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CITIZENS NATL. BANK v. OSETEK

January 18, 1973

CITIZENS NATIONAL BANK and Rex-Noreco, Inc., Plaintiffs,
v.
Michael OSETEK d/b/a Clearview Mobile Homes and Windsor Trails Corporation, Defendants


Levet, District Judge.


The opinion of the court was delivered by: LEVET

OPINION, FINDINGS OF FACT and CONCLUSIONS OF LAW.

Levet, District Judge.

 This is an action for conversion by Citizens National Bank (the Bank) and Rex-Noreco, Inc. (Rex-Noreco) against defendant Michael Osetek (Osetek), the sole proprietor of a retail mobile home sales operation known as Clearview Mobile Home Sales (Clearview), located in Harriman, New York, and the sole stockholder and principal officer of Windsor Trails Corporation (Windsor), which owns and operates a mobile home park (the Park) in Washingtonville, New York. *fn1"

 The claim for conversion arose in September and November of 1970 when Osetek moved five mobile homes located in the Park to the Clearview location and then refused to allow the Bank, through its authorized agents, to repossess the homes pursuant to a first lien security interest. The Bank also has a claim for reasonable costs incurred in dispatching crews in attempts to take possession of the mobile homes.

 On January 11, 1972 plaintiff commenced an action for replevin or, in the alternative, for damages for conversion of five mobile homes in which the Bank had a security interest and which the Bank had sought to foreclose. At trial plaintiff advised the court that the claim for replevin had been abandoned and that the present action is solely for damages resulting from the conversion of the mobile homes by defendant and submitted an Amended Complaint, dated October 18, 1972, deleting the prayer for relief in specie.

 The defendant's Answer and Amended Answer denied the conversion, set up an affirmative defense of laches, *fn2" counterclaimed for amounts allegedly owed for storage of the mobile homes from the date defendant took possession of the mobile homes to the date of trial and for amounts allegedly owed for transporting the mobile homes to the Clearview site.

 After hearing the testimony of the parties, examining the exhibits, the pleadings and the Proposed Findings of Fact and Conclusions of Law submitted by counsel, this court makes the following Findings of Fact and Conclusions of Law:

 FINDINGS OF FACT

 1. This court has jurisdiction over the parties and the subject matter pursuant to 28 U.S.C. § 1332.

 2. Plaintiff Citizens National Bank, a national banking association having its principal place of business in Englewood, New Jersey, makes loans for the purchase of mobile homes secured by a retail installment contract. Plaintiff Rex-Noreco, on behalf of the Bank, engages in the business of placing and servicing such loans. Rex-Noreco also engages in the sale of mobile homes through its subsidiary Little Britain Mobile Homes Sale Inc. (Little Britain). (36, 59-61, 70-75; *fn3" Exs. 1, 2, 3, 4, 5.)

 3. Defendant Osetek is the sole proprietor of a mobile home sales business in Orange County, New York, under the trade name of Clearview Mobile Homes. Osetek is also the sole stockholder and principal officer of Windsor Trails Corporation, which owns and operates a mobile home park, located in Washingtonville (Orange County), New York, known as Windsor Trails Park. (8, 44-46, 107.) 4. Each of the purchasers of the mobile homes was obligated to Little Britain, pursuant to each of the respective sales contracts, to pay the original time sale amount in specified monthly payments for which Little Britain obtained a security interest in the mobile homes. Each contract and the security interest created thereby was assigned by Little Britain to the Bank promptly after each contract came into being. (27-42; Exs. 1, 2, 3, 4, 5.) The Bank purchased from Little Britain the following retail installment contracts entered into between Little Britain and the individual purchasers of the mobile homes: Purchaser Make & Serial No. Original Time Sale Amount Orville Angel 1964 Detroiter #1438 $ 5,351.75 John Barnes 1966 Ritzcraft #3485 $10,901.49 Minetta Freeman 1960 New Moon #0642 $ 6,694.12 George Royer 1965 Liberty #45610 $ 7,773.00 Robert Rysdyke 1962 Rembrant #14011 $ 4,955.89 TOTAL $35,676.25

 (Exs. 1, 2, 3, 4, 5.)

 Within ten days following the making of each contract, the Bank, having received the assignment thereof, duly filed a financing statement showing its security interest in the mobile home covered by such contract with the Office of the Orange County Clerk. (40-47; Exs. 1, 2, 3, 4, 5.)

 5. Each purchaser of the mobile home maintained his home in the Park (Windsor) prior to August 1970. The land upon which each mobile home was physically located was leased by the purchaser from Windsor (Osetek) under an oral month-to-month lease. The oral month-to-month lease did not give Windsor (Osetek), as landlord, any lien or other property interest in any of the mobile homes as security for any rent or other payments due under the lease. (80-88.) I find that Windsor or Osetek, as landlord, did not acquire or obtain any lien or other property interest in any of the mobile homes as security for rent or other payments.

 6. Some time in August 1970 each of the purchasers of the mobile homes defaulted in payments of installments due to the Bank under their respective retail installment contracts. (8-12, 61-75.)

 7. In September 1970 Isidore Goodstein, president of Little Britain, acting on behalf of Little Britain and the Bank, advised Osetek over the telephone that he, Goodstein, would like to take possession of the mobile homes and remove them from the Park. (45, 86.)

 In the telephone conversation Osetek refused to permit employees of Little Britain, as agents for the Bank, to take or obtain possession of the five mobile homes unless the sum of $1,200, representing back rent allegedly owed to Windsor by the purchasers of the five mobile homes, was first paid to Windsor by Little Britain. Goodstein offered to pay $600 to Windsor to settle the matter without litigation and advised Osetek that continued insistence by Osetek on payment of $1,200 would result in litigation pursuant to which the Bank would seek to replevy the mobile homes without the payment of any sums to Windsor. At the time of the telephone conversation Osetek knew that some bank had a first lien security interest in the mobile homes though he did not know the name of the bank. (45, 99-110.)

 8. In spite of Osetek's telephonic refusal to relinquish possession of the mobile homes, Goodstein, on five occasions, sent trucks and men to the Park to attempt to repossess the mobile homes. (37-48.)

 9. With the exception of the mobile home lived in by John Barnes and his family, the other four purchasers of the mobile homes ceased to occupy them shortly prior to the telephone conversation in September between Goodstein and Osetek. All five mobile homes were moved by Osetek from the Park at various times in September and November of 1970 ...


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