Summary
In Cities Service Oil Co. v. Burkett (1964), 176 Ohio St. 449, 200 N.E.2d 314, this court held that a chattel mortgagee, who fails to comply with the notice requirements of Section 1319.07, Revised Code, is precluded from collecting from the chattel mortgagor a deficiency on the indebtedness secured by the chattel mortgage.
Summary of this case from Mutual Finance Co. v. PolitzerOpinion
No. 38389
Decided July 8, 1964.
Chattel mortgages — Repossession and sale without foreclosure — Action for deficiency judgment — Ten-day notice to mortgagor required — Section 1319.07, Revised Code — Evidence — Proper time for introduction — Permitted on cross-examination of adversay's witness, when — Order in which evidence produced discretionary with court.
1. Ordinarily, the proper time for the introduction of evidence in support of a litigant's own case is during the introduction of his evidence in chief and not on the cross-examination of his adversary's witness, but, where, upon cross-examination of such adversary's witness, within proper limits and as an incident thereof, testimony is adduced which tends to establish such litigant's case, it may be allowed to stand and be considered. ( Legg v. Drake, 1 Ohio St. 286, considered and examined in light of Section 2317.52, Revised Code.)
2. Generally, the order in which evidence shall be produced on the trial of an action lies within the sound discretion of the court, and, unless such discretion is patently abused, no reversible error occurs.
3. Under the provisions of Section 1319.07, Revised Code, an action by a mortgagee against the mortgagor for a deficiency judgment following repossession and sale of mortgaged personal property without foreclosure may not be successfully maintained, where the mortgagee failed to give the ten-day written notice to the mortgagor as required by such statute, and it is immaterial that the mortgagor voluntarily surrendered the mortgaged property.
APPEAL from the Court of Appeals for Lorain County.
This cause originated in the Court of Common Pleas of Lorain County when the Cities Service Oil Company, a Delaware corporation, brought its action against Dean Burkett and Mary T. Burkett to recover the sum of $3,521.21, with interest, on a promissory note with warrant of attorney, dated October 24, 1956, a copy of which is attached to the petition. Such note on its face is for $5,000 and shows that it is secured by a chattel mortgage.
In their separate answers, defendants allege as a second defense that the note sued upon was secured by chattel mortgage, that plaintiff seized property covered by the mortgage and sold or otherwise disposed of same without foreclosure proceedings and without notice to defendants, and that plaintiff is now attempting to collect a claimed deficiency contrary to the terms of Section 1319.07, Revised Code, which in its pertinent parts recites:
"Any chattel mortgagee * * * who takes goods, chattels, or property, covered by the chattel mortgage out of the possession of the mortgagor * * * by seizure, or repossession, and sells or otherwise disposes of the same before foreclosure of such mortgage in a court of record, shall not pursue or collect any deficiency upon such mortgage or the obligation secured thereby, from such mortgagor * * * any stipulation in such mortgage, or agreement, or provision of law to the contrary notwithstanding. This section does not apply if the mortgagee * * * gives at least ten days' written notice to the mortgagor * * * personally, or by mailing it to him by registered mail, at the address of the mortgagor given in the mortgage, of the time, place and the minimum price for which the mortgaged property may be sold, together with a statement that the mortgagor may be held liable for any deficiency resulting from said sale."
In its reply, plaintiff, among other things, describes the transaction (the leasing of a gasoline filling and service station and the furnishing of equipment and supplies for its operation) which gave rise to the execution of the note and chattel mortgage and alleges that defendant Dean Burkett sold a quantity of the mortgaged goods, chattels and property and voluntarily surrendered to plaintiff the remainder for credit in agreed amounts against the indebtedness, and that the sum sued for represents the balance due and owing plaintiff on the promissory note.
Upon the trial, plaintiff called as its witness one of its representatives who identified the promissory note sued on and described the circumstances under which it was executed. On cross-examination, this witness, over objection, admitted that the note was secured by chattel mortgage, that, upon default of the defendants in the payment of the note, the mortgaged property was taken by plaintiff without court proceedings and sold by it without notice to defendants.
When plaintiff rested its case, defendants moved for a directed verdict in their favor on the ground that the evidence clearly shows that plaintiff is attempting to collect a deficiency upon a note secured by chattel mortgage in contravention of the provisions of Section 1319.07, Revised Code. The court sustained the motion, directed a verdict for defendants and entered judgment accordingly.
An appeal to the Court of Appeals on questions of law resulted in a reversal of the judgment below as contrary to law and a remand of the cause for further proceedings. As shown by its opinion, this determination of the Court of Appeals was based upon error by the trial court in refusing to permit plaintiff's witness and its representative, familiar with the value of the mortgaged property, to testify as to the value of various items supplied by plaintiff to the defendant Dean Burkett and in permitting defendants, over objection, to establish their affirmative defense in the cross-examination of plaintiff's witness. In reaching such conclusion, reliance was placed on the early case of Legg v. Drake, 1 Ohio St. 286, 292, where it is said in the opinion:
"* * * a party cannot, before the time of opening of his own case, introduce it to the court or jury by the cross-examination of the witnesses of his adversary * * * to allow a party defendant to do so * * * would be giving him an undue advantage."
Allowance of a motion to certify the record places the cause before this court for disposition on the merits.
Messrs. Levin Levin, for appellee.
Mr. Dan K. Cook, for appellants.
The first question before this court for decision is whether the trial court committed prejudicial error in permitting defendants on the cross-examination of plaintiff's witness to show that the mortgaged property was surrendered to plaintiff, and that it was sold by plaintiff without written notice to defendants.
Undoubtedly, the proper time for the introduction of evidence in support of a litigant's own case is during the introduction of his evidence in chief, and it is usually improper during the cross-examination of an adversary's witness to elicit evidence which goes to establish such litigant's case.
This rule, however, does not preclude cross-examination within proper limits, and, where during such cross-examination and as an incident thereof, testimony is adduced which tends to establish a defense, it may be allowed to stand and be considered.
Another rule of general recognition and acceptance is that the order in which evidence shall be produced lies within the sound discretion of the court, and, unless such discretion is patently abused, there is no prejudicial error. 52 Ohio Jurisprudence (2d), 557, Section 72; 53 American Jurisprudence, 103, Section 116; and 88 Corpus Juris Secundum, 206, Trial, Section 96.
Thus, in the court's discretion, a party may be permitted or denied the right to introduce evidence in support of his case during the cross-examination of his adversary's witness. 88 Corpus Juris Secundum, 211, Trial, Section 100.
To the same general effect is the fourth paragraph of the syllabus of Bean v. Green, 33 Ohio St. 444, which reads:
"Whether testimony will be admitted out of time, in the progress of a trial is a question addressed to the sound discretion of the court, and where that discretion is exercised without abuse of the power, the mere irregularity of its admission is not a sufficient ground for the reversal of a judgment."
In Legg v. Drake, supra ( 1 Ohio St. 286, 292), it is stated in the opinion:
"The order in which each party may introduce his evidence on the trial of a cause, must, to a great extent, rest in the discretion of the court. But a defendant has no right to go into the distinct matter of his defense, by way of avoidance, before the plaintiff has rested. And to allow a party defendant to do so in the cross-examination of the plaintiff's witnesses, would be giving him an undue advantage."
The "undue advantage" referred to would be in permitting the cross-examiner to use the witness' testimony to support the cross-examiner's case without making the witness his own. As a result, the cross-examiner would not be bound by any portion of the witness' testimony relating to the cross-examiner's side of the case and the opposing party could not cross-examine the witness with respect to such testimony. Thus, in following and explaining Legg v. Drake, supra, it is stated in paragraph one of the syllabus of Smith v. State, 125 Ohio St. 137, 180 N.E. 695:
"A witness * * * may be properly cross-examined as to all relevant facts developed by the examination in chief and as to such other relevant facts as the party calling such witness could have inquired in order to make out his case. if the cross-examiner goes beyond this scope, he makes the witness his own, is bound by his testimony, and as to such matter subjects the witness to cross-examination by the party calling him."
However, in 1957, Section 2317.52, Revised Code, was enacted. That statute reads:
"When the action or proceeding relates to a transaction or occurrence in which it has been shown or it is admitted that the adverse party acted either in whole or in part through an agent or employee, such agent or employee of the adverse party may be called as a witness and examined as if under cross-examination upon any matters at issue between the parties which are shown or admitted to have been within the scope of such agent's or employee's authority or employment.
"The party calling for such examination shall not thereby be concluded but may rebut such agent's or employee's testimony by counter-testimony.
"The party whose agent or employee is called as a witness by the adverse party and whose agent or employee is examined as if under cross-examination shall not thereby be concluded but may rebut such agent's or employee's testimony by counter-testimony."
The cross-examination held erroneous by the Court of Appeals in the instant case was therefore authorized by the quoted statute.
Consequently, there is no sound reason why, in the exercise of discretion, the trial court herein should not have admitted the testimony complained of when the witness was testifying for plaintiff instead of requiring the witness' later appearance on the presentation of defendant's defense.
In the instant case, the promissory note sued on and introduced in evidence bears the notation that it is secured by chattel mortgage; the amount claimed by plaintiff is less than the face amount of the note; plaintiff's witness was thoroughly familiar with the entire transaction between plaintiff and defendants covering the execution of the note, the giving of the chattel mortgage and the reclamation of mortgaged property; and the cross-examination of this witness took a natural course when inquiry was made of him concerning the complete transaction. True, counsel for plaintiff objected to the extensive cross-examination, and the trial court might have sustained the objection, but, in the circumstances of this particular case and under the provisions of Section 2317.52, Revised Code, we think no prejudicial error was committed in allowing full inquiry of plaintiff's witness during his cross-examination. A result of allowing the testimony to be given during cross-examination was to save the time of the court and that of all others concerned and to shorten the trial. Therefore, it is our conclusion that no reversible error occurred, and that there was no real prejudice to plaintiff.
Next, plaintiff claims that since the mortgaged property was voluntarily surrendered by defendant Dean Burkett at at least unchallenged valuations as to different items, Section 1319.07, Revised Code, is without application. it is plain that the amount sued for by plaintiff represents a deficiency, and the statute referred to makes no distinction between mortgaged property voluntarily turned over to a mortgagee and that which is obtained in other ways. The statute is explicit in providing that no deficiency is collectible from a mortgagor, unless the mortgagee "gives at least ten days' written notice to the mortgagor," in the manner prescribed, "of the time, place and the minimum price for which the mortgaged property may be sold, together with a statement that the mortgagor may be held liable for any deficiency resulting from said sale." Obviously, such notice is required to enable the mortgagor to protect and conserve his financial interest in the best manner he can.
The required notice was not given in the instant cause, and the trial court held that the failure to give it was, under the statute, fatal to plaintiff's case. The same view was entertained by the Court of Appeals for Columbiana County in the case of Lisbon Diesel Supply, Inc., v. Clement, 93 Ohio Law Abs., 461 (Ohio Bar for May 11, 1964), in which it was held that an action for a deficiency judgment after repossession of a mortgaged chattel may not be successfully maintained, where the mortgagee failed to give the notice demanded by Section 1319.07, Revised Code, notwithstanding that the mortgagor voluntarily redelivered the chattel to the mortgagee and knew that it was to be resold. This court agrees with such conclusions.
For the reasons stated, the judgment of the Court of Appeals is reversed, and that of the Court of Common Pleas is affirmed.
Judgment reversed.
TAFT, C.J. MATTHIAS, O'NEILL, GRIFFITH, HERBERT and GIBSON, JJ., concur.