Guarantee Bond & Mortg. Co. v. Hilding

• Decision Date: 29 March 1929
• Docket Number: No. 78.,78.
• Citation: 246 Mich. 334,224 N.W. 643
• Court: Michigan Supreme Court
• Parties: GUARANTEE BOND & MORTGAGE CO. v. HILDING.

246 Mich. 334

224 N.W. 643

GUARANTEE BOND & MORTGAGE CO.

v.HILDING.

No. 78.

Supreme Court of Michigan.

March 29, 1929.

Error to Circuit Court, Kent County; William B. Perkins, Judge.

Action by the Guarantee Bond & Mortgage Company against Charles V. Hilding. Judgment for plaintiff, and defendant brings error. Reversed for a new trial.

Plaintiff financed the operations of the Hermitage Garage & Auto Company, a dealer in new and used cars. It was not a corporation, and a dispute arose, as we shall presently see, as to who was really operating under that name. Plaintiff advanced upwards of $26,000, taking numerous bills of sale covering one or more cars at a time, as the money was from thim to time advanced. Upwards of $11,000 of this sum was repaid. Fred W. French was assistant cashier of one of the banks at Grand Rapids. He became very much involved financially, was arrested, and was also declared a bankrupt. Defendant was appointed trustee of the bankrupt estate. From the light defendant then had, he concluded the business of the Hermitage Company was owned by French. It was then being operated by one Nelson doubtless by virtue of a trust mortgage thereon. After his appointment and about the middle of February, 1921, defendant pasted on the windshields of the cars in the garage the following notice:

‘Take Notice. This automobile is the property of the undersigned, Charles V. Hilding, as Trustee of the Estate of Fred W. French, bankrupt, and shall not be removed from the garage of the Hermitage Garage and Auto Company, Michigan Street and Bond Avenue, Grand Rapids, Michigan, without the written consent of the undersigned Trustee, or without order from the Bankruptcy Court for the Western District of Michigan. Charles V. Hilding, Trustee of the Estate of Fred W. French, Bankrupt.’

As to this transaction, defendant testified:

‘We took the notices, and Mr. Tompkins showed me each car that was not a storage car, supposed to belong to the garage, and pointed them out to us and I posted the notices on the windshields of these cars. The notice I refer to is marked Plaintiff's Exhibit 14.

‘Q. And what else did you do down there? A. I left; I left the garage.

‘Q. Left the garage and went away? A. Yes, sir. Tompkins was in there when I left.

‘The Court: What did you do? I didn't get that. A. After posting the notices we left.

‘The Court: The garage? A. Left the garage.

‘The Court: Left it open? A. Oh, the garage was open, it was in the possession of Nelson, was being run by him, operated there. I simply went there and posted these notices on the cars and went back.

‘The Court: I see. A. I had no possession of the garage.

Mr. McAllister: I ask to have that stricken out.

‘Q. Did you leave any agent or representative in there? A. I did not. Nelson remainded in possession of the garage until the 7th of July; it may have been the 8th. I think you will find the date on the decree, the date the oral opinion was rendered by Judge Sessions.’

On the same day defendant served on plaintiff the following:

‘Grand Rapids, Mich., February 12, 1921.

‘Guarantee Bond & Mortgage Company, 107 Lyons St., N. W. Grand Rapids, Michigan.

‘Please take notice, that the undersigned, Charles V. Hilding, as Trustee of the Estate of Fred W. French, bankrupt, claims to be and is the owner of the property described in the attached ‘List and Description of Automobiles belonging to Charles V. Hilding, Trustee,’ which said property is now in the possession of said Trustee and of the Bankruptcy Court for the Western District of Michigan at the garage of the Hermitage Garage and Auto Company, Michigan Street and Bond Avenue, Grand Rapids, Michigan.

‘Take further notice, that the foregoing property shall not be removed from said garage without the written consent of the undersigned Trustee, or without orders from the Bankruptcy Court of the Western District of Michigan. Charles V. Hilding, Trustee of the Estate of Fred W. French, Bankrupt.’

To which was attached a list of the automobiles involved. Plaintiff countered with a notice claiming the automobiles, and the following day filed a bill in Kent circuit for the foreclosure of its liens. In the bill it was alleged:

‘And this plaintiff further shows unto the Court that, from the time of execution and delivery of said bills of sale, the said automobiles described in said bills of sale have been in what is known as the Hermitage Garage on the corner of Michigan Street and Bond Avenue and in the possession of this plaintiff and the said Claud B. Tompkins and F. W. French, as co-partners, jointly with this plaintiff, and that the said automobiles are now in the said Hermitage Garage and in the possession of Claud B. Tompkins and this plaintiff jointly, the said Claud B. Tompkins being the solvent partner of Claud B. Tompkins and F. W. French, co-partners.’

There were in other paragraphs similar allegations of possession by plaintiff. A temporary injunction was issued commanding defendant to ‘* * * desist and refrain from taking or attempting to take possession of the said automobiles belonging to the Hermitage Garage & Auto Company until the further order of this court in the premises.’

On March 7, defendant here, as trustee, filed a bill in the United States District Court alleging that the automobiles belonged to French alone, set up the adverse claim of the present plaintiff, and alleged: ‘* * * And that complainant and petitioner upon ascertaining such facts and upon also ascertaining that certain property belonging to said French, doing business as the Hermitage Garage and Auto Company, had been converted by others to their own use and benefit, after the filing of the involuntary petition against said French, took possession of the automobiles covered by said bills of sale ans still remaining at said garage as follows: that on the 12th day of February, 1921, complainant and petitioner personally took possession of all of the automobiles hereinbefore described, except as hereinafter noted, and posted upon each of said automobiles at said garage the following notice (setting forth the notice above quoted).’

The present plaintiff set up in its answer to the suit in the federal court:

‘This defendant further shows that this defendant is in possession of said automobiles under bills of sale given to it by the said partnership, composed of said Fred W. French and Claud B. Tompkins; that the said Charles V. Hilding never had possession of any of said property and that he has no just or legal right to same.’

Upon the hearing the United States District Court held that the automobiles were the property of French alone, and that the present defendant was entitled to their possession. Upon appeal the Circuit Court of Appeals reversed the decree of the District Court and held that the automobiles were not the property of French and that defendant was not entitled to their possession. Guarantee Bond & Mortgage Co. v. Hilding, 290 F. 22. In the meantime they had been sold by defendant under order of the referee in bankruptcy, and bid in by plaintiff with an understanding between the parties deferring the question of payment therefor until the decision of the Circuit Court of Appeals. Upon that decision coming down, this action was brought. There is no count for abuse of process, and no count for interfering with plaintiff's sale or right to sell the property to satisfy its lien: The declaration counts solely on conversion. The trial judge directed a verdict against defendant on the ground that the pasting of the notices on the windshields of the cars and the serving of the notice on plaintiff per se constituted conversion. He, of necessity, also held that the testimony in the case and the admissions made in pleadings did not take the question of conversion to the jury. The trial judge, therefore, fixed the date of the conversion as February 15, 1921. The importance of this ruling becomes evident from the testimony in the case clearly establishing that the value of the property on the day defendant took physical possession of the property, and on the day he sold it, was much less than its value on February 15, 1921. The assignments of error growing out of this ruling are the only ones meriting extended discussion.

Argued before the Entire Bench, except McDONALD, J.

Wiest, J., dissenting. Wicks, Fuller & Starr, of Grand Rapids, for appellant.

J. T. & T. F. McAllister, of Grand Rapids, for appellee.

FELLOWS, J. (after stating the facts as above).

Writers and courts have used language which tends to support the view of the learned trial judge, that defendant's acts of pasting the notices on the windshields and asserting title in himself were per se a conversion. Indeed, it is somewhat surprising to find such a variety of holdings as to what constitutes conversion. Bacon, in his Abridgment (9 Bouvier's Ed. Bacon's Abridgment. page 638), said: ‘It is not requisite to show a manual taking of the thing in question, nor that the defendant applied it to his own use, to constitute a conversion; the assumption of a right to dispose of it, or the exercise of dominion over it, to the exclusion or in defiance of the plaintiff's right, is a conversion.’

And Lord Ellenborough, in McCombie v. Davies, 6 East. 538, said: ‘But taking the case higher up upon principle, I think that the defendant's acts amount to a conversion. According to Lord Holt in Baldwin v. Code (a) the very assuming to oneself the property and right of disposing of another man's goods is a conversion; and certainly a man is guilty of a conversion who takes my property by assignment from another who has no authority to dispose of it; for what is that but assisting that other in carrying his wrongful act into effect.’

However, Mr. Greenleaf lays down this rule (2 Greenleaf on Evidence [16th Ed.] p. 588): ‘The plaintiff must, in the next place, show that the defendant has...