Dunlap v. Dunseth

SMITH, P. J. The defendant was the owner of about four hundred acres of farm and pasture lands which she rented — 21 — to one McCarter for $1,000 for the year 1896. In the spring of that year the latter sowed fifty acres of the said farm in flax which was subsequently mortgaged to the plaintiff to secure a promissory note for $250 falling due in August following. When the flax had been cut and threshed the defendant demanded of McCarter that he deliver the same-to her in payment of one of the notes then due, which had been given by him to her for part of the rent of the farm. The plaintiff also demanded possession of the flax under his mortgage. McCarter delivered the flax so threshed to Mr. Hargis for the defendant. It seems that McCarter had obtained from Hargis the seed which he sowed in the previous spring and had given the latter an instrument in the nature of a mortgage on the crop to be grown therefrom to secure the price of the seed so furnished. It was also therein agreed that the product was to be delivered to Hargis at the St. Louis market price. The defendant testified however that she sold the seed to Hargis. But however this may be, it is certain Hargis got the seed and on August 7, 1896, paid defendant the full market value thereof less his commissions and the price of the seed furnished McCarter in the previous spring, which she applied on the rent. On the tenth day of August, following, the defendant and McCarter entered into a contract by which the latter turned over to the former the possession of the farm, and the corn, hay, flax and hogs thereon, in consideration of which the former paid him $800 and canceled his notes for the rent. The hogs are shown to be worth about $400. ^tfnratAaifdiord’s mmSageffore The question thus raised is, whether the plaintiff or defendant was entitled to the delivery of the possession of said flax seed at the hands of McCarter. The statute gave the defendant, in her quality of landlord, a lien upon the crops, grown by McCarter, her tenant on the farm, which attached from the beginning of the tenancy. This lien was paramount — 22 — to the plaintiff’s mortgage. 1 Jones on Liens, secs. 553-556; Selecman v. Kinnard, 55 Mo. App. 635; Toney v. Goodley, 57 Mo. App. 235; Dawson v. Coffey, 48 Mo. App. 110; White v. McAllister, 67 Mo. App. 314. The plaintiff’s insistance is, that a landlord’s lien can only'be enforced by legal process; while it is that of the defendant that where the crop is delivered by the tenant to be applied in satisfaction of the rent due, legal process in such case may be dispensed with. The ordinary rule is probably as plaintiff contends. Knox v. Hunt, 18 Mo. 243; Sanders v. Ohlhausen, 51 Mo. 163; Hulett v. Stockwell, 27 Mo. App. 328. __._. excess of ■ crop over rent- . Where a mortgagee makes sale of the mortgaged chattels without foreclosure proceeding, his conduct and fairness in making the sale is always open to investigation by the mortgagor, and no reason is seen why this just rule may not apply as between the landlord and the mortgagee of the tenant in a case like this where the tenant pays the rent to the landlord by delivering to him the mortgaged crop. Nor is any reason seen why the landlord may not agree with his tenant to receive the crop in discharge of the rent. If the landlord resorted to legal proceess to enforce such lien he could thereby attain no different result than that effected by the agreement. If the crop is received of the tenant by the landlord in payment of the rent no one can complain except the tenant’s mortgagee, who would have a right to investigate such transaction; but if, as here, the crop is conceded to have been taken at its fair market value in payment of rent actually due the .landlord, then how was the mortgagee injured? The acceptance of the crop was in discharge of a paramount lien thereon. If the value of the crop to which the defendant’s paramount lién attached had exceeded in amount that of the rent then due, it is plain that the mortgagee plaintiff would have suffered injury by reason of the transaction and in an appropriate action by — 23 — the latter to redeem he would have been entitled to a decree against the defendant for such- excess. Upon principle this would seem to be so. Jones on Chat. Mort., sec. 712; Flanders v. Barstom, 18 Me. 357; Flanders v. Chamberlain, 24 Mich. 305. The conduct of the defendant in such case would have, no doubt, been a legal fraud against the rights of the plaintiff, since the former had both actual and constructive notice of the latter mortgage. Moore v. Thompson, 40 Mo. App. 195. If, as defendant’s evidence tends to show was the fact, the transaction between the defendant and McCarter,by which the latter turned over to the former the flax crop in payment of the rent, was one that was of itself complete and independent, it seems to us that the plaintiff was not entitled to recover. • — :—-.turning reneinstructfon. The defendant complains of the action of the court in refusing to give her fourth instruction, which was to the effect that if the evidence showed that the agreement of August 10, 1896, was made and entered into after she had applied the proceeds of the flax in controversy on her rent, then past due, plaintiff was not entitled to recover. The evidence adduced by her tended to prove that the transaction referred to in the defendant’s said instruction was closed on the seventh of August, while the contract under which she acquired the possession of the corn, hay and hogs was not entered into until August 10. If the two transactions were independent and distinct it is difficult to understand why the defendant was not entitled to a consideration of the ease upon the theory of her refused instruction. —; —; Hen on equity.” s' It seems to us that if, as the evidence tends to prove, the value of the corn which McCarter turned over to defendant was equal or greater than the amount of the rent due, or to become due her on said farm, then she ought to account to plaintiff for the value of the flax seed. Although she had a lien on both corn and flax seed, yet she had no right to enter — 24 — into a contract with. McCarter by which she could in effect turn over the proceeds arising from the sale of the flax seed to him when she knew that the plaintiff had a valid mortgage lien on the latter. If the value of the corn'was equal in amount to the rent then its reception had the effect to discharge her lien on the flax seed. It may be assumed, in view of what has been already said, that she had the right to enter into an agreement with her tenant by" which she could receive the crops in payment of the rent but she could not rightfully receive any excess covered hy plaintiff’s mortgage. She could not be permitted in that way to appropriate the plaintiff’s security. If the value of the corn had not been equal to the amount of her rent, she could no doubt have added so much of the flax seed as would have been required to supply the deficiency in the value of the corn. Jones on Mort., sec. 1628; Shields v. Kimbrough, 64 Ala. 504. The general rule is, that if a mortgagee has other security for his demand and another creditor has a lien upon one of the funds only, the former must resort in the first place to that security upon which no other than his debtor has any claim. As said by Lord Eldon in Aldrich v. Cooper, 8 Vesey 282-395: “But as in the ordinary case to say a person having two funds shall not by his election disappoint the party having only one fund; and equity to satisfy both will throw him who has two funds upon that which can be affected by him .only, to the intent that the only fund to which the other has access may remain clear to him.” If the corn received by defendant was sufficient to satisfy the amount of the rent due her it seems to us that, in view of the principles just stated, the defendant in equity ought to account to the plaintiff for the value of the flax received by her. The plaintiff under his mortgage acquired the equity of redemption in the flax seed. Why may he not, by his petition in the nature of a bill to redeem, have a personal decree against the defendant for the value of the flax seed, since it is seen that she has disposed of the same so — 25 — that it can not be redeemed in kind? Tbe principles upon which plaintiff can recover, if at all, are strictly equitable, and power to apply and enforce these belong exclusively to a court of equity. It is clear that if the value of the crops which the defendant’s tenant turned over to her was in excess of the amount of the rent the plaintiff can not have relief in an action at law. H the plaintiff can recover at all in this action, it is upon the theory that the receipt of the flax seed by the defendant in payment of the rent was a separate and independent transaction, and that the value of such seed was in excess of the rent. He could recover such excess, if any there was, but the evidence discloses none. Our conclusion is that there was no evidence adduced to justify the finding and judgment in the present action. The judgment will be reversed and cause remanded. All concur.