22 S.D. 314 | S.D. | 1908
This action was instituted by the plaintiff, a corporation, to recover from the defendants an indebtedness represented by certain promissory notes executed by the 'defendant Olaf Iverson, as maker, and Bjorn Iverson, as surety, aggregating $i,-975 together with costs. It is alleged in the complaint “that, said notes and the debt thereof were secured by a chattel mortgage upon a certain threshing machine and engine, which said mortgage was foreclosed on the 28th day of January, 1905, and the proceeds of
It is contended by appellant .that - “the socalled counterclaim, is interposed in an action predicated on contract for the recovery of money only.' It does not arise out of the same transaction, and, since it sounds in tort, cannot be interposed under the statute in an action of this character.” It is 'the contention of the respondent Olaf Iverson that the counterclaim' set out in his answer states a cause of action which arose out of the “transaction set forth in the complaint as the foundation of plaintiff’s claim,” and is also “connected with the subject of the action.” ’We are inclined to the opinion that the respondent is right in his contention, and that the counterclaim did arise out of the transaction set forth in plaintiff’s complaint as the foundation of the plaintiff’s claim, and is connected with the subject of the action. Section 127 of the Revised Code of Civil Procedure provides: “The counterclaim mentioned tin the last section must be one existing in favor of a defendant, and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action: (1) A cause of action arising out of the contract or transaction set forth in the- complaint as the foundation of the plaintiff’s claim, or connected with the subject of the action. (2) In an action arising on contract, any other cause of action ■ arising also on contract and existing at the commencement of the action.” It will -be observed from the reading of the foregoing section that three cases are provided for in which a counterclaim is permissible: First, in a case where the cause' of action is set out in the counterclaim arises-out of the contract or transaction set up in the complaint; second, a cause of action connected with the subject of the action; and, third; in an action on a contract, a cause of action arising on contract 'and existing at the commencement of the action
In McHard v. Williams, 8 S. D. 381, 66 N. W. 930, this court said: “One of the more important purposes of the adoption of the Code system of pleading was to avoid, as 'far as possible, a multiplicity of suitjs, and to enable parties to determine their differences in one action. And to this end counterclaims were designed, not only 'to include recoupment and set-offs at common law, but to enlarge their scope, so that but few cases could arise in which all litigation between the parties to the action might not be settled in the same suit. * * * These provisions 'should receive a liberal construction, as, in the language of Mr. Justice Fuller, in Laney v. Ingalls, 5 S. D. 183, 58 N. W. 572, it enables litigants to determine their controversies without additional expense, and, in case a plaintiff is insolvent, it is often the only means by 'which a defendant may obtain justice.” Minneapolis Thresher Machine Company v. Darnall, 13 S. D. 279, 83 N. W. 266. And this seems to be the view 'taken by the learned Supreme Court of North Dakota in the analogous case of Hanson v. Skogman, 14 N. D. 445, 105 N. W. 90. In that case the court says: “Courts and text-writers have expended much time and learning in attempting to define the meaning of die word ‘transaction,’ and of the phrase ‘subject of the action/ as used in this statute, which 'is common to many states, and, it must be confessed, without marked success. Bliss on Code Pleadings, § 371, in referring to this provision, says: ‘Three classes of counterclaims are here provided for: First, a demand existing in.faypr of.the,defendant and against the plaintiff,
It is disclosed by the record in the case at bar that the defendant Olaf Iverson purchased the threshing machine rig from the plaintiff; that, to secure the payment of the same, the defendant Olaf as principal and Bjorn Iverson as surety executed certain promissory notes for the amount; that, to secure the payment of these notes, the defendant Olaf Iverson executed- a chattel mortgage upon the machinery purchases; that the plaintiff attempted to foreclose the chattel mortgage, but failed (to comply with the provisions of the statute relating to the foreclosure of chattel mortgages, and thereby in effect, converted the property so mortgaged to its own use and became liable /for the value of the same to the defendant Olaf Iverson; that, by virtue of the provisions and stipulations in the chattel mortgage, it sought to declare the full amount due on' the notes before the time specified for their payment set forth in plaintiff’s complaint. It will. thus be seen that the execution of the notes and chattel mortgage were.-a parf of. the
It is further contended by the appellant that- the evidence of the defendant is insufficient to show a conversion by the plaintiff, but in our opinion this contention is clearly untenable. It appears from defendants’ evidence that the attempted foreclosure as the chattel mortgage 'was made in violation of sections 2073-2077, Rev. Civ. Code, inclusive, and therefore did not constitute a valid foreclosure, but was in effect a conversion of the property. Everett v. Buchanan, 2 Dak. 249, 6 N. W. 439, 8 N. W. 31. The law as laid down in that case has been uniformally followed in this state, and it may be regarded as settled within this jurisdiction that where a mortgagee of personal property takes possession of the same for the purpose of foreclosing his mortgage, and sells the same without a substantial compliance with the statute, he converts the property and his lien on the same is extinguished. The provisions relating to the sales of property under chattel mortgages by advertisement is statutory and the proceedings required by the law must be substantially complied with. Felker v. Grant, 10 S. D. 141, 72 N. W. 81; Pitts Agricultural Works v. Baker, 11 S. D. 342, 77 N. W. 586; Colby v. Kimball Co., 99 Iowa, 321, 68 N. W. 786. In the case at bar the property at the time it was mortgaged was situated in Marshall county, and the chattel mortgage was recorded in that county. The property, however, before the sale was removed to Roberts county, and without filing the mortgage or a copy thereof in that county air attempted foreclosure was made, and the property sold at Sisseton in the .latter county. By section 2077 of the Code, above referred to, it is provided that “the notice of sale shall be published in a newspaper, published nearest the place of sale in the county wherein the mortgage or a certified copy shall have been filed.” The foreclosure, therefore, attempted in a county other than that in which the mortgage was executed and filed was clearly unauthorized and void.
It is further contended by the appellant that the title to the property passed by virtue of the chattel mortgage to the plaintiff, but this contention is untenable, for the. reason that under the Code of this state (section 2042, Rev. Civ. Code) a mortgage only constitutes a lien upon the property. The title of the property thereto does not pass until there is a legal foreclosure of the mortgage.
The contention of the appellant that the 'court erred in dismissing the action as to Bjorn Iverson is clearly untenable,.-for the reason that the action was dismissed as to him 'upon the motion of the appellant, and the fact that the court denied the motion to dismiss the action as to Olaf Iverson does not in any manner affect a dismissal of the action as to Bjorn Iverson, or render such dismissal erroneous. We are 'of the (opinion that the court was right in directing a verdict in favor of the defendant Olaf Iverson as the evidence tending to prove a conversion of the property by the appellant was practically undisputed.
Finding no error in the record, the judgments of the circuit court in favor ipf the defendants are affirmed.