W. W. Kimball Co. v. Mellon

• Decision Date: 03 June 1891
• Citation: 48 N.W. 1100,80 Wis. 133
• Parties: W. W. KIMBALL CO. v. MELLON.
• Court: Wisconsin Supreme Court

80 Wis. 133

48 N.W. 1100

W. W. KIMBALL CO.

v.MELLON.

Supreme Court of Wisconsin.

June 3, 1891.

Appeal from circuit court, Milwaukee county; D. H. JOHNSON, Judge.Winfield Smith, for appellant.

Bloodgood, Bloodgood & Kemper, for respondent.

ORTON, J.

The respondent is a corporation in the business of manufacturing and selling pianos, in the city of Chicago, and one H. N. Hempsted was in the business of selling pianos and other musical instruments in the city of Milwaukee, and in April, 1885, they entered into an agreement of the following terms: In consideration of having the exclusive agency to sell pianos for the corporation, Hempsted agrees to sell all instruments ordered, within 30 days from shipment, and promptly remit to the company cash or approved customers' contracts with security on the instrument sold. The contracts to be in blanks furnished by the company, to draw interest, and the average time not to exceed four months, and payment guarantied by Hempsted. On failure to sell within 30 days, he is to pay 8 per cent. interest on the invoice price, but the instruments not to be considered sold to Hempsted. He is to pay the price of the instrument to the company, if his customers' contracts fall due and remain unpaid. All goods in Hempsted's hands to be insured for the benefit of the company. He is to be credited 90 per cent. on goods returned. He is to send statement of the instruments sold and unsold, and make prompt return on sales. Either party may terminate the agency, and stock in Hempsted's hands shall then be subject to the company's order. The form of the contract of sale shall be furnished by the company. Under this contract Hempsted did business, securing pianos from the company, and selling them in his own name, and as his own property, until he failed in business, May 3, 1889. He sold mostly on credit, receiving in such cases from the purchaser a contract in the form given by the company. These contracts were signed by the purchaser, and assigned to the company. About the 4th day of July, 1888, Hempsted sold one of the pianos so furnished by the company to one L. A. Miner, and received from him the following contract made in the prescribed form: “$290. Milwaukee, July 4th, 1888. For value received, I, the subscriber, of Milwaukee, in the county of Milwaukee and state of Wisconsin, promise to pay, to the order of H. N. Hempsted, two hundred and ninety dollars, at his office in Milwaukee, Wis., as follows: Fifteen dollars cash this day, and then fifteen dollars on the 4th day of each succeeding month until full amount is paid, with interest on each payment at the rate of 7 per cent. per annum from the date hereof until paid. The consideration of the above promissory note is the agreement to sell and deliver to the signer one piano made by Emerson & Co., Boston, number 45,755, style 8, by H. N. Hempsted, upon the following express condition, namely: That the signer hereof agrees that, in case he makes default in the payment of any installment of said note, at the time and place when the same becomes due, or attempts to dispose of or removes said instrument from the county of Milwaukee, the said H. N. Hempsted, or his assigns, shall be at liberty to declare the whole sum unpaid, due and payable, and the said instrument the property of the signer, and to sue for and collect the same, with ten per cent. damages for expenses of collection, which the signer agrees to pay; or, at said Hempsted's option, to take possession of said instrument, and to sell the same at private sale, to pay the unpaid balance of said note, interest, damages, expenses, and costs of sale, and return the remainder to the signer hereof; and it is expressly agreed by the signer hereof that all the right and title to the above-named instrument is in H. N. Hempsted or his assigns, and that it is his or their privilege, at his or their option, to sue said note, and collect the same, or to enter the premises of the signer, and to recover the possession of the above-named instrument, with the full right to vest the title in another purchaser. And the signer further agrees that, if the above-named instrument does not sell for sufficient to pay the above note, together with interest, damages, and costs of sale, that the signer hereby agrees to pay the deficiency on demand. [Signed] L. A. MINER. Witness: L. L. TYLER.” At the same time, and as part of the same transaction, and to secure the unpaid purchase price of said piano, the said Miner executed to Hempsted five negotiable promissory notes, payable, respectively, in 4, 8, 12, 16, and 20 months; the first 4 being for $60 each, and the fifth for $35, each note in form as follows, with the following agreement appended thereto: “$______. Milwaukee, July 4, 188--. ______ months after date I promise to pay to the order of H. N. Hempsted ______ dollars, with interest at seven per cent. per annum, value received, payable at Wis. Marine & Fire Ins. Co. Bank.” “This note is given for piano No. 45,755, style 8, manufactured by Emerson Co., the express condition being that the title and ownership of said piano is to remain in the name and subject to the order of said H. N. Hempsted until this note is fully paid. [[[Signed] L. A. MINER.” The last three notes maturing were in September, 1888, and, before any one of them had matured, sold, indorsed, and delivered for full value by said Hempsted to one Albert W. Snyder, acting by W. Smith, his agent, who then had money of Snyder's to invest. Neither Smith nor Snyder had any notice (unless constructive) until May 4, 1889, that the said piano, at the time of the sale, was not the absolute property of Hempsted, or that any contract or other paper had been executed by Miner to Hempsted, other than the said notes; nor of any claim of the plaintiff upon the piano, either at the time of the sale by Hempsted or at any other time. At the time of the sale, Miner supposed that he had to pay only on the said contract, and that the notes were mere accommodation paper, and that Hempsted would take care of them, and deliver them up when their several amounts were paid on said contract. Until May 3, 1889, the plaintiff did not know of the existence of said notes, and supposed that the said contract was the only one connected with said sale. The said contract was duly assigned to the plaintiff by Hempsted, July 31, 1888. A copy of said contract of sale was filed by Hempsted in the office of the clerk of the city of Milwaukee on July 7, 1888, and the assignment or transfer thereof was filed in said office, May 11, 1889. Hempsted negotiated one of said notes at the bank, and paid it to the bank according to such understanding with Miner that he should, himself, take care of the notes. Mr. Smith, Snyder's agent, supposed, at the time of the purchase of said notes, that the notes so given were the only papers executed by Miner on the sale, and that the piano was Hempsted's sole property, and was so informed by Hempsted at the time of the indorsement by him of the notes. In 1886; Hempsted sold Snyder contracts like the one assigned to the plaintiff, with the indorsement of their filing in the city clerk's office on them. In such cases Hempsted had reported and accounted for the sales to the plaintiff as cash sales. Smith advised Hempsted two years before to throw aside that form of contract, and adopt the said method of taking the purchaser's notes like those in question, with the agreement in them reserving the title of the property to himself until paid. At that time Smith had no knowledge of Hempsted's relations with the plaintiff. Hempsted afterwards informed Smith that he did not use any more of these contracts, and that he took only negotiable notes in the form of those sold to Snyder. It would seem, from these facts, that Hempsted had deceived both the plaintiff and Smith acting for Snyder. He made the plaintiff suppose that the contracts so assigned to the company were the only papers taken by him on the sale of pianos, and made Smith believe that the notes in this form were the only papers he received, by telling him so. He concealed from the plaintiff, also, the fact of his ever having negotiated any of such contracts, by reporting and paying them as cash sales. Miner paid the installments of the contract as they fell due, up to May 30, 1889, when Hempsted failed, at his office, and afterwards paid the plaintiff, taking back a bond of indemnity. Snyder obtained a judgment against Miner on said 12 months' note, in the court of GEORGE MCWHERTER, a justice of the peace, September 10, 1889, for $74.20. An execution on said judgment was placed in the hands of the appellant as constable, and was by him levied on said piano as the property of said Miner. At the same time of such levy the appellant, by the authority of Snyder, took possession of said piano by virtue of the agreement appended to said notes. The plaintiff brought this action of replevin in the detinet against the appellant for the amount of its lien on the piano. The defense to the action consists of the above stipulated facts. The plaintiff obtained judgment, and the defendant has appealed to this court therefrom. The above statement of the facts is, in substance, according to the stipulation of the parties, and is necessarily somewhat lengthy, in order to make intelligible the questions of law involved. The defense depends upon the protection which the law gives the said Snyder as a bona fide purchaser for value of the said notes before their maturity, and the plaintiff relies for title upon the contract so assigned to the company by Hempsted, and the first question to be considered is the negotiability of these instruments.

1. The learned counsel of the respondent contends that, if the said contract is not negotiable, then the said notes are not, they being a part of the same transaction. That might be so if Snyder knew that the contract and the notes were a part of the...