Opinion ID: 2074381
Heading Depth: 1
Heading Rank: 1

Heading: Does the transaction between appellee, Hull-Dobbs Motor Co., and Mickel Motor Company constitute a conditional sale within the purview of Section 556.4, Code 1946, I.C.A.?

Text: Section 556.4, Conditional Sales, provides: No sale, contract, or lease, wherein the transfer of title or ownership of personal property is made to depend upon any condition, shall be valid against any creditor or purchaser of the vendee or lessee in actual possession obtained in pursuance thereof, without notice, unless the same    is duly recorded   . Under the purview of this statute, any sale where the transfer of title or ownership is dependent on a condition is a conditional sale. As to what would be considered such transfer of title has been before this Court many times. In Hansen v. Kuhn, 226 Iowa 794, 797, 285 N.W. 249, 252, we quote with approval from Mercier v. Nashua Buick Co., 84 N.H. 59, 146 A. 165, 168, as follows: In its structure and contemplation a conditional sale is no different from any other completed sale. The property sold remains security for the debt, but the transaction of sale itself is a concluded one. The agreement divides itself into two separate parts, one of a fully effected sale and one of provision for securing payment. In this respect it is in full analogy with a sale in which the price is secured by a mortgage of the property sold. Again, 226 Iowa at page 798, 285 N.W. at page 252, we said, quoting from Bentley & Olmstead v. Snyder & Son, 101 Iowa 1, 6, 69 N.W. 1023:    the most infallible test by which to determine under which class the contract falls (bailment or conditional sale) is to ascertain whether there is a promise by the purchaser to pay for the goods delivered. If there is such promise, then, no matter under what form the transaction is disguised, it is held to be a conditional sale, and not a bailment. Further 226 Iowa at page 799, 285 N.W. at page 252, quoting from Donnelly v. Mitchell, 119 Iowa 432, 436, 93 N.W. 369, we say: `To constitute a conditional sale within the terms of the statute, there must be a delivery of possession to the purchaser, with the intention of passing immediate ownership, subject only to the reservation of title to the seller as security for the purchase money.' (Italics ours.) 47 Am.Jur., Sales, Section 828, states: A conditional sale, it has been said, is an executory contract of sale by the terms of which the right of possession vests in the vendee, but the title remains in the vendor until the fulfilment of a condition, generally the payment of the purchase price, imposed upon the vendee, when the title ipso facto passes to the vendee by virtue of the original agreement. See also Craddock v. Bickelhaupt, 227 Iowa 202, 288 N.W. 109, 135 A.L.R. 474; Annotation 92 A.L.R. 305. The undisputed record shows that appellee did everything essential to an executed sale except the surrender of the Title Certificates required for transfer of title in Illinois. The price was agreed upon. Possession of the cars given to Mickel with full knowledge that they were to be taken out of the state, and the Title Certificates were attached to the checks and to be released to Mickel upon payment of the checks, the purchase price. Upon the fulfillment of this condition, payment of the checks, title, as represented by the Title Certificates, would be delivered without any further acts upon the part of appellee. Mickel agreed to the price, as evidenced by the giving of the checks. He took immediate possession of the cars, took them to Iowa and placed a mortgage thereon as security for the loan from appellant. The check was a binding agreement to pay the amount thereof when the Title Certificates were delivered. Under the authority above cited, the transaction was clearly a conditional sale within the purview of section 556.4, Code 1946, I.C.A., rather than an agreement to make a sale as was held by the trial court. II. There being no record of the transaction between appellee and Mickel in the recorder's office in Shelby county, Iowa, appellant is entitled to priority over appellee, by virtue of his loan and mortgage, if in taking same it had no knowledge of the condition attached to Mickel's possession of the cars. It stands undisputed in the record that appellee had no actual knowledge of the circumstances when the loan was made, although no questions or inquiry were made as to his title or right to give the mortgage. In Commercial Credit Corp. v. Interstate Finance Corp., 236 Iowa 459, 18 N.W.2d 178, 159 A.L.R. 663, we held that unless there was known to the purchaser or mortgagee such information as would put a reasonable man upon inquiry and which, if prosecuted with ordinary diligence, would have resulted in a discovery of vendor's rights under the unrecorded agreement, no inquiry is necessary. We find nothing in this record which could be said to place appellant on inquiry and we therefore hold that under section 556.4, Code 1946, I.C.A., appellant was entitled to the cars as against appellee's claim. Appellants cite Kirk v. Madsen, 240 Iowa 532, 36 N.W.2d 757. That case is clearly distinguishable from the instant case as we there held that the purchaser was not an innocent purchaser without notice. For the reasons above set forth, the judgment of the trial court is reversed and remanded for judgment in accordance herewith. Reversed and remanded.