Montpelier Sav. Bank & Trust Co. v. Mitchell, 1898
| Decision Date | 01 November 1960 |
| Docket Number | No. 1898,1898 |
| Court | Vermont Supreme Court |
| Parties | MONTPELIER SAVINGS BANK & TRUST CO. v. Kenneth C. MITCHELL et al., and Trustees. |
W. Edson McKee, Montpelier, for plaintiff.
Paterson & Eldredge, Montpelier, for defendant.
Before HULBURD, C. J., and HOLDEN, SHANGRAW, BARNEY and SMITH, JJ.
This case involves the distribution by the officer of the proceeds received from a foreclosure sale on a conditional vendor's lien. We are concerned with the first two sentences of 9 V.S.A. § 1695 which reads as follows: So our question here is, did the constable turn over the balance of the proceeds to a 'person holding under' the conditional vendee?
In the last analysis, the question before us is whether the judgment order of the court below, which, in effect upheld the sheriff's distribution, can be supported on the facts. The case abounds in legal conclusions expressed by the commissioner and court below. Fortunately, the controlling facts are not in dispute. Our problems, therefore, can be resolved by seeing to it that the law is properly brought to bear on the situation presented by the known facts.
The significant particulars in the sequence of events, leading up to this litigation, were these. In August, 1956, Kenneth Mitchell bought a crawler tractor and other equipment under a conditional sale contract from State Equipment Company, Inc. Thereafter, in March 1958, he gave a chattel mortgage on this property to Plante and Griffith Lumber Company, Inc. Later, in November 1958, Kenneth Mitchell and Emily F. Mitchell gave a chattel mortgage on the same property to State Equipment Company, Inc., the original conditional vendor. All instruments were duly recorded in the order in which they were given. On February 14, 1959, the conditional sale contract was turned over by State Equipment Company, Inc. to Henry C. Lawson, constable, for foreclosure. This he proceeded to do. Having had his sale pursuant to the statute, the constable duly filed his return which showed that from the $5,800 brought in by the sale, he first paid State Equipment Company, Inc. as conditional vendor, the amount of its lien. Next, having deducted certain items of costs and the like, about which there is no dispute, the sheriff paid Plante and Griffith Lumber Company, Inc., the amount of its chattel mortgage. The balance, remaining in his hands, he paid to State Equipment Co., Inc., to apply on its chattel mortgage and note. The return, showing all this, was filed on March 17, 1959.
On April 6, 1959, the plaintiff, the Montpelier Savings Bank & Trust Company, brought suit against the Mitchells, and in this action, on a promissory note held by it, service was made on constable Lawson and State Equipment Co., Inc. as trustees. The trustees made 'no funds' disclosures. Thereupon the plaintiff applied to the county court for the appointment of a commissioner as provided for in 12 V.S.A. § 3070. At the hearing before the commissioner, the plaintiff made no claim of any error on the constable's part other than asserting that the statute as to the application of the proceeds of the sale did not authorize payment by the constable to one holding a chattel mortgage given by a conditional vendee. The plaintiff argued before the commissioner, as here, that when a conditional vendee gives a chattel mortgage, the mortgagee is not--in the words of the statute a 'person holding under' the conditional vendee and hence is not entitled to share in the proceeds of a foreclosure sale. The commissioner adopted this contention of the plaintiff and reported to the county court accordingly. The county court rejected this view and by its judgment order approved the distribution made by the constable, giving judgment to the trustees.
In passing on the action of the county court we must first inquire: can a conditional vendee give a valid chattel mortgage on the property conditionally sold to him? The answer is 'yes'. The vendee under a conditional sales contract acquires immediately an interest or special property in the subject of the sale, recognized in law as well as equity, which he may dispose of without the consent of the vendor. 47 Am.Jur. Sales § 924. See annotation in 87 A.L.R. 942; cf. Uniform Conditional Sales Act § 13. The transfer by the conditional vendee of his interest is, of course, subject to the rights of the conditional vendor, but the transferee acquires whatever right the conditional vendee has. Hatch v. Lamos, 65 N.H. 1, 17 A. 979, 4 L.R.A. 404.
It follows from the foregoing, and it has...
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