Hutchins Hanks Coal Co. v. Walnut Land & Coal Co.

BROADDUS, P. J. The plaintiff’s action is based upon a bill of sale whereby defendant in April, 1905, sold to plaintiff certain personal property, used in mining operations, for the consideration of $500. The bill of sale contained the following clause: “The said gran [254] tor covenants that said property is free from incum-brance and that it has the lawful right to sell and dispose of the same; and that it will warrant and defend the title thereto against all claimants whatever.” Plaintiff alleges that at the time said bill of sale was executed there was a chattel mortgage on said property given by D. L. Hughes to defendant and to F. J. Tygard and H. H. Haverly to secure certain advances made and to be made by them to the said Hughes. The mortgage provides that the property shall remain in the possession of the mortgagor until default be made and that, “Upon taking possession of said property or any part thereof, either in case of default or as above provided the said parties above named or their legal representative, may proceed to sell the same, or any part thereof, at public auction, to the highest bidder for cash at Foster, Mo., in the-of-County of Bates and State of Missouri, first having given (5) five days public notice of the time, terms and place of sale, and property to be sold,” etc. The debt was not paid when due, and Haverly one of the mortgagees took possession of all the property, advertised the same for sale and sold it to himself and Hughes the mortgagor. Upon the conclusion of plaintiff’s testimony the court directed a verdict for the defendant. From the judgment plaintiff appealed. The principal question raised is whether the sale made by Haverly of the mortgaged property was valid. If not the judgment of the court must be sustained. It is a well established rule of law in this State that powers conferred in a mortgage in order to pass title to the purchaser must be strictly followed. [Stewart v. Brown, 112 Mo. 171; Schanewerk v. Hoberecht, 117 Mo. 22; Polliham v. Reveley, 181 Mo. 622.] Under this rule if the mortgage was not given to secure the separate indebtedness of each of the mortgagees the foreclosure by one of them would be invalid. “Where a mortgage is given to secure separate debts each mortgagee may [255] enforce his rights in his own name. If by the mortgage the whole property is forfeited by a single default it is forfeited to the holders of the mortgage jointly.” [Herman on Chattel Mortgages, sec. 143.] This seems to be a correct interpretation of the law. But it is insisted that the mortgage debt was not divisible, that the interests of the mortgagees were not separate. This is true and therefore under the rule Haverly had no power individually to foreclose. But it seems to us that the court in its conclusion left out of consideration one important feature of the case. Notwithstanding Haverly was not authorized in his individual capacity to foreclose the mortgage, his act was ratified by the mortgagor. When he bought in the property at the sale with the consent of Hughes the mortgagor, who joined him in the purchase, it was a waiver on the part of Hughes of any and all defects in the proceedings so far as he was concerned and he thereby lost his equity of redemption. The other mortgagees if not satisfied with the sale have their remedy agáinst Haverly or perhaps against the property itself. But so far as the property is concerned it is lost to the plaintiff. The title has failed by reason of a prior encumbrance. There is another fact to be stated which we think has a bearing in the case, viz.: Haverly testified that the debt for which he bid in the property was $420, and was owing to him, and mentioned no other. The amount of the consideration stated in the mortgage, was $500, but it was expressed that this sum was for what had been advanced and for future advances. We therefore think we are safe in saying that the whole debt was owing to Haverly. If such debt was owing to Haverly the other mortgagees had no real interest in the property and are in no position either at law or equity to complain of the foreclosure proceedings. We, believe that all parties are estopped from denying the legality of the sale. The defendant certainly is. The [256] only important issue in tbe case was whether the title had failed by reason of the foreclosure proceedings. It follows from what has been said that the cause should be reversed and remanded, and it is so ordered. All concur.