93 Mich. 383 | Mich. | 1892
This cause was commenced in the circuit court for the county of Antrim, in chancery, by sworn bill of complaint, signed by William L. Drayton and Hattie A. Drayton, as complainants, for the purpose, among other things, of having a certain sheriff’s deed on statutory sale on the foreclosure of a real-estate mortgage set aside, and the foreclosure proceedings declared void; and also for the purpose of having the said mortgage, and a promissory note given therewith, declared satisfied and canceled. Before the proofs were taken, complainant William L. Drayton died, and his sons, Charles E. and Ben S. Drayton, were substituted in his stead as complainant^. The record shows that, after prolonged negotiations, one John W. Willis, on November 12, 1884, concluded a purchase from the defendants, Chandler & Taylor, of a second-hand saw-mill, boiler, and engine for $1,600,'payable according to three promissory notes executed, by John W. Willis and Nancy Willis, his wife, to said Chandler & Taylor on October 15, 1884. One of the notes-was for $200, due January 1, 1885; one for $600, due April 1, 1885; and one for $800, due January 1, 1886, — with 10 per cent, interest. As security for the payment of these notes,. John W. and Nancy Willis, on November 12, 1884, executed a chattel mortgage for $1,600 on the saw-mill, boiler, engine, and appurtenances; and on the same day Nancy Willis executed to Chandler & Taylor a mortgage for $1,600 on certain real-estate owned by her, which mortgage was also given as security for said notes. On the same day William L. Draytonexecuted to Chandler & Taylor his note for $800, due April 1, 1886; and, as security for the payment thereof, he and his wife, Hattie A. Drayton, executed the mortgage which was-
After the purchase of the mill, Willis caused it to be set up upon the Drayton land, and did some sawing afterwards, but not for a very great length of time, when he finally abandoned it. Chandler & Taylor then took possession of this mill and machinery under their chattel mortgage, but did not regularly foreclose the same, but such talk was had between the parties as finally resulted in the claim made by Chandler & Taylor that they took this mill as payment for the $600 note, including the accrued interest thereon, the first $200 note having been paid before that time by Willis. The record shows that Chandler & Taylor after-wards sold this mill and machinery to one Jones for $750. The last $800 note of the -original indebtedness from Willis to them, according to their claim, still remained due and unpaid.
At the hearing in the court below, the court did not determine whether the Drayton note and mortgage was intended as a guaranty of collection, or whether it was security for payment, as, in his view of the case, it was unnecessary to find that fact. His views were based upon the proposition that where a chattel mortgage is taken as security for a debt, and a party holding the chattel mortgage, under his power of seizure, takes the property and appropriates it to himself, it works a cancellation of the debt. He also held that in this case there was no sale such as was contemplated and required by the chattel mortgage; and that Chandler & Taylor, having taken the chattel-mortgaged property in their own hands, had no right whatever to call upon the Draytons for anything in addition. The decree was accordingly entered in favor of
From this decree the defendants appeal.
It is apparent from the whole record that the chattel mortgage, the Nancy Willis mortgage, and the Drayton mortgage were all given to secure the same debt, which was the debt existing from John W. Willis to Chandler & 'Taylor. The Draytons, who gave their mortgage as collateral security for the payment of this debt, were interested in the security assured by the other two mortgages. If, by a legal enforcement of those securities, enough had been realized to pay the debt, the Drayton mortgage would have been considered as paid; and if enough had not been obtained, or if for any reason the Draytons had been compelled to pay any portion of the debt, they would have been entitled to be subrogated to all the rights of Chandler .& Tajdor in those securities. The foreclosure of the Dray-ton mortgage by advertisement was a practical denial of all these rights. It was a denial of the contention made by the Draytons that no liability existed against them under their mortgage except upon the contingency claimed "by them in the bill, — that the property covered by the chattel mortgage should be destroyed by fire. Under these circumstances, the Drayton mortgage could not be properly foreclosed by advertisement, and that sale must be declared void. In this case the defendants should have proceeded to foreclose the Drayton mortgage in equity, where all the rights of the parties could have been equitably determined and protected. That the statutory foreclosure by advertisement is not adapted to cases where there are conflicting equities, which can only be properly considered and protected in a court of chancery, was clearly held by this
We tliink, however, that the learned circuit judge was in error, under the facts presented by the record in this case, in holding that the mere appropriation of the property covered by the chattel mortgage operated as a payment of the entire debt, and a full satisfaction of the Drayton mortgage. Drayton having assented to the sale, but no price having been agreed upon, we are of the opinion that the correct rule to apply in this case is that the defendants be held to an accounting with the complainants for the full value at the time of its conversion by them of the property covered by the chattel mortgage? and which was appropriated by them in violation of its provisions, and that such value shall be applied upon the indebtedness, for part of which the Drayton mortgage is collateral security. While the bill does not ask this specific relief, yet we consider it sufficient as a bill to redeem, and the prayer for general relief will be treated as a prayer to be allowed to redeem.
The decree of the court below must be reversed, and the case remanded for further proceedings in accordance with the views stated. The defendants will recover the ■costs of this Court.
See Huyck v. Graham, 82 Mich. 353; Pritchard v. Kalamazoo College, Id. 587.