Opinion
Evans, Peterson & Torbet, Paul V. Evans, Colorado Springs, for plaintiffs in error.
William A. Black, Denver, for defendants in error.
COYTE, Judge.
This case was transferred from the Supreme Court pursuant to statute.
The parties appear in the reverse order from their appearance at trial but shall be referred to as they appeared below, or by name.
The Kelleys (defendants) bred and sold appaloosa horses. In October of 1962, they borrowed $40,000 from Colfax National Bank. As security for the loan, they executed a deed of trust on certain real estate they owned, and gave a chattel mortgage on sixty-one head of horses. Both instruments were properly recorded.
In March 1964, the plaintiffs contacted the Kelleys concerning the possible sale of some of these horses. A price of $60,000 for forty-seven horses was agreed upon. The horses were delivered and a down payment made. The balance of the purchase price was evidenced by a note secured by a chattel mortgage naming the Kelleys as mortgagees.
It was undisputed that the Kelleys at the time of the sale of the horses to plaintiffs did not inform them of the existence of the previously executed chattel mortgage on the animals in favor of Colfax National Bank.
The plaintiffs initiated this action in November of 1964, alleging three claims for relief: (1) recission, (2) damages for fraud, and (3) violation of C.R.S.1963, 21--1--13, which violation, if proved, would require forfeiture to plaintiffs of twice the value of the horses sold which were subject to the mortgage.
After the action was started, plaintiffs returned forty-five horses to the defendants and kept two of them. Plaintiffs defaulted in the payment due May 1965 on the purchase price. Kelleys filed a counterclaim for the balance due them from the sale of the horses together with their expense in caring for and selling the horses after they were returned.
At the close of their case, the plaintiffs elected to proceed solely on C.R.S.1963, 21--1--13, which has been repealed by the subsequently enacted Uniform Commercial Code. This statute provided that:
'Any person who shall sell mortgaged personal property to a third person for a valuable consideration without informing him thereof shall forfeit and pay to the purchaser twice the value of such property sold, which forfeiture, together with costs and reasonable attorneys' fees, may be recovered in an action of debt in any court having jurisdiction thereof.'
Based upon its finding that the defendants sold the horses to plaintiffs without informing them that the horses were mortgaged, the trial court concluded that the statute was applicable even though plaintiffs suffered no proven damage. It entered judgment in favor of plaintiffs and against defendants in the sum of $88,000 which the court found to be twice the value of the horses covered by the chattel mortgage. The trial court also found that plaintiffs, by keeping two of the horses had affirmed the contract, and entered judgment for defendants on their counterclaim for approximately $27,711.72. Both parties have appealed. The Kelleys claim the trial court erred in the application of the above-cited statute and the plaintiffs claim the trial court erred in permitting the defendants to recover on their counterclaim.
We shall discuss the plaintiffs' contentions first. The $27,711.72 figure represents the balance due on the purchase price of the horses and the expense incurred by defendants in maintaining the horses after plaintiffs returned the forty-five horses and defaulted in making payment. The figure itself is not in dispute, but rather the basic right of defendants to recover any sum under the note and chattel mortgage. Plaintiffs' argument basically is that the contract itself is illegal, and that defendants had no right to recover under its terms.
The trial court, however, held that the contract was voidable by the purchaser, but that since the plaintiffs chose to affirm the contract and pursue their rights under the statute for twice the value of the property sold, it was enforceable. We agree with the trial court's interpretation of the statute.
The fact that the execution of a contract subjects one of the contracting parties to a statutory penalty does not in and of itself nullify the contract, nor prohibit a party from enforcing his rights under the contract. The distinction has long been made in Colorado between an unlawful contract which is Malum in se, and a contract which is merely Malum prohibitum. Our Supreme Court in Union Gold Mining Co. v. Rocky Mountain National Bank, 1 Colo. 531, held that a contract the performance of which is prohibited by statute is not necessarily void, even though accompanied by penalty. In so holding it stated:
'If the thing prohibited is Malum in se, the contract cannot be enforced, but as to things not immoral or against public policy, it may be sufficient to enforce the statutory penalty only.'
The rule thus cited remains in effect and has been quoted in a more recent case of Waddell v. Traylor, 99 Colo. 576, 64 P.2d 1273.
The next field of inquiry concerns the defendants' contentions that the trial court erred in applying the penalties involved under this statute. In reviewing the various assigned errors, we find one to be dispositive of the matter as a whole.
The statute sued upon provides for a forfeiture of twice the value of the goods sold in those cases where the seller fails to inform the purchaser of the existence of the chattel mortgage on the goods.
As the statute reads, it is twice the 'value' of the horses subject to the undisclosed chattel mortgage which must be awarded in cases of violation of this particular provision. Value in this context would be the market value, or the price the plaintiff might reasonably expect to receive for the horses had they been sold in the open market. In an action in which market value is the measure of damages, the plaintiff has the burden of proving such market value. John v. United Advertising, Inc., 165 Colo. 193, 439 P.2d 53.
To sustain an award for damages there must be evidence in the record to support the judgment. J. C. Penney Co. v. Brown, 155 Colo. 212, 393 P.2d 575. If plaintiff fails to bring forth sufficient competent evidence upon which the trier of fact could base its decision with reasonable certainty as to the amount of damages sustained, then the plaintiff is not allowed to recover. John v. United Advertising, Inc., Supra. Similarly, to support an award for twice the value of the horses sold subject to the chattel mortgage, there must be competent evidence upon which the trier of fact may determine the actual value of said horses.
The facts in this case show the defendants mortgaged sixty-one horses to the Colfax National Bank. Out of the sixty-one head only forty-one were identified by name. The remaining twenty were listed as '1962 colts' without further identification. The facts also established that forty-seven horses together with a few colts at side were sold to plaintiffs, out of which the plaintiffs kept two and returned forty-five. The trial court concluded that out of the list of horses mortgaged by defendants, all twenty of the unnamed colts in the chattel mortgage to the bank were included in the sale to plaintiffs.
The difficulty we find here is with the finding that twenty colts in the mortgaged list were one and the same as the colts sold plaintiffs. On the bill of sale are listed certain named colts, specified as being foaled in 1962. Apparently, the court concluded these colts were the same unnamed colts listed in the mortgage. A few of the 1962 colts listed on the bill of sale were specified as foaled by mares listed on the chattel mortgage and therefore are definitely included. However, there is no testimony or other evidence to establish the remaining 1962 colts on the bill of sale were the same animals as those listed in the mortgage. Mrs. Kelley testified that at the time of the sale of horses they had forty colts. There was not sufficient evidence to support the trial court's finding that all the twenty colts listed in the mortgage were the same as those sold plaintiffs. Any such finding would be based on conjecture and speculation.
Absent the colts, less than twenty head of horses named in the chattel mortgage may definitely be said to have been included in the sale to plaintiffs by the defendants, and thus covered under the provisions of the statute because of their mortgaged status. It was necessary for plaintiffs to prove the market value of these individual horses.
The only evidence of the value of the horses offered by plaintiffs was an insurance policy purchased by the plaintiffs covering the forty-seven horses purchased. The trial court arrived at the $44,000 figure by determining which of the horses were not included in the bank chattel mortgage and then deducting the value attributed to each horse under the insurance policy and then deducting this figure from $60,000. In fact, this policy was the only evidence used by the court in arriving at its determination of the market value for the horses.
There was no objection to the admission of the policy into evidence. The value of each horse as shown on the schedule of the insurance policy was arrived at by allocating the $60,000 among the various animals.
But, ordinarily an insurance policy is not admissible as evidence of the value of property. Cases from several other jurisdictions have announced the rule that the value assigned to property by a plaintiff for insurance purposes may not be used as proof of the value of that property. Carlisle v. Miller, 275 Ala. 440, 155 So.2d 689; New York Underwriters' Insurance Co. v. Mullins, 244 Ky. 788, 52 S.W.2d 697; Pittsburgh Forge & Iron Co. v. Dravo Contracting Co., 272 Pa. 118, 116 A. 147; Adelphia Hotel v. Providence Stock Co., 3 Cir., 277 F. 905. The major exception to the rule being that the assigned value in an insurance policy may be of use for impeachment purposes when the person attributes at trial a value widely at variance with the value he placed on it under the insurance policy. British Columbia Breweries v. King County, 17 Wash.2d 437, 135 P.2d 870. Such an exception is not applicable in this case.
The insurance policy does not provide sufficient probative evidence to prove the fair market value of goods or Since there was no evidence before Since there was not evidence before the trial court of fair market value of any of the horses determined to be on the mortgage, there was no evidence on which the court could make findings as to the value of the horses sold that were subject to the mortgage. Any value placed on these animals by the court would be based upon surmise, speculation and conjecture.
Plaintiffs failed to sustain the burden of proof as to the value of the horses. Therefore, it was error to allow plaintiffs to recover. J. C. Penney Co. v. Brown, Supra; Eccles v. Sylvester, 131 Colo. 296, 281 P.2d 1006.
The judgment in favor of defendants on their counterclaim against plaintiffs is reinstated and as reinstated is affirmed. The judgment entered in favor of plaintiffs as a penalty under the statute is reversed, with directions that plaintiffs' complaint be dismissed, and that the credit and setoff against the judgment in favor of defendants be stricken.
With opinion so modified, petitions for rehearing denied.
SILVERSTEIN, C.J., and DWYER, J., concur.