Brewer v. Ford

7 N.Y.S. 244, 61 N.Y. Sup. Ct. 116, 26 N.Y. St. Rep. 888, 54 Hun 116, 1889 N.Y. Misc. LEXIS 1033

Opinions

Barker, P. J.

The trial court directed a verdict in the defendant’s favor. This, I think, was error. The plaintiff was the owner of the property in question on the 19th day of January, 1880. On that day he, by an instrument in writing, agreed to sell the same with other property to the Clark Manufacturing Company, doing business in the city of Buffalo, at the agreed price of $9,000. The purchaser, in pursuance of the terms of the agreement, gave its negotiable promissory notes, payable on future dates, and bearing interest. The contract contained this provision: “B. F. Brewer agrees to sell to the Clark Manufacturing Company a certain amount of machinery, and. •all patterns pertaining to lock business. * * * Said machinery shall be the property of said Brewer, in care, custody, and charge of the said Mix Brothers until paid for. Said Brewer agrees to accept in payment of said .purchase, as conditioned above, $500 on the 1st day of April, prox.; $500, with interest on the whole amount unpaid, on the 1st day of April, 1881; $1,000 on the whole amount unpaid, on the 1st day of April thereafter until the same is paid. Notes to be given for the amounts. And the aforesaid manufacturing company agrees to make the above-described purchase upon the conditions therein set forth, recited for the faithful performance of the above-written contract and agreement.” Mix Bros., referred to in the agreement, were lock-makers, and immediately after the contract was executed they went into the employment of the manufacturing company, and were engaged in the use of the machinery in question which had been delivered to the purchaser. In April, 1887, the manufacturing company was insolvent, and made a general assignment of all of its property to the defendant, Ford, for the benefit of its creditors. At that time three of the notes, of $1,000 each, remained unpaid, one of them past due and the others would fall due in one or two years thereafter. When the assignment was ■executed, a part of the property and machinery sold under the said contract had been lost, consumed, sold, or destroyed, and that which remained was included in the schedule attached to the assignment, and was delivered into the possession of the assignee, the defendant. The value of this portion of the property had greatly depreciated, and the proofs tended to show that its market value was less than the amount of the unpaid notes. Before the •commencement of this action the plaintiff demanded the property of the defendant, who refused to give up his possession. The plaintiff was the owner of the notes, and had them in court during the trial. At the close of the evidence the court held that by the terms of the contract the title to the property remained in the plaintiff, but that he was not entitled to recover in this action the value of the property mentioned unless he unconditionally delivered up the unpaid notes for cancellation. This the plaintiff refused to ■do, but he offered to place the notes in the hands of the clerk of the court, to remain in his possession for the purpose and with the authority to indorse upon the notes as payment thereon such sum as the jury should, in their verdict, fix as the value of the property, and if the amount of the verdict equals the amount of the notes the notes should be canceled and delivered to the defendant in this action, or to the Clark Manufacturing Company, or to such person or persons as the court may direct. The court thereupon directed a verdict in the defendant’s favor.

By the terms of the agreement the title did not pass to the vendee, but it was expressly reserved to the vendor until paid for. The contract on the part of the vendor was wholly executory. The words used are, “ agrees to sell,” which excludes all claim that it was a sale in prcesenti. It was lawful for the parties to make an agreement to that effect. It is manifest that the object which the parties had in view was to give the plaintiff security on the property until the purchase price was fully paid, for it is distinctly stated that the purchaser consented to all the conditions of the contract, for the purpose of securing “the faithful performance of the agreement,” and, as if to emphasize that the title to the property was not to pass until paid for, the-vendor bound himself in the sum of $500 for the faithful performance of the agreement. The vendees gave no other security than their promise, and it is reasonable to suppose that the contract was put in the form in which it was executed, that the plaintiff should retain the title as a security for the payment of the purchase money. The plaintiff, in this controversy with the-defendant, stands on the terms of the agreement as the basis of his right of action, and we must give effect to the intention of the parties as expressed in the contract. It was undoubtedly understood when the agreement was made that the vendee should have the use of the property and machinery in its manufacturing establishment, although no such intention is expressed in the agreement. But such an arrangement was not inconsistent with the condition expressed on the face of the contract, that the title should not pass to the vendee until the notes were all paid. When default was made in the-payment of the notes which matured April 3,1887, the plaintiff had the right to take possession of the property as against his vendee, for the purpose of preserving his security, and enforcing his right to have the property devoted to the payment of his debt. If he could not retake possession for that purpose, then the security was practically valueless, and the retention of the title in himself was of no avail. The various decisions'^ this state as to the-character and effect of contracts similar to the one now before us sustain the propositions above stated. In Herring v. Hoppock, 15 N. Y. 409, it was determined that one who has bargained for the purpose of a chattel, and agreed to pay therefor at a future day, and has received a delivery under an agreement that no title should vest in him until payment, acquired no title, and that a creditor of such person, who had levied an execution thereon, was liable to the owner for the conversion of the chattel. This proposition is decisive of the present case, for the defendant occupies exactly the same position as his assignor did at the time he made the assignment. The case of Ballard v. Burgett, 40 N. Y. 314, fully recognized the doctrine stated in the-case last cited, and all the subsequent decisions are to the same effect, and the following may also be cited: Cole v. Mann, 62 N. Y. 1; Austin v. Dye 46 N. Y. 500; Strong v. Taylor, 2 Hill, 326; Harkness v. Russell, 118 U. S. 663, 7 Sup. Ct. Rep. 51; Mott v. Bank, 22 Hun, 354; Sargent v. Metcalf 5 Gray, 306; Manning v. Keenan, 73 N. Y. 45. In denying the plaintiff’s-motion for a new trial, which was made before the learned judge who presided at the court, it was admitted that by the terms of the agreement the sale was conditional, and that no title passed to the vendee, and that it remained in the vendor until full payment of the purchase price; but he expressed the opinion that, in default of payment at the time stipulated, the vendor had one of two remedies, either of which he might pursue, but not both: that he could sue for the purchase money unpaid, and, if he did so, that would be an election on his part that the title should vest in the vendee at once, or he could bring an action to regain the possession óf the property, or to recover its value from the wrong-doer, who may have converted it to-his own use, and by so doing would be regarded as having terminated the agreement and canceling the vendee’s promise to pay for the property. This view of the legal effect of the contract denies to the vendor the full benefit of his agreement, and deprives him of the right to enforce the vendee’s promise to pay for the property, and at the same time retain the title thereto, as a security for the performance of the vendee’s promise. In other words, thereto, as stated, would be equivalent to a denial of the validity of such contract.

The rights asserted by the plaintiff, that under the contract he may retain the title to the property, and at the same time enforce the vendee’s promise- to pay the purchase price, are not inconsistent, and both propositions have their foundation in the agreement, which was in all respects lawful as between the parties thereto. Suppose A. should agree to sell to B. an article of personal property, at a fixed price, which B. agreed to pay at a future day, under a stipulation that the possession of the property should remain with the vendor, and the title not pass to the vendee until full performance of the buyer’s promise to pay for the same, no one would assert, I think, that such an agreement was unlawful, and could not be enforced by a resort to proper legal remedies. The vendor could maintain an action on the vendee’s promise to pay, and hold the title to the property, and retain the possession as a security for the payment of the judgment. Such an action would not be inconsistent with the right of the vendor to retain the title and possession until the vendee performed his promise. If it should be held that an action for the purchase money under such an agreement was inconsistent with the title in him, it would be in effect declaring the contract nugatory as to the vendor. So in the case before us, if the plaintiff cannot hold onto the title to the property without canceling the vendee’s promise to pay for the same, he is deprived of one of the terms of his contract, which is admitted to be lawful in every respect. The case we are considering does not apply to that class of cases where the rule is well settled that, when a contract is induced by a fraud, that fact does not render it void, or prevent the property from passing, but gives the defrauded party a right, on discovering the fraud, to elect whether he will continue to treat the contract as binding, or disaffirm it and resume the possession of the property. In such cases the contract continues in force until the party defrauded has determined by his election to avoid it, and when once rightfully determined it is determined forever. Moller v. Tuska, 87 N. Y. 166; Morris v. Rexford, 18 N. Y. 552; Powers v. Benedict, 88 N. Y. 605. These are the cases cited by the learned counsel for the respondent in support of his position. Where the vendor, by the terms of his contract of bargain and sale, intends that the title shall pass to his vendee, and delivers to him the possession, and seeks thereafter to avoid the contract and reclaim the possession of his property, for the reason that the vendee perpetrated a fraud upon him, he must put the purchaser, before he can recover the property, in the same position that he was before the contract was made, and that requires him, if any portion of the money has been paid, to return it to him. In that class of cases the vendor proceeds as if no contract was ever made by reason of the vendee’s fraud. If, with knowledge of the fraud, he sues the vendee on the contract “of sale, it is an affirmance of the contract, and he cannot thereafter pretend that the contract was void. There is another class of cases to which the one at bar is nowise allied in principle or circumstance; that is, where there is a bargain and sale of goods and a delivery to the buyer with the express or implied understanding of immediate payment. Such a delivery is deemed to be conditional, and subject to revocation on the refusal of the purchaser to pay the price. In such a case, if the vendor fails to get payment, he may consider the delivery absolute, and rely on the responsibility of the vendee, or he may disaffirm and reclaim his property; but he cannot do both of these things. The remedies are not concurrent, and, th§ choice between them once being made, the right to follow the other is gone forever. In the language of Judge Comstock, in Morris v. Rexford, 18 N. Y. 557, “the law tolerates no such absurdity as the seizure of goods by a person claiming that he has never sold them and an action by the same person, founded on the sale and the delivery of the same goods, for the recovery of the price. In peculiar circumstances a party may take either one of these courses, but, having rightfully made his choice, the right to follow the other is extinct and gone.” It will be observed in that class of cases no credit is given, nor any agreement that the title to the property shall remain in the vendor until paid for. In this case the goods were sold on credit, with the agreement that the title should not pass until the goods were paid for. It is this provision of the contract which distinguishes it from the cases cited in support of the respondent’s argument. Judgment reversed. Verdict set aside. New trial granted, with costs to abide event.

Dwight, J., concurs.