Vette v. Merrell Drug Co.

GOODE, J. (after stating the facts). — Defendant’s counsel insist the contract between Glascock on one part and Solomon & Wise on the other was of such a nature that their client was exonerated from liability on it in consequence of plaintiff’s procuring an allowance by the referee in bankruptcy of the present demand against Solomon & Wise. They say Yette, by demanding and getting the furniture and fixtures and demanding also the goods, elected to rescind the entire contract and hence released defendant as guar — 240 — antor for the performance of any part of it. Plaintiff’s counsel insist there was a contract of letting- which was independent of the one for the sale of the property, and that defendant guarantied performance of it whether a sale was consummated under the other contract or not. It is conceded defendant and its co-guarantor Bieser, guarantied fulfilment only of those promises made by Solomon & Wise which preceded their signatures, and this preceding matter purported to be a lease of the storeroom, furniture, fixtures and stock of goods for the eight months from October 1, 1904, to June 1, 1905, upon certain terms, to-wit: the parties of the second part (Solomon & Wise) were to pay Glascock $1,800 for the whole term in monthly installments of $225 on the last day of each month. The middle paragraph of the so-called lease permitted Solomon & Wise to cancel the contract at any time prior to its termination, by giving Glascock witten notice of their intention to do so, ten days before the expiration of the current month; further pro viding that upon giving said notice, Solomon & Wise should be released from all liability for rent except for the month. This paragraph stipulated that if Solomon & Wise turned over the premises, fixtures and merchandise to Glascock pursuant to the right accorded them to do so, there should be at least $800 of merchandise at wholesale on hand, and the same should be fresh and up-to-date as it was at the date of the contract. The next paragraph bound Solomon & Wise not to sublet the premises without the consent of Glascock, to replace and repair all breakage and damage to fixtures during their occupancy or pay for same, qnd quit and surrender possession to Glascock at the expiration of the term; also required the parties of the second part to bear the expense of telephone and lights. Part of the undertakings of Solomon & Wise were to be secured by a guaranty and part by a chattel mortgage, the instrument provides, and those stipulations we have mentioned were what de — 241 — fendant guarantied. The stipulation that the stock should, be of the value of $800 if it was returned to Glascock, refers to a return of it upon the cancellation of the alleged lease by Solomon & Wise before the end of the term. There was no stipulation for re-delivery of the merchandise to Glascock or his order after the eighth months had expired; for we think such is not the effect of the following language: “It is specially understood tthat the said .chattel mortgage to be executed shall include all stock and fixtures contained in said drugstore, and all stock and fixtures that may be added to said drugstore from time to time; and the said Solomon & Wise shall guarantee that the stock shall not be less than $800 in case the stock and fixtures are turned back to William Y. Glascock.” That clause refers only to the value of the stock if turned back inside of eight months as previously provided. As Solomon & Wise never attempted to terminate the alleged tenancy, but remained in occupancy until July, 1905, or more than a month after the term had expired, neither Glascock nor plaintiff as assignee, became entitled, by virtue of said proviso of the contract, to a return of the merchandise. Whether return might be demanded under our statute will be determined later. But defendant bound itself inter alia for the payment by Solomon & Wise of $1,800 for the entire term. The whole sum has not been paid, and' defendant would be liable for the balance if the covenants it guarantied were contained in a separate contract of lease. If the whole contract was simply one for the conditional sale of the nroperty, defendant’s liability must be discussed from another point of view. The second part of the agreement between Glascock on one side and Solomon & Wise on the other, was in the form of a proposal by the latter, accepted by Glascock, to purchase the stock, fixtures, furniture and good-will of the establishment, and to execute to them a sublease of the room for a term to end April 30, 1909, the same date Glascock’s lease ended, and for the — 242 — same rental he paid; that the price should be $3,060 in addition to the $1,800 “rental;” that a chattel mortgage should be executed by Solomon & Wise to secure the payment of $2,060 in monthly installments of $150 each, and for the deposit with Glascock of $200 which, if the agreement was all carried out, should be credited on the purchase price, and when added to the $2,860 would make up the $3,060, or the amount of the purchase price above the $1,800 “rental,” which “rental” the agreement assumed would have been paid during the prior 8 months. Several things stand in relief on this agreement : firstly, that Solomon & Wise had no right to purchase the property until they had carried out the first stipulation by paying the full $1,800 for which defendant stood sponsor; secondly, if they failed to carry out the agreement as a whole, and all the terms of it; the two hundred dollars put up with Glascock should go as liquidated damages to him; thirdly, if they abandoned the enterprise during the first eight months and turned the stock back to Glascock, they would lose it, what they had paid on it, and also the $200. Was the first portion of the contract what it purports on its face to be, to-wit: a demise of Glascock’s leasehold, fixtures and merchandise, and the second part a contract giving Solomon & Wise an option to purchase the property at the end of the term, or was the contract as a whole a conditional sale of the leasehold, executed in a peculiar form to evade our statutes regarding conditional sales? We think the latter is the correct conclusion. All parts of the contract purport to have been executed on the same day, including the appendix to provide what should be done in the event the property was burnt, the receipt of Glascock for $200, expressed to be “earnest money as per contract Oct. 1, 1904,” and the recital in the contract said sum was “to be applied in part payment for the above named business.” The monthly installments called for in the first part of the agreement were made up of the rental due the Star Building Company for the storeroom, of — 243 — $125, plus $100 on the price of the stock. That is, $1,000 of the $1,800 to he paid by Solomon & Wise, was for room rent and $800 went toward paying for the furniture, fixtures and merchandise. They were to pay $3,060 more under the second portion of the agreement, and were then to take a lease of the room for the balance of Glascock’s term at the same rental he paid. It was in testimony the parties in negotiating the transaction put an estimate on the stock, approximating its value at eight hundred dollars, and the concluding portion of the contract shows the fixtures were valued at $2,950. These figures show a discrepancy of one hundred and ten dollars as compared with the purchase price, but that circumstance is slight in comparison with others. The parties regarded and treated the arrangement between them as one contract. Their stipulations were put in a single instrument, and in his written assignment to Yette, Glascock spoke of what he. assigned as a contract, using the singular instead of the plural number. . The oral testimony shows, too, the parties contemplated a sale from the beginning of their negotiations'. It seems impossible to hold the first portion to be a lease, though leases of personal property are not unknown to the law. [1 M'c-Adam, L. & T. (3 Ed.), 258.] The delivery of a stock of merchandise by its owner to another person, to be disposed of in the ordinary course of retail trade, is an act incompatible with a demise, because incompatible with retention of a reversion of the property to vest in the owner at the end of the term. [1 McAdam, 127.] The contract looks like a conditional sale which was to become absolute on the execution of a chattel mortgage and the performance of other promises by Solomon & Wise, including the taking of a lease. If so, as the matter never was consummated as agreed, it remained in its first form. Treating it, therefore, as a conditional sale, it is not clear how this conclusion affects the liability of defendant upon its guaranty. Our statutes require sales, leases, — 244 — rentings, hirings and other deliveries of personal property by the owner to another, on condition that the title shall not vest in the transfer until a certain sum is paid, to be evidenced by a writing, executed, acknowledged and recorded as provided in cases of mortgages of personal property, and declare if this is not done, the condition regarding the title remaining in the original owner is void as to creditors of the transferee and purchasers from him in good faith. [R. S. 1899, sec. 3412.] The instrument in question with its first part in the form of a lease, likely was .drawn in evasion of this statute; but defendant is neither a purchaser nor a creditor of Solomon & Wise and, moreover, was apprised of their arrangement with Glascock and a party to it; therefore is not within the protection of the statute. Section 3413 says whenever property is sold, leased, rented, hired or delivered in the manner provided in section 3412 (i. e. so as to retain the title in the owner until payment) it shall be unlawful for the owner to take possession of the property without refunding to .the transferee or any one receiving the property from him, what has been paid on the price, after deducting reasonable compensation for the use of the property, not to exceed twenty-five per cent of the amount paid and allowing for reasonable breakage and damage done while the property was out of the possession of the owner. Said statute is invoked in defense of the present action, in connection with the fact that Vette never offered to pay either Solomon & Wise or the trustee in bankruptcy, seventy-five per cent of what had been paid by the former. This proposition has no relevancy to the liability of defendant. The statute does not compel the owner of property to reclaim it and tender back part of the purchase price, but only prevents him from reclaiming without a tender. We cannot understand why Vette should lose the benefit of the guaranty, which was taken as additional security for performance by Solomon & Wise, because he. did not choose to avail himself of the statutory remedy. More — 245 — over, this decisive fact remains: practically the whole stock of goods had been sold by Solomon & Wise, and it was intended from the first by all parties concerned, including defendant, it should be. Neither Glascock nor Vette had any title to the replenishments or any right under the statute to take them with or Avithout a tender. Vette procured an allowance of the demand before the referee in bankruptcy and it is argued his doing so precludes him from using the present remedy. The idea is this: by proceeding in bankruptcy for an allowance and for the return of the furniture and fixtures, he elected to rescind the contract with Solomon & Wise, thereby releasing defendant from its guaranty of performance of the contract. This argument is weak. As far as the allowance of the referee is concerned, it covered part of what Vette is entitled to judgment for in the present ease, but the obligee of a contract to which there are several obligors, may have different judgments against them for a breach, but can have only one satisfaction. [Carroll v. Campbell, 110 Mo. 557.] If defendant and Solomon & Wise were copromisors, plaintiff might obtain separate judgments against them, and certainly he is not precluded from a judgment against defendant, which bound itself in a distinct contract, by the fruitless allowance against the bankrupts. On what theory the referee in bankruptcy ordered the furniture and fixtures turned over to Vette and the United States District Court affirmed the order, Ave are not apprised. It may be because the instrument executed by Solomon & Wise and Glascock was construed to be both a contract of lease and an option to purchase. The fact that the right of other creditors to take advantage of the non-recording of the contract, if it was a sale on condition, was not enforced, indicates this theory was followed. [Missouri, etc., Plow Co. v. Spilman, 117 Fed. 746; Parlin, etc., Co. v. Hord, 78 Mo. App. 279; Oyler v. Renfro, 86 Mo. App. 231.] But said right may not have been asserted for the reason that the amount paid by Solomon & Wise, even if the — 246 — transaction was regarded as a sale, was less than the value of the goods and the rent of the room while they occupied it. The contract shows the parties grouped together the rent for eight months and the stock, in arranging the price, placing the former at $1,000 and the latter at $800; whereas the furniture and fixtures were priced at about' $3,000. Now though the payments made by Solomon & Wise were, legally speaking, on the whole purchase price, they were regarded by the parties as having been made on the rent and stock only, and may have been so treated in the bankruptcy case; thereby leaving the price of the fixtures wholly unpaid, so that Yette conld reclaim them without, tendering any sum. It can be shown by a computation which we will not introduce into the opinion, that on the theory of a conditional sale, if we remember Yette could get back no part of the merchandise, the Federal tribunals secured what was equivalent to substantial compliance with section 3413 when they relinquished the furniture and fixtures to him without a tender. Those matters are conjecturál and immaterial. According to our view, the sale of the furniture and fixtures fell, as to creditors, within the provisions of section 3412, and after the sale, the property so far belonged to Solomon & Wise that in strictness of law, they could not be reclaimed by Yette without complying with section 3413. But that they were relinquished to him without compliance with said section, is a matter which touches the rights of Solomon & Wise and their creditors, not the liability of defendant on its guaranty. If the creditors and the bankruptcy officials chose to waive the statute, this redounded to Yette’s benefit, but nothing he did in the bankruptcy proceeding es-tops him now. As defendant bound itself for the payment of $1,800 by Solomon & Wise, who are utterly insolvent, and this debt has not been paid in full, defendant must respond for the remainder. The judgment is reversed and the cause remanded. All concur;