Jennings v. Schwartz

On Rehearing. Mount, J. After the original opinion was filed in this case, a rehearing was granted and a reargument was had to the whole court sitting En Banc. The original opinion will be found in 82 Wash. 209, 144 Pac. 39. The facts therein stated are substantially correct. The record shows that the vendor of the boiler in question retook possession of the boiler in December, 1912, instead of February, 1913, as therein stated. Upon this question, the trial court found: [203] “That after the said default in payment and said election by the vendor to terminate said contract and prior to the filing of petition in bankruptcy of the said Pacific Coast Glass Company, a corporation, and prior to the election of the plaintiff herein as trustee of the said bankrupt estate, and prior to the said trustee taking possession of any of the property of the said Pacific Coast Glass Company, the defendant herein, in compliance with the terms of said conditional sale contract took possession of said boiler and has been since said date and now is in possession thereof.” In the former opinion, we rested our decision solely upon the point that the conditional bill of sale mentioned was void because it was not signed by the vendor, as the statute provides. We are now satisfied that it was not necessary to pass upon the validity of the conditional sale contract as affected by creditors of the vendee, because the conditional sale was rescinded and possession of the property was retaken by the vendor before any right or lien of creditors attached. The validity of the sale, therefore, as between the original parties to it, must control the decision. As noted above, the property was sold to the Pacific Coast Glass Company upon conditional sale in August, 1912. Thereafter, in December, 1912, on account of default in payment, the vendor retook possession of the property before the Pacific Coast Glass Company was declared bankrupt, and before a receiver or trustee in bankruptcy was elected. This court has many times held that, where contracts of this kind are void as between the vendor and creditors of the vendee, yet, as between the vendor and the vendee, such contracts are valid. Watson v. First National Bank of Clarkston, 82 Wash. 65, 143 Pac. 451; Secor v. Close, 83 Wash. 77, 145 Pac. 56; MaImo v. Washington Rendering & Fertilizing Co., 79 Wash. 534, 140 Pac. 569; Heal v. Evans Creek Coal & Coke Co., 71 Wash. 225, 128 Pac. 211. In the Mahno case, in discussing the difference between a chattel mortgage and a conditional sale contract, we said': [204] “The one instrument evidences a lien against the legal title; the other is the assertion of the legal title as against the presumption of possession. The purpose of requiring a public record in both cases is the same so far as the rights of creditors are concerned; that is, to prevent the one in possession of the property from pledging it to secure the debt of one creditor and then using it as an unincumbered asset to incur other obligations. As between the parties themselves, there is no distinction between the two instruments, in that the failure to record does not disturb the rights of the immediate parties.” And in the Secor case, where there was a conditional sale contract which had not been filed within time, or at all, we said: “Some contention is made by counsel for appellants, seemingly rested upon the theory that appellant Gadbaw’s rights have been secured, as he claims them here, by the failure of respondent to file in the office of the county auditor the conditional sale contract, and by Gadbaw becoming a subsequent creditor in good faith of Luther and Mitchell. We are quite unable to see that these facts are of any avail to appellants here. The facts show nothing more than that the sale of the mill to Luther and Mitchell became, in law, an absolute instead of a conditional one, as to subsequent creditors in good faith. But this did not prevent Luther and Mitchell returning the mill to respondent in payment of the balance due upon the purchase price thereof, even though they thereby preferred respondent as a creditor, in the absence of the value of the mill at that time being in excess of the balance due upon the purchase price, or some other element of bad faith or fraud entering into' the transaction.” And in the Watson case, which was a chattel mortgage case, we said: “A chattel mortgage not recorded as required by statute (Rem. & Bal. Code, § 3660 [P. C. 349 § 3] ) while void as to creditors who have acquired some form of lien upon the mortgaged property, is, nevertheless, valid as between the mortgagor and the mortgagee.” And so in this case, the conditional sale contract was clearly valid as between the original vendor and the vendee; and [205] when the vendor, in compliance with that contract, retook possession of the property prior to the time when any creditor obtained a specific lien thereon, and prior to the time the vendee was declared a bankrupt, and prior to- the time of the election of the trustee in bankruptcy, the vendor thereupon regained whatever interest he had in the property. The vendee never complied with the contract of purchase, and therefore did not acquire title. The trustee in bankruptcy obtained no more interest in the boiler than the vendee had at the time of the adjudication in bankruptcy. Upon this rehearing, we are urged by the appellant to reverse our rulings in Watson v. First National Bank of Clarkston, Malmo v. Washington Rendering & Fertilizing Co., and other cases where we held that the word “creditors” used in our statute means those only who have acquired some form of lien; and we are urged to hold that the word “creditors” refers to all creditors without regard to whether they have acquired specific liens or not. We are satisfied that our holding in those cases is in accordance with the great weight of authority, and decline to- enter upon a further discussion of that question. For the reasons hereinabove stated, the judgment is affirmed. Morris, C. J., Ellis, Main, Crow, and Parker, JJ., concur.