48 Wash. 689 | Wash. | 1908
This action was commenced by W. B. Presby against A. Melgard, to recover the sum of $500.18, proceeds
The plaintiff’s theory seems to be, that as the proceeds of the sale of the mortgaged property came into the possession and control of defendant, who had knowledge of plaintiff’s second lien, the defendant should have applied to the payment of his prior note for $2,500 and interest, first, all the proceeds of the sale of the wool upon which defendant held a lien but plaintiff held no lien, thus protecting plaintiff’s mortgage on the sheep, and second, the proceeds of the sale of such other portions of the property as might be necessary to fully settle the remainder of the defendant’s claim-; that the defendant failed to do this, but permitted Nelson to divert the funds for other purposes; that the plaintiff' thereby lost the security for his note to which he was entitled, and that the defendant is liable therefor.
The defendant, by his answer, in part alleged that he had been conducting a banking business at Goldendale, under the name of “Bank of Goldendale;” that on January 1, 1904, he took his brother into the banking business with him, which they thereafter conducted as partners• under the sam.te name; that Nelson did not pay the proceeds of the various sales to him, but from time to time deposited them in the bank of the partnership, to his own credit; thát he checked upon his account, making payments to the plaintiff, the defendant, and other parties; that the plaintiff knew of the bank account and Nelson’s method of transacting business ; that he was present at the bank when the proceeds of the wool were disbursed by Nelson; that he assented to the disbursements then made, and
The trial court, over appellant’s objection, admitted evidence showing numerous deposits of money by Nelson in the bank other than proceeds of the sales of the sheep, pelts, and wool. Appellant now insists that error was thereby committed; that although this case is in this court for trial de novo, the error complained of was prejudicial, as the court below considered such incompetent and immaterial evidence in making the findings of fact. One theory on which the appellant claims the respondent to be liable is that the proceeds of the sales made by Nelson were all delivered to respondent personally, who at the time knew the sources from which the money came, and should have so applied the same as to protect appellant’s second mortgage lien. Undisputed evidence, however, shows that Nelson deposited in the bank money received by him from the sheep, pelts, wool, and other sources, receiving the credit therefor in a single running account, and checking against the same. ' If no money had been deposited other than that received from sales of the sheep, pelts, and wool, and if respondent only had been interested in the bank, it might possibly be contended that, instead of making ordinary bank deposits, Nelson was delivering the money into the custody and control of the respondent to be used in discharge of his mortgage lien and also of appellant’s second mortgage lien. But if he made deposits of other funds in the same account, the situation would be entirely different. It was proper for the trial judge to admit the evidence of such other deposits as tending to show the time business relations between the parties. For the same purpose it was also proper to admit in evidence numerous checks drawn by Nelson in favor of respondent, appellant, and other parties. No prejudicial error was committed in receiving or rejecting evidence.
It appeared that the respondent held a first mortgage lien on the wool, the sheep, and their increase, while appellant’s second mortgage was a lien on the original flock of sheep only. Appellant contends that as the proceeds of sales of the wool and the lambs or increase came into respondent’s possession, he should have credited the entire amount on his first note and mortgage; that he failed to do so, but knowingly permitted Nelson to divert the money to other purposes; that by reason of respondent’s acts appellant lost his security, and respondent is liable. The equitable rule, that when one holds a first mortgage on property, a portion of which is covered by a second mortgage, the first mortgagee may be required to first exhaust that portion of the property covered by his lien not subject to the second mortgage, thus protecting the lien of the second mortgagee, need not be questioned. The trial court, however, found that, when the proceeds of the wool, subject only to respondent’s lien, were disbursed, appellant, respondent, and Nelson were all present; that Nelson by check paid a portion of the money on respondent’s first mortgage, another portion on other notes held by respondent, and a small amount on the claim of a third party, and that no objection was made by appellant to such disbursements, all of which were made with his knowledge and consent. It was further found that appellant had knowledge of, and consented to, all the dealings and transactions between Nelson and the respondent, pertaining to sales of the sheep, wool, and pelts. Although the evidence was conflicting, it was sufficient to sustain these findings.
The judgment is affirmed.
Hadley, C. J., Mount, and Fulleeton, JJ., concur.