Freed Furniture & Carpet Co. v. Sorensen

• Decision Date: 06 February 1905
• Docket Number: 1589
• Parties: FREED FURNITURE & CARPET COMPANY, a Corporation, Respondent, v. P. A. SORENSEN, Appellant
• Court: Utah Supreme Court

79 P. 564

28 Utah 419

FREED FURNITURE & CARPET COMPANY, a Corporation, Respondent, v. P. A. SORENSEN, Appellant

No. 1589

Supreme Court of Utah

February 6, 1905

Appeal from the Third District Court, Salt Lake County.--Hon. T. D Lewis, Judge.

Action to recover the possession of certain chattels or their value. From a judgment in favor of the plaintiff, the defendant appealed.

AFFIRMED.

S. P Armstrong, Esq., for appellant.

All of said contracts contain provisions authorizing plaintiff under certain conditions, to declare the note due and payable at once, and to take possession of, and sell the property, "and from the proceeds of such sale pay the balance then due on said note, together with all costs for the taking and selling of said property, holding the residue, if any there shall be, subject to the disposal of the maker hereof."

This provision, which requires the vendor on retaking to sell the property, and to account for any surplus to the vendee which may be left after satisfying the note, renders the transaction a sale with mortgage back as security for the purchase price. In short, it is a controlling feature in determining the contract to be a purchase-money mortgage, and not a conditional sale. Shaub v. Screven, 19 S. Car. 446-7; Palmer v. Howard, 72 Cal. 296, 1 Am. St. 60; Herryford v. Davis, 102 U.S. 235, 246; Russell v. Harkness, 4 Utah 202.

If plaintiff retakes the property it must sell it; it could not simply take it and hold it as owner. If plaintiff were the actual owner, why not? This provision is inconsistent with the theory that plaintiff is the owner. As the court says in Palmer v. Howard, 72 Cal. 296: "Moreover, Palmer and Rey were bound to resell the property if they repossessed themselves of it. They could not have kept it as an owner; and not only so, but they were bound to resell for the benefit of the St. Clairs. This provision is, that if they retake they shall sell 'to the best advantage, rendering to said borrower all surplus, if any, after paying the price agreed upon and the expenses of removal and sale.' This is not a feature of an executory contract of sale. It is the chief characteristic of a mortgage, and is the very sum and substance of proceedings for foreclosure."

Another controlling feature which determines the contract to be a mortgage, is the fact that the vendee is bound to pay the full purchase price, without any option of turning the property back and thus being relieved from further payment. Andrews v. Bank, 20 Colo. 313; Herryford v. Davis, 102 U.S. 235, 246; Hart v. Barney, 7 F. 552-3; Palmer v. Howard, 72 Cal. 296; Aultman v. Silha, 85 Wis. 359,

The language of the instrument; "this day sold," is significant. These words show a contract of sale, not to sell. It is not that the vendor will sell, but has sold. "Its meaning is, therefore, that of a sale with retention of the legal title as security for the purchase money." Beardsley v. Beardsley, 138 U.S. 265-7.

The renewal contract which superseded the original contracts was a mortgage, not a conditional sale. If there could be any room for doubt about the nature of this transaction, it should be resolved in favor of the theory of a mortgage. Turner v. Kerr, 44 Mo. 431-2; Aultman v. Silha, 85 Wis. 359.

The rule permitting these secret liens "is at best a harsh one, and should not be enforced except in cases where the agreement to so hold the title is positive and unambiguous." Edwards v. Simonds, 65 Mich. 355; Palmer v. Howard, 72 Cal. 295; Knittel v. Cushing (Tex.), 44 Am. R. 600; Greer v. Church (Ky.), 13 Bush 434-5.

However disguised, a transaction which is in substance a mortgage will be treated as a mortgage and within the chattel mortgage Act, as to parties dealing with the debtor. Damm v. Mason, 98 Mich. 244; Barney v. Hart (Ky.), 1 S.W. 416; Perkins v. Bank, 43 S. Car. 44; Note, 1 Am. St. 63.

"Conditional sales are not favored in law, and where it is doubtful from the face of the instrument whether the contract is a conditional sale or a mortgage, the courts generally treat it as a mortgage, for the reason that such construction will be most apt to attain the ends of justice, and prevent fraud and oppression." Singer v. Smith, 40 S. Car. 531.

Each party is entitled to tax costs.

Where part of the property, in replevin, is given to plaintiff and a part to defendant, each party is entitled to his costs; not as the judgment was given in this case, that each party pay his own costs. Deshler v. Gwillim, 23 Kan. 313-6; Powell v. Hinsdale, 5 Mass. 343; Seymore v. Billings, 12 Wend. 289; McLaren v. Thompson, 40 Me. 287; Brown v. Smith, 1 N.H. 38-9; Lanyon v. Woodard, 65 Wis. 549; Clark v. Keith, 9 Ohio 74; Knowles v. Pierce, 5 Houst. 184; Wright v. Mathews (Ind.), 2 Blackf. 189; Poor v. Woodburn, 25 Vt. 239.

Messrs. Booth, Lee & Ritchie for respondents.

The contracts are conditional sale notes and not mortgages. The appellant cites and relies upon the case of Palmer v. Howard, 72 Cal. 293-6, for a reversal of the decision of the trial court. The above case was a very poorly considered case, and the Supreme Court of California has overruled it. Rodgers v. Bachman, 109 Cal. 552; Van Allen v. Francis, 123 Cal. 474; Perkins v. Mettler, 126 Cal. 100; Harkness v. Russell, 118 N. S. 663.

"A sale conditional upon the full payment of the purchase price before title can be transferred to personal property, is valid against third parties who subsequently purchased the property without notice." Shoshonetz v. Campbell, 7 Utah 46; Lippencott v. Rich, 19 Utah 140, 22 Utah 196; Machine Works v. Parsons, 10 Utah 105; Hirsch v. Steel, 10 Utah 19; Laundry v. Dale, 22 Utah 320.

The renewal contract is a conditional sale and not a mortgage. "It has been seen that, to constitute a common law mortgage, title must pass from the debtor to the creditor. There can be no common law mortgage without something conveyed by the mortgagor to the mortgagee. This feature is obviously lacking in a case where property is sold, and the seller retains the title to secure the payment of the price. Such transaction is not a mortgage but a conditional sale." Hammon on Chattel Mortgages, sec. 4, pp. 9, 10. The above author cites numerous cases to support the text above quoted.

STRAUP, J., delivered the opinion of the court. BARTCH, C. J., and McCARTY, J., concur.

OPINION

STRAUP, J.

STATEMENT OF FACTS.

This action was brought in the district court for Salt Lake county by the Freed Furniture & Carpet Company, respondent, against P. A. Sorensen, appellant, for the possession of certain chattels, or their value. A jury having been waived, the court found the facts and rendered judgment for respondent for a recovery of part of the chattles and judgment for appellant for part. Appellant appeals from the portion of the judgment for respondent. Respondent and appellant were both engaged in the furniture business in Salt Lake City, and both at different times sold to one C. C. Fairchild a lot of household goods and furnishings. Among the facts the court found: That on January 11, 1901, the respondent delivered to said Fairchild a part of the chattels described in the complaint, upon the following terms and conditions:

"$ 280.00. Salt Lake City, Utah January 11, 1901. For value received I, the subscriber residing at No. Commercial Street, in Salt Lake City, Utah promise to pay to the Freed Furniture & Carpet Company, or order the sum of two hundred and eighty dollars, payable in installments, as follows: The first payment of fifty dollars on the 12th day of January, 1901, and thereafter ten dollars on the day of each succeeding week, till the amount of this note is paid in full, payable at the office of the Freed Furniture & Carpet Co., in Salt Lake City, Utah with interest at the rate of one per cent per month after maturity, both before and after judgment, until fully paid. This note is given for the following described personal property this day sold to the maker hereof by the Freed Furniture & Carpet Co., to-wit: [Here follows a description of the property.] and it is fully understood and agreed that the ownership, title and right of possession of the said property above mentioned, and for which this note is given, shall not pass from the said Freed Furniture and Carpet Company until this note is paid in full, and that should the maker hereof, at any time before this note is paid in full, attempt to sell or otherwise dispose of said property, or to remove the same from the premises above noted as the residence of said maker, without the written consent of the holder of this note, or in case of default of any of the payments as above mentioned, then and in either case, the holder of this note shall have the right to declare this note due, and it shall then be lawful for the Freed Furniture & Carpet Co., or its agents, to take immediate possession of said property wherever found, and to sell the same at public or private sale, and without notice to the maker, and from the proceeds of such sale pay the balance then due on said note, together with all the costs for the taking and selling of said property, holding the residue, if any there shall be, subject to the disposal of the maker thereof. C. C. Fairchild."

On February 25, 1901, and on June 24, 1901 respondent delivered to said Fairchild a part of the goods and chattles described in the complaint, and on the day last named they adjusted and determined the amount then due, including the goods last sold, and a new note was executed, conditioned as above, in which were specified all the goods delivered by virtue of the prior agreements, as well as some goods which the said Fairchild had, previously to the making of any of the said agreements, bought from respondent, and fully paid for. On ...