Daggett, Bassett & Hills Co. v. McClintock

• Decision Date: 21 January 1885
• Parties: DAGGETT, BASSETT & HILLS CO. v. MCCLINTOCK.
• Court: Michigan Supreme Court

22 N.W. 105

56 Mich. 51

DAGGETT, BASSETT & HILLS CO. v. MCCLINTOCK.

Supreme Court of Michigan

January 21, 1885

Error to Menominee.

D. Bethune Duffield, for plaintiff.

B.J Brown, for defendants and appellants.

CAMPBELL J.

On the twelfth of February, 1883, plaintiff, having commenced a suit on contract in the Menominee circuit court against McClintock, filed affidavit in garnishment against Smith &amp Loughrey as having property, etc., of McClintock's in their possession. March 6, 1883, they disclosed that they held certain property under chattel mortgage for $4,775.75 from McClintock, and some securities for the same debt, and had nothing else. Judgment being rendered against the principal defendant for $564.05, the garnishees were held under the charge of the court for this amount. This judgment was rendered in August, 1883. A new trial being denied, error is brought on exceptions taken at the trial. The questions arose on the respective rights of the various parties under the mortgage. The mortgage was made January 25 1883, on a stock of goods in McClintock's store, and was payable in three, six, nine, and twelve months, in equal installments. The mortgage contained a provision that the mortgagor should remain in possession, and be allowed to dispose of the property in the due course of his trade by sale, applying the whole proceeds of such sales towards the discharge of the liabilities secured by mortgage.

On the sixth of February, 1883, the mortgagees obtained peaceable possession. McClintock's testimony indicates that he supposed they had a right, and that he made no distinct opposition, but, as he says, gave no willing consent, but practically acquiesced. Under his testimony we do not very clearly see how the jury could have found that the possession was without consent. But in the view we take of the case this is not important. It appears that a few days before, attachments had been levied on the goods, and McClintock telegraphed the mortgagees to come down. The record does not contain a very full account of these attachment proceedings, which were, in our opinion, very material upon the question of the mortgagees' right to take possession. After taking possession they proceeded to sell the goods and keep up the stock, and they claim this was done,--and from the testimony this seems most likely to facilitate the interests of all parties,--and with McClintock's acquiescence, if not by his active approval. There was no evidence that they had collected any large proportion of their debt, and the court charged the jury that, if this course of dealing was with McClintock's assent, they were not liable as garnishees until their whole debt was paid. But they were also charged--and this is the chief ground of error--that if they took possession without his consent, though in the belief they had a right to do so, the jury might ascertain the value of the property, and if it exceeded the amount of the debt they must account for the balance as garnishees.

This charge went, in our opinion, upon an erroneous view of the garnishee laws, and of the defendant's rights. No matter in whose possession the property may have been, the rights of the property of McClintock were no more than the balance which might remain after the mortgage should be paid. Even a possession taken prematurely would not subject the mortgagees to liability for the price as a conversion of the whole. It would still remain in their hands as mortgagees, subject to McClintock's right of redemption on payment of so much of the debt as had not been realized out of sales, and, if he had not lost the right, possibly to reclamation by him until default. But as soon as any default occurred, their right of possession would be absolute until all of their debt should have been realized. In no case can they be held liable for the value of the whole property before they have disposed of it. And they cannot, even in case of conversion, be responsible except for the balance after their own debt is paid. See Brink v. Truoff, 40 Mich. 310, and S.C. 44 Mich. 69; S.C. 6 N.W. 94.

At the time when this garnishee judgment was rendered, there was a large part of the mortgagees' claim which had not matured, and they were not bound, and, technically, they were not authorized, to sell faster than the debt matured. But they had an unquestionable right of possession on default, if not sooner. Assuming the broadest...