Laing v. Perrott

Campbell, J. Laing, as mortgagee from one Lewis Berger, sued Perrott in trover for the conversion of part of the goods mortgaged, by seizure and sale of them specifically and separate from the entire stock, under execution against Berger. It has been uniformly held that such a levy and sale cannot be justified. But the question chiefly disputed here is as to the proper form of action. The court below held that trover could only lie where plaintiff had a possessory right, and that in this case there was no such right, because the mortgage was not due when the property was sold, and the mortgagee had no right to assume possession until then, unless one of the conditions of retaining the property should have been broken. The mortgage was made on a stock of goods in a store, and was in the usual form, recognizing the business as existing. There was no agreement that the mortgagor should retain possession, but there was a condition, such as is very common in such forms, that if the mortgagor should “ sell, assign, or dispose of, or attempt to sell, assign, or dispose of, the whole or any part of the said goods or chattels, or remove or attempt to remove the whole or any part thereof from the said city of Bay City without the written assent of the party of the second part,” he might take possession and dispose of the property. [300] • There was evidence that previous to the levy and without such assent of the mortgagee, Berger had used a considerable amount of goods to pay an existing debt of $109. "Whatever may have been the right of the mortgagor to make sales in the ordinary course of retail business, and to keep possession while doing so — upon which we need not express any opinion — it is very clear to us that a sale of such an amount not for pay but to apply on a debt is not .such a sale as he could lawfully make, and was a distinct violation of the condition, which gave the mortgagee a right of possession. If lie could make such a disposition he might easily strip the mortgagee-of his whole security. Sales in the ordinary way would give an equivalent and aid in raising money to pay the mortgage, but dispositions which brought in no equivalent would destroy the security and have no tendency to help the mortgagor to funds. As the .court below ruled otherwise the judgment must be reversed with costs and a new trial ordered Cooley and Marston, JJ. concurred.