Winston Motor Carriage Co. v. Broadway Auto. Co.

• Decision Date: 17 November 1911
• Citation: 118 P. 817,65 Wash. 650
• Court: Washington Supreme Court
• Parties: WINTON MOTOR CARRIAGE CO. v. BROADWAY AUTOMOBILE CO.

118 P. 817

65 Wash. 650

WINTON MOTOR CARRIAGE CO. v. BROADWAY AUTOMOBILE CO.

Supreme Court of Washington

November 17, 1911

Department 1. Appeal from Superior Court, King County; Johs F. Main Judge.

Action by the Winton Motor Carriage Company against the Broadway Automobile Company. From a judgment for defendant, plaintiff appeals. Affirmed.

Roberts, Battle, Hulbert & Tennant and C.J France, for appellant.

Hughes McMicken, Dovell & Ramsey and Frank P. Helsell, for respondent.

PARKER J.

This action was prosecuted by the plaintiff in the superior court for King county under sections 573-577, Rem. & Bal. Code, to establish its title and right of possession to an automobile levied upon and held by the sheriff of King county as the property of J. R. Burch under an attachment and execution issued out of that court in an action wherein the defendant was plaintiff and J. R. Burch was defendant. We think the facts upon which the respective rights of the parties rest are shown by this record beyond controversy to be in substance as follows: On August 24, 1908, the plaintiff delivered to Burch an automobile under a conditional sale contract, which, in so far as we need to notice its terms provides: 'This agreement witnesseth: That the Winton Motor Carriage Company, a corporation, party of the first part, has this 24th day of August, 1908, delivered to J. R. Burch, party of the second part, at 1305 Western Ave., Seattle, Washington, the following described personal property, to wit: One secondhand Winton automobile Model M No. 6723, for which the second party agrees to pay the sum of two thousand dollars, eleven hundred dollars upon the delivery of said goods and chattels, receipt whereof is hereby acknowledged, and the further sum of nine hundred dollars in three months at the rate of 8 per cent. per annum from date until paid. It is further agreed that said goods and chattels shall remain absolutely the property of said Winton Motor Carriage Company until said sum of nine hundred dollars, with interest thereon, is paid in full. * * * It is agreed and understood that time is the essence of this contract, and if any said payment remain unpaid after the same shall become due, or if any of the above conditions be violated, said first party, its agents or assigns, may enter upon the premises where said property is stored and retake possession thereof, without previous demand, and retain all installments paid and terminate this contract.' This contract was not filed under section 3670, Rem. & Bal. Code. At the same time Burch executed and delivered to the plaintiff his promissory note for $900 payable three months after date, with interest at 8 per cent. per annum. This note, it is conceded, represented the balance of the purchase price, and it will be noticed was for the same amount, the same time, and the same rate of interest, as stated in the contract. It was an entirely separate instrument from the contract of sale, and there was nothing in that contract indicating any purpose by the parties thereto of having this balance of the purchase price further evidenced in this manner. Soon thereafter the plaintiff indorsed this note, and placed it in the hands of the First National Bank of Seattle as collateral security for a loan which that bank made to the plaintiff. Thereafter, on November 21, 1908, this note being then about to mature, an extension of time of payment was granted, both Burch and the bank consenting thereto, and, in pursuance thereof, a new note was executed by Burch payable direct to, and left with the bank as collateral in lieu of the first note. This second note was indorsed by the plaintiff, and made payable February 21, 1909. A short time after the execution of this note Burch absconded, leaving many unpaid obligations. At the time of and prior to the time Burch absconded the automobile was kept by him at plaintiff's garage, but his possession thereof under the contract was in no manner interfered with or questioned prior to that time. Soon thereafter the plaintiff took up the second note from the bank, and also took possession of the automobile, continuing in possession thereof until it was levied upon and taken from his possession by the sheriff on January 4, 1909, under a writ of attachment issued out of the superior court in an action commenced therein by the defendant against Burch to recover a debt existing prior to the date of the conditional sale contract. Judgment being rendered in that case in favor of the defendant against Burch, and execution having issued thereon to the sheriff for the sale of the automobile, on February 26, 1909, the plaintiff commenced this action by filing an affidavit with the sheriff under section 573, Rem. & Bal. Code, claiming ownership of the automobile. This claim is based upon the plaintiff's rights under the conditional sale contract. Upon issues raised by the defendant's answer to the plaintiff's affidavit a trial was had resulting in findings and judgment in favor of the defendant, from which the plaintiff has appealed.

Did the acts of appellant in taking from Burch the $900 note representing the balance of the purchase price of the automobile, and thereafter endorsing that note over to the bank as collateral security for the loan, constitute in law an election by appellant to make the sale absolute, and thereby vest the title to the automobile in Burch? The correct answer to this question we regard as by far the most important factor to be considered in determining this controversy. It is apparently conceded by counsel for both parties that under a conditional sale contract and a contemporary promissory note representing the unpaid purchase price, such as are here involved, the seller has a choice of two remedies, to wit: He may disaffirm the sale and retake the property upon failure of the conditions which it is agreed will vest title in the purchaser, or he may by some act clearly manifesting his intention so to do elect to treat and rely upon the unpaid purchase price as an absolute debt due from the purchaser. It is a general rule that the seller cannot have both remedies, and that, when he has elected to avail himself of one, he has thereby divested himself of all right to the other. Whatever exceptions there be to this rule, a reference to the authorities will show that such exceptions occur for the most part in jurisdictions where the law regards such contracts of sale only as security for the payment of the debt, in the nature of a lien, or where the contract by its terms evidences an intention to create a lien upon the property as security for the debt. The title which is by this contract reserved in the seller is the absolute title, under which he may retake the property, if at all, and retain it without any obligation whatever to account therefor, or for any surplus of the value thereof above the unpaid purchase price, to the purchaser. The thing which our law recognizes as being retained by the purchaser under this contract is not a mere lien or equity securing the balance of the purchase price, but the absolute title, which remains in him or passes from him to the purchaser absolutely, accordingly as the conditions of the sale are broken, or as they are fulfilled, or as may result from some act of election on the part of the seller. The nature of this title is clearly stated by the Supreme Court of Connecticut in Crompton v. Beach, 62 Conn. 25, 38, 25 A. 446, 448 (18 L. R. A. 187, 36 Am. St. Rep. 323), as follows: 'A contract of conditional sale imposes no lien upon property in favor of the vendor, for that or any other purpose. He does not sell, and receive back a pledge. He retains the title until he elects to part with it, and, when he does so elect, the title passes from him; but nothing else thereby springs up in its place in the nature of a lien or incumbrance upon the property, inuring to his benefit.' The Supreme Court of Minnesota in Alden v. Dyer, 92 Minn. 134, 99 N.W. 784, expressed substantially the same vies as follows: 'It must now be regarded as the settled law of this state, as well as of most others, that, where personal property is sold and delivered with an agreement that the title thereto shall remain in the vendor until the payment of the purchase price, it is a conditional sale, and the transaction cannot be held a mortgage; and it is equally as well settled that, upon the vendee's failure to comply with the condition as to payment, the vendor may elect to retake the property, or may treat the sale as absolute, and bring an action for the price, but the assertion of either right is an abandonment or waiver of the other.' Not only is this the undoubted law of this state, but it is the very theory upon which appellant is now resting its claim of absolute title to this automobile. The application and importance of this principle to our inquiry will be rendered more apparent as we proceed.

An examination of the authorities will show that there are several ways in which the seller under conditional sale contracts may so act that the law will impute therefrom to him an election to waive the conditions of the sale resulting in title passing to the purchaser. While the decisions so holding will be found to relate to varying acts of the seller they all rest upon the same underlying principle, to wit that an election to hold the purchaser personally bound as a debtor owing the purchase price, results in such election vesting title in the purchaser. The bringing of a simple suit to recover the purchase price, unaided by any claim of lien upon or attachment of the property conditionally sold, constitutes an election to vest title in the purchaser and look to him only as a debtor owing the purchase price, under the holdings in the following ...