German-American State Bank v. Erickson

Birdzell, J. This is an appeal from a judgment entered in the district court of Pierce county. The action is one for the recovery of specific personal property, upon which the plaintiff held a chattel mortgage, or for the value thereof, with damages for the detention. In the complaint it is alleged that the plaintiff is entitled to immediate possession of two mares under the terms of a chattel mortgage owned by — 550 — it, which was executed and delivered by one Christian Arveson, the owner of the property in question; that the plaintiff has demanded of the defendant the possession of the property, and that defendant has refused to deliver the same. The answer is in form a general denial qualified by some admissions that are immaterial upon this appeal. In addition, the answer contains a counterclaim in which the defendant claims damages by reason of the seizure by the plaintiff of one of the mares named in the mortgage, which the defendant alleged belonged to him at the time of the commencement of the action. It appears from testimony adduced upon the trial, that the mares in question were mortgaged to the plaintiff by one Christian Arveson, having previously been bought from the defendant, Erickson, and that both had been turned back to Erickson by reason of the nonpayment of the price. This gave rise to the present suit. Owing to certain rulings made upon the trial, which will be later examined, the defendant’s counsel announced that he would no longer participate in the proceedings; whereupon, after the plaintiff had made certain formal, proof, the court directed a verdict in its favor for $350. The rulings adverse to the defendant which led to his withdrawal from the trial were made during the cross-examination of the plaintiff’s witness, Christian Arveson, the mortgagor of the property in question. The witness had testified in his direct examination that he had bought the horses, and on cross-examination he said that his wife took him over to Erickson’s place, as she had the horse. It seems that Arveson and his wife took one of the mares home on that trip, and,, at a later time, Mrs. Arveson took the other one home. A crisis was reached when defendant’s counsel asked Arveson: “Now, as a matter of fact, your wife went over and bargained for those horses, didn’t she ?” The question was objected to as being immaterial, and the objection was sustained. Immediately after this ruling the following colloquy took place between the defendant’s attorney and the court: Mr. Campbell: If that is immaterial, why — as to whether he owned these horses or his wife owned these horses — then we are out of court. The Court: You don’t set that up. If you wanted to prove she was the- owner you should have set that up as a separate affirmative defense. — 551 — Ton set up the question of your own ownership; that you are the owner of the horses. Mr. Campbell: Well, your Honor, there isn’t any question. The Court: I don’t know whether there is or not; that is to be proven. Go on now with this ease; that is all we want. If they had a mortgage on these horses they would he entitled to it. Mr. Campbell: I don’t want to argue with the court; but there is only one point in this case for us. We sold these horses to Mrs. Arve-son; that this man didn’t own them at any time; that his mortgage is no mortgage upon her property, and that she turned them back to us, and, therefore, we are the owners at the time of the commencement of this action. The Court: Why didn’t you set that up ? Mr. Campbell: My view is that the denial raises the question of who owns them. The Court: They allege Christian Arveson was the owner, if you want to show he was not and Mrs. Arveson was; you have sold to her and she turned them back, why didn’t you set that up ? Mr. Campbell: We might as well. The Court: You want to try the case according to the issues that are in the pleadings, that is all we can go by. Mr. Campbell: Let the record show — • The Court: You can dictate it if you wish’. Mr. Campbell: The defendant, at this time, offers to prove and informs the court that the defense to this action upon which he relies, and which he contends is raised by the pleadings under his denial, is that the mortgagor, C. Arveson, under whose mortgage plaintiff is claiming, is not and never was the owner of the horses; that at the time of the commencement of this action this defendant was the owner of the horse; because that he had sold them to one Huida Arveson, the wife of 0. Arveson, to whom he had sold and delivered them; and that they were not sold to the mortgagor, 0, Arveson, and that Huida Arveson had returned them in settlement of the purchase price to him; which return was made subsequent to the giving of the alleged mortgage to the G'erman-American Bank. The Court: I wont pass on that part of it, you are entitled to prove — 552 — that you are tbe owner of tbe property; you have alleged that you are, you are entitled to prove that. Mr. Campbell: Our only basis of ownership is upon tbe state of facts as outlined. Tbe Court: Wbat about that offer of proof? Mr. Weber: We object to tbe offer of proof as not being witbin tbe issues raised. Tbe Court: Is that tbe only issue you are intending to raise? Mr. Campbell: That is tbe only issue outside, well, of course, I bave practically gone over that. I didn’t know about tbe amount of that debt or any of that kind, tbe giving of tbe mortgage. We didn’t know anything about it and it is so pleaded. Tbe Court: Tbe only issue you are raising now is that you want to prove that you are tbe original owners, and that you bad sold them to Huida Arveson, and that some time after Christian Arveson bad given the mortgage to tbe plaintiff, tbe mortgage that is in dispute, you claim that you made a settlement with Mrs. Arveson and that she returned tbe horses to you ? Mr. Campbell: Yes, and that he was never tbe owner of tbe property. Tbe Court: And you kept the note, you never returned tbe note? You bave produced tbe note, exhibit 8 here, didn’t you? Mr. Campbell: That the note was left in tbe bank and that after this action was commenced was returned for tbe purpose of reference to this defendant. We will show, if that is material, about tbe keeping of tbe note. The Court: What about it? Mr. Weber: Plaintiff resists tbe offer of proof on tbe ground that it is not witbin tbe issues raised by tbe pleadings. Tbe Court: Do you want to amend your pleadings ? Mr. Campbell: No, I take tbe stand our pleadings raise tbe issue. Tbe Court: You don’t want to amend? We will allow you an amendment to amend tbe pleadings to act upon whatever you claim is your defense, so that tbe matter can be properly tried. Mr. Campbell: We take the position that tbe pleadings do not need amendment and will rest on our pleadings. — 553 — The Court: All right, I will sustain the objection to the offer of proof so far as the examination of this witness is concerned. Mr. Campbell: In view of the fact of that being the sole defense upon the pleadings, we will, in view of the attitude and ruling, we will take no further participation in the proceedings. Under the pleadings in this case the allegation that Christian Arveson was the owner of the property mortgaged was made by the plaintiff, and it was a material fact to be established upon the trial unless it were admitted by the defendant. The defendant nowhere in the answer admitted the ownership of the property to have been in Christian Arve-son at any time. On the contrary, this allegation was met with a general denial. It is true that, in the defendant’s counterclaim, it was alleged that cut the time of the commencement of the action the defendant was the owner of the property in question, but this is not in any sense equivalent to an admission that at any time prior thereto Christian Arveson had been the owner. As the issues were explained in the course of the foregoing colloquy, it is clear that it would have been competent for the defendant to establish that Christian Arveson had been the owner of the mares in question. Inasmuch, however, as the trial court, in finally ruling upon the materiality of the evidence in question, limited the ruling so that it would apply only to the examination of the witness then upon the stand, the question before us is whether or not, in view of all of the circumstances, the trial court erred in thus limiting the cross-examination. We are of the opinion that the ruling excepted to, under the circumstances, constitutes reversible error. It is apparent that the court would not have made the ruling except upon the theory that the issue of ownership presented was not properly raised by the pleadings. That the court still persisted in the-erroneous theory of the issues in the case further appears from a continuation of the colloquy by way of explanation of its ruling, which was made after the plaintiff’s attorney had been directed to proceed with his proof. The court said: “The court doesn’t intimate of course, by such ruling as that, that the defendant is prevented from setting forth the defense set forth in ¶ 8 of his counterclaim, or the other defenses of his counterclaim.” In the view we take of the pleadings, the defendant had a right not only to cross-examine fully upon the question of ownership, but also to establish affirmatively the plaintiff’s — 554 — and the mortgagor’s lack of title -under the general denial, regardless of the counterclaim, and the pleadings require no amendment whatever to entitle the defendant to cross-examine fully or to introduce affirmative proof. The witness Arveson having testified affirmatively that he purchased the horses from Erickson, it is our opinion, in view of the vital character of his testimony as bearing upon the issue raised by the defendant, that a broad range of cross-examination touching the transaction, as a result of which Arveson claimed to be the owner, should have been permitted. Of course, it is not intended to hold that a suitor or his attorney may freely abandon the trial of an action whenever, in their judgment, an erroneous ruling has been made, but we are of the opinion that when, as in the case at bar, the trial court has announced an erroneous theory of the issues in a case and has ■evinced a purpose to compel a trial according to such erroneous theory, it is not incumbent upon a suitor to further participate in the proceedings unless directed so-to do by the trial judge. On the contrary, when it appears that the continuation of the trial will serve no purpose except to accentuate an erroneous theory, the prejudice of the ruling is sufficiently demonstrated to warrant another trial. Since there must be another trial of this case, it is deemed appropriate to note another error in the judgment. The record discloses that at the time the action was begun the plaintiff attempted to regain from Erickson the possession of both mares, and that the sheriff was only able to find one of them, the other, presumably, being no longer in the possession of the defendant. The one he found was left with the defendant under an arrangement which was satisfactory to the sheriff. This mare, then, may properly be considered as in the legal custody of the sheriff, acting at the instance of the plaintiff. Section 7635, Compiled Laws of 1913, provides that in case a jury finds a verdict against the defendant and the property has been delivered to the plaintiff, they must find that the plaintiff is entitled to the property, and they must also assess his damages if claimed in the complaint. Under this section, as to the mare which was seized by the sheriff, the jury would only be warranted in finding that the plaintiff was entitled to possession and the damages the defendant must pay for detention. But the judgment is in the alternative for the return of the property or its value. This is erroneous. Even if the property be considered as not in the possession — 555 — ■of tbe plaintiff, then, under the same section, paragraph 1, the jury should have been instructed to find “the plaintiff’s interest therein, since the plaintiff was only a mortgagee, and not the owner of the property.” The foregoing observations concerning the form of the judgment may or may not touch the merits of the case, depending upon the evidence that may be adduced upon a retrial going to establish the plaintiff’s interest under its mortgage; also dependent upon whether or not the judgment is so entered that the defendant will obtain credit upon the money judgment for the value of the property already in the possession of the plaintiff. There can be no doubt of the plaintiff’s right to maintain the action in the form in-which it is brought. The mortgage running to it gives it the right to take possession in case any attempt should be made to “dispose of such property.” A similar provision in a chattel mortgage was construed by this court in the case of Ellestad v. Northwestern Elevator Co. 6 N. D. 88, 69 N. W. 44, and it was held that-upon the disposition of property thus mortgaged the right of the mortgagee to take possession arose instanter, and that a mortgagee purchasing mortgaged property is chargeable with the record notice of the stipulation referred to. The case is remanded for a new trial.