Case Name: KNUTE SAND, Respondent, v. THE ST. ANTHONY & DAKOTA ELEVATOR COMPANY, a Corporation, Appellant
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1922-12-16
Citations: 49 N.D. 502
Docket Number: 
Parties: KNUTE SAND, Respondent, v. THE ST. ANTHONY & DAKOTA ELEVATOR COMPANY, a Corporation, Appellant.
Judges: Geace and KobiksoN, JJ., concur.
Reporter: North Dakota Reports
Volume: 49
Pages: 502–522

Head Matter:
KNUTE SAND, Respondent, v. THE ST. ANTHONY & DAKOTA ELEVATOR COMPANY, a Corporation, Appellant.
(191 N. W. 955.)
Opinion filed December 16, 1922.
Rehearing denied January 16, 1923.
Harold B. Nelson, for respondent.

Opinion:
CimiSTiANSON, J.
Plaintiff brought this action to recover the value of certain wheat, rye, oa.ts, and flax alleged to have been converted by the defendant, and upon which the plaintiff had a chattel mortgage. The material facts are not in dispute. They are as follows: The grain in controversy was grown by one Elayer in 1920. The plaintiff, Sand, bad a mortgage thereon executed by Elayer to secure a promissory note in the sum of $562 dated October 14th, 1919 and payable October 1st, 1920. When the grain was threshed, and on or about October 2nd, 1920, Elayer delivered a certain quantity of wheat, oats, rye, and flax to the defendant elevator company. On October 4, 1920, the elevator company issued storage tickets, for the grain in the form as prescribed by our statute, reciting that it had received grain described in the tickets from E. W. Elayer for storage. There is no dispute as to the quantity of grain so delivered to the elevator company and for which the storage tickets were issued, nor is there any dispute as to such grain being covered by plaintiff's mortgage. On October 4th, 1920, the plaintiff, Sand, served written notice upon the defendant elevator company that he held a chattel mortgage upon such grain. On January 19, 1921, the plaintiff, Sand, caused notice of chattel mortgage foreclosure sale to be published, which notice recited that the chattel mortgage would be foreclosed by a sale of the mortgaged property on January 29, 1921, at the St. Anthony and Dakota Elevator at Fero, North Dakota. Upon the trial of this action it was stipulated that at the time such foreclosure was advertised to be held, namely, on January 29th, 1921, plaintiffs agent, advertised to conduct such sale, appeared at the elevator of the defendant elevator company where the grain was stored and demanded the delivery of such grain or the proceeds thereof and that such demand was refused. On May 13, 1921, one Anderson instituted an action against said Elayer as defendant and also instituted a garnishment proceeding ancillary thereto1 wherein the defendant elevator company was made a garnishee. While the record does not establish the fact it is stated in the briefs of both plaintiff and defendant that Sand was inter-pleaded in said garnishment action. ' On June 18, 1921, the plaintiff instituted this action against the defendant. On July 29, 1921, the defendant elevator company served its answer in the garnishment action instituted by Anderson and attached thereto duplicates of the storage tickets issued to Elayer. In such answer it was stated that shortly after the grain described in the various storage tickets was placed in the custody of the defendant elevator company, the following parties made claims thereto: One Blessum, who claimed a thresher's lien thereon, one Sand, the plaintiff in this action, who claimed a chattel mortgage thereon, and one Anderson, the plaintiff in said garnishment action, who claimed a right to have the grain sold and applied in payment of certain indebtedness owing to him by Elayer; that the defendant was unable to ascertain the respective rights of the parties; that it merely held the grain as bailee, and had no interest in the same except for its own protection. The answer further recited that the said Sand had instituted this action, and stated that the defendant made a deposit of all of the duplicate storage tickets described in the affidavit. Attached to said affidavit is a notice addressed to Anderson, plaintiff in said garnishment action, to Sand, plaintiff in this action, and their respective attorneys, and to said Blessum, the owner of the thresher's lien. The notice recites that the elevator company has deposited in the office of the clerk of the district court where said actions are both pending, "duplicates of all of the storage tickets representing all of the grain involved in each and both of said actions, and to which adverse claims are made, and that such deposit is made under § 7594, Comp. Laws, 1918." The trial court rendered judgment in favor of the plaintiff for the amount demanded and the defendant has appealed.
(1) Upon the record before us it stands undisputed that plaintiff's chattel mortgage constituted a valid first lien upon the grain in controversy. Under the express stipulations of the mortgage, the mortgagee was authorized, in case default was made in the payment of the debt secured by the mortgage, to take, remove, and sell the property described in the mortgage in the manner provided by statute. The mortgage further provided that it might "be foreclosed by a sale of such crop, when harvested, in any usual market thereof at any time in the usual manner, at the market price therefor in any such market without notice of foreclosure." At the time the grain was delivered to the defendant elevator company by the mortgagor, Elayer, a default existed and the plaintiff, Sand, was entitled to possession of the grain covered by the mortgage, upon making a demand therefor. Of course, the chattel mortgage was only a lien and defendant could receive the grain for storage or even purchase it, but the grain would be received and held subject to the lien of plaintiff's mortgage. Sanford v. Duluth & D. Elevator Co. 2 N. D. 6, 48 N. W. 434; Catlett v. Stokes, 21 S. D. 108, 110 N. W. 84; Citizens Nat. Bank v. Osborne-McMillan Elevator Co. 21 N. D. 335, 339, 131 N. W. 266. In this case it is stipulated that the agent of the plaintiff on January 29, 1921, demanded possession of the grain, and that tbis demand was refused. Proof of sncb demand and refusal prima facie established a conversion. Towne v. St. Anthony & D. Elevator Co. 8 N. D. 200, 77 N. W. 608; Marshall v. Andrews, 8 N. D. 364, 79 N. W. 851; 38 Cyc. 2031. It is true that such demand and. refusal merely constitutes prima facie evidence of conversion and the defendant might have offered evidence tending to rebut or explain the refusal. No such evidence, however was offered. So far as the record here shows there was an absolute refusal. For aught that appears, the refusal might have been based upon the ground that the defendant had issued storage tickets to Flayer and would deliver the grain only to the holder of the storage tickets. The record does not even show affirmatively when tho different adverse claims were made. No witnesses were examined upon the trial, but all the evidence was stipulated. Defendant's counsel dictated into the record the following stipulation: "It is further stipulated that some time after the grain hereinbefore described and involved in this litigation was deposited at the defendant elevator at Eero, North Dakota, various persons made claim to the same and that their claims were adverse one to the other; that from an investigation by Mr. Gxims-gard, superintendent of the defendant elevator company for said district, as to the nature and validity of said claims it was impossible for him or said defendant elevator company to determine as to which claimant or claimants were entitled to said grain or any part of tho same and that thereafter on July 29, 1921," duplicate storage tickets representing the grain were deposited with the clerk of the district court of Pierce county, etc. It will be noted that his stipulation does not state at what time the various claims were presented. The record does show that defendant was actually notified of plaintiff's claim on the fourth day of October, 1920, —the same day the storage tickets were issued. Under this state of facts we believe that the evidence established a conversion by the elevator company. The rule seems well settled that the refusal of the bailee to surrender property held by it to' one rightfully entitled thereto constitutes a conversion. See 16 C. J. 1151; 3 R. C. L. p. 131; Towne v. St. Anthony & D. Elevator Co, and Marshall v. Andrews, supra. The defendant, however, contends that inasmuch as it deposited the duplicate storage tickets, it is relieved from liability under § 7594, Comp. Laws 1913. That section reads as follows: "Whenever two or more persons make claim for the whole or any part of the same money, personal pro])- erty or effects in the possession or control of any other person as bailee or otherwise and the right of any such claimant is adverse to the right of any other claimant, or is disputed or doubtful, and the bailee, custodian, or person in control of any part of such property, money, or effects is unable to determine to whom the same rightfully belongs, or who is rightfully entitled to the possession thereof, or whenever such bailee, custodian, or person in control has notice or knowledge of any right or claim of right of any person in or to any part of such property, money, or effects adverse to the right of any other claimant therefor; or, whenever any debt, money, property, or effects owing by or in the possession or under the control of any person may be attached by garnishment or other process, and there is any dispute as to who is entitled to the same or any part thereof, in any such case the person in the possession or control of any such property, money, or effects, when an action in any form has been commenced for an account of or growing out of the same or in which the same has been attached as aforesaid, may pay such money or deliver such property or effects to the clerk of the court in which any such action having reference to said money, property, or effects, or the value thereof, may be pending, or-out of which any garnishment or other process may issue with reference thereto; or if no such suit is commenced, he may apply to the district court of the district where such property, money, or effects may be situated, and upon showing to the satisfaction of the court the existence of facts bringing him within the operation of this section, said court shall make an order designating a depositary with whom said property, money, or effects may be deposited by the applicant for such order. In either case such person in the possession or control of such property, money, or effects shall at once notify personally or by registered mail all persons of whose claims he may have notice or knowledge, having or claiming any interest, property, lien, or right in, to or upon such property, money, or effects, of such deposit; and upon giving such notice the person so depositing the same shall thereupon be relieved from further liability to any person on account of such property, money, or effects, provided, that such depositor may be required upon the application of any party interested therein to appear and make disclosure before the court, in which any such action may be pending or by whieh any order designating a depositor may be made, concerning the said property, money, debts, or effects held, controlled or owned by him. If the address of any persons having or making any claim as aforesaid cannot be ascertained, an affidavit to that effect shall be filed with the depositary, and the giving of such notice shall not be required in such cased' This statute was enacted to enable a bailee to be relieved from the embarrassing situation in which he found himself when various parties made conflicting claims to moneys, or property in his custody. See 3 R. C. L. § 54, pp. 132, 133. When conflicting claims are made to moneys or property in his custody, or when it comes to his knowledge or notice that any person has or claims a right thereto adverse to the bailor, or whenever the money or property is attached by garnishment or other process the statute offers the bailee a remedy by which he may be relieved from liability. If any of these conditions exist and an action has been commenced in any form involving or having reference to the money or property, he may deposit it with the clerk of the district court where the action is pending. If the conditions prescribed by statute exist and no suit is commenced, the bailee may nevertheless be relieved by making application "to the district court of the district where such property, money or effects may be situated." And "upon showing to the satisfaction of the court existence of facts bringing him within operation of the section" the court is required to "make an order designating a depositary with whom such property, money or effects may be deposited by the applicant for such order."
In our opinion the defendant in this case has not brought himself within the statute. The grain in controversy was delivered to the defendant prior to October 4th, 1920. When it received this grain it had constructive notice that it was covered by plaintiff's mortgage and on October 4th, 1920, it received actual notice of this fact. On Ianuary 29, 1921, the plaintiff made formal demand upon the defendant for the possession of the grain. Defendant refused such demand. As already stated, such demand and refusal established prima, facie a conversion of the grain on that date. Defendant took no action under § 1594, supra, until after this action had been brought, and it had been made garnishee in an action brought by .one Anderson. Then in July 1921, it .sought to invoke § 1594 by answer made in the garnishment action. In our opinion the findings of the trial court to the effect that the defendant converted the grain is in accord with the facts and evidence as stipulated upon the trial in this action.
The plaintiff offered evidence showing the market price of the grain at Fero, North Dakota, on January 29, 1921. The judgment appealed from is based upon the market value so established. This is the proper measure of damages. Comp. Laws, 1913, § 7168; Towne v. St. Anthony & D. Elevator Co. 8 N. D. 200, 208, 77 N. W. 608; Citizens Nat. Bank v. Osborne-McMillan Elevator Co. 21 N. D. 335, 131 N. W. 266; 38 Cyc. 2094. The trial court, however, awarded judgment for the costs and expenses of the foreclosure sale. In our opinion the plaintiff was not entitled to this allowance. It is undisputed that the plaintiff at no time had possession of the grain-or the storage tickets representing it, and we do not believe that the expenses incident to the attempted foreclosure sale are properly allowable, either as an element of damages or as disbursements in this action. Hence the judgment will be modified by eliminating this item, and, as so modified, it is affirmed.
Geace and KobiksoN, JJ., concur.