Degenhart v. Cartier

ME. JUSTICE MATTHEWS delivered the opinion of the court. The complaint in this action has been before this court on the -question of its sufficiency. (Degenhart v. Cartier et al., 52 Mont. 102, 157 Pac. 637.) The actiop. was brought to recover the sum of $1,012.80, with interest—it being alleged in the complaint that plaintiff had theretofore commenced an action against defendant Cartier, and caused a writ of attachment to be issued therein and placed in the hands of the sheriff for service; that the only property possessed by Cartier, and not exempt from execution, was certain livestock, of the value of $1,600, subject to a chattel mortgage to the defendant Power to secure a note for $1,000; and that, in compliance with section 5766, Eevised Codes, plaintiff deposited the amount due on the mortgage with the county treasurer, payable to Power. The complaint then alleges that before the sheriff could reach the property, and before the levy of the writ, learning of the commencement of the action, defendants caused a second "chattel mortgage for the sum of $675, made by Cartier to Power, to be filed, and thereafter, on the day following the levy, served written notice on the sheriff that Power claimed a lien on the property by virtue of the second mortgage. The complaint further alleges that the sheriff did release the property from the attachment, and thereupon the defendant Power demanded and received from the county treasurer the moneys which had been deposited, -and that Power thereupon satisfied the mortgage of record. The complaint then alleges that thereafter the defendants caused other and further encumbrances and mortgages to be given and placed on the property, and caused the said property to be sold and disposed of, and to come into the .hands of innocent purchasers; that the Cartiers are insolvent, and that - Power had kept the money so received from the [250] county treasurer. The complaint concludes with the allegation: ' “That the acts and things above mentioned as done by the defendants were wrongfully done, for the single purpose of preventing, as they did prevent, the plaintiff from proceeding with the attachment or getting back his deposit, to his damage in the sum of $1,012.80,” the amount so deposited with the county treasurer. ' This court, having determined that' the complaint did state a cause of action, remanded the cause, with direction to overrule the demurrer, and thereafter the defendant Power, and defendants Cartier 1 and wife, filed separate answers, setting up all of the transactions leading up to the commencement of this action at length. Much of this matter was irrelevant or surplusage, and was by the court stricken from the separate answers. Certain allegations in the answers, which may have been material to the issues, were also stricken; but, as these matters do not affect the conclusion herein reached, the court’s rulings thereon will not be considered. The proof substantiates the allegations of the complaint, except in certain very important particulars, which will be hereafter noted. 1. In the case of Degenhart v. Cartier, supra, it is held that, [1, 2] by depositing the amount due on a chattel mortgage in the manner provided by law, an attaching creditor does not pay the debt nor discharge the mortgage, but is subrogated to the fights of the mortgage, and that, if his attachment should fail, he still has- recourse to the property for the amount paid to the mortgagee. The opinion, written with the complaint alone before the court, holds that “the theory underlying the whole complaint is * * that the defendants could not lawfully destroy the right of recourse as against the mortgaged property for the amount so paid, thus obtained by the plaintiff; that they did destroy it .when, under the circumstances stated, Power certified of record that the chattel mortgage had been fully paid, satisfied' and discharged, and in so .doing committed a wrongful act, redressible in damages,” [251] is substantially correct. However, among tbe “circumstance's stated” in the complaint is the allegation that by their conduct the defendants caused the property to be sold and to pass into the hands of an innocent purchaser. To be an innocent purchaser, the vendee must, in good faith, pay a valuable consideration without notice of outstanding legal or equitable rights. (Tate v. Kramer, 1 Tex. Civ. App. 427, 23 S. W. 255.) The testimony of the vendee, Greenheck, clearly negatives the allegation that he was an innocent purchaser; he had been attempting to purchase the cattle for some months; he knew of the mortgage and the commencement of the attachment suit, of the deposit by plaintiff and its withdrawal by Power, and of the dismissal of the suit and the return of the cattle by Cartier, and purchased the cattle some three weeks later. The witness testified that in the meantime he had had a Conversation with Degenhart, and, while the court did not permit him, when a witness for the defense, to relate the conversation, on cross-examination as a witness for the plaintiff it developed that the witness had in that conversation said to Degenhart: “You had better hold on to the cattle, and he said that Durfee told him that Power had to give him a thousand dollars.” Degenhart, called in rebuttal, did not deny that such a conversation took place. On the former appeal, this court, speaking of the plaintiff’s right of recoupment against the property, said: \“As that right is a property right, he cannot be justly deprived of it by anyone, let alone the debtor, who has paid nothing, or .the mortgagee, to whose claim against the property he has, in legal effect, succeeded. In our opinion, therefore, to destroy that right, as the complaint alleges it was destroyed in this instance, was a wrong, whether done by all the defendants, or by Power alone, and for it recovery can be had against the guilty party.” But in order to avail himself of the rule laid down, the plaintiff must bring himself within the rule, by showing that .his right was destroyed “as the complaint [252] alleges it was destroyed,” to-wit, that, through the wrongful acts of the defendants, the property passed into the hands of an innocent purchaser. In other words, he must establish the causal connection between the wrongful acts of the defendants, or the defendant Power, and the resulting damage. As heretofore stated, plaintiff was subrogated to the rights of Powér in the mortgage; his deposit, and the subsequent receipt of the money by Power, did not operate as payment or discharge of the mortgage; and, as between plaintiff and defendant Cartier, the illegal cancellation of the mortgage had no effect whatsoever. Its only possible effect was to render a purchase of the property valid, when made in good faith by someone in ignorance of the lien against the property, and who would be entitled to rely on the record of cancellation. The uncontradicted testimony of Greenheck shows a voluntary relinquishment by plaintiff of his lien against said property, which action on the part of the plaintiff caused the loss complained of. 2. The trial court, in finding No. 12, found that the cancellation of the mortgage of record “did in fact cancel said mortgage and destroy the lien thereof, and the security of the plaintiff thereunder for his said deposit, and said act did prevent plaintiff from pursuing his remedy against the property.” This finding, in the nature of a conclusion of law, was, under the rule above quoted from the former opinion of this court, erroneous. 3. The court also, in said finding No. 12, followed the allegation of the complaint that the defendants “caused the property to be sold and to come into the hands of innocent purchasers. ’ ’ The finding is supported by no evidence whatsoever; on the contrary, the undisputed evidence conclusively rebuts any such presumption. Respondent relies on the principle that, where the consideration fails, an action for money had and received will lie; but here, there is no failure of consideration. Plaintiff received just what he paid for—a subrogation to the rights of [3] Power in the chattel mortgage, for the purpose of sub [253] jecting the property to his claim in the attachment suit. If his attachment suit failed, he had the right to subject the property to his claim for the amount of the deposit—all that he claims in this suit. (Degenhart v. Cartier, supra; Deering & Co. v. Wheeler, 76 Iowa, 496, 41 N. W. 200.) He had the property in his possession at the time of the dismissal of the attachment suit, the cattle having been turned over to him as keeper by the sheriff, and voluntarily yielded possession to Cartier. The deposit was not withdrawn by Power until some time after the demand for' the return of the cattle, and approximately at the time of the dismissal of the attachment suit, up to which time Degenhart could have withdrawn his deposit. In receiving the amount of the deposit, Power secured nothing more than he was entitled to under the chattel mortgage, and,- by doing so, in effect transferred his lien on the cattle to Degenhart. Neither the improper or wrongful satisfaction of the mortgage of record, ■ nor the filing of subsequent encumbrances, in any manner affected the right so acquired by the plaintiff. As between himself and Cartier, he could have asserted his right at any time prior to the sale, and could have done so even after the sale to Greenheck, who had knowledge of the claim against the property, and at the time of the purchase gave the plaintiff the opportunity to make himself whole. It is therefore clear that the resulting damage to the plaintiff was caused, not by the wrongful act of defendant Power, but by his own negligence and voluntary abandonment of his lien, and, having waived his right and permitted the property to be dissipated, he is now in no position to recover from Power, and thus deprive the latter of both his lien and the proceeds therefrom. The judgment is reversed and the cause remanded, with direction to dismiss the complaint. Reversed and remanded. Mr. Chief Justice Brantly and Associate Justices Holloway, Hurly and Cooper concur.