Commercial Securities, Inc. v. Mast

• Decision Date: 02 January 1934
• Citation: 28 P.2d 635,145 Or. 394
• Parties: COMMERCIAL SECURITIES, Inc., v. MAST.
• Court: Oregon Supreme Court

28 P.2d 635

145 Or. 394

COMMERCIAL SECURITIES, Inc., v. MAST.

Supreme Court of Oregon

January 2, 1934

In Banc.

Appeal from Circuit Court, Coos County; J. T. Brand, Judge.

Action by Commercial Securities, Inc., against R. H. Mast. From a judgment of nonsuit, plaintiff appeals.

Reversed and remanded.

J. W. McInturff, of Marshfield (L. A. Liljeqvist, of Marshfield, on the brief), for appellant.

John D Goss, of Marshfield (Goss, Murphy & Skipworth, of Marshfield on the brief), for respondent.

BAILEY Justice.

This action was brought by Commercial Securities, Inc., a corporation, against the defendant, R. H. Mast, to recover the sum of $291.92, as damages for the destruction of a 1929 Pontiac coupé by the defendant, on which motor vehicle the plaintiff had a past-due chattel mortgage.

On May 16, 1931, one George Bundy Wasson, for a valuable consideration, executed and delivered to the plaintiff his note for the sum of $350.30, payable in monthly installments of $29.19 each, beginning on June 15, 1931. At the time the Pontiac coupé was destroyed, on November 23 1931, in a collision due to the defendant's negligence only three monthly installments had been paid on the mortgage, two by Wasson and one by P.J. Rooney Auto Company, the guarantor on the note. Three monthly installments were then past due and delinquent. The automobile was completely demolished in the collision, so that its only value was for junk. The remaining parts were taken to Marshfield by P.J. Rooney Auto Company and sold by that company for $25, and the entire amount was applied by that company in payment of its lien for transportation and storage.

The certificate of title to the car was issued by the state of Oregon on June 6, 1931, and had noted thereon as a lien against the car the chattel mortgage above mentioned. This mortgage, however, was not recorded with the county clerk of Coos county, where Wasson resided and kept the car, or with any other county clerk.

On November 30, 1931, the plaintiff wrote to the defendant, stating to him that the plaintiff had been advised of the accident to Wasson's car, and that the plaintiff was the legal owner of the car until such time as Wasson paid the balance due on the contract of purchase, amounting to $262.71, and suggesting that the defendant notify his insurance carrier to that effect, in order that the plaintiff might be protected in the event that a settlement was made. On December 30 the plaintiff again wrote to the defendant, stating that it was desirous of knowing what had been done toward a settlement by the Occidental Insurance Company of the claim for damages to the Wasson car, and reminded defendant that in its former letter it had stated that there was a balance due to plaintiff of $262.71, and that since that time the dealer, P.J. Rooney Auto Company, had advised the plaintiff that the balance should be $29.21 more than the amount mentioned in plaintiff's former letter, or a total of $291.92, and that this difference was due to the fact that the dealer had advanced one of Wasson's payments when the latter became delinquent. After the receipt of this letter the defendant noted on the bottom thereof that he had notified the insurance company, and that the insurance company had acknowledged the notice and informed him that the matter would be adjusted soon, and returned the letter with such notation to the plaintiff.

The president of the plaintiff corporation at least once, between the time of the collision and the settlement hereinafter referred to, saw the defendant and discussed with him the plaintiff's claim for damages to the motor vehicle.

On or about January 7, 1932, the adjuster for the insurance company which had insured the defendant against liability for property damage to others effected a settlement with Wasson and received from him the following signed release: "In consideration of the sum of three hundred eighty-five and 00-100 dollars ($385.00) received by me this 7th day of January, 1932, I hereby release and discharge R. H. Mast of and from any and all claims which I now have or may hereafter have, by reason of damage to my property on or about the 23rd day of November, 1931, or of any cause, matter or thing whatsoever."

The amended complaint in this action was filed in January, 1933, and alleges the execution of the mortgage, the breach thereof by the mortgagor, the destruction of the automobile through the negligence of the defendant, the value of the car before and after the accident, the notification by plaintiff to the defendant of plaintiff's chattel mortgage, the amount due thereon at the time of the accident, and the request that settlement for destruction of the automobile be made by the defendant direct to the plaintiff to the extent of plaintiff's claim against the car.

To this complaint the defendant filed an answer admitting its negligence as to the collision and denying that the automobile was of any greater value than $385. Defendant further admitted that plaintiff had notified him that plaintiff claimed to hold a chattel mortgage on the automobile, on which there was unpaid the sum of $291.92. As an affirmative defense the defendant alleged that at the time of the accident and at all times mentioned in its answer Wasson was the legal owner of and in possession of the Pontiac coupé described in the complaint, and that on January 7, 1932, the said Wasson, for a consideration of $385, made, executed, and delivered to the defendant the release hereinbefore set out, and further alleged that the release was intended to and did release the defendant from all damages arising out of the accident set forth in the complaint.

In its reply to this answer the plaintiff admitted that Wasson signed the release referred to in the reply, and further alleged that the release was void in so far as the same might affect the rights of the plaintiff, "for the reasons specifically set forth in plaintiff's amended complaint and in this reply." The reply further alleges that plaintiff did not authorize Wasson to accept the sum specified in the release, or any sum, or to execute said release or any release, and that the amount mentioned in the release was paid and said release was executed without the plaintiff's knowledge or consent, and that the plaintiff had informed the defendant of its rights and interest in and to said automobile and had demanded in writing and otherwise that any moneys paid on account of said accident covering the damage to said automobile should be paid direct to the plaintiff. Plaintiff further alleged: "That said money was paid to Wasson and the release executed by him to cover an individual 'equity' in said automobile which Wasson then claimed to have, separate and distinct from the amount of plaintiff's mortgage upon said automobile. Plaintiff is informed and believes and therefore alleges that at the time said money was paid and said release executed by Wasson that the money was so paid with the understanding and agreement that said sum and that said release was to cover Wasson's 'equity' in said car only, and that the amount of plaintiff's mortgage upon said automobile was deducted from the settlement made with Wasson and has ever since said time and still is retained by the defendant."

The action was tried before a jury. At the close of plaintiff's case the court granted defendant's motion for an involuntary nonsuit, and from the judgment entered thereon the plaintiff appeals.

One of the principal questions involved on this appeal is whether or not the holder of a chattel mortgage, after condition broken, can maintain an action for damages against a tort-feasor who injures or destroys the mortgaged property while the same is in the possession of the mortgagor; and, if such an action is maintainable, whether or not a tort-feasor, after knowledge of the mortgagee's claim and request for settlement with him, can settle with the mortgagor so as to preclude recovery from the tort-feasor by the mortgagee for the amount of his mortgage.

The chattel mortgage here in question contained the usual conditions of such instruments, among which was the provision that, upon default in payment of any sum thereby secured, the mortgagee should be entitled to immediate possession of the property thereby covered. Section 54-207, Oregon Code 1930, relating to chattel mortgages, provides as follows: "Whenever the condition of any mortgage of goods and chattels shall be broken, the mortgagee shall be entitled to the immediate possession of the mortgaged property, and when after breach of the condition of any such mortgage the possession of the mortgaged property shall not be delivered up to the mortgagee upon demand by him or by any person duly authorized by him to make such demand of the person or persons having such mortgaged property in possession, the mortgagee may recover the possession of such mortgaged property in the manner provided by chapter III of Title IV of the Code of Civil Procedure."

Under the decisions of this state a chattel mortgage, before condition broken, creates merely a lien. Ayre v. Hixson, 53 Or. 19, 98 P. 515, 133 Am. St. Rep. 819, Ann. Cas. 1913E, 659; Swank v. Elwert, 55 Or. 487, 105 P. 901; Templeton v. Lloyd, 59 Or. 52, 109 P. 1119, 115 P. 1068; Laam v. Green, 106 Or. 311, 211 P. 791; Weatherly v. Hochfeld, 133 Or. 136, 286 P. 588. And the title of the mortgagor to the property continues and is not extinguished until the lien is foreclosed, either strictly according to the terms of the mortgage or in the manner provided by law. See authorities above cited.

After condition broken, the mortgagee is entitled to possession of the property and acquires a qualified title to, or qualified ownership of, the property. Case T....