State v. Redd

• Decision Date: 05 March 1930
• Docket Number: 2196
• Citation: 171 N.E. 20,122 Ohio St. 162
• Parties: The State Of Ohio v. Redd.
• Court: Ohio Supreme Court

171 N.E. 20

122 Ohio St. 162

The State Of Ohio v. Redd.

No. 2196

Supreme Court of Ohio

March 5, 1930

Criminal law - Selling mortgaged chattels without mortgagee's consent - Section 12476-1, General Code - Proof necessary of lack of consent and intent to defraud - Proof admissible of prior similar dealings breaching mortgage without mortgagee's consent.

1.

To establish a violation of Section 12476-1, General Code, the state must prove beyond a reasonable doubt the existence of lack of consent of the owner of the claim secured by the mortgage and of intent to defraud upon the part of the mortgagor.

2.

Upon trial under an indictment charging such violation, evidence of prior similar dealings between the parties, tending to show that the defendant had sold other similar personal property upon which the prosecuting witness held chattel mortgages, in breach of the contract embodied in such chattel mortgages, without the express consent but with the acquiescence of such mortgagee, is admissible as bearing upon the questions of consent by the owner of the claim secured by the mortgage and the existence of intent to defraud upon the part of the mortgagor.

The defendant was arrested under a warrant charging him with violation of Section 12476-1, General Code, which prohibits the sale of mortgaged personal property without the consent of the mortgagee, and an indictment was returned against him charging such a violation. Upon the trial, the jury returned a verdict in favor of the defendant. Thereupon the prosecuting attorney, upon allowance of application, under Section 13681 et seq., General Code, filed exceptions in this court.

Further facts are stated in the opinion.

Mr Winston W. Hill, prosecuting attorney, and Mr. W.B. McLeskey, for the exceptions.

Mr. F.M. Marriott, against the exceptions.

ALLEN J.

The defendant, T.O. Redd, was a member of a partnership engaged in the business of selling new and used automobiles at Ashley, Delaware county,ohio. The partnership was known as Redd Motor Sales, and the members were the defendant and his brother, Foy Redd. On or about January 28, 1929, the partnership applied to the Commercial Credit Company for financial assistance in the purchase of a new Overland coach which the Redd Motor Sales desired to obtain from the Willys-Overland factory in Toledo, Ohio. The Commercial Credit Company advanced to the partnership the sum of $389.07, and took as security therefor a promissory note and a chattel mortgage in the usual form; both the note and the mortgage being signed "Redd Motor Sales By T.O. Redd, Partner." The partnership had theretofore purchased various other cars in a similar manner, with the financial assistance of the Commercial Credit Company, giving the credit company chattel mortgages upon such cars, and paying off the mortgages after sale of the cars.

This particular chattel mortgage contained the following provisions:

"The mortgagor * * * will not sell, assign or dispose of any interest therein, operate (except to drive to mortgagor's place of storage), use, ex- hibit, demonstrate or remove the same from said place of storage, without the written consent of said mortgagee.* * *

"The mortgagee will release any motor vehicle herein mortgaged upon payment by the mortgagor of the Release Price hereinbefore provided.* * *

"The mortgagor shall not be the agent of mortgagee for any purpose whatsoever.

"No waiver of performance of any of the conditions of this mortgage shall be deemed to have been given by the mortgagee unless in writing, signed by the mortgagee. This mortgage contains the entire agreement between the mortgagor and the mortgagee, and no verbal agreement shall be binding."

The defendant sold the car in question without the written consent of the mortgagee, became financially embarrassed, and payment was not made in accordance with the terms of the note and mortgage. He was thereupon indicted under Section 12476-1, General Code, for selling mortgaged property without the consent of the owner of the claim secured by the mortgage. At the trial of the case, both the defendant and the prosecuting witness described the chattel mortgage in question as a "floor-plan" mortgage. Ralph E. Blake, credit manager for the Commercial Credit Company, when questioned as to whether he called this a "floor-plan" mortgage answered, "That's one term of it."

"Q. That's one term applied to this particular mortgage? A. Yes, sir."

Blake then claimed that under a "floor-plan" mortgage the dealer, "when he gets ready to sell the cars, he pays us first before the cars are sold;" but later he made the following statements:

"Q. Mr. Blake, isn't it a fact that it is common practice with your company to permit dealers to exhibit the cars before they are sold? A. On their floors.

"Q. That is a violation of the mortgage, isn't it? A. That's in the warehouse, storage.

"Q. I said that's a violation of the terms of your mortgage that you make them sign, isn't it? A. Yes, sir.

"Q. Isn't it a fact that to your knowledge they demonstrate those cars to prospective purchasers? A. No, sir.

"Q. You say it isn't? A. No, sir.

"Q. Didn't you testify here that to your knowledge Mr. Redd was demonstrating a car on one occasion when you were up there? A. I did.

"Q. Then it is a fact that they do demonstrate them, isn't it? A. Yes, sir.

"Q. And isn't it a fact also that in most cases the dealer sells the car, and immediately forwards the funds to you and pays off the mortgage? A. I couldn't say. We receive our money as soon as the car is sold.

"Q. As soon as the car is sold. Well then, that is the general practice, isn't it? A. Yes, sir."

Blake testified that he personally gave no consent to the sale of the car, and no written consent was introduced.

The record contains testimony as to the nature of the so-called "floor-plan" mortgage, and the court admitted testimony as to the general custom of automobile dealers in the selling of automobiles covered by the so-called "floor-plan" mortgages. In substance, the record shows that the "floor-plan" mort- gage is used where the dealer cannot himself finance the purchase of the motor vehicle from the manufacturer, and is compelled to secure the backing of a finance company. The motor vehicle purchased from the manufacturer is placed upon the salesroom floor of the dealer after the dealer has given the finance company a chattel mortgage thereon, and is sold from such salesroom floor to the retail purchaser. It is the understanding of both parties that the vehicle is purchased for retail sale. In the ordinary course of business, the dealer upon sale thereupon satisfies the mortgage held by the finance company. The court not only admitted the above testimony, but took judicial notice as to the operation of the "floor-plan" mortgage. The court also permitted Foy Redd, brother of the defendant, to testify that the Redd Motor Sales had sold several other automobiles upon which the Commercial Credit Company had mortgages, without the written consent of, and without first paying off, that company previous to the transaction upon which this particular indictment was founded. The record contains two exhibits introduced on behalf of the defendant, namely, two checks, each drawn to the order of the Commercial Credit Company, one dated May 22,1928, for $789.11, and one dated November 15, 1928, for $446.22, each signed by Redd Motor Sales, by T.O. Redd, concerning which Foy Redd testified that these were payments made to the finance company subsequent to the sale of two certain automobiles in account upon the sale of those two particular cars. In connection with the latter check, a bill of sale was also introduced, dated November 14, 1928, a day prior to the date of the check, in which a Willys-Overland car, admitted by the parties to have been one of the machines purchased with the financial assistance of the Commercial Credit Company, was sold by Redd Motor Sales to C.H. Welch,...