Court Opinion

ID: 6688364
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:34:50.752627+00
Date Added: 2024-06-11T08:35:32.637405
License: Public Domain

SMITH, J.
(concurring specially). I concur in the conclusion reached by Justice WHITING. I am inclined to think, however, that if the views of the court in Dowagiac Mfg. Co. v. White Rock Lumber Co., 26 S. D. 374, 128 N. W. 334, were not fully stated, the opinion in this case is based upon the same inaccuracy, namely, that the provision of the contract referred to is construed as a conditional sale, and not as security for payment of the purchase price. In this, as in the former case, counsel on both sides have conceded and argued the case on the assumption that the contract constituted a conditional sale, and that liability depended upon the passing of title by delivery. In both cases the conclusion reached is correct on either theory. But it occurs to me that the fundamental error of both counsel and court is in assuming that sec*92tion 2303, Civil Code, may have application to a contract such as existed in this case. I think the provision of this contract as to reservation of title in the seller should be construed as security for payment of the purchase price, and not as an executory or conditional sale. When thus construed, the question of delivery, as well as the reservation of title in the vendor, becomes wholly immaterial, so far as the right of the vendor to sue for the purchase price is concerned.
The contract in this case was for the purchase by defendant from plaintiff of one 20-horse power gasoline engine for the sum of $1,400 understood to be purchased for resale by defendants, and provided that, if the engine was not sold on or before November 1st, thereafter a note should be given for the purchase price, due in one year, 'drawing interest at 8 per cent, per annum. The engine was delivered as ordered and a note for the purchase price due in one year was given by defendants, pursuant to the terms of the contract. The contract of purchase further provides that the ownership of the engine shall remain in the plaintiff company, subject to its ’order, until full payment of the purchase price, and concludes as follows: “But nothing in this clause shall release the purchaser from making payments as above stipulated.” A careful consideration of these provisions of the contract makes it perfectly clear that the contract of sale became executed as to the vendor, and -the liability of the defendants for payment of the purchase price was intended to become and did become absolute and complete according to the terms of the note given therefor. Such being the clear intent expressed in the contract, the reservation of title in the plaintiff could have been for no other purpose than as a security for payment of the purchase price. This could hardly be made clearer than it is made by the language of the contract, which says: “Nothing in this clause shall release the purchaser from making payments as above stipulated.” The legal rights and relations between vendor and purchaser, and the legal rights of persons who stand to each other in the relation of mortgagor and mortgagee or lienholder, are governed by distinct rules, well defined by the statutes and decisions of the courts and fully understood by the legal profession. The contract of purchase was fully executed on the part of the vendor, when the engine was delivered to and accepted by the defendants. The liability to pay the pur*93chase price thereupon became fixed and absolute under the contract. The retention of title in the vendor could have been for no other purpose than as security for payment of the purchase price. It is perfectly plain that section 2303, Civil Code, has application only to executory contracts for purchase and sale of personal property, and can have no application as a rule of damages or otherwise to an executed contract. The rule of damages there prescribed is for the breach -of an agreement to buy and pay for property, and not a breach of an agreement to pay for property purchased and -delivered. I think the correct view was taken by the Supreme Court of North Dakota in the case of Dwagiac Mfg. Co. v. Mahon, 13 N. D. 516, 101 N. W. 903, a case cited by Judge WHITING, which I think is opposed to the view expressed in the language of the opinion particularly excepted to as hereinafter stated. That case involved the construction of a contract containing a clause identical with that before us in this case, and the precise question here involved was determined in that case. The question was there presented upon a demurrrer -to the complaint, and in discussing it the court says: “The defect claimed is that the proper measure of damages is not claimed; that, the title to-the machines having 'been retained by the plaintiff, he cannot recover for the purchase price, but is only entitled to damages as prescribed’ by section 4988, Rev. Codes 1899. As we construe that section, it has no application to the facts of this case. Here the title was retained by the plaintiff for his own benefit for security purposes solely. There had been a delivery of the machines to the defendants, and defendants had sold some of them. The plaintiff had the right to waive the security clause of the contract, and by commencing an action for the purchase price of the machines did waive it. As we construe section 4988 (section 2303), it applies to cases wh-er.e there has been a refusal to accept the property purchased, or in cases where no delivery has followed the sale.” In other words, where the contract is executory. In short, I think this contract should not be construed as giving the vendor an optional right to rescind the contract and reclaim the property as absolutely its own, or to treat the contract as an executed sale, retaining title as security with a right to enforce the obligation of the vendee to pay the purchase price, as one or the other may best suit its interests. The language in the contract *94should 'be construed; and, when the true intention is ascertained, it should be given effect, and the rule governing the rights of the parties under the contract as construed should be applied. Clauses of this kind should be construed either as security for an absolute liability of the vendee, or as a conditional sale conferring the right of rescission upon the vendor, which would release the vendee from liability. I think this contract should be construed as an absolute sale and delivery, with retention of title in the vendor as security. In this connection it may be observed that, if a contract be construed as a conditional sale, it is well settled that the vendor may waive the condition as to title, and treat the contract as executed and as vesting title in the vendee, in which case he may sue for the full purchase price. It is not contended in this case that the vendor has elected to pursue the latter remedy. But, had he done so, it would not affect his right to recover the purchase price. When the vendor brought this action, it made an election which estopped it from claiming that it held title to the property under any right other than as security for payment of the purchase price, and it waived any possible right to claim a rescission of the contract. The liability of the vendee is therefore absolute in any view of the case.
The retention of the title as security in no' manner affects or limits the right of the debtor to sue and recover judgment upon the indebtedness, regardless of the security. I am further pur-suaded that section 13x5 of the Civil Code, which provides for the filing of contracts of this character in the register of deeds office of the county where the vendee resides, recognizes the retention of title in the vendor as a security, and was intended as protection to persons who deal witih the vendee without notice of the retention of title in the vendor. Upon a conditional sale, the vendor, upon breach of the condition, may rescind the sale and reclaim possession of the property._ This he may not do if he holds the title only as security on an executed sale. His remedy is foreclosure of the lien. In conditional sales the vendor who has fully performed his part of the contract may waive the condition as to title and sue for the purchase price. Dowagiac Mfg. Co. v. Mahon, supra. If the vendor resumes possession without rescinding, he holds the property as security only, and may sue for the purchase price and to foreclose his lien. For reasons which are *95suggested rather than discussed, I am compelled distinctly to dissent from that portion of the opinion in which Justice WHITING says: “It seems perfectly clear to us that section 2303 applies as well in cases where title has not passed for reasons other than that the contract was one of conditional sale, as where it was such an one.” This language necessarily would make section 2303, Civil Code, applicable to a sale upon a contract where title to the property may have been unquestionably retained as security only or where the contract was conditional with right of rescission or waiver. I cannot agree to this conclusion, or to the results which follow such a line of reasoning.
An interesting and illuminating discussion of this question is found in Williston on Sales, § 579. I do not care to discuss, it further at this time.