Court Opinion

ID: 3396650
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:04:15.465071+00
Date Added: 2024-06-11T14:24:46.909680
License: Public Domain

The petition for a rehearing rests upon the argument that as the court of chancery had no jurisdiction of the subject matter of the suit the decree of the court was void, and that even if the court had jurisdiction of the subject matter, the cause being one to foreclose a lien upon personal property given to secure the price agreed to be paid for it, the court should not have entered a deficiency decree for the difference between the amount due and the proceeds of the sale of the property applied to the debt. This argument rests upon the proposition that in the foreclosure of a vendor's lien where the vendor becomes the purchaser of the land at the foreclosure sale a deficiency decree will not be given for the difference between the price agreed to be paid and the amount applicable to the debt derived from the proceeds of the sale.
How this rule is affected by Chapter 7839, Laws of Florida, 1919, requiring a deficiency decree to be entered when the proceeds of the sale of the property subject to the lien shall not be sufficient to pay the debt and costs is not here determined. Before the passage of the Act referred to the power of the court to enter a decree in foreclosure of mortgages for any balance that may have been due to the complainant over and above the proceeds of sale was given by Rule 89 of Circuit Courts, Equity Actions, and was a discretionary one and could be granted or denied according to the facts in each case. See Realty Mortgage Co. v. Moore, 80 Fla. 2, 85 South. Rep. 155. *Page 751 
Such decrees were not entered upon bills to foreclose vendor's liens. See Johnson v. McKinnon, 45 Fla. 388,34 South. Rep. 272; Johnson v. McKinnon, 54 Fla. 221, 45 South. Rep. 23, 13 L.R.A. (N.S.) 874 n.; 127 Am. St. Rep. 135, 14 Ann. Cas. 180.
The answer to the second argument is two-fold, there is Chapter 7839 supra and the case is not one to enforce a vendor's lien. A lien does not exist in favor of the seller of personal property for its purchase price after delivery.
The existence of a vendor's lien rests not in any rule of the common law but in exclusively a doctrine of equity adopted, it has been said, from the civil law which applied to the sale of both real and personal property, which rule courts of equity adopted only so far as it applies to realty but did not adopt it as applied to sales of personalty. So a seller of personal property has no lien for the price of the articles sold after the delivery of possession. See Moore v. Holcombe, 3 Leigh (Va.) 597, 24 Am. Dec. 683; Wellborn v. Williams, 9 Ga. 86, Am.Dec. 427; Michigan State Bank v. Hastings, 1 Douglass (Mich.) 225, 41 Am. Dec. 549; Gregory v. Morris, 96 U.S. 619,24 L.Ed. 740; Cade v. Brownlee, 15 Ind. 369, 77 Am. Dec. 95 n; Newhall v. Vargas, 15 Mo. 314; Cross v. O'Donnell, 44 N.Y. 661; Jenkins v. Eichelberger, 4 Watts (Pa.) 121, 28 Am. Dec. 691 n; James v. Bird, 8 Leigh (Va.) 510, 31 Am. Dec. 668; Crompton v. Beach,62 Conn. 25, 25 Atl. Rep. 446, 18. L.R.A. 187; 24 R. C. L. 127.
As the case is not one to enforce a vendor's lien the argument against the entry of a deficiency decree for the remainder of the purchase price of the property is without merit because there is nothing to prevent a seller of personal property by agreement with the purchaser from taking security upon the property sold for the unpaid purchase price. *Page 752 
If the agreement made between the Sponge Exchange Bank and F. E. Malone was an instrument given and taken to secure the payment of money it was a mortgage and subject to the same rules of foreclosure and to the same restraints and forms as are prescribed in relation to mortgages. See Section 3826, Revised General Statutes.
The foreclosure of mortgages or the enforcement of mortgage or other lien is a subject of equity jurisdiction. See Sec. 11, Art. V., Constitution; Sec. 3117, Revised General Statutes; Chapter 7839 supra.
The language of the instrument taken in connection with the allegations of the bill establishes the following facts: The property belonged to the bank; it agreed to sell it to Malone for a price agreed upon; part of the price was paid in cash and the remainder was agreed to be paid in five installments distributed over a period of six years; the deferred payments evidenced by promissory notes of Malone bearing six per cent interest until paid. The notes were unqualified and unconditional promises to pay certain sums of money at certain times. The possession of the property was immediately delivered to the purchaser, who agreed to keep it "insured" in a certain amount for a definite period and to pay the taxes levied upon it "subsequent to the year 1918." The agreement contained a clause to the effect that the seller should have the "option" to retake possession of the property and retain all payments made upon it in satisfaction of all damages sustained if the purchaser should fail to pay the notes as they became due or any of them or to perform any agreement on his part to be performed. The purchaser retained possession of the property and used it as his own for about four years and paid the interest on all notes to December 31, 1920, and on one note to December 31, 1921. He failed to pay the notes which became due in March 1921, 1922 and 1923 and the seller *Page 753 
never exercised the "option" to retake possession of the property.
The agreement was, upon its face, an executory contract of sale with delivery of possession to the buyer. That is to say, under the agreement title remained in the seller (the Bank) which agreed to transfer it to the buyer upon the payment of the purchase price.
Under this agreement the seller had the option to forfeit and terminate the contract and retain all payments made on the purchase price of the property upon the happening of certain conditions. If it chose that course the Bank had the right to enter and take possession of the property.
An option is the power of choosing; the right of election, an alternative. It is the right of choice between two things, courses or propositions. The choice of one excludes the choice of the other called the alternative. It is loosely spoken of as a right of choice between several things or courses. Webster's New International Dictionary.
The alternative was the right to enforce the payment of the balance of the purchase price, in which case the title to the property would remain where the contract unforfeited had left it; that is, in the seller. The instrument, therefore, gave the seller a right of action to recover the purchase price of the property while the title to it remained in the seller under the agreement.
Unless the agreement was merely a bailment, which its terms deny, and as the retention of the absolute title to a thing sold is inconsistent with an action to recover the debt due for the purchase price of it, what could have been the purpose or intention of the parties in leaving the title to the property in the seller while giving it the right to proceed to the enforcement of the payment of the notes given for the balance of the purchase price unless it was to secure the *Page 754 
payment of the balance due? See Atkinson v. Japink, 186 Mich. 335,152 N.W. Rep. 1079.
Until the seller chose the alternative of proceeding to enforce the payment of the balance due the contract was an executory one; but when it elected to take that course, the possession of the goods having been delivered to the buyer, the seller by taking that choice was enabled to apply the goods to the contract without increasing the damages resulting from the buyer's breach of it. So the contract became executed on the seller's part with the agreement that title should remain in it until the purchase price was paid. The purpose of such an agreement could be none other than that the goods should be held as security for the payment of the balance due in the event the seller should elect to enforce the payment of the purchase price. See note Pate v. Ralston, (158 Iowa 411,139 N.W. Rep. 906,) 51 L.R.A. (N.S.) 735, n. 738.
Upon the seller's election to enforce the payment of the purchase price therefor the agreement became one securing to the seller a lien upon the property as security for the payment of the debt. If the Bank had retained possession of the goods while having the right to enforce the payment of the purchase price it would have had a vendor's lien for the balance due. The agreement merely gave it a lien in the nature of a chattel mortgage. It was signed by both seller and purchaser and its execution witnessed by one witness. The voluntary surrender of the possession of the property by the seller to the purchaser extinguished the common law lien for the purchase price but as it was intended by the parties that the instrument should be a security for the payment of money the statute fixes its character as a mortgage.
We say that the instrument was intended by the parties to be a security for the payment of money. Such intention *Page 755 
is apparent in all like transactions. They originate in the desire of one party, the owner of the chattel, to sell it and the correlative desire of the other party, the purchaser, to acquire it. This mutual desire cannot be realized except by barter and sale of the chattel. They agree upon the price to be paid by the purchaser and the terms of payment. If credit is to be extended to the purchaser the question of security or no security for such payment is considered. If the seller desires security for the deferred payments, he either retains the chattel in his possession, thereby reserving to himself a common law lien upon it for the balance of the purchase price, or takes a chattel mortgage in due form to secure such payments, or he executes a conditional bill of sale reserving to himself the option, on condition of the purchaser's default, to rescind the sale and forfeit all payments made or bring his action on the contract for the balance due.
By paying part of the purchase price and taking possession of the property the purchaser acquires an equitable interest in the thing notwithstanding the continuing of the legal title in the seller by the terms of the agreement. See Varn et al. v. Ashbrook, 84 Fla. 626, 94 South. Rep. 384; Aycock Bros. Lumber Co. v. First Nat. Bank of Dothan, 54 Fla. 604,45 South. Rep. 501.
This dostrine is applicable to the sale of real or personal property. Indeed it would seem to be of peculiar applicability to sales of personal property because as the possession of personal property is prima facie evidence of ownership in the person in possession, the owner who voluntarily surrenders it to the possession of one with whom he is under contract to sell it does so in full knowledge of the rule and voluntarily proclaims to the world that the buyer is owner. There exists some sophistry in the argument which would justify a repudiation of the voluntary proclamation by the seller against a bona fide purchaser for value *Page 756 
without notice on the strength of a secret understanding between the seller and buyer.
When a conditional sales contract is signed by the buyer he thereby gives his consent to the encumbrance upon his equitable interest in the chattel.
In the absence of any statutory provision declaring an instrument given to secure the payment of money to be a mortgage the rule settled by respectable authority is that where a sale is made of personal property on the installment plan, providing for stated payments evidenced by a contract continuing the title in the vender until all payments are made with a condition that upon default of the vendee his right in the property shall fail and the vendor shall have the right to a surrender of the property and to treat all payments made as forfeited, the vendor may elect to consider the property as security for the payment of the balance due and may invoke the aid of a court of equity to the extent of subjecting the property to the satisfaction of the equitable lien thus created and have a judgment against the vendee for any deficiency should the amount realized from the sale of the property fail to fully liquidate the balance due. See Ballinger v. West Publishing Company, 44 App. Cas. D.C. 49; Wolf Co. v. Hermann Sav. Bank, 168 Mo. App. 549, 153 S.W. Rep. 1094; Gigray v. Mumper, 141 Iowa 396, 118 N.W. Rep. 393; Singer Sewing Machine Co. v. Leipzig, 113 N.Y. Supp. 916; Hollenberg Music Co. v. Morris, (Tex.Civ.App.) 35 S.W. Rep. 396; Standard Furniture House v. Burrows, 59 Wn. 455, 110 Pac. Rep. 13.
The vendor in the case at bar never availed itself of the option to retake possession of the property and forfeit all payments made under the contract but elected to enforce the payment of the balance due on the price of the property. That feature of contracts for the sale of personal *Page 757 
property continuing the title in the vendor until the payment in full of the purchase price, called conditional sale, is an attempt to reserve a vendor's lien, which existed at common law and was continued so long as the vendor retained possession of the property and which was lost upon the delivery of possession to the buyer.
Such an agreement of sale when signed by both vendor and purchaser results in securing to the vendor the option of rescinding the sale and retaking possession of the property, subject to the power of equity to prevent an unconscionable forfeiture, or waiving the right to possession and forfeiture, treating the instrument as one to secure the payment of money.
Under such a contract the vendor may proceed at law to recover possession of the property or in equity to enforce the instrument as one given to secure the payment of money. See Sec. 3836, Revised General Statutes, supra.
This doctrine is in harmony with the maxim that equity abhors a forfeiture and is consistent with the power of a court of equity under some circumstances to declare such a contract a mere security and protect the purchaser from unconscionable forfeiture.
The jurisdiction of the chancery court to entertain this case being shown and the defendant having appeared by counsel, thus subjecting his person to the court's jurisdiction, the decree, although it may be subject to the criticism of procedural error, is not void.
The petition for a rehearing is therefore denied.
WHITFIELD, TERRELL, STRUM AND BUFORD, J. J., concur.
BROWN, C. J., dissents.