Powell v. Gagnon

Gilfillan, C. J. Action on two promissory notes. The answer alleged as a defense that the. notes were secured by a chattel mortgage, and that the plaintiff, who was the assignee of the notes and mortgage, took possession of the mortgaged property, and converted it to his own use, and thereby elected to and did accept the property in payment of the debt. On the trial it appeared that, after default in the condition of the mortgage, plaintiff took possession of the property, and attempted to foreclose under the power contained in [236] the mortgage, and at the sale bid in .the property himself, and continued his possession. Defendant claims that the sale was void because of defects in the notice and in its service. A mortgagee in a chattel mortgage is the holder of the legal title, ■which he holds as security for the debt, and subject, until a valid foreclosure, to the right of the mortgagor to redeem, and, unless the mortgage otherwise stipulate, the mortgagee is entitled to the possession of the property. Upon a conversion of the property by the mortgagee the mortgagor is entitled to recover the value of' his interest, which is the difference between the whole value of the property and the amount of the debt for which it is security. If the mortgagee sell and deliver the property to another, whether under void proceedings to foreclose or otherwise, the mortgagor may treat it as a conversion, and bring the mortgagee to account for it. It is not so, however, in an abortive attempt to foreclose, in which the mortgagee bids in the property, and still retains the possession. In such case the void foreclosure proceedings do not affect the mortgage, nor the rights of the parties in the property, nor their relations to each other. Fletcher v. Neudeck, 30 Minn. 125, (14 N. W. Rep. 513;) Cushing v. Seymour, Sabin & Co., 30 Minn. 301, (15 N. W. Rep. 249.) In such a case the mortgagor cannot treat the proceedings as having any effect at all without confirming them altogether; cannot treat them as bringing about a conversion. The mortgagee has no power to elect to accept the property in payment of the debt. There is nothing of that kind in the contract. It may be, as in Cooper v. Simpson, 41 Minn. 46, (42 N. W. Rep. 601,) was said of a ease of a pledge, that facts may exist which will estop the mortgagee to deny that he has disposed of the property, and applied the proceeds in discharge of the debt; but where there is only a simple conversion the value cannot, irrespective of its amount, be held to discharge the debt. The value might be very much less than the debt. Whenever the matter comes before a court, whether in an action to recover the debt or for the conversion, it will adjust the rights of the parties by allowing each the value of his interest in the property; the value of the mortgagee’s interest [237] being the amount of the debt, and of the mortgagor’s the excess in the value of the property above the debt. The defects in the notice and its service claimed by defendant are that it was signed by the party instead of by the constable who made the sale, as the defendant claims it ought, under Laws 1885, ch. 171, to be signed, where the mortgagee wishes or intends to bid, and that, if the notice ought to have been personally served, as required by Laws 1879, eh. 65, § 1, that was not done because the mortgagor could have been found in the town where the mortgage was filed, and it was not served on him, but posted instead. The part of Laws 1885, ch. 171, touching the matter of notice is as follows: “Provided, that such sale, if such mortgagee or pledgee shall wish to bid thereat, shall be at public auction, and upon like notice as is required in case of execution sales in this state, and shall be conducted by the sheriff, or his deputy, of the county, or by a constable of the town in which such mortgaged or pledged property or some part thereof is situated at the time of giving such notice.” Laws 1879, ch. 65, § 1, above referred to, required a written notice of ten days before the sale by serving a copy upon the mortgagor or person in possession claiming the property, if he can be found in the city, village, or town where the mortgage is filed, and, if he cannot be found therein, then by posting. As to ch. 171, we do not think it requires the notice to be signed by the officer, but it may be signed by the party whose sale it is, or by his authorized agent, or by the officer if the party make him his agent for the purpose. It is not the sale of the officer in the sense that an execution sale is. If the mortgagee or pledgee wishes to bid, the sale, when it is reached, is to be conducted by the officer designated. That is required to secure a fair sale, which might not be pnade if the party might be the purchaser when he or an agent selected by him is the seller. The question then occurs does ch. 171 dispense with the. personal notice required by the act of 1879, which personal notice is not required upon a sale on execution ? It could be inferred that it does only from the phrase, “upon like notice as is required in case of execution sales in this state.” Does this necessarily include the-man [238] ner of serving the notice, or may it be satisfied by making it contain all that is required to be in a notice of execution sale? In the case of execution sales the owner knows from the levy that his property is to be sold without unnecessary delay; that it is taken for that purpose; and he is put on inquiry to ascertain the time and place of sale. A mortgagor or pledgor has nothing but the notice to apprise him that the property is to be sold. It ought to require a pretty ■clear expression to justify holding that the legislature intended to •deprive the party of so important a means of having notice as personal service where it can be made. The purpose of notice is to secure a fair sale, and to enable the mortgagor or pledgor to protect his interest. It would be strange that in the part of ch. 171 quoted, in which to secure a fair sale and protect the interests of the mortgagor or pledgor it is provided that the sale shall be made by an officer, the legislature should also take away such right to personal notice as the previous law gave. We can see no reason for taking it away in such case, and do not think the language is such as to .require us to hold such was the intention. Where a reasonable and bona fide effort is made, without success, to find and serve notice on the party, it ought not to be held that he has not done all the statute requires, merely because a more persistent effort might have been successful. In this case as the evidence shows, the mortgagor was boarding ■on bis farm in the town where the mortgage was filed. The agent of the plaintiff went to the farm to servo the notice, and -was there informed that the mortgagor had gone to another town, and was not ■expected back till night. The agent then left, and no further effort was made to serve the notice personally. That was not a reasonable effort to make personal service; and, if no other' effort was made, :and nothing else shows that the mortgagor could not be found, then •the foreclosure proceedings were void. Order reversed. (Opinion published 53 N. W. Rep. 1148.)