Nelson Anderson, Inc. v. McManus

135 N.E.2d 302, 334 Mass. 394, 1956 Mass. LEXIS 680
CourtMassachusetts Supreme Judicial Court
DecidedJuly 6, 1956
StatusPublished
Cited by4 cases

This text of 135 N.E.2d 302 (Nelson Anderson, Inc. v. McManus) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson Anderson, Inc. v. McManus, 135 N.E.2d 302, 334 Mass. 394, 1956 Mass. LEXIS 680 (Mass. 1956).

Opinion

Williams, J.

This is a suit by a mortgagor for an accounting by the mortgagee of the proceeds of a foreclosure sale of personal property and for the assessment of damages for its alleged conversion. Before the trial decrees had been entered dismissing the bill against all the defendants except Jack D. Stone. There was evidence that on November 8, 1947, the plaintiff Nelson Anderson purchased the fixtures, equipment, merchandise, and good will of a restaurant and bar in Whitman from Whitman Restaurant Co., Inc., for $29,600. He paid the seller $10,000 in cash and gave it a chattel mortgage on the property purchased to secure the balance of $19,600. This mortgage contained an itemized fist of the mortgaged goods ending with the notation “Together with all replacements of or substitutions for any of the above articles.” The equity in the property was later conveyed to the plaintiff Nelson Anderson, Inc., a corporation organized and controlled by Anderson and his wife, the plaintiff Catherine Anderson. After one or more mesne assignments the mortgage was purchased by the defendant Jack D. Stone on February 10, 1954. Stone sold the property at foreclosure sale on February 15, 1954, for $4,224.35. The amount then due on the mortgage was $1,013.65.

There was evidence that out of the money received Stone, who was an auctioneer and acted as such at the sale, retained $422.44 as a ten per cent commission for his services in that capacity, $75 for the expense of “lotting” the goods for sale, and $3.60 for the cost of signs. He paid to himself $1,013.65, the amount due on the mortgage, $200 to an attorney for services in instituting foreclosure proceedings, $80.40 to another attorney for services in connection with the sale, and $100 for newspaper advertising. To two creditors of the plaintiff corporation by whom he *396 had been served with trustee process he paid $274.73 to obtain his discharge as trustee. There was a second mortgage on the property dated October 10, 1953, which included a refrigeration unit held by the corporate plaintiff under a contract of conditional sale and “all . . . equipment which . . . [has] hereafter been acquired . . . either in addition to or in substitution of the foregoing.” Stone paid to the holder of this second mortgage $1,477.91 which was the amount due upon it with an attorney’s fee of twenty per cent as provided by the mortgage note if upon default “this note is referred to an attorney for collection.” Finally he paid to himself $387.96 the balance due on the above contract of conditional sale which he had purchased at the same time he took the assignment of the mortgage. He testified that after these payments there remained in his hands $190.27.

In a report of material facts the judge found the sale to have been properly conducted and as to the credits claimed by Stone disallowed only the payment of $200 to one of the attorneys. He found that a fair and reasonable charge for the attorney’s services was $50, and that the plaintiffs were entitled to be paid by Stone $190.27 plus $150 the amount of the overpayment to the attorney. He further found that “Just before the sale the plaintiffs notified the auctioneer that there was property on the premises not covered by the mortgage”; that “The auctioneer paid little or no attention to the statement, but told the plaintiffs they had no right on the premises and to get out”; that “At the sale property belonging to the plaintiffs were sold that were not covered by the mortgage”; that they “were neither replacements or substitutions”; that they were of value $2,390; and that the plaintiffs were entitled to this amount. A final decree was entered establishing the indebtedness of Stone to Nelson Anderson, Inc., in the sum of $2,730.27 with interest from the date of the filing of the bill and costs. From this decree the defendant Stone, hereinafter referred to as the defendant, appealed.

The first question for decision is the correctness of the *397 judge’s findings in relation to the conversion by the defendant of certain property of the plaintiff corporation. This property was not described by the judge in his findings but we think that necessarily he had reference to the property which Anderson contended in his testimony was not covered by the mortgage. The articles comprising this property and their respective values at the time of the foreclosure sale, according to Anderson, were as follows: two Ajax ice makers, $1,500, one electric potato peeler, $75, one Ajax electric ice shaver, $150, one Wyotte cream dispenser, $25, one dishwashing machine, $425, one steam cooker, $45, one laminated shell for baking, $20, one electric neon sign, $300, six dozen champagne glasses, $12, twelve dozen sherbet glasses, $3, and ash trays, grapefruit and oyster forks and cups, $10. There was evidence that these articles were acquired after the mortgage was executed. It appeared that the Ajax ice makers were for the purpose of quantity manufacture of ice cubes which previously had usually been purchased. The use of the electric potato peeler and ice shaver superseded the former procedure of peeling potatoes and shaving ice by hand. The cream dispenser was an appliance dissimilar to any item listed in the mortgage. The electric dishwasher was not a replacement of the listed “Crescent dishwashing machine with five wood racks.” That machine had been replaced by another which admittedly was covered by the mortgage. The one in question being inadequate to carry the load was kept only for a spare. The neon sign which read “Nelson Anderson — Fine Foods” was added to the signs already in place, which continued to be used. The other articles represented additional equipment. We think the judge was not plainly wrong in finding from the evidence that these articles were not replacements of or substitutions for articles listed in the mortgage. They seem rather to have been in the nature of additional equipment. If they were not within' the class of after acquired property contemplated by the mortgage, title to them did not pass to the assignee of the mortgage on his taking them into possession. See Blanchard v. Cooke, *398 144 Mass. 207; Bennett v. Bailey, 150 Mass. 257, 260. The unauthorized taking of possession by the defendant and his subsequent sale of the articles constituted a conversion (Donahue v. Leventhal, 302 Mass. 393, 394) and damages in this suit should be determined as if it were an action for conversion. Castro v. Linchitz, 297 Mass. 381, 387-388.

The defendant contends that, if it be so held, he should be credited with the amounts paid to the mortgagees and the "encumbrancers” by trustee process as paid for the benefit of the plaintiffs. He relies upon Pierce v. Benjamin, 14 Pick. 356, 361, where, a tax collector having made a technically illegal seizure of the plaintiff’s property for taxes and paid the taxes from the proceeds of the sale, it was said that "when the property itself has been sold and the proceeds applied to the payment of the plaintiff’s debt, or otherwise to his use . . . the facts may be shown in mitigation of damages.” This rule was applied in Kaley v. Shed, 10 Met. 317, where the converted property was taken from the converter by attachment in an action against the plaintiff. See King v. Bangs, 120 Mass.

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Bluebook (online)
135 N.E.2d 302, 334 Mass. 394, 1956 Mass. LEXIS 680, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-anderson-inc-v-mcmanus-mass-1956.