« PreviousContinue »
to acquire a perfect title by payment of the price agreed upon. The fact that the property was destroyed while in his custody, and before payment of the amount due did not relieve him of payment of the price agreed on. The seller had done all he was bound to do, except to receive the purchase price. The vendee had obtained all that he was to receive from the vendor in consideration of the payments which he had agreed to make for his property."
Applying the rule, the court in Roach v. Whitfield (1910) 94 Ark. 448, 140 Am. St. Rep. 131, 127 S. W. 722, said: "The appellant, a wholesale dealer, sold to appellees the goods at a fixed price named at the time. Appellees obtained, the moment the goods were delivered to them, absolute control over them. They resold them at their own price. The title was retained in appellant only for the purpose of security, but for no other purpose. So far as the appellant was concerned, she had done all she could do to pass the title when the goods were shipped to appellees. Nothing remained for her to do. The goods were, on delivery, under the complete dominion of the appellees to do with them as they chose, and to resell upon their own terms. We think that, according to the weight of authority and and the best-considered cases, where the title is retained solely for security and passes immediately to the vendee upon the payment of the purchase money, he in the meantime having the absolute control and dominion over the property, the rule is that the loss falls upon the vendee, and the vendor may recover the purchase price undiminished by such loss."
In Burnley v. Tufts (1888) 66 Miss. 49, 14 Am. St. Rep. 540, 5 So. 627, which is probably the leading case allowing a recovery upon the facts under consideration, it appeared that the plaintiff had sold to the defendant a soda-water apparatus, taking therefor several notes, due at stated intervals.
The notes, which were all similar, contained the stipulation that the title to the property should remain in
the plaintiff until all the notes were paid. After several of the notes had matured and were paid, the apparatus was totally destroyed by fire, without any fault on the part of the defendant. The defendant had had exclusive use and control of the property from the time of its purchase until it was burned. He refused to pay the subsequently maturing notes, claiming that the title was in the plaintiff, and that the loss should be borne by him. The court held that the fact that the property had been destroyed while in the defendant's custody and before the time for the payment of the note last due, on payment of which only his right to the legal title to the property would have accrued, did not relieve him from payment of the price agreed on. Cooper, J., delivering the opinion of the court, said: "He got exactly what he contracted for, viz., the possession of the property and the right to acquire an absolute title by payment of the agreed price. The transaction was something more than an executory conditional sale. The seller had done all that he was to do except to receive the purchase price; the purchaser had received all that he was to receive as the consideration of his promises to pay."
That case was followed in Tufts v. Griffin (1890) 107 N. C. 47, 10 L.R.A. 526, 22 Am. St. Rep. 863, 12 S. E. 68, in Tufts v. Wynne (1891) 45 Mo. App. 42, wherein it was also said that the rule that a loss by the destruction of improvements falls on the purchaser of real estate under a title bond should apply to sales of personal property under like conditions, and in American Soda Fountain Co. V. Vaughn (1903) 69 N. J. L. 582, 55 Atl. 54, wherein it further appeared that the purchaser agreed to insure the property, making the loss, if any, payable to the seller as its interest might
In Osborn v. South Shore Lumber Co. (1895) 91 Wis. 526, 65 N. W. 184, the sole question presented was whether the defendant was liable for certain logs which were lost, in view of the fact that the plaintiff had retained the title solely as security for
the purchase money, it appearing that the logs were delivered into defendant's possession, and were lost without any fault of his. The court said: "Where property is sold and delivered, and the vendor has fully performed all the conditions of the contract of sale on his part, and the intention of the parties at the time of the making of the contract, as in this case, clearly is that the vendor is to have no interest in the property after delivery, except as security for the unpaid purchase money; that, subject to the right to resort to said property as such security, the entire dominion and control over the same are turned over to and assumed by the vendee, as such, although, for the purpose of retaining effectually the security, the contract of sale provides that the title and right of possession shall remain in the vendor, as security, until the purchase price is fully paid, and though the amount of the property is yet to be ascertainend by a measurement in order to determine the amount of the purchase money, if any of such property is lost after such delivery, before measurement, such loss must fall upon the vendee, whether the loss accrues through his negligence or otherwise, and the amount of such lost property may be ascertained by competent evidence."
Likewise, in Hesselbacher v. Ballantyne (1898) 28 Ont. Rep. 182, it was held that the loss or destruction of logs purchased under a conditional sale fell on the vendee, although he was not at fault and title still remained in the vendor.
In Carolina, C. & O. R. Co. v. Unaka Springs Lumber Co. (1914) 130 Tenn. 354, 170 S. W. 591, wherein it appeared that a purchaser of lumber under a conditional sale lost it through fire started by sparks from a railroad locomotive, it was said: "A purchaser of personal property, under a conditional sale in which title is retained in the vendor to secure the purchase price, is the equitable owner of the property.
. . The destruction of the property by fire while in the possession of the vendee, before payment, did not
relieve the vendee from the obligation to pay the purchase price."
In Phillips v. Hollenberg Music Co. (1907) 82 Ark. 9, 99 S. W. 1105, the defendant purchased a piano on the instalment plan, upon condition that the title was to remain in the plaintiff company until the piano was fully paid for. The piano was delivered and several payments were made on the purchase price. Before other payments were due, the piano was destroyed by fire without any fault of the purchaser. The court, in holding that the plaintiff was entitled to recover, said. "The obligation of the appellant to pay the purchase money became absolute upon the delivery of the piano, and was not conditioned upon the vesting of the title in the purchaser. The title was held by the vendor as security for the unpaid purchase money. When it was paid, the title vested in the purchaser. Nothing remained for the vendor to do to complete the sale. On the contrary, he could not lawfully deprive the vendee of the property so long as she performed her contract, and she could not rescind the contract so long as he elected to enforce it. She acquired an interest in the property which she could mortgage or sell. The consideration of the contract was legal, valuable, and sufficient, and the fire did not destroy it. There was no failure of consideration."
In Hintermister v. Lane (1882) 27 Hun (N. Y.) 497, where the purchaser of an organ, giving notes therefor, executed a paper acknowledging that she had leased said organ until said notes should be paid, it was said that she was bound to pay the purchase price whether the organ should be destroyed or not.
In Charles A. Stickney Co. v. Nicholas (1915) 98 Neb. 287, 152 N. W. 554, it appeared that the plaintiff shipped a gas engine to the defendant under an agreement which specified that the title should not pass to the defendant until a full payment of the purchase price was made. The court, in holding that a subsequent destruction of the engine by fire, arising through no fault of the defendant, did
not relieve him from liability for the purchase price, said: "Plaintiff, Charles A. Stickney Company, the manufacturer of a gas engine, April 5, 1911, shipped to defendant, a retail merchant, a gas engine, under a written contract containing the following provision: 'Seventh. It is agreed that the title to and ownership of all goods. shipped under this contract shall remain vested in the Charles A. Stickney Company, and the goods are to be held at all times subject to their order until paid for, and if sales are made before payment they shall be made only in the regular course of business, and the proceeds of all such sales, whether cash, book accounts, or notes, are to be held as the property of Charles A. Stickney Company in trust as collateral security for their benefit, and subject to their order until all obligations arising under this contract are fully paid in money, and it is agreed that notes taken by the company are not accepted as payment. And it is further agreed that nothing in this clause shall release the purchaser from making the payments as herein stipulated.' The purchase price was not paid, but while the property was in the possession of the defendant, and without fault or negligence on his part, it was totally destroyed by fire. Plaintiff brought suit for the purchase price, and defendant by answer alleged that under the section of the contract above set out, at the time the property was destroyed, the title was in plaintiff, and he was holding it subject to its order. A jury was waived, the cause was tried to the court, and, 'from a judgment for the defendant, plaintiff appeals. There was some correspondence between the parties which indicates that the engine did not prove satisfactory on a test, and that plaintiff had agreed to send an expert to adjust it. However, as each party relies upon that part of the contract quoted, the case must be determined solely on the construction thereof. The courts are not unanimous, but the weight of authority seems to favor the rule that, where the goods are sold and delivered upon condition that the title is retained in the seller
until the purchase price is paid, the reservation gives the seller only a lien upon the property for the amount of the debt. The rule is different where there is anything further for the seller to do; but where he has delivered the property, and he has no option to rescind his contract and retake possession, the mere reservation of title for the purpose of securing payment of the debt will not defeat his right to recover where the property is accidentally destroyed. In this case the vendee had possession with full right to sell, and any person dealing with him would have acquired good title to the property, and the reservation made in the contract between the parties merely gave the vendor the right to pursue the property until sold in the regular course of business, or, in case of sale, to have the funds arising therefrom held as a trust fund to secure the payment of the debt. He had the option to rescind, and there was nothing further for him to do but to accept payment, and it is expressly provided in the final sentence 'that nothing in this clause shall release the purchaser from making the payments as herein stipulated.' The parties were able to contract, and this defendant voluntarily assumed the risk of loss or damage. The loss of the article in no manner changes the character of the agreement, and the vendee must be held liable for the purchase price."
Likewise, where a gasolene engine, sold under an agreement that title was to remain in the vendor until paid for, was destroyed by fire before the passing of title and while in one of the vendees' buildings, it was held that the loss must be borne by the vendees. The court said: "The foregoing is a sale on condition. It is not a contract to make a future sale. It required nothing to be done by the vendor to pass title. It gives the vendor the right, upon vendees' default, to retake the property, which is a disaffirmance of the sale; or, he may treat the sale as absolute, and bring an action for the price. . . The contract being a present contract of sale, its stipulation that the title
should remain in the vendor until the full payment of the purchase price did not relieve the vendees from the contract to pay, because the property was injured or destroyed." Jessup v. Fairbanks, M. & Co. (1906) 38 Ind. App. 673, 78 N. E. 1050.
In LaValley v. Ravenna (1905) 78 Vt. 152, 2 L.R.A. (N.S.) 97, 112 Am. St. Rep. 898, 62 Atl. 47, 6 Ann. Cas. 684, the evidence showed that the defendant refused to pay for a horse that died before any payments became due on the conditional sale. The court said: "Can there be a recovery for property sold and delivered on condition that the title shall not pass until full payment therefor has been made, when without the fault of the purchaser the property is destroyed before the price falls due? This question we answer in the affirmative.
. The defendant's promise to pay was absolute, and was made upon a sufficient consideration; for he got just what he bargained for the use, possession, and enjoyment of the property, with the right to acquire the absolute title upon payment of the stipulated price; and this was the consideration for his promise. The seller had done all that he was to do to or with the property by the terms of the contract; all that he was to do at all, except to receive the price. And, upon that, the title passed without further action on the part of either party. The defendant's promise was in no sense conditioned on the seller's ability to deliver the title. He could not return the property to the seller and thereby avoid further liability. The result is that we hold that the defendant is liable for the unpaid balance, notwithstanding the death of the horse included in the sale."
It was similarly held in Ballard v. Burgett (1869) 40 N. Y. 314, that if a horse, purchased under a conditional sale, had died before the payment of a note given for the price, such death would have been no defense to an action on the note, as the horse was held at the risk of the purchaser.
Where a conditional purchaser of a cow negligently turned her loose and
lost her, it was held that the seller who had retained title was entitled to recover the price. Neally v. Wilhelm (1854) 4 G. Greene (Iowa) 240, 61 Am. Dec. 118.
Where furniture, sold under a conditional sale with title retained by the vendor, was destroyed by fire, it was held that the risk of loss fell on the vendee. Exposition Arcade Corp. v. Lit Bros. (1912) 113 Va. 574, 75 S. E. 117, Ann. Cas. 1913D, 335.
In Prather v. Norflet (1818) 1 A. K. Marsh. (Ky.) 178, the rule was applied in the case of a slave sold conditionally, and dying before paid for.
So, in Planters Bank v. Vandyck (1871) 4 Heisk. (Tenn.) 617, the loss resulting from the emancipation of slaves, title to which had been retained by the vendor, was held to fall on the purchaser, such reservation of title being regarded merely as a lien.
In Cooper v. Chicago Cottage Organ Co. (1895) 58 Ill. App. 248, all that was decided was that the addition of the words, "title not to pass until this note is paid in full," to an ordinary promissory note, will not preclude a recovery thereon, though the property for which it was given was, without the fault of anyone, destroyed by fire; the court expressly refusing to say what its decision would have been, had the record disclosed a contract of sale under which the title was to remain in the vendor until the note should be paid.
However, in Swaney v. Alstott (1907) 134 Iowa, 63, 8 L.R.A. (N.S.) 1032, 111 N. W. 406, it was held that the loss of a stallion sold conditionally must fall on the vendor, where the contract provided that the purchase price should be paid out of the service fees.
And in J. M. Arthur & Co. v. Blackman (1894) 63 Fed. 536, which was an action on a promissory note, given in pursuance of a contract which provided that, on the payment of certain notes at maturity, the plaintiff would "sell and transfer" certain machinery to defendants, and that the title to the machinery should remain in plaintiff until the notes were paid, it appeared that the machinery was delivered to
the defendant, and without his fault, and before the maturity of the note sued on, was destroyed by fire. To an action upon the note sued on, the defendant entered a plea of failure of consideration In holding that this plea was good, the court said: "Now, according to the agreement of the parties, there are interdependent promises; defendants promise to pay money; the plaintiff promises to transfer property on payment of the money. I do not think the plaintiff can exact the payment of the money when it is made to appear to the court that it never can transfer the property. I consider this a valid defense. The demurrer to it will be overruled." Possession retained by vendor.
In Hollenberg Music Co. v. Barron (1911) 100 Ark. 403, 36 L.R.A. (N.S.) 594, 140 S. W. 582, Ann. Cas. 1913C, 659, the court carried the majority rule to the extent of holding that where the seller retakes the property on the failure of the vendee to pay, and it is destroyed without fault of the seller while held by him as security for the purchase price, the loss falls on the vendee.
In Whitlock v. Auburn Lumber Co. (1907) 145 N. C. 120, 12 L.R.A. (N.S.) 1214, 58 S. E. 909, it appeared that the defendant purchased conditionally a dry kiln, the title to remain in the vendor until the kiln was paid for. At the request of the purchaser, the vendor kept the kiln in its possession, subject to the order of the purchaser. Before actual delivery the kiln was destroyed by fire. In passing on the right of the vendor to recover the purchase price of the kiln, the court said: "The lumber company has made an absolute promise to pay a certain sum of money, the consideration of which was the purchase of the property described in the contract. Why, then, should it not be compelled to perform its promise? It is a mistake to suppose that its liability depends upon whether the title did or did not pass unconditionally to it from the Acme Company. Its obligation arises out of the fact that it has promised to pay the money upon a sufficient
consideration, and the said obligation is in no way affected by the state of the title to the property, as between the parties; that is, whether vested conditionally or unconditionally. . . . The real and substantial nature of the transaction, for the purpose of determining who should bear the loss, is that of mortgagor and mortgagee, or lienor and lienee. The contract, it is true, creates technically a conditional sale, but the vendor, in fact, only retains the legal title as a security in equity, and the title otherwise passes to the vendee with a lien for the purpose named."
So, it has been held that where, on a sale of a pair of horses, it was agreed that the title thereto should remain in the vendor until payment, and the purchaser assumed control of the horses though they remained in the vendor's stable, and one of the horses died, the loss fell on the purchaser. Humeston v. Cherry (1880) 23 Hun (N. Y.) 141. Compare Elphick v. Barnes (1880) L. R. 5 C. P. Div. (Eng.) 321.
Failure to deliver.
The holding in Edward Thompson Co. v. Vacheron (1910) 69 Misc. 83, 125 N. Y. Supp. 939, was to the effect that the conditional vendor of an undelivered set of law books was responsible for the loss thereof in transit. In support of the holding, the court said: "It would be unreasonable to say that defendant had bound himself to pay for what he never got, where it had been stipulated in advance that he should have no title in the article at the time of its loss. . . . Where a publisher contracts to make such a delivery to a subscriber at a distant place, some express clause is necessary to shift the risk of carriage. . . . In the absence of such stipulation, the risks of transit naturally follows the title to the goods at the time; and the publisher must carry out the engagement to deliver at the place appointed."
In Sawyer & M. Co. v. Robertson (1900) 1 Ont. L. Rep. 297, it appeared that the plaintiffs sold an engine and stone crusher to the defendant, re