Court Opinion

ID: 5417151
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:20:06.321738+00
Date Added: 2024-06-11T08:31:04.350111
License: Public Domain

Lehman, J (dissenting),
The plaintiff purchased an automobile truck from the Lincoln Motor Company, Inc., under a conditional contract cf sale. Thereafter the parties to the contract agreed to a rescission of the contract of sale and the plaintiff returned the truck to the vendor. Upon such rescission of the contract the Lincoln Motor Company became obligated to repay to the plaintiff the amount previously paid by the plaintiff upon the contract. The Lincoln Motor Company failed to make such payment and thereafter the plaintiff brought suit against it for that amount. Before the plaintiff could recover judgment against the Lincoln Motor Company that corporation apparently became insolvent and the plaintiff now seeks to recover the amount paid upon the contract in this action against the defendant, the assignee" of the conditional contract of sale.
*317The Lincoln Motor Company on the same day that it delivered the truck to the plaintiff assigned to the defendant all its right, title and interest in and to the agreement of conditional sale and “ in and to the property and rights therein described ” and indorsed to the defendant the fifteen notes made by the plaintiff in accordance with this contract. If the Lincoln Motor Company at the time it agreed to rescind the contract had been the legal owner of the contract, the automobile truck described therein and the notes given thereunder, then the obligations of both parties to the contract would have been terminated and the plaintiff would have had only a right of action against the Lincoln Motor Company under the agreement of rescission for the return of the consideration. Inasmuch, however, as the plaintiff had executed and delivered negotiable instruments under the contract and, in spite of the fact that he had paid at least two of these instruments to the defendant after the assignment, had failed to demand or receive back from the Lincoln Motor Company these notes at the time of the mutual rescission of the contract — that rescission was effective only between the parties thereto and the defendant, as assignee, was not thereby deprived of its right of action against the plaintiff upon the notes and certainly was not bound by the agreement of the Lincoln Motor Company to return the consideration. The defendant was not informed at that time of the rescission, it never authorized it and, so far as appears, the Lincoln Motor Company did not attempt to act in the matter for the defendant but rather for its own benefit and because of its own previous breach of contract. The defendant was clearly not in fact or in law the principal of the Lincoln Motor Company and not bound by any promise of that corporation. It is therefore not liable in this action unless thereafter *318by its own act it assumed on its part some obligation towards Mm.
It is urged that when the defendant with knowledge of the rescission of the contract by the Lincoln Motor Company took the automobile truck into its possession and thereafter sold it, it either ratified the promise of the Lincoln Motor Company and became bound by its terms or at least then became bound to return that part of the consideration which it had itself received.
At the time the defendant took possession of the truck the plaintiff had by agreement with the Lincoln Motor Company, abandoned its right of possession and the legal title and right of possession were both vested either in the defendant or the LincoM Motor Company, provided the agreement of rescission made by the latter company was binding. As pointed out above, that company could not bind the defendant, without its knowledge or consent, to cancel or rescind its right of action upon the notes .delivered to it, but when the defendant took possession of the truck, with knowledge that the plaintiff had given up its right to the possession of the truck, under a rescission with the Lincoln Motor Company, it assumed a position inconsistent with any claim that the Lincoln Motor Company did not have authority to rescind the contract and it must be deemed to have adopted the transaction to the extent of its interest as pointed out by Mr. Justice Bijur. Both on principle and under the authorities cited by Mm, it could not accept the benefit of that transaction and then assert that the Lincoln Motor Company had no right to bind his interest. That rule, however, does not mean that the ¡defendant became bound itself to perform as principal an affirmative promise made by the Lincoln Motor Company on its own behalf. It means merely that it cannot assert any claim that is inconsistent with the right of the *319Lincoln Motor Company to make the agreement. The right of the Lincoln Motor Company to rescind the contract of sale depended upon its right to future payment of the purchase price as evidenced by the notes. It was this interest of the defendant which the Lincoln Motor Company could not bind without the defendant’s consent and when the defendant took the truck it must be considered to have adopted the transaction to the extent of this interest. I cannot, however, agree that the defendant thereby also became bound to return the consideration paid to it. Upon the rescission of the contract by agreement, the Lincoln Motor Company did not then become obligated to return the plaintiff the same particular moneys paid upon the contract and certainly the plaintiff upon a rescission of the contract had no right to follow the proceeds of the moneys into the hands of third parties. One of the notes was paid by the plaintiff by check to the Lincoln Motor Company and by it indorsed to the defendant. I cannot see how the plaintiff can claim that in law it paid this check to the defendant. The other two checks were paid to the defendant by the plaintiff directly and the plaintiff knew that it had paid these moneys to the defendant when it entered into the agreement of rescission with the Lincoln Motor Company. That agreement would have been valid as against the defendant if it had previously consented that its interest in the unpaid balance should be abrogated and if it had given such consent, upon no theory that has been pointed out, could it have been required to return to the plaintiff the moneys received by it. The only obligation to return moneys paid rested upon the Lincoln Motor Company by virtue of its express or implied promise; the only obligation that rested upon the defendant in law or equity by virtue of its consent to or adoption of the contract of *320rescission was to assert no rights inconsistent with that agreement. The plaintiff in entering into that agreement in effect asserted and relied upon the right of the Lincoln Motor Company to make that agreement. If the defendant accepts the result of that agreement. he cannot deny the power of the Lincoln Motor Company to make the agreement; but equally the plaintiff cannot, having made the agreement, now assert that the Lincoln Motor Company had no power to make it and claim greater or different rights than he would have obtained if in fact that company had possessed these powers which the plaintiff believed it had and on the faith of which he entered into the agreement.
The plaintiff claims that the Lincoln Motor Company was the sole owner of the contract of sale with full power to rescind it. If the plaintiff had been correct in this view, he would have no right of action against the defendant. The defendant on the other hand, having accepted the agreement made by the Lincoln Motor Company, cannot claim any right which it would not have had if the Lincoln Motor Company had possessed this power. The court must therefore fix the rights of the parties upon the basis that the agreement of rescission was valid and that the Lincoln Motor Company had the lawful right to enter into it, and since under that agreement the plaintiff did not seek or obtain any rights against the defendant for the return of the consideration or any part of it, the judgment in favor of the defendant is correct.
Judgment should be affirmed, with twenty-five dollars costs.
Judgment reversed, with thirty dollars costs.