Seanor & Bierer v. McLaughlin

Opinion by

Mr. Justice Dean,

The plaintiffs were manufacturers of agricultural implements. The defendant traveled from place to place threshing fanners’ crops. On the second of September, 1889, the plaintiffs put in defendant’s possession a traction engine and thresher, he to use the same with care and keep in good order. The contract was one of hiring or bailment. As the parties evidently intended the event should be an absolute purchase, for security, the vendors retained the title until final payment of the hire. The sum of the hire was the price of the machine, $1,700, to be paid as follows: on delivery, $750; on the 1st of January, 1890, $316.67, with interest; and a like sum on the 1st of January, 1891 and 1892, with interest. As collateral, “to secure the payment of said rental,” the defendant executed and delivered to plaintiffs a judgment bond of same date, in the penal sum of $1,900, conditioned for the payment of the three installments with interest; and further stated : “ This bond is given as collateral to secure the rentals for certain machines leased by obligor from obligees.’.’ The first payment of $750 was made, and the defendant took possession of the machine and used it in threshing the crop of 1889.

Some time before the 1st of January, 1890, the defendant informed Seanor, one of the plaintiffs, that he would be unable to pay the first installment of $316.67. On that day, Seanor called on defendant and demanded payment, who again told him he was not able to pay, and that Seanor should take the machine away; Seanor then examined it and the same evening arranged to have it removed. Defendant demanded his bond, or a receipt for it, before the machine was taken away, but Seanor refused to give either, and early on the morning of the 3d of January, removed it. After taking the machine, on the same day, plaintiffs confessed judgment on the bond, and issued-execution for the first installment. On petition and affidavit of defendant, the court opened the judgment, and awarded an issue. At the trial the facts were, in substance, as we have stated them. The court below was of the opinion that: 1. The rights of the parties were to be determined by the written contract between them, the lease and the bond. 2. That on default of payment of „ any installment, plaintiffs could enter judgment and-collect by execution, or rescind the contract, and repossess themselves of the machine, but could not adopt both remedies. 3. That the undisputed evidence showed a rescission of the contract, and thereafter defendant was no longer answerable on the bond. Therefore, a verdict was directed for defendant. From the judgment entered, plaintiffs press this appeal.

The merit of the assignments of error depends solely on whether the construction given by the learned judge of the court below to the written contract, as set out in the lease and bond, was right. The contract was to pass the possession of the machine to the defendant, and to make secure the payment of its value to the plaintiffs. Its value, as fixed by both parties, was $1,700. It is fair to presume, the plaintiffs intended bjr the contract to get this sum once, and that defendant did not intend to pay it or any part of it twice. Parties may, in contracting, provide penalties for non-performance, but, unless they do so in unmistakable language, courts will not insert them. In the lease, after specifying the three installments and their dates of payment, the defendant immediately said: “ And as collateral to secure the payment of said rentals, I have executed and delivered .... my judgment bond of even date herewith.” Then almost the last words of the bond are: “ This bond is given as collateral to secure the rentals.” The principal obligation by the contract, was to pay for the machine $316.67 with interest on the 1st of January of the three following years; and “ If default be made in said payments .... they, said Seanor & Bierer, or their agent,-may resume actual possession of the same; and I hereby further authorize and empower the said Seanor & Bierer .... to enter the premises wherever said machines may be, and take and carry them away.”

This was primarily the obligation to pay, and the remedy to enforce payment. Plaintiffs retained title to the chattel, with the right to resume possession in default of payment of the hire. Then the judgment bond is given, in express terms, as a security collateral to the performance of this principal obligation. There is no technical legal definition of the word collateral, distinct from its common signification; it is an additional security for the performance of the principal obligation, and, on the discharge of the latter it is to be surrendered. Therefore the plaintiffs had two distinct remedies, either -of which they might adopt to enforce their right. They parted with the possession of the machine at the price of $1,700; $750 of this to be paid in hand, which they received; they still retained title, with the right to resume possession on default in either payment of $316.67. But the subject of. the contract being a movable chattel, and this security being at best little more than a chattel mortgage, they took a personal judgment bond with power of attorney to enter it and confess judgment in any court of record of the United States or elsewhere, as collateral to the original obligation. Either remedy was complete in itself, and the plaintiffs, on default, could adopt either; but they were not cumulative; they could not adopt both, unless it was plainly expressed in the contract, or a necessary implication from its terms. The words of this contract negative such a construction ; the defendant stipulates that “ if default be made in said payments or any of them, .... then, in that case I hereby covenant and agree to return said machines to said Seanor & Bierer, and that they .... or their agent may resume actual possession of the same.” That was the penalty for default on the primary obligation, and repossession of the machines the discharge, of it. On default of payment the plaintiffs were not bound to accept the machine or' take possession of it; they couid have entered judgment on the bond, levied on the machine and any other property of the defendant, in satisfaction of their demand. But they l'eseinded the contract by retaking into their possession the subject of it, which they had a right to do, and then immediately entered their bond and issued execution to levy on other property of defendant, which they had no right to do, for the contract or obligation, to which the bond was collateral, no longer existed. It ought to have been surrendered to defendant when he demanded it at the time plaintiffs took away the machine.

The contract in this case is not essentially different from those in Campbell v. Hickock, 140 Pa. 290, and Scott v. Hough, 151 Pa. 630, in both of which cases we held that the remedies were distinct and not cumulative. If the bailor rescinded by repossessing himself of the property, the right of personal action against the bailee was at an end. That the words “ rescission ” or “ rescind ” do not occur in this contract, is not material. Rescission is a fact; the word itself may be used by the contracting parties to indicate the right, but other words may be adopted to point out that coufse of conduct of the parties which shall constitute the fact of rescission.

The decision in Campbell v. Hickok, supra, was based on the stipulation of the contract that the lessor had the right, on lessee’s failure to pay any installment, to repossess himself of the property, and, having exercised this right, the contract was rescinded in fact, and there was an end of personal obligation on part of lessee. While the word “ rescinded ” is used in that contract, the right to rescind and the act necessary to a rescission are plainly expressed without it, and the interpretation was fully warranted even if the word had not been used.

Here the plaintiffs, in effect, in tbeir contract, stipulated that, on default of payment of rental, they should have the right to take the machine back to make good the default; there was default, and because of it, they took back the machine. This was both a right to rescind and the exercise of the right, or a rescission in fact. The construction put upon the whole contract by the learned judge of the court below was right. Therefore the assignments of error are overruled and the judgment is affirmed.