Stark v. Huber Manufacturing Co.

Dodge, J. Whether the complaint sufficiently alleges that ¡the chattel mortgage given defendant by the Baileys was such [435] a contract as is declared void by subd. 10, sec. 1770b, Stats. 1898, and whether any warranty of validity of snch mortgage is shown, may be passed, for the reason that there are presented other seemingly insuperable obstacles to the maintenance of this action. The complaint is entirely silent as to whether the debtors have made any objection to the validity of either the note or the chattel mortgage sold plaintiff by defendant. We may perhaps guess that they have not, since plaintiff makes no claim to recovery of the price he paid, as he naturally would if he had been unable to collect. Viewing the situation, then, in this light, namely, that the owners'concede the validity of the note and mortgage as against them, •the plaintiff is entitled, if invalidity of mortgage against the judgment creditor be conceded, as also defendant’s warranty of such validity, to recover only the damage which he has suffered by reason of the superior rights of such judgment creditor. If plaintiff were purchaser outright of a warranted title to the chattels, his damages would be all that he necessarily paid to clear it from any superior liens or rights (Rawle, Cov. Tit. [2d ed.] 158; Johnson v. Brice, 102 Wis. 575, 580, 78 N. W. 1086; Patterson v. Cappon, 125 Wis. 198, 203, 102 N. W. 1083), but he obtained by the mortgage only a right in the property as security for a specified amount. If he can recover the full amount of his secured debt he is in no wise damaged by the presence of other and superior liens. One holding a thousand-dollar mortgage on property salable for $10,000 is not injured by a prior mortgage of $100, for the security, after paying such superior incumbrance, is still sufficient to satisfy his rights therein. Hence a-holder of security who is obliged to pay a prior lien in order to protect his own has no right to damages against a warrantor without allegation and proof of inability to collect his own debt in full after reimbursing himself the amount paid in protection of his security. Foster v. Taggart, 54 Wis. 391, 11 N. W. 793; Beetle v. Anderson, 98 Wis. 5, 73 N. W. 560; Shaw v. Gilbert, 111 Wis. 165, 191, 194, 86 N. W. 188; Ill. T. & S. [436] Bank v. Alex. Stewart L. Co. 119 Wis. 54, 65, 94 N. W. 777. There is in this complaint no allegation either that the signers of the note axe not entirely solvent and ready to pay it,, nor that the property mortgaged is not adequate to satisfy the judgment paid off by plaintiff and also his mortgage debt. Nay, it is not even alleged that they have not been paid and satisfied. The complaint, therefore, fails to show that plaintiff has as yet suffered any loss or damage. If, however, we indulge in no assumption as to the attitude of the mortgagors,, and proceed to view plaintiff’s rights upon the letter of the complaint, -then we have, as alleged, a wholly invalid and void mortgage, conferring no lien at all. In that situation there could be neither reason nor necessity for plaintiff to discharge any prior liens or incumbrances. Such payment could not be necessary to protect his interest, for he has none. Ilis measure of damages, if he has been wholly unable to collect his debt, is the price paid by him to defendant, or, at most, the amount of the debt. Hahn v. Doolittle, 18 Wis. 196; Roehl v. Volckmann, 103 Wis. 484, 79 N. W. 755; Duecker v. Goeres, 104 Wis. 29, 36, 80 N. W. 91. We do not decide whether, under some circumstances, this amount, might be increased by expenses necessarily incurred in good faith in' attempting to defend or enforce his lien before he discovered its invalidity, for this plaintiff obviously made such discovery before he paid the amount he now seeks to recover. He cannot charge the defendant with the results of his own gratuitous and useless act in buying up or paying off any other debt of the mortgagors. No such act could have been within the contemplation of the parties as a probable result of the breach of a warranty of the validity of the mortgage. Another consideration precludes recovery as damages of the specific sum paid to discharge this judgment against the mortgagors, and that is that plaintiff cannot have lost the money so paid except by his own neglect. The complaint al [437] leges the validity of such judgment and right to levy execution thereunder upon the mortgaged property. In absence of such facts he had no need to pay it. These allegations being true, plaintiff, if compelled to pay the judgment, could have enforced it either against the debtors or against such property. He can still do so, unless, by his own neglect, he has allowed either the right or the opportunity to be lost. If so lost, of course he cannot hold defendant responsible. One in peril from breach of a warranty must exercise reasonable diligence to minimize damages. Kelley, M. & Co. v. La Crosse C. Co. 120 Wis. 84, 90, 97 N. W. 674. Another assignment of error rests upon the fact that final judgment against plaintiff was entered without notice of application therefor. While we are all of opinion that the statutes, together with Circuit Court Rule XI, sec. 1, require notice of application for judgment under such circumstances, the members of the court are equally divided, in opinion as to whether such an omission is of itself a fatal error, or merely such an irregularity in procedure that reversal need not result, unless, in some form of application to the trial court, appellant shall have made affirmatively to appear that he has suffered substantial prejudice thereby. See Douville v. Merrick, 25 Wis. 688; Bonnell v. Gray, 36 Wis. 574; Lindauer v. Clifford, 44 Wis. 597. By the Court. — Judgment affirmed.