West American Finance Co. v. Finstad

• Decision Date: 06 January 1928
• Docket Number: 20699.
• Citation: 262 P. 636,146 Wash. 315
• Parties: WEST AMERICAN FINANCE CO. v. FINSTAD.
• Court: Washington Supreme Court

262 P. 636

146 Wash. 315

WEST AMERICAN FINANCE CO. v. FINSTAD.

No. 20699.

Supreme Court of Washington

January 6, 1928

Department 1.

Appeal from Superior Court, King County; Ronald, Judge.

Action by the West American Finance Company against George Finstad. From a judgment dismissing the action, plaintiff appeals. Affirmed.

Tolman J., dissenting.

Cosgrove & Terhune, of Seattle, for appellant.

Bogle Bogle & Gates, R. Kline Hillman, Edward G. Dobrin, and Joseph Nievinski, all of Seattle, for respondent.

MITCHELL J.

An automobile dealer, in consideration of $400 paid and $930.94 to be paid on the installment plan, sold the automobile involved in this action under a so-called contract of conditional sale, and on the same day assigned and delivered the contract to the West American Finance Company, who promptly filed the contract for record in the auditor's office as a conditional sale contract. The contract was signed by both parties. Thereafter the vendee delivered the automobile to the dealer, upon what terms the record is silent. Thereafter the dealer sold and delivered it to the respondent, George Finstad, in consideration of a cash payment of $975. He had no knowledge or notice of the prior transaction concerning the automobile nor was he aware of the filing and recording of the instrument referred to as a contract of conditional sale. There being a default in the terms of the contract held by the finance company it brought this action against Finstad to recover the automobile. Upon the trial of the case to a jury, as nonsuit was granted at the close of plaintiff's case; the trial court holding that the contract assigned to the finance company was in legal effect a chattel mortgage, and, lacking an affidavit of good faith and an acknowledgment, it was void as to the defendant, a subsequent purchaser for value and in good faith. The West American Finance Company has appealed from a judgment dismissing the action.

The question on the appeal involves the correctness of the holding of the trial court that the contract must be considered as a chattel mortgage and not a contract of conditional sale. The determination of this question depends upon the intention of the parties to be gathered from all the terms of the contract; there not being in the case any evidence other than that appearing on the face of the instrument to indicate the intention of the parties.

The instrument is a long one, and most of it need not be set out in considering it for the purposes of this case. It is entitled 'Contract of Conditional Sale.' It says:

'The undersigned seller hereby sells, and the undersigned purchaser hereby buys, subject to the terms and conditions of this contract, the following property,' etc.

Section 1 provides:

'Title to said property shall be and remain in the seller until the said deferred balance shall have been fully paid in cash.'

Section 2 gives the residence of the purchaser as King county, and provides that the automobile shall not be removed out of that county without the written consent of the seller or its assigns. Section 3 says that no assignment of the contract nor any loss, damage, injury, or destruction of the property shall release the purchaser from his obligations and liabilities, including the satisfaction of all deferred payments. Section 4 provides that the contract shall be assignable by the seller free and clear of all equities, set-offs, counterclaims, and defenses of the purchaser against the seller, and not assignable on the part of the purchaser. Section 5 provides that deferred payments becoming due may, upon failure of the purchaser to perform any of the terms of the contract or become insolvent, be declared immediately due. Section 6 provides against promises, representations, or warranties not indorsed in writing on the contract. Section 7 provides that the purchaser shall keep the automobile in good condition, free from taxes and liens, and shall not use or let it be used for hire or any illegal or improper purpose. Section 8 provides that the proceeds of insurance on the automobile in the event of loss shall be applied to the seller's benefit. Section 9 is as follows:

'Time is declared to be the essence of this contract, and, if the purchaser shall fail to perform any of the terms or provisions hereof, the seller or its assigns may, without demand or notice, take immediate possession of said property, including any attachments, equipment, or accessories thereto, and for that purpose the seller or its assigns may enter upon the premises wherein said property may be, and remove the same. The seller or its assigns may resell said property so retaken at public or private sale without demand or notice of any kind, without having such property at the place of sale, and upon such terms and in such manner as the seller, or its assigns, may, in its or their sole discretion, determine. The seller or its assigns may purchase at any public or private sale. From the proceeds of any such sale the seller or its assigns shall deduct all expenses incurred in the retaking, repairing, and reselling of said property, and also a reasonable attorney's fee, and the balance shall be applied to the payment on account of the obligations of the purchaser hereunder; any surplus shall be paid to the purchaser; in case the net proceeds of said sale shall be insufficient to discharge the purchaser's obligations hereunder in full, the purchaser will pay any such deficiency with interest at the rate of 7 per cent. per annum from such sale until paid upon demand.'

Section 10 is as follows:

'The seller or its assigns shall have the right to enforce one or more remedies hereunder, successively or concurrently, and such action shall not operate to estop or prevent the seller or its assigns from pursuing any further or other remedies which he may have hereunder, or which he may have by virtue of law, and any repossession or retaking or sale of said property pursuant to the provisions of this contract shall not operate to release the purchaser from the payment of all of said deferred payments until full payment thereof has been made by the purchaser in cash. The remedies accorded to the seller hereunder are cumulative and shall be in addition to any other rights or remedies which the seller may have by virtue of law.'

Section 11 provides that, if the automobile shall be seized under process against the purchaser, and if the seller shall make claim for release of the property, the purchaser will pay to the seller a reasonable attorney's fee to be 'added to the purchase price and shall be secured by this contract.' Another section provides that, if the contract shall be placed in the hands of an attorney because of default of the purchaser, the purchaser will pay an attorney's fee whether suit be brought or not. There are other provisions of the contract which in our opinion have no bearing upon the question here and need not be further referred to.

The fact that the instrument is called a contract of conditional sale is not controlling, for it often happens, as in Sayward v. Nunan, 6 Wash. 87, 32 P. 1022 that a writing purporting to be an unconditional and absolute bill of sale is held to be a chattel mortgage. The fact that, by one of the terms of the agreement, the title is to remain in the seller until the purchase price is paid, does not necessarily import that the transaction was a conditional sale. Chicago Railway Co. v. Merchants Bank, 136 U.S. 268, 10 S.Ct. 999, 34 L.Ed. 349. To the same effect, Heryford v. Davis, 102 U.S. 235, 26 L.Ed. 160. Nor is the fact that the appellant by this action seeks only to recover possession of the property decisive of the case. By section 10 of the contract it is specifically provided that the retaking or sale of the property shall not operate to release the buyer from the payment of the full purchase price. The contract is to be construed according to the intention of the parties signing it as deducible from all the terms employed, which, of course, embrace those relating to substantial rights as well as those relating to...