Court Opinion

ID: 4010191
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:11:33.283542+00
Date Added: 2024-06-11T07:44:42.379122
License: Public Domain

The following opinion was filed June 6, 1944:
There is a motion for rehearing by appellant Nickel who filed a brief in support of his motion.  It is such as to merit a reply.  None of the respondents has replied.  For want of a suitable reply our labors have been greatly increased.
The gravamen of the movant's brief is that the court in its opinion filed made misstatements of fact that formed the basis of its decision.  Some misstatements of fact were made but only one of them relates to the basis of the decision, and none of the others bear at all on its merits.  We stated, (1) that the chattel mortgage referred to in the opinion conferred power upon the trustee to sell at public sale the property named in the mortgage and thus implied that the mortgage conferred no power to sell at private sale.  It does confer power to sell at private sale, upon specified conditions, but as hereinafter stated, those conditions were not complied with. The movant also complains, (2) that a conclusion of law stated or implied from the closing statement of the opinion that failure to file affidavits of renewal of the chattel mortgage rendered the mortgage void.  We consider that response to these two contentions should properly be made.
(1) The mistake of fact above noted does not affect the correctness of our decision for the reasons which we will here state with some material facts that do not appear in the opinion filed.  The provision of the chattel mortgage is that in case of default the "mortgagee is hereby authorized and empowered . . . to enter into or upon any place where said mortgaged property may be, and take possession of said mortgaged property and convey it away, and after expiration of five days from the time of such seizure of said property to sell and dispose of the same, at public or private sale with or without notice in its discretion."  The mortgagee did not comply with *Page 137c 
this provision as to taking possession and removing the property, and executed the bill of sale to Salen within two days from the time the void court order pursuant to which the sale was made was signed by the circuit judge.  The statute regulating the sale of property under a chattel mortgage in force at the time the mortgage was executed, sec. 241.13 (1), Stats. 1927, provided that "no sale of any personal property taken by virtue of any chattel mortgage . . . except by consent of the mortgagor . . . shall be made before the expiration of five days from the time when the same was actually taken . . . and during such period such property shall be subject to redemption by payment of the mortgage debt."  The mortgagor did not consent to the sale to Salen, and as above stated the property was never "actually taken" by the mortgagee and was made two days after the signing by the circuit judge of the order under which the sale was made and by virtue of which Salen in the county court action for a declaratory judgment solely relied in attempting to justify the sale and under which the appellant, by adopting Salen's answer in the county court action as his own, solely attempts here to support his title to the mortgaged chattels.  Argument might be made in this connection that the mortgagor's only right in case of sale not in accordance with the statute cited is to redeem the property. This may ordinarily be so.  But it is not so where the power of sale given in the mortgage is not complied with (Herman, Chattel Mortgages, sec. 219; Roarty v. Mitchell, 7 Gray (Mass.), 243; Smith v. Provin, 4 Allen (Mass.), 516, 518;Simson v. Eckstein, 22 Cal. 580, 590; Bradley v. Chester ValleyR.R. 36 Pa. 141), and that power was not complied with here.  Nor is it so where no title passes to the purchaser, and no title passed to Salen under the circumstances here present.Vreeland v. Waddell, 93 Wis. 107, 111, 67 N.W. 51.  The trial court expressly held that under the rule of the VreelandCase the title did not pass.  And we think he was fully justified *Page 137d 
in so holding.  It was held, in effect, in Kellogg v. Malick,125 Wis. 239, 253, 103 N.W. 1116, that a mortgage sale not made in good faith, where unlawful advantage is taken, is void.  And in the Vreeland Case, supra, the sale was held void under the circumstances there present some of which are here present.  The purchaser here, as there, knew that the sale was made in violation of the statute; and here, as there, the mortgagee and the purchaser colluded together to make the sale wrongfully; here the property was sold for a grossly inadequate sum; the mortgagee represented to the circuit judge in getting the order relied upon that $1,000 was all the property was worth that he petitioned for leave to sell; while it is herein stipulated that such property was worth at least $4,000.  Salen testified in the county court trial that he examined the property enough before offering to buy so that "he knew what he was doing" and that certain specified items of it were worth in the aggregate $2,900; the president of the Davis Company testified that it was worth $10,000 and that for two items of it that he was authorized to buy for his employer he offered $3,500 to Waukesha county which under a tax deed claimed the items as fixtures.  Under all these circumstances we hold that the Salen sale was void and passed no title.  The appellant knew the circumstances of the sale to Salen and the value of the property when he bought from Salen and can claim no rights as an innocent purchaser.
Appellant claims that the village cannot attack the validity of the sale to Salen because at the time the sale was made it had no lien upon, and therefore no interest in, the personal property by reason of nonpayment of the personal property tax assessed against the Davis Company.  The latter premise is true, as the evidence does not show an execution levy on the property, although the complaint in the action in the county court alleges such levy.  But the Davis Company might make such claim, and its receiver succeeds to its rights in that *Page 137e 
behalf.  It was stipulated in this proceeding that the court should determine the validity of the purported sale to Salon.  It is by virtue of that stipulation that Nickel is bound by the court's judgment herein.  And the village, admittedly a judgment creditor of the Davis Company for the personal property taxes, is entitled to have the avails of the receiver's sale applied to payment of its claim as against Nickel who is not a creditor of the company.  It is to be noted that the $1,000 paid by Salon never came into the hands of the receiver, or into the hands of the Davis Company at all.  That money, or all but $140 of it which the mortgagee claims, is still in the hands of the Hardy-Ryan Abstract Company, the mortgagee, and whatever rights, if any, Nickel may have to that money as assignee of Salen, is not here involved.  This case as far as Nickel is concerned, only adjudges the invalidity of the sale to Salen and disposes of the funds that came into the hands of the receiver.
(2) The concluding statement of the opinion filed "And the chattel mortgage had become void for failure of the corporation to file the affidavits required by sec. 241.11, Stats., as essential to keep it valid" is erroneous as matter of law and is withdrawn.  The mortgage remains valid as between mortgagor and mortgagee, and is invalid only as against subsequent creditors who thereafter procure a lien on the property by levy under an execution or attachment, or as to subsequent purchasers in good faith.  Bank of Viroqua v. First Nat.Bank, 200 Wis. 224, 228 N.W. 139; Graham v. Perry,200 Wis. 211, 228 N.W. 135.  These cases were cited by appellant in his reply brief and our failure to note them is inexcusable, although it may be said in mitigation that the judgment in the village suit to recover the unpaid personal property taxes was entered May 7, 1941, and the sale to Salen was made November 8, 1941.  Levy on execution obviously might have been made prior to the sale to Salen, and as above stated, the village complaint in the county court action for declaratory *Page 137f 
relief alleges that it was in fact so made.  However we find in the record a certificate of the clerk of the circuit court that execution was not issued until November 14, 1941, and that return of the execution was never made.  Our error does not affect the correctness of the judgment in the instant case that Salen took no: title under the sale to him and that movant Nickel, as his assignee, acquired no title or claim upon the fund in the hands of the receiver.  He not being a creditor of the corporation is not prejudiced and cannot complain as to the distribution of that fund between the two creditors, county of Waukesha and village of Lannon.  One further fact may be here noted that the only creditors of the corporation who filed claims in the receivership proceedings were two owners of two bonds and the Hardy-Ryan Abstract Company, whose claims were based on the bonds the trust deed was executed to secure.  As none of the parties but Nickel appealed from the judgment and none filed a motion for review, this court properly refrained from considering the merits of the judgment as between these parties.
By the Court. — The motion for rehearing is denied, without costs. *Page 138