Montgomery v. Grattan

California Court of Appeal Jan 20, 1958 No. Civ. 17637Published

Before: Kaufman

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Holding. The court held that a chattel mortgagee with a right to possession upon default may recover possession of the property from a third party who has taken control of it, and that the evidence supported the trial court's findings regarding the defendant's possession and liability for the missing property.

Issues

Whether a chattel mortgagee may recover possession of mortgaged property from a third party who has taken control of it.
Whether the defendant is liable for the loss of property he took into his possession.
Whether there was sufficient evidence to support the trial court's findings regarding possession and rental value.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The law is well settled in this state that a chattel mortgagee under a mortgage conferring a right of possession, upon default may, after default, recover possession of the mortgaged chattel in a replevin action.”

“A chattel mortgagee under a mortgage conferring a right of possession upon default may recover possession of the property from a third party who has taken the property with notice of the mortgage.”

KAUFMAN, P. J.

On December 9, 1954, the United Machinery Engineering Corporation, a machine shop operated by Sam Saso and Clarence Tindall, executed a chattel mortgage to secure the payment of a promissory note for $16,803.20

[834]

three years from date with interest of 6 per cent per annum to the plaintiffs. The mortgage was duly recorded on December 16, 1954. The plaintiffs also became the owners of some of the other machinery of the corporation by virtue of a bill of sale dated April 20, 1955. United Machinery was the tenant of two buildings on the premises owned by the defendant at 965 Chestnut Street in San Jose. On about April 20, 1955, United Machinery in default under the chattel mortgage and owing past due rent, ceased operations. The defendant instituted a suit for back rent against the president of the corporation, Sam Saso, and attempted to attach the machinery remaining on the premises. While the attachment proceeding was pending, the defendant, upon hearing from his neighbors that Sam Saso was carrying away machinery by the truckload, replaced the lock of the building with a lock of his own, thus excluding all others from the premises. The property was never attached by the defendant. On April 22, 1955, the plaintiffs gave notice that pursuant to the terms of the mortgage, they took possession of the property described in the mortgage. On May 7, 1955, the plaintiffs gave notice of intention to sell the property subject to the mortgage on May 16, 1955.

The defendant continued in the possession of the machinery until October 11, 1955, when the sheriff replevied all of the machinery owned by the plaintiffs on the defendant’s premises. At the time of the replevin, some of the machinery listed in the chattel mortgage and the bill of sale could not be accounted for. This missing machinery is the subject of this action brought by the plaintiffs. The complaint stated three causes of action: claim and delivery for the missing machinery or the value thereof; conversion for the rental value of the machinery; and damages for the negligent handling of the machinery. Upon trial of the action, the court after making findings of fact entered a judgment for the plaintiffs on the first two causes of action in the sum of $2,392. From that judgment the defendant appeals, contending that:

1. A landlord in possession of a tenant’s property is not absolutely liable for any loss of the property.

Montgomery v. Grattan

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KAUFMAN, P. J.

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