U.S. Fidelity & Guaranty Co. v. North West Engineering Co.

• Decision Date: 28 March 1927
• Docket Number: 26332,s 26331
• Citation: U.S. Fidelity & Guaranty Co. v. North West Engineering Co., 146 Miss. 476, 111 So. 846 (Miss. 1927)
• Parties: United States Fidelity & Guaranty Co.Et Al. v. North West Engineering Co.[*]
• Court: Mississippi Supreme Court

111 So. 846

146 Miss. 476

United States Fidelity & Guaranty Co.Et Al. v. North West Engineering Co.^[*]

No.s 26331, 26332

Supreme Court of Mississippi

March 28, 1927

WATSON et al. v. SAME.(Division B.)

1 SALES.Reservation of title in unrecorded conditional sale contract, made in state requiring recording, held good against attachment in state not requiring recording.

Where property was sold on conditional sale in Wisconsin for immediate shipment to Mississippi, though the contract was not recorded as required by laws of Wisconsin, the reservation of title was good as against attachment without notice in Mississippi, the laws of which do not require such contract to be recorded, and this though the contract stipulated that the rights of the parties thereto were to be governed by the laws of Wisconsin.

2 SALES.Reservation of title held not rendered inoperative as con-ditional sale by taking additional security.

Seller of personal property with reservation of title by taking additional security for price, such as mortgage, either on that or other property, held not to make reservation of title inoperative as conditional sale.

HON. W A. ALCORN, JR., Judge.

Claimant issues, between the Northwest Engineering Company, as claimant, and the United States Fidelity & Guaranty Company and others and H. W. Watson and others, as execution creditors, were consolidated, and judgment rendered therein for claimant, from which the other parties appeal.Affirmed.

Robertson Yerger & Cook, for appellants.

I.The rights of the appellee to the property in controversy are to be determined by the laws of the state of Wisconsin; and under the laws of the state of Wisconsin, the conditional sales contract reserving title to the property in controversy is void as to appellant for the reason that it was not filed for record in accordance with the Wisconsin statutes, and, therefore, appellant has a superior right to the property of the appellee.

Appellant occupies the position of a bona-fire encumbrancer for value inasmuch as the lien acquired by the levy of the attachment came into existence before appellant had any knowledge or notice of any of the rights of appellee to the dredging machine.The lien of the attachment relates back to the levy by the sheriff.Redus v.Warford,4 S. & M. 579;Grayv.Perkins, 12 S. & M. 622;Saundersv.Columbus Ins. Co., 43 Miss. 583;Section 2291, Hemingway's Code, and cases cited there under.

This being true, the question is presented as to whether or not the rights of the appellee under its conditional-sales contract are superior to those of an attaching creditor, who is, under our laws, a bona-fide encumbrancer for value, and who has no notice of the rights of the appellee.

We submit that the rights of the appellee spring out of the contract upon which it bases its right to a recovery in this suit.It will be observed by the court that this contract was executed in the state of Wisconsin and was fully performed in that state.In either of such cases, under the decisions of Mississippi, the laws of the state of Wisconsin would govern.Iveyv.Leland, 42 Miss. 444;Parteev.Sullivan, 44 Miss. 272;Allenv.Bretton, 47 Miss. 199;McKeev.Jones, 67 Miss. 405;Hartv.Livermore, 72 Miss. 809;Aetna Ins. Co. v.Mount,45 So. 835.

All of the above cases hold that the law of the state in which a contract is to be performed governs the rights of the parties thereto.Where the place of performance differs from the law of the place of making the contract, the law of the performance generally governs in Mississippi.Martinv.Martin, 1 S. & M. 176;Emanuelv.White, 34 Miss. 56;Kauffman v.Bank of Kentucky,41 Miss. 212;Harrison v.Pike,48 Miss. 46;Lienkauf Co.v.Haney, 46 So. 625.

So much for the general rules with reference to the question of what law determines the rights of the parties to this contract.It is to be observed that the contract was made and executed and performed in Wisconsin.In the case at bar, however, the question of what law shall govern the rights of the parties is not open to conjecture or argumentation.The parties themselves fixed the law that should govern the contract under consideration and distinctly stipulated and agreed that such contract should be a Wisconsin contract.

Parties have the right by contract to agree as to the law of what state shall govern their rights arising under their contract, provided that the law to be enforced in the forum would not be contrary to public policy of the state of the forum, or contrary to public morals.5 R. C. L., page 938;12 C. J., page 451.

This being true, it is a proper subject of inquiry as to what are the rights of this appellee under the laws of the state of Wisconsin.Seesection 5, chapter 122, Uniform Conditional Sales Act, Wisconsin Statutes of 1925.

Appellee failed to comply with this plain, simple provision of the state of Wisconsin as to recordation.Harrisonv.Broadway Motor Co., 128 Miss. 766, 91 So. 453, is really controlling of the question presented herein in favor of the appellee.The Matter of C. P. Cogle, Bankrupt,2 Am. Bank. Rep.(N. S.) 848, is somewhat analogous to the case at bar.

II.The appellee, by the taking of the chattel mortgage, with power of sale, waived any title it might have to the property in controversy under the provisions of the conditional sales contract and, therefore, the reservation of title contained therein is not available to appellee in this controversy.

The appellee in the contract of sale provided that upon the delivery of the property in question a chattel mortgage would be excuted by A. V. Wills & Sons for its benefit.This was done and constituted a complete novation of any security that it might have theretofore retained.It is perfectly apparent that it is impossible for one to give a valid chattel mortgage upon property to which he has not title and, therefore, the appellee by contracting for and receiving such chattel mortgage impliedly if not expressly, contracted that the title to the property in controversy passed to A. V. Wills & Sons and they accepted and received the chattel mortgage as the security for the balance of their purchase price.Reserving a title and accepting a chattel mortgage on the same title from a third party is an impossible situation in law.35 Cyc. 675;Aultmanv.Silha, 85 Wisc. 359, 55 N.W. 711.

This court will not give its consent to the proposition that the appellee can reserve to itself some of the benefits that might accrue to it by the laws of the state of Wisconsin and cast from itself all the burdens that might be imposed upon it by the laws of that state.Maynard, FitzGerald & Venable, for appellee.

I.The only real question involved is whether or not the laws governing the title to the property levied upon were the laws of the state of Mississippi, where the property was situated when levied upon, or the laws of the state of Wisconsin where the title was retained.This seems to us to be an effort on the part of the appellant to have the court reverse its own decision in the case of Harrisonv.Broadway Motor Co., 128 Miss. 766, 91 So. 453.

We can file no better brief in this court than to refer in its entirety to section 130, pages 300--02, inclusive, of Judge MINOR'S "Conflict of Laws" which with nicety and exactness sets forth the exact claim made by the appellee in the court below and in this court.See, also, Herveyv.Locomotive Works, 93 U.S. 664;Marvin Safe Co.v.Norton, 48 N. J. L. 412, 57 Am. Rep. 566, 7 A. 418;Weinsteinv.Freyer, 93 Ala. 257, 9 So. 285;Public Parks Amusement Co.v.Carriage Co., 64 Ark. 29, 40 S.W. 582;The Marina,19 F. 760.

It is absolutely necessary with regard to the laws of recordation of instruments that the laws of the place where the property is situated when sold or levied upon must be the laws to govern the transaction of the sale or levy.This is evidently the fact if the title were not retained, but a like lien for the purchase money was retained; and no matter whether recorded or not in Wisconsin could not effect a levy or sale of the property in Mississippi.

What a puerile and useless thing it would be to record the contract in reference to the sale of the property in Wisconsin when the property had already gone to Mississippi!When the property arrived in Mississippi there was no necessity for recording the sale contract in Mississippi because the Mississippi law provided by numerous decisions in the supreme court of Mississippi that it was not necessary to record such a contract in Mississippi, and under Code of 1906, section 4777, goods and chattels might be retained in possession for as much as three years without demand made before it was necessary for the recordation of retention contract.Burkhalter v. Mitchell,107 Miss. 92, 64 So. 967;Ross-Meehanv.Pascagoula, 72 Miss. 608;Hunterv.Crook, 93 Miss. 812;Mosebyv.Williams, 5 How. 520;McKeev.Mitchell, 68 So. 468.

The question of recordation of the contract, as above stated, is only for the protection of the parties in the state where the property involved is situated.The fact that the parties to the contract stated that the contract should be governed by the laws of Wisconsin does not mean that the recordation of the contract could be governed by the laws of Wisconsin.This is an entirely different situation.The contract itself is governed by the laws of Wisconsin, but recordation and the title of the property is governed by the laws of the state where the property is situated when sold or levied upon.

II.Waiver of retention of title by taking additional security."Where there is an express contract that the title be retained in the vendor, it is not waived by him by implication because he took the...