Ballinger v. West Publishing Co.

Mr. Justice Van Orsdel delivered the opinion of the Court: The important question is whether the remedy adopted is open to plaintiff. Defendant insists that plaintiff was limited to an election either to sue at law for the balance due or to take [51] the books, defendant forfeiting the amount paid thereon. This contention has support. It has been held that the vender, upon the breach of the condition, may elect either to treat it as an absolute sale, and sue for the price, or to treat the sale as a nullity and retake the property; but he cannot do both. Sanders v. Newton, 140 Ala. 335, 37 So. 340, 1 Ann. Cas. 267. The law as to the rights of the parties to a contract of conditional sale is by no means uniform in the American states. We think, however, that by the great weight of authority, the court below was well within its jurisdiction. The contract imposed upon defendant a personal liability to pay the full purchase price. Although the contract reserved title to the property in the vender, and gave him a right to declare a forfeiture upon default of payment, that was not his only remedy. The law abhors forfeitures ; and, largely to prevent possible abuses under a hard and fast construction, courts of equity have gradually extended relief, primarily for the protection of vendees from unconscionable forfeitures. The authorities upholding equity jurisdiction “establish the principle that while such a sale is not a mortgage, and the title to the personal property does not pass from the conditional vender to the vendee, still it is in the nature of a mortgage, and is nothing more than a lien retained as a provision for the security of the payment of the purchase money.” Southern Ice & Coal Co. v. Alley, 127 Tenn. 173, 154 S. W. 536. The right of a vender under a conditional sale to invoke the jurisdiction of a court of equity is defined in the case of Re National Cash Register Co. 98 C. C. A. 425, 174 Fed. 579, as follows: “In equity the reserved title of the vender is regarded as in the nature of a security for the payment of the price, and in some states it is held that such a conditional sale is the equivalent of an out and out sale and a mortgage back to secure the payment of the purchase money. At law the transfer of the property gives to the vendee the right to the possession so long as he is performing his agreement to pay. But when he fails to do this, his right to the possession ceases, and he then holds it for the vender. But in equity these considerations are regarded [52] as technical merely, and the court will look to see whether the vender has such a hold or claim upon the property as entitles him to subject it to the payment of the purchase money. The maxim that equity follows the law is inapt where the legal remedy is inadequate to the enforcement of equitable rights.” It seems to be settled by the weight of authority that where a sale is made of property on what is known as the “instalment plan,” providing for stated payments, evidenced by a contract continuing the title in the vender until all payments are made, with a condition that upon default of the vendee his right in the property shall fail and the vender shall have the right to a surrender of the property and to treat all payments made as forfeited, the vender may elect to consider the property as security for the payment of the balance due, and may invoke the aid of a court of equity to the extent of subjecting the property to the satisfaction of the equitable lien thus created, and have a judgment against the vendee for any deficiency should the amount realized from the sale of the property fail to fully liquidate' the balance due. McDaniel v. Chiaramonte, 61 Or. 403, 122 Pac. 33; Standard Furniture House v. Burrows, 59 Wash. 455, 110 Pac. 13; Fred W. Wolf Co. v. Hermann Sav. Bank, 168 Mo. App. 549, 153 S. W. 1094; Gigray v. Mumper, 141 Iowa, 396, 118 N. W. 393; Singer Sewing Mach. Co. v. Leipzig, 113 N. Y. Supp. 916; Hollenburg Music Co. v. Morris, — Tex. Civ. App. —, 35 S. W. 396; Campbell Printing Press & Mfg. Co. v. Powell, 78 Tex. 53, 14 S. W. 245; Simpson Crawford Co. v. Knight, 130 N. Y. Supp. 236. The distinction between the ordinary common-law lien and the equitable lien thus created is defined in 3 Pom.' Eq. Jur. 1st ed. 230, § 1233, as follows: “It is simply a right of a special nature over the thing, which constitutes a charge or encumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action, and either sold or sequestered under a judicial decree, and its proceeds in the one case, or its rents and profits in the other, applied upon the demand of the creditor in whose favor the lien exists. It is the very essence of this' condition that, while the lien continues, the possession [53] of the tiling remains with the debtor or the person who holds the proprietary inteiest subject to the encumbrance. The equitable lien differs essentially from the common-law lien, which is simply a right to retain possession of the chattel until some debt or demand due to the person thus retaining is satisfied, and possession is such an inseparable element that, if it be voluntarily surrendered by the creditor, the lien is at once extinguished.” This sort of equitable lien was recognized in Walker v. Brown, 165 U. S. 654, 41 L. ed. 865, 17 Sup. Ct. Rep. 453, and Ingersoll v. Coram, 211 U. S. 335, 53 L. ed. 208, 29 Sup. Ct. Rep. 92. The jurisdiction of the court to entertain this action being the imp< rtant question in the case, it becomes unnecessary, in view of the conclusion reached, to consider the minor and dependent propositions advanced at bar and in brief of counsel. The decree is affirmed, with costs. Affirmed. Petitions by the appellant for a rehearing and for the allowance of an appeal to the Supreme Court of the United States were denied October 5, 1915, and October 9, 1915, respectively.