Herring v. Creech

84 S.E.2d 886 (1954) 241 N.C. 233

James R. HERRING and wife, Patricia Faye Herring,
v.
C. B. CREECH and wife, Bessie L. Creech; and Virgil A. Creech and wife, Iva B. Creech, Trading and Doing Business as Creech Brothers Auto & Trailer Sales.

No. 594.

Supreme Court of North Carolina.

December 15, 1954.

W. P. Burkhimer, Wilmington, for plaintiffs, appellants.

Aaron Goldberg, Wilmington, for defendants, appellees.

BOBBITT, Justice.

The complaint, in substance, alleges: (1) plaintiffs' ownership and possession of the trailer; (2) the delivery of possession by plaintiffs to defendants as bailees upon the specific terms alleged; (3) the failure of defendants to redeliver possession to plaintiffs upon demand; and (4) the value of the trailer. Plaintiffs sue for the value of the trailer, not to recover possession thereof. Defendants, by answer, admit they do not have the trailer, alleging that Johnson Trailer Sales had repossessed the trailer as authorized by the conditional sales contract.

Plaintiffs, by their allegations, base their case squarely and solely upon defendants' failure to redeliver the trailer to plaintiffs in breach of their alleged duty to do so. There are no allegations that the trailer was in any way damaged while in defendants' possession. Nor are there allegations of negligence, fraud or connivance by the defendants in connection with the repossession of the trailer by Johnson Trailer Sales, or of any advantage accruing to defendants by such repossession.

In an action in the nature of a common law action in trover and conversion, as distinguished from an action in trespass, proof of surrender of the chattel to the true owner is a complete defense. Hostler's Adm'r v. Skull, 1 N.C. 183, Tayl. 152, 1 Am.Dec. 583; Dowd v. Wadsworth, 13 N.C. 130, 18 Am.Dec. 567; Barwick v. Barwick, 33 N.C. 80; Pitt v. Albritton, 34 N.C. 74; Boyce v. Williams, 84 N.C. 275; Vinson v. Knight, 137 N.C. 408, 49 S.E. 891.

In Thompson v. Andrews, 53 N.C. 125, this Court recognized and applied this principle in an action by bailor against bailee. The action was brought to recover the value of wheat left by plaintiff's agent at defendant's mill with instructions to keep it until plaintiff called for it, to which defendant assented. Defendant delivered the wheat to a third party (Pickard), who had demanded it as owner. It was held that delivery to the true owner was a complete defense to plaintiff's action. Battle, J., for this Court, says: "If Pickard were the real owner of the article, could the plaintiff's act of bailing it to the defendant prevent Pickard from claiming it and recovering its value, if it were withheld from him by the defendant? Surely not. No man can be thus deprived of the right of demanding his property from any person who has possession of it and retains it against his will. The refusal of the possessor to deliver it upon such a demand would be evidence of a conversion, for which, if unexplained, the owner would be entitled to recover the full value of his property. If, then, the possessor cannot upon the ground of his being the bailee of another person, resist the claim of the true owner, his surrender of the article to the owner must necessarily be a defense against the action of the bailor, founded upon the charge of a conversion of the property."

An accepted principle in the law of bailments is that, in short phrase, the bailee is estopped to dispute or deny the bailor's title. A complete and accurate statement of this principle is given us by Judge Dobie: "The bailee is not permitted to dispute the bailor's title, at the time of the delivery of the goods to him, by setting up in himself an adverse title to the goods as of that time." Dobie, Bailments and Carriers, sec. 14. Peebles v. Farrar, 73 N.C. 342, cited by appellant, illustrates the factual situation in which the principle applies. There, the plaintiff (landlord) delivered to the defendant (merchant) seven bales of cotton. The defendant agreed to store it in his yard and take care of it for the plaintiff. Thereafter, the defendant sold the cotton and applied the proceeds of sale on a mortgage debt due him by plaintiff's tenant. Plaintiff recovered from defendant the value of the cotton. The matter is put succinctly by Pearson, C. J.: "His Honor * * * instructed the jury that the receipt of the cotton by the defendant of the plaintiff, with an express promise on the part of the defendant that he would take care of the cotton for the plaintiff, constituted the relation of ``bailor and bailee.' There can be no doubt about that. His Honor further instructed the jury that a bailee is not allowed to dispute the title of the bailor and set up title in himself. This is familiar learning. The matter is too plain for discussion." (Emphasis added.) 6 Am.Jur., Bailments, sec. 99; Annotation, 43 A.L.R. page 153 et seq.

The law in other jurisdictions is summarized as follows: "As an exception to the general rule that a bailee is estopped to deny his bailor's title, the weight of modern authority supports the view that where a demand by the true owner, entitled to immediate possession, has been made upon the bailee, and the property has been turned over to him, the bailee, where he acts in good faith and without fraud or connivance, may show the title of the true owner and delivery to him as an excuse for the failure to redeliver to the bailor." 6 Am. Jur., Bailments, sec. 107. See, also, Annotation, 43 A.L.R. page 157 et seq.

If a bailee surrenders possession of a chattel to a person other than the bailor, or as authorized by the terms of the bailment, he does so at his risk and peril for neither good faith nor honest mistake will afford protection. Lawson, Bailments, sec. 22(d). The only defense is that such surrender of the chattel was to the true owner.

If Johnson Trailer Sales was entitled to repossess the trailer on 21 November, 1952, had it been in the actual possession of plaintiffs at that time, it had equal right to repossess the trailer when in actual possession of the bailee, the bailee's possession being in the right of the bailor. For, against a third party asserting ownership, "the bailee can never be in a better situation than his bailor." Story, Bailments, sec. 102. Repossession by a lienholder then entitled to possession as against the bailor is a complete defense to the cause of action alleged in the complaint.

True, proof of the facts alleged in the complaint, together with defendants' admission that Johnson Trailer Sales obtained possession from defendants, nothing else appearing, is sufficient, prima facie, to require submission to the jury. Millers Mut. Ins. Ass'n of Illinois v. Atkinson Motors, Inc., 240 N.C. 183, 81 S.E.2d 416, and cases cited. But when the facts disclosed by plaintiffs' evidence, together with undisputed evidence offered by defendants tending to explain or make clear that which has been offered by plaintiffs, Singletary v. Nixon, 239 N.C. 634, 80 S.E.2d 676, establish that the party obtaining possession was legally entitled to such possession as against plaintiffs, the prima facie case fades out in the light of such facts. Morgan v. Citizens' Bank, 190 N.C. 209, 129 S.E. 585, 42 A.L.R. 1299; Swain v. Twin City Motor Co., 207 N.C. 755, 178 S.E. 560.

Plaintiffs admittedly had defaulted in their payments and the lienholder was entitled to immediate possession. Johnson Trailer Sales repossessed the trailer. In so doing it acted for the bank and in its own behalf. It was obligated to purchase the trailer from the bank by paying therefor the amount of the unpaid balance of the $2,100 debt. It was authorized by the bank to make the repossession. After repossession, Johnson Trailer Sales paid the bank and got from the bank the originals of the $2,100 note and conditional sales contract. These were identified by Mr. Blaine Johnson, owner of Johnson Trailer Sales, offered as a witness by defendants; and these originals were offered in evidence. Plaintiffs' evidence tends to establish rather than challenge Johnson Trailer Sales' right of repossession.

If, as appellant contends, evidence tending to show that plaintiffs received prompt notice of the repossession by Johnson Trailer Sales and that plaintiffs had opportunity and ability to get the trailer by payment of the debt secured by the conditional sales contract but were unwilling to do so, is irrelevant, this is so because the cause of action alleged turns upon whether the lienholder was legally entitled to repossess the trailer rather than upon the lienholder's or the plaintiffs' subsequent conduct in relation thereto.

Conflicting evidence, (1) as to whether defendants agreed to advance payments to the lienholder in order to get additional time to sell the trailer, and (2) as to whether defendants agreed to notify plaintiffs in the event the lienholder should demand possession, is beyond the scope of the pleadings and without significance on the question presented here. Too, conflicting evidence as to whether the repossession by Johnson Trailer Sales was at night, in the absence of defendants, or in daylight, in the presence of one of the defendants, is beside the point; for the determinative question here is the legal right of Johnson Trailer Sales to repossess, not the circumstances of such repossession.

Appellants' other assignments of error have been carefully considered. However, since none deals with a matter that would affect the correctness of the judgment of the court below, discussion thereof is unnecessary.

The plaintiffs proceed on the theory they can recover from defendants the value of the trailer just as if there were no lien (in default) thereon. Such lien is much too significant to be ignored.

For the reasons stated, the judgment of the court below is affirmed.

Affirmed.