Herl v. State Bank of Parsons

403 P.2d 110, 195 Kan. 35, 1965 Kan. LEXIS 352

• Court: Supreme Court of Kansas
• Decided: June 12, 1965
• Docket: 44,014
• Status: Published

Opinions

The opinion of the court was delivered by

Hatcher, C.:

This was an action to recover damages for the wrongful conversion of personal property. A motion for summary judgment was sustained by the trial court on the pleadings, exhibits and an affidavit filed by the defendant. ■

The petition commingled three separate causes of action. Damages, both actual and punitive, were requested for (1) conversion of mortgaged property where possession of the property was obtained by a replevin action and sold at public sale before answer date, (2) conversion of plaintiffs’ property sold at the public sale which was not covered by the mortgage and (3) wrongfully preventing plaintiffs from harvesting growing crops.

The first cause presents the chief controversy. We will avoid considerable confusion if we summarily dispose of causes two and three before considering the issues of fact and law raised by the former.

The trial court did not rule separately on the claims but simply sustained the motion for summary judgment addressed to the action as a whole.

It should also be explained at this point that the amended petition which we are considering named an officer of the defendant bank and the bank’s surety on the replevin bond as parties defendant. These parties were taken out of the cause by a demurrer. No appeal was taken therefrom and the State Bank of Parsons was left as the only party defendant.

First considering appellants’ claim that the appellee wrongfully sold property not covered by the mortgage in question, we find it to be without merit. The appellee did sell three cows, several calves and some miscellaneous dairy equipment at the public sale which were not covered by the mortgage. There is a dispute as to how this property got to the public sale and under whose instructions it was sold. However, it is not disputed that the appellants did attend the sale; they stood by and watched this property sold in the normal course of a public sale without protest, and accepted and cashed the bank’s money order for the full amount of the sale price.

We are forced to conclude that the appellants did acquiesce in the sale of such non-mortgaged property and, having accepted the proceeds of the sale with full knowledge of all the facts and circumstances, are bound by the results thereof. (Hazel v. Lyden, 51 Kan. 233, 32 Pac. 898. See, also, Bank v. Commission Co., 113 Kan. 545, 215 Pac. 828; Westhusin v. Landowners Oil Ass’n, 143 Kan. 404 55 P. 2d. 406; Pelischek v. Voshell, 181 Kan. 712, 313 P. 2d 1105.)

Considering appellants’ claim as set out in the amended petition to the effect that appellee wrongfully prevented appellants from harvesting certain com and maize, it appears the alleged claim has been abandoned. The issue is not presented in the statement of points on which appellants intend to rely, neither is it covered in appellants’ brief.

The only questions left for our consideration are the propriety of the sale of the mortgaged property and the propriety of the accounting.

The facts which will determine the validity of the summary judgment must be gleaned from the pleadings, the exhibits and the affidavit submitted in support of the motion for summary judgment.

On the hearing of a motion for summary judgment there should be no attempt to resolve conflicting questions of fáct. The party who moves for a summary judgment has the burden of establishing without a doubt that there is no genuine issue of fact (Warner v. First National Bank of Minneapolis, 236 F. 2d 853, certiorari denied, 352 U. S. 927, 77 S. Ct. 226, 1 L. Ed. 2d 162); Any doubt as to the existence of such an issue is resolved against the movant (Zampos v. United States Smelting Refining and Min. Co., 206 F. 2d 171). The pleadings are to be liberally construed in favor of the party opposing the motion (Purity Cheese Co. v. Frank Ryser Co., 153 F. 2d 88). He is to be given the benefit of all reasonable inferences to be drawn from the evidentiary matter and all facts asserted by the party opposing the motion and supported by affidavits or other evidentiary material must be taken as true. These and other rules applicable to the consideration of a motion for summary judgment will be found in 3 Barron & Holtzoff, Federal Practice and Procedure, § 1231, et seq.

The facts which we must accept as true may be summarized.

On May 5, 1961, plaintiffs mortgaged certain property, consisting of cows and heifers, to the defendant to secure a note in the amount of $4,600 due on January 5, 1962. The mortgage contained the following provision:

. . if the said mortgagee shall at any time in good faith deem said debt insecure or fear waste of said property, then, and in either such case the mortgagee may take possession of the said property or any part thereof. Upon taking possession of said property, the said mortgagee, or his legal representatives may proceed to sell the same or any part there of at public or private sale, and after satisfying the necessary costs, charges and expenses incurred in connection with such sale, including attorney’s fees, the balance of proceeds realized from said sale shall be paid on the debt and interest secured hereby, and thereafter they shall pay over the surplus, if any, to said mortgagor. ...”

On November 20, 1961, the defendant filed a replevin action alleging itself to be insecure and seeking judgment for possession of the mortgaged property on the strength of its chattel mortgage. A writ of replevin was issued and possession of the mortgaged animals was taken from plaintiffs and given to defendant on the 24th day of November, 1961. The answer date in the replevin action was fixed as December 20,1961.

The plaintiffs in the action being considered never appeared in the replevin action although they were personally served with summons.

On or about December 16, 1961, at a duly published sale the defendant sold all the mortgaged animals.

Following the sale the bank made an accounting to plaintiffs, the defendants in the replevin action, and delivered to them the bank’s money order for $388.33, the amount of the sale price less the balance due on the mortgage and expenses. The accounting was refused and the money order was not cashed.

On December 21, 1961, the bank took a default judgment in the replevin action in which it was awarded possession of the mortgaged property and the replevin bond was released.

Sometime in the fall of 1963, the date not being disclosed by the record, the plaintiffs brought the present action for conversion.

In addition to the facts hereto stated the petition alleged:

“That at the time of the filing of said replevin action, the said note and chattel mortgage were not due and the statement and affidavit of the state bank of parsons and j. j. flynn, jr. to the effect that it deemed itself insecure was untrue and not made in good faith, but made for the purpose of fraudulently appropriating and converting to its own use and to the loss and detriment of plaintiffs, plaintiffs’ property, as more specifically alleged hereinafter.”

The prayer was for actual damages in the amount of $14,200.00 and punitive damages in the amount of $30,000.00. It will be understood that commingled with the claim for damages for conversion of the mortgaged property was also the claim for conversion of the property that was not mortgaged and also damages for wrongful prevention of harvesting of crops. It cannot be determined just what is claimed as the value of the mortgaged property. However, plaintiffs do not contend that the sale did not produce the full value of the mortgaged chattels.

Although the appellants state several points on which they rely for reversal, they reduce their argument to a simple contention in their brief: “. . . It is appellants’ position that the sale held prior to the answer date by appellee amounted to a conversion of appellants’ property covered by the chattel mortgage- . .

The appellants have with commendable frankness made a further concession which materially simplifies the issue to be determined. They stated:

“Appellant freely admits that insofar as the replevin action itself is concerned there was subsequent to the premature sale a journal entry filed which decreed that the plaintiff in that case, the State Bank of Parsons, be awarded possession of the mortgaged property which was the subject of the replevin action. Insofar as the possessory aspects of the mortgaged property are concerned, appellant concedes that the replevin action is res judicata. However, it is what transpired before the obtaining of judgment that is the real basis of the case at bar.”

A replevin action does determine the right to possession. It will also determine title where the right to possession depends on title. The plaintiff in a replevin action must recover on the strength of his own title or right to possession. (Rauh v. Dumler, 170 Kan. 698, 228 P. 2d 694.) In Johnson v. Beach, 146 Kan. 781, 73 P. 2d 1040, it is stated:

“At common law (54 C. J. 418) and under our statutes, G. S. 1935, 60-1002 and 61-502, replevin is a possessory action. To maintain replevin under our statutes the plaintiff must show (a) that he owns the property, or that he has a special ownership or interest therein; (b) that he is entitled to the immediate possession of the property, and (c) that the property is wrongfully detained by the defendant. (Batchelor v. Walburn, 23 Kan. 733.)” (p. 782.)

We believe the replevin action involved in this case determined more than the bare right to possession. The bank claimed no right in the petition for replevin other than that given by the mortgage. The bank had no right to possession of the property other than for the purpose of selling it and accounting to the mortgagees for the surplus after satisfying the mortgage. Implicit in the judgment giving right to possession under the mortgage was the duty under the mortgage to sell the property.

We are forced to conclude that the judgment in replevin was not only res judicata as to the right to possession but was also res judicata of the rights and duties of the mortgagee to sell under the terms of the mortgage. Had the court found that the bank was not entitled to possession of the mortgaged property because it did not in good faith deem the debt insecure, the bank would have been guilty of conversion in selling the property and the judgment in replevin would have been res judicata of that fact.

There are, however, other matters which are not adjudged in a replevin action as a matter of course. A mortgagee who takes possession of mortgaged property under a replevin action has no greater right to dispose of the property than is granted by the terms of the mortgage. If the mortgagee makes a fraudulent or improvident sale of the property he is liable to the mortgagor for the actual value of the property, even though tibie sale was conducted in the manner provided in the mortgage. Also, if he claims unnecessary expense or refuses to pay over the balance of the sale price the mortgagor may seek a proper accounting. (Watkins v. Layton, 182 Kan. 702, 324 P. 2d 130.)

The appellants make no claim that in their petition the sale price was not a fair one. In their petition they allege only that the bank had no right to sell and that it should be held liable for conversion, or in the alternative that they should have an accounting. Since the judgment in the replevin action determined the right of the bank to sell the property as an incident to possession, the only question remaining for determination is a proper accounting. This question could not be reached by a motion for summary judgment as a disputed factual question is presented.

The appellee contends that the appellant could have litigated the question of a proper accounting in the replevin action and therefore it cannot now be raised in a separate action. No doubt the question could have been raised in the replevin action had appellants seen fit to do so. This court has taken a rather liberal approach as to the numerous issues which a defendant may raise in defense to an action in replevin. (Petersime Incubator Co. v. Ferguson, 143 Kan. 151, 53 P. 2d 505; General Refrigeration Sales Co. v. Roberts, 145 Kan. 333, 65 P. 2d 269; United States Hoffman Machinery Corp. v. Ebenstein, 150 Kan. 790, 96 P. 2d 661; Federal Deposit Ins. Corp. v. Cloonan, 169 Kan. 735, 222 P. 2d 533.)

There are many claims which a defendant may permissibly raise by way of counter-claim or cross-petition but which are "not compulsory. This was particularly true under the old code.

The rule that all matters which could be litigated in an action become res judicata does not have as severe an application as appellee would have us make in this case.

Matters which the defendant could have raised by cross-petition but which are not raised by the pleadings or could not have been litigated under the facts constituting the cause of action under the first suit are not res judicata. (Kenoyer v. Board of Barber Examiners, 176 Kan. 424, 271 P. 2d 267.) Also, in Green v. Kensinger, 193 Kan. 33, 392 P. 2d. 122, this court held: “A judgment is not conclusive as to matters incidentally brought into a trial and not substantially in issue.” (Syl. 5.)

In Ferguson v. Petersime Incubator Co., 146 Kan. 815, 73 P. 2d 1026, we stated:

“. . . We may consider what was actually done at the trial of the counterclaim according to the record as pleaded in the case at bar. If we assume that the damages arose from different wrongful acts, and that each constituted a separate cause of action, then in that situation the rule most favorable to appellant is that stated in Stroup v. Pepper, 69 Kan. 241, 76 Pac. 825:

“ ‘The rule that a judgment in bar, or as evidence in estoppel, is binding not only as to every question actually presented and considered and on which the court rested its decision, but also as to every question that might have been presented and decided, does not apply to a different cause of action between the same parties, except as to questions shown to have been actually decided in the former action.’ (Syl. f 1.)

“This rule has been followed repeatedly in this state.” (P. 820.)

The actual issues in a replevin action are quite limited. In American State Bank v. Holding, 189 Kan. 641, 371 P. 2d 167, this court stated at page 644 of the opinion:

“. . . In substance, the only issue in a replevin action, such as the instant case, is whether the plaintiff is entitled to the possession of the replevin property at the time of the commencement of the action, and the rights of the parties are determined as of that time. . . .”

We must conclude that the appellants have a right to a full and complete accounting of the disposition of the proceeds from the mortgage foreclosure sale including the propriety of the expenses claimed by appellee.

The judgment is affirmed as to all issues except the right to an accounting; it is reversed insofar as it denies to plaintiffs a full and complete accounting of the proceeds from the foreclosure sale.

APPROVED BY THE COURT.