Court Opinion

ID: 9847509
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:01:05.19118+00
Date Added: 2024-06-11T09:17:18.681031
License: Public Domain

Wertz, J.
(dissenting): I cannot agree with the majority opinion which fell to my lot to write, nor can I bring myself to the conclusion that the agreement entered into by the parties in the instant case constituted a conditional sale as that term is used in the commercial field, or as contemplated by the exclusionary provision of the insurance policy. A conditional sale in the commercial field of law has a definite meaning as hereinafter related.
Provisions frequently appear in theft, fire and collision policies *12upon automobiles making the policy void if any change other than by death of the insured takes place in the interest, possession or title of an automobile unless otherwise provided by agreement endorsed thereon, and such provisions are ordinarily valid and enforceable. A breach thereof by the insured voids the policy. (Koenke v. Iowa Home Mutual Cas. Co., 175 Kan. 473, 264 P. 2d 472.) However, in order for such a clause to become operative, there must be a change in the property interest of the insured in the automobile, and not merely some contractual arrangement respecting the car which, whatever personal obligations it creates between the parties, does not work any change as to ownership, and where an insured enters into a contract contemplating transfer of the automobile insured, but no further steps are taken and no formal transfer by insured is ever executed, it cannot be said as a matter of law that there has been any transfer of title within the meaning of the policy so as to result in the forfeiture thereof. (6 Blashfield, Cyclopedia of Automobile Law and Practice, 218, § 3598.)
It is stated in 47 Am. Jur., Sales, 72, § 871:
“The transfer by the vendor to the vendee of the possession and right of use of the goods sold is one of the distinctive elements of a contract of conditional sale. The vendee acquires the right of possession and use of the property sold, as long as he is not in default, and the right to become the absolute owner upon complying with the terms of the contract, without further assent on the part of the vendor. These are the vendee’s legal rights, of which no act of the vendor can divest him.” (Italics supplied.)
In a conditional sale, the title in the seller is for security only to assure the payment of the purchase price. It carries with it none of the ordinary incidents of ownership. The buyer has the possession and use of the property to the complete exclusion of the seller, subject only to the seller’s remedies in case of default. (Luke v. Mercantile Acceptance Corp., 111 C. A. 2d 431, 244 P. 2d 764; Bowden v. Bank of America, 36 Cal. 2d 406, 413-414, 224 P. 2d 713; 78 C. J. S. 254, § 553; Void on Sales, 267, § 95.)
In 2 Williston on Sales, Revised Edition, 285, § 330, it is stated:
“In fact the buyer acquires not simply a contract right but a property right. This is due to the fact that the seller does not simply contract that the buyer shall have possession but actually delivers possession, and this possession is delivered not to hold the goods for the seller, but to use as the buyer’s own. Moreover, the buyer, so long as he is not in default, may maintain his possession and use of the property against the world.”
The .interests held by a purchaser under a conditional sale are *13twofold; first, his right to the possession and use of the chattels; secondly, his right to acquire the absolute title and complete ownership upon payment of the purchase price. While the rights of the conditional purchaser in the chattels are not limited to mere possessory interest, possession in him is, nevertheless a component part of his equitable ownership. The right of possession is exclusive in him as long as he is not in default in the performance of his contract. A conditional sale constitutes somewhat of a dual ownership in which both the seller and the buyer own the property, a divided ownership in which one of the prime essentials of complete ownership — the title — is in the seller, and the other essential— possession and privilege of use — is in the buyer, together with the added privilege of acquiring the title upon payment of the full purchase price. (3 Jones on Chattel Mortgages and Conditional Sales, 336, 339, §§ 1263, 1264.)
This brings me to the question whether the evidence as a matter of law meets all of the elements of a conditional sale. I think it is clear from the facts, and what the parties did in the present case, that a conditional sale was not intended. The agreement between the parties was executory in its nature. Each of the parties had an unfulfilled promise to perform, and both promises were subject to the condition that the finance company would accept Bessette as obligor on the outstanding mortgage. Their agreement would become executed only after the acceptance by the finance company of Bessette on the mortgage, and when the plaintiff delivered the certificate of title, the extra set of keys and the unlimited possession pursuant to the agreement, and until such time the car was not one which had been sold under a conditional sale, so as to bring it within the exclusionary clause of the insurance policy.
Defendant contends that possession, of the automobile was given to Bessette. Even if it were conceded a limited possession was given, such possession was not such as is contemplated by a conditional sale. Bessette had no right to use the automobile nor could he treat it as his own, as is contemplated under a conditional sale contract. The car was left on his premises only as security for the down payment which he had parted with, and the fact that neither could use the automobile was evidence that the entire contract was in abeyance until the finance company had accepted Bessette as obligor under the outstanding chattel, mortgage. If Bessette was accepted as obligor, then plaintiffs would deliver the *14title, possession and the other set of keys. If Bessette was not accepted by the finance company as obligor on the outstanding chattel mortgage, then plaintiff would return the $140 to Bessette, pick up his automobile, and place the parties in status quo. The arrangement was somewhat analogous to an escrow agreement pending completion of a sale. In Pomeroy v. Insurance Co., 86 Kan. 214, 120 Pac. 344, it is stated:
“While a deed is in escrow, awaiting the performance of conditions precedent to the delivery thereof by the vendor to the vendee, there is no change in tlie title or right of possession to the property although the purchaser occupies it with the consent of the vendor in anticipation of completing the contract of sale and purchase.
“Where, in such case, the vendor has a fire insurance policy on a house situated on the premises, and the house is destroyed by fire while so occupied and before the conditions of the escrow are performed, the hazard from fire not being increased, the right to recover on the contract of insurance is not forfeited.” (Syl. ¶ ¶ 1 and 2.)
In the case of Bisi v. American Automobile Ins. Co., 137 Conn. 424, 78 A. 2d 533, a somewhat similar situation to the instant case arose. The facts were that the parties entered into an agreement for the sale and purchase of an automobile. There was an insurance policy involved covering the automobile with exclusion provisions identical to the one in our present case. The buyer made a down payment in cash and executed an instrument transferring title of the automobile he was trading for a new automobile. The completion of the sale was held in abeyance from Saturday until the following Monday, because it was impossible to acquire the finance' company’s consent to an assignment of the conditional sale contract until that time. The buyer was allowed to take the car over the week end because he desired to make a trip. A collision occurred and the car was damaged. In an action to recover on the automobile collision policy, the court held that an executory agreement to make a conditional sale becomes executed so that the vendor no longer holds the goods for sale only when possession is delivered pursuant to the conditional sale. Delivery for any purpose other than to complete the executory agreement does not execute that agreement, and further held that the agreement between the parties did not come within the exclusionary clause of the policy relating to automobiles sold on conditional sale.
In view of what has been said, I am of the opinion that the contract entered into between the narties was merely executory in *15nature and did not amount to a conditional sale as to fall within the exclusionary clause of the insurance policy, and that the judgment of the trial court should be reversed and a new trial ordered on all issues.
Habvey, C. J., and Smith, J., join in the foregoing dissent.