Klinkert v. Fulton Storage & Mercantile Co.

BabdeeN, J. We congratulate ourselves that we are seldom called upon to consider such a. judicial hotchpotch as is presented in this case. It will be observed from the statement that the facts are vastly complicated and involved. The confusion has been more confounded by the manner of trial. The case was begun in May, 1896. It was finally got to issue some time in the year following. The findings recite that the case was referred to a referee to take the testimony, but no order of reference or referee’s report appears in the files. They further recite that the case was finally submitted to the court oh the referee’s report and further proofs then offered, at the May term of court, 1898. No decision was then rendered, and the case slumbered until December, 1899, when the Fulton Storage & Mercantile Company obtained an order — 499 — "to show cause why certain findings then proposed should not he signed. Eor some reason not disclosed by the record, the ■court declined to entertain 'the proceeding. The case continued its peaceful slumbers until April, 1901, when findings were filed and judgment entered. .It'should be said, in justice to 'the trial court, that the delay was occasioned by the ■court’s being advised from time to time that a settlement -of the case was pending. The case was originally commenced on the supposition that plaintiffs were the owners of the property in dispute, and had a right to its immediate possession, and that the defendant August Ruhnke stood in the way of their exercising that right. We say, with some hesitation, that said defendant suffered default. At least, no answer from fiim appears in the record. Shortly after the suit was commenced, the defendants Jos. Ruhnke and the Fulton .Storage & Mercantile Company each'filed affidavits claiming the title and right to possession of said property, and were made parties defendant. • It then became a triangular fight between three mortgagees. Owing to the loss of the referee’s report, the case cannot be reviewed as to its facts, but must be considered on the findings. The statement contains a brief history of the giving of these several mortgages. Upon the facts disclosed, the court found and concluded that the claim of plaintiffs was postponed to that of Joseph Ruhnke, because their mortgage had never been renewed. The mortgages of the company were declared fraudulent and void as to creditors. The findings are novel and anomalous. They are significant both as to facts found and for failure to find facts. They find that August Ruhnke was the owner of the property and was in possession of it when the suit was commenced. 'The claimants were all mortgagees, and yet it is nowhere found that any demand on August had ever been made. There is no finding that any one of the mortgages was due. The court concluded that the plaintiffs were entitled to a special lien upon the property amounting to $1,204, and yet — 500 — there is not a single fact found to justify it as to the amount. The court found that the defendant company gave an undertaking and got possession of the property; that the value of the use of the property during the time they held it was over $10 per month, and he thereupon concluded that it and its sureties should pay $590 as damages for its use to the parties interested in this litigation. The amended judgment entered is a joint judgment in favor of plaintiffs and the defendant Joseph Nuhnke for a return of the propei’ty, with damages as stated, and, in case a return could not be had, for its value and interest, with.a provision that if a return was had, and the damages collected, it should first be turned over to Joseph Nuhnke to pay his claim, and the balance, if any, should be applied on plaintiffs’ demand. The judgment so entered was against the defendant company and its sureties. After entry of the first judgment, the appellants moved to vacate it, and to amend and modify the findings, upon some sixteen different grounds. Among other things, it was shown, and not disputed, that at some time after the suit was commenced the defendant company turned over the property in question to Joseph Nuhnke, and had not had possession since. The court denied the motion, and granted plaintiffs leave to amend the conclusions and judgment to substitute “interest on their claim as damages in place of use.” The changes made in the findings and judgment far exceeded the authority given in the order. The appellants urge these and many other objections as being fatal to the validity and integrity of the proceedings in the court below. We are unable to find any legal justification for the judgment in this case. All of the contesting parties in the court below were mortgagees. The court found that Joseph Nuhnke had the paramount claim on the property under his chattel mortgage. He failed to find whether this or either of the other mortgages was due. Assuming that they were due when this litigation was commenced, under the finding of the — 501 — court,the legal title to the property in dispute and the right to its possession were vested iu Joseph Buhnke. This is because, under the law of this state, “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.” Flanders v. Thomas, 12 Wis. 410; Holzhausen v. Parkhill, 85 Wis. 446. The mortgagor or junior mortgagees have only a right of redemption after breach of the condition, and before sale. Smith v. Coolbaugh, 21 Wis. 427; Boyd v. Beaudin, 54 Wis. 193. The mortgagee, after condition broken, has the legal title to the property, and the right to the possession thereof, against everybody; and his rights to recover against any person unlawfully converting the same in hostility to his rights as mortgagee are just as perfect as though he was the absolute owner thereof; the only difference being that, as against persons claiming under the mortgagor or his assignees, his right to damages would be limited to the ajnount due on his mortgage. Smith v. Konst, 50 Wis. 360; Lowe v. Wing, 56 Wis. 31. The defendant Joseph Buhnke having come into court asserting his legal rights, and the court having found them as stated, he was entitled to a judgment for a return of the property, as against the mercantile company, and damages for the time said defendant withheld possession thereof from him. He was not entitled to a judgment against the sureties, because they never undertook to return the property to him. Their undertaking was to the plaintiffs, and to none other. In case a return of the property could not be had, Joseph Buhnke was entitled to a judgment against the company for the amount of his debt, interest, and costs, provided said recovery could not exceed the value of said property and interest on such value from the time it was so taken by the company to the date of judgment. Smith v. Phillips, 47 Wis. 202. At this point there arises another complication. The mo — 502 — tion to modify the findings showed that, at some indefinite time after the suit was commenced, the company turned over the possession of this property to Joseph Ruhnke. The latter’s attorney admitted that he received such possession for his client “soon after this suit was commenced.” This fact was undisputed, and it became the plain duty of the court to ascertain the facts, and readjust the findings and judgment to conform to the changed conditions. Especially was this so because of the great delay in making findings, and we regard it as an abuse of discretion for the court not to have made inquiry into the matter. An additional reason why the court should have done so was because in the original judgment the company and its sureties were held responsible for the use of the property to the date of the judgment, amounting to $580. There is no legal justification for any such allowance in this ease. The party claiming the use must show that he was in a position to use it, and that he would have used it. It is only for the loss of the use of property which the party is in a situation to use and can use that the value of use is allowed. Oobbey, Replevin, § 897. There is no finding that meets this situation. Not being entitled to the use, the mortgagees’ damages would be limited, at most, to interest on the value of the property from the time it was detained; the amount of any deterioration, if any, in value, on account of any act done by the company; and the expense of replacing the property. Morris v. Baker, 5 Wis. 389; Beveridge v. Welch, 7 Wis. 465; Booth v. Ableman, 20 Wis. 603; Anderson v. Sloane, 72 Wis. 566. Upon no theory of the case, under the findings, were any of the parties entitled to the value of the use of the property as damages. The court erred in entering a joint judgment in favor of plaintiffs and the defendant Joseph Ruhnke against the company and its sureties. As already shown, the sureties were under no obligation to restore the property to JosephRuhnke. Their contract was entirely with the plaintiffs, and cannot be — 503 — enlarged or extended beyond the terms of their undertaking, and they are liable in this action only as it is found that the company has breached its obligation to the plaintiffs. In how far that has occurred can only be determined after the actual situation and condition of the property has been ascertained. Without knowing just how the matter stands, it is impossible to direct a proper judgment in this case. The order and judgments appealed from are reversed, and the cause will be remanded, with directions to the court to ascertain and find the situation and condition of the mortgaged property, whether and when the property was delivered to. the • defendant Joseph Ruhnke, and whether it had deteriorated in value by any act of the company while in its .possession. The court should take additional testimony sufficient to put it in possession of such facts as are necessary to enter a judgment that will protect the rights of all parties, on the basis of facts already found and to be found. If the court finds the property has heretofore been delivered to Joseph Ruhnke, the court should also award damages by way of interest on its value from the time the company received it until it surrendered possession. If it deteriorated while in its possession, by any act or neglect' for which it was responsible, that, also, would be a proper element of damages. The judgment should also be framed so as to protect the rights of plaintiffs, and to properly enforce the same against the company and its sureties. To just what extent the latter may be liable to plaintiffs must depend in some degree upon the exact facts found in relation to the situation-and condition of the property. The obligations of the defendant company and its sureties are to be enforced in favor of the plaintiffs, except in so far as they have been modified by the-facts found, of to be found as herein directed. The junior mortgagees have a right of redemption from the paramount mortgage, and their rights in this regard should be protected in the judgment. The case is a good one for settlement, and we — 504 — trust by tbe time tbe remitittur gets back to tbe court below tbe parties will be able to consummate that wbicb they have so long delayed. ■ By the Court. — Tbe judgments and order are reversed, and tbe cause is remanded for further proceedings as directed in tbe opinion.