Court Opinion

ID: 8184293
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:06:33.860984+00
Date Added: 2024-06-11T16:40:21.548708
License: Public Domain

WiNsnow, J.
The trial court found that the transactions in question amounted simply to a conditional sale of the machinery, that the title remained in the plaintiff, and that upon retaking the same the consideration for the notes entirely failed. If the premises of the court are right, the conclusion probably follows. Hine v. Roberts, 48 Conn. 267; Bailey v. Hervey, 135 Mass. 172. It is claimed by plaintiff, on the other hand, that title to the machinery *364passed to the defendant John, and that the plaintiff’s interest therein was simply that of mortgagee. If this last contention be correct, it is manifest that the trial court erred in its disposition of the case. The legal effect of the transactions between the parties is, then, the question to be decided. Was it a conditional sale simply, or a sale absolute with a mortgage back for security?
Where this question is at all doubtful, the courts are inclined to hold the transaction a mortgage. The real nature of the transactions, as disclosed by the written documents and all the surrounding circumstances, is sought to be ascertained. Rockwell v. Humphrey, 57 Wis. 410. The courts do not favor a conditional sale.
In viewing this transaction, and ascertaining its legal effect, all the contemporaneous documents executed between the parties are to be considered. There is, first, the order, which plainly contemplates an absolute sale and expressly provides for the execution of a first mortgage on the machinery ; second,, the notes, which contain a provision that the title of the machinery*shall not pass until the notes are paid in full, but which also contain a clause authorizing sale of the property and application of the proceeds on the notes, which clause is inappropriate to anything but a mortgage; third, the chattel mortgage, which expressly recognizes and asserts and warrants that the title of the machinery is in Silha, and contains elaborate and full provisions for foreclosure and sale in case of default, and covenants that, in case the proceeds of the sale are insufficient to pay the debt, Silha will pay the deficiency; fourth, the real-estate mortgage. Consideration of all of these documents forces our minds to the conclusion that the transaction was an absolute sale with mortgage back. The stipulations and agreements which indicate this intent are numerous, while theHg is only one which points to a conditional sale, and that is coupled with a provision only suitable to a *365chattel mortgage. The acts and conduct of the parties also point to the same conclusion. The giving of mortgages upon the machinery and other property to secure the payment of the notes, with stipulations to pay the balance remaining after foreclosure, is utterly inconsistent with the idea of a conditional sale. Silver Bow M. M. Co. v. Lowry, 6 Mont. 288. We must hold that the title to the machinery passed to Silha, subject only to the lien of purchase-money mortgage. This being so, the debt to the plaintiff still existed after the seizure and sale of the machinery, and the real-estate mortgage could be foreclosed for the balance left after, applying the net proceeds realized on the chattel mortgage sale. No question arises upon the counterclaim, as the defendant John, for a consideration, has effectually released all claims for damages arising out of the purchase.
The real-estate mortgage, however, is a first lien upon the undivided one-sixth of the real estate only. As to the remaining five sixths, it is subject to the purchase-money mortgage held by the defendant Wenzel. 19 Am. & Eng. Ency. of Law, p. 579, § 3, and note.
By the Court.— Judgment reversed, and cause remanded with directions to render judgment of foreclosure in accordance with this opinion.