American Box Machine Co. v. Zentgraf

Patterson, J.: This is a submission of a controversy upon an agreed statement of facts'pursuant to‘section 1279'of the Code of Civil Procedure, and the question is whether the plaintiff is entitled to recover against the defendant for the conversion of certain machines which, prior to [523] January, 1898, were delivered by the plaintiff into the possession of the firm of Reichert & Co. The machines, which were of the value of $1,070, were so delivered under a contract, the terms of which were at first set forth in a letter addressed by Reichert & Co. to the plaintiff, dated January 10, 1898, in which the plaintiff was ¡requested to ship to the defendant the said machines “ as per terms and conditions named below,” viz.: “ One-tliird cash without discount thirty days from date of shipment, and balance in two equal notes of same date at four and three months. All notes shall contain interest at six per cent per annum. * * * And- we will keep said property insured to the amount of $1,070, at our expense, against loss or damage by fire, in some company satisfactory to you, and in your name and for your benefit, delivering the policy to you, until the sum of $1,070, as above, is paid in full, and until the whole sum of $1,070 is paid said property is to remain yours; but when such $1,070 is paid in full the property shall become ours, and in case of default or violation of any of the terms or conditions of this lease, you may take possession of and remove said property wherever found, without being guilty of any tort. And if this lease shall terminate through our failure to perform any of the conditions named, we hereby agree to return the property to you, cleaned and crated, and in as good sound condition as when received, the usual wear excepted. It is also understood, and we agree, that no portion of this property shall be sold, transferred, assigned or removed by us without your written consent; and we further- agree to notify you immediately of any loss or damage by 'fire which may occur to this property during the term of this-lease. The delivery by us to you of any promissory note or commercial paper shall not be deemed a payment of any part of the aforesaid sum until such note or paper is paid in full, and shall not preclude you from enforcing the foregoing agreement.” On the goods being received by Reichert & Co., that firm delivered to the plaintiff a second instrument, containing the following provision : . “ * * It is understood and agreed that the delivery of these machines, is conditional only; that the title to and ownership of these machines do not pass to the lessee, but remain in the American Box Machine Company until the full payment of this bill, or of all [524] notes and the renewals thereof, representing the invoice value, or any portion thereof, which the lessee agrees to pay at maturity, and until maturity the lessee is licensed to use the machines ; and in case-of non-payment of any of the notes at maturity the ownership of the machines still remains in the American Box Machine" Company, but the lessee remains liable on the notes for the face thereof, as compensation to the American Box Machine Company for the use of the machines.” The cash payment was made by Reichert & Co., and that firm gave two promissory notes for the balance,- each for the sum of $350, and ■ each' dated February 21, 1898 ; one payable at three and the other at four months, with interest at six per cent. ' That firm subsequently paid the plaintiff $285.48 on account of the first note. The second note never has been paid. A true copy of each of the above-mentioned instruments was filed in' the office of the register of New York on January 17,1898. No refiling was ever had. On September 20,1898, the plaintiff sued Reichert & Co. to recover the balance due on the first note and the whole amount of the second note. The action was defended, the cause was tried and judgment recovered by the plaintiff; execution was- issued thereupon and it was returned unsatisfied. On October 25, 1898, Reichert & Co. executed" and delivered to this defendant a chattel mortgage on certain personal.property.• It covered the machines in question, which were then in the possession of the mortgagors. Such chattel mortgage was filed in the office of the register on-October 27,1898. On April 1-4,1899, the chattel mortgage was foreclosed and the machines were sold at public auction to the defendant for $275." The plaintiff had no notice of the chattel mortgage. It demanded the machines from the defendant, who also had notice given him, at the time of the sale under the foreclosure of the mortgage, that Reichert & Co. were not the owners of the machines, and he was warned not to-buy them. Two questions are presented for our consideration. The first relates to the existence of a right in the plaintiff to maintain the action by reason of the failure to refile the two instruments under which it claims. The original filing continued those instruments in force as notice to third parties for a period of one year from the date on which they were filed.. If the defendant’s right arose after the [525] expiration of that year, there having been no refiling, under the statute, of the instruments under which the plaintiff claims, his present contention would be correct. But his rights arose under the chattel mortgage, and not merely as a purchaser at the sale. When he took his chattel mortgage the instruments given to the plaintiff were on file, and a year had not elapsed. There was then upon record that evidence which informed him that Reichert & Co. were Avithout authority to include in the chattel mortgage the machines, Avliieh were the subject of the conditional agreement between Reichert & Co. and the plaintiff. What Avas decided on that point in Mecch v. Patchin (14 N. Y. 71) applies in this case. Second. It is claimed by the defendant that by bringing the action to recover the balance due upon the notes and by the retention of the money paid on the first note, the -plaintiff made an election of-remedies,' and, as a consequence thereof, abandoned its right to reclaim the property or to assert ownership under the íavo instruments ¿riven to it bv Reichert & Co.; and that thus that firm became vested with the absolute title to the property. This contention does not accord with the terms of the agreement betAveen the parties to the transaction. Reichert & Co. Avere at liberty to contract and did contract that the title to the machines should not be changed until full payment of the notes, and to consent that they should hold the the, machines simply in- the relation of lessees thereof until the articles were fully paid for. On a submission of a controversy we are not entitled to draAv any inference Avhatever, and we can only construe this contract according to its terms as made between the parties themselves. (Fearing v. Irwin, 55 N. Y. 486.) The,evident object of-both was-to secure to the plaintiff the full payment of the Avhole amount of $1,070, and, in default of that, to allow, in any contingency, the plaintiff to repossess itself of the property. Reichert & Co. Avere entirely competent to make such a contract. The case differs from those cited by counsel for the defendant to the proposition t-liat the plaintiff Avaived its right of ownership Avheri it elected to sue to recover the balance of the purchase price. Orcutt v. Rickenbrodt (42 App. Div. 238) Avas a case in Avliieh, by the terms of a special contract, the property Avas to remain in the vendor until the purchase price had been fully paid. When the contract Avas executed the purchaser paid something'on account; -Subsequently [526] the seller requested the purchaser to give a promissory note for the balance due. When that note matured the purchaser sued upon it, and thus plainly transferred his right from the property to a recovery upon the note. That is not this case. Here the notes were given as part of the original transaction and under the express, stipulation that the retention of the title in the purchaser should not he affected by the giving of the notes nor until those notes were actually and absolutely paid, whether at the end of legal proceedings or without them does not affect the question, for there is nothing inconsistent, in suing upon the notes, with the provision of the contract that the title to the merchandise should not be changed until the notes were fully paid. Wright v. Pierce (4 Hun, 351) was a case under the circumstances of which it was adjudged that there was a waiver of the terms of a conditional sale where the seller brought his action to recover the unpaid purchase price, leaving the property in the possession of the purchaser. But in that case there was no special contract such as appears here. We are of the opinion that, under the terms of the contract, the plaintiff’s title to the machines was not changed by his suing and ■recovering upon the notes, and that there should be judgment forth e plaintiff for the sum of $275, with interest from April 14,1899,. as asked for in the submission, with costs. Van Brunt, P. J., O’Brien, Ingraham and McLaughlin, JJ, concurred. Judgment ordered for plaintiff, with costs.