On December 22, 1934, one Harry Harms borrowed from the plaintiff bank $2,595.30, and to secure the- payment thereof executed and delivered to the plaintiff a chattеl mortgage covering certain sheep located in Moody county, S. D. This mortgage was duly filed with the register of deeds of Moody *516 county. The 'mortgage providеd that, if default 'be made in any of its terms, or if any attempt Ibe made to remove, dispose of, or injure said property by the mortgagor or by any other persоn, then the mortgagee would be entitled to take immediate possession of the property covered by the mortgage for the purpose of reаlizing on its security. On February 7, 1935, while the mortgage was still in force and without the knowledge or consent of the plaintiff, the said Harms transported the sheep from Moody county to Sioitx City, Iowa, and there delivered them- to the defendants who were commission merchants operating in the Sioux City stockyards. The defendants sold the sheеp and realized therefrom the sum of $1,-870.76, out of which sum the defendants paid $44.25 as yardage and insurance, $32 commission to themselves, and $73.08 to the truckers for transpоrting the sheep from Moody county to Sioux City. The balance was paid over to Harms. The defendants had no actual knowledge of the indebtedness owing by Harms tо- the plaintiff, or of the chattel mortgage covering the said sheep, until some time after the entire transaction was completed; and, at the time оf the sale and áf the time of delivering of the proceeds of the sale to Harms, the defendants believed that Harms had a lawful right to sell the sheep. The plaintiff did not learn of the sale of the sheep until about June 1, 1935, and thereafter made demand upon the defendants for the sheep or the proceeds dеrived from the sale thereof. The plaintiff in this action seeks to hold the defendants liable- for the wrongful conversion of the said sheep'. The trial court, aftеr finding the facts, as above set out, held that the-defendants were not liable to the plaintiff, and this is an appeal from the judgment dismissing plaintiff’s complaint. . ■
In this state a breach of the conditions of the mortgage,- coupled1 with and which gives the right to possession to the mortgagee, gives the mortgagee such a qualified ownership as will enable him to maintain an action for conversion. Northern Finance Corporation v. Midwest Commercial Credit Co., 59 S. D. 282,
The question for our consideration, therefore, is whether or not the defendаnts acted in such a manner as to make them liable in conversion to this plaintiff. It is first contended by respondent that the filing of the chattel mortgage in Moody cоunty imparted no notice thereof tO' these defendants. Our statute section 1584, Rev. Code 1919, provides as follows: “The filing of a mortgage of personal proрerty, in conformity to the provisions of this article, operates as notice thereof to all subsequent purchasers and incumbrancers of so much of sаid property as is at the time mentioned in the preceding section situated in the county or counties wherein such mortgage or authenticated copy thereof is filed.” •
Respondent contends that these defendants, being merely factors. or commission merchants, are neither “subsequent purchasers oi" incumbrаncers” within the meaning of the above section of our Code. With this contention of respondent we are inclined to agree. However, we are of the opinion that the question of notice or knowledge of the mortgage by these defendants is not decisive of their liability in this case. If the defendants were not рurchasers of these sheep, and we agree with respondent that they were not, they were the agents of Harms in selling- and disposing of the sheep to the рacking company. By the great weight of authority an agent who assists his principal in converting- property of a third person to the use of the principal or master is personal!}- liable to the true owner for the loss thereby inflicted. See many cases cited in annotation in 20 A. L. R., commencing on page 120. Under оur decisions it is no longer subject of dispute that as 'between Harms, the mortgagor, and this plaintiff, the mortgagee, Harms wrongfully converted these sheep, and rendеred himself liable to-the plaintiff in an action for the wrongful conversion. That the defendants assisted Harms in the conversion of these sheep is without question. The dеfendants not only assisted in'the sale, but ac *518 tually conducted the sale, and thereafter 'disbursed the proceeds derived from such sale. Clearly, these defеndants played an active and very important part in the conversion of these sheep. The only defense is that the defendants acted innocently аnd without knowledge or notice of plaintiff’s mortgage. However, we are convinced that innocence or lack of notice or knowledge is no real defense. The applicable rule is well stated in the Restatement of the Law of Agency, § 349, as follows: “An agent who does acts which would otherwise constitute conversion of a chattel is not relieved, from liability by the fact that he acts on account of his principal and reasonably, although mistakenly, believes that the principal is entitled to possession of the chattels.”
Under tire terms of the mortgage, the right to the possession of these sheep vested in the plaintiff upon demand when Harms took them from Moody county and delivered them to- the defendants at Sioux City, and- Harms never had a possession which would entitle him to sell or dispose of the property without the consent of the mortgagee. The acts of Harms clearly amounted to a conversion of the sheep, and, under the rule above set out, it is no defense for this agent to say that he was acting for his principal. In Mechem on Agency (2d Ed.) § 1456, the rule is stated as follows : “The fact that the agent acted in good faith, supposing the principal had a legal right to have done what was done, is no defense.”
The decided сases very generally support this- view. Greer v. Newland,
Respondent further places considerable emphasis upon the case of Catlett v. Stokes, 21 S. D. 108, no N. W. 84, 85, but this case simply 'holds “a purchaser of mortgaged property cannot be held liable for a conversion of it without a definite demand by the mortgagee, or a definite refusal tо surrender.” The case is not applicable to our present situation. The defendant here was not a purchaser of mortgaged property, but was аcting as the agent of the mortgagor in selling and disposing of the property.
The case of Drovers’ Cattle Loan & Investment Co. v. Rice, 10 F. (2d) 510, an opinion by Judge Scott in the United States District Court for the northern distriсt of Iowa, fully supports respondent’s contention herein. However, Judge Scott was apparently of the view that the question of notice was the decisive question in the case. With this opinion we must respectfully disagree. Under the view we have taken herein the defendant was a wrongdoer. This brings his acts within the meaning of the third subdivision of section 1278, Rev. Code 1919, which provides that an agent is responsible to third persons “When his acts are wrongful in their nature.”
The judgment appealed from is reversed.