Rea v. Universal CIT Credit Corporation

Annotate this Case

127 S.E.2d 225 (1962)

257 N.C. 639


No. 30.

Supreme Court of North Carolina.

September 19, 1962.

*227 Walter G. Edwards, Hertford, and John H. Hall, Elizabeth City, for plaintiff appellee.

Blanchard & Farmer, Raleigh, for defendant appellant.

RODMAN, Justice.

Does the evidence suffice to warrant a finding that defendant wrongfully took possession of the automobile? If not, the court erred in submitting the first issue to the jury.

Until modified by statute, G.S. ยง 45-3.1, a mortgagee of chattels or his assignee was, in the absence of an agreement to the contrary, entitled to possession of the mortgaged property even prior to a default. Grier v. Weldon, 205 N.C. 575, 172 S.E. 200.

After default a mortgagee is entitled to possession of the mortgaged property and he may exercise that right without process of law provided he does so peacefully. Freeman v. General Motors Acceptance Corp., 205 N.C. 257, 171 S.E. 63. Where, as here, the mortgage contains an express provision authorizing mortgagee to peacefully enter the premises of mortgagor and take possession, such entry and taking is not wrongful. The law is, we think, well stated in Willis v. Whittle, 82 S.C. 500, 64 S.E. 410. Hydrick, J., there said: "It is well settled that, after condition broken, the legal title to mortgaged chattels vests in the mortgagee. The right of the mortgagee to seize mortgaged chattels after condition broken is a license coupled with an interest, which cannot be revoked by the mortgagor. It is part of the consideration of the mortgage, and to allow the mortgagor to revoke it would be a fraud on the rights of the mortgagee, and would very much impair the value of chattel mortgages as securities. The right to seize carries with it by necessary implication the right to do whatever is reasonably necessary to make the seizure, including the right to peaceably enter upon the premises of the mortgagor. There is one restriction, however, which the law imposes upon this right. It must be exercised without provoking a breach of the peace; and, if the mortgagee finds that he cannot get possession without committing a breach of the peace, he must stay his hand, and resort to the law, for the preservation of the public peace is of more importance to society than the right of the owner of a chattel to get possession of it." The right of a chattel mortgagee to take possession of property without legal process is the subject of an annotation appearing 57 A.L.R. 26. Here the evidence fails to disclose any conduct on the part of defendant or its agents when it went on plaintiff's property to take the automobile which would tend to constitute a breach of the peace.

*228 The exercise of a legal right in a lawful manner cannot support a claim for either punitive or compensatory damages. The court erred in permitting plaintiff to recover either compensatory or punitive damages resulting from the repossession of the automobile; but since the foreclosure sale was not advertised as required by law, plaintiff was, as the court held, entitled to have the jury fix the fair market value of the car when sold, and to recover the amount by which such value exceeds the balance owing and secured by the conditional sale contract.

Plaintiff alleged that he had in his automobile at the time it was taken certain tools which had a value of $650. These tools had not been returned to him. Defendant denied there were any such tools in the car at the time it took possession. It tendered an issue to determine its liability for such tools as might have been in the car at the time of seizure. Defendant argues here that it cannot be held liable for tools in the car when defendant took possession. This contention is based on a provision of the conditional sale contract obligating mortgagor "to send notice by registered mail to holder within 24 hours after repossession if Customer claims that any articles not included herein were contained in the car at the time of repossession, failure to do so being a waiver of and bar to any subsequent claim therefor." Manifestly the quoted provision can have no application to the facts of this case. The car was taken without the knowledge of plaintiff. It was taken on 3 July 1961. Plaintiff testified: "I next went back to my home in Belvedere about the third week in July. My car was not where I had left it. It was gone. I have never seen it since." Certainly it was never contemplated that the mortgagor should notify defendant of a fact unknown to plaintiff.

The issues submitted were not directed to and determinative of the question: Did defendant, when it took the automobile, also take and convert chattels not included in the mortgage? Plaintiff is entitled to have that question determined, and, if the jury answer in the affirmative, he is entitled to compensation based on the market value of such property.

New trial.