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[60 Mont. 74.]

"Error in holding that at the time Amelia Wyant and A. L. Wyant gave their mortgage to the Chester State Bank they had no interest in the Hotel Inverness which they could mortgage, and that the Hotel Inverness never became subject to that mortgage."

The question primarily material herein is: What right, if any, did the Chester State Bank acquire by virtue of its mortgage from Amelia Wyant and husband under date of December 27, 1913?

Chapter 86, Laws of the Thirteenth Session, page 378, reenacts section 5757, Revised Codes, and provides: "Any interest in personal property which is capable of being transferred may be mortgaged"-so that, if the Chester State Bank was a bona fide mortgagee prior to the filing for record of the conditional contract of sale from Amanda L. Gesche to Amelia Wyant, its rights became fixed under the provisions of section 5092, Revised Codes, as amended by Chapter 52, Session Laws of 1911, as follows: "All contracts, notes and instruments for the transfer or sale of personal property, where the title is stipulated to remain in the vendor until the payment of the purchase price or some part thereof, shall be in writing, and the original or true copy thereof, certified by the county clerk and recorder, shall be filed with the county clerk and recorder of the county wherein the property is situated; otherwise, any such contract, note or instrument is void as to bona fide purchasers, mortgagees, or attaching creditors of such property prior to such filing." (Cuerth v. Arbogast, 48 Mont. 209, 136 Pac. 383.) And likewise its assignees, the defendants herein, occupied the same position as the Chester State Bank, and were entitled to the same rights and immunities which said bank acquired, which seems to preclude any argument as to the rights of the Chester State Bank, if in fact it is a bona fide mortgagee for value and without notice.

The testimony of J. O. Berglin, cashier of the Chester State Bank, is the only evidence in the record pertaining to

[60 Mont. 74.]

the bona fides of the said bank mortgagee, and in so far as his evidence is of any probative value, it does tend to show that the Chester State Bank is a holder of the mortgage in good faith for value and without notice. If the Chester State Bank was a mortgagee in good faith, and its mortgage was filed prior to the filing of the conditional contract of sale, it then had a vested right and ownership (Rev. Codes, sec. 5092, as amended, supra), of which it could not be divested except by voluntary act on its part, or by operation of law through the statute of limitations, and hence it could sell or assign its rights to third persons who would occupy the same position and succeed to the same rights as the bank itself.

The complaint charges that the mortgage to the Chester State Bank was taken in the name of said bank as mortgagee, but for the use and benefit of these defendants. The evidence does not support this allegation. The court made no finding as to the rights acquired by the Chester State Bank under its mortgage, but it did find that between December 20, 1913, and December 27, 1913, the date of the mortgage, the defendants had actual notice of the existence of the conditional contract of sale between Amanda L. Gesche and Amelia Wyant, and that Amanda L. Gesche was the owner of the hotel building in controversy, and upon this finding based its judgment that the mortgage to the Chester State Bank was of no effect and void as to this plaintiff. We think this was error.

It would be an anomaly in the law to say that the bank had rights as a bona fide mortgagee, but that it lost those rights and lost its bona fides upon assignment of its mortgage, even though defendants may have possessed actual knowledge of the existence of the conditional contract of sale. Even under the doctrine of implied findings approved in this state (Crosby v. Robbins, 56 Mont. 179, 182 Pac. 122), to be consistent with its express findings, and to support its judgment, the court must have impliedly found the Chester State Bank had knowledge of the title of the plaintiff in the building in controversy at

60 Mont.-6

the time it accepted its mortgage from Amelia Wyant, but such implied finding would be wholly unwarranted under the [3] proof. Amelia Wyant held a mortgageable interest in the property, but upon the record as a whole we think a retrial should be had, and recommend that the judgment and order denying a new trial be reversed, with directions to grant a new trial.

PER CURIAM: For the reasons given in the foregoing opinion it is ordered that the judgment and order denying a new trial be reversed, with directions to grant a new trial.


(No. 4,375.)

(Submitted April 20, 1921. Decided May 16, 1921.)

[198 Pac. 360.]

Real Property-Brokers-Fraud-Evidence-Insufficiency.

1. In an action against a real estate broker to recover secret profits claimed to have been made by him in a transaction resulting in an exchange of plaintiff's land for that of the purchaser, plaintiff paying to the purchaser the difference between the price set upon his (plaintiff's) land and that taken over by him in exchange, evidence held not to sustain a charge of fraud or misrepresentation on the part of the broker as to the value of the land received by plaintiff in exchange, it appearing that plaintiff was an experienced farmer thoroughly conversant with ranch property, had inspected the land before consummating the deal and taken possession, apparently satisfied with his bargain until he learned that the land taken over by him in exchange had been procured by defendant at a less price than he (plaintiff) was required to pay to its owner, no proof of the value of either property having been introduced.

Appeal from District Court, Missoula County; Asa L. Duncan, Judge.

1. For authorities passing on the question of right of principal to recover from broker or other agent commissions which latter received from other party to the contract, see notes in 1 Ann. Cas. 573; Ann. Cas. 1917A, 511; 28 L. R. A. (n. s.) 952.

[60 Mont. 82.]

ACTION by D. S. Terry against Allen Stephens and another. From a judgment for plaintiff, and from an order denying his motion for new trial, Stephens appeals. Reversed, and cause remanded with directions to enter judgment for defendant.

Messrs. Murphy & Whitlock, for Appellant, submitted a brief; Mr. A. N. Whitlock argued the cause orally.

Mr. Harry H. Parsons and Mr. Thomas N. Marlowe, for Respondent, submitted a brief; Mr. Marlowe argued the cause orally.

MR. COMMISSIONER JACKSON prepared the opinion for the court.

Plaintiff alleges in substance that he owned certain property at Paradise, Montana; that W. H. Montgomery & Co. owned 150 acres of land in the Flint Creek district; that defendants were real estate agents and brokers in Missoula, Montana; that in May, 1913, plaintiff obtained the services of the defendants as agents or brokers to sell or exchange his property, agreeing to pay defendants five per cent of the purchase or exchange price, which was set at $3,800; that subsequently the defendants notified plaintiff that they had listed with them the Montgomery land at a price of not less than $7,800, which figure was low and the market price for it, and that in obtaining title thereto the plaintiff's title to his lands would be credited in the sum of $3,800, leaving a balance due to W. H. Montgomery & Co. on the exchange of $4,000; that the defendants represented to the plaintiff that the price of the Montgomery land was so low that Montgomery would pay no commission, and before the sale could be consummated, plaintiff would have to pay defendants the entire commission; that plaintiff accepted the proposition and offer, and did pay to defendants the sum of $430 as commission; that plaintiff relied implicitly on the representations of defendants, and that he was not acquainted with the market and actual value of the Flint Creek lands, and

[60 Mont. 82.]

the representations were made by the defendants with the object and intent that they should be believed and relied on by plaintiff; that, so believing and relying, plaintiff conveyed title to his lands to the defendants for convenience, and at their request, and executed a written contract, under defendants' direction, with W. H. Montgomery & Co. to purchase the Flint Creek lands and pay a balance therefor of $3,700; that the representations and statements of defendants were false, and were known to be false by defendants when made, and were made in an unlawful attempt to profit in the transaction, and for the purpose of having plaintiff act on the same; that plaintiff believed them to be true and acted upon them; that the W. H. Montgomery Company received but $4,800 for their property, and this plaintiff was defrauded by the defendants. of $3,000, which defendants kept, converted to their own use, and defrauded the plaintiff thereof. Then it is alleged that the fraud herein was not discovered until March, 1915, when plaintiff, conferring with Montgomery, discovered what the company had received for the Flint Creek property, and that defendants while acting as his agents, charged him a commission on one hand, and made a wrongful and illegal profit on the other. Plaintiff prayed judgment in the sum of $3,000. The defendant Hooverson was not served and did not appear. The answer of defendant Stephens denies the allegations of plaintiff, except the execution of the contract between W. H. Montgomery & Co. and the plaintiff, and by way of affirmative defense pleads the statute of limitations (subd. 4, sec. 6449, Rev. Codes) and the statute of frauds. The reply is a denial of the affirmative defense and by estoppel. A trial was had to a jury. Defendant's motions for nonsuit and directed verdict. were denied, and verdict returned for the plaintiff in the sum of $3,000. Defendant appealed from the judgment and the order denying a new trial.

Fourteen specifications of error are set out. It is not necessary to consider any of them, except those bearing on the action.

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