Court Opinion

ID: 9712696
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:58:32.912732+00
Date Added: 2024-06-11T18:23:13.639870
License: Public Domain

Yeager, J.,'
dissenting.
I respectfully dissent from the majority opinion in this case, and so that the position for which I contend may not be misunderstood I am dealing with the subject matter in detail.
This is an action by State Securities Company, a corporation, plaintiff and appellant, to recover damages for alleged conversion of personal property from William Svoboda, Billie B. Svoboda, also known as William Svoboda, Jr., and Svoboda and Sons, a partnership, defendants and appellants.
*535There was a trial of the case to a jury. The case however was not submitted to the jury. At the conclusion of the evidence a motion made by the defendants in the alternative for a directed verdict or for judgment in their favor was sustained. From this ruling the plaintiff has appealed.
There is no substantial dispute as to what the record in this case discloses. The record of the pleadings and evidence discloses that on and prior to March 7, 1955, Arnold Tambke and Eula Tambke were the owners of certain farm machinery and other personal property; that the Thayer County Bank, Hebron, Nebraska, had a chattel mortgage on this property; that the plaintiff also had a chattel mortgage thereon which was junior to that of the Thayer County Bank; that on March 7, 1955, the mortgage of the plaintiff was in default; that both mortgages provided that in case of default the mortgagees were entitled to take possession of and dispose of the property; that without notice to the plaintiff the farm machinery described in the mortgages was sold at a farm sale at which the defendants acted as auctioneers; that the Thayer County Bank had no notice of plaintiff’s mortgage; that officers of the bank acted as clerks at the sale; and that after the sale, out of the proceeds the Thayer County Bank received sufficient to pay what was due it under its note and mortgage and the balance was paid to the Tambkes.
It is specifically pointed out that the evidence discloses without dispute that Arnold Tambke attended the sale; that there he demonstrated a tractor which was a part of the property sold; that the defendants, before the sale was made, announced and advertised that it was the property of and was being sold for the Tambkes; and that the defendants received nothing from the sale except an auctioneer’s fee. On the trial the following statement was made by the court which was acceded to by plaintiff’s attorney: “Thereupon the plaintiff, in open court, states that he concedes that the defendants *536announced at and prior to the sale of the Tambke property set forth in plaintiff’s petition, the defendants announced that the property to be sold was the property of Arnold Tambke, and that during said sale Arnold Tambke demonstrated a tractor, which was one of the articles listed, and acted about the said property as the owner thereof.”
The plaintiff contends in five assignments of error that the judgment of the district court should be reversed. On the basis of these it urges also that a judgment for damages sustained should be rendered in its favor.
Although there are five assignments of error the determination to be made by this court depends upon the question of whether or not an auctioneer under facts such as existed in the circumstances disclosed by this record shall be held as a converter and be required to respond in damages for conversion of property in an action by a mortgagee of personal property where such mortgage has been properly placed of record.
It is asserted by the plaintiff, and the assertion is correct, that by the clear weight of authority the auctioneer is liable under such circumstances as these, and the fact that the owner was present at the sale, was identified as the owner by the auctioneer, and the auctioneer acted only as the spokesman in making the sale and handled no funds, would not destroy this legal attitude and viewpoint.
It should be pointed out however that while this represents the majority rule, there is a minority view, and also that the majority rule fails to contain any expression from many jurisdictions.
If this rule is to be accepted it becomes obvious that the judgment of the district court was erroneous and the plaintiff was entitled to a directed verdict and a judgment thereon in its favor.
The rule has been neither accepted nor rejected in this jurisdiction. In Corn Land Farms Co. v. Barcus, 105 Neb. 869, 182 N. W. 487, 23 A. L. R. 119, in an obiter *537dictum statement, this rule was recognized but it had no controlling significance in the determination of any question before the court. The question before the court was that of whether or not a clerk at an auction was liable as a guarantor of title to property sold. In the opinion in recognition of the rule, it was said: “Plaintiff has proceeded upon the theory that the duties and liabilities of the clerk are the same as those of the auctioneer. * * * We do not believe that the same rule would apply to one occupying a purely clerical position as would apply to one who was conducting the sale as auctioneer.”
In the light of a firm and fixed view that the majority rule in its all-inclusive aspects is not reasonable, and is in conflict with another well-recognized rule relating to duties and liabilities of auctioneers which appears to meet the demands of reason and justice, the majority rule should be rejected for those instances wherein, as here, the auctioneer was a mere voice for the owner who was named and pointed out, and was present; where the property was at hand, observed, and inspected; where no pertinent information was in the possession of the auctioneer and withheld; and where the sole basis of holding that the auctioneer is guilty of conversion is his failure to inspect the official records to ascertain whether or not the property put up for sale was subject to a chattel mortgage.
This is in conformity with what is termed the minority rule. The minority rule is asserted in Abernathy & Long v. Wheeler, Mills & Co., 92 Ky. 320, 17 S. W. 858, 36 Am. S. R. 593; Frizzell v. Bundle & Co., 88 Tenn. 396, 12 S. W. 918, 17 Am. S. B. 908; Blackwell v. Laird & Lang, 236 Mo. App. 1217, 163 S. W. 2d 91; Cresswell v. Leftridge (Mo. App.), 194 S. W. 2d 48.
In Frizzell v. Rundle & Co., supra, it was said: “Defendants having neither actual or constructive notice of the mortgage, and having in the whole matter acted only as the innocent agent and factor of the mortgageor *538(sic), with whom the possession had been left, are not guilty of conversion, and the judgment is affirmed.”
In Abernathy & Long v. Wheeler, Mills & Co., supra, in dealing with a like situation, it was said: “In such case the warehouseman asserts no interest in the goods or right to them, hostile to the mortgagee or true owner; he simply acts as the custodian and mouthpiece of the apparent owner.” Recovery against the auctioneer was denied.
In the case of Cresswell v. Leftridge, supra, the reasoning contained in the three preceding cases was commented on with approval. From an examination of the majority and the minority rules it appears that reason supports the latter. It is difficult to see why an auctioneer should be held liable as a converter in an instance, such as the one being considered here, where he has made a full disclosure with the claimed owner present and he acts only as the mouthpiece of the owner. The effect of doing so is not to allow recourse against him for some wrong which he has committed but to arbitrarily impose a liability on him for the wrong of another. If instead of the auctioneer acting as mouthpiece the owner himsélf had acted, would any liability attach to the auctioneer? No one would say so. Then from what source comes a meritorious reason for holding the auctioneer (mouthpiece) liable?
The majority rule is not only on its face fallacious but it is also contrary to and inconsistent with a related situation pertaining to liability of auctioneers. If an auctioneer is liable to a mortgagee under circumstances such as exist in this case, why should he not be liable to a purchaser who has been damaged on account of the sale of the mortgaged property? He however ordinarily is not.
The general rule as stated in 5 Am. Jur., Auctions, § 57, p. 488, is as follows: “Accordingly, an auctioneer selling for a known principal is not responsible to the buyer for the title, in the absence of his own affirma*539tive agreement, for an auctioneer does not impliedly warrant the title of his vendor.”
The rule is stated in 7 C. J. S., Auctions and Auctioneers, § 13 b (1), p. 1269, as follows: “Generally speaking, an auctioneer is not personally liable to third persons where his principal is disclosed; but he must keep within the limits of his agency, and, like any other agent, may make himself personally liable by expressly pledging his own responsibility.”
By comparison of this rule with the majority rule with reference to the liability of an auctioneer to a mortgagee it becomes clear that the two are definitely inconsistent. Reason fails to harmonize a deprivation of relief against the man who has paid his purchase money and the grant of relief to a mortgagee. Both have an action' against the seller and in addition the mortgagee has the further right of recovery of the property itself for the purposes of foreclosure of his recorded mortgage.
The simple answer is that neither should be treated as having been wronged by the auctioneer, since in reason nothing has been done by the auctioneer to the prejudice of either of them.
In the light of the observations made herein it is my opinion that an auctioneer who in good faith and without notice of a mortgage thereon sells personal property at auction, which is in fact subject to a chattel mortgage, for a principal whose identity has been disclosed, in which property the auctioneer has no interest but acts only as a mouthpiece of the owner, is not liable to the mortgagee for any damage sustained as the result of such sale.
Messmore, J., concurs in this dissent.