A. D. Puffer & Sons Manufacturing Co. v. Lucas

Clark, J.: The prayer of defendant for instruction as to the measure of damages was properly refused, the damages aslced being too remote, and the instruction given in lieu was correct. The agreement found by the first issue was executory, not executed, and hence did not bar the further prosecution of the action. Indeed, its breach did not furnish ground for a proper counter-claim in this action since it did not exist “at the commencement of the action.” The Code, §244 (2); Hogan v. Kirkland, 64 N. C, 250; Reynolds v. Smathers, 87 N. C., 24. But the plaintiff is not excepting thereto. [383] We think, however, the Court erred in refusing the last motion. “Where the transaction between the parties is in reality, and.in its legal effect, a contract of sale conditional upon the payment of the purchase price in successive installments, it cannot be modified, nor its legal effects avoided by the fact that they speak of it as a ‘lease’ and call the installments ‘rent.’” 3 Am. and Eng. Ene., 426, and the numerous cases there cited. The principle applicable is thus clearly stated by Davis, J., in Hervey v. Locomotive Works, 93 U.S., 664: “It was evidently not intended that this large sum should be paid as rent for the mere use of the engine for one year. If so. why agree to sell and convey the full title on the payment of the last installment?” This view is in accordance with well recognized legal principles, is supported by “the reason.of the thing” and sustained by the overwhelming weight of authority, tíueh contracts as the one in question are becoming greater in frequency and general interest. They are principally used in connection with the sale of sewing-machines, pianos, furniture, soda-fountains, rolling-stock on railroads, and the like. The intent and agreement clearly expressed that upon the payment of the last installment of so-called “rent” the thing leased shall become the property of the lessee, stamps unmistakably the true nature of the transaction. To permit the so-called “lessor” to resume possession of the property and declare all payments forfeited when perhaps all but one may have been paid, is contrary to the fundamental principles observed hi courts of equity. Among the very few cases which may be considered as holding or intimating a contrary opinion is one from our own Courts, Puffer v. Baker, 104 N.C., 148. An examina- ■ tion of- that case shows that it holds that the contract (which is like the one before us) was “terminable by the lessees,” and that upon such termination the obligation of all [384] futuro notes for rent became null. In this wo concur. It is as if upon a paper which is on its face a deed of conveyance with forfeitures, but which in equity is a mortgage, the vendee should avail himself of the forfeiture and throw up the contract instead of asking in equity to be relieved of the forfeiture upon paying the balance, or for a sale. Not asking for his equity, he is remitted to his legal rights. The vendor has no ■ equity to assert, as he has his remedy at law to recover the property on breach of the condition. It is true that the decision in Puffer v. Baker, supra, may be further construed as meaning that upon the failure to make any payment, as it becomes due, the vendor can resume possession of the property without any equitable right in the vendee to call for an account and a sale of the property. We hardly think the Court intended to go so far. But if that is a just construction of the language used, the decision docs not meet with our concurrence. In Foreman v. Drake, 98 N. C., 311, the lessee had an “option” and the title did not pass, as in the present case, ipso facto upon performance of the conditions; i. e., on payment of the last installment of “rent.” The judgment below should be modified by permitting the defendant in a reasonable time (to be stated by the Court) to pay the sum found to be due plaintiff after deducting the counter-claim from the balance remaining unpaid of the purchase-money, with interest, and if not then paid, a sale of foreclosure to pay off such balance and the costs of the action, the residue, if any, to be paid to the defendant. The appellee will pay the costs of the appeal. Error. Modified.