Puffer Mfg. Co. v. Dearman

• Decision Date: 20 February 1911
• Docket Number: 14678
• Court: Mississippi Supreme Court
• Parties: THE CYCLONE CASE. PUFFER MANUFACTURING COMPANY v. WILLIAM A. DEARMAN

54 So. 310

97 Miss. 622

THE CYCLONE CASE. PUFFER MANUFACTURING COMPANY v. WILLIAM A. DEARMAN

No. 14678

Supreme Court of Mississippi

February 20, 1911

FROM the circuit court of Lamar county, HON. WILLIAM H. COOK Judge.

The Puffer Manufacturing Company, appellant, was plaintiff in the court below; Dearman, appellee, was defendant there. From a judgment in defendant's favor, plaintiff appealed to the supreme court. The suit was upon a number of promissory notes given by the defendant to plaintiff, according to defendants' claim, as installments of hire for a soda fountain; but, according to plaintiff's claim they were given as installments of purchase money for the fountain. One of the notes (they were all alike except as to times of maturity) is set out in the opinion of the court. The appellant, the manufacturing company, contracted to put appellee, Dearman, in possession of and give him the use of a soda fountain and fixtures to be installed in his place of business at Purvis, Mississippi, and thereafter the property was installed in accordance with the agreement. Shortly after the installation of the fountain and when only one payment of the hire had been made, and before any of the others were due, the property was destroyed by a cyclone which devastated the town. The other facts are sufficiently stated in the opinion of the court.

Judgment affirmed.

F. M Hunt and Mayes & Longstreet, for appellant.

The contract under which the appellee held the soda fountain etc., was not a contract of lease, but one of conditional sale, with title retained to secure the purchase money. In 3 Am. & Eng. Ency. Law (1st ed.) 426, in the text we have the following:--"Where the transaction between the parties is in reality, and in its legal effect, a contract of sale conditioned on the payment of the purchase price in successive installments, it cannot be modified, nor its legal effect avoided by the fact that the parties speak of it as a "lease," and call the installments "rent." As shown in the notes to the above this doctrine is upheld by the overwhelming weight of authority. In Ham v. Cerniglia, 73 Miss. 290, 18 So. 577, there was merely a written contract drawn as a lease with nothing said about the title passing. This court held that the question whether the contract in that case was one of lease or conditional sale is determined by parol evidence, and cites with approval cases sustaining the text of the American and English Encyclopedia of Law quoted above.

In line with the above authorities is also the case of Dederick v. Wolfe, 68 Miss. 500, 9 So. 350. This court in the latter case, quoting from the United States supreme court says: "In determining the real character of a contract, courts will always look to its purpose, rather than the name given it by the parties." The same doctrine as is set forth in this case is set forth in Hervey v. Locomotive Works, 73 U.S. 664; Hereford v. Davis, 102 U.S. 235. For further authority to sustain our position that the contract in this case is one of conditional sale and not of lease, see 21 Am. & Eng. Ency. of Law (1st ed.) 629, 636; 43 Am. Dig. (Cent. ed.) col. 1653, 1657; 6 Am. & Eng. Ency. Law (2d ed.) 447-449. In the case of Unitype v. Long, 16 Am. B. R. 129, the United States circuit court of appeals held a contract more resembling a lease than the one in this case a contract of conditional sale. The supreme court of Pennsylvania now holds such contracts conditional sales. Kelly Springfield Road Roller Co. v. Schleimit, 220 Pa. 413, 69 A. 867, 123 Am. St. Rep. 707.

The true construction of a contract like the one involved in this case is set forth in Ross-Mehan Brake Shoe Foundry Co. v. Pascagoula Ice Co., 72 Miss. 615, 18 So. 364, in the following language:--

"The right of a seller of personal property to make a conditional sale thereof, reserving title until payment of the purchase price, is too firmly settled in this state to admit of controversy. Duke v. Shackleford, 56 Miss. 552; Burnley v. Tufts, 66 Miss. 48, 5 So. 627. But the reservation of title is but as security for the purchase price, and if the property is restored to the seller, he must deal with it as security, and with reference to the equitable rights of the purchaser. Duke v. Shackleford, supra; Dederick v. Wolfe, 68 Miss. 500, 9 So. 350; McPherson v. Lumber Co., 70 Miss. 649, 12 So. 857; Tufts v. Stone, 70 Miss. 54, 11 So. 792. Being but a security for the payment of the money, the benefit thereof follows the debt, when assigned, as an incident thereof."

In Tufts v. Stone, 70 Miss. 54, 11 So. 792, this court held that, though the contract stated that the title remained in the seller until the purchase money was fully paid, the court will look through the letter of the contract to determine the intention, and declare the title to be vested in the purchaser with a lien thereon for the purchase money.

The foregoing authorities clearly show that appellee should be treated as owner of the property for which the notes sued on were given so far as a case like this is concerned, and it necessarily follows that, as appellant merely retained title as security, and could deal with it only as security for the purchase price, that the destruction of the property, being merely destruction of the security, will not relieve the appellee from paying therefor. But we have a case decided by this court directly in point, in the case of Burnley v. Tufts, 66 Miss. 48, 5 So. 627, which is thoroughly decisive of the case at bar. It declares that if property sold on condition that title shall remain in the vendor until the purchase money is paid, is destroyed, without fault on the part of the vendee, the loss falls on the vendee, who will still have to pay the balance due on the purchase price.

The cases of Henry v. Lavalley (Vt.), 2 L. R. A. (N. S.) 97; Marion Mfg. Co. v. Buchanan (Tenn.), 8 L. R. A. (N. S.) 590, and Whitlock v. Auburn Lumber Co. (N. C.), 1 L. R. A. (N. S.) 1214, are directly inline with Tufts v. Stone, supra. In the note to Henry v. Lavalley, 2 L. R. A. (N. S.) 97, are collected the earlier authorities on this point. It is there shown that in nearly every case in which the seller has done all that is required of him in order that title shall vest absolutely in the purchaser, except to receive the purchase money, it has been held that if the property is destroyed without fault on the part of the purchaser, he will have to pay for it.

In the case of Marion Mfg. Co. v. Buchanan (Tenn.), 8 L. R. A. (N. S.) 590, we have the following:--

"We are of the opinion that the true rule is that the loss must fall on the purchaser."

The supreme court of North Carolina, in Whitlock v. Auburn Lumber Co., 58 S.E. 909, 12 L. R. A. (N. S.) 1214, further says: "The real and substantial nature of the transaction for the purpose of determining who should bear the loss is that of mortgagor and mortgagee, or lienor and lienee."

Under the contract, the parties thereto made what was, in legal effect, a conditional sale, and not a lease. It is an old device, which the courts have often rejected, to put what is, in fact, a conditional sale in the form of a lease; but calling the contract a lease, and calling the vendee a lessee, does not amount to anything. The law looks to things in order to classify them, and not to the names with which parties see proper to badge them.

A good statement of the doctrine is found in 6 Am. & Eng. Ann. Cases, 685. So, also, in 35 Cyc. 656, are cited many cases; and see the note to Fleet v. Hertz, 94 Am. St. Rep. 248.

McWillie & Thompson and C. G. Mayson, for appellee.

That the contract was one of lease and not of sale seems to us to be quite apparent from its terms, and its executory provisions for a future sale cannot avail the appellant in this case.

1. The contract designates itself as a lease. While this fact is not absolutely controlling, it had and should receive persusive effect in determining its true construction, since it shows that the idea of a lease was uppermost in the minds of the parties and they are presumed to have acted intelligently, and to have deliberately and wisely selected an appropriate term to express their meaning, unless a misuse of the word is clearly apparent from the instrument itself.

2. The first sentence of the contract is in these words, omitting the merely formal verbiage. "I, W. A. Dearman, have hired, leased and received of Puffer Manufacturing Co." the property. Neither the words bought or purchased is used, nor are the words acquired title or like words to be found in the instrument. No words whatever are used which in legal effect invest Dearman with title, as of date of the contract, to the property.

3. The term of the lease, or the time Dearman should have the use of the property, is definitely fixed by the contract itself in these words:--"for the term, to-wit: five years ten and 25/100 months, ending December 1, 1913." Language quite appropriate to a lease or hiring contract, but wholly inappropriate in a contract of sale, whether the sale be conditional or unconditional.

4. The words following the description of the property are these "and I [Dearman] do promise and agree with the said Puffer Manufacturing Co.,--to pay it or them for the possession and reasonable use thereof, for said term, the sum of One Thousand seven hundred and seventy-five ($ 1,775.00) dollars, as rent," etc. Here we have payments to be made (not for title to the property) but "for the possession and reasonable use thereof," and the possession and use was "for said term" and the payments were to be made "as rent," language wholly at war with the idea that the title to the property passed to appellee upon the execution of the contract, but singularly appropriate to a...