Estes v. Lamb & Co.

Hart, J. (after stating the facts). Following the rule of the common law, this court has held that a parol reservation of title in personal property made at the time of the sale is valid, and that such oral reservation of title is effectual as against a Iona fide purchaser for value to the same extent as such a reservation in a written contract. Jones v. Bank of Commerce, 131 Ark. 362. To the same effect see Begrist v. Crabtree, 131 U. S. 287. Counsel for appellees recognize this to he the rule, but claim that the 'rule is not applicable in the present case because, at the time the agreement for the oral reservation of title was made, it was also agreed that the purchaser should execute his note for the purchase price, and that the note executed pursuant to the agreement is a plain note of hand signed by the purchaser with two sureties. It is generally held that the giving of a note to represent the purchase price does not change a contract which would otherwise be one for a conditional sale to one of absolute sale. International Harvester Co. v. Pott, 32 S. D. 82, Ann. Cas. 1916 A, p. 327 and note at p. 331. In Bierce v. Hutchins, 205 U. S. 340, it was expressly held that the taking of notes for the purchase price and the taking of collateral security did not in any way qualify the conditional sale features of such contracts. In that case the court said: “Parties can agree to pay the value of goods upon what consideration they please, * * * and when a purchaser has possession and the right to gain the title by payment he can not complain of a bargain by which he binds himself to pay and is not to get the title until he does.” The giving of a promissory note for debt is no payment unless by agreement of the parties the notes are taken in payment of the debt. Triplett v. Mansur-Teb-betts Implement Co., 68 Ark. 230. In that case the court held that where goods were sold on condition that the title shall remain in the vendor until the purchase notes are paid, the execution of renewal notes for the debt is not a payment unless by agreement of the parties the notes are taken as such. It is true that in all the cases above cited the contracts of conditional sale were in writing, but the courts do not seem to have made any point of that fact. The cases all turn on tlie rule that the giving of the promissory note does not discharge the debt for "which it was given unless snch be the express agreement of the parties. It only operates to exténd the time of payment nntil the note is due. Our own court has not recognized any difference in this respect between oral and written contracts for the reservation of title for the conditional sale of personal property. In Rex Buggy Co. v. Ross, 80 Ark. 388, Boss bought a carload of buggies from the Bex Buggy Company with the understanding that the title to the property should remain in the vendor until the purchase price was paid. Boss agreed to execute his promissory note for the price of the buggies upon receipt thereof payable in four months after date. The court held that, upon executing the notes, he was entitled to the possession of the buggies and to retail them in due course of trade until he failed to comply with the conditions of the sale to him. The statement of facts does not show whether the contract for the conditional sale of the buggies was a written or oral one. The undisputed evidence establishes the oral contract of sale in the instant .case with the reservation of title in Coward until the property , was paid for. The undisputed evidence also shows that Estes did not pay for the mules and by agreement turned them back to Coward. The evidence also shows that the agreement t.o execute the note was made at the same time the oral contract for the conditional sale was made. The mortgage to appellee was executed subsequent lo the contract of conditional sale between Coward and Estes. Estes acquired an interest in the property which he could sell or mortgage to appellees without the consent of Coward, but Coward’s right to recover the property if the purchase price was not paid could not be prejudiced by such sale or mortgage. Clinton v. Boss. 108 Ark. 442. Neither was the right of Coward affected by the fact that he transferred to the bank as collateral security the note given by Estes for the purchase price of the property. The reservation of title in the instant case appears from the oral contract for the conditional sale, but not in the purchase money notes. In such cases the seller may transfer the notes as collateral security and on default of the buyer retake the property. The reason is, he is interested in the payment of the notes so as to relieve him from liability as indorser and he therefore has the right to retake possession of the property. 35 Cyc. 702; McDonald Automobile Co. v. Bicknell (Tenn.), Ann. Cas. 1916 A, 265, and McPhearson v. Acme Lumber Co., 70 Miss. 649, 12 So. R. 857. No complaint is made that a judgment is rendered in favor of appellees against Estes for the amount he owes them. From the views we have expressed, it follows that the chancellor erred in rendering a decree for appellees, and for that error the decree must be reversed and the cause will be remanded with directions to enter a decree in favor of J. H. Coward for the possession of the property and for further proceedings not inconsistent with this opinion.