Graves v. Negy

• Decision Date: 06 October 1923
• Docket Number: 24,704
• Citation: 219 P. 286,114 Kan. 373
• Parties: T. H. GRAVES, Appellee, v. ELMER J. NEGY et al. (GEORGE W. MOLITOR, Appellant.)
• Court: Kansas Supreme Court

219 P. 286

114 Kan. 373

T. H. GRAVES, Appellee, v. ELMER J. NEGY et al. (GEORGE W. MOLITOR, Appellant.)

No. 24,704

Supreme Court of Kansas

October 6, 1923

Decided July, 1923.

Appeal from Reno district court, WILLIAM G. FAIRCHILD, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. SALE OF AUTOMOBILE--Chattel Mortgage Given--Recital in Chattel Mortgage Void as Against Public Policy. A recital in a chattel mortgage given by the purchaser of an automobile that he waived "any right of action whatsoever against the seller, . . . growing out of the repossession or retention of said motor vehicle," when subjected to an interpretation that the seller could repossess himself of the automobile after it was more than half paid for and could dispose of it without giving an accounting thereof to the mortgagor, is against public policy and void.

2. SAME--No Election of Remedies Required. No error occurred when the trial court refused to require the plaintiff to elect whether he was seeking damages for conversion of his automobile or merely to have it subjected to a lawful foreclosure.

3. SAME--Plaintiff's Evidence Good Against Demurrer. The evidence examined and held sufficient to support plaintiff's cause of action against defendant's demurrer thereto.

4. SAME--Evidence of Facts Concerning Sale of Mortgaged Property Competent. No error arose in showing that defendants, after making some repairs on the car, sold it to another purchaser at its original sale price. Such evidence tended to show its value and throw some light on the question of defendants' good faith in the exercise of their rights as mortgagees.

5. SAME--Amount of Veridict Not Prejudicial. Although the evidence would have justified a larger verdict for plaintiff than that rendered in his behalf yet it will not necessarily be disturbed on appeal at the instance of defendants when no miscarriage of justice is discerned therein so far as defendants are concerned.

6. SAME--Sale of Chattel Mortgaged Property by Mortgagee to Himself. A sale of property under a chattel mortgage by the mortgagee to himself, or to a corporation of his creation, or to one in which he has a director's voice and vote, will only be permitted to stand, if timely challenged, when the circumstances clearly show fair dealing and good faith on the part of the mortgagee.

W. A Huxman, and Aaron Coleman, both of Hutchinson, for the appellant.

A. C. Malloy, R. C. Davis, and Warren H. White, all of Hutchinson, for the appellee.

OPINION

DAWSON, J.:

This was an action to recover the value of plaintiff's interest in a Haynes automobile.

Plaintiff purchased the car from the defendants, Negy and Molitor, in September, 1920. The price was $ 3,250. In payment plaintiff gave defendants another car and also gave them a note for $ 1,640 secured by a chattel mortgage on the Haynes car. He made two payments of $ 205.10 each on the note, and thereafter apparently got into difficulties of some sort and left town, Hutchinson, but shortly afterwards returned. During his absence, defendants took possession of the car under this mortgage, and about that time they organized a corporation, The Southwest Motor Car Company, of which they were the controlling stockholders; and after a colorable but abortive sale of the car to one Sutton, the defendants transferred plaintiff's car to the corporation of their creation at a valuation of $ 2,000. Either defendants or their corporation made some repairs on the car, and it was sold to one Childs at its original sale price of $ 3,250.

On plaintiff's return to Hutchinson he demanded his car and offered to pay his note and mortgage thereon. This was declined. It is not clear whether the sale to Childs had been effected at that time or not. Then plaintiff demanded a settlement, which was refused. Hence this action. Plaintiff pleaded the material facts, and alleged that these sales were made for the purpose of defrauding and depriving him of his interest in the automobile.

As a defense to plaintiff's action, defendants set up their chattel mortgage on the car, the default of plaintiff on his note, and their right under the mortgage to take possession of the car and to sell it at private sale; and that pursuant thereto they had sold it to the Southwest Motor Car Company in good faith.

On this joinder of issues, the cause was tried before a jury which returned a verdict for plaintiff in the sum of $ 1,000. Judgment being entered thereon and defendants' motion for a new trial overruled, they appeal.

It is first urged that defendants were entitled to judgment on the pleadings, because of the recitals in the chattel mortgage admittedly signed by plaintiff, the chief clause of which reads:

"Purchaser does hereby waive any right of action whatsoever against the seller, his agent or representative growing out of the repossession or retention of said motor vehicle . . . purchaser does specifically waive the benefit of any or all laws or statutes governing the resale of said vehicle repossessed by seller if purchaser is permitted so to do by law, . . . or if any execution, judgment, sequestration or any writ should be levied on any property of purchaser."

Of course a vendor of a chattel may ordinarily sell it upon such terms as he sees fit (Denny v. Van Dusen, 27 Kan 437), but there are certain qualifications upon that doctrine. He cannot bind his...