Endicott v. Digerness

205 P. 975, 103 Or. 555, 1922 Ore. LEXIS 166

Opinion

BEAN, J.

1. Defendant having answered to the merits and prayed for equitable relief, a court of equity has jurisdiction of tbe cause. Plaintiff proceeds upon tbe contention tbat defendant is estopped from asserting tbat be is tbe bolder of tbe title to any of tbe property in controversy; tbat be waived title to tbe property by causing tbe action at law to be commenced by tbe First National Bank of Silverton against tbe Comstock-Brown-Alm Company for tbe recovery of tbe $2 per thousand feet of lumber manufactured and sold under tbe terms of tbe contract. This was after defendant bad taken possession of tbe mill. It is also contended by tbe plaintiff tbat tbe prosecution of tbe action by tbe bank, as tbe assignee of tbe defendant, was splitting an entire cause of action.

2. It will be remembered tbat tbe contract provided tbat payment should be made to tbe First National Bank of Silverton, Oregon, for lumber manufactured by the mill and sold, at the rate of $2 per thousand feet. While this amount was to be credited on the note of the purchasers, the contract clearly provides for the collection of the $2 per thousand feet by the bank, and as far as the remedy availed of by the action, the Comstock-Brown-Alm Company and its assignors, by the terms of the contract, consented to the bringing of such action. Such proceeding was a mere carrying out of the contract.

3. The rule against splitting a cause of action is for the protection of the debtor. Therefore he may waive its benefits by expressly or impliedly consenting to the institution of separate actions upon a single demand: 1 C. J., p. 1109, § 280. However, only one action has thus far been instituted by the defendant, or in his behalf upon the contract or note. The rule against splitting by assignment is inapplicable where the assignment like the one in the present case is of a separate and distinct cause of action: 1 C. J., p. 1110, § 283; Krebs Hop Co. v. Livesley, 59 Or. 574, 581 (114 Pac. 944, 118 Pac. 165, Ann. Cas. 1913C, 758).

4. The rule laid down in 1 Mechem on Sales, Section 615, which has been adopted and followed by this court is, that where the vendee in a contract of conditional sale is entitled to the possession of the personal property so sold until default, the vendor who would take advantage of a default has a choice of remedies.

“1. He may treat the contract as rescinded, upon the default of the buyer, and recover his goods. If he does this, he has no other remedy.

“2. He may treat the contract as in force but broken by the vendee; he may retake and keep the goods as his own, and, if the contract imposed upon the buyer an absolute obligation to buy, he may recover of the buyer damages for the breach of his agreement to buy and pay for tbe g’oods. The measure of damages will ordinarily be the difference between the contract price and the market value of the goods at the time and place of default.

“3. He may, if the contract contains an unconditional agreement on the part of the vendee to pay, waive a return of the goods, treat the contract as executed on his own part, and recover from the vendee the agreed price of the goods.

“4. He may, in some cases, if the contract permits it, without rescinding or terminating the contract, resume possession of the goods, hold them subject to the contract, and then enforce performance by the vendee, who, upon such performance, will be entitled to restoration of the goods.”

See Herring-Hall-Marvin Co. v. Smith, 43 Or. 315 (72 Pac. 704, 73 Pac. 340); McDaniel v. Chiaramonte, 61 Or. 403, 408 (122 Pac. 33); Francis v. Bohart, 76 Or. 1, 5 (143 Pac. 920, 147 Pac. 755, L. R. A. 1916A, 922). In some states a choice of only two remedies is given such a vendor, and in others an election of only three remedies is accorded the seller upon the breach of a contract of conditional sale by the purchaser, leaving out the fourth remedy mentioned above.

It is claimed by defendant that under the fourth remedy mentioned he took possession of the goods with the assent of the vendee, and holds them subject to the contract; and that the enforcement of the performance by the vendee in the action brought by the bank was within his rights. It is conceded that the commencement of any litigation that can proceed only on the theory that title has passed to the purchaser on waiver by the seller constitutes an election which the seller cannot revoke: Francis v. Bohart, 75.Or. 1, 6 (143 Pac. 920, 147 Pac. 755, L. R. A. 1916A, 922); Whitney, v. Abbott, 191 Mass. 59 (77 N. E. 524); Bierce v. Hutchins, 205 U. S. 340 (51 L. Ed. 828, 27 Sup. Ct. Rep. 524, see, also, Rose’s U. S. Notes).

Does recovery of the goods bar an action for the price? The authorities on this question are apparently not harmonious. This seems to be on account of there being various forms of conditional sales contract. It is stated in 1 Mechera on Sales, Section 621, thus:

“But does it necessarily follow that a recovery of the property destroys the consideration for the contract, or in effect rescinds it? As has been seen before, these agreements may usually be separated into two parts — an executory agreement to sell, and a bailment of the property. Either of these is a valid contract and may stand alone. May not the latter be withdrawn without necessarily defeating the former? Clearly it may be by express terms of the contract; but without express provisions to that effect, may not the contract be so interpreted as to permit of this result? This must depend upon the contract. If by a fair interpretation of the contract the seller may, upon default in payment or otherwise, have a right to resume possession, may he not do so without rescinding, but holding the property still subject to the contract, ready to be restored if payment is made ? ”

5. Referring to the general features of the contract in question, the vendor agreed to sell the property on condition that the vendee would pay the purchase price within one year. The vendee agreed to purchase the same, and absolutely promised to pay as stipulated. Title to the property was to remain in the seller until the full amount of the purchase price was paid. The provisions of the contract contemplated that the vendees should operate the mill and make collections for lumber sold through the bank and pay the seller $2 per thousand feet for each thousand feet sold and collected. It was not provided by the contract that the purchasers should retain and use the machinery for a year until the note was due, but in order that the seller would have some compensation for the use and wear of the mill it was agreed that the $2 per thousand should be paid as soon as collected. The contract is unlike that considered in the case of Francis v. Bohart, 76 Or. 1 (143 Pac. 920, 147 Pac. 755, L. R. A. 1916A, 922), where upon a breach the plaintiff had a single “cause of action arising out-of a contract single in its terms.” In the present case the contract for the payment for the $2 per thousand is separate and distinct from the note given for the purchase price. When the 637,000 feet of lumber was manufactured by the use of the sawmill and sold and the proceeds thereof collected, there was due to the seller or his authorized collector, the bank, the sum of $1,274. The Comstock-Brown-Alm Company, the assignee of the purchasers, recognized that this amount was due by the payment of $191.28. The action, of the bank for the collection of the balance of the $2 per thousand was not inconsistent with the right of Digerness to insist that the title to the machinery still remain in him. When the $2 per thousand became due under the terms of the contract Digerness or his assignee was entitled to receive the same, whether the balance of the purchase price was ever paid and the title to the goods passed to the Comstock-Brown-Alm Company, or not. The voluntary payment by the company did not change the title to the personal property. If the company had voluntarily paid all of the $1,274 when due the title to the machinery would not have vested in it, but would have remained in Digerness until the full purchase price was paid. His conduct, therefore, in attempting the enforcement, by an action of law, of the payment of the balance of the $2 per thousand was not inconsistent with the position that the title to the sawmill was not yet in the purchaser.

6. By the terms of the contract the purchasers-gave him the right to have the $1,274 and still keep his title until the note was paid. The 'defendant’s authorizing the bringing of the action was not an election between two inconsistent remedies, but was an act perfectly consistent with his claim to retain his title. It was all in strict compliance with the stipulation of the contract. A large part of the contract price still remains due, and the defendant has the right to retain the possession of the personal property which he had taken prior to the action. He in no way thereby forfeited his right to retain such possession. The case comes fairly within the fourth remedy above referred to, which has long been sanctioned by this court. The purchasers, or those holding under them, are entitled to the possession of the personal property upon compliance with the terms of the contract: Haynes v. Temple, 198 Mass. 372 (84 N. E. 467); 20 C. J., p. 9, § 8; International Harvester Co. v. Bauer, 82 Or. 686 (162 Pac. 856).

In Tufts v. D’Arcambal, 85 Mich. 185 (48 N. W. 497, 24 Am. St. Rep. 79, 12 L. R. A. 446), referred to in 1 Mechem on Sales, Section 622, a case like the one at bar, we read:

“The contract provides expressly that the title to the property shall continue to remain in plaintiff until the apparatus is paid for, and that, in case of the nonpayment of either of the notes at maturity, the plaintiff shall have the right to take possession of the property; but it contains no provision that such act shall operate as a rescission of the contract or a forfeiture of the payments thereon. The reduction of the property to possession by the plaintiff does not excuse performance by defendant, as defendant has the right, upon payment of the amount due, to a return of the property. Plaintiff had the right, under the express conditions of the contract, to secure himself by taking possession, and the exercise of this right-under the contract did not entitle the defendant to rescind the contract, or to a recovery of the amount paid, or to a delivery to him of the unpaid notes; neither did it give him any lien upon the property for the amount paid by him.”

The case of Ratchford v. Cayuga County etc. Co., 217 N. Y. 565 (112 N. E. 447, L. R. A. 1916E, 615), arose between a plaintiff claiming title under a conditional sales contract and a subsequent mortgagee of the property from the conditional vendee who claimed that title had passed by waiver. The conditional sales contract provided for the payment of the purchase price in installments. The last installment being unpaid, the seller brought an action to recover same and had a judgment. The mortgagee then brought the action to foreclose the mortgage held by him, and thereupon the present plaintiff brought replevin for the goods, and the court permitted a recovery, saying:

‘1 The question depends for its answer on the law of election of remedies. • Where two inconsistent remedies, proceeding upon irreconcilable claims of right, are open to the suitor, the choice of one bars the other. But to have that. effect, the remedies must be inconsistent. We find no inconsistency here. The contract says that the title is to remain unchanged until the price is paid in cash. The vendor has the right to receive the price and brought an action to get it. The judgment preserves the obligation of the vendee’s promise to make payment, but puts it in another form. There is no inconsistency between an attempt to get the-money, and a reservation of title if the attempt is not successful. In asserting title the vendor does not treat the contract as void in its inception. Elterman v. Hyman, 192 N. Y. 113 (84 N. E. 937, 127 Am. St. Rep. 762, 15 Ann. Cas. 819); Davis v. Rosenzweig Realty Operating Co., 192 N. Y. 128 (84 N. E. 943, 127 Am. St. Rep. 890, 20 L. R. A. (N. S.) 175). The contract is treated as subsisting and enforced according to its terms.

“ * * The vendor sued for the installment in default, and nothing else. In doing so it did not renounce its title any more than it would have done by the acceptance of a note.”

In 20 C. J., page 12, Section 9, the rule is stated as follows:

_ “All. actions which proceed upon the theory that the title to property is in plaintiff are inconsistent with those which proceed upon the theory that title is in defendant. But there is no inconsistency between different remedies all of which are based upon claim of title to property in plaintiff, or all of which are based upon the affirmance of title in defendant.”

In Bent v. Barnes, 90 Wis. 631, at page 634 (64 N. W. 428), we read:

“It is said that the plaintiff, having brought a replevin action and obtained partial relief, cannot maintain this action, because the remedies are inconsistent. We perceive no inconsistency. Both actions are founded on the same basis, namely, the ownership of the lumber by the plaintiff. There is no inconsistency between any of the claims made in the replevin action and the claims made in this action. The defendant is in no way prejudiced by the failure of the plaintiff to obtain full relief in the replevin action and by her resort to this action for the balance. ’ ’

See Hobart Electric Mfg. Co. v. Rooder, 121 N. Y. Supp. 274; note, L. R. A. 1916A, 925.

7. Defendant at all times has attempted to enforce the contract, not to rescind it. By allowing the Comstock-Brown-Alm Company additional time at its request to rebuild tbe mill and make payment of tbe balance of tbe. note, he did not evince an intent to waive bis title to tbe mill macbinery.

8. Tbe plaintiff was in no way prejudiced by tbe position of tbe defendant. He knew when he became tbe purchaser at tbe execution sale, of tbe claims of tbe defendant; be knew or could have easily ascertained tbe amount that was unpaid to defendant on bis claim against this property. Tbe sale upon execution was made subject to tbe claim of defendant.

9. No general rule in regard to a waiver by such a seller can be laid down, other than that a waiver may be inferred whenever tbe conduct of tbe conditional vendor is inconsistent with tbe idea that be still expects to enforce a return of tbe goods if tbe conditions are not performed. Whether such is tbe case or not is a question of fact: 1 Mecbem on Sales, § 624.

10. Tbe contract under which tbe macbinery is claimed is general in its terms and does not specify tbe manner of taking possession of tbe personal property in case of default. Tbe position of tbe plaintiff seems to ignore tbe fact that possession of tbe personalty was taken by tbe defendant prior to tbe time of tbe levy of tbe execution resulting in a sale under which plaintiff claims. Tbe position of Digerness is analogous to that of a mortgagee. If a mortgagee takes possession of mortgaged chattels before any other right or lien attaches, bis title under tbe mortgage is good against everybody: Jones on Chattel Mortgages (4 ed.), §178.

11. Tbe right of possession of personal property is, as a general proposition, in tbe person bolding tbe legal title. This person, in tbe case of a contract of conditional sale, is tbe vendor. Tbe contract usually contains some clause which, like the one in question, at least by implication gives the vendee the possession of the property until he defaults in payment. After default the vendor is entitled to possession until the vendee redeems: Griffin and Curtis, Chattel Mortgages and Conditional Sales (3 ed.), p. 215, § 7. Under the circumstances of this case the plaintiff in the writ of execution levied on the property-in question, could sell only the interest of the ComstockBrown-Alm Company in the property, and could not sell the interest of the defendant therein.

12. Without deciding whether it is absolutely necessary, as enunciated in the case of McDaniel v. Chiara Monte, supra, the defendant having been brought into court of equity by the plaintiff, is entitled to have the conditional contract of sale foreclosed.

The plaintiff’s assignor attempted to sell the property in question to satisfy an execution for the sum of $99, knowing, or having reason to know, that the defendant had title to the property and was entitled to the possession thereof until a claim much larger than plaintiff’s should be satisfied. The equities are with the defendant.

The decree of the lower court will be reversed and one entered in accordance herewith.

Reversed and Decree Entered.