state as required of foreign corporations doing business in the state. Clapp v. Halliday, 48 Ark. 258; Millington v. Hill, 47 Ark. 301; Jones, Chattel Mort. (4 Ed.), sec. 487; Jones, Real Prop. Mort. (5 Ed.), secs. 740, 741; Ghio v. Byrne, 59 Ark. 280. In addition to this, there is nothing to show that ° the.Neimeyer Company was doing business in this state at the time this debt was contracted or the mortgage executed. The mortgage was executed by Gates & Son in this state upon property here to secure a debt due the Neimeyer Company, but that does not show that such company was doing business in this state. The Nei-meyer Company was not a corporation engaged in the •business of loaning money or taking mortgages, but was engaged in the business of buying and selling lumber. Such a corporation doing business in another state, to whom a citizen of this' state becomes indebted in the course of its business there, may collect such debt in this state; or secure it by taking a mortgage, without first appointing an agent here; for the taking of a mortgage under such circumstances is not “doing business” in the state, within the meaning of our law relat'ing to foreign corporations. Florsheim Bros. Dry Goods Co. v. Lester, 60 Ark. 120; The Charter Oak Life Ins. Co. v. Sawyer, 44 Wis. 387. ofSproof oTy conversion. inability for conversion. Damages for Having concluded that the court did not err ag’ainst appenant jn bolding that the mortgage in question was a valid lien upon this property in appellant’s possession, to the extent that its value exceeded the sums paid by appellant to Byrne .& Company, we are next to consider the relief to which the plaintiff is entitled under the facts of this case. The complaint filed by appellee contained, in substance, an offer to repay to appellant the amount paid Byrne & Company, and a demand for the property. The answer of appellant was a refusal of this demand, and a specific denial of any right or interest in said property on the part of appellee. This was f rima fa.cie evidence of a conversion of such property by appellant. Ray v. Light, 34 Ark. 421; Zachary v. Pace, 9 ib. 212. As the property was afterwards consumed and de-jt jt j stroyed, while in the hands of the appellant company, it is liable to appellee for the value of the interest of appellee therein at the time of the conversion, and can be compelled to account for the same. But the circuit court not only charged appellant with the full value of said property in excess of the sums paid by Byrne & Company, and interest thereon, but also charged it with the full rental value of said property so long- as it remained in its possession. We think that this was clearly in excess of the relief to which appellee was entitled • under the pleadings. Appellant had peaceably and lawfully obtained possession of the property, and claimed it as a matter of right. As, under the decree of the’circuit court, it had a beneficial interest in the property superior to the mortgage of appellee, to the extent of the purchase money paid by it to Byrne & Company, it could be liable to appellee only for the value of the property less the value of its own interest therein. The remainder left represents the valúe of the interest in the property covered by the mortgage of appellee. No special, damages are alleged or proved, and appellant, under the facts here, cannot be compelled to account for a greater sum than this value, with interest added. Jones v. Horn, 51 Ark. 19; McClure v. Hill, 36 Ark. 268; Street v. Sinclair, 71 Ala. 110. Restating the account in accordance with these rules, we have the following result, to wit: Value of property in mortgage from Gates & Son to Neimeyer Company, afterwards sold by Byrne & Company to Sunny South Company, and converted by it... . .$ 4,575 00 Value of other property included in said mortgage, afterwards sold by Gates & Son to Sunny South Company, and converted by it... 835 00 Total...$ 5,410 00 Amount paid by Sunny South Company to Byrne & Company on 17th of July, 1888, for ’ balance due on purchase money of property...$ 3,350 00 Interest on same from July 17th to September 29,1888... 40 20 Total credits $ 3,390 20 Parties cannot assume inconsistent positions. Balaace representing- the interest in said property subject to the Neimeyer Company mortgage...$ 2,020 80 In stating this account we have taken the value of the property as found by the circuit court, except that we deduct therefrom $820, the value of the following property improperly charged against appellant: Boarding house.. $ 150 00 Tenement houses.. 250 00 Six yoke oxen. 270 00 Saw edger. 150 00 Total. $ 820 00 The mortgage to the Neimeyer Company did not include such houses, and the evidence shows that appellant did not receive or convert the other property named. It was therefore improper to charge appellant with the value of the same. The Neimeyer Company obtained a decree against ¡Gates & Son upon their mortgage debt for the sum of $5,941.00. By charging appellant with the rental value of the mortgaged property, the circuit court found that the value of all the property and rents which came into appellant’s hands, subject to the mortgag-e in question, “was more than sufficient to pay plaintiff’s judgment against Gates & Son upon the mortgage in question.” The court, therefore, gave judgment in favor of the Neimeyer Company against the Sunny South Company, appellant, for the full amount of said mortgage debts. The appellee contends that this judgment should be affirmed, for the reason that the evidence shows that the appellant company agreed to pay this debt of Gates & Son to the Neimeyer Company as a part of the consideration for the mortgaged property; that for this reason the court was justified in giving a judg-ment against appellant for the full amount of this claim to Neimeyer Company against Gates •& Son, and that the same should be upheld. But we are not called upon to decide whether, if the question was presented by the pleadings,'this mortgage of appellee might not, under the evidence, have been, as against appellant, held to be a first lien on the entire property acquired by it from Byrne & Company. No such question is before us, for no such question is presented by the pleadings. The original complaint filed by the appellee asked for no personal judgment, but distinctly recognized and admitted the right of appellant to demand the repayment of the sums paid by it to Byrne & Company, in discharge of the balance due on the purchase money, and asked permission to repay these sums to appellant, that appellee might subject the property to its mortgage. The case having been tried in the circuit court upon the allegation of appellee that the claim of appellant for the amount paid by it to Byrne & Company was paramount to its own mortgage lien, it will not now be allowed to assume the inconsistent position of disputing such claim. It is true that the appellee afterwards filed an amended complaint, setting out additional facts, and praying for a personal judgment against appellant for the full amount of its debt against Gates & Son; but this amendment was, on motion, stricken out, and the decree of the court was rendered on the original complaint. No appeal was taken from this order of the court striking out the amendment to the complaint, and that amendment is not before us, and cannot be considered. So far as the evidence in this case tends to support the cause of action set out in the original complaint, and the judgment entered thereon, we can consider it; but we cannot base our judgment upon a pleading which was stricken out and not considered by the circuit court when no appeal is taken by the party whose pleading was thus stricken out. Dooley v. Dooley, 14 Ark. 122; Clark v. Barnett, 24 Ark. 30. The evidence which tends to show that the appellant purchased the mortgaged property, and as a part consideration therefor agreed to pay the mortgage debt, tends directly to support the cause of action set out in the original complaint; for it shows that the mortgage which appellee seeks to foreclose was valid as against the appellants. The circuit court found that “the claim of the Sunny South Lumber Company is . superior and paramount to plaintiff’s to the extent of the money paid by them in the purchase of the claim of Byrne & Company, with legal interest.” We cannot disturb the finding and decree of the court' in this regard, even if we were convinced that it was wrong, for there is no pleading on the part of appellee before us which asks for a ruling contrary to this finding of the circuit court, and it must therefore stand. Mock v. Pleasants, 34 Ark. 63; Thorn v. Ingram, 25 ib. 52; Clark v. Barnett, 24 id. 30; Dooley v. Dooley, 14 id. 122. Note. — As to when a foreign corporation is engaged in doing business within a state, see note to Cone Export, etc. Co. v. Pool (S. C.), 24 L. R. A. 295. (Rep.) The evidence in this case is conflicting, and so voluminous that we have been compelled to state our conclusions in regard to it, without discussing it or setting, it out in detail. A consideration of it convinces us that substantial justice will be administered by requiring the appellant to account for the value of the property included in the mortgage and afterwards converted by it, less the credits allowed by the circuit court for money paid by appellant to Byrne & Company for said property. The balance for which appellant should account we have ascertained to be the sum of $2,020.80, with interest at six per cent, from September 29, 1888, the date of the conversion of the mortgaged property by appellant. The decree of the circuit court will be modified to this extent, and a decree in favor of appellee entered here for such sum ¡and interest.