Racine-Sattley Co. v. Hansen

121 N.W. 573, 84 Neb. 525, 1909 Neb. LEXIS 235

• Court: Nebraska Supreme Court
• Decided: May 21, 1909
• Docket: No. 15,680
• Status: Published

Opinion

Fawcett, J.

On March 24, 1906, one Nels Hansen was engaged in the business of selling farm implements at retail at Magnet, in Cedar county. On that date plaintiff sold him quite a large quantity of agricultural implements, and took from said Hansen a written contract, which, among other things, provided that upon receipt of the goods, or upon monthly balances, at the option of Hansen, the. said Hansen should execute notes to the plaintiff for the amount to be paid for the goods so received according to the terms of said written contract, and that all goods ordered thereafter for that season’s trade should be subject to the same conditions as to time and manner of payment as those then being ordered. The plaintiff agreed to give Hansen the exclusive sale of the goods of the classes then ordered at Magnet and vicinity for the season ending July 31, 1906, and Hansen agreed not to buy or sell any other makes or like goods for the same period, and not to countermand the order then given or any part of it except upon payment of 20 per cent, of the net amount of the goods purchased as liquidated damages. The contract further provided: “In case of death of member of firm making this contract, or if the purchaser under this contract sells out, fails or becomes insolvent, or any member of the purchasing firm fails, sells out or becomes insolvent, all accounts or notes for goods purchased under this contract, including renewal notes, regardless of who holds said notes, shall then become due and payable, whether the notes be given in payment for goods or accounts or as' collateral security thereto. The purchaser agrees to settle promptly for any part of the above order, with exchange, by note or accepted draft for all time bills, and cash or its equivalent for all cash bills, and further agrees that all notes of the undersigned are to be secured by good farmers’ notes, proceeds of sales of an equal amount and 20 per • cent, in addition as collateral security to said notes, whenever so requested by the Racine-Sattley Company of Nebraska. The title to the goods (and all proceeds of any sale of same), for which this order is given, and all goods subsequently ordered and the proceeds of sale thereof to remain in the name of the Racine-Sattley Company of Nebraska until the same are settled for with cash; and notes or accepted drafts given are not accepted as payment, but only as evidence of indebtedness.” This contract was not filed in the office of the county clerk of the county, or in any manner made a matter of publicity. Hansen gave his notes for the agreed price of the goods delivered under the contract, which notes were not yet due by their terms at the time of the occurrence of the subsequent events which gave rise to this litigation. Hansen continued to conduct the business, with what success is not disclosed, until on or about July 20 of the same year, when he traded his entire stock, including the unsold portion of the stock covered by the contract, and other goods which had subsequently been delivered to him by the agent of plaintiff, to Dr. J. M. Talcott of Crofton for an equity in a farm. Dr. Talcott duly signed and acknowledged an assignment of his contract for the land in question, but under an agreement with Hansen placed the contract with such assignment indorsed thereon in a bank at Crofton, in which Talcott was a stockholder, and in the banking house of which he had his Office. Under the written contract entered into between Dr. Talcott and Hansen on July 20, Hansen guaranteed all his implement stock as that day invoiced “to be complete in 30 days from date and all extra stock now in building not invoiced! * * * Said Talcott to place contract for land in P. S. Bank, Crofton, to be left for 30 days from day when it shall be turned to said Hansen if said J. M. Talcott finds implement stock complete as stated.”

It is evident from this that Dr. Talcott was taking the stock on Hansen’s invoice, and was reserving to himself thirty days’ time in which to verify the correctness thereof. If found'to be correct, then the assignment of the land contract to be delivered to Hansen. Hansen on his part immediately delivered possession of the stock and business to Dr. Talcott, who placed a man in charge, and for about ten days the business was conducted regularly, so far as the evidence discloses, by Dr. Talcott’s agent. About ten days after Dr. Talcott took possession of the stock and began conducting the business, one E. E. Sutton entered into negotiations with Dr. Talcott for a trade of some farm land for the stock of goods. Pending these negotiations Sutton got in communication with the defendant, Gillilan, and proposed to trade the stock which he was to get from Talcott to Gillilan for one of Gillilan’s farms. After some negotiations Gillilan signified his willingness to make the exchange, he to turn in his quarter section of land at $30 an acre, and to take the stock at invoice prices, and settlement to be made for the difference, whichever way it might be. Sutton thereupon stated to Gillilan that in his trade with Talcott he (Sutton) would have to raise $1,400 in cash, bnt that he did not have the money on hand, or words to that effect. It was then agreed between Sntton and Gillilan that Gillilan Avould advance $1,400 to enable Sutton to complete his deal Avith Talcott, and that he (Gillilan) would take from Sutton a mortgage back on the land, which he Avas conveying to Sutton, for the $1,400. Thereupon Gillilan, by direction of Sutton, drew a check for $1,400 upon his account in the Hartington National Bank, payable to the order of Dr. Talcott. After the taking of the inventory was completed, Sutton called up Dr. Talcott at Crofton by telephone, and told him of the arrangement, stating that Gillilan Avould pay him $1,400 cash. Gillilan was then placed in communication with Talcott and confirmed Sutton’s statement, stating that he was ready to turn over the check as soon as possession of the stock and business was turned over to him. Thereupon Talcott instructed his agent in charge of the business to turn over the stock to Gillilan upon Gillilan’s delivering to him the check for $1,400. The check was delivered, and possession of the stock and business turned over to Gillilan by Talcott’s agent. Gillilan conducted the business for tAvo days, when an agent of the plaintiff appeared upon the scene and claimed to Gillilan that the stock belonged to Hansen, and that plaintiff had a mortgage on it and Avanted to take the stock, which Gillilan refused to deliver up. Gillilan then called up Dr. Talcott and told him of the claim that was being made by plaintiff’s representative, and advised Dr. Talcott that he (Gillilan) was going to stop payment on the check. Gillilan also called up his bank at Hartington and instructed them not to pay the check until further notice. The undisputed evidence of Dr. Talcott is that he had indorsed the check, and deposited it in the Orofton bank, and obtained credit for the $1,400 prior to the time that Gillilan notified him that plaintiff was claiming the stock and that he was going to stop payment on the check. Gillilan’s testimony, which is not contradicted by the plaintiff’s representative, John F. Day, who was present at the trial and testified as a witness, is that Day made no claim to him that plaintiff was the owner of the stock, hut on the contrary, insisted that Hansen owned the stock and that plaintiff had a mortgage on it. Gillilan subsequently had the records examined, and, finding that there was not any mortgage on record against the stock, instructed his bank to pay the $1,400 check, which was done. Finding that Gillilan would not deliver up the stock, the attorney of the plaintiff was sent for and the stock taken by plaintiff under the writ of replevin in this action. The action was tried in the district court for Cedar county to the court and a jury. The jury returned a verdict “that at the commencement of this action the defendant Frank M. Gillilan had the right of property and was entitled to the possession of the property replevied herein, and we assess the value thereof at $3,089.78.” From a judgment upon that verdict this appeal is prosecuted.

Plaintiff’s first contention is that the sale to Hansen was a conditional sale, and that the stock remained, and at the time it was replevied was, the property of plaintiff. Conceding this to be true, plaintiff must still fail in this action, unless the record shows that Dr. Talcott had knowledge or notice which would put a reasonable person upon inquiry that plaintiff had title to the property. Dr. Talcott testified that, at the time he made the deal with Hansen and obtained the possession of the stock, he had no knowledge or notice whatever of any claim or interest of the plaintiff therein. Gillilan also testified that, at the time he made the deal with Sutton and Talcott, he had no knowledge or notice of any interest or claim of plaintiff in the stock. A careful examination of the entire record fails to disclose any evidence which in any manner contradicts or impeaches the testimony of either. So far as this record discloses, Talcott and Sutton and Gillilan were all acting in the utmost good faith, so far as plaintiff was concerned, without any knowledge or notice of anything to put them upon inquiry as to any secret ownership of plaintiff or any one else in the stock. Plaintiff contends that regardless of the question as to whether they had any knowledge or notice of plaintiff’s claim at the time of entering into the negotiations, Gillilan had knowledge of plaintiff’s claim prior to the time he paid for the stock, or at least prior to the time the check he had given had been paid by his bank; that he at least .knew of the fact in time, and that he did in fact stop payment upon the check; and that, if he subsequently instructed his bank to pay the check, it was at his own risk.

Plaintiff insists further that there is no evidence that Gillilan had ever conveyed the farm to Sutton, which he testifies he was to give Sutton as a consideration for the stock. Upon the latter question the evidence is somewhat meager, but we think it was sufficient to warrant the jury in finding, as it must have found, that the farm had been conveyed to Sutton. Gillilan testified without objection that he had the stock of goods in his possession at the time they were taken under the writ of replevin in this suit. “Q. How did they come into your possession? A. I had bought them and paid for them and had them in my possession about three days.” In regard to the $1,400, he testified that Sutton said “he couldn’t put up the $1,400, but, if I would carry him back for this $1,400 that he would have to pay on the stock, and I agreed to it. There was a little mortgage on the land, and we took a second mortgage on the land.” Again he testified: “I put my farm in at $4,800 — $30 an acre.” We think the argument of counsel for Gillilan is sound, that his testimony that “we took a second mortgage on the land,” and that he “put in his farm at $4,800,” is tantamount to testifying that he had deeded the land to Sutton ; that he could not have taken a second mortgage back unless he had conveyed the title. In the absence of any contradictory evidence, we think this was sufficient to warrant the jury in finding that Gillilan had deeded the land to Sutton. As to the $1,400 check, we think it is immaterial whether the check had actually been paid by the Hartington bank before Gillilan received notice of tbe fact that plaintiff was claiming a lien upon it, for two reasons: First, Dr. Talcott had in good faith and without fraud sold and delivered the stock to Gillilan. Gillilan had conveyed the land to Sutton and had thereby paid the full consideration for the stock. The check given to Dr. Talcott was nothing more nor less than a loan by Gillilan to Sutton, secured by a second mortgage upon the land Avhich he had conveyed to Sutton, and, having received the mortgage for the $1,400 and delivered the check in consideration therefor, he liad' no right or authority to stop payment of the check. His subsequent instruction to his bank therefore was an immaterial matter, so far as this case is concerned. If Gillilan had persisted in his instructions to his bank to refuse payment of the check, Talcott could have brought suit upon the check and recovered judgment against Gillilan therefor. By the delivery of his check to Talcott in the manner shown by the evidence, all control over that check had passed from Gillilan. The transaction between himself and Sutton was complete and irrevocable upon the part of either. Second, even if the $1,400 had constituted a part of the consideration which Gillilan was to pay for the stock, he was warranted in recalling his stop order to his bank Avhen he discovered that plaintiff had no such interest in the stock as it claimed to have in Day’s conversation with him. Gillilan testified unqualifiedly that Day’s statement to him was that Hansen owned the stock and that plaintiff had a mortgage upon it. This testimony Day does not attempt to contradict. When Gillilan had the records examined and found that the claim was untrue, he was justified in withdrawing his stop order and alloAvihg the check to go through.

With the moral turpitude of Hansen in selling this stock of goods for which he had not paid we have nothing to do, nor can any blame attach to Talcott, Sutton or Gillilan for the same, unless they had guilty knowledge of it, which, as we have seen, the evidence in the record before us fails to show. But, from a careful reading of tlie contract, we are not entirely satisfied that Hansen was guilty of any fraud in selling tine stock to Dr. Talcott. The contract seems to contemplate the right of Hansen to “sell out” at any time he might see fit so to do. It provided that “in case * * * ¡ the purchaser under this contract sells out, * * * all accounts or notes for goods purchased under this contract, including renewal notes, regardless of who holds said notes, shall then become due and payable.” And in the clause providing that the title to the goods should remain in plaintiff, the contract recites: “The title to the goods (and all proceeds of any sale of same), for which this order is given, * * * to remain in the name of the Racine-Sattley Company of Nebraska until the same are settled for with cash.” A fair construction of this language would seem tq indicate that Hansen might “sell out,” but that, in case he did so, all proceeds of the sale should, in lieu of the stock sold out, remain in the name of plaintiff. Under this wording of the contract, while plaintiff , might be entitled to demand the land contract assigned by Dr. Talcott to Hansen in payment for the stock, it does not necessarily follow that Hansen acted fraudulently in the matter. That his conduct will bear that construction, however, must be conceded. The verdict of the jury amounts to a finding that defendant Gillilan was an innocent purchaser of the stock in controversy for a valuable consideration, and that plaintiff wrongfully took such possession from him. These were questions peculiarly for the jury, and we cannot disturb their finding.

Complaint is made by the plaintiff that the value of the property as found by the verdict is not sustained by the evidence. This Contention must also fail. Hansen was placed upon the stand as a witness. He testified that he had been engaged in the implement business for nearly 20 years; that he had been thus engaged in the retail business in and around Magnet for about 2-1,- years; that he was acquainted with the fair market value of goods such as were replevied; that he was acquainted with the fair market value of the goods taken, in Magnet, at the time they were replevied,. and that their fair and reasonable value was $3,872.50. The only other witness who testified as to the value Avas plaintiff’s representative, Mr. Day, who testified that he knew the stock and value of it, and that it was worth $2,766.20 in the Avholesale house at Omaha, to'which there should be added the freight and drayage from Omaha to Magnet. Plaintiff complains because Day was not permitted to testify what the freight charges from Omaha to Magnet would amount to. This was not error, as no offer was made to prove the facts which would have been elicited if the answers to the questions propounded had been permitted by the court. Alter v. Covey, 45 Neb. 508.

Plaintiff further contends that the verdict of the jury should be set aside because “the verdict of the jury is a compromise and the jury’s guess”; in other words, that they did not find the exact amount which either Hansen or Day testified to, but returned their verdict for an amount between the two, viz., $3,089.78. The jury, after hearing the witnesses and seeing them upon the stand, refused to take the exact figures of either, but arrived at what they found was the fair value of the property. The amount of their verdict is so materially less than that testified to by Mr. Hansen, and so little in excess of that testified to by Mr. Day, that it is clear the jury were not influenced by passion or prejudice against plaintiff. After hearing all of the evidence, the jury exercised their own judgment as to the value of the goods. This we think they had a right to do.

Plaintiff next insists that the verdict is contrary to instruction No. 6, given by the court upon its own motion. This instruction reads as follows: “If the jury believes from the preponderance of the evidence that the defendant Frank M. Gillilan had knowledge of the contract of purchase under which Neis Hansen purchased the goods in question,'or had knowledge of the fact that the purchase price had not been paid, if that be a fact, or if you find that the purchase price was not paid by the said Gillilan until notice sufficient to put a careful and prudent person upon inquiry which would lead to a discovery of the fact, if it be a fact, that said goods had not been paid for by the defendant Hansen, then F. M. Gillilan would not be an innocent' purchaser, and you should find for the plaintiff, and so say by your verdict.” The verdict was certainly not contrary to this instruction, but was in entire harmony with it.

The remaining contention of plaintiff is that the court erred in refusing to give instruction No. 1 requested by appellant, which was an instruction directing the jury to return their verdict in favor of the appellant. In refusing to give this instruction the court did not err.

We have examined the alleged “errors in reception and rejection of evidence,” but are unable to agree with counsel for plaintiff that there was any prejudicial error in the rulings of the court complained of.

Finding no prejudicial error in the record, the judgment of the district court

Affirmed.