Ludden & Bates Southern Music v. Hornsby

• Decision Date: 10 September 1895
• Court: South Carolina Supreme Court
• Parties: LUDDEN & BATES SOUTHERN MUSIC HOUSE. v. HORNSBY.

22 S.E. 781

45 S.C. 111

LUDDEN & BATES SOUTHERN MUSICHOUSE.

v.HORNSBY.

Supreme Court of South Carolina.

Sept. 10, 1895.

Lease or Mortgage op Personalty — Replevin —Counterclaim.

1. An instrument purporting to be a lease of a chattel for a term of months, at a stipulated monthly rental, and containing a proviso that the lessee "may, at any time within said term of rental, purchase * * * by paying the above valuation therefor; and, in that case, only, all amounts theretofore paid as rental or advance deposit shall he deducted from the price, "—is a lease, and not a mortgage.

2. In an action to recover possession of a specific chattel, held under a lease which in terms provided that at any time the lessee might purchase the property, and be allowed, as a deduction from the price thereof, all amounts theretofore paid as rental, the defendant may counterclaim in equity, on the ground of fraud in the execution of the contract, for a cancellation thereof, or that the title to the chattel be adjudged in him, or that he be permitted to hold the property until the money paid by him has been refunded.

Appeal from common pleas circuit court of Richland county; Benet, Judge.

Action in replevin by the Ludden & Bates Southern Music House, a corporation, against Martha A. Hornsby. Defendant answered, setting up a counterclaim in equity, and, upon reference of the case to a master, plaintiff's demurrer thereto was sustained. From an order of the circuit court reversing the ruling of the master, and ordering the case back to him for trial, plaintiff appeals. Affirmed.

The following are the exceptions referred to in the opinion: "The defendant excepts to the report of the master, * * * and will ask for a reversal thereof: (1) For that said master sustained the demurrer to the defendant's answer. (2) For that said master declined to entertain defendant's defense, as set up in her answer, or the testimony offered to sustain the same. (3) For that said master re fused to entertain said defense, on the ground that he failed to perceive how an answer could change a law case into an equity case. (4) For that said master held that the case at bar was similar in principle to an action to recover possession of chattels mortgaged, after condition broken, and relied upon the cases as to chattel mortgages for authority in deciding the issues raised by the demurrer. (5) For that the master held that defendant limited her right to hold possession of the property at issue to the single plea that 'she reserved the right to become a purchaser for the sixty-five dollars paid under the terms of the agreement, and accordingly refused to surrender possession when demand therefor was made upon her, ' whereas said defense was one of two interposed by said defendant, and, in any event, she was entitled to any relief set up in her answer, supported by the proof and pleadings, and authorized by the subject-matter of the controversy. (6) For that said master decided that plaintiff is entitled to a decree adjudging that it is entitled to the possession of the organ in question, and to recover of the defendant the sum of twenty-five dollars as a reasonable counsel fee for the attorney in this case. (7) For that the master declined to entertain the defendant's plea, and yet considers and discusses it throughout his report, and bases much of his adverse decision upon proof adduced in support of the allegations affirmatively set out in said pleadings."

The order referred to is as follows: "The plaintiff, a corporation duly incorporated under the laws of the state of New Jersey, brings its action in claim and delivery against the defendant, and alleges that, under the terms of a 'lease, ' hereto attached as an exhibit, it leased a certain musical instrument, to wit, an organ, to the defendant, upon the terms, and subject to the conditions, therein particularly set forth, which permitted her to buy said organ for the sum of one hundred and fifteen dollars. The defendant, in answering said complaint, admits the execution of the paper termed a 'lease, ' and alleges that certain payments, aggregating sixty-five dollars, have been made by her under its terms; that, after paying said sum, she has discovered that a fraud has been practiced upon her by the plaintiff, whereupon she has refused to make further payments, and has offered to restore the organ to plaintiff upon the return of the money obtained from her by reason of the fraud and imposition complained of. The alleged fraud, as charged in the answer, amounts to this: That at the time of, and before, the signing of the lease under which plaintiff proceeded, the plaintiff represented to defendant that the instrument in suit was a new one, which had never been out of its storeroom, and that it was, in all respects, in good order; whereas she has discovered that it is a worn and second-hand instrument, worth no more than the sum already paid by her to plaintiff, whereupon shehas refused to pay any more of the installments claimed by said plaintiff. Thereupon a consent order was made, referring the case to the master for Richland county, with instructions to take the testimony and report upon all matters of law and fact At the first reference held by that officer the plaintiff interposed an oral demurrer to the answer, on the ground that the affirmative defenses set up in the answer did not state facts sufficient to constitute a cause of action. At first the master overruled the demurrer, but, after the testimony was all in, he entertained and sustained it, and, having dismissed the affirmative defenses interposed in the answer, reported to this court his finding that the demurrer was well taken. Upon exceptions having been filed by the defendant, the case comes before me for consideration.

"I shall not address my remarks to the exceptions as filed, but rest my decision upon the ground, raised by the answer, that fraud and imposition were practiced upon the defendant in obtaining her signature to the contract of lease which is the foundation of the pending controversy. It is hardly necessary to make refutation of the master's position that an answer cannot change a law case into an equity case. The case (Maxwell v. Thompson, 15 S. C. 612) which he cites to sustain that doctrine does not apply here, where a consent order has been made, based upon an equitable defense, referring all issues of law and fact to him for his determination. See Adicks v. Lowry, 12 S. C. 108; Parker v. Jacobs, 14 S. C. 118; Chapman v. Lipscomb, 18 S. C. 233. It is very true that the supreme court, in the case entitled Music House v. Dusenbury, 27 S. C. 464, 4 S. E. 60, has interpreted the paper here sued on as a lease, and not as a chattel mortgage. But it is equally true that the extreme doctrine therein enunciated has been limited by the later case, decided by that same tribunal, entitled Manufacturing Co. v. Smith (S. C.) 19 S. E. 132, where it is declared by Mr. Justice McGowan, as the mouthpiece of the court: 'It is difficult for one to sell and deliver property, and at the same time to remain owner of it. After careful consideration, I feel constrained to concur with his honor, Judge Izlar, that the contract between these parties was not a lease, but, substantially, a sale of the machine for fifty-five dollars, —ten dollars in cash, and the remaining forty-five dollars in small installments. * * * We think that a lease is generally executed by the owner of the property. This paper was signed by the person negotiating for a purchase of the article. The defendant could not secure the credit portion of the purchase money until some interest was conveyed to him by the company.' Neither can I agree with the plaintiff or the master that the case under consideration, and the answer interposed by defendant, are settled by Manufacturing Co. v. Smith, supra, or by Talbott v. Padgett, 30 S. C. 167, 8 S. E. 845, because those cases decided no such issues as are raised in this case. On the contrary, they rightfully decided, in keeping with the unbroken line of precedent, that the defendant in claim and delivery is not entitled to an accounting, nor can he interpose a counterclaim in his answer. The defendant, however, has a right, under the new practice, to interpose an equitable defense, which puts in issue the making of the contract itself, — call it what you may: lease, conditional sale, or chattel mortgage. And such a defense is properly pleaded and a proper matter of investigation in a court of equity, and, when sustained by legal proof, entitles the party to the protection of this court when, in a case of claim and delivery, or in any other law case, it can be shown 'that, at the time of entering into the agreement to purchase said organ, said plaintiff, its agents and servants, assured this defendant that the organ she was purchasing was new, and bad never been in use, that it was in...