Ballou v. Cunningham

60 Barb. 425 | N.Y. Sup. Ct. | 1871

Lead Opinion

Johnson, J.

The action was to recover the balance remaining due upon a chattel mortgage, after a sale of the mortgaged property, and the application of the proceeds. The mortgage was to secure the payment of the $200, three months from date, which sum the mortgagor agreed then to pay. He further stipulated and agreed that in case he should make default, the mortgagee might take possession of the property, and sell the same, either at public or private sale, and after deducting all expenses, apply the proceeds. The mortgage further provides that “ if from any cause said property shall fail to satisfy said debt, interest, costs and charges, I covenant and agree to pay the deficiency.” The debt was not paid at the day specified, and the plaintiff" took possession of the property by virtue of the mortgage, by his agent, one Jones, who was a constable. Jones advertised and sold the property at public auction, except one cow, which the plaintiff" sold at private sale the day before the auction, for $40.

The defendant claimed that by taking the property upon the mortgage, and selling it, the debt was paid, if he could prove, as he proposed to do, that the property was really worth much more than the amount of the debt. This evidence was objected to by the plaintiff’s counsel.

The judge ruled that inasmuch as the plaintiff" had sold the cow at private sale he must account for her full value, and that the defendant might prove the value of the cow. To this ruling the plaintiff’s counsel excepted. This exception presents the only question in the case.

I think this ruling was clearly erroneous. The ruling is placed simply upon the ground that the sale was private. By the terms of the mortgage, the plaintiff had the same right to make a private sale that he had to make a public sale, and there is no reason why he should be held to account for the value of the property sold in that way, more than for that sold in the other. Each sale was under the power contained in. the instrument. The defendant had clothed the plaintiff with this power, and made him his agent to sell his remaining interest, which was a mere equity of redemption. The title of the plaintiff had become absolute by the default of the defendant in making payment. All that was then left to the defendant was the right to redeem, by paying the debt before the property should be sold.

By the sale, in the mode prescribed in the mortgage, the right of redemption was cut off, and the defendant had expressly agreed to pay any deficiency after the proceeds of the sale, (less costs and expenses,) should be applied. The parties agreed that in case of default, which might render a resort to the property necessary in order to give the plaintiff his money, the property might be sold by the mortgagee, and its value ascertained in that way, and applied in payment of the debt.

It is now said that the defendant should have had notice of the private sale, before it was made, and that as he had no notice he is not bound by it, but may have the full value of the cow applied in payment, contrary to his express agreement. Ho such question was raised or suggested at the circuit, and the ruling was not placed upon any such ground. But if it had been, the position is clearly untenable. The nature of the power exercised must be gathered from the terms of the instrument, and that certainly does not require or contemplate any notice to the defendant in case of a private sale. The plaintiff’ was acting as the defendant’s agent or attorney, with full power to sell and convey all the right the defendant might have, and it would be an unheard of thing to require the agent or attorney to give his principal notice, before he could sell and conclude such principal. Had notice been given, could the defendant, by objecting, have prevented the plaintiff selling in that way ? Clearly not. It might just as well be said that he could prevent a public sale in that way. But the precise question has been decided by the court, in the eighth judicial district, which is authority in this court. (Chamberlain v. Martin, 43 Barb. 607.) It was there expressly held that a private sale, under such a power in a mortgage, without notice to the mortgagor, was valid, and concluded the mortgagor, if made in good faith. Ho case can be found to the contrary, where the sale has been made in good faith, under a power and authority like this. There is no room for pretending here that the plaintiff did not act in good faith, in selling the cow at private sale. He testifies that he sold her for all he could get, and that he intended to sell her for all she was worth; and there is no testimony or circumstance leading to a contrary conclusion. Ho one testifies that he would have given more for the cow, or that she could have been sold for more at that season of the year. Ho one can suppose that the cow would have sold for a better price at public sale; much less will the law infer it, without some proof. Indeed it would appear, judging from results, that the cow was in fact sold more advantageously to the defendant’s interests than the property sold at public auction. The net proceeds of all the other property sold at the public sale were only about $90. The expenses of the public sale and keeping the property, amounted to $23.75. This shows how expensive it was to keep animals on hand at that season of the year, and the importance of their being sold at the earliest practicable moment. But these considerations bear only upon the question of good faith, which was not raised upon the trial. The ruling there was, that upon the mere fact of selling at private sale, the law gave the defendant the right to have applied upon his debt all he could prove his property to be worth. This surely cannot be the law in a case like this. The parties have agreed that in case the debtor fails to pay as he has promised, the property may be converted into money by the creditor, either at public or private sale as he may elect, and the net proceeds only applied in extinguishment of the debt. Surely the creditor who has pursued the remedy secured to him by his agreement, cannot, upon .any just principle, be made liable beyond the amount realized, unless he has violated the letter or spirit of the agreement. Under the ruling at the circuit, the jury allowed the defendant, for his cow, $36 more than the plaintiff'had realized. This is certainly a novel contrivance for the payment of debts. The parties have agreed what shall be applied, in case the plaintiff is driven to a sale of the property to get back his money loaned; but the court and jury undertake to make payment and satisfaction upon a basis altogether different from the agreement; to make, in fact, a new agreement. The ruling must have proceeded upon the ground that the plaintiff had no right to sell except at public sale, and having sold at private sale, contrary to the agreement, he was to be charged, and the defendant credited, upon the same principle that would have been applied had the plaintiff kept the cow himself, instead of selling her and converting her into money. This was clearly errroneous. There is, indeed, no ground upon which this ruling can be sustained, without proof that the plaintiff, in making the private sale, acted in bad faith, and might, had he acted fairly and honestly, or with proper care and diligence, have obtained a better price.

[Fourth Department, General Term, at Buffalo, February 6, 1871.

The judgment should therefore be reversed, and a new trial ordered, with costs to abide the event.

Talcott, J., concurred.

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Dissenting Opinion

Mullin, P. J.,

dissented, on the ground that when a mortgagee sells at private sale, without notice, he must allow to the mortgagor What the property thus sold is reasonably worth.

blew trial granted.

Mullin, P. J., and Johnson and Talcott, Justices.]