Civil No. 1698. Third Appellate District. September 25, 1918. W. R. HENDERSON, Plaintiff and Respondent, v. W. F. FISHER, Defendant and Appellant.

11] CHATTEL MORTGAGE-SALE OF PROPERTY-PURCHASE BY MORTGAGEE-VOID SALE. A sale of personal property made under a chattel mortgage is at least voidable, if not void, where the mortgagee, through his agent, conducted the sale and became the purchaser of the property.

[2] ID.-MANNER OF SALE-DISREGARD OF DIRECTIONS OF MORTGAGOR-VOID SALE. Where the mortgagee disregards the directions of the mortgagor as to the manner in which the property should be sold, the sale is subject to be set aside for unfairness.

[3] ID. FAIRNESS OF SALE. To be effective a sale by a mortgagee must in all respects be fairly and honestly conducted, and he has no right by any unfairness to sacrifice the property for anything less than its fair market value; the conduct and fairness of a sale of chattels by a mortgagee, and the rights acquired under such sale are always open to investigation by the mortgagor.

[4] ID.-RIGHT OF MORTGAGEE TO PURCHASE. As a general rule the mortgagee can not purchase at his own sale under the power in the mortgagee in the absence of an agreement in the mortgage or statutory provisions to that effect.

[5] ID.-WRONGFUL PURCHASE BY MORTGAGEE-EXTENT OF LIABILITY.-Where a mortgagee purchases at his own sale, he becomes liable to the mortgagor for the actual value of the property at the time of the sale without reference to the amount bid.

Appeal from the Superior Court of Modoc County-Clarence A. Raker, Judge.

For Appellant-Jamison & Wylie.

For Respondent-C. S. Baldwin.

The action involved the validity of a sale of certain horses and mules under chattel mortgage of the same given in connection with a real estate mortgage to secure the payment of a promissory note of $4,000 and interest. The sale of said personal property was set aside by the court by reason of irregularity in the proceedings connected with said sale and, also, because the court found that said sale was unfairly and fraudulently conducted by the defendant with the "intent and design on his part to foreclose plaintiff's equity of redemption in and to the mortgaged personal property and to purchase the same thereat for himself and for his own use and benefit at a sum far less than the actual value thereof".

The irregularity in said sale consisted in the fact that the defendant was a purchaser of the property and that he disregarded the directions of plaintiff as to the order in which the property should be sold.

There can be no doubt that the findings of the court in these particulars are amply supported by the evidence, and that the said findings warrant the judgment that was entered in favor of plaintiff for the recovery of the sum of $1,941.66.

As to the sale, the law provides that it must be had at "public auction in the manner and upon the notice of sale of personal property under execution". (Civ. Code, 2967, 3005.)

Section 694 of the Code of Civil Procedure prescribes the manner of sale under execution, and the portions of this section particularly applicable to the case at bar are as follows:

"Neither the officer holding the execution nor his deputy can become a purchaser or be interested in any purchase, at such sale. When the sale is of personal property, capable of manual delivery, it must be within view of those who attend the sale, and be sold in such parcels as are likely to

bring the highest price." Furthermore, "the judgment debtor, if present at the sale, may also direct the order in which the property, real or per sonal, shall be sold, when such property consists of several known lots or parcels, or of articles which can be sold to advantage separately, and the sheriff must follow such directions".

[1] Since it appears, both from the pleadings and the evidence, that the mortgagee, through his agent, conducted the sale and became a purchaser of the mortgaged property at such sale the position of appellant was analogous to the sheriff in conducting an execution sale, and, hence, the effect as to appellant of said sale would be the same as if the sheriff had bid at an execution sale. But, in the latter instance, under the decisions, there can be no doubt that the sale would be, at least, voidable, if not void. (Wickliff v. Robinson, 18 Ill. 145; Price v. Thompson, 84 Ky. 219; Carr v. Houser, 48 Ga. 417.)

The case of Wright v. Ross, 36 Cal. 442, is cited by appellant in support of the position that the mortgagee may become a purchaser of the mortgaged property. It is to be observed, however, that this case related to a judicia! sale and was had before section 3005 of the Civil Code was amended in 1909. That decision is not in point upon the proposition before us.

As to the manner of sale the court found: "that at said sale all of said property was sold en masse; that plaintiff was present at said sale and made a reasonable effort to have said property sold in parcels to suit the convenience of bidders present at said sale and that his efforts in that behalf were ignored by defendant and his agent who conducted said sale; that bidders present at said sale offered to defendant and to his agent who conducted said sale to bid reasonable sums for certain portions of said property less than the whole, but that said offers were ignored by defendant and his agent who conducted the sale, and that the character of said personal property is such that it would probably bring more if sold in parcels than if sold en masse".

As before stated, this finding is supported by the evidence. It further appears from the evidence and the court found that the value of said mortgaged property was at the time of said sale and ever since has been of the amount of $2,500. It was all sold, however, for the sum of $506. It was upon that fact in connection with the manner in which the sale was conducted that the court based its decision that this sale was unfairly and fraudulently conducted by defendant, which finding we have herein before sufficiently recited. [2] We think that this finding was justified by the facts to which we have hereinbefore alluded.

As to the principles of law applicable to the facts of the case there can be little dispute and we may briefly state them.

[3] To be effective a sale by a mortgagee must in all respects be fairly and honestly conducted, and he has no right by any unfairness to sacrifice the property for anything less than its fair market value. The conduct and fairness of a sale of chattels by a mortgagee, and the rights acquired under such sale will always be open to investigation at the instance of the mortgagor. [4] As a general rule, the mortgagee can not purchase at his own sale under the power in the mortgage in the absence of an agreement in the mortgage or of statutory provisions to that effect. His purchase may invalidate the sale and does not bar the mortgagor of his equity of redemption. [5] By such act, a mortgagee becomes liable to the mortgagor for the actual value of the property at the time of the sale without reference to the amount bid. His liability, in such cases, is for the difference between the market and the actual value of the property sold, notwithstanding he was not guilty of actual fraud.

Where the mortgaged property consists of many parcels, and the mortgagee offers the whole for sale in a lump, instead of offering it in such lots as would suit the convenience of buyers, this is considered an unfair manner of sale.

The foregoing principles of law applicable to the situation are enunciated in a note to the case of Wygal v. Bigelow, 16 Am. St. Reps. 495, to which we may refer for a comprehensive discussion of the whole subject. Many cases are therein considered which have an important bearing upon the position of respondent herein and are in harmony with the decision of the trial court.

It may be remarked in conclusion that the court allowed appellant credit for the balance due on his note, and gave plaintiff judgment for the difference between that and the actual value of the stock as shown by the evidence. We car see no merit in the claim of appellant and presume he probably concluded that there was no valid answer to respondent's contention, as he has filed no final brief in the case and did not appear for oral argument.

The judgment is affirmed.

We concur:

BURNETT, J.

HART, J.

CHIPMAN, P. J.

Civil No. 1545.

Third Appellate District. September 25, 1918. BYRON A. BEARCE et al., Plaintiffs and Appellants, v. J. M. DAVIS, Defendant and Respondent.

[1] ACTION ON PROMISSORY NOTE-DENIAL OF EXECUTION-CONFLICT OF EVIDENCE-APPEAL-AFFIRMANCE OF JUDGMENT.-In this action to recover on a promissory note wherein the defendant denied its execution, it is held that in view of the conflict in the testimony, the verdict of the jury in favor of defendant will not be disturbed.

Appeal from the Superior Court of Merced County-E. N. Rector, Judge. For Appellants-James D. Meredith.

For Respondent-F. W. Henderson.

The transcript on appeal in this case was filed April 30, 1916. The time for filing opening brief by appellants expired May 22, 1916, and on that day the time for filing appellants' brief was extended thirty days. No further extension of time was asked and none granted. The cause was placed upon the September calendar, 1918, and due notice thereof given to the attorneys for the respective parties. At the call of the calendar there was no appearance by either party and the cause was ordered submitted on the record. We have before us nothing but the clerk's transcript, showing the judgmentroll, and the reporter's transcript of the proceedings at the trial. We might, with propriety, affirm the judgment on the assumption that the appeal has been abandoned. We have, however, examined the record. nature of the action and the defense thereto will be seen from the following instruction given by the court:

The

"This is an action in which plaintiff seeks to recover judgment against defendant J. M. Davis upon a promissory note alleged to have been executed by defendant and thereafterwards endorsed by him and delivered to B. H. Payne, who plaintiff claims subsequently sold and assigned said promissory note to plaintiff. Plaintiff alleges that said promissory note is for the principal sum of $1,000 together with interest on said sum from January 12,

1915, until paid at the rate of six per cent per annum. Plaintiff contends that the promissory note sued on herein was executed on the 12th day of January, 1915, by defendant J. M. Davis, and sold and assigned before the maturity thereof by B. H. Payne, defendant's indorsee, to plaintiff for a valuable consideration. Plaintiff alleges that no part of the principal sum nor any of the interest thereon has ever been paid by defendant.

"By way of defense defendant denies the execution of the note pleaded in plaintiff's complaint, denies that he ever signed the same or that he ever indorsed it or delivered it to B. H. Payne."

The cause was tried by a jury and defendant had the verdict, and judgment followed in his favor.

Defendant testified to the circumstances surrounding the execution and delivery to Payne, in 1914, a note for like amount, but positively denied the execution of any other note or of the note in suit. Payne testified quite as positively that this note was executed by defendant and delivered to him by defendant on the day of its date. Upon the question of execution and delivery of the note the evidence was in conflict.

The court instructed the jury as follows:

"Plaintiff alleges that on the 12th day of January, 1915, defendant executed the note pleaded in its complaint and defendant denies this. I instruct you that the date of said instrument as alleged is material and you must find, if you find in favor of the plaintiff, that on the 12th day of January, 1915, or thereabouts, defendant executed a note for the principal sum of $1,000, bearing date January 12, 1915, as alleged in plaintiff's complaint.

"Defendant admits that on or about the 25th day of July, 1914, he executed a promissory note for the principal sum of $1,000 bearing date on said day and delivered the same to B. H. Payne. I instruct you that proof of or admission of the execution by defendant of the last mentioned note is no proof of the execution, if any, of the note sued on in this action.

"In order for plaintiff to recover, among other things, it must be proved that defendant executed and delivered the identical note pleaded in its complaint; proof of the execution of another note will be of no avail."

[1] The issues were thus very clearly placed before the jury. There was testimony as to the circumstances under which Payne received the note given by defendant in 1914 and their subsequent relations which we do not think it necessary to set forth, but which may have influenced the jury in reaching their verdict. However, there was a conflict in the testimony upon the main issue. The jury accepted the defendant's testimony as true and having done so the verdict for defendant necessarily followed. Under the rule, where there is substantial evidence sufficient to support the verdict the reviewing court will not interfere.

The judgment is affirmed.

We concur:

HART, J.

BURNETT, J.

Civil No. 2456. First Appellate District.

CHIPMAN, P. J.

September 26, 1918.

J. A. WALDTEUFEL, Plaintiff and Appellant, v. C. H. JONES, Defendant and Respondent.

[1] BROKER'S COMMISSION-PROCURING OF AGREEMENT FOR LEASE WITH OPTION TO PURCHASE-NEGATIVE FINDING SUPPORTED BY EVIDENCE.-In this action to recover a commission for obtaining an agreement for a lease of

certain property containing an option to purchase, it is held that the finding that the plaintiff did not procure such an agreeemnt is supported by the evidence.

Appeal from the Superior Court of Mendocino County-J. Q. White, Judge.

For Appellant-W. D. L. Held.

For Respondent-Robert Duncan.

This is an action to recover broker's commissions for obtaining interests in certain real estate. The defendant had judgment in the trial court, the plaintiff has appealed, and has brought up the record under section 953A, Code of Civil Procedure. In his complaint the plaintiff alleged that the defendant employed him "to acquire for and on behalf of said defendant, an option to purchase said property and to lease the same". The trial court made a negative finding on the above allegation. The appellant claims such finding is not supported by the evidence.

[1] The allegation is not clear, but the plaintiff tried the case on the theory that the allegation of his complaint was to the effect that he was employed to obtain an agreement for a lease containing an option to purchase. Taking plaintiff's theory as to the meaning of his pleading, we think the finding complained of is sustained by the record. It is an admitted fact that at San Francisco, in the absence of the plaintiff, the defendant leased from J. A Ridemeyer the property known as Vichy Springs; that the lease commenced June 1st, 1914, and was to expire March 1st, 1917; the rental was fixed at $2,500 per year, payable June 1st, 1914, March 1st, 1915, and March 1st, 1916; the property leased was described (partly by government subdivisions and partly by metes and bounds) as "containing in the neighborhood of 900 acres", also the equipment of the hotel, consisting of kitchen range, kitchen and dining room and bedroom furniture, and linen; the lease contained an option to purchase for the sum of $55,000 the above mentioned real and personal property, or to purchase for $70,000 that property and adjacent lands, 1,400 acres in all. The plaintiff did not produce any evidence that he ever obtained an agreement for a contract containing such terms. The lessor, J. A. Ridemeyer, testified positively that he never gave to the plaintiff any agreement for any lease. The record shows a conflict in the evidence on the quoted finding, if not a failure of proof. The judgment should be affirmed and it is so ordered. STURTEVANT, J. pro tem.

We concur:

BEASLY, J. pro tem.

LENNON, P. J.

Civil No. 2516. First Appellate District. September 25, 1918.

W. H. WRIGHT et ux., Plaintiffs and Respondents, v. YOSEMITE TRANSPORTATION COMPANY, Defendant and Appellant.

[1] COMMON CARRIERS-DUTY TO PASSENGERS.-A carrier of persons for reward must use the utmost care and deligence for their safe carriage.

[2] ID.-ACTION FOR DAMAGES-PERSONAL INJURIES-NEGLIGENCE OF STAGE COMPANY-SUFFICIENCY OF EVIDENCE.-In this action against a stage company for damages for personal injuries, it is held that the findings of negligence on the part of the company are supported by the evidence.

Appeal from the Superior Court of Mariposa County-J. J. Trabucco, Judge.