Monticello State Bank v. Killian

Hart, J. (after stating the facts). The court submitted the ease to the jury on the theory that the sale of the stallion was a sale on trial or a delivery with the right to buy within a stipulated time if the defendants liked the horse, and that until the expiration of the limited time the title and risk was in the vendor. On the other hand it is contended that the delivery of the stallion under the agreement amounted to what is called a contract of sale or return and that in such cases the title vests immediately in the defendants and that the loss of the horse, under the facts- of this ease, must fall upon the defendants. If the transaction is a sale on trial, it is said to be a sale on condition precedent; that is, the title does not pass until the condition described is fully performed although the possession is delivered. Such transaction is rather a bailment with the option to buy than a sale, and the title does not become vested in the purchaser until he exercises his option to purchase. Haddon v. Finley, 125 Ark. 529, 189 S. W. 353; Ward Furniture Manufacturing Co. v. Isbell, 81 Ark. 549. On the other hand in cases of a purchase with a right of return, the title and risk immediately pass to the purchaser. If it is a sale or return, it is said to be a sale on condition subsequent; that is, the title passes with the possession but subject to be divested if the condition is not performed and the property is returned. In this class of cases the title passes by the delivery of possession subject to defeasance by the exercise of the option reserved to rescind and return. Osborne v. Francis, 38 W. Va. 312, 45 Am. St. Rep. 859; Guss v. Nelson, 200 U. S. 298; Sturm v. Boker, 150 U. S. 312; 35 Cyc. 290; Tiedemanon Sales, see. 213; 1 Wharton on Contracts, sec. 590; Benjamin on Sales, Bennett’s 7th Ed. American Note, 605. In the contract under consideration, the transaction is called in one place a purchase and sale. The defendants are spoken of throughout as the purchasers. In the second clause of the contract it is expressly provided that if the horse should not prove himself a satisfactory foal-getter the purchasers agree to return him to the seller and receive another horse of equal value. By the fifth clause of the contract it is provided that the purchasers shall procure a policy of insurance on the stallion for a period of not less than one year for not less than $1,000.00, for which amount, in the event of the death of the horse during the next ensuing three years from date, the seller agrees to replace him with a horse of equal value. (1) The terms of the contract in question show the transaction to be a sale or return. Therefore the title to the horse passed to the defendants subject* to be divested out of them and revested in the seller by the return of the horse to the seller in accordance with the terms of the contract. The horse died before the defendants exercised their right to return him under the contract and the loss must fall on them. 35 Cyc. 254; Strauss Saddlery Co. v. Kingman & Co., 42 Mo. App. 208, and Sturm v. Boker, 150 U. S. 312. It is claimed that this construction of the contract renders it harsh and unjust in its terms. It is sufficient for us to say that the parties have so willed it. Under the law the parties were competent to make the contract in that manner and if the terms of the contract are sufficient to show they did so their stipulation is the law of the case. Courts can only enforce contracts which may be lawfully made according to their terms. They are not at liberty to pass upon the justice or injustice of the actions of parties who are capable of contracting for themselves. The construction we have given the contract is borne out by the fifth clause óf it. In it the purchasers agree to have the life of the said stallion insured for a period of not less than one year for not less than $1,000.00, for which amount, in the event of the death of said horse during the next ensuing three years from date, said A. B. Holbert agrees to replace him with a horse of equal value at his barn. The parties are presumed to have understood the terms of the contract. Thus the parties themselves recognized that the purchasers would be liable for the purchase price of the horse in ease he died. This is borne out by the fact that they provide that in case they should insure him as provided in the fifth clause of the contract, that the seller should give them another horse in case he died within three years. This of itself shows that the purchasers realized that they must pay for the horse unless they exercised their option to return him in the manner provided for in the contract. It follows that the court erred in not instructing a verdict for the plaintiff as requested by it and for that error the judgment must be reversed. Inasmuch, however, as the case has been fully developed and the question of the liability of the defendant is entirely one of law, it will not be necessary to remand the case for a new trial. Judgment will be entered here for the balance due on the note amounting to $2,450.00 with interest thereon from May 10, 1913, at the rate of 8% per annum until paid.