Artificial Ice Co. v. Pratt
176 N.W. 45
S.D.
1920
Check Treatment
McCOY, P. J.

Action to foreclose chattel mortgage. Defendant interpose the defense of payment. Finding and judgment were for plaintiff, and defendant appeals;

It appears from the record that respondent sold to ap*504pellant a team for horses for $285, and that appellant on April-12, 19x8, gave 'to respondent a note and chattel mortgage on the team' as security for the payment of paid purchase’ price, which note became due November 1, 1918. Appellant thereafter paid $79.28 on said note, w¡h¿ch payment is conceded by respondent. Appellant contends that, in addition to the said payment, he delivered to one Newell, secretary of respondent, at respondent’s place of business, certain potatoes, to be sold and the proceeds to be credited on said note secured by said mortgage; that said potatoes were sold, and the proceeds thereof, $235, delivered to Newell; that Newell failed to credit said $235, potato proceeds, on- said secured note, but applied the same in payment of another indebtedness of appellant to Newell personally. Respondent contends that appellant was justly indebted to said Newell personally in the sum- of $270, and that by express agreement with appellant the proceeds of said potatoes was applied on said individual debt owing to Newell. There was very sharp conflict in the testimony. Appellant testified that, when he -delivered said potatoes, he requested that the proceeds thereof be applied on said note secured by said mortgage, and' Newiell testified that it was expressly agreed between them that the potato proceeds should be applied on the individual debt of Newell.

[1] The entire legal rights of these parties must be controlled by the facts. Finding's of fact, based upon conflicting evidence, will not be reversed on appeal, unless the clear preponderance of the evidence is against such findings. We cannot say that such is the case -here. There was evidence submitted on either side which, if believed by the court; 'might have justified a finding and judgment either way; but the evidence was of such a conflicting nature that the court must find for one or the other of these parties, taking into consideration all tlie surrounding circumstances, and the appearance of the several witnesses, and their demeanor on the witness stand. The court having found in favor of plaintiff, under s-uch conflicting testimony, such findings will not be disturbed by this court.

[2, 3] Appellant urges that the trial court had no jurisdiction to try this case, because -of the alleged equitable counterclaim interposed. We are of the opinion that in this particular *505character of action-an equitable counterclaim may be interposed and tried out in the municipal court. The statute expressly provides that the municipal courts have jurisdiction of actions to foreclose chattel mortgages. Section 2123, Code 1919. The foreclosure of a chattel mortgage is the exercise of equitable jurisdiction. Where the e,q|uitable counterclaim grows out of the same transaction as the chattel mortgage sought to be fore- • closed, or is directly connected therewith, we know of no good reason wfiy the same should not be interposed in the foreclosure suit in the municipal court. The general policy of our system of civil procedure is that all matters pertinent to a legal controversy be determined in one action. General equity jurisdiction has not been conferred upon municipal courts, but wherever special eq|uity jurisdiction has been conferred, we are of the view that it carries with it as inherently incident jurisdiction to determine the whole controversy, including an equitable counter claim pertinent to the cause of action alleged.

[4] Appellant also urges, as a matter of law, that said potato proceeds should have been applied on the mortgage indebtedness, which was due, instead of on the individual, debt of Newell, which was not due. The trouble with this proposition is that under the evidence of Newell the individual debt to him became due in September, 1918. Again, this is not a case where a creditor has two or more claims or debts against the same debtor. In this case respondent only held one claim or debt against appellant. Newell, as an individual, applied such proceeds on the debt he held as an individual against appellant. Under the evidence, which the trial court had the right to and evidently did believe, the application rvas made on the individual debt by express agreement. Under such circumstances, the statute in relation to the application of money paid by a debtor has no application.

The' judgment and order appealed from are affirmed.