*1 99 1970] Nat. Bank v. Marston faith on part. was not evidence bad defendant’s of fact say finding judge "Wecannot trial was erroneous.
Affirmed. Costs to defendants.
All concurred. v. MARSTON NATIONAL BANK
MICHIGAN 1. Fraud —Material Fact —Disclosure. by remaining damaged The defendant silent as to the condition a car applying on, he was allowing for a loan thus bank money which loaned him the to assume that the car was good condition, committed fraud. 2. Fraud —Material Fact —Disclosure. Failure to diselose material necessary prevent faet a false impression positive is much a misrepresentation; fraud as it is pretenses not essential that which a fraud is ac- complished expressed in words. 3. Fraud —Actionable Fraud —Elements. exists, general Actionable fraud rule, as a appears (1) where it that defendant representation; made (2) material false; it that when he he it made knew that it [1] [2] [5] [3, 7‘ 15 Am Jur 9] 13] 11,12] 10] 8^ 6] 21 Am Jur 4] Am Jur 37 Am Jur 41 Am 15 Am Jur Am41 15 Am Jur 37 15 Am Jur 15 Am Am37 Am Jur Jur, Pledge Jur, Pledge Am Jur Jur 2d, Jur References 2d, 2d, 2d, 2d, 2d, 2d, 2d, 2d, Creditors Bills 2d, Fraud Fraud Automobiles and Highway Traffic 36. Chattel Commercial Chattel 2d, Chattel Chattel Fraud and Deceit and Collateral Chattel and Deceit and Deceit §§ Mortgages Mortgages for Points Collateral Security Mortgages Mortgages Mortgages Code §§ 55-57. §§ §§ Security §§ §§ §§ §§ in Headnotes 82, 84, 146,147. 177, 12-19. §§ 178, 118, 119, 120, 122. 238. 126. 85, 118, 122, §§ §§ 181. 87. 99-102. 78-89. 133. recklessly, any knowledge false, or made it assertion; positive (4) that as a truth and it its made upon by plaintiff; with intention that should he acted upon *2 it; and that the (6) in reliance acted injury. thereby suffered 4. Fraud —Elements—Standard of Proof. Fraud —Actionable proved fraud All of the elements of must be with a reasonable degree exist; certainty all of must found of them be to the recovery. to a absence of one of them fatal Security 5. Creditors’ Suit — Interest —Effect on Debt. security way The of a in no affects existence interest the existence debt; merely provides of the the the secured party recovery with an immediate of source addition to the standard remedies of the unsecured creditors. Liability Deficiency. Mortgages — —Sale—Debtor’s
6. Chattel any deficiency fully in his debt liable for debtor remains to applied sale are proceeds of a of the collateral after the 440.9504[2]). (MCLA the debt Code —Intent. Commercial Creditors’ Suit —Remedies—Uniform adopted state, Code, Commercial The Uniform open the creditor after options intended to a to broaden theory of them old rather than to limit under the default rights of remedies; and remedies creditors the of 440.9504; (MCLA [1], 440.9503, 440.9501 are cumulative §§ 440.9502). Mortgages on Note —Re- of Collateral —Suit 8. Chattel —Sale quirements. holding defendant, bank, Plaintiff a secured creditor car, collateral, required to the defendant’s the was not the dispose bringing suit the before of collateral to 440.9504). (MCLA [1], 440.9501 owing balance note the §§ Mortgages Rights 9. Chattel —Debtor’s —Possession. use possession A of deprive creditor cannot debtor not length time and of the collateral for unreasonable of apply proceeds liquidation its to asset from sale toward (MCLA 440.9504[1]). of debt Mortgages — — 10. Chattel —Re- Default Creditor’s Possession striction. possession may take of if A the collateral creditor dispose collateral, never intended because Nat. Bank v. Marston debtor, during the possession, time of creditor’s may profitable have been able to make use of may the asset or greater gone lengths far than the creditor sell (MCLA the collateral [1]). Mortgages Disposition. 11. Chattel —Creditor's Duties — creditor, possession A once he default, has collateral after must act in sale, reasonable manner toward proposed lease, retention permissible, disposi- where other tion; disposition if feasible, is not the assets re- must turned, subject, still course, to the creditor’s in- (MCLA terest 440.9504[1]). Mortgages Rights Disposition. 12. Chattel —Debtor’s — recovery A has injuries debtor resulting from the creditor’s failure reasonably to act commercial sell, manner lease, permissible, retain where or otherwise dispose collateral the creditor has taken (MCLA 440.9501[1]). on default Mortgages — — — 13. Chattel Automobiles Possession Certifi- *3 cate of Title. Possession of a vehicle’s certificate of title the secured credi- deprived tor car, the debtor of the collateral, use of the the effectively as physical as would possession y of the ear. Mortgages of Remedies —Automobiles— n 14. Chattel —Election Certificate of Title. Secured creditor’s title certificate of an automobile, collateral, not result in the creditor’s did remedies where the was intended be a allowing plaintiff method of secured creditor to retain its forcing interest after and not a method of an remedies, election of did physical not have con- car, trol and the did indicate not an intention to exercise its of retention of the collateral. Appeal from Clair, St. Halford I. Streeter, J. Submitted Division 2 June 4, 1970, at Detroit. (Docket No. Decided 7358.) 10, December
Complaint by Michigan National Bank against Edward J. Marston for the amount due on note. Judgment Af- plaintiff. Defendant appeals. firmed. $ Sharp Beauchamp, Stommel, Sullivan,
Walsh, O’ plaintiff. $ Keyes, for defendant. Drillock Atkins, Borr P. and and J., Before: H. Gillis, J. Levin adaile,* JJ. is an insurance man Defendant J. Borradaile, damaged purchased automobiles, sideline, as
who, April repaired In them. and then resold them, Imperial in- purchased convertible, he completely gutted fire had been terior which During condition. excellent but was otherwise plain- purchase negotiations he for the called department to find loan in order tiff’s installment super- Imperial. a 1965 out the loan value gave defend- $3,000, but the visor the loan value at of the car ant did mention the condition not or later the loan was executed. time the call when purchased for $1,350. Defendant the car 90-day giving Subsequent signing note car, the bank a defendant hos- was involved in automobile accident and pitalized period. Ultimately, for an extended September bankruptcy. In when the went into note had paid, been the bank learned that the storage garage car demanding that the owner was storage fees. December
$600 damaged when the bank learned that the car bought it. *4 bankruptcy January in re- 1967, the trustee leased car to bank. the vehicle title to the At point Michigan Bank sell this car to National tried to repossessed who in
three dealers dealt damaged garage The cars. offer was from the
* sitting Appeals by assignment. judge, Circuit on the Court of Bank Nat. v. Marston but offer turned owner was down be- $500 credit risk. bank poor cause was The brought in suit the note October and the was case heard in of 1968. September
The court, trial sitting without a determined jury, that defendant’s loan obtained under pre- false was, therefore, tenses and discharged held in bankruptcy proceedings the United States District Court the Eastern District of Michigan. The trial court further determined that the actions in bank title to car in at- obtaining sell tempting were reasonable under the Uniform Commercial provisions Code, MCLA et Ann seq. § 440.9504 1964 Rev (Stat 19.9504 et because the .seq.), bank never obtained of the car it did the cer- although tificate title.
This appeal predicated on the above two hold- ings. Should the appeal fail, defendant asks vehicle be transferred immediately to him pursuant to the trial court opinion. This order was not in included the original judgment.
I The initial question is whether debt defendant’s discharged bankruptcy proceedings. Federal Act (11 Bankruptcy 35) provides: USCA A
“(a) discharge shall release from all bankrupt of his provable debts, whether ** # allowable in full or in such as part, except are liabilities for or obtaining money property by false or pretenses false representations, or for or obtaining money on credit or property obtaining an extension or renewal upon credit reliance false a materially statement in writing respecting his financial condition made published caused *5 App Mich published any manner whatsoever
to made or be intent to deceive.” with appeal again contends defendant trial and At repay than to never intended other he that because the loan present and, fraud there- that was no there bankruptcy. discharged in That was the debt fore, point fraud- at which the transaction is not the part. was committed The fraud on defendant’s ulent the bank to his allowed silence, defendant, when being on a car made used that the loan was assume good a material to disclose condition. Failure impression prevent necessary as is false fact misrepresentation. positive It is a fraud much pretenses by is which fraud that not essential expressed accomplished Falsehood be words. spoken deliberately aas is the same when created People (1966), App 2 Mich 409, v. Vida falsehood. (1920), People 301; Mich 414; People 297, v. Schultz (1862), Clark v. Paving Asphalt Company v. Pontiac
In A & A Speedway, (1961), Inc. 363 Mich the Court quoted a definition of fraud: general is rule that constitute actionable “The (1), appear: that made a fraud it must representation; (3) (2) that false; it was material he it knew false, that made he that it when recklessly, any knowledge of its made it positive (4) assertion; truth and as a that he made upon the intention with that it should be acted by plaintiff; (5) upon that acted in reliance thereby injury. it; Each suffered proved of these must facts with a reasonable certainty, degree all of them must be found exist; the one of absence them is fatal to a recovery.” supported amply these met
That criteria are the record. Not did defendant make material Nat. Bank v. Marston misrepresentation by his silence, bnt acted injury in reliance on this omission and suffered thereby. (1969), Papin v. Demski 17 Mich (1970) 383 affirmed, Mich 561.
II discharged in As was not the debt question proceedings, of we next consider the propriety 9 of of the actions under Article hank’s basic the Uniform Code. The issue Commercial having security raised is interest bank, whether the holding in the car and title to the car after bank- ruptcy, required dispose of the collateral bringing owing before suit for the balance on the question impression. note. This is a of first rights parties following The default are set part position out in 5 of article 9. It is defendant’s (Stat 440.9505(1) § Ann that under MCLA 1964Rev [1]), plaintiff required dispose § 19.9505 of (Stat § Ann 1964 car under MCLA 440.9504 Rev 19.9504) provides which in turn inter alia for the parties. sale of collateral secured 440.9505(1) (Stat MCLA 1964Rev Ann [1]) pertinent part: states in paid “If the debtor has the cash in price 60% of the case purchase interest money security of consumer or goods the loan in the case 60% of goods, and has. another interest consumer signed renouncing after default a statement
modifying rights part his under this a secured party who has taken possession collateral must dispose it under section 9504, and if he fails to do so with- days in 90 after he takes the debtor at option may his recover conversion or under sec- 9507(1) party’s liability.” (Em- tion on secured phasis supplied.) proofs establish that defendant made below payments Moreover, on the note.
no at time paid alleged has never “60% # * * price cash of the loan”. As 60% payment clearly code such to be a con- intends precedent operation dition to the of MCLA 440- .9505(1), the section to be irrele- supra, we consider vant case. to the instant purpose
It is of course basic law that the of col- lateral secure creditor and increase his recovery chance of in the case default. The way of a in no existence affects merely provides It the existence the debt. recovery party secured with immediate source of in addition of an standard remedies unsecured example, Thus, creditor. should a sale take (Stat place 440.9504(2) Ann 1964 under MCLA 19.9504[2]), fully §Rev the debtor remains liable *7 any deficiency proceeds applied after the are to the debt. specifies rights
While Article 9 a number of party,1 440.9501(1) (Stat § the secured Rev MCLA Ann [1]) provides rights § 19.9501 and “the remedies referred to in this subsection are cumula point discussing In tive.” Professor Stein heimer has written: contemplates flexibility
“The code considerable procedures by the default which can be used party. (1) proceed part secured He can under 5 proceed appropriate provi- of article under security agreement (3) proceed sions and judgment procedures a creditor. These are cumu- employed may danger lative and of elec- tention § § 440.9504 440.9503 19.9505(2)]). 1 The remedies of collateral [Stat [Stat Ann Ann include 1964 (MCLA 1964 Rev Rev taking possession § 19.9503]), 440.9505 § 19.9504]), [2] sale after [Stat of collateral objection default Ann 1964 (MCLA (MCLA Rev re- Nat. Bank v. Maeston 440.9501, MCLA Practice Com- of remedies.” tion L. Jr. Roy Steinheimer, mentary, by Bank Aurora Olsen v. National Valley See also NE2d Ill (1968), (234 547, 550, 2d where the court notes: Rptr 270) UCC “The is founded rule, including Illinois, majority pursue rationale that a creditor able of a number of remedies a until against one debtor *****2 the debt is satisfied.”2 We, therefore, conclude that the intent the code was to broaden the creditor after options open to default rather than to limit them under the old remedies. theory As the facts of the illustrate, instant case defend ant’s if could argument, accepted, reduce secured creditor less favorable than an position un secured creditor. Here collateral was placed control of a physical garageman, superior a lien resulting to plaintiff’s (MCLA Ann [Stat 440- § 9.1711] Rev MCLA § .9310 Ann 1964 [Stat Rev 19.9310]) for an amount quite excess of possibly the value of the If car. plaintiff were required to sell the collateral, he would have to pay first file garageman suit challenge of the claim. propriety either event would effectively be increasing the amount owed it a debtor who has already defaulted and whose assets been re greatly duced by do bankruptcy. We not believe that code intended such a strained result.3 Eev specifically places NJ but rather could first that 3While MCLA 440.9501 *8 2 Cf. Super § 19.9207, creditor was not Frank Briscoe (242 on the § the duties A2d employ secured Co., required Inc. v. Suburban the banker’s [1] 5 UCC of party (Stat MCLA 440.9207 to Rptr 271) seek satisfaction when the Ann 1964 Eev right § of set-off. Trust Co. where the court held debtor, (Stat § from 19.9501[1]). rather (1968), Ann 1964 than
III the bank owes that mean, however, This does not respect collateral. to the to defendant with no duties (See § [Stat Ann 1964 Rev MCLA 440.9207 also, 19.9207]). a creditor unfair allow It would be to possession deprive of and use the to debtor length of time for an unreasonable the collateral proceeds apply from its asset and not liquidation it Moreover, of the debt. sale toward equally to a creditor take unfair to allow would be possession to never intended at if the creditor all, period dispose security. during that For possession deprived may have debtor is may profitable the asset or use of been able make lengths greater gone the creditor have than far possession act creditor has he must to sell. Once a sale, reasonable manner toward permissible, proposed or other lease, disposition. retention where (MCLA [Stat 440.9504[1] Ann 1964 19.9504(1)].) disposition is not fea- If such Rev subject, of still sible, returned, the asset must be the the the creditor’s interest. To course, to injury extent the creditor’s inaction results (See recovery. has a debtor, the debtor MCLA [1] [Stat Ann 1964 Rev 19.9501 (1)].) physical not have case did the instant title, it have However, the vehicle. did deprived which, circumstances, under the effectively physical pos as of the car use plaintiff owed Thus, session. defendant those duties **4 outlined above.* by placing storage, creditor, has created the lien the collateral expense. duty pay A creditor does not have the the may debtor unilaterally obligation. create such requests The defendant for the vehicle that the title be trans- already As ferred to him. we held above a creditor dispose liquidation return not to must collateral chooses toward *9 Michigan Nat. Bank v. Marston noting, It is worth however, that fact that plaintiff held title did not result in an only remedies. The title was intended abe meth- plaintiff allowing od of to retain its forcing after a method of election of remedies. The held in the narrowest sense of the word and neither had physical control of the car nor indicated an intention to exercise its of retention of the collateral.
IV In the instant ease there nowas evidence adduced tending below to substantiate either that any way acted in than a other reason- able or manner that defendant suffered a loss plaintiff’s failure to sell or return title. This Court will not assume or unreasonableness the existence alleged proven. of a loss where neither has been Affirmed, appellee. Costs to Judge parts concurs I, II and IV of the Levin opinion prepared join but is not some part join observations in III and hence does not part. debt, subject liability, presumably question will be satisfactorily part. resolved further discussion our