Crompton v. Beach , 18 L.R.A. 187 ( 1892 )

The present contention grows out of the same contract which was considered by the court in Beach's Appeal fromCommissioners, 58 Conn., 464, and the facts therein stated are applicable to this case, but need not be repeated here. Under the authority of that decision the plaintiff, as administratrix of George Crompton, having secured a dividend of twenty-five per cent from the insolvent estate of the Home Woolen Mills Company, brought the present action of replevin for the property against the defendant, who is the trustee in insolvency of said company; and the sole question for our decision is the one considered, but not determined, by the court in the former case, whether the vendor, having elected to enforce the claim upon the note, could at the same time retain the right to retake the machinery if the note was not fully paid. The Superior Court held that such right could not be retained, and rendered judgment in favor of the defendant for the return of the property, with damages for the replevin and detention, and the plaintiff appealed.

The contract appears in full in the former case, (58 Conn., 465), but we will repeat the closing paragraph, which is, that, upon default, the vendor "shall have the right, at any time, to resume possession of the machinery, and to enter the premises and remove the same as his own property; and if any portion of said note, or renewals thereof, shall remain unpaid, when possession shall be so taken by the party of the first part or his authorized agent, then the amount which may have been paid shall be for the use of said machinery while in possession of the party of the second part, and said note shall then be cancelled and given up." It is the present claim of the plaintiff that, although by reason of the express stipulation, after possession had been resumed, no further right to recover the purchase price would exist, yet by resorting to her remedies in the order in fact taken, both the remedy by collection and that by resumption were open to her. The argument in favor of such claim appears to be three-fold: — First, that the default of the vendee did not operate as a rescission of the contract; that the rights of the vendor survived such default; and that the rights of the parties thereafter existing were to be determined, not alone by the ordinary methods furnished by the law, but by those and such other proceedings as were expressly provided in the agreement itself, namely, that until the vendor exercised his right to resume possession, "the amount which might have been paid should be for the use of the machinery." Second, that in this case the remedies provided by the law and the agreement of the parties are cumulative and collateral, and that each, except as limited in their order by the contract, might be pursued independently, until full satisfaction resulted. Third, that the vendor had, under the contract, a lien upon the property, which was in effect a mortgage, and was entitled to the same relief as if the title had been transferred and reconveyed for security. We will consider each of these claims separately. In reference to the first, that the default of the vendee did not operate as a rescission of the contract, it is true, and constitutes the basis of the decision in the former case of Beach's Appeal. But it must be manifest to any one who examines that case, that this court did not then attribute to such facts the consequences which the plaintiff now asserts. Indeed, it is very evident that while leaving the question now at issue in form undecided, the mind of both the majority and minority of the court was strongly opposed to the plaintiff's present position. This the plaintiff concedes, and a considerable portion of the brief presented in her behalf, and of the oral arguments based thereon, was devoted to an effort to explain how this court was led into its "apparent error," which error is said to have consisted in "presuming that the case ofBailey v. Hervey et al." (135 Mass. 172, cited58 Conn., 480,) "was based on a contract similar, in effect, to the one under consideration," and therefore, as Judge LOOMIS said in the former opinion, "directly in point." The plaintiff says that, in fact, the contract in Bailey v.Hervey et al. differed from the one now under consideration, and was, in effect, the same as in Hine v. Roberts, 48 Conn., 267, followed by Loomis v.Bragg, 50 Conn., 228, in which the vendor's only remedy was held by this court to be the retaking of the property. To demonstrate this, since it does not appear in the reported case, the plaintiff's counsel have been at the exceptional pains of procuring what is stated to be an exact copy of the actual contract construed in Bailey v.Hervey et al., and has caused the same to be printed in full for our examination at the end of their brief. The argument is, that such contract would not have been construed in Connecticut as it was in Massachusetts, as conferring an option upon the vendor; that the assumption on which the opinion is conditioned is directly negatived by the law of this court as declared in Loomis v. Bragg, "a decision not then published, and doubtless unknown to Justice ALLEN;" and that therefore the case is erroneous, and should have been decided upon other and better grounds, by which the same result might have been reached, and should not have been recognized as an authority by this court. Conceding this, for argument's sake only, we fail to see how it in any wise affects what Judge LOOMIS declares to be "the clear and cogent reasoning contained in the opinion cited," for the Massachusetts court, having, whether correctly or otherwise, held that the contract was one which did vest an option in the vendor, and was therefore similar to that now before us, the correctness and force of the reasoning upon the premises assumed does not depend in the least upon the truth of the premises themselves. Nor is this court concerned to discover the fidelity to principle, in all its parts, of the case cited from another jurisdiction, but contents itself with so much of the logic of the case as applies clearly and with force to our own. The court there said, in discussing a contract which it at least considered and held to be similar in effect to what we have determined the one before us to be: — "When the plaintiff discontinued his payments on account, what was the legal position of the defendants? If it be assumed that they might, at their option, either retain the goods as their own property, without any obligation to account for the proceeds or value to the plaintiff, or that they might collect the price in full, it is plain that they were not entitled to do both. They could not treat the transaction as a valid sale and an invalid one at the same time. If they reclaimed their property, it must be on the ground that they elected to treat the transaction as no sale. If they brought an action for the price, they would thereby affirm it as a sale. Two inconsistent courses being open to them, they must elect which they would pursue, and, electing one, they are debarred from the other. Reclaiming the goods would show an election to forego the right to recover the price. But, instead of reclaiming the goods in the first instance, they brought an action against Bailey for the price, made an attachment of his property by trustee process, and entered their action in court, and he was defaulted. "As Judge LOOMIS has aptly said, "to accept this as good law would be to establish a principle which would, upon the facts found, preclude the appellee from hereafter reclaiming the machinery in question." We do so accept it, because it commends itself to our judgment, and so clearly does this appear that, although, as Judge LOOMIS further adds, we "are aware that it may receive further support from other decisions to the same effect," we deem their citation uncalled for.

The plaintiff, however, says that she did not exercise any option until she resumed possession; that the provisions of the contract that the amount paid should be for the use of the machinery, applies equally whether such payment, prior to such resumption, was by the voluntary act of the vendee or was coerced by the legal action of the vendor. This claim is, we think, not only opposed to the reasoning which we have quoted and approved, but requires for its support a construction of the contract which must be based upon a presumed intention of the parties, which is neither found expressed in the language of the instrument nor can be conceived of as existing in the mind of its makers. The only thing which, in case of the vendee's default, the contract expressly provides for, is the right of the vendor to retake the property, which is to operate as a discharge of the note. And although we have held that the vendor had the option to enforce payment instead, it cannot reasonably be supposed that the parties ever intended that the vendor, through the exercise of an option not expressly given, could by reversal of the order of procedure, instead of retaking the property and cancelling the note, collect the note and then retake the property. Cases cited by the plaintiff's counsel, which hold that when the option is exercised by retaking the amount already voluntarily paid may be retained and cannot be recovered back by the vendee, are not in point. These are payments made by the vendee in affirmance of a contract which it does not lie in his power to disaffirm, and while the contract remains in force and when the vendor makes default, and it thereby becomes the right of the vendor to elect whether he will affirm or disaffirm, if he does the latter, under a contract similar to the present, the vendor is under no obligation to return to the vendee what he has paid in part performance of a contract which it was his fault that he did not perform altogether. But while voluntary payments are made by the vendee in affirmance of the contract, involuntary ones can only be coerced after default, and import a like affirmance on the part of the vendor, because upon such default, it being the right of the vendor to elect whether he will affirm or disaffirm, though it may be true that he might defer such election for a considerable time, yet, whenever he brings an action to recover the contract price, he does affirm it, just as much as he disaffirms it when he retakes the property. To say, therefore, that the vendor's option, in the case before us, was not exercised until the retaking, is erroneous. It involves a double election — to affirm the sale to get as much as possible out of the general assets of the insolvent estate, and then to rescind it to get as much more as possible out of the property specifically, which seems to us, it must be said, a fast and loose fingering of the contract. The plaintiff insists that there is no injustice in this, since she only seeks to obtain the amount of the purchase price of the property, and cannot get more; that whenever the sum collected equals the debt, the property vests in the vendee, and whenever such sum less than the debt is enough to make the balance due below the value of the property, the vendee can obtain title by paying the remainder. There seems to be an inconsistency in this reasoning. If not only what is voluntarily paid, (in this case nothing was in fact so paid,) but what she collects, may be held as rent, why is the plaintiff under any obligation to apply it as part payment upon the note? When she retakes the property it is her duty under the contract to cancel and give up the note. But the note being discharged, is she thereupon to return the property? If the sum received is rent merely, why does not the whole purchase price continue due? If, on the other hand, she is bound to apply it in part payment, why is it not because she has elected to treat the obligation as absolute and not as conditional? We think the plaintiff is mistaken in her claim.

Coming, then, to the second point in the plaintiff's argument, that the law and the agreement taken together, give to her cumulative remedies, which she is entitled to pursue separately until they result in satisfaction, the answer to this claim appears to be clearly embraced in what has already been said. This is not a question of remedy, but of right. The contract was conditional. The note should be paid or the property might be retaken. There was an option. True, this court has held that such option belonged to the vendor and not to the vendee. The debt was absolute if the vendor elected to treat it as such. The plaintiff's intestate, or she as his administratrix, might therefore, upon the vendee's default, demand and enforce either payment or return. If the latter, that by the express terms of the instrument enured to discharge the note. If the former, that equally, though by operation of law, transferred and confirmed the title. Having elected, therefore, to enforce the note, the plaintiff is entitled to all the remedies which the law, or the contract, gives her for that purpose, but not for any other purpose. She could attach the property. She did in fact attach other property. Insolvency intervening, the claim was presented and the dividend received. What other remedy for the enforcement of the debt exists? Not now to retake the property as a means to that end. A contract of conditional sale imposes no lien upon property in favor of the vendor, for that or any other purpose. He does not sell and receive back a pledge. He retains the title until he elects to part with it, and when he does so elect the title passes from him; but nothing else thereby springs up in its place in the nature of a lien or encumbrance upon the property, enuring to his benefit.

And this brings us directly to the remaining claim of the plaintiff, that the contract in question is in the nature of a mortgage. It is not a mortgage. If it had been, it must, in order to be valid, have been executed with statutory formalities, which are lacking, and recorded. It would require foreclosure to perfect title, and it ought to have been considered by the commissioners on the insolvent estate as security for the plaintiff's claim upon the property of such estate, which was not done. It is not, therefore, claimed to be a mortgage, but that it was in the nature of a mortgage. We think, however, that it is just as far from the nature of a mortgage as any other conditional sale; no more and no less; and that to hold that between conditional sales, a class of contracts so often construed and so clearly defined in this state, and chattel mortgages proper, there is an intermediate and anomalous species of contracts, which the court will regard as importing in favor of a vendor all the benefits of both a mortgage and a conditional sale, and against the vendee, the trustee for the benefit of creditors of the vendee's insolvent estate and the public generally, to whom such unrecorded and undisclosed conveyances operate too often disadvantageously, all — the burdens of both, with none of the advantages of either, would be opposed to public policy and cannot be and is not law.

There is no error in the judgment complained of.

In this opinion the other judges concurred.