Jeffrey Mfg. Co. v. Mound Coal Co.

215 F. 222, 1914 U.S. Dist. LEXIS 1697

• Court: District Court, N.D. West Virginia
• Decided: July 2, 1914
• Status: Published

Opinion

DAYTON, District Judge

(after stating the facts as above). [1] It cannot be doubted that, by the terms of the contract, the sale of this machinery, made by plaintiff to the copartnership, was a conditional one, and that title to such machinery and the right to reclaim it in case of default in payment of the purchase money, were clearly reserved. Nor is it questioned that not a dollar of such purchase price was ever in fact paid. This being true the case is clearly ruled and determined by the two very recent decisions of the Supreme Court, in Holt v. Henley, 232 U. S. 637, 34 Sup. Ct. 459, 58 L. Ed. 767, and in Detroit Steel Cooperage Co. v. Sistersville Brewing Co.. 233 U. S. 712, 34 Sup. Ct. 753, 58 L. Ed. 1166. Both of these cases were taken up by certiorari from this Fourth circuit; one originating from Virginia, the other from this slate and district. In both cases the rulings of the District Court and the Circuit Court of Appeals are reversed. In the first case, a conditional sale, of the kind and character involved here, and the right to remove the property, is upheld, although the contract was never recorded, as against a prior recorded mortgage providing for its lien upon all after-acquired property, as also against the trustee in bankruptcy having, under Act June 25, 1910. c. 412, § 8, 36 Stat. 838, 840 (U. S. Comp. St. Supp. 1911, p. 1500), amending section 47a (2) of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 557 [U. S. Comp. St. 1901, p. 3438]), all the rights of a creditor holding a lien.

The second case affirms the former’s ruling in this regard, and goes a step farther and defines and narrows the possible exception to it where property has gone into possession of the conditional sale purchaser and become attached to the realty, to be where—

“Hie property claimed lias become so intimately connected with or embodied in that which is subject to the mortgage that to reclaim it would more or less physically disintegrate the property held by the mortgagee.”

That the seller in these conditional sale contracts is the real owner of the property until absolute sale is fully perfected under the terms of the contract, and that the mortgagee in an existing mortgage providing for its lien upon after-acquired property is not as to such property a purchaser without notice is clearly held in both cases. In this case a landlord, whose tenant has acquired possession of property of another under such a contract and placed it upon the leased premises, can have no stronger claim to be an “innocent purchaser,” under his landlord’s contingent lien for rent, than is such mortgagee to whom, under the express terms of the mortgage, the property is transferred. The right of the seller, under conditional sale contract, who is the real owner until the sale is fully consummated, is paramount to that of either, subject only to the risk he takes of having his property “so intimately embodied” in the other property of the tenant or mortgagee as to cause more or less disintegration of the latter in case of removal thereof.

[2] It follows that judgment must be rendered in this case for the recovery of this property or the value thereof, in case recovery of it cannot be had, and also damages for its detention. If a money value is to be recovered, there will be no trouble in ascertaining the damages for detention. Such damages would be the lawful interest upon the purchase price under the terms of the sale contract. If, however, the recovery is to be of the machinery itself, then it becomes necessary to determine the extent to which its retention and use has deteriorated its value. The evidence before me is wholly inadequate for this purpose, and, unless parties' can further stipulate and agree as to what this damage by reason of retention and use is, this court must hear further evidence in regard thereto.