Houghtelin v. Diehl , 47 Idaho 636 ( 1929 )

The majority opinion entirely overlooks the agreement made between Houghtelin and Diehl, and though the bank was not a party to it, it was acquiesced in by the bank and the bank now relies on it.

This agreement was found by the court to be as follows:

" . . . . that said instrument (bill of sale from Diehl to Houghtelin) was executed and delivered by said Diehl for the purpose and with the understanding that said A.L. Houghtelin would manage, control and dispose of the property therein referred to to the best advantage, and would apply the proceeds received from the sale thereof, including Diehl's share of the crops on the ranch in question, first, to the payment of the debts due by said Diehl to the Hazleton State Bank, including both the secured and unsecured debts described in paragraphs 3 and 4 thereof, and secondly, to the payment of the debt then due by Diehl to said Houghtelin Sheep Company, and thirdly, any amount remaining to be paid to Diehl, or deposited to his credit."

By this agreement it is apparent that before Houghtelin could take the property and dispose of it and pay the bank its mortgage he was to have possession of the property, and by the agreement was to manage and dispose of it. Conceding for the purposes of argument that the attachment was superior to the bill of sale, Houghtelin in paying the mortgage was seeking to carry out the agreement when stopped by the bank.

Houghtelin having paid the mortgage is clearly entitled to be subrogated to the amount paid by him on the mortgage. He owed no debt to the bank.

The majority opinion announces the doctrine that before subrogation can be claimed, the creditor must be paid in full. Houghtelin was never a debtor of the bank. He agreed to take the property and dispose of it and pay Diehl's debt. He advanced his own money in furtherance of the contract and now the bank keeps both the property and the money. This is clearly inequitable, unjust and contrary to one of the fundamental principles of subrogation that when a person pays an obligation in an attempt to protect what he considers his property, he is entitled to subrogation. (2 Jones on Mortgages, 8th ed., secs. 1111, 1122; 5 Pomeroy's Equitable Remedies, 2d ed., secs. 2343, 2346; 2 Story's Equitable Jurisprudence, 14th ed., sees. 706, 720; Jones on Chattel Mortgages, 5th ed., sec. 659; seePlatte Valley Cattle Co. v. Bosserman-Gates etc. Co., 202 Fed. 692, 121 C.C.A. 102, 45 L.R.A., N.S., 1137.)

Recognizing the superiority of the chattel mortgage, it was incumbent on appellant to protect his right of possession, since the bank had commenced foreclosure of the mortgage. In view of that fact, the language in Boise Development Co. v. Boise, 30 Idaho 675, at 684, 167 P. 1032, at 1033, is pertinent, apt and, I believe, squarely in point:

"But it is essential in order to apply the doctrine of election of remedies that the party must actually have had at his command more than one remedy. As was said by this court in an early case, 'He must not only think he has them, but must in fact have them.' (Elliott v. Collins, 6 Idaho 266, 55 P. 301.) . . . . Applying the rule to the facts in this case, it is apparent that the plea of election of remedies must fail. Respondent sued for the breach of what it believed to be a contract, when as a matter of fact no such contract was in existence."

Thus in the case at bar the appellant in the replevin action thought he had a bill of sale but the court found that it was not a bill of sale.

This in no way injures respondent, since respondent's attachment claim was clearly secondary to the chattel mortgage. Appellant, by paying off the chattel mortgage, merely stepped into respondent's shoes.

Houghtelin did not get any advantage by claiming subrogation. All the bank was ever entitled to under its chattel mortgage or the attachment was the property. By seeking subrogation, Houghtelin is not attempting to have his claim against Diehl paid but is merely seeking reimbursement for what he paid in protecting Diehl, and in complying with the terms of the contract as found by the trial court.

The chattel mortgage and the attachment were entirely distinct proceedings and had no connection one with the other, and such was found by the trial court and it clearly was the intention of the parties to so consider them.

The majority opinion says appellant could not interfere with the bank's pursuing every remedy it had and indicates that the payment of the mortgage was only a partial payment. It was an entire payment of the mortgage and the only payment for which Houghtelin seeks subrogation. There is no question but that the attachment was secondary to the chattel mortgage.

Herein the appellant is seeking to recover only that which he has paid, attempting to protect that which he thought he had a right to and is thus authorized to claim subrogation. (Whitley v. Spokane Ry. Co., 23 Idaho 642, 132 P. 121; FirstNat. Bank v. Regents, 26 Idaho 15, 140 P. 771; Witthoft v.Commercial Development etc. Co., 46 Idaho 313, 268 P. 31.)

The other points urged in the appellant's brief, by reason of the result of the majority opinion, were not mentioned in the majority opinion. Without discussing them, I think they should be decided in favor of appellant and that the judgment should be reversed and remanded, with instructions to permit appellant to foreclose on the mortgage for the amount he paid on its foreclosure.

I am authorized to say that Wm. E. Lee, J., concurs with me in this dissent.