I. J. Bartlett Co. v. Ness

• Decision Date: 05 October 1923
• Docket Number: No. 23498.,23498.
• Citation: 195 N.W. 39,156 Minn. 407
• Parties: I. J. BARTLETT CO. v. NESS.
• Court: Minnesota Supreme Court

156 Minn. 407

195 N.W. 39

I. J. BARTLETT CO.

v.NESS.

No. 23498.

Supreme Court of Minnesota.

Oct. 5, 1923.

Appeal from District Court, Goodhue County; Albert Johnson, Judge.

Action by the I. J. Bartlett Company against O. A. Ness. Verdict for defendant, and from an order denying its motion in the alternative for judgment or a new trial, plaintiff appeals. Reversed.

Syllabus by the Court

In this action replevining an automobile, plaintiff merely alleged ownership and right of possession; defendant alleged a purchase thereof, inability to pay an installment when due, two extensions granted for usurious sums exacted; the reply predicated the right of ownership and possession upon the conditional sales contract executed upon the last extension of time; and plaintiff when the trial opened announced that it stood on that contract. Such being the pleadings and position taken by plaintiff at the trial, it is held: The court did not err in submitting as the sole issue whether defendant had proven the last contract void for usury; nor was there error in refusing to direct a verdict for plaintiff, based on the proposition that no usury in the extensions invalidated the original sales contract.

Remarks of the court held so prejudicial to appellant that a new trial should be had. Ell M. Rosenstein, of Minneapolis, for appellant.

A. J. Rockne, of Zumbrota, for respondent.

HOLT, J.

Action in replevin in which defendant had a verdict. From an order denying its motion in the alternative for judgment or a new trial, plaintiff appeals.

The complaint alleged plaintiff's ownership and right of immediate possession to a certain Hudson automobile of the value of $1,000, also its wrongful detention by defendant. The answer alleged a purchase thereof by defendant from plaintiff on January 7, 1921, for $1,500; the payment of $900 of the price and the giving of a promissory note for $600, due May 1, 1921, and bearing interest at 8 per cent.; the inability to pay the whole thereof when due and an extension of time for which plaintiff exacted a usurious charge of $27.50; the granting of a further extension on September 15, 1921, upon a further usurious exaction of $26 in addition to the interest stipulated; and a demand that the usurious instruments be canceled. The reply averred that the sale of the automobile was evidenced by a contract of January 7, 1921, under which title remained in plaintiff until payment of the purchase price with the right of plaintiff to retake the automobile if default was made; that default was made and because thereof the suit was begun. It was further alleged that the $27.50, received from defendant when the extension of May 7th, and the $26, when the one of September 15th were given, went to pay the charges of the note brokers to whom plaintiff had transferred the promissory notes given by defendant in the transaction; and alleged that this was done for and at the request of defendant. The reply then ‘admits that on the 15th day of December, 1921, the said note for $426 became due and payable, and alleges that by reason of the failure on the part of said defendant to pay said note the plaintiff herein was compelled to pay the same to the holder thereof, thereby becoming the owner of said note, and the conditional sales contract given at the time of the execution of said note; that as the owner of said conditional sales contract and note, the plaintiff elected to retake the said automobile upon default in said payment and has retaken the same.’

At the trial plaintiff offered the note for $426 with the conditional sales contract executed September 15, 1921, and when defendant objected that these instruments were merely renewals and did not show the entire dealings, the court inquired of plaintiff's counsel whether those instruments were the basis of the cause of action. His answer was:

‘Yes, sir; if there are any renewal contracts, or anything else, it is part of their case and not part of our case.’

With the introduction of that note and contract plaintiff rested. Thus by both proof and pleading plaintiff planted its right of possession upon the last sales contract. Defendant in attempting to prove the usury introduced the original contract and the subsequent contracts with the notes, not already in evidence. To negative usury plaintiff offered a written order for the automobile executed at the time of the first contract, wherein plaintiff agreed to extend the time of payment, and defendant to pay for such extensions. Plaintiff's testimony also disclosed that the extension contracts and notes were accepted in payment of the previously executed instruments. When the evidence was in, plaintiff moved for a directed verdict on the ground that the automobile could be taken under the terms of the original sales contract even though superseded by the renewal contract relied on in the reply and this be conceded tainted by usury and void. The motion was denied.

[1] It is true that, if the original debt and security is free from usury, any extension of time by a substituted usurious security does not preclude the holder of the debt from resorting to the original security. Burnhisel v. Firman, 22 Wall. 170, 22 L. Ed. 766;Farmers' & Mechanics' Bank v. Joslyn, 37 N. Y. 353;Patterson v. Birdsall, 64 N. Y. 298, 21 Am. Rep. 609;Ganz v. Lancaster, 169 N. Y. 357, 62 N. E. 413,58 L. R. A. 151;Morse v. Wellcome, 68 Minn. 210, 70 N. W. 978,64 Am. St. Rep. 471; and Cain v. Bonner, 108 Tex. 399, 194 S. W. 1098, 3 A. L. R. 874, with annotation of cases. But some regard must be paid to the issues as presented by the pleadings, the position taken by the holder of the debt at the trial, and the character of the action. This was an action in replevin wherein plaintiff asserts the exclusive ownership and immediate right of possession to an automobile under a contract which absolutely forfeits all payments which had been made on its purchase. In justice and fairness defendant ought to have the opportunity to make the small payment yet due and to receive credit for all amounts paid pursuant to any usurious sums exacted for renewals. When usury was tendered as a defense, plaintiff should have placed itself in a position which indicated that it would rely on the original contract rather than on the one substituted. On the contrary, in the reply as well as when the court at the beginning of the trial, in order to make a ruling, inquired as to the basis of the action, plaintiff announced that it stood on the note and contract of September 15, 1921. If plaintiff had desired to go back to the original sales contract, the correct procedure is suggested in Eckart v. Roehm, 43 Minn. 271, 45 N. W. 443. In Cowles v. Canfield, 49 Minn. 496, 52 N. W. 135, a suit to foreclose a mortgage substituted for a former mortgage securing the same debt, usury in the last mortgage defeated plaintiff...