76 P. 243 | Cal. | 1904
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *531 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *532 The complaint states a cause of action to recover possession of some 2,509 centals of wheat, in the warehouse of the Stockton Milling Company, or the value thereof in case delivery cannot be had. The defendants other than Hersom, trustee, answered, admitting that the wheat was in the warehouse of the Stockton Milling Company, and denying the other allegations of the complaint. The defendant Hersom answered separately, denying that plaintiff was the owner of, or entitled to the possession of, the wheat; admitting that he took possession of the wheat, but denying that he did so wrongfully. His admission was found by the court to be untrue. He also filed a cross-complaint against the Stockton Milling Company, alleging that it was wrongfully in possession of the wheat, that the cross-complainant was entitled to possession, and asking judgment for the recovery thereof, or for the value, if delivery could not be had. The plaintiff answered this cross-complaint against the Stockton Milling Company, denying the right of Hersom to the possession of the wheat, and setting up certain affirmative matters in further defense. The Stockton Milling Company and the other defendants filed a joint answer to the cross-complaint of Hersom, setting up affirmatively that the wheat in controversy was rightfully in possession of H.H. Hewlett under a certain chattel mortgage executed by Stuart, and that Hewlett was the owner of the property. The cause was tried by the court and judgment given in favor of the defendant Hewlett, declaring that he was the owner absolutely of one fourth of the wheat in question, and that he was entitled to the possession of the remaining three fourths by virtue of the chattel *535 mortgage, for the purpose of securing the debt therein set forth, and further adjudging costs in favor of Hewlett and the other defendants against the defendant Hersom and the plaintiff. Four separate appeals are here presented: First, an appeal by the plaintiff from the judgment; second, an appeal by Hersom from the judgment; third, an appeal by the plaintiff from an order denying his motion for a new trial; and the fourth, an appeal by Hersom from an order denying his motion for a new trial. Numerous points are presented upon these appeals, and in order to a proper understanding of the case it will be necessary to give a preliminary statement of the facts involved.
The wheat in controversy was raised upon a tract of land containing 1,160 acres situated in Stanislaus County. This land was leased by the defendant Hewlett to J.D. Stuart on November 20, 1897, for the term of two years, ending October 1, 1899. The term was afterwards extended for an additional year ending October 1, 1900, and it was during this extension that the wheat in controversy was sown and harvested. The lease provided that Stuart should sow the premises to wheat, and in proper time, at his own expense, harvest, thresh, clean, and sack the same, and when sacked that he should divide and set apart one fourth of the grain as the yearly rental, and deliver the same to Hewlett, that until such delivery the whole crop should be the property of Hewlett, and that upon such delivery, and not before, the remaining three fourths of the crop should become the property of the lessee, Stuart. It further provided that the lessee should in proper season summer-fallow such proportion of the land as in the proper farming thereof should be summer-fallowed, and that if he failed so to do Hewlett should have the right to enter upon the land and do such summer-fallowing thereon as should be proper and necessary, in which event there should be turned over to him such portion of the crop, in addition to the one fourth, as should be necessary to reimburse him for the expenses of such summer-fallowing. Upon August 22, 1899, Stuart executed to Hewlett a note for $757.62, payable one day after date. As security for this note Stuart pledged to Hewlett certain personal property; and it was agreed that the lease should be extended for the succeeding year, and that when the crop of grain was sown thereon Stuart should execute to *536 Hewlett a chattel mortgage on the crop to secure the note then executed and such further advances as should be made by Hewlett to Stuart. On November 13th Hewlett advanced Stuart the further sum of $210, for which Stuart executed his note, payable one day after date. On November 15th, in pursuance of the former understanding, Stuart executed to Hewlett a chattel mortgage on the crop to be thereafter raised and grown upon the lands leased, to secure the payment of the two notes. The mortgage provided that Stuart should care for the crop until it was fit for harvest, and then harvest, thresh, clean, and sack the same, and deliver the wheat to Hewlett as security for the payment of the note, and that if he failed in any respect to do so Hewlett should have the right to enter upon the premises, protect the crops, retain possession thereof, and harvest, thresh, and sack the same; that he should also have the right to haul and store the same, and sell and dispose of it at any time, and for such sums as he should deem proper for the best advantage of all concerned, and out of the proceeds to pay the costs and charges and all of the expenses incurred by Hewlett in the care, protection, harvesting, hauling, storing, and selling, and the residue to apply upon the debts secured by mortgage. The court found that the mortgage was made in good faith, and without design to hinder, delay, or defraud creditors, or to give a preference to the said Hewlett. During the months of November and December the wheat was sown upon the land by Stuart, the lessee, from which the wheat in controversy was produced, Hewlett advancing the seed, feed, and money necessary for that purpose.
On November 1, 1897, one James Watson obtained a judgment in the superior court of Stanislaus County against J.D. Stuart for the sum of $680 and costs, which judgment was afterwards assigned to Summerville, the plaintiff in this action. On November 1, 1899, the plaintiff caused an execution to be issued upon the judgment, and on January 17, 1900, under said execution the sheriff of said county sold to the plaintiff the leasehold interest of said Stuart in the land described, and on the same day, in pursuance of said sale, executed to the plaintiff a deed conveying to him the said property. The execution was not formally levied upon the land, nor upon the growing crop. The claim of the plaintiff *537 in this respect is, that the leasehold interest was real estate, and carried the crop with it, and that, as the judgment was a lien upon the real property of the defendant, no formal levy was necessary. Notice of the sale was given for three weeks previous thereto, as required by law in case of sales of real estate.
On January 25, 1900, Stuart filed his petition and schedules therein, and was duly adjudged a bankrupt by the United States district court in and for the northern district of California. At that time the wheat in question was a growing and standing crop on the land on which it was sown. Thereafter, on February 14, 1900, the defendant Hersom was elected a trustee of the bankrupt estate, and ever since has been such trustee. The crop mortgage executed by Stuart to Hewlett was recorded in the recorder's office in Stanislaus County on November 15, 1899, on the day of its execution. The lease was also recorded in the same office in Stanislaus County on the following day. At the time the mortgage was made Stuart resided in Stanislaus County. This, however, does not appear from the pleadings, but is found as a fact by the court. The notes mentioned in the chattel mortgage have not been paid. After the execution of the deed by the sheriff to the plaintiff, Hewlett demanded of the plaintiff that he, as the successor of Stuart, summer-fallow the land as the lease provided. The plaintiff failed to do so, and thereupon, about March 1, 1900, Hewlett entered and performed that work. Thereafter he continued in possession of the land for the protection of the crop, and when the wheat was harvested he took it into his possession and caused it to be shipped to the defendant Stockton Milling Company for storage, and that company still holds it in its possession. As to the three-fourths interest in the wheat which by the lease was to be the property of Stuart, Hewlett claims a right to hold it, or its proceeds, only to the extent that is necessary to pay the debts described in his mortgage. Other facts affecting particular points presented will be stated in connection with the discussion of the respective points to which they relate.
1. The judgment recovered by Watson against Stuart on November 1, 1897, did not become a lien on the leasehold estate of Stuart upon the subsequent execution of the lease creating that estate. This proposition is new in our jurisprudence, *538
but it is clearly deducible from the principles applicable to and declaring the character of such property. The Code of Civil Procedure makes a judgment a lien on "all the real property of the judgment debtor not exempt from execution in the county, owned by him at the time, or any which he may afterwards acquire," during the five years' continuance of the lien. (Code Civ. Proc., sec. 671.) The only case in which the principle in question came before this court is McDermott v. Burke,
Section 700 of the Code of Civil Procedure provides that "Upon a sale of real property, the purchaser is substituted to and acquires all the right, title, interest, and claim of the judgment debtor thereto; and when the estate is less than a leasehold of two years' unexpired term, the sale is absolute," and that otherwise it is subject to redemption as therein prescribed. This, however, cannot be considered as a legislative construction of the phrase "real property" applicable to and fixing the meaning of the same phrase where used in section 671 providing for judgment liens. Section 700 was intended *540 to state the effect of a sale of any and all interests in real property, and to declare in what cases it should be subject to redemption. It applies alike to sales made to enforce the lien of the judgment and to sales of chattels real enforcing liens created by the levy of an execution. It has no relation to or effect on the questions, when the lien begins, the manner of its creation, or the acts from which it arises. The effect of the clause therein concerning leasehold interests with respect to its bearing on the meaning of the phrase "real property" is merely to show that for the purposes of that section those words are used in a sense broader than their common-law meaning, and include chattels real as well as freehold estates. Without that clause the section would be held to apply only to estates of inheritance and estates for life, or, by the common-law classification, freehold estates. (See People v. Westervelt, 17 Wend. 675;Westervelt v. People, 20 Wend. 417; Ex parte Wilson, 7 Hill (N.Y.) 150, which affirm this proposition.)
The claim of the plaintiff that no formal levy was necessary upon the growing crop nor upon the leasehold interest is, by reason of the proposition which we have just considered, necessarily untenable. It may be conceded, as was decided inLenhardt v. Jennings,
2. It is contended by Hersom, and also by the plaintiff, Summerville, that the defendant Hewlett has waived his lien by filing his answer to the suit in claim and delivery, and therein averring that he is the absolute owner of the wheat in controversy. The principle relied upon is stated thus in Williams
v. Ashe,
The further claim is made that by taking the possession of the wheat when it was harvested Hewlett wrongfully converted it to his own use, and thereby, under section
So far as the appeal from the judgment is concerned, this would dispose of this proposition. But it is claimed that the evidence shows that Hewlett, without authority, took possession of the leased land several months before the crop was ready for harvesting; that this was a conversion of the crop and a consequent waiver of the lien of the mortgage; and that therefore the court should have found that Hewlett was not entitled to the possession. There are several grounds upon which this claim must be held untenable. A chattel mortgage does not pass title to the mortgagee or give him a right to possession of the mortgaged property before the debt becomes due, unless the mortgage so provides. (Bank of Ukiah v. Moore,
3. There is no merit in the proposition that Hewlett lost his lien by reason of the removal of the wheat from the land *544
on which it grew. The provisions of section 2972 of the Civil Code that the lien of a mortgage upon a growing crop continues after its severance from the land so long as it remains on the land of the mortgagor has no application to the facts of this case. That section refers to cases where the crop, after severance, is removed by the mortgagor, or by some third person, from the mortgagor's land, and not to cases where the mortgagee, in pursuance of the terms of the mortgage, removes the crop for his better security. (Campodonico v. Oregon Imp. Co.,
4. The defendant Hersom gave notice of motion for judgment in his favor against the defendant Hewlett and Stockton Milling Company upon the pleadings, consisting of Hersom's cross-complaint and the answer of the said defendants thereto. In pursuance of this notice a motion was made for judgment against the Stockton Milling Company alone. This motion was denied, and the ruling is assigned as error. The motion was properly denied. Hersom claimed solely as trustee in bankruptcy of J.D. Stuart. The first allegation of the answer to this cross-complaint is a denial that Hersom is or ever was "the duly elected, appointed, qualified, or acting trustee" of said bankrupt estate. The allegation of the capacity of Hersom is material to his recovery. The denial of that allegation in the general form in which it was made was applicable to each count or cause of action stated in the cross-complaint. It raised a material issue which it was necessary to decide before it could be said that Hersom was entitled to any judgment whatever. The presentation of this issue was sufficient to prevent a judgment on the pleadings. (Widmer v.Martin,
5. We are of the opinion that the execution of the mortgage by Stuart to Hewlett on November 15, 1899, was not an unlawful preference of a creditor, and, as such, in violation of the provisions of the bankruptcy law. In order to make such a preference unlawful it is necessary, — 1. That the preference shall have been made with the intention on the part of the bankrupt to prefer the person to whom the mortgage is given; and 2. That the mortgagee, at the time he receives the *545 mortgage, shall have reasonable cause to believe that it was intended thereby to give a preference to him. This involved the further proposition that the mortgagee must, at the time he receives the mortgage, have reasonable cause to believe that the debtor is insolvent, for otherwise the preference would be lawful and innocent. Insolvency under the present Bankruptcy Law does not occur, as it did under the former law, when the person is unable to meet his obligations as they become due. Under the present Bankruptcy Law a debtor is not insolvent unless his property, at a fair valuation, is not sufficient in amount to pay his debts. We do not think the evidence in this case necessarily shows that Hewlett, at the time he took the mortgage, had good cause to believe, either that Stuart, in this sense, was insolvent, or that he intended thereby to give a preference to the mortgagee. The transaction itself implies the contrary. Shortly prior to the giving of the mortgage Hewlett had extended the lease for another year, with the understanding that Stuart would sow a crop of grain thereon, that Hewlett should advance him such money as was necessary to enable him to care for the crop, at least to the harvesting, and should take a chattel mortgage to secure such advances and the pre-existing debt. Stuart had sown the land, in part at least, to grain at the time the mortgage was given, and proceeded thereafter, apparently in good faith, to complete the sowing, Hewlett furnishing seed and feed for that purpose. These acts are inconsistent with the theory that either party at that time believed that Stuart's property was insufficient to pay his debts, and that it was intended that Hewlett was to be preferred to the exclusion and injury of other creditors. It does not appear that Hewlett knew of the insolvency of Stuart. The only evidence upon that point is that of Stuart himself, who testifies as follows: "I guess Mr. Hewlett was acquainted with my financial condition; I don't know that really; I told him I needed money, and I wanted a little money at that time. I think he knew my financial condition at the time of the pledge of which I spoke." This could well be understood to mean only that Hewlett knew that Stuart needed money, which does not necessarily imply insolvency. If it was intended to mean more, it was a mere conclusion of Stuart. He states no facts upon which to base it, and we do not think it is sufficient to enable us to say that the finding of *546 the court on this point is contrary to the evidence. The records at that time disclosed the existence of three judgments, taken several years previously, in the superior court of the county. The appellant, Hersom, claims that Hewlett must be deemed to have constructive notice of these judgments, and therefore must be presumed to know that Stuart was insolvent. We do not understand this to be the law. Such judgments constitute a lien upon the real estate of the judgment debtor, and all persons dealing with that real estate must be held to have constructive notice of the judgment, but the law goes no further than this. It does not require every person who deals generally with the judgment debtor to take notice of the existence of these judgments, nor does it impute notice to such persons for the purpose of charging them with knowledge of insolvency. There is nothing in the evidence to indicate that Hewlett had any actual knowledge whatever of the existence of these judgments. It is also to be observed that there is no evidence to show that Stuart was in fact insolvent at the time he made the mortgage. The judgments do not, necessarily, prove insolvency. The schedules filed in the bankruptcy proceeding some six weeks later show that he was indebted in an amount near ten thousand dollars, but there is nothing to show what property he had at that time other than the inference to be derived from the judgment of the court in bankruptcy that it was not sufficient to pay these debts. This might justify an inference that he was not solvent at the time he gave the mortgage, but it is not sufficient to call for a reversal of the finding of the court on that subject, nor to require a finding that Hewlett at that time knew that he had not sufficient property to pay his debts. We cannot disturb the finding on this point.
6. In the portion of Hewlett's answer to the cross-complaint referring particularly to the crop mortgages, it is averred that the mortgage was duly recorded in Stanislaus County, in which the land is situated, but it does not allege that Stuart, the mortgagor, then resided in that county. It is silent as to his residence, and there is no general statement that it was recorded in the county of his residence. It is contended that this renders this part of the answer ineffectual, that the mortgage, as stated, does not constitute a valid lien on the wheat, and that this defect is not cured by the evidence *547
and finding that Stuart at the time the mortgage was executed resided in that county. It is perhaps a sufficient answer to this proposition to refer to the fact that the cross-complaint is addressed to the defendant Stockton Milling Company alone, and that therefore Hewlett was not called upon to answer it at all. The only judgment in favor of the Stockton Milling Company is a judgment for costs against Hersom and in favor of that company jointly with Hewlett and two other defendants. There being no cross-complaint against Hewlett, the judgment in his favor for the possession of the wheat is based upon the complaint and the answer thereto. The fact that Hewlett joined in an insufficient answer to the cross-complaint against another party is immaterial and does not affect the judgment in his favor. Disregarding this point, however, and considering the case as if the cross-complaint had been directed to Hewlett also, we think the objection is not well taken. The allegations of the cross-complaint concerning the right of Hersom are allegations of the ultimate facts. The first count relates to all the wheat. It avers that Hewlett leased the land to Stuart, that Stuart had sowed to wheat a portion of the lands leased, that at the time of the adjudication in bankruptcy the wheat was a growing crop on the land and was the property of Stuart, and that ever since his appointment as trustee the said Hersom, as such trustee, had been and was still entitled to the possession of the wheat. The other counts relate exclusively to certain specific lots of the wheat, and each alleges, in general terms with respect to the particular lot to which it refers, that Hersom, as such trustee, was, and still is, entitled to the possession thereof. The defendant Hewlett, in answer to these allegations, denies that the crop was the property of Stuart at the time he was declared a bankrupt, or that Hersom, as trustee or otherwise, was then, or at any time had been, entitled to the possession of the wheat, or any part thereof, and alleges that he, Hewlett, at all of the times in controversy, was, and still is, entitled to the possession thereof. The action of claim and delivery is primarily an action for possession. The general allegations of ownership or right of possession of the defendant are sufficient, and this form of statement is the better form of pleading. (Nudd v. Thompson,
7. The judgment against the defendant Hersom and the plaintiff, in favor of Hewlett and the other defendants, for their costs, is not subject to the objection made by Hersom that it is erroneous against him because he was a co-defendant. *549 He filed a cross-complaint against Hewlett's bailee, and this made it necessary for Hewlett to either defend against Hersom's claim himself or see that his bailee did so. In either case Hersom is not legally injured by a judgment for the costs incurred in defeating his claim.
We find no error in the record. It is therefore ordered that the judgment and orders appealed from be affirmed.
Angellotti, J., and Van Dyke, J., concurred.
Hearing in Bank denied.