Court Opinion

ID: 6616255
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:23:10.052123+00
Date Added: 2024-06-11T15:58:32.464489
License: Public Domain

Gill, J.
This is a suit by the holder of a second mortgage against the first mortgagee, wherein the former seeks to charge the latter (to the extent of the former’s debt'against the mortgagor) by reason of an alleged misappropriation of'the mortgaged goods by the defendant, first mortgagee. The cause was tried before the court, and the judge trying the same made a written finding of the facts coupled with the court’s views as to the law of the case ; and which, for the purpose of a brief and clear statement of the facts shown by the evidence, as well as the law governing the case, we here quote entire:
‘ ‘ Edgar I-Ienson and George Henson executed two chattel mortgages — one to defendant, dated March 5, 1883, the other to plaintiff, dated November 15, 1888. Both mortgages were regular and were duly recorded. The defendant advertised the mortgaged property for *199sale March 4, 1889, the day on which the plaintiff’s debt matured, and on that day sold four mules together for two hundred and fifty-five dollars. The defendant bid off the four mules at his own sale. His debt at that tinie amounted to one hundred and two dollars. He paid the excess over to the constable who cried the sale, and the constable paid this excess to the Hensons, the mortgagors. On the fifth day of March, 1889, the day after the sale, the plaintiff went to the defendant’s house and stated to defendant that he came to pay off defendant’s debt and expense and take the mules; the defendant demanded fifty dollars’ damages, in addition to his debt, which the plaintiff refused to pay. Afterwards, on March 9, 1889, the defendant sold and delivered the four mules to Henson, and took his note for the purchase money (three hundred and five dollars), secured by chattel mortgage.
“The sale made by defendant to himself under the first mortgage was invalid, and did not cut off the equity of redemption of either the plaintiff or the Hen-sons. The Hensons, however, acquiesced in what was done, and received the money paid by the defendant over and above his debt, and afterwards one of them bought the mules from the defendant. The receiving of this money by the Hensons from the defendant at his sale was equivalent to a release by them to defendant of any claim or interest in the mules, but this mortgagee’s sale did not cut of the equity of redemption of the plaintiffs, and on the day succeeding the sale, when he proposed to pay off the defendant’s claim, he had the legal right to do so. 'The refusal of the defendant to permit him to redeem without the payment of fifty dollars’ damages was wrongful, and when he afterwards, on March 9, 1889, made a sale and delivery of the mules to Henson, after denying plaintiff’s right to redeem, he became liable to plaintiff for the value of the mules over and above his debt, there being no evidence as to any *200expense legally incurred by the defendant. The mules at public sale brought two hundred and fifty-five dollars; at private sale, a few days afterwards they sold for three hundred and five dollars. There are three witnesses estimating the value of the mules at from two hundred and forty to two hundred and sixty dollars, and three witnesses estimating their value at five hundred dollars. The mules were from twelve to fifteen years old — some of them had defects. Estimating the value of the mules at three hundred and. five dollars, and defendant’s debt at one hundred and two dollars, it leaves a balance of two hundred and three dollars, for which plaintiff is entitled to judgment.
“While plaintiff might have maintained a simpler remedy under his mortgage, we are not prepared to say that the remedy sought by the petition in this case cannot be maintained.
“In Jones on Chattel Mortgages [2D. Ed. ] section 712, it is said:
“ ‘ When a court of equity has established the right to redeem, but the mortgagee has consumed or disposed of the property, so that it cannot be redeemed in kind, it may enter a personal decree' against the mortgagee for the excess of the value of the property over the amount found due on the mortgage.’
“James M. Sandusky, .Judge.”
I. Upon reading and considering the evidence, we feel entirely satisfied with the foregoing finding of facts, as well as the result reached, as shown by the judgment entered thereon. The learned judge, trying the cause, has found a legal fraud to have been done the plaintiff. The evidence fully justifies this conclusion, if not to warrant the charge of actual fraud. Thompson knew of the existence of plaintiff Moore’s claim and mortgage on the four mules. Knew that Moore was seeking and demanding payment from the Hensons, since Moore had given him written notice *201thereof by letter dated February 13, 1889 ; and, yet, in the face of these facts, Thompson, at a sale under his mortgage, on March 4, 1889, offered and sold at public sale, “iu bulk,” all four mules, and himself became the purchaser at his own sale. The evidence conclusively shows that to pay Thompson’s balance against Hensons (being only one hundred and two dollars) the sale of one (at most not more than two) of the four mules would have been sufficient, yet he sells the entire bunch at one sale, realizing nearly three times the money needed, and thereby shutting off: the plaintiff Moore’s rights in the remainder. The evidence, it is true, shows that Henson consented to this sale of all four mules “in bulk,” and the result indicates the purpose of such consent, since he was to buy from Thompson, the purchaser, the same mules, freed, as he-thought, from Moore’s mortgage. However, Hensons had no authority to consent away the rights of the subsequent (second ) mortgagee. Moore was the mortgagee of the equity of redemption in those mules, and a sale of more than was sufficient to pay the prior mortgage was an outrage on his rights, since it affected the security for his debt. The surplus of the mortgaged chattels left after paying the prior incumbrance, was pledged to secure Moore’s claim, and to the extent of his debt, was his property, and not Hensons. 2 Jones on Mort., sec. 1921; Reid v. Mullins, 43 Mo. 306; Strawbridge v. Clark, 52 Mo. 21.
II. So, too, as stated in the opinion of the circuit judge, the sale by Thompson to himself was invalid, as to Moore, the subsequent mortgagee. Jones on Chat. Mort., sec. 806. The mortgagee cannot legally become a purchaser at his own sale, unless authorized or consented to by the parties in interest.
“It matters not, in the application of this rule, that the sale was bona fide, and for a fair price. The rule is not intended to remedy an actual wrong, but is *202intended to prevent the possibility of it,” says the author last cited.
This plaintiff never consented or agreed that Thompson, the prior mortgagee, might purchase the mortgaged mules, sold at his own sale. Hence, plaintiff had still, after such sale, the- right of redemption, and he attempted to exercise that right; but it was refused by defendant, who sold the mules and appropriated the proceeds to his own use. Having then converted the mortgaged property, the defendant became liable for its value alter the payment of his own debt. He held the property, and proceeds in trust, first, for the payment of his balance of one hundred and two dollars and the remainder to be applied on the claim of this plaintiff. Jones on Chat. Mort., sec. 798; Rutherford v. Williams, 42 Mo. 34; Moore v. Ryan, 31 Mo. App. 474.
We see no reason to discuss some other questions, merely technical, raised in counsel’s brief. The judgment is clearly for the right party, and is affirmed.
All concur.