Opinion
42607, 42608.
ARGUED FEBRUARY 8, 1967.
DECIDED APRIL 11, 1967. REHEARING DENIED MAY 5, 1967.
Trover. DeKalb Civil and Criminal Court. Before Judge Morgan.
Westmoreland, Hall Pentecost, John L. Westmoreland, Jr., for appellant.
Gambrell Mobley, Albert Sidney Johnson, for appellee.
1. A motion tantamount to a motion for judgment notwithstanding the verdict is not permissible when a judge presides without the intervention of a jury.
2. The evidence adduced was insufficient to show the plaintiff had title or right of possession to property sought to be recovered in a trover action.
3. The trial judge did not err in excluding evidence of bad faith and damages arising therefrom.
ARGUED FEBRUARY 8, 1967 — DECIDED APRIL 11, 1967 — REHEARING DENIED MAY 5, 1967 — CERT. APPLIED FOR.
Howard Lumber Company brought this action in trover in the Civil Court of DeKalb County against Borochoff Properties, Inc. The petition as amended alleged that the defendant is in the possession of a certain "chain type glue clamp carrier" of the value of $2,500 to which the plaintiff claims title; that the defendant refuses to deliver the property to the plaintiff or pay him its value.
The defendant filed its answer denying the material allegations of the petition. The cause came on for trial before the judge sitting without a jury.
The trial judge entered a money judgment for the plaintiff in the amount of $2,500. To this judgment the defendant filed a motion for new trial and a motion for judgment "notwithstanding the judgment." Upon the overruling of these motions the defendant appeals to this court (Case No. 42607).
The defendant enumerates as error the overruling of the motion for new trial and the motion for judgment "notwithstanding the judgment" on the grounds that the plaintiff failed to prove: (1) any title or right of possession of the property sought to be recovered in trover; (2) any conversion of the property by the defendant; (3) the value of the property upon the plaintiff's election to take a money judgment.
The plaintiff brings a cross appeal (Case No. 42608) complaining of the trial judge's exclusion of certain evidence sought to be introduced by the plaintiff.
This case rose upon the following facts. Scottdale Industries, in possession of the "glue clamp carrier," had left the machine on the property of the defendant under a lease agreement. Upon Scottdale's going into bankruptcy, Mercantile Financing Company filed a reclamation petition in the bankruptcy proceedings claiming, inter alia, the property here involved. Mercantile claimed the property under a recorded financing statement and security agreement with Scottdale dated April 2, 1965. The bankruptcy court in granting the reclamation petition recited that Mercantile "is entitled to possession of the property claimed." The order also set out that it "does not adjudicate or in any way indicate the respective rights of other creditors as to the property which is the subject of the reclamation petition by Mercantile Financial Corporation, said creditors being left to their remedies under state law for determination of such rights, if any."
From exhibits offered and evidence adduced, the defendant entered into a landlord's lien waiver with Mercantile at the time Scottdale and Mercantile entered into the security agreement. However, the defendant on May 10, 1965, caused a distress warrant to be levied on the leased property. The sale under this distress warrant was enjoined by the bankruptcy court.
After Mercantile obtained the property under its reclamation petition it entered into a temporary storage agreement with the defendant of the property listed in the reclamation petition, including the "glue clamp carrier," subject of this action. It then appeared that Black Brothers Company, Inc., had a prior financing statement to that of Mercantile dated April 17, 1964. Upon ascertaining this fact, Mercantile released its claim to Black Brothers.
Black Brothers, holding under their prior financing statement, proceeded to negotiate with the plaintiff for the sale of the "glue clamp carrier." Introduced as evidence of the sale was a document which contains the following pertinent provisions: that a representative and agent for Howard Lumber Company purchased the described equipment from Black Brothers Co.; that Howard has purchased the equipment "for the amount of $1,400 paid by certified check, receipt of which is hereby acknowledged."
The instrument recites that Black Brothers will furnish to Howard Lumber Co. a bill of sale for the equipment conveying good and marketable title; that the certificate is given as interim evidence of the transaction between Howard Lumber Co. and Black Brothers pending preparation and delivery of a bill of sale or other proper documents evidencing this transaction. The instrument was signed: "Black Brothers Co., Inc. By: [signature] Albert Sidney Johnson, Attorney at Law for Black Brothers Co., Inc."
An agent for Southeast Transfer Co. employed by the plaintiff to move the property, testified that when he attempted to move the machine Mr. Borochoff, the president of the defendant corporation, "came out and stopped us." He further testified that the defendant's president "told us that we were stealing the machine" and said "you will have to get a court order to get the machine out." Mr. Borochoff refused to let him take it away. The plaintiff's attorney testified that later Mr. Borochoff told him that he was claiming a landlord's lien or storage lien.
1. While the appellant filed what he denominated as a motion for judgment "notwithstanding the judgment," we find no authority for such a motion. Moreover, if this be construed as the equivalent of a motion for judgment notwithstanding the verdict, the rule is well settled that such a motion is not permissible when a judge presides without the intervention of a jury. Smith v. General Motors Acceptance Corp., 98 Ga. App. 840 ( 107 S.E.2d 334); Wood v. Sheppard, 100 Ga. App. 376, 378 ( 111 S.E.2d 242). Hence, in considering the appeal we treat the enumerations of error only with reference to the grounds of the motion for new trial.
2. In a trover action the burden of proof is on the plaintiff to show that he has title or right of possession in the property sought to be recovered. Hinchcliffe v. Pinson, 87 Ga. App. 526 ( 74 S.E.2d 497). The defendant contends that the plaintiff has failed in this regard since there was no proof showing that Black Brothers, from whom the plaintiff purportedly purchased the property, had the right to sell the machine.
The defendant also insists the transfer was invalid because in order for Black Brothers to sell the property to Howard, reasonable notification of the time of the intended disposition must have been sent by the secured party to the creditor under Code Ann. § 109A-9-504 (3) (Ga. L. 1962, pp. 156, 423). We do not deem this to be a material factor for consideration because "when collateral is disposed of by a secured party after default, the disposition transfers to a purchaser for value all of the debtor's rights therein. . . The purchaser takes free of all such rights and interests even though the secured party fails to comply with the requirements of this Part or of any judicial proceedings." Code Ann. § 109A-9-504 (4) (Ga. L. 1962, pp. 156, 424).
Therefore, the controlling question in the case sub judice is whether Black Brothers, under whom the plaintiff claimed title, could convey good title pursuant to its security interest as evidenced by a recorded financing statement.
Mercantile obtained the property by reclamation petition in the Scottdale bankruptcy procedure. While the adjudication by the bankruptcy court determined that title to the property was not in Scottdale, the order granting possession to Mercantile and relinquishing jurisdiction over the property recited that it did not adjudicate the respective rights of other creditors, as to the property, who were left to their remedies under state law for such determination.
The plaintiff contends that Black Brothers' rights are derived from those of Mercantile under the bankruptcy proceedings. This contention is without merit because Black Brothers' rights, based on a prior financing statement, stand independently of Mercantile's claim. The evidence shows only that Mercantile, after learning of Black Brothers' prior claim, made no claim whatsoever; that Black Brothers obtained a "release" of the machine from Mercantile. No details of the character or contents of the "release" are set out. Furthermore, there was not sufficient evidence to show that Black Brothers paid Mercantile a valuable consideration for the "release."
The Commercial Code ( Code Ann. § 109A-9 — 501 (1); Ga. L. 1962, pp. 156, 420) provides for the rights and duties of the holder of a security instrument after default. Code Ann. § 109A-9-501 (3) (Ga. L. 1962, pp. 156, 420) states that "parties may by agreement determine the standards by which the fulfillment of these rights and duties is to be measured if such standards are not manifestly unreasonable." Since there is no definition per se of what constitutes a default within the purview of the Commercial Code, this is one of those standards which are determined by the parties contractually. Thus, in this case, the prime consideration is whether a default has occurred under the terms of the security agreement.
Mercantile's security agreement with Scottdale provided that bankruptcy constituted an "event of default." Therefore, under Code Ann. § 109A-9-504 (1) (Ga. L. 1962, pp. 156, 422), Mercantile as the holder of a security instrument after default might sell or otherwise dispose of the property. Although Black Brothers' financing statement is part of the transcript, the security instrument itself upon which Black Brothers must rely does not appear in the record. Since Black Brothers' status is predicated solely upon their holding a security interest prior to that of Mercantile, in order to avail itself of the Commercial Code provision regarding the right of a secured party after default to sell or otherwise dispose of the collateral ( Code Ann. § 109A-9-504 (1); Ga. L. 1962, pp. 156, 422), a default within the meaning of its security instrument must have occurred.
The absence of the security instrument and the terms thereof preclude a determination of whether a default had occurred which authorized Black Brothers to convey title pursuant to the Commercial Code provisions. Thus, the evidence adduced was insufficient to show that the plaintiff had title, or a right of possession, to the property in question and a new trial must be granted.
3. In the cross appeal the plaintiff contends the court erred in refusing to admit evidence relating to bad faith, and damages arising therefrom, on the part of the defendant.
While we are cited cases which allowed the recovery of attorney's fees for bad faith in a trover action ( Atlantic C. L. Railroad Co. v. Nellwood Lumber Co., 21 Ga. App. 209 ( 94 S.E. 86); Sapp v. Howe, 79 Ga. App. 1 ( 52 S.E.2d 571)), the rule is that in order for the exclusion of oral evidence to be considered "it must appear that a pertinent question was asked, that the court refused to allow the answer, and that a statement was made to the court at the time, showing what the answer would be; and that such testimony was material and would have benefited the complaining party." Allen v. Kessler, 120 Ga. 319 ( 47 S.E. 900).
Here, when testimony as to the defendant's statements was attempted to be given, the trial judge asked: "Is this necessary?" Counsel for the plaintiff then stated: "I think I am fixing to show what his attitude was. I want to show bad faith." Such conclusion is not sufficient to show this court whether error was committed in excluding the evidence and thus does not meet the requirements of the above quoted rule. Burke v. State, 76 Ga. App. 612, 624 ( 47 S.E.2d 116); Thrailkill v. State, 103 Ga. App. 189, 191 ( 118 S.E.2d 837).
The other excluded evidence related to damages arising out of the purported bad faith of the defendant. Since no proper foundation was laid, in that bad faith was not shown, there was no error in its exclusion.
The plaintiff's cross appeal is without merit.
Judgment reversed and remanded for a new trial on the main appeal. Judgment affirmed on the cross appeal. Frankum, P. J., and Deen, J., concur.