Court Opinion

ID: 5169461
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:52:22.135431+00
Date Added: 2024-06-11T08:24:02.922270
License: Public Domain

ON PETITION POR REHEARING.
SULLIVAN, J.
A petition for rehearing has been filed in this case, and it is contended by counsel that the court misapprehended their contention in relation to the construction of* the stipulation involved in said suit and as to the condition of the record and other matters. The court held in the former opinion that the substance of appellants’ argument on *321the bearing was to the effect that the trial court was to determine under the provisions of the stipulation whether the mortgage was on its face a valid and binding instrument.
We do not think the court misunderstood counsel’s contention in that regard. The legal effect of that contention clearly was that the court could not find said mortgage valid as to part of the property under consideration, and void as to the other part, and the court in its former opinion, after quoting from said stipulation, said: “It will thus be seen that the court was to determine the validity of the mortgage, not from the instrument itself, but upon the evidence and circumstances shown thereby. It could not have been the intention of plaintiff to consent to a judgment against him for the value of property that was in fact not covered by the mortgage,” etc. The court further said: “The conduct of the parties in the trial court.shows clearly that they intended that this matter .should be determined, not only upon the instrument itself, but upon all the facts and circumstances submitted in evidence. ’ ’ So, if the court had misconstrued the legal effect of counsel’s contention, it decided the case along the lines now conceded by counsel to have been his contention. Counsel’s contention is to the effect that it was immaterial whether or not the mortgage covered all the goods seized or only a portion thereof, for under the stipulation, should the mortgage be held valid, judgment must go for petitioner for the full walue of said property. The court cannot concur with counsel in that interpretation of said stipulation. Counsel for respondent did not intend and, in fact, did not stipulate that judgment should go against his client for any property or the value thereof, which was not covered by said mortgage. The effect of counsel’s contention is that if the court should find said mortgage valid so far as one dollar’s worth of said property was concerned, then it must find it valid as to the entire amount of property taken by the sheriff. We cannot .agree with counsel in that construction of said stipulation.
It is next contended that the evidence does not show that ■goods covered by said mortgage were sold by the mortgagor .and the proceeds thereof applied to his own use with the *322knowledge and consent of the mortgagee. The mortgagor knew the terms of his mortgage. He knew that it did not coyer any stock purchased and placed in said building to replace that sold by the mortgagor. The mortgagee testified that he expected Van Blaricom would continue in the retail business and expected him to sell and dispose of the stock,, and he testified as follows: “I knew he was selling and disposing of it during the time he was there. He never ac-
counted to me for the sales of the stock that I had the mortgage on. I never demanded an accounting for the sales of that stock.” Under that evidence, we are unable to comprehend how counsel can so earnestly contend that the evidence fails to show that the mortgagee had no knowledge that the mortgagor was selling said mortgaged property and that he was not applying the proceeds of said sale in payment of the mortgage debt, as he testified to those facts himself. The evidence shows that the mortgagee had knowledge of all of those facts. "Where a person tabes a mortgage upon a stock of goods, which contains provisions that the mortgagor may remain in possession and continue to sell the goods, and shall apply the proceeds of the sales on the mortgage debt, and it appears that the mortgagor did continue in possession thereof for about nine months and sold off the greater portion of the stock so mortgaged, and made no application of the proceeds of the sale in payment of the mortgage debt, with the knowledge and permission of the mortgagee, such transactions, are prima facie evidence of the invalidity of the mortgage.
From the evidence, it is clear that the mortgagee knowingly permitted the mortgagor to continue to sell the merchandise-covered by the mortgage for more than nine months after its execution, and appropriate the proceeds to his own use.. It was held in Rocheleau, v. Boyle, 11 Mont. 451, 28 Pac. 872,. a case similar to the one at bar, that the phrase “knowingly permitted” was equivalent to “understood and agreed,” and the court there held that a mortgage under such facts and circumstances “becomes a mere sham, a mere appearance, a delusion asserting in form what is not a fact.”
*323Conceding that the mortgage was valid when executed, the acts and conduct of the parties after its execution were such as to annul its provisions so far as creditors and the trustee in bankruptcy of the mortgagor were concerned. And as there was no provision in said mortgage that it should cover any additions to said stock of merchandise, it never did cover such additions.
A question is raised in regard to the findings of fact containing conclusions of law. It is recognized by eminent authority that it is difficult sometimes to distinguish between an ultimate fact and a conclusion of law, and while our statute, sec. 4407, Rev. Stat., requires the court in giving its decision, to state the facts found and conclusions of law separately, it does not require the court to find probative facts. Ultimate facts and not probative facts are required to be found. While the findings are not as full and complete as might be desired, they are sufficient to sustain the judgment.
Counsel insists that there is no evidence to support the finding to the effect that said mortgage was void. We again suggest that the evidence is amply sufficient to support such finding.
It is strenuously contended by counsel that as the conversion of said goods occurred some day's prior to the adjudication in bankruptcy and the appointment of the trustee, that the trustee for that reason would have no right or authority to recover said chattels so converted or their value. We cannot agree with that contention. The bankrupt was the owner of the goods so converted, and had a legal right to their immediate possession at the time of the conversion, and his right continued up to the time of the appointment of trustee, and thereafter the trustee had the same right in regard to said converted property as the bankrupt himself. This disposes, of the contention of the appellant that the complaint must allege ownership and right to possession in the plaintiff at the time of the alleged conversion.
Some question is" raised as to the sufficiency of the allegations of the complaint. The allegations of the complaint are sufficient to show that the trustee had the legal right to the *324immediate possession of said goods at tbe time tbe suit was brought, and if legal possession could not be obtained, that be bad a right to recover tbe value of tbe goods so converted.
It is contended that when tbe state court acquires jurisdiction of tbe property and tbe possession, it may proceed to sell under a mortgage foreclosure and to' distribute tbe proceeds of tbe sale. That is no doubt true where tbe mortgage is valid, but under a void mortgage we know of no rule of law that would permit tbe mortgagee to seize tbe property of tbe mortgagor not covered by tbe mortgage, and sell it under a mortgage foreclosure. Tbe decisions cited by counsel proceed upon tbe theory that tbe mortgages involved were valid, and only such property was seized under them as was described therein, while in tbe case at bar, tbe greater portion of tbe property seized was not covered by tbe mortgage at all, and as to tbe remainder, the court held tbe mortgage void. We have no contention on this point with counsel, so far as valid mortgages are concerned, but tbe rule be contends for is only applicable to valid mortgages and not to void ones.
Tbe petition for a rehearing is denied.
Ailshie, C. J., and Stewart, J., concur.