Woods v. Gaar, Scott & Co.

• Decision Date: 04 October 1892
• Citation: 53 N.W. 14,93 Mich. 143
• Parties: WOODS v. GAAR, SCOTT & CO.
• Court: Michigan Supreme Court

53 N.W. 14

93 Mich. 143

WOODS v. GAAR, SCOTT & CO.

Supreme Court of Michigan

October 4, 1892

Error to circuit court, Kent county; ALLEN C. ADSIT, Judge.

Action by Andrew B. Woods against Gaar, Scott & Co. Judgment for plaintiff. Defendant appeals. Reversed.

Clapperton & Hine, (Arthur C. Denison, of counsel,) for appellant.

Tatem & Quinsey, for appellee.

MCGRATH, J.

This is trover by mortgagor against mortgagee for value of goods taken possession of and sold under the insecurity clause in the mortgage. April 16, 1889, plaintiff bought of defendant a steam threshing rig, consisting of engine and separator, for $1,800. Four hundred dollars was paid down, and the balance represented by six notes, two of which were payable October 1 and December 1, 1889, two October 1 and December 1, 1890, and two October and December 1, 1891, secured by a real-estate mortgage of $400, and a chattel mortgage upon the threshing rig. The first two notes, amounting to $508, were not paid at maturity, but, after some negotiations, on January 14, 1890 plaintiff executed a deed to defendant of the land covered by the real-estate mortgage. Defendant surrendered one of the two matured notes, and upon the others made the following indorsement: "It is hereby agreed that, if Andrew B. Woods pays to Gaar, Scott & Co., or its agents within twenty (20) days from date, $100.00, to be applied on the note against him due next December, 1890, this note shall be considered paid, and shall be returned to him." The $100 was paid within the time, and the second note was surrendered. On May 1st following defendant took possession of the engine and separator, advertised and sold them, itself bidding them in at $100, and subsequently selling them. There was nothing due upon the mortgage at the time defendant took possession, nor was it claimed that there was any change in the circumstances of the mortgagor, or that there had been any breach of any of the conditions of the mortgage. The mortgage contained the following clause: "But in case default shall be made in the payment of any of said notes, or in the interest thereon, or any part thereof at the time above limited for the payment of the same, or if the said party of the second part shall at any time deem itself insecure, it shall be lawful for the said party of the second part, its successors or assigns, or its authorized agent, to enter upon the premises of said parties of the first part, or any part thereof, as may be, and take possession thereof, and remove the same to any place within the state of Michigan and to sell and dispose of the same for the best price or prices that can be obtained therefor, at private sale or public vendue." The learned circuit judge instructed the jury, "if defendant acted in good faith, and had reason to deem itself insecure, that plaintiff could not recover that it was for them to say, under all circumstances, whether or not defendant did have any good reason to think, and did think, that it was insecure at the time; that if, on the contrary, defendant did not have reason to think that it was insecure, and that, after having got all it could from the plaintiff, it fraudulently and arbitrarily, without good and sufficient cause, took advantage of the plaintiff's necessities, seized the property, and sold it before the debt (to the payment of which it was pledged) became due, then that would be a conversion of the property, and the defendant would be liable for the value of the machine, less the amount owing by the plaintiff to the defendant at that time; that, if they found that defendant obtained this deed and money by falsely leading the plaintiff to believe that, by giving the deed and paying the $100, it would allow him to keep the possession of the machine during the season, then that would be an evidence of bad faith on the part of the defendant at the time of the seizure and sale; that they were to consider the facts on which the defendant claims it was acting in determining that it was insecure, and determine the good or bad faith of the defendant in seizing this property in May, 1890,-whether such facts constituted an honest reason for deeming itself insecure in fact; for I charge you that its action must have been based on an honest and bona fide belief that it was insecure. You are not to question its judgment, however erroneous it may have been. If it was based on an honest belief, that is sufficient; that is, if you...