American Can Co. v. White

WOOD, J., (after stating the facts). (1-2) The court erred in construing the contract as a lease. Although the contract recites, “I, P. S. White, do hereby agree to lease,” etc., and although the appellee is designated in the body of the contract as the “lessee,” nevertheless the language which states the reciprocal duties and obligations and the respective rights of the parties shows that it was their intention to enter into a contract to sell on certain conditions, hut not to lease. The contract must be construed as a whole and the intention of the parties gathered from the use of the language as a whole rather than from some particular word or words, without reference to the context in which those words are used. When the words “lease” and “lessee” are considered in connection with their context, it is clear that they were not used in the narrow technical sense, and to so construe them would destroy the evident meaning of the other language of the contract and not give effect to the intention of the parties as manifested by the language of the contract when talien in its entirety. The appellee, in his testimony, designated the contract as “simply a lease, the same as any installment plan,” and he seeks here to have that construction placed upon it. (3) Mr. Tiffany, in his work on Sales, at page 134, says: “The character of the transaction depends upon the intention of the parties, which is evidenced in most cases by a written contract, and which is not determined by the name which the parties have given to the instrument, but is to be gathered from all its terms. Thus instruments in the form of leases, and so designated, and providing that the so-called lessee shall become the owner of the thing leased upon payment of stipulated installments of rent, usually equivalent to the value of the thing, which the lessee agrees to pay, and reserving the right on the part of the lessor upon default in payment to resume possession, have often been held to be conditional sales.” Citing numerous cases in note.' . And Professor Mechem says: ‘ ‘ The mere fact that the parties declare that their agreement shall not amount to a sale, or shall not be construed in any other manner, is not conclusive. They can not, by their agreement, control the operation of the rules of construction. In very many of the cases the instrument in question has been called a lease, and much of the language used has been such as would be appropriate to a lease. It is, of course, entirely competent for parties to make leases of chattels, but the instrument will not be deemed a lease where its contents and evident purpose shows that some other construction is demanded. Hence the cases are numerous in which instruments called leases have been held to be conditional contracts to sell, that is, agreements, to sell with payments made a condition precedent to the passing of the title, notwithstanding that the parties have expressly stipulated that no such construction should be put upon their contract.” 1 Mechem on Sales, § § 568, 569, p. 468, and numerous cases cited in note. (4) In the case in hand appellant, under contract, delivered the possession of the machine to the appellee and was not entitled to take possession of the same from the appellee except in default of some one or all of the installments. The appellee had the possession and use of the machine and agreed to pay for the same on the installment plan, and when the payments were made as designated appellee was to have title to the machine. Until such installments were paid according to the contract the title to the machine remained in the appellant. Appellant had the option, under the contract, upon the failure of the appellee to pay any one or all of the installments, to take possession of the machine or to leave the machine in the possession of the appellee and to declare all the unpaid balance due and to sue for the same. These provisions, as we construe the contract, constituted it one for a sale and not a lease. See Miller v. Steen, 30 Cal. 402, 89 Am. Dec. 124; Murch v. Wright, 95 Am. Dec. 455; Lundy Furniture Co. v. White, 79 Am. St. Rep. 41, and other authorities cited in appellant’s brief. As we understand the undisputed evidence, upon the failure of the appellee to make the payments the appellant did not exercise the option it had under the contract to take possession of the property and rescind the contract, but, on the contrary, it affirmed the contract and permitted appellee to retain possession of the machine and sued for the purchase money. This, appellant, had the right to do'. See Bowser Fur. Co. v. Johnson, 117 Ark. 496; Hollenberg Music Co. v. Barron, 100 Ark. 403; Bell v. Old, 88 Ark. 99. Appellee still having possession of the property, and the purchase price thereof being payable in money, appellant also had the right, in connection with its suit for the purchase money, to have the property impounded and a lien created and enforced on the same to pay the balance of the purchase money under the provisions of section 4966 et seq. (chap. 101), Kirby’s Digest; Fox v. Ark. Industrial Co., 52 Ark. 450; Stephens v. Shannon, 43 Ark. 464. The judgment is therefore reversed, and the cause will be remanded with directions to enter judgment in favor of the appellant and for further proceedings according to law.