Ratchford v. Cayuga County Cold Storage & Warehouse Co.

The action is to foreclose a mortgage covering certain real estate, and the question is whether the machinery and apparatus of the refrigerating plant located upon the mortgaged premises is real estate and covered by the mortgage, or personal property. The machinery and apparatus were placed upon the premises under a contract of conditional sale therefor, made subsequent to the mortgage. The contract was made by the Shipley Construction & Supply Company, the conditional vendor, with the defendant the Cayuga Cold Storage & Warehouse Company, the conditional vendee, and owner and mortgagor of the premises. Subsequently, the conditional vendor assigned the contract to the appellant, the York Manufacturing Company, and the machinery and apparatus was. furnished and

By the terms of the contract it was agreed:

“That the title to and ownership of the machinery, apparatus or plant herein contracted for shall remain in the Shipley Construction & Supply Company until the entire purchase price herein agreed to be paid, and all the notes and other securities given to secure the same, or any part thereof, shall be actually paid in cash.”

And it was further provided that in case of default the conditional vendor had the right to enter upon the premises upon which the may chinery and apparatus are installed and take possession and remove the same, and should be afforded every facility therefor.

[1] ' The contract was not filed as the statute relating to such contracts provides. Personal Property Law (Consol. Laws 1909, c. 41) § 63. But of course the owner of the premises had actual notice thereof, as it was a party to the contract.

The learned trial judge held that the property covered by the conditional sales contract retained its character as personal property as against the owner and the prior mortgagee. I think that holding was correct. Fitzgibbons Boiler Co. v. Manhassett Realty Corporation, 125 App. Div. 764 , 110 N. Y. Supp. 225 ; Id., 198 N. Y. 517 , 92 N. E. 1084 . But the appellant was defeated upon another ground which will be stated presently.

[2] As has been stated, the Shipley Construction & Supply Company assigned the contract to the appellant, the York Manufacturing Company, which thereafter constructed the machinery and apparatus and delivered the same, as provided in the contract, and the first three payments were made to that company. But default was made in the last payment. Thereupon an action was brought by the appellant against the conditional vendee, in the City Court of Auburn, to recover the same. The complaint in that action alleged that the plaintiff therein, the York Manufacturing Company, had sold and delivered at the request of the defendant and duly installed certain refrigerating machinery and attachments, at the price therein stated, which the defendant had agreed to pay, stating the amount and the terms of payment as in the contract; and that there remained due and owing to the York Manufacturing Company from the Cayuga Cold Storage & Warehouse Company the sum of $587.25, together with interest from the 11th day of March, 1910, no part of which had been paid. The learned trial judge held that the prosecution of that action was such an election of remedies as precluded the York Manufacturing Company from holding the machinery and apparatus under the provisions contained in the conditional sales contract.

Orcutt v. Rickenbrodt, 42 App. Div. 238 , 59 N. Y. Supp. 1008 , and Avery v. Chapman, 127 N. Y. Supp. 721 , are relied upon to support

“In other words, he has treated the note as a payment of the purchase price of the piano, and has thereby deprived himself and his assignee of the right to resort to the alternative remedy. (Citing cases.)”

The case of Avery v. Chapman, supra, was likewise an action for the conversion of a piano, by a purchaser from the conditional vendee against the conditional vendor. An execution issued upon the judgment obtained by the conditional vendor against the conditional vendee, in an action for the purchase price of the piano, was levied upon the piano, after it was sold by the conditional vendee, and the purchaser sued the conditional vendor. The contract in that case provided that in case of repossession the conditional vendee should waive all claims of every name and nature and all payment should be considered for the use of the piano, and not on account of the purchase price; and it was held that the contract did not contemplate that the conditional vendor, upon repossessing himself of the piano, should continue to hold it as security for the purchase price, and did not give the conditional vendee any right thereafter to tender the balance of the purchase price and retake the piano; that the right to purchase was then expressly waived. And it was further held that the bringing of the action for the purchase price was a conclusive election to waive the title and all right to reclaim possession of the piano, citing in support of that holding the case of Orcutt v. Rickenbrodt, supra.

The Orcutt Case was distinguished in American Box Co. v. Zentgraf, 45 App. Div. 522 , 61 N. Y. Supp. 417 , which was a controversy over certain machines which had been delivered under a conditional bill of sale, and it was there claimed that by bringing an action to recover the balance due upon certain notes and retaining the money paid upon another note therefor, under the terms and at the time the contract was executed, the conditional vendor had made an election of remedies so as to preclude him from asserting ownership or right of possession under the conditional bill of sale. But the court held to the contrary, distinguishing the case of Orcutt v. Rickenbrodt, supra, by the fact that the note there sued upon was not given at the

I think that decision accords with other decisions in this state (Brewer v. Ford, 54 Hun, 116 , 7 N. Y. Supp. 244 , affirmed 126 N. Y. 643 , 27 N. E. 852 ; National Cash Register Co. v. Coleman, 85 Hun, 125 , 32 N. Y. Supp. 593 ) and other states (Hilliard on Sales [3d Ed.] 37; Canadian Typo. Co. v. Macgurn, 119 Mich. 533 , 78 N. W. 542 ).

As before stated, under the express terms of the contract in the case at bar, it was provided that the title to the property should not pass until the entire purchase price had been paid and all notes and other securities given to secure the same or any part thereof should be actually paid in cash. I do not see that the City Court action is, at all inconsistent with the holding of the property as security for the purchase price. The proceeding was simply to establish judicially the obligation which the vendee assumed by the terms of the contract. It added nothing to the obligation of the vendee, neither do I think it ■detracted therefrom. It was necessary that the vendee pay the balance ■of the purchase price to obtain title to the property, and such payment whether, voluntarily or by compulsion, would extinguish the vendor’s claim to the property and vest the title absolutely in the vendee, whether that balance is evidenced by a judgment or by contract or note, as provided thereby.

[3] Such contracts now stand practically upon the same basis as chattel mortgages. Equitably, the conditional vendee is the owner and the vendor holds the property merely as security for the purchase price, although the legal title does not pass to the vendee until payment.

Many changes have been made in the statute relating to conditional ■sales, since it was first enacted in 1884 (Laws of 1884, c. 315), safeguarding conditional vendees against harsh provisions in such contracts. A conditional vendor may not now take and appropriate absolutely the property and forfeit what has been paid thereon, although the contract so provides upon the conditional vendee making default. The statute requires that, whenever the property is retaken by the vendor, it shall be retained for 30 days from the time of such retaking, during which the vendee or his successor in interest may comply with the terms of the contract and thereupon receive the property. After the expiration of the time, if the terms are not complied with, the property shall be sold at public auction. Unless such property is sold within 30 days after the expiration of such, period of time, the vendee or his successor in interest may recover from the vendor the amount paid thereon. The act makes provision for giving notice of the sale

I think the mortgage in suit does not cover the machinery and apparatus, and that the first, second, and third findings designated “conclusions of law” should be set aside, and the judgment modified substantially as demanded in appellant’s answer, and, as so modified, affirmed, with costs to the appellant of this appeal and in the trial court.

All concur, except ROBSON, J., and FOOTE, J., who dissent upon the authority of Orcutt v. Rickenbrodt, 42 App. Div. 238 , 59 N. Y. Supp. 1008 .