Brown v. AVEMCO Investment Corp.

Robert Herriford financed an airplane through a loan from AVEMCO Investment Corp. (AVEMCO) (defendant), secured by an interest in the plane, with a clause accelerating the full loan balance if Herriford transferred or encumbered his interest in the plane. Herriford later leased the plane to Brown and two others (plaintiffs) under an agreement letting them pay down Herriford's AVEMCO debt with an option to buy the plane once it was paid off. When Brown and the others tendered the full remaining balance to AVEMCO and announced they were exercising the purchase option, AVEMCO refused the payment, declared the loan accelerated based on Herriford's lease to Brown, repossessed the plane from Herriford, and later sold it to a third party for $7,000. Brown and the others sued AVEMCO for conversion; the trial court refused to instruct the jury that acceleration required AVEMCO's good-faith belief its security was impaired, and the jury found for AVEMCO. Brown and the others appealed.