McRae v. Merrifield

• Decision Date: 15 January 1887
• Citation: 2 S.W. 780,48 Ark. 160
• Parties: MCREA ET AL. v. MERRIFIELD ET AL
• Court: Arkansas Supreme Court

2 S.W. 780

48 Ark. 160

MCREA ET AL. v. MERRIFIELD ET AL

Supreme Court of Arkansas

January 15, 1887

APPEAL from Clay Circuit Court, Hon. W. H. CATE, Judge.

Judgment affirmed.

E. F Brown, for appellant.

1. A fair interpretation of the contract shows that the title passed to Erwin & Nesbit, plaintiffs reserving only a security in the nature of a mortgage, which, not being recorded, was void as against appellants. The proof shows that plaintiff never relied on the condition reserving title but that the delivery was unconditional, and a complete sale. The evidence also required a showing of solvency on the part of the vendees, and looked to other property than the machinery for the security of the notes. The contract is also indorsed: "Paid by notes."

2. No demand was made in this case before suit. (17 Ind. 90; 54 ib., 58.) Vendors cannot assail title as against a bona fide purchaser where he has been guilty of laches. 36 Mo. 497.

3. Where one voluntarily places personal property in the hands of a purchaser, and thus makes him the ostensible owner, a sale by the latter to a bona fide purchaser for value without notice, will be valid to pass the title, although the sale by the owner was on condition of payment for what has not been performed. 5 N.Y. 41; 6 Johns, 437; 37 Barb., 509; 6 Drew, 238; 36 N.Y. 497; 30 Ark. 403; 2 Kent's Com., 6th Ed., 496-7; 77 N.Y. 391; 15 N.Y. 409; 26 ib., 598; 6 Duer., 238; 21 Ill. 330; 25 Barb., 483; 6 Pick. 262; 4 ib., 516; 13 Ill. 614; 8 Wend. 256; 2 Sanders, 47; 4 Wash. C. C., 594; 37 Ill. 370; 24 ib., 591; 46 ib., 487; 68 Ill. 553; 13 ib., 610; 21 ib., 330; 88 ib., 190; 14 S. & R., 214; 5 ib., 286; 10 ib., 419; 4 Watts, 121; 64 Penn., 501; 1 Barr., 190; 8 Wright, 451; 3 Brewster, 548; 2 Grant, 248.

4. Taking the personal guarantee, indorsed upon the notes and contract, extinguished the plaintiff's vendor's lien, and enabled the vendees to pass a good title to an innocent purchaser.

F. G. Taylor, for appellees.

1. Demand was not necessary. 35 Ark. 169.

The contract itself shows that the title was reserved, and that it was a conditional sale. In such a case the rights of the vendors is preferred to those of even an innocent purchaser. Andrews v. Cox, 42 Ark. 473; McIntosh v. Hill, 47 Ark. 363.

OPINION

COCKRILL, C. J.

The appellees (the plaintiffs below) brought an action of replevin against the appellants to recover possession of an engine, a saw mill and a lot of tools, etc. A jury being waived, the court found the facts as follows:

"That plaintiffs on order shipped the mill and other property to Erwin & Nisbet under a contract of sale, in which it was expressly agreed that the title should not pass from the plaintiffs to the purchasers until the purchase money was fully paid. This is shown by the contract which is admitted in evidence. That the purchase money was never paid in full is alleged in the complaint and not denied by the answer; that Erwin & Nisbet sold the mill to defendants for an adequate consideration, which was mostly paid, and that they were innocent purchasers, without notice of plaintiffs' rights, and were dilegent in making inquiry as to outstanding claims, and bought in good faith; that the value of the boiler was $ 500; engine, $ 200; saw mill, carriage and attachment, $ 200; belt and fixtures, $ 50."

Judgement was entered for the plaintiffs.

1. CONDITIONAL SALE: Title: Right of vendor.

The correct determination of this case depends altogether upon the construction that must be given to the contract entered into between the plaintiffs and Erwin & Nisbet, from whom the appellants purchased. If that contract was, in fact, a conditional sale, the title to the property remained in the plaintiffs, unless the condition was performed or waived, and Erwin & Nisbet could transfer no better title, even to an innocent purchaser, than they themselves had. This we have ruled at the present term (McIntosh v. Hill, 47 Ark. 363, 1 S.W. 680), and since the decision, the Supreme Court of the United States, upon an exhaustive review of the authorities, have reached a like conclusion. (Harkness v. Russell & Co., 7 S.Ct. 50.) If, on the other hand, the title passed by the contract, and the plaintiffs have, as it is argued, reserved only a security in the nature of a mortgage, then the purchasers from their vendees took the property freed from this claim because under our law a mortgage is void as against strangers, unless acknowledged or proved and filed for record. The contract, as far as it is material to this question, is as follows:

2. Mortgage or conditional sale: Construction.

"INDIANAPOLIS, Dec. 4, 1882.

"To C. E. Merrifield, Indianapolis, Ind.:

"You are hereby authorized to fill the following order for the undersigned, and have the same ready for delivery at Indianapolis, Ind. on or about the 15th day of December, 1881, and ship to Rector, Clay county, Ark. one 20-horse engine on skids, with wooden axles and 4 1/2 boxes attached, dupley inspirators on engine in place of pumps, we to give you mortgage on engine and mill, and all fixtures we get of you, for which the undersigned hereby agree to pay you the sum of $ 1960, as follows, notes to drawn 8 per cent. from this date until paid:

"Cash

$ 400

Note due 15th June, 1883, for

500

Note due 15th Dec. 1883, for

500

Mote due 15th June, 1884, for

560

Note due 18

Note due 18

$ 1960

"And it is expressly understood that, a part of the consideration for the extension of time above named is that the merchandise herein mentioned shall be fully settled for cash or notes before such merchandise is used, and if the purchaser shall use said merchandise and refuse to make settlement as provided herein, the whole amount shall become due at once, and the purchaser shall have no right to claim any extension of time whatever.

"And it is especially understood and agreed that the title or ownership of above property does not pass from C. E. Merrifield until it is fully paid for (notes and drafts not to be considered as 'payments' until actually paid), and in default of the full payment of any one payment as herein agreed, you or your agent may, without process of law, take full possession of and remove said property above mentioned.

"And it is further agreed that said machinery shall not be attached to so as to become a part of any real estate, but shall remain personal property until the debt herein secured is fully paid. And we hereby bind ourselves not to sell, trade, transfer, convey or otherwise dispose of the machinery above ordered, or any part thereof, until fully paid for, without having first obtained the consent of C. E. Merrifield.

"E. P. ERWIN, (Seal.)

"Jo. NISBET, (Seal.)

"Postoffice, Rector, Clay Co., Arkansas.

"Order sent in by "

Reservation of title.

If we look alone to that provision of the contract which reserves the title or ownership of the property to the vendors, it is evident that it was the intent of the parties not to make an absolute sale and purchase, but only an agreement to sell on the one hand and purchase on the other, upon the condition that the notes described were paid at maturity. The meaning is plain, and the language admits of no other construction.

Promise to give mortgage.

It is argued, however, that the previous provision looking to the execution of a mortgage by the intended purchaser is inconsistent with the plaintiff's ownership, and is itself a recognition of title in Erwin & Nisbet. If a mortgage had been actually executed this would undoubtedly be true, or if the clause were itself a mortgage, the argument would be well founded, for a contract is to be judged by its substance and not by the name that the parties may choose to give it. But all the provisions of a contract are to be construed together, so that if possible they may all harmonize.

Now, a suggestion or even a stipulation by Erwin & Nisbet that they would give a mortgage is not of itself necessarily a mortgage. As was said in Barnett v. Mason, 7 Ark 253: ...