Sills v. Hawes

• Citation: 59 P. 422,14 Colo.App. 157
• Parties: SILLS v. HAWES.
• Decision Date: 11 December 1899
• Court: Court of Appeals of Colorado

59 P. 422

14 Colo.App. 157

SILLS v. HAWES.

Court of Appeals of Colorado

December 11, 1899

Appeal from district court, Gunnison county.

Action by George W. Hawes against Charles T. Sills to recover for the conversion of mortgaged property. From a judgment in favor of plaintiff, defendant appeals. Affirmed.

Thomas C. Brown, for appellant.

S.D Crump, for appellee.

WILSON J.

Plaintiff Hawes, was the owner of a ranch in Saguache county, near the city of Gunnison, upon which he resided. In the latter part of November, 1896, he executed to Mrs. Sills, wife of defendant, a promissory note for a certain sum of money payable 12 months after date, and, to secure its payment gave to her, at the same time, a chattel mortgage upon certain horses and other personal property on his ranch. Soon after, he had a conversation with defendant, who, in this as in all other business affairs, acted as agent for his wife, and told him that he thought of going to Cripple Creek, in order to secure employment during the winter, and that in such case he would leave some person in charge of his ranch and property. Defendant advised him to go. This is the testimony of the plaintiff, and is undisputed. About the 1st of January following he did go to Cripple Creek, having first employed a neighbor to look after his stock and other property upon the ranch. About a week after his departure the defendant went to the ranch, and took and removed therefrom, and afterwards sold, all of the stock and personal property thereon, including as well that which was embraced in the mortgage as some that was not. He gave no notice to the plaintiff of the seizure or sale until more than two months thereafter, when he wrote him, stating what he had done. At the time of the taking and removal of the personal property, defendant also took possession of the ranch, placing a man in charge, and continuing to occupy it. Upon learning the facts, plaintiff returned, and commenced this suit to recover damages for the unlawful taking and conversion of the personal property and for the ouster from the ranch. Defendant answered, setting up that in all things he acted as agent for his wife, and that he took possession of and sold the personal property by virtue of a certain provision in the mortgage which reads as follows: "If at any time hereafter, before said indebtedness shall be fully paid, said party of the second part, her assigns or legal representatives, shall feel insecure or unsafe in this security, then, and in any such case, said party of the second part, her heirs or legal representatives, or the agent of them or either of them, may take immediate and full possession of the aforesaid property, goods, and chattels, and any and every part thereof, *** and proceed to sell the same," etc.

In answer to the second count in the complaint, with reference to the taking possession of the ranch by the mortgagee, it was alleged that plaintiff had abandoned the ranch, and notified the mortgagee of the same, and agreed with her that she might go upon the ranch, and harvest and dispose of the hay thereon, and credit the same upon the note of plaintiff. Trial was to a jury, and verdict and judgment were in favor of plaintiff.

The chief argument and contention of defendant is based upon this insecurity clause in the mortgage. The court, among other instructions, gave the following: "If the jury shall find and believe from the evidence that the defendant, acting as the agent of the holder of the mortgage, really and in good faith believed that this security was becoming unsafe, and had a right so to believe from the facts which he knew personally, or which had been communicated to him, then he had a right to take any property which was covered by the mortgage, and dispose of it, and that he might do lawfully, even though said security was not in fact becoming unsafe." The defendant insists that this instruction was error. He claims that this provision in the mortgage is for the benefit of the mortgagee, and that, upon his taking possession under it before default, no proof is required to show that he considered himself unsafe, the legal presumption being that such was the fact; that the mortgagee is the sole judge of the happening of the contingency upon which he may take possession; that such a clause vests in the mortgagee an absolute discretion to take possession of the property whenever he may deem himself insecure, and the exercise of this right does not depend upon the fact that he has reasonable ground for deeming himself insecure. We cannot indorse such a harsh and arbitrary doctrine. It is true that there is some authority in support of this rule, but the great weight of modern authority, as well as reason and justice, it appears to us, are against it. The true rule, it seems to us, should be, and is, that the mortgagee has the right to determine for himself whether he is unsafe in his security, subject, however, to the limitation upon this right that his judgment must be exercised in good faith, and upon reasonable grounds or probable cause. We do not go to the extent of saying that he must prove there was actual danger, but we think he should be required to show that there was apparent danger, or that he had good reason to believe there was such grounds for such belief that a reasonable man might in good faith act upon. The object of a chattel mortgage is usually to give the mortgagor the possession, use, and enjoyment of the property during the time the indebtedness runs, as well as to secure the payment of the indebtedness. The rule contended for by defendant would give the mortgagee the power to absolutely defeat the whole object and purpose of the mortgage, at his own arbitrary will and pleasure. He might turn around upon the very next day after a mortgage was executed, and, under such a clause, take possession of, and...