Court Opinion

ID: 3496300
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:04:04.5077+00
Date Added: 2024-06-11T12:54:35.545257
License: Public Domain

Plaintiff Emma G. Shand is the holder of a chattel mortgage on one Special Automatic Mactile Block machine numbered E-214, which had been sold by the mortgagor, the Mac Company, Inc., a Delaware corporation, on title-retaining contract, dated August 5, 1937, to Skrzycki and Brozek *Page 431 
for and in behalf of the National Ventilated Block Company, a corporation to be later organized. This corporation after its organization became a bankrupt before the date of trial and John T. Spencer, its trustee, was substituted as defendant. Plaintiff is the wife of E.M. Shand, treasurer and secretary of the Mac Company.
The chattel mortgage was dated October 26, 1937. According to defendant's answer, this machine was delivered on or about December 24, 1937. The chattel mortgage was filed with the register of deeds of Wayne county on December 31, 1937. Machine E-214 and another were covered by the Mac Company conditional sales contract. The second machine was not delivered until sometime in March of 1938.
Between August 24, 1937, and December 31, 1937, when plaintiff filed her mortgage and notified the Block company, either $2,800 or $2,850 had been paid to the Mac Company. Between that date and the delivery of the second machine, additional moneys were paid and, by July 23, 1938, a total of about $7,000 had been paid on the purchase price of these two machines and other items. The mortgage debt was $1,200.
Plaintiff secured possession of the mortgaged machine by a writ of replevin issued December 28, 1938.
The ledger sheets of the Block company, which were received in evidence, do not show any allocation of its payments to specific items of indebtedness. The entire indebtedness was shown in one account without detailing the items. In its answer the Block company alleged that it had paid about $925 for work and repairs on the machines and that, because of their inferior workmanship and material, there was nothing due the Mac Company, and neither it nor the holder of the chattel mortgage was *Page 432 
entitled to possession of the machines. Defendant averred that it had carried out its agreement with the Mac Company; that no moneys were due the Mac Company; that no proper demand for possession had ever been made; and that defendant had suffered damages to the extent of $4,646, being the actual value of the machine replevined, and $2,000 in addition thereto for being deprived of its use. At a hearing in the pretrial division of the Wayne circuit court, both sides agreed that the question at issue was properly stated by the court as follows:
"Before this chattel mortgage was recorded, and before the Ventilated Block Company had knowledge of this chattel mortgage, they made certain payments on their conditional sales contract with the Mac Company. As to those payments, counsel for the plaintiff concedes that they are protected. The question then arises as to whether or not the National Ventilated Block Company is protected on payments they made subsequent to the filing of the chattel mortgage and notice to them that there was a chattel mortgage in existence. The claim of the defendant, Ventilated Block Company, is that having entered into the conditional sales contract prior to the chattel mortgage, their dealings with the Mac Company, and the plaintiff having knowledge of this conditional sales agreement, enabled them to make payments direct to the vendor."
The trial judge, sitting without a jury, held that, after the Block company "had notice of the chattel mortgage, they were bound to recognize the same and make their payments in realization that this mortgage was a good and binding chattel mortgage." The court stated that no testimony was produced as to the actual value of the machine at the time it was replevined. The court was of the opinion that plaintiff was entitled to maintain the *Page 433 
action of replevin and entered a judgment in her favor.
Material testimony necessary for decision of the issues presented by the pleadings either was not taken or was not included in the settled record.
Plaintiff's rights as mortgagee of the vendor's interest in the property covered by the conditional sales contract can be no greater than those of her mortgagor at the time the mortgage was given. See 3 Jones on Chattel Mortgages and Conditional Sales (Bowers Ed.), chap. 28, § 1256. Her rights are further limited by what occurred between that date and December 31, 1937, when she notified the vendee, the Block company, and filed her mortgage in Wayne county. 3 Comp. Laws 1929, § 13424, as amended by Act No. 18, Pub. Acts 1934 (1st Ex. Sess.), and Act No. 129, Pub. Acts 1935 (Comp. Laws Supp. 1940, § 13424, Stat. Ann. § 26.929). In view of defendant's contentions that no demand had been made for possession and that nothing was due the Mac Company on the replevined machine at the time, various questions should have been decided. The trial court should have determined both the value of the replevined property at the time of taking and the amount, if any, owing the Mac Company on this machine as of December 31, 1937. See 3 Comp. Laws 1929, § 14839 (Stat. Ann. § 27.1837), and Kohl v. Lynn, 34 Mich. 360.
Under the provisions of Court Rule No. 72, § 1, subd. (e) (1933), as amended, the cause must be remanded for the taking of such proofs as may be necessary to present the issues on appeal properly. The judgment of the trial court is vacated and the cause remanded for the entry of judgment after such proofs have been taken. Costs to appellant.
SHARPE, C.J., and BOYLES, CHANDLER, NORTH, STARR, WIEST, and BUTZEL, JJ., concurred. *Page 434