Holzhausen v. Parkhill

Oetost, J. This is an action in replevin for one store ledger and a note given by one Albert Rusch to the defendant for $42.38. It was brought in a justice’s court, and the plaintiff obtained judgment, and the defendant appealed to the circuit court. The following facts appear to have been established by the evidence: The plaintiff and one Louis Horn were a firm of merchants at Thorp in the county of Clark. On the 20th day of November, 1890, they gave a chattel mortgage on their whole stock in trade, furniture, and fixtures, and one horse, to the North Star Boot & Shoe Company, to secure the payment of $500 and interest, according to certain notes, the last one of which would become due January 1, 1891. On the 13th day of December, 1890, they gave a mortgage on the same property to the Chippewa Yalley Mercantile Company, to secure the payment of $624.36, according to certain notes, the last of which would become due on the 1st day of March, 1891, bearing eight per cent, interest; and this company purchased and had assigned to them said first-mentioned mortgage, and by the consent of the mortgagors fook possession of the property and store, with the right to make sales sufficient to pay both of said mortgages. On the 15th day of December, 1890, this last-mentioned company sold out their mortgage interest in the [448] property to Mahler, Albenburg & Co., to whom the plaintiff’s firm also owed $500, and with the consent and agreement of said firm they- took full possession of the store and property, with the right to make sales sufficient to satisfy both of said mortgages as well as said $500. This sale was absolute in terms, but such was no doubt the effect of it. By the consent and agreement of said firm, all the accounts and books of account and credits of said firm were added to the securities of said mortgages, and they also passed into the possession of said last-mentioned company, to be •collected and applied on their claims. The defendant, as the agent and attornéy of said company, therefore held the said ledger and note claimed in this action by the above authority. It was also the agreement of said firm that the said company should be paid their necessary expenses in taking care of the property and in malting it available to the best advantage in the payment of the said claims upon it. On the 8th day of January, 1891, the company sold the remaining property to one Garrison for $668. This sum, added to what the company had been paid and had collected from accounts and sales and otherwise, according to the contention of' the defendant makes the sum of $1,298.88, or $1,398.88, as the whole amount the company ever received on all of said claims, when the claims themselves were over $1,500, without any of the expenses added thereto, and, with such added, the claims of the company were over $1,800. On the other hand, the plaintiff disputes this claim for expenses, and contends that the company has been paid in full for all of their liens on the property or accounts and credits qf the firm. The testimony was repeated more than once, and was uncontradicted, that there has never been any accounting or settlement between the parties of any of these matters. The special verdict of the jury is confined to these claims on the property, except that the value of the property in [449] this action is $43.88. This value of the property is the only part of the verdict that is appropriate to this action of replevin. The court rendered judgment for the plaintiff for the return of the property or for its value. The store ledger, as an account boob, together with the accounts in it, and the. note, were securities in the hands of Mahler, Albenburg & Go., by the defendant as their'agérit, the same as the goods, and they are entitled to their possession until their claims are all paid; and they contend that there is a considerable amount yet unpaid; and this cannot be ascertained without an accounting. This leads to'the commanding question in this case, and that is whether these mortgage and security matters can be tried and adjusted by the court in an action of replevin,— a strictly legal action. It is obvious that they cannot. The court. has assumed to try many issues quite foreign .to' suqh an action. It has attempted to ascertain what became of this mortgage property in the hands of three different mortgagees ; how much of it lias been sold, and what accounts have been collected; what payments have been- made; what was due upon the mortgage claims, with the interest thereon; what was paid for taxes, rent, and insurance; what were the necessary expenses and disbursements; and, finally, every material fact necessary to an exact adjustment of the whole matter. On an adjustment of these matters by the aid of a jury, the court has determined that the defendant and those he represents are no longer entitled to retain the possession of the residue of the mortgage property, and, in effect, ordered that its possession be given up to the plaintiff, as the mortgagor, as in case of the redemption of mortgage property. The matters involved in such an inquiry showupon their face that they are cognizable only in a court of equity. The parties interested should be brought in upon a proper complaint to answer and to account. The pleadings in re450 plévin afford no notice of these important issues. It is claimed by the learned counsel of the respondent that this objection was not made in the trial court, and was therefore waived. It is by no mears certain that this was not a mistrial of such' a case, and therefore fatal to the judgment; but the learned counsel of the appellant insists that this .objection was taken at the trial and argued by counsel on the defendant’s motion for the court to direct a verdict in his favor. “ The law appears to be well settled that the execution of a chattel mortgage transfers to the mortgagee a defeasible title to the mortgaged property, which becomes absolute at law by the failure to pay the debt at the stipulated time; but, notwithstanding the mortgagor is divested of all interest in the property at law, he still has an equity of redemption, which a court of equity would protect and enforce.” This extract from the opinion of Mr. Justice Cole in Flanders v. Thomas, 12 Wis. 410, expresses the whole law on the subject, and the reason of it. After default, and the mortgagee has taken possession of the property, the mortgagor has no longer any legal title to it. It follows, of course, that he cannot bring the legal action of replevin for it. ITis only remedy is to file a bill in equity to redeem. See, also, Nichols v. Webster, 2 Pin. 234. Mr. Justice Cole cites the following cases in support of this doctrine: 2 Story, Eq. Jur. § 1031; Hart v. Ten Eyck, 2 Johns. Ch. 62-99; Kemp v. Westbrook, 1 Ves. Sr. 278; Charter v. Stevens, 3 Denio, 33; Patchin v. Pierce, 12 Wend. 61; 4 Kent, Comm. 139. “ The mortgagor’s only right "is to redeem.” Smith v. Coolbaugh, 21 Wis. 427. The same doctrine is stated in a recent case of Lathrop v. Cheney, 29 Neb. 454, and many cases cited. This being the settled doctrine of this court, it is needless to cite other cases. Those cited in the appellant’s brief may be referred to. In this view of the case, the exceptions taken on the [451] trial become immaterial. Notwithstanding the judgment in this case, it is very clear that the mortgagees have not been, as yet, divested of their legal title to the property claimed in this action. By the Gourt.— The judgment of the circuit court is reversed, and the cause remanded with direction to dismiss the complaint without prejudice to the plaintiff’s right to Ijring an action in equity to redeem the property.