Bingenheimer Mercantile Co. v. Sack

Johnson, J. Plaintiff brought an action to foreclose a chattel mortgage; in the district court of Morton county and obtained judgment. Defendant appeals. Appellant asks for a trial de novo. The complaint is in the usual form, alleging, in substance, the corporate character of the plaintiff, the execution of a chattel mortgage by the defendant on the 20th of August, 1921, covering, among other things, all of the crops grown upon the premises therein described and situated in Morton county; that the mortgage was executed to secure a note, dated the same day and due October 1, 1922 in the sum of $1,269-.05. It is then alleged that the plaintiff is still the owner and holder of the note and the mortgage; that no part of the note has been paid and that the defendant is “selling, secreting and otherwise disposing of said mortgaged property” arid that, by reason thereof, the plaintiff deems itself unsecuro and has elected to foreclose the mortgage. The complaint concludes with a prayer for judgment against the defendant for the sum of $1,269.05 with interest and costs and that the plaintiff be adjudged to have a subsisting chatted mortgage lien on the grain raised upon the premises described in the mortgage, that the. judgment — 384 — be adjudged a lien upon the property, that the property be sold under a decree of the court and the proceeds applied in payment of the sum found due the plaintiff; it is further prayed that the plaintiff be permitted to purchase tbe property and that it have execution against the defendant for any deficiency that may remain, after applying the net-proceeds of the sale on the note. To the foregoing complaint, the defendant, after admitting the corporate character of the plaintiff, answered, denying the execution of the mortgage and the indebtedness as alleged in the complaint; the defendant alleges the fact to be that the description of crops to be mortgaged was inserted in the chattel mortgage fraudulently by an agent of the plaintiff, that the mortgage was not read to the defendant before he signed it and that the defendant was unable to road the English language at the -time; the defendant alleges, in substance, that the agent of the plaintiff represented and stated to him that the mortgage, about to be executed contained no crop mortgage clause, but that such clause, was fraudulently inserted therein. The defendant further alleges that the plaintiff has no interest in the grain seized by tbe officer in the foreclosure action and that tbe defendant, on April 7, 1922, leased tbe premises described in tbe chattel mortgage to William Sack; the defendant attaches as an exhibit the lease entered into with the said William Sack. The lease is not in the record as certified to this court. The defendant further alleges that on the 26th of September, 1922, the sheriff of Morton county took the grain in controversy from his possession and from the possession of one William Sack; mad that the defendant was not at any time the owner of the wheat, oats and rye levied upon and taken by tbe sheriff as aforesaid, but that tbe same was at all times the property of William Sack and that the defendant had no right, title to or interest in the same. The answer alleges payments on the note, the amount of which ho does not know, and concludes with a prayer for an accounting between the parties and for judgment that the plaintiff has no title to or interest in the grain seized by tbe sheriff and grown upon the premises described in tbe mortgage. At the trial,'defendant testified, in substance, that a prior mortgage had been executed by him to the plaintiff and that when the mortgage sought to be foreclosed was executed, lie was told by the agent of the plaintiff that it contained the same property, but did not contain a — 385 — mortgage on the crop; tliat he was unable to read the English language; that the mortgage was not read to him and that he signed the same wholly because of the representation and understanding that the iustrunv.ut did not contain a mortgage clause covering his crops. The agent of the plaintiff at Judson testified that in October, 1921, the defendant called at the office and stated that he wished the mortgage on the crop released. The agent who procured the mortgage was not available as a witness. The record shows that he was, at the time of the trial, in the state of Louisiana. The agent at Judson also says that defendant discussed the crop mortgage with him in the spring of 1922. While defendant admits having mentioned the mortgage, he denies that ho made any reference to the alleged fact that the crops were included therein. lie testified that the first time he knew that the mortgage covered his crop was when the sheriff seized the grain in his granary on the home place. Upon this point the court found against the defendant’s contention and, after reading the testimony, we are satisfied that this finding is correct. While under the statute the case is tried anew', nevertheless, “'the judgment of the trial court upon the facts must still have weight and influence with this court, especially when based upon the testimony of witnesses who appeared in person before that court.” Christianson v. Farmers’ Warehouse Asso. 5 N. D. 438, 444, 32 L.R.A. 730, 67 N. W. 300. We are satisfied that the finding of the trial court on the issue of fraud, is-correct. The principal contention made by the defendant, both in the trial court .and on this appeal is that he at no time had any interest in tin-crop raised upon the premises described in tbe chattel mortgage; that he leased the same on the 7th of April, 1922, to his brother, William Sack; that under the lease with his brother, he had no interest in the crop raised, hut was to receive a cash rental for the use of the land. The other Sack w'as not called "and did not testify. The defendant strenuously contends that because he had leased the premises in this manner and on the foregoing terms, and because, as he testified, he did not farm the land, he- had no interest in the crop and the mortgagee likewise had no interest in the grain grown on the premises described in the mortgage and, therefore, no right to the possession thereof for the purpose of foreclosing the mortgage. The defendant further contends — 386 — that the burden of proof is upon the plaintiff to establish his right to the possession of the grain, to prove that the defendant had title thereto and that the grain was raised on the premises described in the mortgage through the efforts of the mortgagor. Numerous errors are assigned by the defendant on this appeal, but, in the-view we take of the case, it is not necessary to examine them in detail herein. Substantially all of them are involved in the contention that the court erred in refusing to permit the defendant to prove that he had no title to the crop. We are satisfied that the defense principally relied upon by the defendant is wholly unsound and that he cannot, in equity, maintain it.- He was, at the time the mortgage was executed, the owner of the premises described therein and he resided thereon; he undertook, by the instrument described in the complaint, to give his creditor a lien upon the crop which was to be raised upon the land the following year. He now insists that, because, subsequent to the execution of the mortgage, hut prior to the maturity of the note secured thereby, he voluntarily put it out of his power to raise a crop upon the land by entering into an agreement with his brother in such form that he would have no interest in the crop raised, but have a right of action as upon a debt against Ms brother for the rental, he can now say to this plaintiff, in defense to an action to foreclose the mortgage upon the grain raised upon the premises described therein, that he has no title to the grain seized, no right to the possession thereof (although, in point of fact, it is in his possession) and that the plaintiff never acquired any right to seize the same, sell it pursuant to judgment, and apply the proceeds upon the indebtedness secured by the mortgage. It is elementary that the mortgagor is estopped from asserting, in defense to an action to foreclose a mortgage lien, that he was not, at -the time the. instrument was made, the owner of the property described therein. In other words, the mortgagor, as a general rule, may not ■deny 'his own title to the property upon-which he assumes to create a mortgage lien in favor of another, who usually has relied upon such representations of ownership, whether express or implied, and changed his position to his detriment, in reliance upon the representation that ■tire mortgagor was the owner of the property. Myers v. Snyder, 96 Iowa, 107, 64 N. W. 771; Adams v. Wildes, 107 Mass. 123; First — 387 — Nat. Bank v. Fowler, 51 Wash. 638, 99 Pac. 1034, 54 Wash. 65, 102 Pac. 1038; 21 C. J. 1069; Gottschalk v. Klinger, 33 Mo. App. 410. It is presumed that the person in possession of personal property is the owner thereof. Comp. Laws 1913, § 7936, subsec. 11; Tracy v. Juanto, 103 Or. 416, 205 Pac. 822. “Possession of personal property is prima facie evidence of ownership.” Hare v. Young, 26 Idaho, 691, 146 Pac. 109; 22 C. J. 126. The grain seized by the sheriff had been raised on the premises described in the mortgage and owned by the defendant; it-was in the possession of the defendant when seized by the officer*. Hnder the principle of law* stated heretofore, the defendant is estopped from rebutting the presumption of ownership that arises from the fact that the property was in his possession. It must be borne in mind that William Sack, alleged by the defendant to be the owner of the grain, is not a party to this action, although he made a third party claim and asked leave of the court to intervene. The claim was disallowed by the sheriff and the petition for intervention was denied by the court. He does not appeal. The third party claimant is not a necessary, although a proper party to the foreclosure proceedings. German-American State Bank v. Seattle Grain Co. 89 Wash. 376, 154 Pac. 443. The third party claimant, therefore, in this case, will not be affected by this decision, insofar as it determines any question pertaining to the title to the grain in controversy as between the defendant and appellant, Sack, and the plaintiff and respondent company. We see no reason why the principle that the mortgagor, in a suit to foreclose thé mortgage, may not impeach his own title to the property described therein, should not be applied in this proceeding. When the defendant executed the chattel mortgage upon the crops to be raised on the premises described therein, he was the owner thereof and. impliedly represented to the plaintiff, when the mortgage was made, that by no act of his, so long as he was the owner of the land, would he deprive the mortgagee of the right to enforce the lien against the crops grown thereon if default occurred in the payment of the note secured by the instrument. He cannot now, in a court of equity, be heard to say that he has done that which he impliedly represented he would not do. 21 C. J. 1113, ff. The trial court found the execution of the mortgage, found against — 388 — the defendant upon the claim of fraud, found that the grain was raised upon the premises described in the mortgage, and the evidence shows that it. was so raised and taken from the possession of this defendant and another. We are satisfied, after careful consideration of the evidence, that the judgment of the trial court is correct and should be affirmed. It is so ordered. Bronson, Ch. J., and Christianson, Bikdzell, and Nuessle, JJ., •concur.