Opinion
No. 7,032.
Submitted April 6, 1933.
Decided April 25, 1933.
Conversion of Grain Covered by Chattel Mortgage — Right of Action in Mortgagee — Threshermen's Liens — Manner of Acquiring — Statutory Steps to be Pursued — Purchaser of Grain Covered by Mortgage Guilty of Conversion. Chattel Mortgages — Crops — Conversion — Right of Action in Mortgagee Against Purchaser. 1. A chattel mortgagee of crops whose mortgage was properly filed has a right of action for conversion against the subsequent purchaser thereof. Threshermen's Liens — Acquisition of Lien by Filing Account of Amount Due — Statutory Requirement to be Followed. 2. One claiming a thresherman's lien, under Chapter 20, Laws of 1929, amendatory of sections 8366 and 8367, Revised Codes 1921, must at least substantially follow the procedural steps by which the right to the lien is perfected, among them its initiation by filing a just and true account of the amount due him for the services performed. Same — Failure to File Account — Nonexistence of Lien — Purchaser of Mortgaged Grain Without Defense to Action for Conversion by Mortgagee. 3. Where a thresherman served a notice of claim of lien on a crop threshed by him, as required by section 8367, above, as amended, upon an elevator company, but never initiated his right to a lien by filing an account of the amount due him with the county clerk, he never acquired a lien, and the company in buying the wheat covered by a prior mortgage, and paying the amount claimed by the supposed holder of a thresherman's lien with the consent of the mortgagor, was without defense to the mortgagee's action in conversion. Same — Lien not Created by Service Performed by Thresherman. 4. Held, that the contention that a thresherman's lien is created by the services and labor performed by him, and not by the filing of the account required by section 8367, above, as amended, is without merit. Same — Right of Possession of Threshed Grain not in Lien Claimant During Sixty-day Period Described for Filing Account — Conversion. 5. In an action for the conversion of a crop of grain covered by a mortgage which gave the mortgagee right of possession upon default of the mortgagor in any of its terms, the claim of defendant elevator company which purchased the wheat and paid the proceeds to an alleged holder of a thresherman's lien that right of possession of the grain was in the lien claimant during the sixty-day period within which the latter had the right to file his account and thus initiate his lien, and that therefore the purchase of the wheat did not constitute conversion, plaintiff having no right of possession, held unfounded, the statute not giving the right of possession to the lienor.
Appeal from District Court, Cascade County; H.H. Ewing, Judge.
Messrs. Speer Hoffman, for Appellant, submitted a brief; Mr. Harvey B. Hoffman argued the cause orally.
Citing: McGlauflin v. Wormser, 28 Mont. 177, 181, 72 P. 428; Stritzel-Spaberg Lbr. Co. v. Edwards, 50 Mont. 49, 144 P. 772; Crane Ordway Co. v. Baatz, 53 Mont. 438, 164 P. 533; Interstate Lbr. Co. v. Magill-Nevin Co., 57 Mont. 334, 188 P. 144; Feuchtenberger v. Williamson, Carroll Saunders, 137 Va. 578, 120 S.E. 257; Bird Bros. v. Southern Surety Co., 139 Tenn. 11, 200 S.W. 978; First Nat. Bank v. Lyon-Gray Lbr. Co., 110 Tex. 162, 217 S.W. 133; Powers v. Brewer, 238 Ky. 579, 38 S.W.2d 466; Nohrnberg v. Boley, 42 Idaho, 48, 246 P. 12; Price v. Bray, 48 Idaho, 268, 281 P. 470; Adams v. Central City Granite Brick Block Co., 154 Mich. 448, 117 N.W. 932, 129 Am. St. Rep. 484.
Messrs. Freeman, Thelen Freeman, for Respondent, submitted a brief; Mr. James W. Freeman argued the cause orally.
Appellant in its brief herein apparently takes the position that no lien existed in favor of Albert Leistiko, the owner of the combined harvester and thresher with which the wheat in question was harvested, because the account mentioned in section 8367, Revised Codes 1921, was not filed in the office of the county clerk of Cascade county. In support of this position, numerous Montana case are cited and quoted from by appellant in its brief, but without exception all of these cases involve mechanics' liens and most of the cases cited from other jurisdictions also pertain to mechanics' liens.
The provisions of section 8339 pertaining to mechanics' liens very clearly make a compliance with the provisions of section 8340, requiring the filing of the "account of the amount due him after allowing all credits" with the county clerk, a condition precedent to the creation of mechanics' liens, since the words "has a lien" are qualified by the clause "upon complying with the provisions of this chapter." But section 8366, as amended, without any qualifications whatever, specifically provides that the owner of a combined harvester and thresher, and thresherman, "shall have a lien upon the grain and other crops threshed by said threshing machine, or cut and threshed by said combined harvester and thresher for and on account of the services rendered and the labor performed by them on the said grain and crops."
This distinction between the provisions of the foregoing statutes pertaining to mechanics' liens and those pertaining to liens of threshermen and owners of combined harvesters and threshers clearly indicates that under the former, the lien if not created by the making and filing of the "account of the amount due" is at most merely an inchoate or potential lien, or a mere right to a lien until the requirements pertaining to filing have been complied with, while in the latter the "services rendered and the labor performed" create the lien. Such a construction is in harmony with the general rule that a thresherman's lien exists from the commencement of the threshing. (2 C.J. 1021, sec. 132; Mitchell v. Monarch Elevator Co., 15 N.D. 495, 107 N.W. 1085, 11 Ann. Cas. 1001; Hahn v. Sleepy Eye Milling Co., 21 S.D. 324, 112 N.W. 843.)
The foregoing rule that it is the labor performed which creates the lien and not the filing of the claim is also recognized with respect to loggers' liens, in McCoy v. Cook, 13 Wn. 158, 42 P. 546, and with respect to labor liens in California: People v. Moxley, 17 Cal.App. 466, 120 P. 43; Seigal v. Hechler, 181 Cal. 187, 183 P. 664; Mazzera v. Ramsey, 72 Cal.App. 601, 238 P. 101; Hampton v. Christensen, 148 Cal. 729, 84 P. 200.
In Rogers Lumber Co. v. Schatzel, 52 N.D. 837, 204 N.W. 854, the precise point raised by the plaintiff in the instant case was disposed of contrary to plaintiff's contention. (See, also, Gordon v. Freeman, 112 Minn. 482, 128 N.W. 834, 1118.)
The only case cited by appellant which is at all similar to the instant case is Nohrnberg v. Boley, 42 Idaho, 48, 246 P. 12, the decision in which was concurred in by three of the justices of the supreme court of Idaho and dissented from by two of them. In the dissenting opinion Mr. Justice Taylor, in speaking for the minority of the court, clearly points out that the reasoning in the opinion of the majority of the court is unsound in that it fails to take into account that the lien is created when the services are performed.
This is an action in conversion brought by the Great Falls Farm Machinery Company, a corporation, against the Rocky Mountain Elevator Company, also a corporation. The cause is submitted to us on an agreed statement of facts.
On March 27, 1930, Gustave Ekert, a farmer then indebted to the plaintiff on a promissory note for $300, due on or before October 1, 1929, executed to the plaintiff herein a chattel mortgage covering the crops to be grown on certain specifically described land in Cascade county. This mortgage was filed on March 28, 1930. Under the provisions of the mortgage plaintiff was authorized upon default in any of the terms of the mortgage, to declare the whole sum due and payable and to enter upon the premises of Ekert and take possession of the crop. Ekert defaulted in his payments. On August 11, 1930, Ekert, then in possession of an unharvested crop of wheat standing on the land described in the mortgage, hired one Leistiko to combine the wheat. Leistiko combined and hauled to the elevator of the defendant company 315 1/2 bushels of this wheat. On August 19, 1930, Leistiko served upon the defendant elevator company a notice of claim of lien, pursuant to section 8367, Revised Codes of 1921, as amended by Chapter 20, section 2, Laws of 1929. The reasonable value of the wheat is stipulated to be $198.94, and the value of the services of Leistiko is likewise stipulated to be $198.94. The defendant company, by and with the knowledge and consent of Ekert, upon demand by Leistiko paid the $198.94, claimed for his services in combining and hauling the wheat, to him. Leistiko did not at any time file his motion of lien in the office of the county clerk as is required by the provisions of section 8367, as amended, supra. He evidently assumed that, having received the money, no further action was required. The plaintiff machinery company demanded the possession of the grain and the defendant refused to deliver the same to it. This action followed. Defendant had judgment and from it plaintiff prosecutes this appeal.
Under the decisions of this court it is clear that the [1] plaintiff here, as chattel mortgagee of the crop, has the right to bring an action in conversion against the subsequent purchaser. ( Moore v. Crittenden, 62 Mont. 309, 204 P. 1035; United States Nat. Bank v. Great Western Sugar Co., 60 Mont. 342, 199 P. 245.)
The question to be decided is whether the defendant elevator [2, 3] company was justified in paying to Leistiko the value of the wheat. The answer to this question depends upon whether Leistiko ever had a valid and existing lien upon the crop and particularly at the time of payment. The legislative declarations pertinent to this inquiry are sections 8366 and 8367, Revised Codes of 1921, as amended by Chapter 20, sections 1, 2, Laws of 1929, as follows:
"Section 8366. All threshermen owning or operating threshing machines, and all owners of combined harvester and threshers, shall have a lien upon the grain and other crops threshed by said threshing machine or cut and threshed by said combined harvester and thresher, for and on account of the services rendered and the labor performed by them on said grain and crops.
"Section 8367. Every person intending to avail himself of the benefits of this Act must file with the County Clerk of the county in which said grain or other crops were grown, within sixty days after the last service was rendered or labor performed in the threshing of said grain or other crops, or the cutting and harvesting and threshing by said combined harvester and thresher, a just and true account of the amount due him or them for such services or labor, after allowing all just credits and offsets and containing a correct description of the grain or other crops to be charged with such lien, the price agreed upon for such threshing or cutting and harvesting, the name of the person, firm or corporation for whom such labor and services were performed, and a description of the lands as nearly as possible, upon which said grain or other crops were raised, and a description of the legal sub-division of land upon which said grain is stored, and if said grain is stored in an elevator, the locality of the said elevator, which statement of facts shall be verified by affidavit of the person claiming such lien, or his duly authorized agent or attorney, having knowledge of the facts; and any error or mistake in the account or description of the grain or other crops or of the property upon which it was raised, shall not invalidate said lien. If the grain or other crops so threshed, cut, harvested and threshed are being hauled from the machine or combine direct to the elevator or to any other purchaser, then the threshermen or owner of the combine desiring to claim such lien shall also serve written notices upon the elevatorman or other private purchaser, that he will claim or hold a lien upon said grain or other crops for his services or labor performed in threshing, or cutting and threshing the same."
In construing the sections of the Code relative to mechanics' liens, this court has repeatedly held that those sections create "a new right, and the statutory proceedings by which this new right is perfected and enforced must be strictly followed." ( Interstate Lumber Co. v. Magill-Nevin etc. Co., 57 Mont. 334, 188 P. 144, 145; Stritzel-Spaberg Lumber Co. v. Edwards, 50 Mont. 49, 144 P. 772; McGlauflin v. Wormser, 28 Mont. 177, 72 P. 428.) These considerations are applicable to a thresherman's lien under the statute. It, too, is a new right and the statutes requiring its initiation by filing with the county clerk must be at least substantially followed.
In this case no statement of account was ever filed with the [4] county clerk as provided by statute. Defendant's position is that the lien is created by the "services and labor performed," and not by the filing, and hence that Leistiko's lien was in full force and effect during the sixty days immediately following the day on which he rendered his last services, notwithstanding his failure to file, and that, since the lien was in existence at the time the defendant turned the money over to him, defendant has a valid defense to this action. The case of Rogers Lumber Co. v. Schatzel, 52 N.D. 837, 204 N.W. 854, 856, involving almost identical facts, is relied upon to support this contention.
With this contention we cannot agree. The legislature has seen fit to give to the thresherman or harvester a lien having priority over all other liens or encumbrances, with the exception of the lien of the one who furnishes the seed from which the particular crop is grown. As the price of this lien the harvester or thresherman must file with the county clerk a statement of account, verified by oath. The language of the statute is clear and explicit as to this. It says, "Every person intending to avail himself of the benefits of this Act must file," etc. Presumably, the reason for this requirement is to give to the other encumbrancers such notice as will enable them to protect their rights in the crop. It is true that, upon filing, the lien automatically takes effect from the time of the rendition of the services. When the necessary filing is made, the doctrine of relation back applies, but unless the filing is made within the statutory period, the thresherman and his assigns are mere unsecured creditors.
The elevator company in this case stands in no better position than would Leistiko, were he claiming an interest in the grain. It, in purchasing the rights of Leistiko, did not make the filing unnecessary. The secondary encumbrancers having an interest in the grain are entitled to test the validity of the thresherman's claim, whether that claim is held by the thresherman or another. When the elevator company succeeded to the thresherman's right, it took it subject to the right of interested parties to contest it. The filing is required in order to give those parties notice of the claim and an opportunity to contest the same. Hence we find that Leistiko lost his right to a lien by failure to follow the statute, and that the elevator company is in no better position than Leistiko. This result was reached by the supreme court of Idaho in the case of Nohrnberg v. Boley, 42 Idaho, 48, 246 P. 12, and in Vollmer Clearwater Co. v. Union Warehouse Supply Co., 43 Idaho, 37, 248 P. 865.
The true distinction between the holdings of the Idaho court and the North Dakota court is found in the fact that the former, following the general rule, recognizes the right of the lienor, from the time he performs the service to the time of the filing of his lien, as an inchoate right which may or may not ripen into an actual lien. If the filing is made within the statutory period, then the lien relates back in such a way as to give full force and potency to it from the beginning, but if the filing is not made, the inchoate right never ripens into an actual lien. The North Dakota construction is based upon the theory that the actual lien comes into existence full-fledged when the labor is performed. That court, in the Rogers Lumber Company Case, supra, said: "The filing of the lien, while a necessary step in the enforcement, is in reality an idle ceremony where the enforcement is rendered unnecessary by the voluntary discharge of the obligation to secure which the inchoate lien exists." It is difficult to reconcile this statement with the contention that an actual lien, good as against the world, comes into full being upon the rendition of the services, rather than upon the filing of the account. It is obvious that the view of the North Dakota court might well be accomplished by legislative enactment and thereby, as the court said, an "idle ceremony" avoided, but the fact remains that our legislature did not make any such specific provision and it is beyond the power of this court to interpolate such a provision into the text of the law and by construction declare a plain mandate of the law to be an "idle ceremony."
It may be said, however, that the period which we may denominate as an open period between the performance of the labor and the filing, presents a rather difficult matter. That is evidenced by the fact that section 8367, as amended by Chapter 112, section 2, Laws of 1931, has shortened the time for filing to ten days, whereas the law under consideration gives the prospective lienor sixty days within which to file. All this impresses us with the fact of recognition by the legislature that vested rights cannot be ignored without some kind of notice. Holders of mortgages are restricted in their ultimate rights by the terms of the law, but such restrictions cannot be imposed without notice and a consequent opportunity to be heard.
Defendant urges that plaintiff has failed to prove a [5] conversion for the reason that the demand was made during the sixty days within which Leistiko had a right to file his account, and that during that time the right of possession was in Leistiko; hence that when the plaintiff made his demand it had no right to the possession of the grain and that refusal to deliver did not constitute conversion. The contention must fail for the reason that the right of possession was not in Leistiko. The thresherman's rights in a case of this nature are based upon the statute, and it gives him no right of possession.
The judgment is reversed and the cause remanded, with direction to enter judgment for the plaintiff.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES ANGSTMAN, MATTHEWS and ANDERSON concur.
Rehearing denied June 3, 1933.