Money Corp. v. Draggoo

• Decision Date: 02 March 1936
• Docket Number: No. 30.,30.
• Citation: 265 N.W. 452,274 Mich. 527
• Parties: MONEY CORPORATION v. DRAGGOO.
• Court: Michigan Supreme Court

274 Mich. 527

265 N.W. 452

MONEY CORPORATION

v.DRAGGOO.

No. 30.

Supreme Court of Michigan.

March 2, 1936.

Action by the Money Corporation against Sherman G. Draggoo. From a judgment for plaintiff, defendant appeals.

Reversed.

Appeal from Circuit Court, Muskegon County; John Vanderwerp, judge.

Argued before the Entire Bench.

Anderson & Anderson, of Muskegon, for appellant.

Smedley & Stribley and Harold H. Smedley, all of Muskegon, for appellee.

BUTZEL, Justice.

Among the assets taken over by plaintiff, Money Corporation, from another loan and investment company were two notes of defendant, dated August 13, 1932. Each contained a clause stating that it was secured by an automobile fully described; that the title therein was in the payee of the note; that, upon default, the payee had the right to retake the property; that ‘the said property shall not be removed from S. G. Draggoo in the city of Muskegon,’ etc. Each note was filed in the office of the city clerk of Muskegon and had annexed to it the affidavit required by section 13424, C.L.1929, in order to file a chattel mortgage. Defendant retain the certificate of title. We need not decide what type of transaction this was, except to state that security was its purpose.

It is conceded that, in accordance with the agreement of the parties, each automobile was left with defendant under the floor plan arrangement, giving him the absolute right to sell the car described in the note without gaining the permission of the loan company, and in that event he was either to pay the note or else substitute another automobile to secure the indebtedness. Some time prior to January 1, 1933, he sold one car in Detroit and the other in Muskegon. He, however, did not pay the notes or give any new security. Although in August of 1933 plaintiff was told that both cars had been sold, it continued to accept small payments on the interest from defendant; he promising that he would pay the balance in full. On June 8, 1934, a little more than one month after defendant had made his last payment on interest, he was adjudicated bankrupt. Plaintiff, after an unsuccessful reclamation proceeding in the bankruptcy court, brought the present suit in which it sought judgment solely for the wrongful conversion of the two cars. Defendant contended that there was no conversion and also that he was legally discharged from liability by the bankruptcy court. He has appealed from the judgment rendered by the trial judge in favor of plaintiff.

We shall not lay down any general rule covering what factual situations constitute conversion. See, however, Globe & Rutgers Fire Ins. Co. v. Fisher, 234 Mich. 258, 207 N.W. 884, and Hopkins v. Grand Rapids Trust Co., 262 Mich. 261, 247 N.W. 175. It is sufficient to hold, as we do, that defendant's discharge in bankruptcy released him from liability. A discharge in bankruptcy releases the bankrupt from all provable claims except those set out in section 17 of the Bankruptcy Act, as amended (11 U.S.C.A. § 35). It is plaintiff's argument that its claim is not a dischargeable one, and it invokes section 17(2) of the Bankruptcy Act, as amended, 42 U.S.Statutes at Large, p. 354 (11 U.S.C.A. § 35(2), which states that the liability for willful and malicious injuries to the person or property of another is not a debt dischargeable in bankruptcy. An act of conversion, if willful and malicious, is an injury to property within the meaning of this provision. Probst v. Jones, 262 Mich. 678, 247 N.W. 779;McIntyre v. Kavanaugh, 242 U.S. 138, 37 S.Ct. 38, 61 L.Ed. 205;In re Stenger (D.C.Mich.) 283 F. 419;Baker v. Bryant Fertilizer Co. (C.C.A.4th) 271 F. 473. Notwithstanding the many conflicting decisions brought to our attention, we shall follow the construction placed on the statute in the very recent case of Davis v. AEtna Acceptance Co., 293 U.S. 328,55 S.Ct. 1518 153,79 L.Ed. 393. In that case, the defendant, a retail automobile dealer, barrowed from plaintiff almost the entire cost of an automobile, and, upon the receipt of the car, delivered to the plaintiff a promissory note, a chattel mortgage securing its payment, a bill of sale absolute in form, and a trust receipt stating that he would not sell or dispose of the car except with the written consent of plaintiff. Defendant...