First of America Bank-Oscoda v. Volpe

Per Curiam. This is an appeal from an order of final judgment entered in an action for claim and delivery. In 1986, plaintiff First of America Bank-Oscoda accepted a promissory note for $36,117.45 from William G. Soper, who pledged as security various pieces of construction equipment. Plaintiff then perfected its security interest in the collateral offered by Soper. In 1987, defendant Joseph Volpe, through his general contractor, hired Sop-er’s excavating company to perform various work on a parcel of his property. In the fall of 1987, Soper & Sons Excavating, Inc., completed the work, but left an excavator on defendant’s premises. Over the next several months, defendant’s repeated attempts to contact Soper & Sons to have the excavator removed were unsuccessful. In July 1988, defendant sold the excavator for $8,000. William Soper eventually defaulted on his note to plaintiff. In February 1989, plaintiff filed a complaint against Soper, defendant, and others alleged to be in possession of collateral listed in the security agreement. Plaintiff alleged that the excavator left on defendant’s premises was the same excavator listed as collateral in the security agreement. Plaintiff filed a motion for possession of collateral pending final judgment, and secured an order to show cause against defendant. On April 17, 1989, the show cause hearing was held on plaintiff’s motion for possession, and defendant explained that he was no longer in possession of the excavator left on his premises. Following the hearing, the trial court issued its opinion, which denied plaintiff’s request for possession pending [285] final judgment because defendant was no longer in possession of the excavator. The court did conclude, however, that plaintiffs security interest followed the excavator and that defendant’s claim of abandonment did not exempt the excavator from plaintiffs lien. Accordingly, the trial court ruled that plaintiff was entitled to proceed against defendant. Plaintiff then prepared a proposed order requiring defendant to pay the $8,000 he had received as proceeds from the sale of the excavator. Defendant retained counsel at this time and filed objections to plaintiffs proposed order. A hearing on defendant’s objections was held in September 1989, following which the trial court ruled that plaintiff was entitled to the proceeds and issued a judgment to that effect. From an order making this judgment final, defendant appeals as of right. We reverse. An action for claim and delivery is governed by MCR 3.105 (formerly GCR 1963, 757), which provides in part: (E) Possession Pending Final Judgment. (1) Motion for Possession Pending Final Judgment. After the complaint is filed, the plaintiff may file a verified motion requesting possession pending final judgment. The motion must (a) describe the property to be seized, and (b) state sufficient facts to show that the property described will be damaged, destroyed, concealed, disposed of, or used so as to substantially impair its value, before final judgment unless the property is taken into custody by court order. (3) Hearing on Motion for Possession Pending Final Judgment. (b) At the hearing, each party may present [286] proofs. To obtain possession before judgment, the plaintiff must establish (i) that the plaintiff’s right to possession is probably valid; and (ii) that the property will be damaged, destroyed, concealed, disposed of, or used so as to substantially impair its value, before trial. Plaintiffs motion before the trial court was merely for possession pending final judgment, and not for summary disposition. As such, the trial court was not empowered to assess the merits of plaintiffs underlying claim or defendant’s defenses and render final judgment. Loader Leasing Corp v Centurion Excavators, Inc, 121 Mich App 510, 512-513; 328 NW2d 427 (1982). See also Bennett v Wright, 79 Mich App 566; 263 NW2d 17 (1977). Hence, we conclude that the trial court erred in entering judgment in favor of plaintiff where plaintiff only sought possession pending final judgment pursuant to MCR 3.105(E). The trial court should have limited its decision to whether defendant may have a meritorious defense to plaintiffs action. Loader Leasing and Bennett, supra. Having determined that the entry of final judgment was premature and erroneous, we need not address defendant’s remaining arguments. Just as it was improper for the trial court to address the merits of defendant’s defenses, it would also be improper for us to make such a determination. However, we do conclude that defendant may have a meritorious defense, because the evidence indicates that the excavator left on his property may not be the same excavator listed as collateral in plaintiff’s security agreement. Furthermore, we find that the trial court was correct to deny plaintiff’s motion for possession because defendant contested the identification and was no longer in possession of the excavator. [287] The trial court’s February 12, 1990, order of final judgment and its September 11, 1989, order of judgment, both in favor of plaintiff and against defendant Joseph Volpe are reversed. This case is remanded to the circuit court for proceedings consistent with this opinion. Reversed and remanded.