Universal Credit Co v. Taylor

• Decision Date: 13 June 1935
• Citation: 180 S.E. 277
• Parties: UNIVERSAL CREDIT CO. v. TAYLOR et al.
• Court: Virginia Supreme Court

180 S.E. 277

UNIVERSAL CREDIT CO.

v.TAYLOR et al.

Supreme Court of Appeals of Virginia.

June 13, 1935.

Error to Corporation Court of Alexandria.

Action by notice of motion for judgment by Universal Credit Company against Dalton Taylor and another. Judgment sustaining defendants' demurrer to notice of motion, and plaintiff brings error.

Reversed and remanded.

Argued before CAMPBELL, C. J, and HOLT, HUDGINS, GREGORY, BROWNING, CHINN, and EGGLESTON, JJ.

Albert V. Bryan and T. Brooke Howard, both of Alexandria, for plaintiff in error.

William A. Moncure and J. Randolph Caton, Jr., both of Alexandria, for defendants in error.

HUDGINS, Justice.

On May 27, 1933, the Carter Motor Company of Alexandria, by a conditional sales contract, sold to defendants a truck for the sum of $1,091, of which $395 was paid in cash, and the balance, $696, was payable in future installments of $58 each, the vendor reserving title to secure the unpaid purchase price. The contract contained, among others, the following provisions:

"In the event the purchaser defaults on any payment * * * this contract shall be in default and the full amount shall become immediately due and payable. Upon any such default the seller * * * may take possession of said property * * * without legal process, without demand (possession after default being unlawful), * * * The seller may resell said property, so retaken, at public or private sale, with demand for performance, with or without notice to the purchaser. * * * From the proceeds of any such sale, the seller shall deduct all expenses for retaking, repairing and selling such property; * * * the balance thereof shall be applied to the amount due; any surplus shall be paid over to the purchaser; in case of deficiency the purchaser shall pay the same with interest and the purchaser does hereby confess judgment in the amount of such deficiency. Upon repossession by seller, all payments shall be retained by seller as compensation for use, damage and depreciation of said motor vehicle. Seller shall have the right to enforce one or more remedies hereunder successively and concurrently, and such action shall not operate to estop or prevent the seller from pursuing any further remedy which he may have hereunder, and any repossession or retaking or sale of the property pursuant to the terms hereof shall not operate to release the purchaser until full payment has been made in cash."

By proper assignment, the Universal Credit Company became the owner of all the rights of the vendor in and under the contract. In September, 1933, defendants defaulted in the payment of the required installments. The Universal Credit Company repossessed the truck without legal action, sold it, whether at private or public sale does not appear, and applied the proceeds to the unpaid balance of the purchase price, leaving due thereon the sum of $468.65, for the recovery of which plaintiff instituted this action by notice of motion for judgment.

To this notice of motion defendants demurred on the ground that the notice of motion showed on its face that plaintiff had repossessed the truck without legal process, that this was tantamount to a rescission of the conditional sales contract and barred plaintiff from any action at law to recover the purchase price, or in detinue to recover possession of the property, or a suit in equity, or to proceed under Code section 5190 to enforce the lien and obtain a judgment for the deficiency. To the action of the court in sustaining the demurrer, plaintiff sought and obtained this writ of error.

Defendants concede that plaintiff, under the terms of the conditional sales contract, before repossessing the truck, had a right to institute an action at law for recovery of the unpaid purchase price (see Southern Mfg. & Supply Co. v. Klavan, 125 Va. 438, 99 S. E. 566), a suit in equity, or to proceed under Code § 5190 to foreclose the lien on the truck and for deficiency judgment. See Liquid Carbonic Co. v. Whitehead, 115 Va. 586, 80 S. E. 104.

If plaintiff had elected to pursue any one of the above remedies, the result would have been to deprive defendants of any right or interest in the truck, which would have been sold at public auction under an execution or by order of court; the net proceeds of salewould have been credited on the execution, in the one case, and on the unpaid purchase price, in the other, and a judgment rendered against defendants for the unpaid balance.

After making these concessions, defendants contend that repossession of the truck without legal process constitutes a rescission of the conditional sales contract, on the theory that the promise of payment and the implied obligation to transfer the title are mutual, and, as each promise is the sole consideration for the other, the inability or refusal of the seller to perform excuses performance by the buyer. This theory has been adopted in a few jurisdictions, even though the contract may expressly give the seller the right to repossess the property, sell it, and hold the buyer for any deficiency. See Minneapolis Harvester Works v. Hally, 27 Minn. 495, 8 N. W. 597; 24 R. C. L. 493-4.

Williston, in exposing the fallacy of this theory, has this to say:

"But that this (right to reclaim possession) involves a termination of the buyer's obligation to pay the price does not follow. The consideration for the promise to pay was the conditional right given the buyer, and 'when a, man acts in consideration of a conditional promise, if he gets the promise he gets all that he is entitled to by his act, and if, as events turn out, the condition is not satisfied, and the promise calls for no performance, there is no failure of consideration.' If the terms of the bargain alone were to be considered, the exercise by the seller of his right to reclaim the goods would not debar him from recovering the full price. The only reason for denying him so broad a right is the equitable principle which forbids a forfeiture; and this should go no further than to limit his recovery to his actual injury.

" * * * No satisfactory solution of the rights of the parties in such a transaction can be found without observing that the essential character of the transaction is the same as that of an absolute sale with a mortgage back." Williston On Sales (2d Ed.) vol. 2, pp. 1423, 1425.

The New Hampshire court, in ...