Court Opinion

ID: 6562144
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:16:29.428235+00
Date Added: 2024-06-11T15:56:34.843338
License: Public Domain

Mr. Justice Hayt
delivered the opinion of the court.
To hold that an action in the nature of trover can be maintained under the circumstances of this case would be contrary to the uniform current of both American and English authority. To support such an action the plaintiff must allege and prove a right of possession in himself, and a conversion of the- property by the defendant. The right of possession being in the mortgagee, the mortgagor cannot, after default, maintain trover against him for a refusal to surrender the property or for selling it. It is no answer to say that the forms of action have been abolished by our Civil Code. The legal and equitable rights of the parties must still be determined by the same principles that measured the rights and liabilities under the former practice. Jones on Chattel Mortgages, secs. 435, 436; Landon v. Emmons, 97 Mass. 37; Horn v. Reitler, 12 Colo. 315; Exchange Bank v. Ford, 7 Colo. 314.
“ A mortgagor, after condition broken, while the chattels remain in the hands of the' mortgagee, may, under proper circumstances, maintain a bill in equity to redeem or a bill for an accounting after they are disposed of, and perhaps an action for damages when the conduct of the mortgagee has been negligent or oppressive; but these actions proceed upon principles quite different from an- action of replevin.” Horn v. Reitler, supra.
The complaint proceeds upon the theory that the property was unlawfully converted by the defendants, while admitting that the mortgagee took possession of the property after condition was broken. No facts are alleged going to show that the defendants were properly charged with fraud, negligence or oppression. From this brief statement it will be seen that the pleading is so radically defective that it could not have been sustained if a proper demurrer had been directed against it. Instead of demurring, however, appellant answered, taking issue upon the allegations of the complaint, and alleging a Iona fide sale of the prop*321erty to Halthusen, and the due application of the proceeds of such sale to the extinguishment of the secured indebtedness. %
Should it be conceded that the issues were by the answer and replication broadened sufficiently to admit proof of fraud had such evidence been tendered, none was offered except as the inadequacy of price may have tended to establish such fraud. The cause seems to have been tried upon a mistaken theory throughout. The scope and nature of the issues, as understood by counsel at the trial, are made plain by the charge of the court to the jury. They were told that the principal things to be determined were the amount of plaintiff’s indebtedness to the bank, and the value of the property taken by it. If the value of the property exceeded the indebtedness, the jury were plainly told that the plaintiff was entitled to recover the balance. These were the only questions left by the charge for the jury to determine. No question was submitted to the jury as to the bonafides of the sale of the mortgaged property. This should not be considered a matter of surprise in view of the entire omission of evidence specially directed to this point. The proof is not sufficient to support any cause of action that can be maintained by a mortgagor against a mortgagee in possession after condition broken.
Appellee seeks to charge the defendant bank.upon the assumption that it had taken property to which the plaintiff had a legal title, and having disposed of it by sale, it was responsible to him for the difference between the price realized and the market value of the property at the time. It is clear,, upon the authorities, that the bank was not responsible upon any such hypothesis, and that the sale as disclosed by the record was not a conversion for which it could be held liable. Landon v. Emmons, supra; Atchison v. Graham, 14 Colo. 217; Metzler v. James, 12 Colo. 322; Heyland v. Badger, 35 Cal. 404; Stamps v. Gilman, 43 Miss. 456; Bragelman v. Dane, 69 N. Y. 69.
Aside from this, the judgment rendered is excessive and *322cannot for this reason be allowed to stand. The chattels at the date of the sale to Halthusen are alleged in the complaint to have been of the value of $12,600 and the book accounts $1,300, making a total of $13,900 as the greatest possible value of the property. As against this, the record discloses that Mrs. Newton held a mortgage upon the property for $4,000 and accrued interest, amounting at the time of the trial to the sum of $400. To this total of $4,400 should be added the sum of $3,500 received from Halthusen, and we have a total of $7,900 as the consideration for the sale by the bank to Halthusen.
If the proof had supported the allegations of the complaint as to the value of the property, and had it been otherwise sufficient, appellee would have been entitled only to a judgment for the difference between these two amounts, or $6,000, while the judgment rendered is for $8,138.33. The proof, however, fell short of sustaining the allegations of the complaint in reference to value.
As we have seen, it is admitted by the pleadings that the sale wTas made subject to the Newton mortgage for $4,400. And although it does not appear that the attention of the court below was called to this state of the pleadings at the trial, nevertheless the parties to the litigation and their attorneys must be held to have understood that such title as Halthusen acquired was subject to the Newton mortgage. This money was due Mrs. Newton. It was never paid to the bank, and’it -was neither liable' to Mrs. Newton nor to the plaintiff for it. Such rights as she may have had by reason of the mortgage upon the property,,were neither extinguished nor in .any way impaired by the' sale to Halthusen. If any person was entitled to recover this amount, it was Mrs. Newton and not the plaintiff, and she is not a party to this action.
In view of a retrial of the case, we deem it necessary to notice briefly the contention of appellants that the title off a mortgagee in possession after condition broken is absolute. While his title is sometimes stated to be absolute, this is *323only true at law, and the use of the word, even in this connection, is misleading, in view of the reserved rights of the mortgagor as defined by the modern decisions. It is now well established that he will be held to the exercise of reasonable care and diligence in the disposition of the property, and also to account for any surplus remaining after his debt is fully discharged. Bird v. Davis, 14 N. J. Eq. 474; Stromberg v. Lindberg, 25 Minn. 513; Webber v. Emmerson, 3 Colo. 248; Metzler v. James, supra; Wygal v. Bigelow, 42 Man. 479; leach v. Kimball, 34 N. H. 568; McConnell v. The People, 84 Ill. 583; Hungate v. Reynolds, 72 Ill. 425.
The judgment will be reversed and the cause remanded with directions to the district court to allow the parties to amend the pleadings as they may be advised.

Reversed.

Mr. Justice Elliott, having presided at the trial below, did not participate in this decision.