Case ID: ad_154/html/0373-01.html
Source: Caselaw Access Project
Author: {"author": "Kellogg, J.: Houghton, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George J. H. Crowe, as Trustee of the Estates of Pappas & Karahall, a Copartnership, and Nicholas Pappas and Peter Karahall, Individuals, Bankrupts, Appellant, v. The Liquid Carbonic Company, Respondent.
    Third Department,
    December 30, 1912.
    Sale — conditional sale — default — retaking and sale of property — executory agreement to waive rights under section 65 of Personal Property Law—public policy — final judgment under section 1317 of the Code of Civil Procedure.
    Where the vendor under a contract of conditional sale, upon the bankruptcy of the vendee, leases the property and retains the rent, and three months later takes possession of the property, it is too late to sell it pursuant to section 65 of the Personal Property Law, notwithstanding the provisions of the statute as to retaining the property for a period of thirty days after retaking and of selling for the benefit of the vendee are both expressly waived by the contract, as well as the right to retain all installments paid for the use of the property while the vendee had possession.
    An executory agreement to waive one’s rights under section 65 of the Personal Property Law is against public policy and void..
    Pinal judgment directed under section 1317 of the Code of Civil Procedure. Houghton and Lyon, JJ., dissented, the former with opinion.
    Appeal by the plaintiff, George J. H. Crowe, as trustee, etc., from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Broome on the 12th day of April, 1912, upon the decision of the court, rendered after a trial at the Broome Trial Term, the jury having been discharged, dismissing the complaint upon the merits.
    
      H. J. Hennessey, for the appellant.
    
      T. B. & L. M. Merchant, for the respondent.
   Kellogg, J.:

May 7, 1909, Pappas & Karahall purchased of the defendant, under a contract of conditional sale, a soda fountain and apparatus for $1,885, $400 of which was paid by the delivery of an old fountain, $225 in cash, and the balance was represented by thirty-six promissory notes of $85 each, with interest, dated May 7, 1909, one note payable each month thereafter. On the 21st day of January, 1910, the said firm and its members were declared bankrupts, and thereafter the plaintiff was duly appointed trustee in bankruptcy. The notes which had become due up to that time had been paid; those subsequently maturing were not paid. The fountain was in the store carried on' by said bankrupts. One Beaumann, under a chattel mortgage, acquired title to the goods and fixtures in the store aside from the fountain and continued the business in the same store. The fountain and apparatus were inventoried by the plaintiff in the schedules in bankruptcy as held under a conditional sale contract, but remained in the store: On February 3, 1910, the defendant leased the fountain in the store to Beaumann, the occupant of the store, for the month of February at $15, and like monthly leases were made for March, April and May. The rental was duly paid but was not indorsed by the defendant upon the contract of sale. In June the defendant removed the fountain and apparatus from the store and claimed to have retaken it then and after thirty days caused notice of sale to be given, and the fountain was subsequently sold, apparently according to the .provision of the law relating to conditional sales.

There was no note in arrear on the day of the leasing, but one became due a very few days after, and when each subsequent lease was made there were notes in default.

Section 65 of the Personal Property Law (Consol. Laws, chap. 41; Laws of 1909, chap. 45) provides that where property is retaken by the vendor under a contract of conditional sale, it shall be retained by him for thirty days from such retaking in order to enable the vendee to comply with the contract, and if the default continues the vendor must within thirty days thereafter sell the articles at public auction, and Unless such articles are so sold within thirty days after the expiration of such period, the vendee or his successor in interest may recover of the vendor the amount paid on such articles by such vendee or his successor in interest under the contract for the conditional sale thereof.” The plaintiff seeks to recover the installments paid upon the contract,, but by the judgment appealed from he is denied relief. The defendant had no right to lease the fountain to Beaumann, unless he claimed that right under the contract of conditional sale, and it was proceeding upon the theory that default had been made or was about to be made. After default the plaintiff could not object to the defendant’s retaking or renting the property, as it was its right under the contract. That the defendant considered it was leasing the fountain for its own benefit, and not for the benefit of the plaintiff, is evident by its appropriating the rent and not crediting it on the contract. It took control of the fountain and retained it for four months, and its attempt thereafter to comply with the statute was too late. It had incurred the liability to repay the installments paid upon retaining the property after thirty days without ■ taking any steps for selling it. The contract purported to waive this provision of the statute as to retaining the property for thirty days after retaking it and selling it for the vendee’s benefit, but provided that upon such retaking the vendee’s right to comply with the terms of the contract and thereupon receive said property is expressly waived. This statute was passed pursuant to a wise public policy. It was known that property was frequently sold upon conditional sales, and after the vendee had nearly paid for it, the vendor would seize and resell it, and the vendee would lose the property and the payments as well. The Legislature evidently realized that the persons making this class of contracts were at a disadvantage and were not entirely in a position to adequately take care of themselves by exacting favorable terms for such a contract, and, therefore, the law provided what should be the effect of such a contract and in what manner and- how the vendor might retake and sell the property. If by an executory contract the provisions of the statute may be waived in advance, it practically nullifies the statute because a waiver will always be found. The authorities indicate that such a waiver by executory agreement in advance of default and at the time of making the contract is against public policy and ineffectual, and we so hold. (Roach v. Curtis, 115 App. Div. 765; 191 N. Y. 387; Hurley v. Allman Gas Engine & Machine Co., 144 App. Div. 300.)

The defendant did not retake and sell the property in the manner required in the case of a conditional sale, and the attempted waiver' of the provisions of the statute in that respect is without effect.

Under section 1317 of the Code of Civil Procedure, as amended in 1912, this court may “render judgment of affirmance, judgment of reversal and final judgment upon the right of any or all of the parties, or judgment of modification thereon, according -to law, except where it may be necessary or proper to grant a new trial or hearing, when it may grant a new trial or hearing.” The evidence shows that this plaintiff is entitled to recover the payments actually made. The 8th and 9th findings of fact show upon undisputed evidence the payments made; there is, therefore, no necessity for a new trial. The judgment should, therefore, be reversed upon the law and the facts. The 14th and 15th findings of fact are disapproved of as without evidence and a final judgment directed for the plaintiff for the payments made on said contract as shown by the 8th and 9th findings of fact, with interest thereon from April 12, 1912, with costs to the plaintiff in the court below and upon this appeal.

All concurred, except Houghton and Lyon, JJ., dissenting, the former in opinion.

Houghton, J. (dissenting):

I am unwilling to find as a fact in opposition to the finding of the trial court that the defendant actually repossessed itself of the soda water fountain sold to Pappas & Karahall under conditional contract of sale prior to the 1st day of June, 1910.

The purchasers became bankrupt. "A considerable part of their property was subject to a large chattel mortgage. The soda water fountain, however, was not included. The receiver in bankruptcy took possession of all the property of Pappas & . Karahall not covered by the chattel mortgage. Such receiver, therefore, took possession so far as the law would permit, of the interest of the bankrupts in the fountain which they were under contract to buy. A sale under the chattel mortgage was attempted and the bankruptcy court issued a restraining order and the sale was not actually had until February, 1911, more than seven months after June 1, 1910. Although it does not appear that there was any restraining order with respect to the soda water fountain, still there was controversy over the chattel mortgage, over the lease, and the fountain was practically in the custody of the bankruptcy court. Both the receiver and the trustee say that they took possession of the fountain and that they never voluntarily surrendered it, and it was never actually removed until June 1, 1910, and concededly after its removal the defendant complied with all the requirements of the Personal Property Law with respect to holding and sale at public auction.

The sole circumstance against all these facts from which it can be adduced that the defendant did take possession of the fountain prior to the first day of June is that the defendant leased the fountain from month to month to the chattel mortgagee, who had purchased the perishable stock of the bankrupts and was conducting the store which they formerly occupied.

The letters of instruction of the defendant to its attorneys and their acts I do not think conclusively show that there was any intention of actually taking possession of the fountain by virtue.of the right which the defendant had under its contract of conditional sale.' It is true the defendant’s attorneys- kept the money received for the rental; but if the defendant did not take possession of the fountain the money belongs to the bankrupts or their trustee, and the fact that the defendant or its attorneys have possession of it does not conclusively establish that the defendant repossessed itself of the fountain by virtue of its contract.

But even if it be assumed that the defendant did retake the fountain as- early as February, 1910, and, therefore, did not comply with the requirements of the Personal Property Law with respect to holding it thirty days and reselling within the succeeding thirty days, still I am of opinion that the purchasers had a right to waive the requirements of the statute and that their agreement so to do is not against public policy and, therefore, ineffectual.

The contract of purchase contained a clear and explicit waiver of the requirements of the statute, and reads as follows: And we [purchasers] hereby agree that it shall not be necessary for you. [defendant seller] to retain said property for a period of thirty days after retaking, or to. sell the same for our benefit; but upon such retaking our right to comply with the terms of this contract and thereupon to receive said property is expressly waived.” If the requirements of the statute with respect to. the retaking of property sold by conditional sale and the retaining of it for thirty days and the selling of it for the heneft of the buyer within the succeeding thirty days can be waived at all, the language quoted would clearly seem to constitute such a waiver.

The object of the statute in requiring the retaining of the property for thirty days after retaking is to give the buyer an opportunity to redeem tinder his contract and complete his purchase, and the requiring a sale at public auction within the next succeeding thirty days is to ascertain if a surplus may not be obtained over the amount due and expenses incurred which can he repaid to the buyer.

Of course a buyer of personal property under a conditional contract of purchase can agree to waive and forego all such privileges, unless it is against public policy to permit him so to do. A man with full understanding may deliberately contract to waive and may waive rights which the common law or the statute law or even the Constitution, itself accords to him unless for some reason it is against the Common good to allow him to do so. The statute was enacted primarily to protect persons of small means who were compelled to pinchase household goods and necessities on the installment plan, and to prevent the seller from retaking the property after a large proportion of the installments had been paid, without any accounting therefor, and simply because the contract had been broken.- This practice tended to impoverish citizens and to make paupers and public dependents of industrious and striving householders and families. • It has long been the law that one having a family to provide for was entitled to certain exemptions against execution. The object of such exemptions was to prevent pauperism and destitution, and it was, therefore, held by the courts that it was against public policy for a householder prospectively to contract to waive such exemption. (Kneettle v. Newcomb, 22 N. Y. 249.) The provisions of the Personal Property Law with respect to conditional sales had in view the same salutary purpose as the Exemption Law, and with respect to all exempt property, and possibly as to all useful and necessary household goods, I am willing to concede that a buyer should not be permitted by contract to waive the provisions of the statute. I can see no reason, however, for extending the prohibition to ordinary articles of commerce and of trade. Mo considerations of public policy are involved in contracts made by a merchant with respect to his business affairs. . A druggist or a candy maker can install a soda water fountain in connection with his business if he chooses, or he can run his establishment without it. If he sees fit, without any advantage being taken of him, to make a bargain to purchase a soda water fountain on the installment plan, I fail to see any consideration of public policy which should prevent him from agreeing that if he fails to pay all the installments the seller may retake the property and claim it as his own without selling it at public auction and accounting to him for the proceeds. Because the statute may require the intervention of public policy as to the purchase of some articles it does not necessarily follow that public policy applies to all articles purchased by conditional contract of sale.

Roach v. Curtis (191 N. Y. 387) is not a conclusive authority requiring a holding that the contract under consideration was against public policy. The goods purchased in that case were articles of household furniture and there was a waiver only of the sale at public auction. While it is strongly intimated that an agreement to waive the requirements of the statute in the conditional purchase of household furniture would be against public policy, and, therefore, void, it is not so expressly held, the decision turning upon the point that the waiver was not broad enough to include all provisions of the statute but related only to the manner of sale on default.

The same may be said of the decision in Hurley v. Allman Gas Engine & Machine Co. (144 App. Div. 300), which ultimately turned upon the proposition that the agreement of waiver was not broad enough to include a, waiver of sale.

In the present case the requirements of retaining the property for a period of thirty days after retaking and of selling for the benefit of the buyer .are both expressly waived, as well as the right to retain all instalhnents paid for the use of the property while the vendees had possession. •

It seems to me that there is no ground for saying that the agreement which the parties entered into for the purchase of the soda water fountain respecting the waiver of the provisions of the statute was against public policy, and I, therefore, vote for an affirmance of the judgment.

Judgment reversed upon the law and facts. The 14th and 15th findings of fact are disapproved of as without evidence. Final judgment directed for the plaintiff for the payments made as per the 8th and 9th findings, with interest from April 12, 1912, with costs to plaintiff in the court below and on this appeal.