Case Name: Bear v. The Colonial Finance Co.
Court: Ohio Court of Appeals
Jurisdiction: Ohio
Decision Date: 1932-05-16
Citations: 42 Ohio App. 482
Docket Number: 
Parties: Bear v. The Colonial Finance Co.
Judges: Lemert and Montgomery, JJ., concur.
Reporter: Ohio Appellate Reports
Volume: 42
Pages: 482–489

Head Matter:
Bear v. The Colonial Finance Co.
(Decided May 16, 1932.)
Messrs. Hart, Drukenhrod & McHenry, for plaintiff in error.
Mr. Clayton Hof man, for defendant in error.

Opinion:
Sherick, P. J.
This is an action brought into this court on petition in error by John D. Bear, plaintiff in the trial court, for conversion of an automobile. The error complained of is that a motion for a directed verdict at the conclusion of the plaintiff's case was improperly sustained.
The petition alleges ownership in the automobile, and that on July 9, 1931, the defendant unlawfully converted it to its own use, and has withheld the same and deprived the plaintiff of the use thereof. Damages are claimed for the value of the car and the use thereof in the total sum of $475.
To this petition the defendant answered, admitting the taking of the car, but denying all other averments: and defendant further alleged that it held a mortgage on this car, given by one Fabinak to the Myers Motor Company, that default had been made in the payment of the installments due on the note which the mortgage was given to secure, and that the conditions of the mortgage were broken. The answer further recites a clause of the mortgage accelerating the amount due when installments are unpaid, and asserts the mortgagee's right to take possession of the property. The mortgage hears date of April 4, 1931, and was filed with the county recorder on April 7,1931. A dismissal is prayed for. No reply was filed to this answer.
The evidence develops the further facts that between the 4th day of April and the 30th of the same month Fabinak traded the car back to the Myers Company, and that on the last-named date plaintiff purchased the car of the Myers Company and received a previously executed Dill of sale in blank from Fabinak. At the time of purchase the plaintiff had no knowledge that the car was mortgaged, and the balance of the purchase price, to wit, $80.00, he secured by the execution of a mortgage to the United Acceptance Corporation. The payments thereon had been promptly paid to the time of seizure by the defendant company, on July 9,1931.
It is further proven that three agents of the defendant company were present at the time of plaintiff's purchase of the car; that they did not inform him that their company held a mortgage on this car; that they were in the Myers Company place of business on that day checking cars and offered through their company to. finance his purchase. It was not proven that these agents knew their company had a mortgage on this car, or that they were more than special agents for their company, or that any knowledge they may have had was transmitted to their principal.
Further proof was made of the important fact that, prior to the time the defendant company repossessed the car, the plaintiff had no knowledge of the defendant's claimed lien, and that he strenuously objected to the seizure, and only consented to deliver it to a garage designated by the defendant after he had been threatened with arrest, and upon the promise that the car would be returned to him within a few days. Thereafter the company sold the car. The amount it sold for or the balance due on the defendant's mortgage at time of seizure is not in evidence.
The plaintiff in error makes three contentions, the first being that the conduct of the defendant's agents on the day of his purchase estops the defendant company from now asserting its mortgage; second, that defendant's conduct after learning of plaintiff's purchase constituted a waiver of the defendant's chattel security; and, third, that the method and manner adopted by the defendant in repossessing the car constituted a conversion thereof.
In view of the failure of proof hereinbefore indicated, there can be no estoppel in this suit. It is ele mental that knowledge on the part of one sought to be estopped is essential. It was not proven that the company's agents had knowlédge of their company's mortgage, and, even if they did have such knowledge, such cannot be imputed to the principal. The agency proved was a limited agency to check cars, and it is not shown that the agents had authority to negotiate loans or to bind their principal outside the scope of their limited powers.
The second claim of the plaintiff must be answered in the negative, for it is not proved that the principal knew of or ratified the act and conduct of its checking agents.
A much more serious question is, however, presented by the third claim, and this we shall now proceed to consider. The evidence introduced on behalf of the plaintiff established the fact that the automobile was taken against the objection of the plaintiff, that his resistance was overcome by threatened arrest, and promise of a prompt return of the property seized. From this state of facts the duty develops upon this court to adopt the rule announced in Edmundson v. Pollock, 5 C. C., 185, 3 C. D., 92, wherein the court held under the theory of an implied contract that a mortgagee after default had a right to repossess the mortgaged property by use of force so long as the force used was only such as to overcome the resistance offered, or to follow the rule applied in most jurisdictions, which is set forth in J ones on Chattel Mortgages (5th Ed.), Section 705, page 396, in the following language: "But the law will not allow him [the mortgagee] to commit or to threaten a breach of the peace, and then to justify his conduct by a trial of the right of property. Instead of using force, the mortgagee must resort to his legal remedies."
This court in the case of M. J. Rose Co. v. Lowery, 33 Ohio App., 488, 169 N. E., 716, which was an exaggerated case in which a mortgagee broke and entered the mortgagor's home, when the mortgagor was absent, and seized mortgaged property after default, approached the question now presented, but was not called upon therein to elaborate its views as to the law applicable to a situation like the present one. However, upon a closer consideration of the rule and reason therefor, we now see no reason why a rule should apply to an exaggerated case and not to one where a lesser degree of force is employed in the seizure.
A conversion has been defined as "any distinct act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with one's rights." One may have a right to property, but he may assert that right in an unlawful and wrongful manner, and in so doing be guilty of converting to his own use the interest of another therein.
We quote with approval from a note in L. R. A., 1915E, at page 196: "In actions by the mortgagor against the mortgagee for the recovery of personal judgments for unlawful seizure of the mortgaged property, the courts have not found it necessary to distinguish between cases in which the mortgagee was, and those in which he was not, legally entitled to possession of the property seized. In either case the mortgagee is liable, and practically the same measure of damages applies in either case, ' ' and again, at page 200 of L. R. A., 1915E, "where the mortgagee is legally entitled' to possession of the property, but becomes a wrongdoer by reason of the manner of acquiring possession only, he is, in the absence of proof of special damages resulting directly from the wrongful act, liable only for the value of the property at the time it was taken, less the amount of the mortgage debt." This rule of damages is, of course, under the'state of the pleadings in the instant case as they now exist, of limited application, in that the defendant company in its answer does not plead a balance due under its mortgage, and hence proof thereof and thereunder would not have been properly received.
The case of Wilson Motor Co. v. Dunn, 129 Okl., 211, 264 P., 194, 57 A. L. R., 17, is instructive. Its holding correctly states what we believe to be the generally accepted rule, and which is our view of the law herein applicable. Therein the court said: "Although a chattel mortgage provides that the mortgagee, under certain conditions, may take possession of the mortgaged property, yet neither the. mortgagee, its assignee, nor their agents have the right to take possession of the property by force, threats, violence, or stealth, and without the consent of the mortgagor. The law will not permit a mortgagee to commit or threaten a breach of the peace and then to justify the conduct by a trial of the rights of property." A valuable note listing other authorities is appended to the report of this case in 57 A. L. R., 26.
In Ben Cooper Motor Co. v. Amey, 143 Okl., 75, 287 P., 1017, the same court made further remark to the effect that "A man is not required, in defending his property, to use physical force to resist the taking thereof by another. If he tells the other not to take the property, and the other person, in the face of the instruction, proceeds to take it, that may be conversion. The circumstances of each case must be considered in determining whether or not a 'breach of peace' has taken place, and the jury is the judge of the facts."
There is no question that a mortgagee after default has a right to the possession of the mortgaged property, as he is then the legal owner thereof, but until the property is repossessed the mortgagor unquestionably may pay the balance due, that is, exercise his equity of redemption, and, if the property be seized in an unlawful manner, he has been deprived of that right or equity, and of this he may complain. The right of the mortgagee, as said in 11 Corpus Juris, 560, is subject only to the restriction that the mort gagee, to secure possession of the mortgaged property after breach of condition, ' ' must act in an orderly manner and without creating a breach of the peace." Surely it is a breach of peace to threaten one with arrest. It is in this instance a threat of preferring and prosecuting a groundless criminal charge contrary to our law, and is as equally reprehensible as if physical force had been employed to overcome resistance.
Two further authorities may well be mentioned, the first being Willis v. Whittle, 82 S. C., 500, 64 S. E., 410, wherein it is held: ' ' The right to seize carries with it, by necessary implication, the right to do whatever is reasonably necessary to make the seizure — including the right to peacably enter upon the premises of the mortgagor. There is one restriction, however, which the law imposes upon this right. It must be exercised without provoking a breach of the peace; and if the mortgagee finds that he can not get possession without committing a breach of the peace, he must stay his hand, and resort to the law, for the preservation of the public peace is of more importance to society than the right of the owner of a chattel to get possession of it."
And the second is Street v. Sinclair, 71 Ala., 110, where it is held that a mortgagee entitled to the possession of the property after default proceeds at his own peril in taking possession of the property, if he commits the slightest assault or other breach of the public peace, for, if individuals were thus allowed to redress their own private injuries, the peace of society and good order of government would cease.
We therefore conclude, in view of the reasons assigned and adopted, and having in mind the enormous increase in sales made where chattels are mortgaged back to secure the purchase price and the resultant repossessions which do of necessity follow, that it is the sounder policy to so restrict the unconscionable and unwarranted activity of unscrupulous and exact ing mortgagees in the necessary recovery of their property. The poorer unsuspecting buyer is more deserving of the court's protection. Threats and force should not be abetted, and it must be remembered that one should have his day in court. The rule of Edmunds on v. PollocJc, supra, is therefore disapproved of, and it must follow that the motion for a directed verdict should have been overruled, and it should have been left to the jury to determine whether a breach of the peace had occurred.
Judgment reversed and cause remanded.
Lemert and Montgomery, JJ., concur.