Court Opinion

ID: 3323531
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:41:04.973934+00
Date Added: 2024-06-11T14:24:46.153788
License: Public Domain

The rights of the parties depend on the effect of the instrument under which possession of the stock and merchandise in the appellant's store was received by the insolvents. Construed as a whole, it amounts substantially to a conditional sale, on credit, for $8,000, by the terms of which the absolute title was not to pass to them until full performance of the obligation which they assumed, but by which they were invested with the power to transfer an absolute title to all or any part of the goods to third parties, with whom they might deal in the ordinary course of their business as plumbers. The provision that upon a default in making the agreed payments they were to return the property with any accretions on demand, or so much of it as should not have been "lawfully used" by them "in the regular prosecution" of the business which they were "to carry on at said location," necessarily implies a right to use all or any part of the property in the same manner as if they owned it, in the usual course of dealing at their store. They could thus transfer a greater title than they had, but they did so, not as owners, but under a power conferred by the owner. Lewis v. McCabe,49 Conn., 141, 155.
Had they thus worked up all the material, and sold off all the finished goods, prior to their insolvency, this would not have shortened the agreed term of credit. There was no relation of dependence between their sales and collections and the payments they were to make to the appellant. Had they made no sales they would still have owed him the full $8,000. It was an entire sale to them for an entire price.
Their promise to return to him, on his demand, in case of their failure to make any of the agreed payments, so much of the property turned over to them as had not been used, with all accretions, was plainly inserted in the contract for his benefit and not for theirs. It did not authorize them because of their own default to throw the remnants of the property back upon him, and by so doing escape payment for what they had used up or sold to others. Appleton
v. Norwalk Library Corporation, 53 Conn., 4, 8;Beach's Appeal from Comrs., 58 id., 464, 475;Crompton v. Beach, 62 id., 25, 38. *Page 297 
The trustee in insolvency occupied no better position in this respect. The contract was one sanctioned by the laws of this state, and he had no greater rights under it than the insolvents had. He had, indeed, less. The power to use or sell, which the contract gave, was personal to the insolvents, and dependent on their continuance in the plumbing business. Rogers v. Whitehouse,71 Maine, 222; Crawcour v. Salter, L. R., 18 Ch. Div., 30.
At the date of their assignment they were indebted to the appellant in the sum of $6,500 only, having duly paid the first two installments of the contract price. They had an interest in the remaining goods which was transmissible to their trustee in insolvency, and which his payment of $6,500, in the installments agreed, would have converted into a perfect title. Newhall v. Kingsbury,131 Mass., 445; Beach's Appeal fromComrs., 58 Conn., 464, 473. He finding, however, that the goods were worth less than the debt which rested upon them, declined to take possession, disclaimed title, and notified the appellant to remove them from the store occupied by the insolvents.
By the credit of $2,800, which it is found was about their value, given on this account in the claim presented by him to the commissioners, the appellant has, in effect, acknowledged that the goods have been restored to him, made the insolvents bailees of them for him, and agreed to a deduction from his claim against the estate to the extent of $2,800.
It is claimed by the trustee in insolvency that his disclaimer of title, coupled with his notice to the appellant to take the property away, and the subsequent action of the latter, have discharged the debt.
Had all the property received by the insolvents under the contract remained in their possession at the time of their assignment, and had the appellant then taken possession of it again, whether on his own demand or on a disclaimer by the trustee, he would have thereby manifested an election to rescind the contract as to any acts to be thereafter performed. Crompton v. Beach,62 Conn., 25, 35. But a considerable portion of this property had been sold or used up before the *Page 298 
insolvency, and the contract furnished no rule of apportionment by which to ascertain the value of the use thus made of a part, and otherwise made of the rest, and to apply a credit therefor on the remaining debt. Nor did the appellant demand a return of the goods left on hand. The title had always been in him, and, when the trustee renounced any claim to them, the only interest not wholly in the appellant was that of the insolvents, which had become practically valueless by their assignment. The goods still remained in their possession, and the only act of reclamation on the part of the appellant is the credit given on the claim presented to the commissioners, for "goods now said to be on hand, $2,800."
Under these circumstances we think he cannot be deemed to have elected to take these remnants of the stock and merchandise which he had sold, in satisfaction of the contract debt.
In Crompton v. Beach, (supra,) the agreement of conditional sale provided that the vendor might resume possession in case of any default in payment of the purchase money, and that thereupon all payments theretofore made should be treated as rent and any obligation to make future payments canceled, and we held that he could not, upon a total default, present a claim for the whole purchase money against the insolvent estate of the vendees, receive a dividend, and then replevy the property sold from the trustee in insolvency on a claim of title. In the case now before us both the contract and the acts of the parties under it were materially different. The trustee left in the hands of the insolvents a fund of $2,800, in which they had an interest, but an interest which their insolvency had practically deprived of any value. Their obligation to complete their contract payments remained undischarged. By surrendering the property to the appellant, its rightful owner, and by his accepting it as a credit of $2,800 on account, he virtually received a payment from them of that amount on their contract indebtedness thereafter payable. It came from them and not from the estate. It came from them by relation as of the date of *Page 299 
their assignment, as soon as the trustee decided not to claim the property. It had the same effect, therefore, as if, immediately prior to the assignment, they had without fraud anticipated their obligations by paying the appellant $2,800. His claim against their estate was thereby correspondingly reduced, and instead of being $6,500, now amounted to but $3,700. As such he presented it, and while no part of it was yet payable, nevertheless, as the obligation was fixed and certain, and the debt drew interest from January 1st, 1892, the account was a proper subject of allowance, and the form in which it was stated was substantially correct.Bacon v. Thorp, 27 Conn., 257, 261.
  The judgment of the Superior Court is reversed, and the cause remanded with directions to enter judgment allowing the claim of the appellant in full as presented, for $3,700, and interest on $6,500 from January 1st, 1892, to the date of the assignment in insolvency.
In this opinion the other judges concurred.