Harris v. Seaboard Air Line Railway Co.

190 N.C. 480

• Court: Supreme Court of North Carolina
• Decided: November 18, 1925
• Status: Published

Opinion

CoNNon, J.

Judgment herein was rendered upon statement of facts agreed, as follows:

“That some time prior to 18 September, 1919, the plaintiff sold to W. M. Richards one five-passenger Ford automobile under a title-retaining contract, recorded in the office of the register of deeds of Gran-ville County, on 20 October, 1919, in Book No. 137, at page 448, and in the office of the register of deeds of Wake County, on 21 February, 1920, in Book No. 360, at page 32, a copy of said contract being attached hereto and made a part of this ease agreed, and the amount due plaintiff on said title-retaining contract was $300, with interest from 18 September, 1919.

“The said Ford automobile was delivered to W. M. Eichards at the time said contract was made, and he continued in possession thereof until about 23 October, 1921. That on or about 23 October, 1921, the said automobile was being driven by W. M. Eichards, and was negligently injured and damaged by one of the defendant’s trains at a railroad crossing between Neuse and Wake Forest, N. C. That on 4 November, 1921, the defendant paid W. M. Eichards the sum of $250 for the damage to the said automobile and W. M. Eichards executed to defendant a release, a copy of which is hereto attached and made a part of this ease agreed.

“Upon the foregoing facts agreed, the plaintiff contends that he is entitled to recover the sum of $250, with interest thereon from 4 November, 1921. The defendant contends that plaintiff is not entitled to recover any sum whatsoever.”

The note and contract executed by W. M. Eichards to plaintiff, trading under the name and style of Creedmoor Auto Company, dated 18 September, 1919, at Creedmoor, N. C., is in words and figures as follows:

“$400.00.

“On the 15th day of November, 1919, I promise to pay to Creed-moor Auto Company, or order, the sum of four hundred dollars, with interest thereon from maturity, at the rate of six per cent per annum. Payments of $25.00 to be made monthly until paid in full.

“This note is given for part of the purchase price of an automobile manufactured by Ford Motor Co., being No., with motor No. 625330, this day purchased by W. M.°Eichards of said Creedmoor Auto Company, and the title to said automobile is hereby retained by said Creedmoor Auto Company, until this note and interest is paid in full.

“And upon default in the payment of this note when due, the said Creedmoor Auto Company is hereby authorized to take possession of the said automobile, and sell the same, by public auction, for cash, first giving twenty days notice of the time and place of such sale, the proceeds of such sale to be applied to the payment of this note, the interest thereon, and the cost of the sale, and the surplus, if any, to be paid to W. M. Eichards.

“Witness my hand and seal, this 18th day of September, 1919.

“(Signed) W. M. Eichaeds (Seal).”

The release executed by W. M. Richards to the defendant, is as follows:

“For and in consideration of the sum of two hundred and fifty dollars, to me paid, the receipt of which is hereby acknowledged, and for no other consideration whatsoever, I, W. M. Richards, do hereby release and forever discharge the Seaboard Air Line Railway Company, and any and all railroads, owned, leased, operated or controlled by it, and its. successors, from all claims and causes of action for or by reason of all injuries of whatsoever nature, including especially to damage and destruction to Ford (five x>assenger) auto, property of W. M. Richards, also any and all personal injuries and claims received by me on or about the 23rd day of October, 1921, at or near Smith Crossing, National Highway, between Neuse and Wake Forest, N. C., Wake County, North Carolina.

“In witness whereof, I have hereunto set my hand and seal this 4th day of November, 1921. (Signed) W. M. Riohakds (Seal).”

Defendant excepted to the judgment herein, and assigns same as error. It does not deny liability for damages, resulting from injuries to said automobile, caused by its negligence; it is conceded that the amount of such damages is $250.00; in defense of the action brought by plaintiff, mortgagee, to recover such sum, defendant pleads payment of said sum to1 W. M. Richards, mortgagor in possession of the automobile, with the consent of plaintiff, at time same was injured; defendant relies upon the settlement with and release by W. M. Richards as a bar to plaintiff’s right to recover.

The question, therefore, presented by this appeal, is whether a settlement made in full for all damages to a chattel by the tort-feasor with the mortgagor in possession, using the chattel with the consent of the mortgagee, is a bar to the action to recover such damages by the mortgagee, whose mortgage is duly recorded at the time the chattel was injured. This question has not been heretofore presented to this Court.

The relationship between plaintiff and W. M. Richards, with respect to said automobile, by virtue of the contract which provides that the title to the automobile sold by plaintiff to W. M. Richards is retained by plaintiff until the note given in part payment of the purchase price has been paid in full, is that of mortgagee and mortgagor; the title-retaining contract is to all intents and purposes a chattel mortgage. Sloan Bros. v. Sawyer-Felder Co., 175 N. C., 657; Piano Co. v. Kennedy, 152 N. C., 196; Hamilton v. Highlands, 144 N. C., 282; Puffer v. Lucas, 112 N. C., 379.

Tbe legal title to tbe automobile remained in plaintiff, as mortgagee, from tbe date of tbe contract to tbe date of its injury by defendant; tbis title drew to it tbe right of possession, certainly after default in tbe payment of tbe note, wben plaintiff was expressly authorized by tbe contract to take possession of tbe automobile and sell tbe same. It has been held by tbis Court that a mortgagee, both before and after default in tbe payment of tbe note or indebtedness secured thereby, has tbe right of possession of tbe mortgaged property, where there is no express provision or necessary implication to tbe contrary. By express provision of tbe contract, tbe right to possession was in plaintiff at time of injury. Johnson v. Yates, 183 N. C., 24; Hamilton v. Highlands, supra, 280; Satterthwaitei v. Ellis, 129 N. C., 67; Moore v. Hurtt, 124 N. C., 28; Hinson v. Smith, 118 N. C., 503.

Plaintiff, tbe owner of tbe legal title, and by reason thereof, entitled to possession of said automobile, permitted same to be and remain in tbe possession of W. M. Eicbards, bis mortgagor; W. M. Bichards, with tbe consent of plaintiff, was driving tbe automobile at tbe time it was injured by tbe negligence of defendant; bis possession was, therefore, rightful and lawful. Tbe rights and liabilities of said mortgagor, in possession of tbe mortgaged property, after default in tbe payment of tbe note, with tbe permission and by tbe consent of tbe mortgagee are those of a bailee. Chicago R. I. & P. Ry. Co. v. Earl, (Ark.), 181 S. W., 925. 5 N. C. L., p. 464, note 20.

It has been held by tbis Court, in an opinion written by Justice Brown, in R. R. v. Baird, 164 N. C., 253, that where a third party has deprived a bailee of tbe possession of tbe property bailed, or has injured it by bis negligence, tbe bailee may recover tbe whole value of tbe property, unless tbe bailor interposes by a suit for bis own protection, and that be will bold tbe excess beyond bis special interest in trust for tbe bailor. 5 Cyc., 223, sec. 8; 6 C. J., 1168, sec. 184. It has been uniformly held that tbe bailee has a right of action against a third party, who by bis negligence causes tbe loss of or an injury to tbe bailed articles, and tbis right has been held to be tbe same, even though tbe bailee is not responsible to tbe bailor 'for tbe loss. 5 Cyc., 210; 6 C. J., 1149, see. 111. 3 R. C. L., p. 138, sec. 62.

It would seem that if a bailee, who has possession only of tbe property, tbe title to which remains in tbe bailor, may maintain an action to recover damages for injury to tbe property, caused by tbe negligence of a third party, a mortgagor, in possession, after default, with tbe consent and by tbe permission of tbe mortgagee, may likewise maintain tbe action. Tbe interest of a mortgagor in tbe property mortgaged is greater than that of a bailee in tbe property bailed. The contract of bailment does not contemplate any change in tbe legal title to tbe property bailed — -it remains in tbe bailor. Tbe mortgagee’s legal title, however, is beld subject to tbe equity of redemption in tbe mortgagor; upon payment of tbe note, or tbe performance of tbe condition by tbe mortgagor, tbe mortgagee’s title is divested and passes to tbe mortgagor.

“Tbe mortgagor in lawful possession, wbetber by tbe terms of tbe mortgage or otherwise, has tbe right to protect bis possession against third parties by appropriate legal remedies, because be is regarded as tbe owner of tbe property mortgaged as against all persons except tbe mortgagee, and it is not necessary in such actions to join tbe mortgagee. Hence, tbe mortgagor may maintain an action to recover for damages to tbe property caused by tbe negligence of a third person.” 11 C. J., 598, sec. 300.

“Tbe mortgagor may, even after default, maintain any action necessary to protect tbe property against wrongdoers. Although on default, tbe legal title and right to possession are in tbe mortgagee, yet as between third persons and tbe mortgagor who is suffered to remain in tbe possession of tbe property, tbe latter has tbe right of possession and such a special interest that be may maintain such actions as are necessary to protect bis possession and bis special right.” 5 E. C. L., 474.

Tbe foregoing statement of tbe law applicable is sustained by tbe Supreme Court of Arkansas in an opinion written by Justice Wood, in Chicago R. I. & P. Ry. Co. v. Earl, 181 S. W., 925. It is there said: “Since tbe mortgagor in possession has tbe right to maintain a suit for damages against tbe wrongdoer for injury to tbe property, it follows as tbe logical, if not necessary, corollary of this doctrine that tbe mortgagor would have tbe right to settle with tbe wrongdoer without suit; also that tbe wrongdoer, having tbe right to settle, and having settled with tbe mortgagor, would not be liable over to tbe mortgagee. This rule is in accord with tbe commendable policy of compromising and adjusting differences without going to law.” See, also, Wilkes v. Southern Railway, 85 S. C., 346, 67 S. E., 292. This case is reported with full' annotations in 137 Am. St. Rep., 890. After reviewing many authorities, tbe annotator says: “A mortgagor’s right to maintain suit for injury or destruction of tbe mortgaged chattel due to negligence of tbe defendant has never been seriously denied.”

Either tbe mortgagee or tbe mortgagor of personal property, may sue to recover tbe property or damages for its conversion, injury or destruction ; as between them, tbe right of tbe mortgagee to tbe property or to tbe recovery is superior to that of tbe mortgagor, but only one cause of action arises from tbe wrongful act of tbe wrongdoer; a settlement by him with either tbe mortgagee or mortgagor, in tbe absence of fraud or collusion, is a bar to tbe action of tbe other. Tbe sum paid or recovered as damages is beld in trust to be applied according to tbe respec-tire rights o£ mortgagee and mortgagor; these rights may be enforced by appropriate legal remedies. Wilkes v. Southern Railway, supra; Donnell v. Deering, (Me.), 97 At., 130. R. R. v. Baird, supra; Blackstone, Book II, chap. 30, p. 453.

The rule with respect to the right of action in the mortgagee or mortgagor is the same as in the case of bailor and bailee; namely, “either the general owner of the property or one having a special interest in it, can maintain trespass or case for an injury to it, or trover for conversion of it. But a judgment recovered by either is a bar to a suit by the other for the same- cause of action, and it would seem that a voluntary payment of damages by the defendant to one would be a bar to a suit by the other.” Jones on Chattel Mortgages, sec. 477a and cases cited.

Registration of the contract between plaintiff and W. M. Richards did not affect the right of the latter, as mortgagor or vendee in possession, to maintain an action to recover damages for the injury to the automobile, caused by the negligence of defendant; nor did it affect the right of defendant to settle with 'W. M. Richards, and by payment of such damages to him to be discharged from further liability on the cause of action which accrued against it because of its wrongful act. Registration affects the rights only of purchasers for value from, or creditors of the mortgagor; as against them, the mortgage or conditional sale is void until registered, as provided by statute. C. S., 2576, 3311, 3312. The title of the mortgagee or vendor is valid from the date of registration, as against purchasers for value or creditors; a tort-feasor is neither a purchaser for value nor a creditor.

It was held by this Court in Johnson v. Yates, 183 N. C., 24, that a mechanic, who repaired an automobile in the lawful possession of the mortgagor, acquired, under our statute, C. S., 2435, a lien upon the automobile for the reasonable value of the repairs, and that such lien was superior to the title of the mortgagee whose mortgage was duly recorded. The mechanic’s right to a lien for the reasonable value of his repairs is not affected by the registration of the mortgage; so we must hold that one, who by his wrongful act, injures the mortgaged property, in the lawful possession of the mortgagor, and against whom a cause of action accrues for damages resulting from his wrongful act, may in good faith pay the amount of such damages, to the mortgagor, and that such payment is a full discharge and satisfaction of the cause of action not only of the mortgagor, but also of the mortgagee. A release by the mortgagor, in possession at the time the cause of action accrues, is a bar to an action by the mortgagee for damages arising from the same cause of action. It would be manifestly unjust to hold that a tort-feasor is liable to damages resulting from the same wrongful act to both, mortgagee and mortgagor. Only one cause of action arises from tbe wrongful act; payment of damages to one wbo may maintain an action to recover same is and ought to be a full satisfaction of liability to another who might have recovered upon the same cause of action. As said by Justice Hydride in Wilkes v. Southern Railway, supra, “It would, indeed, be an anomaly to hold that after condition broken, mortgaged chattels might be taken from the possession of the mortgagor, or injured or destroyed by any trespasser and that the mortgagor could have no redress except through the mortgagee.” When the mortgagor has received payment for the damages, he holds the same in trust for his mortgagee who may enforce the trust by appropriate proceedings.

The assignment of error must be sustained and the judgment herein

Reversed.