Opinion
Decided January 29, 1934.
Conversion — Action by chattel mortgage — Demand and refusal not necessary, when.
It is unnecessary to allege and prove a demand for the return of a chattel and a subsequent refusal, in an action for conversion, brought by a chattel mortgagee having an overdue note and recorded mortgage, against a purchaser after default, who resold the chattel to a third person and appropriated the proceeds.
ERROR: Court of Appeals for Lucas county.
Mr. M.L. Okun, for plaintiff in error.
Messrs. Mulholland Hartmann, for defendant in error.
The Mercantile Discount Security Company commenced an action in the Municipal Court of Toledo to recover of the defendant, Noah J. Melick, for the conversion of an automobile on which the plaintiff held a chattel mortgage. The case was tried on an agreed statement of facts now embodied in the bill of exceptions, and judgment was rendered for the defendant. Error was prosecuted to the Court of Common Pleas, where that judgment was affirmed, and now the Security Company seeks a reversal of these judgments.
The agreed statement of facts is quite short, and from that statement it appears that the plaintiff Security Company is the owner of a promissory note and mortgage on a Graham-Paige sedan, signed by Herman Heinemann on October 2, 1929. The note is for the amount of $118.37, payable in instalments of $7.50 each two weeks, with an acceleration clause making the whole amount due upon failure to pay any instalment. No instalment was paid and the note became due two weeks after its date. The mortgage was duly filed and recorded in Lucas county on October 9, 1929, and is still properly on record, and no part of the same has been paid. On December 31, 1930, Heinemann sold the automobile to Harold Johnson, and he sold it on October 2, 1931, to Melick, the defendant in this case. Thereafter the defendant sold the automobile to Howard Zimmerman of Fremont for $350. All of these transfers were made without the knowledge or consent of the mortgagee. It is further agreed that during all the time the defendant was in possession of the automobile it was worth at least $200. Under these facts the Municipal Court rendered judgment for the defendant.
The plaintiff in error claims it was entitled to a judgment for the amount due it on the note and mortgage, on the ground that the facts show that the defendant converted the property to his own use. The defendant contends that he is not liable in conversion because no demand was made on him before the bringing of the action; and this absence of a demand is the only fact on which the defendant relies to sustain the judgment.
The agreed statement of facts shows that the note and mortgage matured on October 17, 1929, two weeks after the instruments were executed, and even without any acceleration clause the entire amount was due long before the action was commenced in the Municipal Court.
Ever since the decision in Robinson, Jr., v. Fitch, 26 Ohio St. 659, it has been the law in Ohio that the interest of a mortgagee under a chattel mortgage is that of general owner of the mortgaged property. That action was one brought by the mortgagee, on default of payment by the mortgagor, to recover the possession of two elephants, "Chief" and "Parepa", and it will be noticed that the affidavit in replevin contained no statement that any demand had been made. The law as thus stated in the case just cited has been often followed by the lower courts in Ohio, and is cited in Metropolitan Securities Co. v. Orlow, 107 Ohio St. 583, 140 N.E. 306, 32 A.L.R., 992, where it is stated in the opinion that the rule thus announced had never been departed from.
In the case at bar the mortgage was due before the sale was made by the mortgagor, and upon that default the holder of the mortgage became immediately entitled to the possession of the property, so that the possession of the subsequent purchasers of the property was wrongful, and, in law, a denial of the rights of the mortgagee. The Ohio cases on this point are cited in 7 Ohio Jurisprudence, 420, the summary statement being that one who buys from a mortgagor a chattel upon which there is a properly executed and recorded mortgage, and resells the chattel to a third person without knowledge or consent of the mortgagee or repaying the mortgage, is liable in an action for conversion. It is true that in some, if not all, of the cases cited to sustain that proposition, a demand had in fact been made, but it does not appear in any case that the court held that any such demand was required.
It has long been the law that a refusal to restore goods on demand is only evidence of a conversion, and if a conversion appears by the evidence, or by an agreed statement of facts, it is not necessary that a demand and refusal should be shown. Hogan v. Atlantic Elevator Co., 66 Minn. 345, 69 N.W. 1. Likewise it was held in Daniels v. Foster Kleiser, 95 Ore., 502, 187 P. 627, that no necessity exists for proving a demand and refusal if a conversion has actually occurred.
In Baltimore Ohio Rd. Co. v. O'Donnell, 49 Ohio St. 489, 32 N.E. 476, 34 Am. St. Rep., 579, 21 L.R.A., 117, it was held that a petition in an action for conversion which alleged plaintiff's ownership of the property, and its value, and that the defendant converted it to his own use, stated a cause of action, and that it was not necessary to allege a demand for the property by the plaintiff, and a refusal. In that case the court also stated that this results necessarily from the fact that while a demand and refusal may afford evidence of a conversion they are not the only evidence by which it may be proven.
The agreed statement of facts shows that while the mortgage was in full force, and of record, the defendant purchased the automobile after default had occurred in payment of the mortgage, and later resold the property to a third person and appropriated the proceeds. This amounted to an actual conversion of the property, and a demand would have been futile and unavailing.
From what has been said it follows that the judgments of the lower courts must be reversed and the cause remanded for further proceedings.
Judgment reversed and cause remanded.
WILLIAMS and LLOYD, JJ., concur.