Investment Service Co. v. LaLonde

• Decision Date: 20 February 1964
• Docket Number: No. 36624,36624
• Citation: 63 Wn.2d 834,389 P.2d 414
• Court: Washington Supreme Court
• Parties: INVESTMENT SERVICE CO., an Oregon corporation, Appellant, v. John L. LaLONDE, Respondent.

Page 834

63 Wn.2d 834

389 P.2d 414

INVESTMENT SERVICE CO., an Oregon corporation, Appellant, v. John L. LaLONDE, Respondent.

No. 36624.

Supreme Court of Washington, Department 2.

Feb. 20, 1964.

Rehearing Denied April 10, 1964.

Ned Hall, Vancouver, Hart, Rockwood, Davies, Biggs & Strayer, Donald Paul Hodel, Portland, Or., for appellant.

Robert L. Harris, Vancouver, for respondent.

FINLEY, Judge.

This appeal involves a contest between (1) the holder-assignee of a security interest reserved by the seller of an automobile, and (2) a subsequent purchaser of that automobile. The memorandum of sale was filed as a conditional sale contract. The subsequent purchaser is contending that the security interest is actually a chattel mortgage; that filing it as a conditional sale contract was of no effect, and that he consequently acquired the automobile unencumbered by the security interest. In support of his contention the subsequent purchaser relies upon his interpretation of a provision in the contract which, he claims, authorized the vendor-and/or security holder (a) to repossess the chattel after default by the buyer, and (b) to thereafter obtain a deficiency judgment for the amount remaining due on the contract price. The trial court was persuaded by this argument relating to the dubious contract provision and held that the provision made the security interest a chattel mortgage, and that its being filed as a conditional sale contract consequently was ineffectual, resulting in the entry of summary judgment in favor of the subsequent purchaser.

The circumstances of the original sale may be summarized as follows: Francis Motor Car Company, a corporation located and doing business in the state of Oregon, sold a 1961 Ford automobile to Floyd Johnson, a resident of Clark County, Washington. A document entitled, Retail Installment Contract, was executed, whereby the vendor retained a security interest in the automobile to secure the balance owing on the sales contract. This document was subsequently filed in Clark County as a conditional sales contract.

Shortly thereafter, the respective interests of both the vendor and vendee passed to others. The Francis Motor Car Company assigned the security interest to the United States National Bank of Portland, which, subsequently, assigned it to Investment Service Company, the plaintiff-appellant herein. After Johnson, the original vendee, obtained possession of the automobile under the original sale, Appliance Buyers Credit Corporation (a judgment creditor of Johnson) levied upon the automobile in Clark County, and purchased it at the ensuing execution sale. On the following day, the Appliance Buyers Credit Corporation sold and delivered the automobile to the defendant-respondent, John LaLonde.

Johnson defaulted on the original contract by refusing to make further payments, and the appellant, Investment Service Company, demanded surrender of the automobile. The respondent LaLonde, then in possession of the automobile, refused to surrender it, and Investment Service Company instituted the instant replevin action. After the summary judgment for LaLonde, Investment Service initiated this appeal, claiming the right to immediate possession because of Johnson's default respecting the alleged conditional sales contract.

The crucial question is whether the security interest reserved by the vendor involves a conditional sales contract or a chattel mortgage. If the security device was in fact a chattel mortgage because it contained a provision authorizing a deficiency judgment, then there was no Washington filing, as such, and LaLonde, having no constructive notice of plaintiff's interest, must prevail.

There is no contention on appeal that the characterization of the security device should be made by resort to law other than that of Washington. We do not reach any conflict of law issue on this point, even though the contract was made in Oregon, and that state was apparently the situs of the chattel at the time of delivery pursuant to the contract. If the law of another jurisdiction is not pleaded it will be presumed to be the same as that of Washington. Nissen v. Gatlin (1962), 60 Wash.2d 259, 373 P.2d 491. In Norm Advertising, Inc. v. Monroe St. Lbr. Co. (1946), 25 Wash.2d 391, 171 P.2d 177, we said:

'* * * While chapter 82 [p. 204], Laws of 1941, Rem.Supp.1941, §§ 1278 to 1281, provides that the courts of this state shall take judicial notice of the Constitution, common law, and statutes of every other state, nevertheless § 1281, supra, requires that such laws be pleaded, which was not done in this case.'

The respondent's claim that the appellant's security interest must be treated as a chattel mortgage is based upon certain language in the memorandum of sale, purportedly authorizing a deficiency judgment. The challenged provision is in the section of the security document which spells out the remedies available to the vendor upon default by the vendee. This section contains three separate provisions, denoted as (a), (b) and (c). Clause (a) provides for the repossession of the automobile upon default, and clause (b) provides for suit for the purchase price, without repossessing or otherwise resorting to the property. It is the third clause (c) that contains the allegedly objectionable provision, and is the source of the present dispute. In part, it provides that upon default by the vendee the vendor may

'(c) Elect any other legal or equitable remedy for the recovery of said property or the collection of the amount remaining due under this contract, or both; * * * Any action by seller to enforce payment shalll not waive any of seller's rights hereunder or pass title to said property, and all rights and remedies hereunder are cumulative and not alternative.' (Italics ours.)

It is urged by the respondent that the words, 'or both,' indicate that the propety can be recovered, and then the amount remaining due can also be recovered. He also emphasizes the word, 'cumulative,' in reference to the remedies in the entire section, including clauses (a) and (b), and he asserts that this can only indicate that all of the remedies are to be available and in any order, making it possible to repossess, and then obtain a deficiency judgment.

On the other hand, the appellant emphasizes the word, 'elect,' and the provision which states that an action on the price shall not pass title in the property to the vendee. He suggests that the intent indicated by the words, 'or both,' is to allow an action on the purchase price, and then repossession of the property, if the judgment cannot be collected. By thus reversing the order in which it is...