D'Aprile v. Turner-Looker Co. , 239 N.Y. 427 ( 1925 )

The defendant sold personal property to the plaintiff. Title to the goods passed to the buyer. Under section 135 of the Personal Property Law, the seller had a right, denominated a lien, to retain possession of the goods until payment or tender of the price. It exercised this right, and while still in possession of the goods it brought an action for the price. By bringing this action, the seller did not lose its lien, for even a judgment for the price would not have this effect. (Personal Property Law, section 137.) The seller's lien or right of possession carries with it a right to resell the goods (Personal Property Law, section 141), and a right to rescind the sale (Personal Property Law, section 142). Even before the Sales Act was enacted, an unpaid seller under such circumstances had the same remedies. He might sue for the entire price, or he might sell the property and recover the difference between the contract price and the price obtained on such resale, or he might keep the property as his own and recover the difference between the market price at the time and place of delivery, and the contract price. (Dunstan v.McAndrew, 44 N.Y. 72; Mason v. Decker, 72 N.Y. 595.) During the pendency of the action for the price, the defendant proceeded to exercise its right to resell. Whatever may have been the rule in this state prior to the Sales Act (Westfall v. Peacock, 63 Barb. 209), I agree with the views expressed in the prevailing opinion that under the Sales Act the bringing of the action for the price did not constitute a choice of one remedy which would bar the seller from the subsequent adoption of the other remedy afforded by the statute, through enforcement of his lien by resale, for both remedies are based upon the theory that title to the property had become vested in the buyer. (Mason v. Decker,supra.) After that sale, however, the seller was no longer entitled to recover the price of the goods, but might "recover from the buyer damages for any loss occasioned by the resale." (Personal Property Law, section 141.) In spite of the resale during the pendency of the action for the price, the seller has recovered judgment for the full price. In the case of Urbansky v. Kutinsky (86 Conn. 22), and other cases that might be cited, the buyer recovered only the balance of the purchase price after crediting the amount received upon the resale. He was entitled under the statute to that. Here the seller has recovered judgment for the full price. It was not entitled under the statute to such judgment after a resale, but only to damages for any loss. Conceding, as I do, that at the time the defendant resold the goods, it still had the right to make such sale by virtue of its lien, it seems to me that the subsequent judgment for the price precludes the defendant from urging that it resold the goods in the exercise of that right; for such a resale would, I think, be inconsistent with a judgment for the price obtained thereafter. The question is not whether the seller had the right under its lien to resell after the bringing of the action for the price, but whether it did sell as lienor. If the judgment for the price is based upon implied findings which are inconsistent with an assertion of previous sale as lienor, that judgment does not render unlawful a sale which was previously lawful; it merely conclusively adjudicates that there was no lawful sale.

I recognize that at the time of the trial of the action for the price, the seller consented to an amendment of the answer by which the first buyer would have been permitted to plead the amount received upon the resale as an offset, but as the prevailing opinion has pointed out, that would have shattered his defense, and I think it would also have constituted an admission that the resale was lawful and properly conducted. The seller may not compel the buyer to plead the resale as an offset or partial defense, if after such resale the seller is entitled to recover a judgment, not for the price, but only for damages. The decisive consideration in this case, in my opinion, is whether the judgment for the price establishes conclusively not only that title to the goods passed to the buyer, but that such title was still in the buyer at the time of the judgment. The answer to this question depends upon the nature of the seller's right of action for the price, as well as upon the nature of his right to resell.

The price is the consideration paid for a transfer of title, and under the Sales Act only under exceptional circumstances may there be a recovery of the price without transfer of title. A judgment for the price constitutes an adjudication not merely that title had passed to the buyer, but that the seller had not rescinded such transfer of title. If the resale results in a rescission of the original transfer of title and a resumption of title in the seller, then it can hardly be doubted that an action for the price, which constitutes the consideration for the transfer of title to the buyer, will not lie thereafter. It is urged that a resale made under section 141 of the statute should not be confused with a rescission of the transfer of title as provided in section 142. I find no essential difference in the nature of the rights accorded by these two sections. The rights accorded under both sections arise under the same circumstances, viz., "where the buyer has been in default in the payment of the price an unreasonable time." The result is the same: "The seller shall not thereafter be liable to the buyer upon the contract to sell or the sale, but may recover from the buyer damages for any loss occasioned by the breach of the contract or the sale." True, section 141 contains additional provisions which could be applicable only to a resale, viz., that the seller shall not be liable to the original buyer "for any profit made by such resale," and that the "seller is bound to exercise reasonable care and judgment in making a resale, and subject to this requirement may make a resale either by public or private sale." The meaning of these additional provisions is hardly open to doubt. By virtue of them the seller may on the one hand retain any profit made by a resale, and on the other hand may fix the amount of any loss through a resale, fairly and judiciously made. I find nothing in these provisions which is logically inconsistent with the view that the exercise of the seller's right to resell provided by section 141 is founded upon a total rescission of the transfer of title. That section merely provides an additional right to fix the amount of loss suffered by the seller. The right of a buyer, with title to the property, to have the profit made upon a resale seems clear "unless the seller has the right totally to rescind the sale, revest himself with the ownership of the goods, resell them as his own, and take the proceeds for his own account. That the seller has this alternative right will be seen from the following sections, but here it may be said that on whatever reasoning the doctrine is based, the law seems to recognize the seller's right to keep any profit from the resale. This is expressly so provided in the Sales Act." (Williston on Sales [2d ed.], section 553.)

Discussion of the classification into which the right of an unpaid seller to resell logically should be placed, or the philosophical basis of that right, if such basis there be, may not assist materially in the determination of the concrete question before us. We are concerned with the substance of the rights given by the statute. It is said that under section 142 a seller who rescinds the sale may resell thereafter for his own account, while the seller who proceeds under section 141 "does not act as owner, but by virtue of a power, and like an agent or fiduciary, he must act prudently and fairly." If such an obligation rests upon the seller he should be accountable, as other agents or fiduciaries are, for failure to carry out his obligation. Even though the conceded anomaly that the "fiduciary" need not account to the owner for any profits made be regarded as without decisive significance, the fact that even where the seller does not act prudently and fairly in making the resale he is not guilty of conversion, nor at least before judgment for the price, accountable for any loss suffered by his misconduct, should not be overlooked. The resale, if not fairly made, becomes a rescission under section 142 of the act, and the only effect of the seller's misconduct is that the price realized no longer serves to fix the loss, as would be the case under a resale made in accordance with section 141. In both cases the seller retains the profits, in both cases he may still hold the buyer for damages for his loss, and nothing else, and if he obtains a judgment for the price after he has disposed of the goods he has obtained more than he is entitled to.

While this court has in many early cases referred to resales made by an unpaid seller as if made by him as an agent of the buyer, in the case of Moore v. Potter (155 N.Y. 481, 487) it has noted the inaccuracy of such language. "The use of the words `as agent of the vendee' was not intended as a determination that the relation between the parties was that which ordinarily exists between a principal who owns property and an agent who may be authorized to manage or sell it. But it is a general expression which has been somewhat inaccurately used to define the right of a vendor to make a resale and hold the vendee responsible for his loss. It is quite manifest that a resale made under such circumstances is not made by the vendor strictly as agent of the vendee, but he acts for himself in disposing of the property for the purpose of ascertaining the actual damages he may sustain." (See, also, Ackerman v. Rubens, 167 N.Y. 405.) In considering the earlier decisions in the light of these cases we may also properly give some weight to the fact that at the time they were written the right of the seller to retain any profit upon a resale was not clearly established; in fact the contrary rule was sometimes assumed. (See Westfall v. Peacock, supra.)

If we hold that a seller may after resale still obtain a judgment for the price, subject to an offset for the price realized, we place the buyer in an unfortunate position. He may not even know that the resale has been made, and it seems unreasonable to hold that the buyer's remedy is by an offset which he may not know exists. It may be urged that even in such case the plaintiff could obtain a satisfaction of judgment upon proof that the seller had realized upon the security and upon payment of the difference between the judgment and the amount realized, but it is somewhat anomalous to hold that a judgment may be reduced by proof of facts which might have constituted an offset at the trial. If we place our decision upon the narrow ground that in this case the buyer was informed of the resale, and he refused an offer to permit him to plead an offset, our difficulties seem no less. He could plead an offset only by admitting the fairness of the sale, yet he may desire to litigate that very question. The statute gives the seller the right to recover only for his loss, and not for the price. He must establish his loss by proof of a resale made with reasonable care and judgment. It can hardly be incumbent upon the buyer to plead as an offset the amount obtained by the seller upon a resale, for such a plea would preclude him from litigating the propriety of the resale.

If the result in this case is that the buyer pays less than the seller could have compelled him to pay if he had proceeded properly, the result is due to the attitude of the seller. It has chosen to resell the buyer's property and yet to hold the buyer for the price, instead of the loss occasioned to it by the buyer's breach. It has not attempted to account to the buyer for the proceeds of the property. It still offers as a defense to the action for conversion, to deliver to the plaintiff goods similar to the goods which belonged to the buyer. It claims the benefit of the resale but it does not assume its burden. It has itself caused any loss which it may have suffered.

The judgment should be affirmed, with costs.

POUND, McLAUGHLIN and ANDREWS, JJ., concur with CARDOZO, J.; LEHMAN, J., reads dissenting opinion in which CRANE, J., concurs; HISCOCK, Ch. J., absent.

Judgment reversed, etc.