Seaboard Finance Co. v. Carter

MOORE, P. J. Respondent sued to recover a deficiency remaining after the sale of movables made pursuant to a chattel mortgage.

On March 11, 1946, respondent loaned appellant $15,658 on a note and chattel mortgage to pay the balance of the purchase price of four vehicles, to wit, a CMC truck and Weber trailer and a Sterling truck and a Fruehauf trailer. They were acquired for the partnership of Carter and Spurgeon which had theretofore engaged in the fishing business. Carter made the down payment of $4,700 and alone executed the note and the mortgage. By agreement they were to share the profits equally in their new enterprise of transporting goods for hire. On July 2, 1946, there was a default in the payments on the note. Demand was made for possession of the chattels as provided by the mortgage. Thereupon Mr. Spurgeon, without objection on the part of appellant, voluntarily delivered the mortgaged chattels to respondent. The [740]latter promptly forwarded to appellant a notice in writing that unless all sums due under the note be paid, it would sell the chattels on or after five days following the notice. That document was received by appellant. However, no sale was made for over a year for reasons about to be related.

Within a week after the vehicles were delivered to respondent, appellant filed action No. 516539 to recover moneys paid, damages, and for cancellation of the note and mortgage on the ground of fraud in their procurement, and for injunction against respondent’s foreclosing the mortgage or exercising the power of sale. He procured a restraining order against such sale which was not dissolved until February, 1947. The sale of the vehicles took place July 2, 1947, exactly one year after they came into respondent’s possession. At the foreclosure sale the sum of $10,000 was received for all four vehicles. During that period the chattels were kept on vacant lots and at all times prior to the sale their whereabouts were known to appellant.

In the meantime the judgment on his action, No. 516539, had gone against Carter and he had appealed. The Supreme Court annulled the mortgage insofar as it affected the Sterling truck and Fruehauf trailer by reason of respondent’s failure to comply with sections 2981 and 2982 of the Civil Code relating to conditional sales but affirmed the validity of the mortgage lien on the CMC and Weber vehicles. All other demands of Carter were rejected and the court ordered the trial court “to determine the sums due to the plaintiff on the unenforceable portion of the contract relating to the Sterling and Fruehauf vehicles and enter judgment accordingly.” (Carter v. Seaboard Finance Co., 33 Cal.2d 564, 588 [203 P.2d 758].) Pursuant to such directive further proceedings were had in the court below and judgment was entered in action No 516539 in favor of Carter for 22/45 of the amount loaned on the mortgage, to wit, the sum of $4,314.20. Immediately following the award of such judgment, the same court tried the instant action for the deficiency claimed and held that the loan as to the CMC truck and Weber trailer was valid and awarded respondent $5,034.65. That judgment was credited with the amount recovered by appellant in action No. 516539 leaving respondent’s net recovery $570.75.