United States National Bank v. Great Western Sugar Co.

MR. JUSTICE REYNOLDS delivered the opinion of the court. This action was commenced by plaintiff to recover a judgment against defendant for conversion of chattel mortgaged property. Judgment was rendered in favor of plaintiff, and defendant has appealed. The case was submitted upon an agreed statement of facts, from which the following facts appear: On the fourteenth day of May, 1914, the defendant entered into a written contract with one C. H. Nelson, under the terms of which the latter promised to grow and deliver to defendant sugar beets to be raised on a certain twenty acres of land leased by him in Carbon county, Montana. Pursuant with the terms of the contract he planted the twenty acres to beets, but on the eighth day of September, 1914, by bill of sale, he sold [348] to one William Nelson his interest in his lease and beet crop, and thereupon William Nelson went into possession of the land and crop. On the sixteenth day of Septembei’, 1914, William Nelson gave to plaintiff a chattel mortgage upon the crop, which mortgage was duly acknowledged and sworn to so as to entitle it to be filed, and on the seventeenth day of September, 1914, it was filed in the office of the county clerk and recorder of Carbon county, Montana. Defendant did not have any actual notice of the transfer of the lease and crop to William Nelson nor of the giving of the mortgage from William Nelson to plaintiff. At the time of the commencement of this suit, the debt for which the mortgage was security had not been paid. After the filing of the mortgage the beet crop was delivered to defendant at Golden, Carbon county, Montana, and credit was given therefor on the books of defendant company to C. H. Nelson. Payment was made by defendant on November 15 and December 15, 1914, by its cheeks made payable to C. H. Nelson, Mrs. Edward Elge, lessor, and the Bridger State Bank, to which bank at one time C. II. Nelson had given a mortgage but which mortgage was paid. These checks were paid in due course. The mortgage to plaintiff provided that it should cover the crop, “whether in stack, bin, or elevator or aboard cars, in silo or at sugar factory.” On November 14, 1914, plaintiff wrote a letter to defendant, inquiring about the delivery of the beets, which letter was received by defendant after mailing the November check. On November 17, 1914, plaintiff wrote defendant another letter, inquiring whether or not all the beets had been delivered and settled for. The only question involved in this appeal is whether or not the facts as above mentioned sustain the judgment. [1,2] Inasmuch as defendant held merely an executory contract for the purchase of the beets in question, it had no vested interest in the beets until delivery was made to it at Golden, Carbon county, Montana. At that time a valid transfer of the crop and lease had been made to William Nelson, who had [349] gone into possession of same, and William Nelson had given the mortgage to plaintiff, and it had been duly filed. While defendant did not have any actual notice of the bill of sale to William Nelson and his mortgage to plaintiff, yet the facts above mentioned established constructive notice whereby defendant took possession of the beets subject to plaintiff’s mortgage. There is no question whatever but that a chattel mortgagee may maintain an action of conversion against the purchaser of the mortgaged property upon such purchaser appropriating the property to his own use, the mortgagee having at the time the right of possession of the property, and the obligation for which the mortgage was given being unpaid. (Harrington v. Stromberg-Mullins Co., 29 Mont. 157, 74 Pac. 413.) It is urged by appellant that the facts in this particular case do not sustain the charge of conversion, for two reasons: (1) Because plaintiff consented to the sale to defendant; and (2) because the statement of facts fails to show that plaintiff was entitled to the possession of the beets at the time of the alleged conversion. [3] Upon the first contention, this court is unable to say, as a matter of law, that the facts presented in the statement of facts show that plaintiff consented to such sale. If the plaintiff did consent to such sale, then the appropriation of the property would not be unlawful, and action of conversion could not be maintained. This is a question of fact to be submitted to the trial court. [4] In regard to the second contention, the complaint alleges that plaintiff was entitled to the possession of said crop at the time of its appropriation by defendant for the sole reason that the chattel mortgage provided that in the event the property was removed, or attempted to be removed, from the county of Carbon, plaintiff would then be entitled to immediate possession thereof, and that the beets were shipped from the premises in Carbon county to the defendant in Yellowstone county. The statement of facts, however, fails to bear out the allegations of the complaint as to this feature of the [350] case. From the statement of facts it appears that the beets were delivered to the Great Western Sugar Company at Golden, Carbon county, Montana. It fails to show that the beets were shipped from that county or were otherwise removed therefrom, and thus fails to show that plaintiff was entitled to possession thereof as pleaded, which is a necessary element of plaintiff’s case. (Harrington v. Stromberg-Mullins Co., supra.) This results in a fatal variance between the pleading and the proof. [5] Respondent suggests that, inasmuch as the chattel mortgage contains other provisions whereby plaintiff might be entitled to possession of the crop, the complaint should be deemed amended to conform with the statement of facts in these respects. The proofs referred to relate to the right of the mortgagee to take possession upon default in payment of the obligation by the mortgagor and the provision whereby the mortgagee may take possession upon a sale of the property, both of which contingencies are set forth in the statement of facts. While in some cases the complaint may be deemed amended after trial to conform to the proof, yet such rule cannot be invoked where the amendment involves a change in the issues of the case and does not conform to the theory upon which the case was tried. In this ease the suggested amendment would place plaintiff’s right to possession upon an entirely different basis than that claimed in the complaint, would leave the defendant without any answer to the amended complaint, and the record itself excludes the idea that the case was submitted upon the theory involved in such proposed amendment. Plaintiff therefore must stand upon his complaint as filed, as to an essential allegation of which there is an absolute failure of proof. For the reasons above stated, the judgment will be reversed, and the cause remanded for new trial. Reversed and remanded. Mr. Chief Justice Brantly and Associate Justices ' Cooper, Holloway and Galen concur.