Tenney v. State Bank of Wisconsin , 20 Wis. 152 ( 1865 )

Dixobt, O. J.

In this case we hold:

1. Assuming the correctness of the proposition urged by the plaintiff’s counsel, that it is competent to show by parol a contemporaneous agreement by which the vessel was to be employed in her business of commerce and navigation, and her earnings applied to the discharge of the debt due to the bant (a point which we do not decide), that the parol evidence establishes no such agreement. On the contrary, our conclusion is, that Branch was to retain the control of the vessel and receive her earnings, and that there was no agreement by which he was bound to apply the earnings specifically to the payment of the debt due the bank. This is obvious from a perusal of the deposition of the chief witness Hibbard. When it was agreed that Branch should continue to manage and control the vessel, the same as though he had given a mortgage, we understand reference to have been made to a chattel mortgage of the kind in common use among us, which provides that, until forfeiture or condition broken, the mortgagor shall retain possession of the property mortgaged. The language of the parties is susceptible of no other reasonable construction. It is true, the witness says that Branch relied upon the earnings as a means of discharging the debt; but this was mentioned as a reason why he preferred a mortgage to a bill of sale; but he did not agree to make such specific appropriation.

ISTeither Iribuschwor the bank had any claim to or interest in the earnings, as such, so long as the vessel remained in the possession of Branch; and they could not have compelled such application of them. Branch could have appropriated them as he saw fit, and they could not have followed the funds into the hands of a third person receiving them with notice of the agreement. They relied upon the interest which Branch had in relieving the vessel from the incum-brance, for the application of the money to the payment of their debt. If a teamster mortgages his team to secure a debt, and stipulates that he is to retain possession, giving as a reason that he wants the team to earn money to pay the debt, no one will contend that the mortgagee is entitled to a specific application of the earnings. If tire teamster neglects to make the application, or to pay the debt, the remedy of the mortgagee is by a seizure and sale of the team, npon which alone he has a lien. It seems to ns, under the parol evidence, that the two cases are precisely analogous. This view of the agreement is corroborated by the subsequent conduct of the parties. Branch retained possession of the vessel, and received and appropriated as he saw fit the proceeds of the voyage made in the fall of 1857, without, so far as we are informed, the slightest objection on the part of Mr. Iribusch or the bank.

2. We hold that there is nothing in the language of the de-feasance, or in the other evidence presented, showing an agreement for such specific appropriation of the earnings. Taken in connection with the parol evidence, which the plaintiff’s counsel insist must be admitted, we hold, as already said, quite the contrary. It is undoubtedly true that, by the writings alone, Iribusch was entitled to the immediate possession of the vessel, and consequently of her earnings. It may also be true that, had he, disregarding the parol agreement, taken and held the possession of the vessel, it would have been his duty to have employed her so as to have earned as much as reasonably could have been for the benefit of the mortgagor ; in which case he must have accounted to the mortgagor for the earnings upon any final settlement. But this would have been the result not of any express agreement that the earnings were to be so appropriated, but of the aiDplication of a familiar principle of law growing out of the relations of the parties. If, then, we reject the parol evidence, and give effect to the written contract alone, the bill of sale and defeasance being taken as one instrument, and construe it as the plaintiff’s counsel claim, and most favorably for the mortgagor, it amounts to no more than a covenant on the part of Iribusch not to sell the vessel in satisfaction of his debt and of the previous liens. Tn the case of an ordinary mortgage, the mortgagee has the right to sell, but Iribusch deprived himself of this right by his agreement to reconvey the vessel when the debt was paid. I am not clear that such is the true construction of the contract, nor that Iribusch, after waiting a reasonable time, the earnings proving insufficient and Branch refusing to pay, would not have been authorized to sell. But supposing that he had no such authority, or, having it, that he sold without allowing Branch a reasonable time in which to redeem, the result is that he broke his covenant, and the question is, what should be the rule of damages ? If, on the other hand, we give effect also to the parol agreement, then he violated his promise by taking the vessel from the possession of Branch and selling it, and the like question of damages arises.

It seems to us that the rule of damages is the same in either case; and this brings us to the third point.

3. "We hold that the rule of damages is, the value of the vessel at the time of the sale; and that the measure of the plaintiff’s recovery must be the value, after deducting the sums then due to the bank and upon prior liens, with interest from the date of the sale. In no view which we have been able to take of the case, can we say that the plaintiff is entitled to an account for the earnings of the vessel after the sale. The sale, under the circumstances, was equivalent to a conversion of the vessel ; and in cases of the conversion of personal property, the value of the property at the time of conversion, with interest by way of damages to the the time of recovery, has always been considered a just and adequate compensation. If Iribusch had taken the vessel without any legal right, and converted it, with no circumstances tending to show malice, or if he had destoyed it by an act of negligence, the rule of damages would have been, the value and interest. "We can perceive no reason for applying a different rule now.

4. We hold that it is now too late to object to the jurisdiction of the court. The defendants, by answering and proceeding to a trial upon the merits, waived it. It is well settled that the objection that the plaintiff has an'adequate remedy at law must be taken, in tke first instance, by answer. The defendant, by not taking the objection by answer, waives it in all cases except those of such purely legal character as that a court of equity, from its peculiar organization, cannot afford relief: such for instance as slander, assault and battery, and other actions for tort sounding purely in damages, or cases involving dry legal titles to land, or debt on a written instrument. McDonald v. Crockett, 2 McCord’s Eq., 130; Cable v. Marlin, 1 How. (Miss.), 558; Underhill v. Van Cortland, 2 Johns. Ch., 369; Ludlow v. Simond, 2 Caines’ Cas., 1. In this case, although the plaintiff has an adequate remedy at law, yet we think there is not a total want of jurisdiction in equity. The relation of mortgagor and mortgagee, and that of vendor and vendee under an executory agreement to convey property, is one of trust; and this is one of the peculiar heads of the jurisdiction of equity. Inhusch held the vessel under a trust to reconvey it to Branch upon the conditions named in the defeasance, and the cause of action grows out of the violation of such trust. Courts of equity will sometimes enforce specific performance of agreements relating to personal property; and if the defendant does not object at the proper time, we see no reason why the court may not, in a case like this, give compensation in damages where the perfomance becomes impossible, as is done in like actions instituted to compel the performance of contracts relating to real property. At all events, cases where the courts have dismissed bills for want of jurisdiction, no objection having been taken, are very scarce.

As suggested by counsel, the court can, no doubt, make an issue and send the cause to a jury to determine the amount of damages, and this would seem to obviate all objection to the jurisdiction.

This opinion proceeds, of course, upon the supposition that Mr. Branch knew nothing of, and did not assent to, the sale by Inbusch. We find no evidence in the case authorzing us to conclude that he did know of or has assented to the sale.

By the Gourt. — Judgment reversed, and cause remanded for further proceedings according to law.

Downer, J., Raving been of counsel for the respondent, took no part in the decision of this cause.