Russell & Co. v. Harkness

• Decision Date: 11 September 1885
• Parties: RUSSELL & CO., A CORPORATION, RESPONDENT, v. H. O. HARKNESS, APPELLANT
• Court: Utah Supreme Court

7 P. 865

4 Utah 197

RUSSELL & CO., A CORPORATION, RESPONDENT, v. H. O. HARKNESS, APPELLANT

Supreme Court of Utah

September 11, 1885

APPEAL from a judgment of the district court of the first district. The opinion states the facts.

Affirmed.

Messrs Kimball & Heywood, for the appellant.

Construing the whole contract and notes together, they amount to a sale with a lien reserved to respondent. In Illinois, under a statute similar to that of Idaho, (Jones on chattel mortgages, section 202), the supreme court of that state have construed like contracts: McCormick v. Hadden, 37 Ill. 447; Ketchum v. Watson, 24 Ill. 591; Murch v. Wright, 46 Ill. 488; Lucas v. Campbell, 88 Ill. 447; and arrived at this conclusion.

To the same effect are: Hearvey, et al., v. R. I. Locomotive Works, 93 U.S. 664; Heryford v. Davis, 102 U.S. 235.

The case at bar falls fully within the reasoning of the court in the foregoing cases. The form of the contract cannot vary its effect.

The property being sold in Idaho, and remaining there until sold to appellant, its transfer is regulated by the laws of that territory, notwithstanding the respondent was a resident of and the contract appears to have been made, in another jurisdiction: Green v. Van Buskirk, 5 Wall., 307; Same v. Same, 7 Wall., 139; Hervey et al., v. R. I Locomotive Works, 93 U.S. 664.

The contract of sale was not proved or recorded in compliance with the law of Idaho. The purchasers being in possession of the property on December 22d, 1882, and then selling it to appellant, he acquired a valid title against respondent.

Under statutes like that of Idaho, making unrecorded mortgages void against persons, other than the parties to them, such mortgages have no validity against subsequent purchasers and mortgagees, although they have actual notice of the prior mortgage: Jones on Chattel Mortgages, sec. 314; Bingham v. Jordan, 1 Allen, 373; Travis v. Bishop, 13 Met., 304; Gasiner v. Patterson, 23 Cal. 299; Donaldson v. Johnson, 2 Chand. (Wis.), 160; Garland v. Plummer, 72 Me. 397; Wilson v. Milligan, 75 Mo. 41; Kennedy v. Shaw, et al., 38 Ind. 474; Matlock v. Straughn, 21 Ind. 128; Sage v. Browning, 51 Ill. 217; Frank v. Miner, 50 Ill. 444; Dowell v. Stewart, 83 Ill. 538; Lemen v. Robinson, 59 Ill. 115.

Messrs. Bennett, Harkness & Kirkpatrick, for the respondent.

That a conditional sale of personal property by which the title is not to pass until full payment by the conditional vendee is good against him and his creditors and vendees is held in nearly every state and territory in which the subject has been considered: Brown v. Haynes, 52 Maine, 578; Rogers v. Whitehouse, 71 do., 222; Kimball v. Jackson, 42 N. H., 242; Fisk v. Ewen, 46 N. H., 173; Armington v. Houston, 38 Vt. 448; Coggill v. Hartford & M. H. Ry. Co., 3 Gray, 545; Burbank v. Crocker, 7 Gray, 158; Goodell v. Fairbrother, 12 R. I., 233; Cragin v. Coe, 29 Conn. 51; Hughes v. Kelly, 40 Conn. 148; Brown v. Fitch, 43 Conn. 512; Hine v. Roberts, 48 Conn. 267; Ballard v. Burgett, 40 N.Y. 314; Austin v. Dye, 46 do., 500; Cole v. Mann, 62 do., 1; Parmlee v. Catherwood, 36 Mo. 479; Griffin v. Pugh, 44 do., 326; Ridgway v. Kennedy, 52 do., 24; Hall v. Draper, 20 Kansas, 137; Cole v. Berry, 13 Vroom, (N. J.,) 308; Couse v. Fregent, 11 Mich. 65; Whitney v. McConnell, 29 do., 14; Knowlton v. Redenbaugh, 40 Iowa 114; Sumner v. Woods, 67 Ala. 139; Reported 42 Am. Rep. 104); Hunter v. Warner, 1 Wis., 141; Pitts v. Owen, 9 do., 152; Kohler v. Hayes, 41 Cal. 455; Cardinal v. Edwards, 5 Nev., 36; Singer Manf. Co., v. Graham, 8 Or., 17; Call v. Seymour, 40 Ohio St. 670; Bradshaw v. Warner, 54 Ind. 58; Hodson v. Warner, 60 do., 214; McGinn v. Sell, 60 do., 249; Benjamin on Sales, 3d. Ed. sec. 320 and note.

It is said by the annotator of the case of Lewis v. McCabe, 21 Am. Law Reg., 217, that there are no decisions in North Carolina, South Carolina, Georgia, Mississippi, Tennessee and Delaware, but probably this may arise partly from the statute system in some of those states of taking liens for advances on crops and farm implements, stock and products.

In Illinois, since quite an early day, these contracts were held invalid against creditors and purchasers from the conditional vendee.

Cases cited in appellant's brief.

In Pennsylvania the decisions have not been uniform and some fine distinctions have been drawn, but the latest decisions seem to agree with the Illinois cases. In Kentucky the law is said to be the same. With these exceptions the courts of every state in which the subject has been considered have held conditional sales valid, and the elementary writers so announce the law.

ZANE, C. J. EMERSON, J., and TWISS, J., concurred.

OPINION

ZANE, C. J.:

It appears from the findings of the district court, that on the second day of October, 1882, the plaintiff entered into the following contract with Phelan & Ferguson: "On or before the first day of May, 1883, for value received in one sixteen-horse power engine and boiler, number one thousand twenty-six hundred, and a portable saw mill, complete, number one hundred and twenty-seven, bought of L. B. Mattison, agent of Russell & Co., we, or either of us, promise to pay to the order of Russell & Co., Massilon, Ohio, three hundred dollars, payable at Wells, Fargo & Co.'s bank, Salt Lake City, Utah Territory, with ten per cent. interest per annum from October 1, 1882, until paid, and reasonable attorney's fees, or any costs that may be paid or incurred in any action or proceeding instituted for the collection of this note, or enforcement of this covenant. The express condition of this transaction is such, that the ownership or possession of said engine, boiler and saw mill does not pass from the said Russell & Co., until this note and interest shall have been paid in full, and the said Russell & Co., or their agents, have full power to declare this note due and take possession of said engine, boiler and saw mill when they may deem themselves insecure, even before the maturity of this note; and it is further agreed by the makers hereof, that if said note is not paid at maturity, that the interest shall be two per cent. per month from maturity hereof till paid, both before and after judgment, if any should be rendered. In case said engine, boiler and saw mill shall be taken back, Russell & Co., may sell the same at public or private sale, without notice, and apply the proceeds on the note, or they may, without sale, endorse the true value of the property on this note, and we agree to pay on the note any balance due thereon after such endorsement, as damages and rental of said machinery; as to this debt, we waive the right to exempt, or claim as exemption, any property, real or personal we now own, or may hereafter acquire, by virtue of any homestead or exemption law, state or federal, now in force, or that may hereafter be enacted."

The court also found that plaintiffs were, at the time of the contract, the owners of the engine, boiler and saw mill described above, and another engine, boiler and saw mill, all described in the complaint, and that they were of the agreed value of four thousand nine hundred and eighty-eight dollars at the date of the contract, a small portion of which was paid in cash; that Phelan & Ferguson gave seven notes for the remainder due on the first days of May, August and November, 1883, and the first days of May, August and November, 1884, and February, 1, 1885; that each of the notes were in the same form as the above, differing only in amount, date of maturity, and in description of the property; that Phelan & Ferguson took possession of the property in Idaho, where it was at the date of the contract, and remained in possession until the second day of December, 1882, and then sold and delivered the same to the defendant, in part payment of an indebtedness due him and one Langsdorf. The court also found that defendant knew at the time he received the property that it had not been paid for by Phelan & Ferguson, and that plaintiff claimed title thereto; that Phelan & Ferguson were, at the date of their contract, residents of Idaho; that the value of the property on the second day of December, 1882, was one thousand six hundred dollars, and that nothing had been paid on the notes. It also appears that there was a chattel mortgage act in Idaho, which, among other things, provided that chattel mortgages should not be valid, except between the parties, unless made, executed and recorded in conformity with that act, and that no such mortgage was executed to the plaintiff.

The defendant insists that the terms and conditions of the contract manifest an intention to create a secret lien on the property, and should be construed to be a chattel mortgage, and invalid because not executed and recorded according to the Idaho statute. The plaintiff claims that the intention was, as shown by the contract, that plaintiff should retain the title unless payment should be made according to the terms of the notes, and that the purchaser should have a right to the possession and use of the property until the seller should feel insecure, or until default in payments.

The intention of the parties, as expressed in the contract evidently was to give to the purchaser the possession and use of the property until the seller should feel insecure for reasonable cause; or until payment according to the notes. In the latter case, the purchaser was to have the title also, and in case of default in payment the right to have the proceeds of the sale, or the value of the property, credited on the notes; and the seller was to have the price with interest according to the notes, and for security the title with the possession of the property, if he felt insecure for reasonable cause, and...