Stewart v. Smith

The respondent states the case in part as follows:

"This action was begun on May 11, 1925, by the service of the summons and complaint, for damages on the alleged breach of an implied warranty. The appellant sold to respondent an automatic electrical piano in June, 1920, for which respondent agreed to pay $1,750.00, and executed a title-retention agreement securing her notes which she gave in payment of the purchase price."

For the purposes of this appeal the construction placed upon the complaint by the counsel for the plaintiff, as an action for damages on account of the breach of an implied warranty, will be adopted, although the complaint alleges no damages, and sounds much more like an action for the rescission of the contract of sale and the return of the money paid by the plaintiff on account thereof; it appears to have been so considered by the circuit Judge. The counsel for the defendant also, in his printed argument, follows the construction of the complaint made by the counsel for the plaintiff, which doubly justifies the Court in adopting that construction.

The complaint alleges, in substance, that on June 9, 1920, the plaintiff bought from the defendant an automatic electrical piano at the price of $1,750, paying $175 cash, $157.50 payable August 23, 1920, and the balance in ten notes of $141.75 each, payable in succeeding months, the deferred payments being secured by a title retention contract; that the piano was guaranteed by the defendant who agreed to return payments made by the plaintiff if it did not prove satisfactory; that the piano was worthless; that the plaintiff made various complaints of defects which the defendant attempted in vain to correct; that the plaintiff offered to return the piano and demanded the return of her money, all of which was refused; that she had been put to considerable expenses in having the piano repaired; that in December, 1924, the defendant "repossessed himself of said piano under his title retention contract of sale"; that the plaintiff has paid upon the piano $1,552.25, which she demands in the prayer for judgment be returned to her.

The defendant in his answer admits the execution of the sale contract and that the plaintiff has paid upon it the amount alleged, but denies all other allegations of the complaint. He also sets up a counterclaim for $352.95; that being the balance due upon the unpaid notes with interest, less $75, proceeds of sale of the piano made by him after seizure under the contract. The plaintiff replied to the counterclaim and denied the same.

The case was tried before His Honor, Judge Townsend, and a jury at the summer term, 1925, resulting in a verdict in favor of the plaintiff for $400. The defendant has appealed.

The undisputed facts appear to be as follows:

On June 9, 1920, the defendant sold to the plaintiff an electrical automatic piano, at the price and upon the terms stated, taking from her a title retention agreement as security for the unpaid portion of the purchase price; the plaintiff made the cash payment required of $175, and the payment due August 23d of $157.50, leaving $1,417.50 unpaid, for which she gave ten notes of $141.75 each, payable in successive months, upon which she has paid from time to time, all but $325.23, as of May 30, 1925, as claimed by the defendant. She claims to have paid all but $197.75.

Soon after the delivery of the piano the plaintiff made complaint that it would not operate satisfactorily, and the defendant sent his man to repair it. She claims to have made complaints continually, and was assured that the defects could be remedied; she also claims that she offered to return the piano and recover back payments she had made; she, however, continued to pay the notes as they matured, at least six of them. She moved the piano to Greenville and rented it there to a bathing pool proprietor; she then moved it to Columbia and rented it there to various amusement places; she then sold it to the proprietor of Moore's bathing pool for $275. Then in December, 1924, the defendant seized and sold it under his title retention contract for $75.

Upon the trial of the case, the defendant moved for a nonsuit and for a directed verdict, upon various grounds; both motions were refused. The only matter deemed necessary to consider is that the motion for a nonsuit should have been granted upon the ground that the title to the piano, having been reserved in the defendant by the title retention agreement, it became essential to the maintenance of an action upon the implied warranty that the notes remaining unpaid be paid, so that the title would thereby vest in the buyer; the law being that the buyer cannot maintain an action upon the implied warranty unless the title to the subject of the sale be vested in him.

There can be no doubt of the proposition that a title retention agreement, taken as security for the purchase price of a chattel, is, for all legal purposes, a chattel mortgage.Talbott v. Sandifer, 27 S.C. 624; 4 S.E., 152; Perkinsv. Bank, 43 S.C. 39; 20 S.E., 759; Hill v. WinnsboroCo., 112 S.C. 243; 99 S.E., 836; and nine South Carolina cases cited in opinion.

It is equally well established that, even before the note secured by a chattel mortgage becomes due, the title to the chattel is in the mortgagee, with usually the right of possession until maturity of the debt, vested by the mortgagee in the mortgagor. In Hill v. Winnsboro Co., 112 S.C. 243;99 S.E., 836, the Court said:

"As a general proposition, the execution of a mortgage vests the legal title to the property in the mortgagee; and likewise gives him the right to the possession of the property, unless there are circumstances indicating that such was not the intention of the parties."

This necessarily follows from the fact that, prior to the Act of 1797 (Code, § 5223), the title to all property, real and personal, was transferred to the mortgagee. Under that Act the title to real estate remains in the mortgagor. Nothing is said about personal property; hence in the absence of a similar statute applying to personal property, the law as to it remains as theretofore. See innumerable cases cited in First and Second Decennial Digest, "Chattel Mortgages," Key No. 159.

If there should be any doubt as to this proposition, there can be none as to the proposition that upon condition broken both the right of possession and the title unite in the mortgagee.Martin v. Jenkins, 51 S.C. 42; 27 S.E., 947; Rainwaterv. Bank, 108 S.C. 206; 93 S.E., 770; Greene v.Washington, 105 S.C. 137; 89 S.E., 649; Bank v. Brigiman,106 S.C. 362; 91 S.E., 332; L.R.A., 1917 E. 925;Dickerson v. Cleland, 120 S.C. 221; 112 S.E., 920.

It is also true that, where the mortgagor sells the property covered by the mortgage, even his right of possession is gone.

"This right to the possession of the property until condition broken, is personal to the mortgagor, and may be forfeited by him, if he should sell the property or otherwise dispose of its possession." Hill v. Winnsboro Co., 112 S.C. 243;99 S.E., 836.

So that, in the case at bar, the plaintiff was divested of title by the title retention contract; In fact, she never has been vested with the title to the piano. She has lost the right to the possession of it both by selling the piano and by defaulting in the payment of the last notes. Both the right to the possession and the title having been lost, she cannot maintain an action upon the implied warranty, as title is essential to such an action. In Bunday v. Columbus Co.,143 Mich., 10; 106 N.W., 397; 5 L.R.A. (N.S.), 475, quoting syllabus, it is held:

"The title does not pass at the time of installation, by a contract for the sale of machinery which stipulates that, until the price is paid, the title and ownership shall remain in the vendor; so that before such payment the purchaser cannot maintain an action for breach of warranty of quality."

See Jones, Chat. Mortg. (2d Ed.), § 426.

"And payment of the purchase price is not a condition precedent to an action for damages, unless the sale is conditional and title does not pass until payment." 35 Cyc., 445.

"As the plaintiff never acquired title to the wagon, he can have no action for breach of warranty." Stearns v.Drake, 24 R.I. 272; 52 A., 1082; Benj. Sales (7th Ed), 962.

"An action for breach of warranty will not lie where the sale was conditional on payment of the full price due in installment and the last installment has not been paid." Englishv. Hanford, 75 Hun., 428; 27 N.Y.S., 672.

"A purchaser who does not fulfill the terms of his contract of purchase can maintain no action for breach of an implied warranty." Reynolds v. Roberts, 57 Vt., 392.

"In a case of a conditional sale an action for breach of warranty cannot be maintained in the absence of statute, until the price is paid and title has fully passed." Shearerv. Kakoulis (Co. Ct), 144 N.Y.S., 1077.

"It has been held that, where the title is reserved by the seller until the price is paid, the buyer cannot before payment maintain an action for breach of a warranty of quality contained in the contract." 24 R.C.L., 156.

"A conditional vendee cannot before title is vested in him, recover general damages for a breach of warranty." Bacav. Fleming, 25 N.M., 643; 187 P., 277; Penser v. MarchAss'n. Ann. Cas., 1918-B, 914; Levis v. Pope Co., 202 N. Y., 402; 95 N.E., 815; Blair v. Johnson, 111 Tenn., 111;76 S.W. 912; Dearing v. Thompson, 156 Mich., 365;120 N.W., 801; 24 L.R.A. (N.S.), 748; Moneyweight v.Davis, 180 Mich., 8; 146 N.W., 391; People's Co. v. MeKeen, 214 F., 73; 130 C.C.A., 513; Singer v. Smith, 40 S.C. 529;19 S.E., 132; 42 Am. St. Rep., 897.

As the plaintiff never had the title to the piano, her only remedy was a rescission of the contract of sale and a return of what she had paid on the purchase price. Manifestly under the circumstances of this case she could not maintain an action for rescission, having sold the piano and placed it beyond her power to return to the seller. Ebnerv. Haverty, 128 S.C. 151; 122 S.E., 578. It is not questioned that in a case of ordinary sale, where the title has passed to the buyer, the fact that he has sold the property, or the fact that he still owes notes for the purchase price, will not affect his right to sue upon the breach of either an express or an implied warranty. Williamson v.Paxville, 102 S.C. 295; 87 S.E., 69; Kirven v. Chem.Co., 77 S.C. 493; 58 S.E., 424 (in opinion of Justice Wood); Wiggins v. Hunter, Harp 80; Parker v. Pringle, 2 Strob. 242; Carter v. Walker, 2 Rich., 40; Mauldin v.Milford, 127 S.C. 508; 121 S.E., 547; Ellision v. Johnson,74 S.C. 202; 54 S.E., 202; 5 L.R.A. (N.S.), 1151.

The judgment of this Court should be that the judgment of the circuit Court be reversed, and that the case be remanded to that Court for judgment of nonsuit under Rule 27.