Payne v. Parker

• Citation: 48 So. 835,95 Miss. 375
• Decision Date: 18 January 1909
• Docket Number: 13,679
• Court: United States State Supreme Court of Mississippi
• Parties: WILLIAM L. PAYNE v. RICHARD S. PARKER, TRUSTEE

48 So. 835

95 Miss. 375

WILLIAM L. PAYNE v. RICHARD S. PARKER, TRUSTEE

No. 13,679

Supreme Court of Mississippi

January 18, 1909

FROM the circuit court of Lee county, HON. EUGENE O. SYKES, Judge.

Payne appellee, was plaintiff in the court below; Parker, trustee appellant, was defendant there. From a judgment predicated of a peremptory instruction in plaintiff's favor defendant appealed to the supreme court.

Parker the appellant, was trustee in a deed of trust executed by one James Little for the benefit of Thompson & Son, the deed of trust conveying two mules and a mare. As trustee Parker took possession of the animals; whereupon Payne, the appellee instituted this replevin suit to recover their possession. Payne's claim was based upon an alleged reservation of title by him as seller of the property until the full amount of the purchase price due from Little, the alleged buyer should be paid.

The facts are fully stated in the opinion of the court.

Reversed and remanded.

Anderson & Long, for appellant.

We do not contend that under the law of this state, the seller of personal property cannot reserve the title until the same is paid for, and neither do we contend that any writing is necessary for this purpose, but we do contend, that, in order for a seller of personal property to reserve the title, or to be a seller thereof, he must be the owner of the property at the time of the sale and must have the title thereto, and also must have possession or right to the possession at the time he sells it or at some future time. In this case, appellee had neither the title, possession nor right to possession of the mules and mare at the time he claims to have sold them to Little and to have reserved the title in himself. According to his testimony, which is all there is on this point, he contends that in one conversation or verbal contract he bought from, and sold back the mare and mules to Little, and that Little sold to him and bought back the same property. In other words he claimed that both of them in one conversation, or deal, were buyers and sellers of the same property.

In order to constitute a transaction a sale there must be a subject matter, a purchaser and a seller; and the purchaser must acquire the title to the subject matter and the possession or right to the possession, either present or in the future. Under appellee's testimony he never did acquire the possession of the mules and mare, it was not intended for him to have the possession thereof, nor did he get the right to the possession, either present or in the future; for in one offer he bought and sold, and in one acceptance Little sold and bought. Had appellee asked Little for the possession, Little's reply would have been: "You are not entitled to the same, and have never been entitled to anything except the $ 325 when it is due." Had the mules and mare dropped dead prior to the conversation, during the time of it, or afterwards, the property would have been Little's and whatever loss there would have been would have fallen upon Little and not upon appellee. Little would still have owed appellee the amount of money due him, for which appellee could have sued him, and realized the amount by judgment and execution, and there was never a time in the whole transaction when the property was appellee's, and when Little would have been absolved from liability to pay appellee the amount of the debt Little owed him. There never was a time in the whole deal when appellee could have sold the live stock to a third party, and when Little could have been forced to surrender the possession of the same, nor was there ever a time that appellee could have replevied the stock from Little, and have claimed the property, instead of the $ 325 due him.

The doctrine by which sellers of personalty are allowed to reserve the title therein as against innocent third persons without placing such reservation of record, operates as a hardship on the purchasers thereof in good faith and on bona fide encumbrancers, and such doctrine will not be extended to cases not strictly within the terms and letter of the law. The only reason why this doctrine is supposed to be fair and just is, that, as the seller of personal property has lately had possession of the property and parted with the same, this is presumed to be notice of how it is held by his vendee. In this case appellee never had at any time the possession of the mules and never had the title thereto, and it had been, according to his testimony, three years or more since he had had the mare in his possession; and during this time he had taken a note and deed of trust on the mare, placed it of record, and had marked it satisfied of record, thus leading the public not only to decide that Little was the owner, but that he, the appellee, had been paid in full for her.

It is often difficult to decide whether a transaction is a conditional sale or a mortgage, and the usual ruling is that where one party owes the other a debt and property is used for the security of the payment of the debt and the debt is kept alive, the transaction is a mortgage and not a conditional sale. The intention of the parties, to be gleaned from all of the facts in the sale, is also a controlling factor in deciding whether the deal is a mortgage or a conditional sale: Sewall v. Henry 9 Ala. 33; Rockwell v. Humphreys, 57 Miss. 410; Weatherly v. Weatherly, 40 Miss. 462; Lawson's Rights & Practice, sec. 3076.

If this transaction between appellee and Little is held to be a conditional sale of the property from appellee to Little, and to bind bona fide purchasers and encumbrances, then the giving of trust deeds on personal property for the security of the money in any case is a waste of time, labor and expense for recording fees. All a creditor would have to do would be, in one breath to buy his debtor's property and then sell it back to the debtor and reserve the title, without any change of possession, or right to possession, and without anything existing, to give the public any notice of such rights. Or if one person should desire to borrow money from another, and hold personal property for security, all he would have to do would be to say: "I sell you this horse for $ 100 and buy him back for $ 100 and he is yours until paid for;" and on the purchaser's handing over the money the transaction would be complete.

Who can reserve the title? No one except the owner. Who is the owner? That person having the title and the right to dispose of property. In this case, as we have said above, Payne, the appellee, was never the owner of the mules or mare and never had the right at any time to dispose of them, and at best, from all of the testimony, he only had an equitable claim or mortgage, not shown of record, against the mules and mare, and of which Thompson & Son had absolutely no notice or knowledge. The deal or transaction between Payne, the appellee, and Little, the owner of the mules and mare, is almost exactly the same as the deal between the parties in the case of Barnes v. Holcomb, 12 Smed. & M. 306, except that in the case cited the instrument which was attempted to be declared a conditional sale instead of an equitable mortgage and the accompanying papers which were given with such instrument, were all in writing, but yet the facts and intentions of the parties in the Barnes case, supra, were identically the same as the intentions and conduct of the appellee and Little here. In the Barnes case, the transaction was declared to be a mortgage and not a conditional sale, and it was also held that an absolute purchase under the facts of the case could have hardly been contemplated by the vendee. Of course, no absolute purchase of the mules and mare was ever contemplated or had by Payne, the appellee, in the present case.

In Klein v. McNamara, 54 Miss. 90, the following is laid down as a test of whether an instrument or a transaction is a mortgage or a sale: "(1) Was the treaty in reference to a borrowing and lending of money, and was the obligation to repay incurred? (2) Did the relation of creditor and debtor exist before the conveyance, and did that relation continue? (3) Was there great disparity in the price of the property?"

In case of doubt, the court leans in favor of a mortgage, rather than a sale. 6 Am. & Eng. Ency. of Law (2d ed.) 443, notes. The distinction between a mortgage and a conditional sale is, that when the relation of debtor and creditor still remains as to the money to be used in the repurchase or redemption the transaction is a mortgage; otherwise it is a conditional sale. Hoopes v. Bailey, 6 C. 325.

The operation of the principle contended for by appellee would result in the state of Mississippi and the different counties being swindled out of hundreds of thousands of dollars of taxes due by a host of money sharks and tax-dodgers.

Clayton, Mitchell & Clayton, for appellee.

The only question in this case is whether with reference to third parties there was a valid sale of this property. Appellee was the only witness before the court, who could have known the facts about the sale, and his testimony is very clear as to the terms of the sale. He testified that Little came to him and proposed to sell to him the mules and said that if Payne would pay him $ 50 cash and pay off the deed of trust on the mules, the mules would be Payne's. Payne agreed to this proposition and at the very instant in which he did so the title to the mules became vested in appellee. Appellee then sold the mules back to Little for $ 200 with ten per cent added, at the same time reserving the title. That is, they agreed at this time to draw up a note to such effect at any time appellee might desire. Appellant questions the rights of parties to buy and sell in the...