First Nat. Bank of Colorado Springs v. Wilbur

• Decision Date: 27 April 1891
• Citation: 26 P. 777,16 Colo. 316
• Parties: FIRST NAT. BANK OF COLORADO SPRINGS v. WILBUR.
• Court: Colorado Supreme Court

26 P. 777

16 Colo. 316

FIRST NAT. BANK OF COLORADO SPRINGS v. WILBUR.

Supreme Court of Colorado

April 27, 1891

Appeal from district court, Arapahoe county.

In October, 1882, Matthew C. Wilbur brought this suit against the First National Bank of Colorado Springs to recover the difference between the price at which certain personal property was sold under mortgage by the bank and its value in the market at the date of sale; and also to recover the difference between the actual value of certain assigned book-accounts and the price at which the same were sold. The complaint in form is analogous to one in the old action of trover, and contains all its essential elements. It set up the ownership of the plaintiff in the goods, the possession and converation by the bank and Halthusen, and prayed a money judgment. The value of the chattels is stated to be $12,600 in this pleading, and the book-accounts at $1,300. The answer admits the indebtedness of plaintiff in the sum of $4,000 on the 1st of August, 1882, and alleges that said indebtedness was secured by three several mortgages upon the livery stock of plaintiff, and by an assignment to it of certain book-accounts. It admits that the property described in the complaint was a correct list of the property taken possession of by plaintiff on August 1, 1882, under the several mortgages; it denies that the property was of the value of $12,675, as alleged in the complaint; states its true value to have been no greater than $7,400; and the book-accounts transferred of no greater value than $400. It is alleged also in the answer that said mortgages 'given to secure said indebtedness as aforesaid were given subject to a prior chattel mortgage held by Ruth A. Newton upon the same property to secure her in the payment of $4,000, and interest thereon at 10% per annum from April 20, 1881, no part of which has been paid.' And this is not denied in the replication. The sales to the defendant Halthusen upon the 8th day of August, 1882, are admitted in the answer, but all collusion and bad faith is denied. It is expressly alleged that said transfers were made subject to said prior mortgage to Ruth Ann Newton, aforesaid, and this also is not denied. It alleges violations by appellee of the provisions of the chattel mortgages, and justifies the taking possession of the property. Without objection, the cause was tried to a jury and under oral instructions, resulting in a verdict for the plaintiff, Wilbur, of $8,138.82, with interest amounting to $2,708.41. The interest was subsequently remitted. No specific objection was taken to the charge. One in the general form of an 'exception in favor of the defendant' was saved.

At the trial it appeared that in the spring of 1881 plaintiff Wilbur, and one J. E. Newton formed a copartnership for the carrying on of the livery business at Colorado Springs. On the 12th day of October, 1881, the firm was indebted to the defendant bank in about the sum of $3,300. It appeared that at this date one Humphrey, who was connected with the institution, had signed an appeal-bond for the benefit of the firm. To secure both the indebtedness and the contingent liability, the firm, on the day named, executed a chattel mortgage upon all the livery stock owned by it, which is specifically set out both in the instrument and in the complaint. Later, the liability upon the bond was apparently extinguished, and the mortgage stood as security for the loan. By its terms and the tenor of the note it was due one year after its date. It contained all the usual grinding provisions of that class of securities as taken by financial institutions, but was expressly made subject to the prior mortgage of Mrs. Newton. In case of default in payment of the principal, or of the interest, which was to be paid monthy or in the event of an attachment against the firm, or in case the mortgagee should feel 'insecure or unsafe in his security,' the mortgagee was authorized to take 'immediate and full possession,' and to 'proceed to sell the said property at public or private sale, on such terms, and for such price or prices, in such manner, and to such persons, as he might see fit.' The debt was not diminished by the payment of any part of the principal, and was increased by a failure to pay the accrued and accruing interest. Later, and in May and July, 1882, the security was somewhat increased by mortgages on other property which had been added by purchase to the stock. These later mortgages were given to secure the identical paper and indebtedness protected by the original instrument. The course of dealing had resulted in the creation of other debts between the parties which appeared to exist in the shape of overdrafts and a general bank balance against the firm. In July, 1882 as a further security to cover all existing debts, the firm, by assignment, transferred to the bank all its bills receivable and book-accounts, amounting in value to something like a thousand dollars. Wilbur was left in charge of the collections, and continued to run the business until about the 1st of August, when he voluntarily turned over all the property covered by the mortgages to the bank which held the securities. At the time of the formation of the copartnership between Wilbur and Newton, the firm executed a mortgage to Newton's mother, Ruth Newton, to secure her for the $4,000 which she had loaned her son to put into the business. The defendant offered this mortgage in evidence, as also the indorsement on its margin showing its satisfaction on the day following the sale to Halthusen. Neither the instrument nor the indorsement were admitted in evidence, and defendants saved an exception to the ruling of the court upon that question. The bank took possession, as the record shows, under the several mortgages executed by the firm covering the property described in the instruments. It was conceded on the trial, and for all its purposes, that the bank had a right, by the terms of the securities, to take possession as and when it did. On the 9th of August, 1882, after the bank had gotten the property under its control, it sold the entire stock at private sale, in a lump, together with the assigned book accounts, to Halthusen, and put him in possession. The price for which both the stock and accounts were sold was $3,500. With the proceeds the bank canceled the original note of $3,221.17, and surrendered it to Mr. Newton, formerly one of the concern. The balance was credited to the unsecured account, which amounted to about...