STATE SECURITIES COMPANY v. Svoboda

110 N.W.2d 109, 172 Neb. 526, 1961 Neb. LEXIS 103
CourtNebraska Supreme Court
DecidedJuly 14, 1961
Docket34901
StatusPublished
Cited by15 cases

This text of 110 N.W.2d 109 (STATE SECURITIES COMPANY v. Svoboda) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
STATE SECURITIES COMPANY v. Svoboda, 110 N.W.2d 109, 172 Neb. 526, 1961 Neb. LEXIS 103 (Neb. 1961).

Opinions

Brower, J.

Plaintiff and appellant State Securities Company, a corporation, licensed under the Industrial Loan and Investment Company Act, brought this action for damages [527]*527for conversion of certain personal property upon which it held a mortgage against the defendants and appellees William Svoboda and William Svoboda, Jr., individually, and as a copartnership under the name of Svoboda & Sons, auctioneers, who sold the same at the request of the owner and mortgagor Arnold Tambke without plaintiff’s knowledge and consent.

Trial was had to a jury. At the trial most all of the facts were admitted, stipulated, or uncontroverted, leaving no substantial matter in dispute. The plaintiff’s note and mortgage, .dated December 16, 1954, and filed December 20, 1954, in the proper clerk’s office were all proved as alleged. There was due and unpaid thereon $379.58, on the sale date which was shown to be March 7, 1955. A tractor and eight other items of farm machinery which were sold for $519.50, were in the plaintiff’s mortgage and the sale price was proven to be their value. The sale was held on the premises of Lloyd Orth who sold his property ahead of that brought by Tambke. The defendants admitted acting as auctioneers for Tambke and soliciting for the bids and knocking off the property to the bidders. The property of Tambkes was separately advertised as belonging to him. Tambke was present throughout the sale, demonstrated the tractor, and acted about the property as owner. The sale was clerked by the Thayer County Bank through its cashier and president. The Thayer County Bank had a chattel mortgage on the tractor, and most of the other items of substantial value in the plaintiff’s mortgage, together with one or two other small items. Its mortgage which was introduced in evidence was both dated and properly filed in May 1954, and was first in priority. The Thayer County Bank, on receipt of the sale price of $519.50, deducted first the costs of the sale in the amount of $23.96, and the amount of its mortgage of $209.40, which satisfied it in full. The mortgage note was delivered to Mrs. Tambke with a check payable to the Tambkes for the balance of $286.14. At [528]*528that time neither the Thayer County Bank nor its officers, nor the defendants, knew of the plaintiff’s subsequent lien.

At the conclusion of the evidence the plaintiff moved the court for a directed verdict. The motion was overruled. Thereupon, the defendants moved the court to dismiss the plaintiff’s action or direct a verdict for the defendants. The motion was sustained and a judgment was entered dismissing the plaintiff’s action and taxing the costs to the plaintiff;

A motion for new trial being overruled, the plaintiff appeals to this court, assigning as error the overruling of plaintiff’s motion and the sustaining of defendants’ motion for directed verdict. Also it is assigned that the trial court erred in failing to find as a matter of law that defendants as auctioneers and agents of the mortgagors were liable to the plaintiff mortgagee for damages resulting from the tortious conversion; and that it erred in finding the defendants were released from liability by virtue of the disclosure of their principal to the audience at the auction which did not include the plaintiff mortgagee.'

The defendants argue that plaintiff failed to properly plead a special ownership in the property which would entitle it to maintain conversion, and also that the holder of the second mortgage could not maintain conversion against the auctioneer where the first mortgagee of a past-due mortgage received the purchase money and deducted therefrom the amount due on its mortgage and paid the surplus thereof to the mortgagor.

The defendants’ claim that the plaintiff’s petition was insufficient cannot be sustained. Defendants cite several cases, including Raymond Bros. & Co. v. Miller, 50 Neb. 506, 70 N. W. 22; Locke, Huleatt & Co. v. Shreck, 54 Neb. 472, 74 N. W. 970; and Hill v. Campbell Commission Co., 54 Neb. 59, 74 N. W. 388, where the facts constituting the special ownership or the right of immediate possession were not set out or were insuf[529]*529ficiently set out. In some of the cases, it was held that the conclusions stated in the words of the statute were not sufficient. In other cases, the conditions in the chattel mortgage were not shown to have been broken entitling the plaintiff to immediate possession.

In the instant case copies of the mortgage and note were attached to the petition of the plaintiff and made a part thereof. It was pleaded that the defendants acting for and on behalf of the mortgagor Tambke proceeded to sell, and did sell, the mortgaged property to various purchasers and assisted in the disposition of the property. The mortgage provided that, “if any attempt be made to dispose of or remove said property from the county * * *, said mortgagee is hereby authorized to enter upon the premises where the said property may be * * * and remove and sell the same in any manner the said mortgagee may see fit * * *.” The petition alleges that the mortgagor did not pay the installment due on January 26, 1955, before the sale and was thereafter at all times in default. The petition, with the mortgage set out as a part thereof, pleads the fact’s sufficiently and it is not necessary to set out the conclusions of the pleader. Schmidt v. Village of Papillion, 92 Neb. 511, 138 N. W. 725. In 10 Am. Jur., Chattel Mortgages, § 181, p. 836, it was said: “A junior mortgagee who has obtained possession of the property can maintain an action for trespass or trover against a stranger who interferes with his rights. Even though he is not in possession, it is the more general rule that he can maintain an action in replevin or for conversion against the mortgagor or any person other than the senior mortgagee for any taking of the property which is in conflict with his rights as junior mortgagee.” The footnote there states as follows: “The basis of the rule is that a junior mortgagee after condition broken is entitled to the possession of the property as against the whole world except the holder of the sénior mortgagee (sic). Under this rule an attaching creditor of [530]*530the mortgagor stands in the shoes of the mortgagor as respects his rights against a possessory action by the junior mortgagee. Annotation: 43 A. L. R. 389; Ann. Cas. 1916A, 865.” It is apparent in this action there was an excess over the first mortgage and plaintiff has pleaded and may maintain an action for conversion.

By great weight of authority it has been held that an auctioneer who sells mortgaged property at an auction at the request of the mortgagor without the consent or knowledge of the mortgagee converts the mortgaged property and is liable to the mortgagee in conversion for the damages sustained. Bunn v. Walch, 54 Wash. 2d 457, 342 P. 2d 211; Allred v. Hinkley, 8 Utah 2d 73, 328 P. 2d 726; Morin v. Hood, 96 N. H. 485, 79 A. 2d 4; First Nat. Bank of Pipestone v. Siman, 65 S. D. 514, 275 N. W. 347; Birmingham v. Rice Bros., 238 Iowa 410, 26 N. W. 2d 39, 2 A. L. R. 2d 1108; Kearney v. Clutton, 101 Mich. 106, 59 N. W. 419, 45 Am. S. R. 394; Eureka Spring Sales Co. v. Ward, 226 Ark. 424, 290 S. W. 2d 434; 5 Am. Jur., Auctions, § 60, p. 489; 7 C. J. S., Auctions and Auctioneers, § 13c, p. 1270; Annotation, 20 A. L. R. 135. There are many other similar cases in other sister states.

In the jurisdictions following the majority rule the good faith of the auctioneer and his lack of knowledge is not a defense to the action. Kearney v. Clutton, supra; Morin v. Hood, supra.

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STATE SECURITIES COMPANY v. Svoboda
110 N.W.2d 109 (Nebraska Supreme Court, 1961)

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Bluebook (online)
110 N.W.2d 109, 172 Neb. 526, 1961 Neb. LEXIS 103, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-securities-company-v-svoboda-neb-1961.