Opinion
Rehearing Denied June 12, 1973.
Page 462
John Ira Green, Henry Blickhahn, Alamosa, for plaintiff-appellant and third-party defendant-appellant.
Al H. Haas, Durango, Elizabeth A. Conour, Del Norte, for defendant and third-party plaintiff-appellee.
COYTE, Judge.
The facts in this case are set forth in Morgan v. Freel, Colo.App., 475 P.2d 641, (not selected for official publication), wherein we determined that a bill of sale executed and delivered by plaintiff to defendant was in fact a chattel mortgage given as an incident to a security transaction. We remanded the case for a new trial on a basis consistent with the opinion.
On the new trial, the court found that there was no joint venture endeavor between the parties, that plaintiff was indebted to defendant for certain items of work, and that the chattel mortgage had been foreclosed by defendant on October 3, 1963, by defendant's taking possession of certain equipment. Plaintiff appeals and contends that the evidence does not support the finding of the trial court that defendant had foreclosed his chattel mortgage; but that, if the chattel mortgage were in fact foreclosed, defendant should be required to account to plaintiff; that the trial court erred in not finding that a joint venture existed between the parties which required an accounting; and that the court erred in not awarding plaintiff costs on his prior appeal.
Plaintiff contends that defendant testified in the prior trial that he had not foreclosed, and that such testimony is binding on him. However, in regard to this testimony, the trial court specifically found, as follows: 'The court rejects all of such testimony in that the term, 'foreclose' is technical, was quoted out of context, and is indefinite.' The court further found:
'Defendant testified, and the Court accepts this testimony as a fact, that defendant foreclosed on October 3, 1963 by plaintiff telling defendant to go ahead and take the machinery and equipment; that plaintiff could not redeem. This testimony was controverted by plaintiff, but even though the testimony is conflicting, the Court accepts as true, the testimony that defendant did foreclose with the consent of plaintiff, and defendant thereafter took possession of all of the machinery and equipment except one HD--14 tractor, no. HD--14--C6171, one HD--14 tractor, no. HD--14--C, one 4,000 gallon Fruehauf trailer tank, one 2,000 gallon water tank, and one Lincoln portable welder. The Court is of the opinion that as to these five items, defendant had a reasonable time to take possession of the same, did not do so, and has abandoned them.'
We find no error in these findings of the trial court.
The evidence is uncontradicted that defendant did not sell any of the property on which he had foreclosed, and that he put all property of which he took possession to his own use. The bill of sale which we held to be a chattel mortgage made no provision for the mortgagee to become the purchaser. The same situation prevailed in Miller v. Kaiser, 148 Colo. 510, 366 P.2d 659, wherein the court stated:
'The chattel mortgage contained no provision authorizing the mortgagee to become the purchaser at foreclosure sale. Thus, the defendant did so at his own risk. In handling the mortgagor's property at a foreclosure sale, the mortgagee occupies a fiduciary relationship in the nature of a trustee for the mortgagor. Webber v. Emmerson, 3 Colo. 248. This is not to say that a mortgagee cannot become the purchaser when no authority to do so is given in the chattel mortgage; however, if he does so he is liable to the mortgagor for the fair market value of the property at the time of the sale. Thompson v. Hartman, 72 Colo. 88, 209 P. 635; J. H. Hincke Printing Company v. Bailey, Trustee, 83 Colo. 242, 263 P. 719; Baer Bros. Land and Cattle Company v. Hill et al., 122 Colo. 536, 224 P.2d 944.'
In the instant case plaintiff contends that the value of the property taken by defendant had a value of approximately $30,000, while defendant contends the value was not worth the total amount owed. The trial court made no finding as to the value of the property taken into possession by defendant on October 3, 1963. Defendant occupies a fiduciary relationship toward plaintiff in the nature of a trustee for the mortgagor in the foreclosure of the chattel mortgage. Since he put the property to his own use, it is necessary that he account to plaintiff for the market value of the property at the time of the foreclosure. The fact that the court found that plaintiff had consented to the foreclosure would not be material. Defendant still has the duty to account to plaintiff for the market value of the property taken on October 3, 1963.
Plaintiff's contention that there was no foreclosure was based upon the further contention that there existed a joint venture to which he lent his equipment. This contention was resolved against him by the court when it made the following finding:
'. . . (T)he Court finds from the testimony including that of the plaintiff, there was no joint venture agreement between plaintiff and defendant during the Fall of 1963 and through the year 1964 concerning the engaging in the business of use of heavy equipment for earth moving and other types of custom work in which heavy machinery is used.'
While there was conflicting testimony on this issue, the record supports the finding made by the trial court. Accordingly, this finding will not be disturbed on review.
Plaintiff complains that the trial court did not award him costs on his previous appeal. Our remand order in the previous case provided:
'It is further ordered and adjudged that said plaintiffs in error do have and recover of and from said defendant in error their costs in this court expended, to be taxed.'
This case was originally filed prior to the adoption of C.A.R. 39. The costs should be computed in accordance with R.C.P. Colo. 114, and after computation judgment should be entered accordingly.
The judgments entered by the trial court are affirmed, except for the judgment dismissing plaintiff's complaint requesting an accounting for the value of the property taken into possession by defendant on the foreclosure; and the cause is remanded with directions for the trial court to make findings as to the value on October 3, 1963, of the equipment belonging to plaintiff and of which defendant actually took possession under his act of foreclosing on the chattel mortgage on that date and also compute the amount owing to defendant on that date. If the value of said equipment exceeds the amount owing, the court is directed to enter judgment or grant an offset against defendant's judgment for the amount of the excess value. The trial court is further directed to enter judgment in favor of plaintiff for his costs in accordance with our mandate in the prior appeal.
ENOCH and SMITH, JJ., concur.