OOSHOW, J.
The allegations in the complaint charging fraud to the defendant are not sustained by the evidence. Fraud is never presumed, but must be established by clear and convincing evidence. The plaintiff alleged fraud and had the burden of proof to establish it. In our opinion, the evidence is not sufficient to establish any fraudulent intention on the part of the defendant in either his representations or conduct in entering into the partnership relation with the plaintiff. It follows that plaintiff is not entitled to a decree canceling the quitclaim deed.
The Circuit Court found that the partnership was dissolved December 15, 1919. This finding was doubtless based upon the conduct of the parties. In
this finding we concur. We believe the evidence justifies the finding that the conduct of the defendant in taking over active management of the partnership •affairs and practically ousting the plaintiff from further participation in the partnership business amounted to a dissolution of the partnership in view of the conduct of the plaintiff thereafter. The complaint is based upon that theory of the case. Plaintiff complains in his reply brief because the court did not order a sale of the property belonging to the partnership December 15, 1919, and decree an accounting of the partnership affairs. In this contention the plaintiff is taking a position inconsistent with the theory on which he framed his complaint and presented his case. We believe that the plaintiff has no just ground for complaint, because the court found that the partnership was dissolved December 15, 1919, and that the defendant was the owner of the personal property thereafter. Defendant’s conduct was a conversion of plaintiff’s interest in the personal property.
The defendant held the promissory note for $14,131.58. This note was secured by a chattel mortgage covering all of the interest of the plaintiff in and to the cattle belonging to the partnership described as follows:
“About 350 head of stock cattle, together with all the offspring and increase from and of said cattle, the same being branded ‘Y’ on the left side.”
The promissory note was payable on demand and was dated March 18, 1919. It was, therefore, past due December 15, 1919, and the defendant, by its terms and by the terms of the chattel mortgage, was lawfully entitled to take possession of the property.
The defendant denies that he took possession of
the property by virtue of the chattel mortgage, and insists that he simply exercised the right of a partner to participate in the management of the partnership affairs. The Circuit Court, however, found against Mm and we believe rightly. The partnership agreement prescribed that the plaintiff should devote all of his time to the partnership affairs. No such requirement, on the part of the defendant, is to be found in the partnership agreement. Both parties agreed that they contemplated that it would require at least ten years to build up the herd and to place the business on a profit-producing basis. Both parties testified that the defendant agreed to finance the partnership. The only disagreement in the record is regarding the amount of money it would require to do that.
The defendant contends that after December 15, 1919, he conducted the business in the interest of the partnership. All of his acts and his entire conduct show that he conducted the business in his individual name. This manner of doing business was in direct conflict with the articles of copartnership. He undertakes to explain his conduct in receiving checks payable for partnership property, which he sold in Ms own name, and in paying all alleged partnership obligations by checks on his private account. Some of the checks so received by defendant were written by himself. He testified that it was more convenient to transact the business in that way. The reasons assigned by him are not convincing. He testified that the check-book used by the partnership was a large one and could not be conveniently carried with him; that he was traveling a great deal and that it was more convenient to use a small checkbook. No reason is given, however, why he could not
have used a small check-hook in drawing on the partnership account. The conduct of the defendant entirely overcomes his testimony to the effect that he was conducting the business after December 15, 1919, as partnership business. By taking possession of the partnership property and thereafter holding it without selling it or foreclosing the chattel mortgage, he converted the partnership property to his own use.
Mr. Justice Bean, in
Laam
v.
Green,
106 Or. 311, 321 (211 Pac. 791), states the rule of law, where the mortgage of personal property has converted it to his own use, as follows:
“The general rule for the measure of damages in an action by a mortgagor against a mortgagee for a conversion of the mortgaged property is the difference between the market value of the property at the time of the conversion and the amount of the mortgage debt:
Springer
v.
Jenkins,
47 Or. 502 (84 Pac. 479);
Swank
v.
Elwert,
55 Or. 501 (105 Pac. 901).
Lomax
v.
Walk,
33 Or. 385, 386 (54 Pac. 199), is a case very similar to the case at bar. It was a suit betw.een partners for the dissolution of a partnership and for an accounting.
The plaintiff, Lomax, mortgaged his interest in the partnership property to his partner the defendant Walk.
“The mortgage provides that if the defendant ‘at any time deemed himself insecure,’ it shall be lawful for him to take possession of the property therein described, ‘and the same to sell and dispose of at public or private sale, as he may see fit, and out of the proceeds arising from such sale to retain and pay’ the amount due on such promissory note.”
The defendant Walk, deeming himself insecure, took possession of the property but before the note, which it was given to secure, matured. He held the
property about nine months after the maturity of the note, and then proceeded to advertise and sell the mortgaged property at public sale as provided in the mortgage. On page 387, the court, speaking through Mr. Justice R. S. Bean, said:
“The validity of the mortgage, and the right of the defendant to take possession of the mortgaged property before the maturity of the note, are conceded by the plaintiff. His sole contention is that defendant, having exercised the right given him, and taken possession of the property, ought to have sold and disposed of it within a reasonable time thereafter, and, not having done so, he must account for its value at the time of the taking. The rule upon this subject, as gathered from the authorities, seems to be that a mortgagee of personal property of a perishable nature, or the value of which is liable to fluctuate in the market, who takes possession under the terms of his mortgage, must sell and dispose of the property in the manner authorized by law for a foreclosure of such mortgage within a reasonable time thereafter, or he will be liable for its value at the time he took it into his possession.
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OOSHOW, J.
The allegations in the complaint charging fraud to the defendant are not sustained by the evidence. Fraud is never presumed, but must be established by clear and convincing evidence. The plaintiff alleged fraud and had the burden of proof to establish it. In our opinion, the evidence is not sufficient to establish any fraudulent intention on the part of the defendant in either his representations or conduct in entering into the partnership relation with the plaintiff. It follows that plaintiff is not entitled to a decree canceling the quitclaim deed.
The Circuit Court found that the partnership was dissolved December 15, 1919. This finding was doubtless based upon the conduct of the parties. In
this finding we concur. We believe the evidence justifies the finding that the conduct of the defendant in taking over active management of the partnership •affairs and practically ousting the plaintiff from further participation in the partnership business amounted to a dissolution of the partnership in view of the conduct of the plaintiff thereafter. The complaint is based upon that theory of the case. Plaintiff complains in his reply brief because the court did not order a sale of the property belonging to the partnership December 15, 1919, and decree an accounting of the partnership affairs. In this contention the plaintiff is taking a position inconsistent with the theory on which he framed his complaint and presented his case. We believe that the plaintiff has no just ground for complaint, because the court found that the partnership was dissolved December 15, 1919, and that the defendant was the owner of the personal property thereafter. Defendant’s conduct was a conversion of plaintiff’s interest in the personal property.
The defendant held the promissory note for $14,131.58. This note was secured by a chattel mortgage covering all of the interest of the plaintiff in and to the cattle belonging to the partnership described as follows:
“About 350 head of stock cattle, together with all the offspring and increase from and of said cattle, the same being branded ‘Y’ on the left side.”
The promissory note was payable on demand and was dated March 18, 1919. It was, therefore, past due December 15, 1919, and the defendant, by its terms and by the terms of the chattel mortgage, was lawfully entitled to take possession of the property.
The defendant denies that he took possession of
the property by virtue of the chattel mortgage, and insists that he simply exercised the right of a partner to participate in the management of the partnership affairs. The Circuit Court, however, found against Mm and we believe rightly. The partnership agreement prescribed that the plaintiff should devote all of his time to the partnership affairs. No such requirement, on the part of the defendant, is to be found in the partnership agreement. Both parties agreed that they contemplated that it would require at least ten years to build up the herd and to place the business on a profit-producing basis. Both parties testified that the defendant agreed to finance the partnership. The only disagreement in the record is regarding the amount of money it would require to do that.
The defendant contends that after December 15, 1919, he conducted the business in the interest of the partnership. All of his acts and his entire conduct show that he conducted the business in his individual name. This manner of doing business was in direct conflict with the articles of copartnership. He undertakes to explain his conduct in receiving checks payable for partnership property, which he sold in Ms own name, and in paying all alleged partnership obligations by checks on his private account. Some of the checks so received by defendant were written by himself. He testified that it was more convenient to transact the business in that way. The reasons assigned by him are not convincing. He testified that the check-book used by the partnership was a large one and could not be conveniently carried with him; that he was traveling a great deal and that it was more convenient to use a small checkbook. No reason is given, however, why he could not
have used a small check-hook in drawing on the partnership account. The conduct of the defendant entirely overcomes his testimony to the effect that he was conducting the business after December 15, 1919, as partnership business. By taking possession of the partnership property and thereafter holding it without selling it or foreclosing the chattel mortgage, he converted the partnership property to his own use.
Mr. Justice Bean, in
Laam
v.
Green,
106 Or. 311, 321 (211 Pac. 791), states the rule of law, where the mortgage of personal property has converted it to his own use, as follows:
“The general rule for the measure of damages in an action by a mortgagor against a mortgagee for a conversion of the mortgaged property is the difference between the market value of the property at the time of the conversion and the amount of the mortgage debt:
Springer
v.
Jenkins,
47 Or. 502 (84 Pac. 479);
Swank
v.
Elwert,
55 Or. 501 (105 Pac. 901).
Lomax
v.
Walk,
33 Or. 385, 386 (54 Pac. 199), is a case very similar to the case at bar. It was a suit betw.een partners for the dissolution of a partnership and for an accounting.
The plaintiff, Lomax, mortgaged his interest in the partnership property to his partner the defendant Walk.
“The mortgage provides that if the defendant ‘at any time deemed himself insecure,’ it shall be lawful for him to take possession of the property therein described, ‘and the same to sell and dispose of at public or private sale, as he may see fit, and out of the proceeds arising from such sale to retain and pay’ the amount due on such promissory note.”
The defendant Walk, deeming himself insecure, took possession of the property but before the note, which it was given to secure, matured. He held the
property about nine months after the maturity of the note, and then proceeded to advertise and sell the mortgaged property at public sale as provided in the mortgage. On page 387, the court, speaking through Mr. Justice R. S. Bean, said:
“The validity of the mortgage, and the right of the defendant to take possession of the mortgaged property before the maturity of the note, are conceded by the plaintiff. His sole contention is that defendant, having exercised the right given him, and taken possession of the property, ought to have sold and disposed of it within a reasonable time thereafter, and, not having done so, he must account for its value at the time of the taking. The rule upon this subject, as gathered from the authorities, seems to be that a mortgagee of personal property of a perishable nature, or the value of which is liable to fluctuate in the market, who takes possession under the terms of his mortgage, must sell and dispose of the property in the manner authorized by law for a foreclosure of such mortgage within a reasonable time thereafter, or he will be liable for its value at the time he took it into his possession. Jones on Chattel Mortgages, § 773; 2 Cobbey on Chattel Mortgages, § 988;
In re Haake,
2 Sawy. 231, Fed. Cas. No. 5883;
Lee
v.
Fox,
113 Ind. 98 (14 N. E. 889);
Waite
v.
Dennison,
51 Ill. 319;
Howery
v.
Hoover,
97 Iowa, 581 (66 N. W. 772);
Whittemore
v.
Fisher,
132 Ill. 243 (24 N. E. 636). And in our opinion it is of no consequence, under the terms of a mortgage like the one in hand, that he takes possession before the maturity of the note. If he exercises a right given him by the mortgage, and takes possession before the note becomes due, he is bound to exercise the same degree of diligence in selling and disposing of the property as if the note had matured. * # His right to take possession is for the purpose of foreclosing his mortgage by selling and applying the proceeds of the property to the payment of his debt. And when he takes such possession he must proceed diligently to foreclose, or he will be required to ac
count to the mortgagor for the value of the property taken.”
In that case, as in the instant case, the property declined in value after possession was taken by the mortgagee, and before he proceeded to sell. Applying these authorities to the instant case, the defendant is liable to the plaintiff for the value of one half of all the partnership property, as of December 15, 1919.
All of the parties agree that the herd of cattle owned by the partnership in the instant case is a superior herd. All of the steers, which had been owned by the partnership, had been sold. The larger part of the herd remaining were stock cattle, which were purchased for breeding purposes. The object of the partnership was to build up a superior herd of beef cattle. The parties agreed that this could not be done in less than ten years.
The defendant claims there was a slump in the price of cattle in December, 1919, but the testimony of a disinterested witness, who testified regarding the value of cattle during that period, is to the effect that the decline in cattle began about April, 1920. The defendant having taken possession of the property and having retained it, should have accounted specifically for the value of all of the property so taken. In the state of the record, we are unable to ascertain how the learned Circuit Judge reached the amount he did in his findings of fact set out in the statement above. We believe, under the circumstances, that every doubt as to the value of the property and the business should be resolved in favor of the plaintiff. He was at the mercy of the defendant. The defendant held a chattel mortgage securing the note, which, by its terms, was past due. The plain
tiff could not, therefore, withhold possession from the defendant, or prevent the foreclosure. He was helpless.
By the conduct of the defendant the object for which the partnership was organized was defeated. The prospect, therefore, of reaping a profit from the partnership was swept away by the conduct of the defendant. His conduct was in direct violation of the partnership agreement. For that reason, we believe that equity and justice requires that the defendant be held to have taken over the partnership property in satisfaction of the mortgage indebtedness owing him by the plaintiff. This conclusion is reached, largely, because we are unable, from the state of the record, to make an accurate and satisfactory accounting between the parties. We can only approximate the value of the property of the partnership converted by the defendant to his own use. The value of the property, so converted .by defendant, approximates the amount of plaintiff’s indebtedness to defendant. When the defendant became dissatisfied, he should have pursued the methods provided in his partnership agreement to dissolve the corporation. If he had strictly followed his agreement with the plaintiff, foreclosed the mortgage as provided therein, the court would have been in a position to have accurately applied the law and have done equity between the parties.
Defendant’s conduct not only deprived the plaintiff of his interest in the partnership property, but also of every prospect of reaping any benefit from his investment of time and money in the partnership undertaking.
The findings of the Circuit Court in effect charged the defendant with having converted all of the per
sonal property belonging to the partnership. The chattel mortgage covered only the cattle. The horses, tools and machinery belonging to the partnership were not covered by the chattel mortgage. The value of that property, however, is stated with reasonable accuracy and doubtless was taken into consideration by the Circuit Court in reaching his conclusion. Plaintiff’s own testimony, regarding the value of the cattle covered by the chattel mortgage, does not make that value as much as the mortgage indebtedness. The difference is small and is fully covered by the personal property converted by the defendant and not included in the chattel mortgage.
The testimony, regarding damages sustained by plaintiff, is not sufficiently definite and specific to justify any judgment for plaintiff other than costs and disbursements.
The alleged damages claimed by plaintiff for the use of the land during 1921 are not within the issues framed by the pleadings and are not considered in our decision.
The decree of the lower court will be reversed and a decree entered here to the effect that the partnership between the plaintiff and defendant was dissolved December 15, 1919; that the defendant then and there converted to his own use the property of the partnership and all of the interest of the plaintiff therein; that by the conversion by the defendant to his own use of the interest of the plaintiff in and to all the personal property, the promissory note held by the defendant against the plaintiff was paid and the same should be canceled; that the chattel mortgage was thereby satisfied; that the plaintiff and defendant are the owners as tenants in common of the real property described in the quitclaim deed re
ferred to in plaintiff’s complaint, and described in defendant’s answer, and that plaintiff recover his costs and disbursements both in this court and in the Circuit Court. Reversed and Decree Entered.
McBride, C. J., and Bean and Brown, JJ., concur.