Conway v. Skidmore

• Decision Date: 12 March 1935
• Docket Number: 1870
• Citation: 48 Wyo. 73,41 P.2d 1049
• Parties: CONWAY v. SKIDMORE, ET AL
• Court: Wyoming Supreme Court

41 P.2d 1049

48 Wyo. 73

CONWAY v. SKIDMORE, ET AL

No. 1870

Supreme Court of Wyoming

March 12, 1935

APPEAL from the District Court, Laramie County; SAM M. THOMPSON Judge.

Action by J. H. Conway, doing business as the Standard Loan Company against J. Fred Skidmore and another. From a judgment for plaintiff, defendants appeal.

Reversed and remanded with directions.

For the appellants, the cause was submitted upon the brief of Edward Lazear, of Cheyenne.

A mortgagee buying property at an invalid sale is liable for the value of the property and assumes the burden of proof as to the validity of the sale. Harrison v. Hall, et al. (N. Y.) 145 N.E. 737; Jones v. Franks, (Kan.) 6 P. 792; First State Bank of Ardmore v. Dougherty (Okla.) 120 P. 656; Castner v. Darby, (Mich.) 87 N.W. 199; Lee v. Fox, et al., (Ind.) 14 N.W. 889; 5 R. C. L. 469; 11 C. J. 708. Statutes relating to the foreclosure of chattel mortgages must be strictly construed. Jankowitz v. Kaplan, et al., (Minn.) 165 N.W. 276; Huber Mfg. Company v. Ellis, et al., (Mo.) 201 S.W. 391; J. I. Case Threshing Mach. Co. v. Copren Bros., (Cal.) 162 P. 650; Trudell v. Hingham State Bank of Hingham, (Mont.) 205 P. 669; Henderson v. Fisher, (Cal.) 176 P. 64; O. S. Kelly Co. v. McCarty, et al., (Kan.) 88 P. 883; Perryman v. Abston, Wynne & Co., (Ark.) 261 S.W. 623; Montgomery County Nat. Bank v. Wherry, (Kan.) 169 P. 1146. The contract gave to the mortgagee five options, four by the contract itself, that is, public sale with notice or without notice, and private sale, with notice or without notice, and contained a power of sale. The fifth method would be the one allowed by statute. Finance Corporation v. Smith, 42 Wyo. 387; 11 C. J. 700, 709, 710; Baldwin v. McDonald, 24 Wyo. 140; Howrey v. Star Ins. Co. of America, (Wyo.) 28 P.2d 479, 481; Intermountain B. & L. Ass'n. v. Casper Mutual B. & L. Ass'n., (Wyo.) 29 P.2d 104; Ireland v. Waymire, (Kans.) 191 P. 305; Freeland v. Dolen, (Okla.) 203 P. 184. The Law of Waiver--Bowers, Section 65. The rule covering the recovery of attorney's fees in chattel mortgage foreclosures is governed by the following authorities: Wyoming Investment Company v. Wax, et ux., 45 Wyo. 349; Morgan v. Haley, 13 L. R. A. (N. S.) 736; In re Murcott Steel Products Company, 294 F. 86; Bank of Benson v. Hove, (Minn.) 47 N.W. 450; Williams v. Flowers, (Ala.) A. S. R. 24; 774; Montgomery v. Crossthwait, (Ala.) 24 A. S. R. 844; Simpson v. Butts, (Okla.) 226 P. 334; Letcher v. Wrightsman, (Okla.) 158 P. 1152; 2 Jones Chattel Mortgages, 558; 11 C. J. 737; 63 A. L. R. 1314, 1318 and 1319 and 4 R. C. L. 471. When the mortgagee makes an unfair sale, he is liable for the value of the article sold. The questions here involved relate to "good faith," "value," and lawful "compliance with powers," and whether the instrument be deemed a conditional sales contract, or a chattel mortgage, the question of good faith is exactly the same. Expenses stipulated for in the instrument did not include attorney's fees or collection costs. Attorney's fees are not collectible, unless the parties expressly stipulate therefor. Plaintiff's bid was intended to cover costs and attorney's fees, only he did not intend to pay the defendant anything. The foreclosure sale being void merely operated to charge the plaintiff with the value of the chattel, and it was established by proof to be of the value of $ 150.00 to $ 160.00. The action was for $ 154.00 or the reasonable value of the radio. The judgment should be reversed.

For the respondent, the cause was submitted upon the brief of John Delaney, of Cheyenne.

Appellants appear to consider that the transaction giving rise to the sale contract, was in some way a loan of money. No money was involved. It was only the sale of a radio. The cash selling price was $ 166.00. A down payment of $ 25.00 was made. There was a carrying charge of $ 14.10, and an agreement that the payments should be $ 12.95 per month for twelve months. A conditional sales contract of this character is not void as usury. Berger v. Lodge, (Cal.) 265 P. 515; 27 R. C. L. 213, 215; 39 Cyc. 926; Holland-O'Neal Milling Company v. Rawlings, 268 S.W. 683,686. The agreement provided for monthly installment payments, with interest after maturity, at the highest legal rate, together with any collection expenses incurred by the seller or his assigns. A stipulation to pay costs of collection, includes the compensation of an attorney in case suit is instituted. 3 R. C. L. 895; McClain, et al. v. Continental Supply Company, (Okla.) 168 P. 815; Nussenfield v. Smith, (Conn.) 148 A. 388, 390. The findings of the court below were amply supported by the evidence. We think the court was justified in allowing attorney's fees under the stipulation of the contract. No authorities are cited indicating that the facts shown in this controversy were illegal. The judgment should be sustained.

KIMBALL, Chief Justice. BLUME and RINER, JJ., concur.

OPINION

KIMBALL, Chief Justice.

This is an action commenced in a justice of the peace court by plaintiff, the assignee of a conditional sale contract, to recover from defendants, the buyers of the property, a deficiency claimed to be due after the property had been retaken and resold by plaintiff and the net proceeds of the resale credited on the unpaid purchase price. In the justice court the verdict and judgment were for defendants. On appeal to the district court evidence was taken before a jury, but when each side requested a directed verdict, the jury was dismissed, and the court rendered judgment for plaintiff for the amount claimed. The defendants have appealed to this court.

Defendants, husband and wife, on January 10, 1931, bought of Modern Home Appliance Company a radio, paying $ 25 of the purchase price and signing a conditional sale contract whereby they agreed to pay the rest ($ 155.40) in twelve equal monthly instalments, with interest after maturity at the highest legal rate, "together with any collection expenses incurred by the seller or his assigns. " The contract provided that title to the radio was to remain in the seller or assigns until all amounts due were paid. On failure of the buyers to pay any monthly instalment, the seller or assigns might declare all remaining instalments immediately due and payable, take possession of the radio, and "make such disposition thereof as may be deemed desirable and all payments made shall be retained as liquidated damages for the use of said article, or said article may be sold with or without notice at public or private sale and the proceeds thereof, less expenses, credited upon the amount unpaid and in either event, as liquidated damages for breach of this contract. In case of deficiency, the undersigned agrees to pay the seller or his assigns, said deficiency, and does hereby confess judgment in the amount of such deficiency."

The contract was assigned to plaintiff by the seller. After defendants failed to pay the first instalment due February 18 and the second due March 18, the plaintiff, on March 23, took possession of the radio and advertised it for sale at public auction.

The advertisement was evidently intended as the notice which the statutes (§§ 71-115 to 71-118, R. S. 1931) provide for in case of foreclosure of a chattel mortgage containing a power of sale. It was headed "Notice of Foreclosure Sale"; referred to default in payments due under a "chattel mortgage," and contained the recitals required by the statute (§ 71-118). It gave notice that the property would be sold "at public auction to the highest bidder for cash at the store room known as The Modern Home Appliance Company at 1821 Capitol Avenue, Cheyenne, Laramie County, Wyoming, on the 10th day of April, 1931, at ten o'clock in the forenoon of said day to satisfy the amount secured by said mortgage."

The property was sold for $ 35. The claimed expenses of sale were 75 cents for drayage, $ 13.88 for publishing the notice of sale and $ 20 for attorney's fee, total $ 34.63. Though the expenses were only 37 cents less than the amount for which the property was sold, defendants apparently were credited with $ 1.40, and this action was then brought to recover from defendants the deficiency ($ 154) and $ 15 attorney's fee for prosecuting the action. The judgment was for these amounts and interest and costs, totalling $ 205.73.

The cash selling price of the radio was $ 166. A calculation on the back of the conditional sale contract shows how the amount due from defendants was arrived at. The cash payment of $ 25 was deducted, leaving $ 141, which was described as the "unpaid balance before adding carrying charge." A carrying charge of $ 14.10 was then added, making the "amount due by purchaser" $ 155.10.

Defendants contend that the contract was in effect a borrowing of $ 141 with an agreement to pay $ 14.10 interest, which was usurious in view of the requirement that the loan be repaid in monthly instalments. The contention finds no support in the authorities. The fallacy is in assuming that the transaction must be treated as a borrowing of money instead of a sale of property. The amount which defendants agreed to pay for the radio, as shown by the conditional sale contract, was $ 25 paid at the time and $ 155.40 to be paid in the future. There was no evidence to require a finding that the sale on credit was a cloak for a usurious loan. It was one of those familiar mercantile transactions in which a dealer selling on credit asks more than the cash price. In such case the amount added to the cash price to make the credit price may be fixed on consideration of many things which may increase the risk or reduce the profits. See Ricker v. Fay Securities Co., 110 Cal.App. 750, 294 P. 732; In re Bibbey, 9 F.2d 944, 946. The...