Baker Aircraft Sales, Inc. v. Cassel
| Decision Date | 21 February 1962 |
| Citation | 19 Cal.Rptr. 581,200 Cal.App.2d 563 |
| Court | California Court of Appeals Court of Appeals |
| Parties | BAKER AIRCRAFT SALES, INC., a California corporation, Plaintiff and Appellant, v. R. G. CASSEL, Mrs. R. G. Cassel, and L. C. Whitehall, Defendants and Respondents. Civ. 20171. |
Wenke & Phelan and Samuel M. Salmon, Long Beach, for appellant.
Mathews & Traverse, Eureka, for respondents.
This is an appeal by plaintiff Baker Aircraft Sales, Inc., from a judgment of dismissal entered on an order sustaining a demurrer to plaintiff's third amended complaint without leave to amend.
Plaintiff's complaint alleged that on January 13, 1959, it entered into a written contract with defendants, whereby plaintiff agreed to lease a certain Piper Apache aircraft to defendants for a period of 42 months, at a total rental of $50,072.62, with $6,000 to be paid upon delivery of the plane and 42 equal monthly installments of $1,049.34, commencing on February 15, 1959. The contract, a copy of which was incorporated by reference into the complaint, provided that if defendants defaulted in the payment of any rental installment, plaintiff was to have the option of terminating the lease and/or repossessing the plane. Any such repossession of the plane was not to constitute a termination of the lease unless plaintiff so notified defendants in writing, and plaintiff was given the additional right to lease the property to a third party or to sell the property at public auction in accordance with the California pledge laws. In the event that plaintiff elected to pursue either of these remedies, the contract provided that there would immediately be due from defendants the difference between the total unpaid rent under the lease and any amount received by plaintiff from the sale or lease of the plane to a third party, plus plaintiff's costs in repossessing, selling or releasing the plane.
Plaintiff averred that it had performed all of the conditions required of it under the contract and had delivered the aircraft to defendants; that defendants paid the $6,000 upon delivery of the plane and three monthly installments; that on May 15, 1959, defendants failed and refused to make any further payments, although demand was duly made, and shortly thereafter plaintiff repossessed the plane and kept and stored it until November 20, 1959, at which time plaintiff sold the plane to third parties at private sale for $28,500, which was the fair market price of the plane at that time. Plaintiff sought damages in the amount of $13,135.45, this being the total unpaid rent under the lease, plus the costs to plaintiff of repossessing and selling the plane, and less the amount realized from the sale of the plane.
Defendants demurred generally to the complaint, asserting that plaintiff was required under the contract to comply with the California pledge laws in the event that it chose, after repossession, to sell the plane; that it admittedly, by its pleading, had not done so and since this provision was a condition precedent to plaintiff's right to recover any deficiency remaining after sale, the complaint set forth no cause of action. The trial court agreed and sustained the demurrer without leave to amend, and entered its judgment of dismissal.
The rule is well settled that a general demurrer should be sustained without leave to amend only if the complaint cannot be amended to state a cause of action. (Lincoln v. Grazer (1958) 163 Cal.App.2d 758, 761, 329 P.2d 928; Kauffman v. Bobo & Wood (1950) 99 Cal.App.2d 322, 323, 221 P.2d 750.) If the complaint states a cause of action on any theory, a general demurrer must be overruled. (Kauffman v. Bobo & Wood, supra.)
In the case at bar, the trial court sustained the demurrer without leave to amend on the sole ground that appellant, in electing to repossess and sell the leased property, was bound to sell the property at public auction in accordance with the terms of the lease, and that appellant having sold the property at private sale without notice, it was barred from recovering a deficiency judgment. In support of its ruling, the court relied upon Metheny v. Davis (1930) 107 Cal.App. 137, 290 P. 91, and Rocky Mountain Export Co. v. Colquitt (1960) 179 Cal.App.2d 204, 3 Cal.Rptr. 512.
We do not consider these authorities applicable to the facts of this case.
In the Metheny case, the plaintiff was the holder of a promissory note secured by a chattel mortgage on certain furniture. Under the terms of the mortgage, plaintiff was given the right, in the event of the mortgagor's default in payment, to take possession of the mortgaged property and sell it "in the manner provided by law." (107 Cal.App. p. 138, 290 P. at p. 91.) A default subsequently occurred, and plaintiff took possession of the furniture and had it sold at auction. In so doing, however, plaintiff failed to make a demand for payment of the indebtedness and further failed to give notice of the sale. Plaintiff subsequently brought suit against the mortgagor to recover the deficiency due on the note. The court held that the plaintiff, by disposing of the property without following the requirements of the mortgage, had extinguished the mortgage lien and was thus barred from recovering a deficiency judgment. In so holding, the court pointed out that a mortgagee, under California law, has a mere lien on the mortgaged property. When a mortgagee takes possession and sells the property without following the method prescribed by law or set forth in the mortgage, his actions amount to a conversion of the mortgaged property, and his lien is thereby extinguished. The court noted that in those jurisdictions holding that a mortgagee has legal title to the mortgaged property, the rule is otherwise, and an invalid sale will not destroy the mortgagee's right to bring a later action for the deficiency. In those jurisdictions, the mortgagor's only relief from an invalid sale is to have the fair market value of the mortgaged property credited upon his note.
The Colquitt case merely reaffirmed the rule of the Metheny case as applied to a chattel mortgagee who had sold the mortgaged property without giving the notice required by law.
Neither decision is authority for the proposition that a lessor of personal property is subject to the same rules as is a chattel mortgagee. Indeed, the language of the Metheny case...
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