Summary
In Commercial Credit Co. v. Cain, 190 Miss. 866, 1 So.2d 776, 777 (1941), the debtor gave custody and control of the car to her husband who was not a party to the loan.
Summary of this case from Wilson v. General Motors Acceptance Corp.Opinion
No. 34526.
April 28, 1941. Suggestion of Error Overruled June 9, 1941.
1. SALES.
Provision in conditional sales contract of automobile that if for any reason seller should deem itself or automobile insecure, seller might without notice or demand and without legal process, take possession of automobile, is known as the "insecurity clause" and is reasonable and valid.
2. SALES.
Under "insecurity clause" of conditional sales contract covering automobile, it is not necessary that there be any present default in payment or any breach of the contract in the strict sense of that term in order that the clause may be brought into operation.
3. SALES.
The seller may proceed under the "insecurity clause" of conditional sales contract covering automobile upon such circumstances of presently apparent danger as would furnish probable cause for the belief that the security is unsafe when viewed in good faith by a man of reasonable prudence.
4. SALES.
Under the "insecurity clause" of conditional sales contract covering automobile, seller may take possession over the objections of the buyer so long as it is done openly at a proper place and without force or violence or any threat thereof and when the circumstances are such as to create no apprehension of any violence on the part of the buyer or any other person from whom the possession is being taken.
5. SALES.
In action by conditional buyer against credit company for wrongful taking of automobile under the insecurity clause, evidence showed that credit company properly proceeded under the insecurity clause and that taking was in accordance therewith.
6. SALES.
Where possession of automobile is taken under the insecurity clause of conditional sales contract, one so taking possession must deal with the automobile as security and with reference to the equitable rights of the buyer and must without any unreasonable delay, or unwarranted costs give buyer the opportunity of removing the insecurity or danger to the security and to have prompt delivery of automobile when this has been done, and no arbitrary or unreasonable terms or conditions can be imposed but only such as ought to satisfy a reasonably fair and prudent person.
7. APPEAL AND ERROR.
Where one issue was not submitted to jury, and did not appear to have been fully developed and the two issues that were submitted were wrongfully decided, judgment would be reversed and remanded for new trial upon the issue that was not submitted.
APPEAL from the circuit court of Coahoma county, HON. WM. A. ALCORN, JR., Judge.,
Cooper Thomas, of Indianola, for appellant.
This contract is binding on the purchaser wherein she agrees if any installment provided for is not paid when and as due the purchaser gives to the seller the right of repossession. The insecurity clause is one of several conditions stated in the alternative. It is just as binding as the default clause.
Under such a contract, the authorities are in substantial agreement that the right to take the property from the possession of the other party does not justify the use of force to take it — it must be done without force or violence, and if possession cannot be so obtained, then resort must be had to the processes of the courts.
Com. Credit Co. v. Spence, 185 Miss. 293, 184 So. 439; Singer Sewing Mach. Co. v. Hayes, 22 Ala. App. 250, 114 So. 420; Bankston v. Hill, 98 So. 689, 134 Miss. 288, 37 A.L.R. 88; North v. Williams, 6 Am. St. Rep. 695; 55 C.J. 1287, Sec. 1313; W.T. Walker Furniture Co. v. Dyson, 19 L.R.A. (N.S.) 606; Dominick v. Rea et al., 36 A.L.R. 850.
Contracts sometimes contain provisions to the effect that the seller may repossess himself of the property, if, at any time, he should deem himself insecure, and such a provision is valid and enforceable. And when a breach of a provision of this character occurs, it is immaterial that there has been no default in payment. Nevertheless, in construing this provision it is held that the seller cannot act in an arbitrary manner and that before he will be entitled to possession of the property sold, it is necessary for him to show that the buyer had committed or was about to commit some act which would tend to impair the security, in other words, that he has good cause to believe that he is insecure.
Swain v. Schild, 66 Ind. 156, 117 N.E. 933; 55 C.J., p. 1196, Sec. 1173, p. 1286, Sec. 1311; Call v. Seymour, 50 Ohio St. 670; Beatrice Creamery Co. v. Sylvester, 65 Colo. 569, 179 P. 154, 13 A.L.R. 441; 11 C.J. 554, 555, Secs. 253, 254; Hogan v. Akin (Ill.), 55 N.E. 137.
The mere failure of the plaintiff or her agent to consent to the taking can certainly not be classed as either force or violence. The agent of the plaintiff merely stated that he did not give his consent and that he was unwilling for the company to take the car.
C.F. Adams Co. v. Sanders, 23 Ky. L. Rep. 1978, 66 S.W. 81; 36 A.L.R. 853.
Stovall Lowrey and John W. Crisler, both of Clarksdale, for appellee.
The only real question in this case is whether appellee's car was surrendered or maliciously taken.
No one has the right to take from another by force or against his will property in his possession, even though the claimant may be entitled thereto, and he must resort to the courts to obtain possession if the party in possession refuses to deliver the property.
Wilson v. Kuykendall, 112 Miss. 486, 73 So. 344; D'Aquilla v. Anderson, 153 Miss. 549, 120 So. 434; Com. Credit Co. v. Spence, 185 Miss. 293, 184 So. 439.
This duty is on the claimant even though the written contract provides that he may take the property without process of law whenever and wherever he finds it.
Com. Credit Co. v. Spence, 185 Miss. 293, 184 So. 439.
Under the insecurity clause of the conditional sales contract the holder of the paper cannot arbitrarily take possession but must have reasonable cause for exercising the rights therein conferred.
55 C.J. 1286, Sec. 1311.
The burden rests upon the plaintiff to show the fulfilment of a condition precedent, but in case of a condition subsequent, such as a breach of contract, the burden rests on the defendant.
13 C.J. 764, Secs. 957, 958.
Argued orally by Forrest C. Cooper, for appellant, and by John W. Crisler and Stovall Lowrey, for appellee.
On May 9, 1940, appellee purchased from Clarksdale Auto Sales, which was a business conducted by her husband, a Studebaker Champion automobile for which she paid $100 in cash, and for the balance executed a conditional sales contract, by which title was retained in the seller until the balance of the purchase price evidenced by twenty-four monthly notes of $37.05 each should be fully paid. The contract was immediately assigned and delivered by the seller to appellant for full value received.
The agreement contained the provisions ordinarily found in these conditional sales contracts, among which was the following: "Or if for any other reason Seller should deem itself or said Car insecure, Seller or his representative may take possession of said Car . . . wherever it may be found, and may enter any premises therefor without notice or demand to Purchaser and without legal process, and Purchaser waives all claims for damages caused thereby," etc.
On May 31, 1940, and before the first installment note became due, appellant, upon probable cause, as hereinafter stated, exercised its right under the foregoing provision to take possession of the car, and did so by taking it from a place described in the declaration as one of the public streets of Clarksdale, and while the husband of appellee was present, appellee having placed the automobile in her husband's active care, control and possession. The husband objected to the taking, but there was no altercation, nor was there any force, or violence or threats thereof. The keys were in the car; and when appellant's agent stated to appellee's husband that the car was going to be taken, the agent soon got in the car and drove it to a nearby storage house where it was put for safe keeping in the custody of that place.
An action in tort was brought by appellee, and on the trial she recovered actual and punitive damages. The course of the trial covered a rather wide range, so that a two-volume record thereof has been brought to this Court. To deal in detail with the facts would require an opinion of undue length, wherefore we shall not undertake a set-up of the facts further than necessary to disclose the law points involved.
The quoted provision is generally referred to in the books as the insecurity clause, and it is held reasonable and valid by all the courts. Its usefulness and availability is of more than ordinary importance in its application to mortgaged property which is subject to so many hazards as are attendant upon mortgages, or which, in effect, is the same thing, the retention of title for security of the purchase money, on automobiles, motor trucks, and the like. And it is not necessary that there be any present default in payments, or any breach of the contract, in the strict sense of that term, in order that the clause may be brought into operation. It is self-sufficient; and whatever the mortgagor may have done, or omitted to do, as regards other provisions of the mortgage contract, the insecurity clause is available when the circumstances as respects the jeopardy, or rather the apparent jeopardy, are present under the rule which is hereinafter stated and adopted.
This so-called insecurity clause has been interpreted in such manner as to divide the decisions of the various courts into three classes: (1) Those which hold that the mortgagee is the sole judge of the issue whether the security has become endangered, and that no proof is needed beyond the fact that he has actually deemed himself unsafe and has proceeded upon that belief; (2) those which hold that the mortgagee may proceed upon such circumstances of presently apparent danger as would furnish probable cause for the belief that the security is unsafe when viewed in good faith by a man of reasonable prudence; and (3) those which hold that the danger must rest in a fact or facts of actual, ultimate existence, disregarding the appearances, however indicative of probable cause the appearances may be.
The view first mentioned is supported by a strong line of cases, and by Jones on Chattel Mortgage (5 Ed.), pp. 636-642. The third view is that of a minority. We adopt the rule as expressed by those within the second classification above indicated, and believe that in so doing we align ourselves with the weight of the authorities as well as with the sounder reasoning. See 55 C.J., p. 1286; 11 C.J., pp. 554-556; 14 C.J.S., Chattel Mortgages, sec. 182; pp. 788, 789; 10 Am. Jur., pp. 870, 871, and the numerous cases cited in notes to those texts. And adopting this interpretation of the insecurity clause, we are of the opinion that, taking the evidence in behalf of the mortgagor, together with the various admissions therein, as true, and adding thereto that part of the evidence on behalf of appellant which is substantially undisputed, the right of the mortgagee to avail of the insecurity clause, and to proceed under it, was established in this case in point of law as applied to the facts thus ascertained.
Appellee says in her brief, however, that "the only question is whether appellant oppressively took appellee's car or whether it was surrendered voluntarily." And appellee argues that unless it was surrendered voluntarily, the action of appellant in taking it was an oppressive tort.
The express language of the quoted insecurity clause to which we again call attention is that when the clause has come into operation the mortgagor "may take possession of said car . . . wherever it may be found and may enter any premises therefor without notice or demand to purchaser and without legal process." This provision is not one, any more than any of the others, which may be revoked by the mortgagor, as would be the effect if he could sterilize it by merely withholding his consent to the exercise of the contract right. If this were permissible, the clause had as well be omitted from the contract. Under it the mortgagee has the right to take possession, in so far as concerns the manner thereof, over the objections of the mortgagor, so long as openly done at a proper place, and without force or violence or any threat thereof, and when the circumstances are such as to create no apprehension of any violence on the part of the mortgagor, or other person from whom the possession is being taken. The limitations on the manner of the taking and the reasons for the limitations are set forth in Commercial Credit Company v. Spence, 185 Miss. 293, 184 So. 439, and need not be repeated here. The limitations were not transgressed by the mortgagee in the present case, and there was, from a legal standpoint, no actionable wrong on the part of the mortgagee either in exercising its rights under the insecurity clause or in the manner of that exercise.
From the standpoint of mere social preference, it may well be thought that unless the surrender of possession is entirely agreeable to the mortgagor, it would be better to resort to legal process, but this entails costs, often considerable, and sometimes a delay which in itself under some circumstances might be dangerous to the security. By the limitations set forth herein we have cut down the manner of the exercise of the right as much as the law and the purposes of the insecurity clause will allow, and we cannot impose further limitations upon it.
But as pointed out in the Spence case, when possession is recovered by the mortgagee, he must still deal with it as security and with reference to the equitable rights of the mortgagor; and this rule applies with equal force when the property has been taken under the insecurity clause. When the mortgagee acts under that clause, he must give to the mortgagor without any unreasonable delay or unwarranted costs the opportunity to remove the insecurity or danger to the security and to have prompt redelivery to him of the property when this has been done; and in respect to this the mortgagee must impose no arbitrary or unreasonable terms, or conditions, but only such as ought to satisfy a reasonably fair and prudent person.
It appears from the record of the evidence on behalf of appellant that it made or attempted to make what it considered a reasonable arrangement with appellee for the return to her of the car and that this was promptly offered. All this seems to be disputed by appellee, or at best there is no clear development of the facts on this point. The particular issue was not submitted to the jury, not a single instruction for either side brought it to the attention of the jury or called for a decision by the jury upon it. The case was presented on the two questions hereinabove dealt with as respects the availability of the insecurity clause and the manner of the taking thereunder. What was done after the taking was put aside from the jury, and as to the latter issue, we do not know what the jury would have decided.
We are holding, as already stated, that there is no liability upon the two issues submitted to the jury, and if there were nothing else in the case than those two issues, we would enter a judgment of dismissal here. But there remains the issue as to what was done after the taking by the mortgagee, and as to that issue we remand for a new trial.
Reversed and remanded.