Title: FINANCE CORPORATION v. King

State: colorado

Issuer: Colorado Supreme Court

Document:

370 P.2d 432 (1962) FINANCE CORPORATION, Plaintiff in Error, v. Gene Wilson KING, Defendant in Error. No. 20051. Supreme Court of Colorado. En Banc. April 2, 1962. Rehearing Denied April 23, 1962. *433 Richard M. Huckeby, Denver, for plaintiff in error. No appearance for defendant in error. MOORE, Justice. We will refer to the parties as follows: plaintiff in error as the corporation, and defendant in error as King. The corporation in its complaint alleged that King purchased a motor vehicle on February 22, 1960, at which time he executed a combined note and chattel mortgage on said vehicle under which he obligated himself to pay $882.24 in twenty-four monthly installments. It was further alleged that King removed the vehicle from the state of Colorado without the consent of the corporation (purchaser and holder of the note and mortgage from the vendor of the vehicle); that the corporation was the lawful owner of said motor vehicle and entitled to possession thereof; that King "wrongfully withheld" the vehicle from the corporation and "has wrongfully and unlawfully converted" it to his own use; that he had defaulted in the payments due under his contract and that the amount due thereon was $840.10. King by answer admitted the execution of the note and mortgage, but denied generally the other allegations of the complaint. As an affirmative defense he alleged that on August 10, 1960, he filed a voluntary petition in bankruptcy in the district court of the United States for the district of Colorado; that the debt evidenced by said note and chattel mortgage was included in his schedule of debts; that the corporation was duly notified of said petition but entered no contest thereto; that the corporation, as a secured creditor, was allowed to recover the vehicle under an order of the bankruptcy court; that no fraud was committed by him; that the corporation was notified as to the location of the vehicle; and that the debt involved had been discharged by judgment of the bankruptcy court. At the pre-trial conference counsel filed an instrument which bears the caption, "Memorandum of Facts for Pre-Trial." This instrument reads as follows: In the court's findings and judgment we find the following: "The Plaintiff seeks to hold the defendant liable, first, on the theory that the defendant, having violated the terms of the chattel mortgage by removing the car from the State of Colorado became a trustee for the plaintiff and is liable for a breach of fiduciary duty; or, second, that the defendant was holding the car in trust for the plaintiff and converted it to his own use by placing it in an inaccessible position; or, third, that even though the obligation to pay the money under the contract was discharged in bankruptcy proceedings, the defendant was still liable for the security. "The use of the automobile was vested in the defendant under the law until he was released therefrom, either by the plaintiff taking the same into possession after declaration of a forfeiture, or after filing of the petition *435 in bankruptcy by the Receiver or Trustee in Bankruptcy. And while the defendant was so in the possession of the automobile, the law imposes upon him the duty to use care in the use of the chattel; and he is only liable for the willful damage to the plaintiff. "Under the agreed memorandum of facts there is no proof that the defendant was guilty of any willful act, and apparently the car careened off the side of the mountain because of a mechanical failure which cannot be construed in itself to be of a willful nature. In such a case, if there had been no bankruptcy proceedings, the plaintiff would have had to sue the defendant upon the note for recovery of a judgment, and would have no cause of action upon tort or otherwise under the facts of the case. Judgment entered in favor of King. We adopt the language of the trial court above quoted, and in supplementation thereof direct attention to the case of Davis v. The American National Bank of Denver, 149 Colo. ___, 367 P.2d 325, from which we quote the following: The judgment is affirmed.