Neitzel v. Beam

• Decision Date: 26 April 1926
• Citation: 42 Idaho 411,245 P. 936
• Parties: H. R. NEITZEL, Doing Business as the BANNOCK MOTOR SALES COMPANY, Appellant, v. W. C. BEAM, Doing Business as the MOTOR INN GARAGE, Respondent
• Court: Idaho Supreme Court

245 P. 936

42 Idaho 411

H. R. NEITZEL, Doing Business as the BANNOCK MOTOR SALES COMPANY, Appellant, v. W. C. BEAM, Doing Business as the MOTOR INN GARAGE, Respondent

Supreme Court of Idaho

April 26, 1926

CONDITIONAL SALES-ASSIGNMENT OF SALES CONTRACT BY VENDOR-EFFECT OF INDORSEMENT BY VENDOR-EFFECT OF USING CONDITIONAL SALES NOTES AS COLLATERAL-VENDOR'S RIGHT TO MAINTAIN ACTION IN CLAIM AND DELIVERY.

1. Where vendor on conditional sale delivers possession to vendee, and thereafter sells and assigns sales contract to third party, assignee is substituted to all rights of assignor who is left without interest; title resting in assignee.

2. Provisions of C. S., sec. 6063, that transfer of non-negotiable contract for payment of money transfers all rights of assignor, only apply where instrument is sold or transferred for value and not deposited as collateral security.

3. Mere indorsement does not operate to transfer or assign a non-negotiable instrument without delivery thereof.

4. Indorsement by vendor in conditional sale contract of conditional sale notes, and placing them as collateral to general line of credit, does not constitute an election to treat sale as absolute.

5. Where vendor in conditional sale contract placed notes as collateral to general line of credit with right to possession of any notes deposited, seller was not thereby deprived of right to maintain action in claim and delivery for possession of property covered by conditional sale contract.

6. Mere assignment or indorsement for security of conditional sale notes or contracts does not vest title to property in holder of collateral, particularly when indorsement is to secure general line of credit.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.

Action in claim and delivery. Judgment for defendant. Reversed and remanded.

Reversed and remanded, with instructions. Costs awarded to appellant.

S. Ben Dunlap and W. B. Davidson, for Appellant.

Title retaining notes or conditional sales contracts are not negotiable instruments under the negotiable instrument law. (C. S., secs. 5868, 5872; Kimpton v. Studebaker Bros., 14 Idaho 552, 125 Am. St. 185, 14 Ann. Cas. 1126 94 P. 1039.)

In order to create a valid assignment of a non-negotiable instrument, the intent to assign and transfer the owner's interest must exist, and there must be a present transfer of the assignor's right, a transfer so far complete as to deprive the owner of his control over the subject of the assignment. The intention must be to vest a present right in the thing assigned. (Donovan v. Middlebrook, 95 A.D 365, 88 N.Y.S. 607.)

As to bonds, and notes not negotiable, the legal title to them passes by assignment only; and as to them, indorsement is not equivalent to assignment. As to them, assignment means more than indorsement; it means indorsement by one party, with intent to assign, and an acceptance of that assignment by the other party. (Bank of Marietta v. Pindall, 2 Rand (23 Va.) 465.)

Under the provisions of C. S., sec. 6413, before one may enforce a lien for the improvement of personal property, it must appear that the work was done at the request of the owner. (Alexander v. Mobile Auto Co., 200 Ala. 586, 76 So. 944; Small v. Robinson, 69 Me. 425, 31 Am. Rep. 299; Lloyd v. Kilpatrick, 71 Misc. 19, 127 N.Y.S. 1096; Shaw v. Webb, 131 Tenn. 173, Ann. Cas. 1916A, 626, 174 S.W. 273; Lowe v. Woods, 100 Cal. 408, 38 Am. St. 301, 34 P. 959.)

The pledgee of property does not sustain the relation of owner to the property pledged. (C. S., secs. 6388, 6396, 6397, 6403, 6406; Murphy v. Bartsch, 2 Idaho 636, 23 P. 82.)

The vendor named in a title note, even though he has pledged the note as collateral security, does not forfeit his right of ownership therein, and still has such an interest in the note and in the title to the property reserved therein that he can bring an action to recover possession of the said property upon the default of the purchaser in the absence of any objection by the pledgee of the note. (Gilman v. Heitman, 137 Iowa 336, 113 N.W. 932; Norton v. Warner, 3 Edw. Ch. (N. Y.) 106; Ridgway v. Bacon, 72 Hun, 211, 25 N.Y.S. 651; Simson v. Saterlee, 64 N.Y. 657; Burlingame v. Parce, 12 Hun (N. Y.), 194; Williams v. Rorer, 7 Mo. 556; Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237; Story on Bailments, p. 311, sec. 308; Richardson v. Ashby, 132 Mo. 238, 33 S.W. 806; Dickey v. Porter, 203 Mo. 1, 101 S.W. 586; 22 Am. & Eng. Ency. of Law, 2d ed., 64.)

Cleve Groome, for Respondent.

The appellant must establish his right to immediate possession at the time of the bringing of the action and not at some time prior thereto, or after that time. (Bingham County etc. Assn. v. Rogers, 7 Idaho 63, 59 P. 931; Afferbaugh v. McGovern, 79 Cal. 268, 21 P. 837; Frederick v. Tracy, 98 Cal. 658, 33 P. 759; Manti City Sav. Bank v. Peterson, 30 Utah 475, 116 Am. St. 862, 86 P. 414; Chan v. Slater, 33 Mont. 155, 82 P. 657.)

When the vendor in a title note transaction elects to treat the unpaid portion of the purchase price as a debt, the title passes to the vendee and the sale is absolute. (Utah Implement Co. v. Kesler, 36 Idaho 476, 211 P. 1079; McMasters v. Torsen, 5 Idaho 536, 51 P. 100; Bernhard v. Idaho Bank & Trust Co., 21 Idaho 598, Ann. Cas. 1913E, 120, 123 P. 481; Kaesemeyer v. Smith, 22 Idaho 1, 123 P. 943, 43 L. R. A., N. S., 100; Winton etc. Co. v. Broadway Automobile Co., 65 Wash. 650, 118 P. 817, 37 L. R. A., N. S., 71; Merchants & Planters Nat. Bank v. Thomas, 69 Tex. 237, 6 S.W. 565; Parlin & Orendorff Co. v. Harrell, 8 Tex. Civ. App. 368, 27 S.W. 1084; Sioux Falls Adjustment Co. v. Akins, 32 S.D. 154, 142 N.W. 651.)

The indorsement of a title note by the seller to a third person, without proper words of assignment also assigning the property title reserved therein, is an election to treat the transaction as a debt. The indorsee in such instance does not gain title to the property involved in the conditional sales contract or title retaining note, thereby vesting title in the purchaser of the property. (Winton etc. Co. v. Broadway Automobile Co., supra; Burch v. Pedigo, 113 Ga. 1157, 39 S.E. 493, 54 L. R. A. 808; Merchants & Planters Nat. Bank v. Thomas, supra; Parlin etc. Co. v. Harrell, supra; Farrar v. Bracket, 86 Ga. 463, 12 S.E. 686; Hunt v. Harbor, 80 Ga. 746, 6 S.E. 596; Carhart v. Reviere, 78 Ga. 173, 1 S.E. 222; Bradley v. Cassels, 117 Ga. 517, 43 S.E. 857.)

Though the vendee in possession of a chattel under a conditional sale contract has not title between himself and the true owner, yet he may pledge the property to one who loans him money or credit bona fide without notice and the latter will acquire a valid lien on the property for the payment of the money loaned and will be protected against the vendor's claim for the purchase money. (Ohio & M. Ry. Co. v. Kerr, 49 Ill. 458; Michigan Cent. Ry. Co. v. Phillips, 60 Ill. 109; Western Union R. Co. v. Wagner, 65 Ill. 197; Brudage v. Camp, 21 Ill. 330.)

The pledgor may convey or assign his rights in the goods pledged to a third party, but he has no right to the possession of the goods until the debt has been paid or the pledge or lien otherwise discharged, and until then the pledgee has the whole present interest. (Austin v. Vanderbilt, 48 Ore. 206, 120 Am. St. 800, 10 Ann. Cas. 1123, 85 P. 519, 6 L. R. A., N. S., 298; Minneapolis Agricultural & M. Assn. v. Canfield, 121 U.S. 295, 7 S.Ct. 887, 30 L.Ed. 962; De Clark v. Bell, 10 Wyo. 1, 65 P. 852; State Nat. Bank v. McMahan, 45 Okla. 585, 146 P. 1; C. S., secs. 6388, 6389.)

The pledgee of property has the control of it for the time being and represents not only his own interest, but that of the pledgor in taking any proper action for the preservation of it and the collection and care of the proceeds. (Shaw v. Wellman, 59 Hun, 447, 13 N.Y.S. 527; Jones on Collateral Security, 3d ed., sec. 430.)

The pledgor has no right to maintain an action against a third person for the recovery of the property pledged until he has paid or tendered the payment of his debt. (Selleck v. Macon Compress & W. Co., 72 Miss. 1019, 17 So. 603; Peebles v. Murphy (Miss.), 17 So. 278.)

BAUM, Commissioner. William A. Lee, C. J., and Budge and Givens, JJ., concur. Wm. E. Lee, J., did not sit at the hearing or participate in the decision in this case.

OPINION

BAUM, Commissioner.--

In the year 1920, the plaintiff, appellant herein, delivered to one Fred McKinley two trucks and one touring-car, receiving from the said McKinley four certain conditional sale contracts or title notes. Each of the said notes contained an express reservation of title in the plaintiff until the amounts mentioned in said notes were paid. McKinley thereafter made certain payments, but during the year 1922 became in default in his payments on each of said notes, and was in default on December 5, 1922, the day this action was instituted. During 1922, appellant established a line of credit with a banking institution in Boise, and deposited with such institution, as collateral security, certain notes; and the notes in question, containing the indorsement of the appellant, some time prior to, and subsequent to, December 5, 1922, were so deposited as collateral. No record was kept by the bank of the notes so deposited, and he could call for any of the paper so deposited and obtain the same, or could substitute other paper therefor. Appellant produced the notes in question on the day of the trial. During 1922, the defendant, respondent herein, performed certain work upon the motor-cars, and furnished to said McKinley at various times at his request, certain supplies; and McKinley was indebted to the respondent in the sum of $ 658.97. On December 5, 1922...