Court Opinion

ID: 6739237
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:44.006079+00
Date Added: 2024-06-11T16:01:54.353093
License: Public Domain

Birdzell, J.
(dissenting). I dissent. This is an equitable sequestration proceeding. The case was before this court once before on an appeal from an order overruling a demurrer to the complaint (38 N. D. 531, 165 N. W. 558), and it was then held that the complaint stated a cause of action. Thereafter answers were filed by the defendants, and the matter came on for trial in the district court. Before the tak*515ing of any evidence, however, the defendants moved that no evidence be received, and the trial court, taking notice of its records in other litigation, sustained the motion. Later, findings of fact and conclusions of law were signed and a judgment of dismissal entered. This appeal is from the judgment. So the case is not here for review of any disputed questions of fact, and involves merely the proper application of equitable principles.
Under the opinion of Mr. Justice Bronson it is held, first, that the plaintiff is precluded from maintaining this action on behalf of itself and the other general creditors of the Harvey Mercantile Company, because in a prior conversion action by Phillips against this plaintiff it asserted its lien on the property converted in mitigation of the damages claimed by Phillips, which lien was supported by the same judgment that the plaintiff relies upon here; and, second, that the plaintiff is precluded by reason of having so previously asserted its lien as to place itself in the position of a preferred creditor. It is said that, having placed itself in that position, it is now precluded from sharing with other possible general creditors on any portion of its indebtedness, because of a supposed inconsistency in the means of redress adopted. I am unable to concur in the holding upon either of these two propositions.
The reasons actuating the dissent upon these two propositions are, briefly stated, as follows: The findings in the conversion action show that Phillips had not been damaged, because the amount of the indebtedness for which the converted property was security was in excess of the value of the property, from which it would follow that Phillips had no equity. The finding is that the value of the elevator property was and is several thousand dollars less than the lien of the chattel mortgage. In these circumstances, it seems to me that equity requires only that the defendants in this action be given the benefit of the full value of the property taken by the John Miller Company in the manner indicated, and that this be applied upon the indebtedness. In other words, that the value of the converted property be applied to reduce plaintiff’s indebtedness pro tardo. It must be remembered that the plaintiff used its indebtedness in the conversion action only for the purpose of mitigating damages, and not for the purpose of a counterclaim or offset upon which it would have been entitled to an affirmative judgment. *516See 1 R. C. L. 343; Huffman v. Knight, 36 Or. 581, 60 Pac. 207; Gahlert v. Quinn, 35 Mont. 457, 119 Am. St. Rep. 864, 90 Pac. 168.
■ Neither is it apparent to me that the plaintiff, by relying upon the security it held upon the elevators, placed itself in a position inconsistent with its claim as a general creditor. By relying upon its security it did not assume the position of a preferred creditor, but only that of a secured creditor. If, having waived its security, except to the extent necessary to show that Phillips had sustained no damages warranting a recovery by him in conversion, it seeks to sequester the assets of the defendant mercantile company for the benefit of itself and the general creditors. I can see nothing inequitable or inconsistent in allowing the plaintiffs the relief sought, so long as the defendants are given full credit for the value of the property already obtained by the John Miller Company, and so long as that company is properly charged with its receipt.
Christianson, Oh. J. I concur in the foregoing opinion prepared by Mr. Justice Birdzell.