O'Rourke v. Hadcock — 24 N.Y. St. Rep. 511

Majority

p. 511

William F. O’Rourke, App’lt, v. John I. Hadcock, Resp’t.

(Court of Appeals, Second Division,

Filed June 18, 1889.)

Headnote

1. Contract—Conditional sale op chattels—Right op vendor to sell.

When several distinct chattels are sold, upon condition that the title shall not pass from the vendor to the vendee until the agreed price is paid, and the vendor, in affirmance of the contract, seizes the chattels, for the avowed purpose of selling them and collecting the amount due upon the contract, he has no right to seize and sell, or seize and return, more than sufficient to satisfy his demand and expenses; and when he continues to sell, after he has realized enough to satisfy the debt and costs, he becomes a trespasser.

2. Same—When vendor cannot terminate contract.

Where an executory contract for the sale of chattels provides that the title shall not pass until the agreed price is fully paid, which is payable in installments, and the vendor permits the vendee to retain possession and make other payments after the whole contract price is due, the vendor cannot seize the property and terminate the contract for non-payment, until he has demanded payment of the vendee.

p. 512

S. Judgment-Former action—When conclusive.

Where the record shows that a judgment in a former action was rendered on the merits, it becomes conclusive between the parties, and such judgment-roll, in a subsequent action, is evidence of the amount due from defendant to plaintiff. Bradley, J., dissenting.

Appeal from a judgment of the general term of the superior court of the city of Buffalo, affirming a judgment in favor of the defendant, for $8,500, damages, and for the return of two canal boats, and in case a return cannot be had, for their value, $1,400.

On the 31st day of May, 1873, the plaintiff was the owner of the canal boat Jay Pettibone, its tackle and furniture, ■and four mules and their harnesses, then used in towing the boat. On that day, a written contract was entered into between the parties, by which plaintiff agreed to sell to defendant, this property, for $6,000, which the defendant agreed to pay in twelve equal installments, with interest, the last payment falling due November 1, 1875. To secure the payment of these sums, defendant gave twelve promissory notes. It was stipulated in the written contract that defendant should have immediate possession of the property, but that title to the boat should not pass from the plaintiff to the -defendant until the purchase price was paid, but the contract contains no provision in respect to the mules and their harnesses. At the date named, defendant was the owner of the canal boat, Dr. M. S. "Kittinger, its tackle and furniture. To secure the payment of said $6,000, the defendant mortgaged fche property last mentioned, to the plaintiff.

On the 27th of June, 1876, there was an unsettled account between these parties, embracing many items, extending through several years, and aggregating more than thirty thousand dollars, inclusive of the outstanding notes, given by the defendant to the plaintiff, for the purchase price of said boat. At this time, a dispute as to the state of these accounts arose between the parties, each claiming to be the creditor of the other. On the day last named, the plaintiff advertised that by virtue of the contract and chattel mortgage, he would sell the boats by public auction, on the seventh of July, 1876, and, at the same time, seized the Pettibone, and held possession of it for one day.

July 7, 1876, Hadcock, the defendant herein, began an action against O’Rourke, the plaintiff herein, setting up the existence of the aforesaid executory contract, the promissory notes and chattel mortgage, the open account, and alleged that he had fully paid for the boat, and prayed for an accounting, and for a judgment that O’Rourke surrender up the notes, chattel mortgage and contract, execute to him a bill of sale of the Jay Pettibone, and that he be restrained from selling the property described in the contract and mortgage. An issue was joined in this action, which was referred to a referee, who found that the plaintiff, Hadcock, was still indebted to O’Rourke, the defendant, in the sum of

p. 513

:$136.38, and directed a judgment dismissing the complaint with costs. December 30, 1881, a judgment was entered pursuant to the report.

July 21, 1876, the plaintiff claimed that the notes, or some part of them, were unpaid, and took from the defendant and converted to his own use, without defendant’s consent, said four mules and harnesses. On the next day, July 22, 1876, the plaintiff advertised that he would sell, on July 28, at 10 o’clock A. M., the Pettibone, her tackle, apparel, furniture, and the four mules and their harnesses, at public auction, by virtue of the executory contract of sale. And on the same day, by a separate notice, advertised that he would sell the boat Dr. M. S. Kittinger, her tackle, apparel and furniture, at public auction at the same time, by virtue of the chattel mortgage.

_ July 22, 1876, this action for the recovery of the possession of the two boats, their tackle, apparel and furniture, was begun, and on the 24th of July, the sheriff seized the property, and the defendant not excepting to the plaintiff’s sureties, nor requiring the return of the chattels pursuant to the Code of Procedure, the sheriff delivered the chattels to the plaintiff. July 28, 1876, the plaintiff sold the Kittinger, pursuant to his notice of sale, under the chattel mortgage, for $800, and the Pettibone pursuant to his notice ■of sale under the executory contract, for $1,500.

This action was referred to the same referee who determined the first action, and he found that on the 21st of July, 1876, the plaintiff was indebted to the defendant, on account of the executory contract and twelve notes, in the sum of $126.38. He also found that the four mules and their harnesses were, on July 21, 1876, of the value

of............................................ $770 00

deducting from this amount................... 126 38

the remainder due upon the note, from the value

of the mules, left........................... $643 62

due from O’Rourke to Hadcock. It was found

that the value of the Pettibone at the time of

trial was......................... $750 00

that the value of her use and the dam-

ages for her detention was......... 4,150 00

--$4,900 00

that the value of the Kittinger at the

time of the trial was.............. 650 00

and the value of her use and the dam-

ages for her detention was......... 3,350 00 4,000 00

total......................................... $8,900 00

p. 514

and judgment was directed for $8,500, the value of the use and the damages for detention of the two boats, and for the return of the two boats, but, in case a return could not be had, for $1,400, their value. A judgment was entered, in accordance with this report, with costs. From this judgment, the plaintiff appeals to the general term, where the judgment was affirmed, from which judgment he appeals to this coui’t.

J. M. Humphrey, for pl’ff-app’lt; George J. Sicard, for def’t-resp’t.

The referee, by his decision, in effect, finds that the plaintiff elected to affirm the contract of sale, and collect the amount due upon it. The plaintiff’s conduct was entirely consistent with this theory, and entirely inconsistent with the plaintiff’s present theory, that he disaffirmed the contract of sale and relied upon his title reserved by the contract. The plaintiff advertised that, by virtue of the contract and chattel mortgage, he would sell by public auction, July 7, 1876, all of the property described in these instruments, and again, that he would sell the property by public auction, by virtue of the contract and mortgage, July 28, 1876, and on the day last named he did sell all of the property (he having acquired possession of it through this action), except the mules and their harnesses. The plaintiff called Mr. Davis as a witness, who testified that he attended the sale as attorney for the plaintiff, and that the plaintiff was present. He also testified: “Both boats were sold within half an hour. The Pettibone was sold first; I recall it because the Pettibone was the original security, and the Kittinger was sort of a collateral. After the sale of the Pettibone, I recall that I asked Mr. O’Rourke to give me the amount of his claim, and Mr. Anthony, who had kept, the books for Mr. O’Rourke, gave me the amount of claim, a statement. Then I directed the sale of the Kittinger, upon the information that the Pettibone had not sold for enough to satisfy the claim. I gave that direction.” It is apparent that the plaintiff did not avail himself of his right, to rescind the sale and re-possess himself of the property described in the contract, by virtue of his legal title, in case-any part of the price was unpaid; but he elected to collect the sum which he claimed to be due, and he thereby affirmed the sale. Had he disaffirmed the sale, he could not have legally dorie more than to retake the property sold. But instead of doing only this, he enforced the chattel mortgage and the contract, for the avowed purpose of collecting' his debt. It is well settled that when a mortgagee, holding a mortgage upon several chattels, continues to sell after he-has realized enough to satisfy the debt and costs, he becomes a trespasser. So when several distinct chattels are sold, upon condition that the title shall not pass from the vendor to the vendee until the agreed price is paid, and the:

Dissent

p. 515

vendor in affirmance of the contract seizes the chattels for the avowed purpose of selling them and collecting the amount due upon the contract, he has no right to seize and sell, or seize and retain more than is sufficient to satisfy his demand and expenses. The plaintiff asserted in his notice •of sale that he would sell the mules and their harnesses to satisfy his claim, and, though the title to them was not reserved by the contract, we think he is now estopped from saying that his act was not by virtue of the contract, and for the purpose of collecting his debt, but was wholly wrongful. But it is said that the case does not show that the mules and their harnesses were sold. The only evidence upon this subject was given by Davis, who testified: “The mules were not sold at this time (July 28, 1876), nor were the harnesses.”

The trial of this case was not concluded until March 3, 1884, more than seven years after the plaintiff took the mules and their harnesses. He was examined, but did not explain what he had done with this property, and the evidence justified the referee in finding, either that the property had been sold, or its condition so changed that he was liable to account for its value by way of application as a payment upon the very debt which he sought to collect by taking the property, and by this action arising out of the very contract, by virtue of which they were taken. When an executory contract for the sale of chattels, provides that title shall not pass until the agreed price is fully paid, which is payable in installments, and the vendor permits the vendee to retain possession and make other payments after the whole contract price is due, the vendor cannot seize the property and terminate the contract for non-payment, until he has demanded payment of the vendee. Hutchings v. Munger, 41 N. Y., 155 . There is no evidence in this case that the plaintiff demanded payment of the defendant. Davis testified that he demanded the boats and property covered by “ these mortgages,” which the defendant denied. The referee did not find whether possession of the boats and their furniture was demanded, but he did find that the plaintiff took the mules and their harnesses without a previous demand.

The judgment roll in the first action between these parties was evidence of the amount due from the defendant to the plaintiff. This amount was the subject litigated in the action. The record shows that the judgment was rendered on the merits, and so it became conclusive between the parties. Code Civil Procedure, section 1209.

The judgment should be affirmed, with costs.

All concur, except Bradley, J., who reads dissenting opinion.

(dissenting).—The action is replevin brought

to recover the possession of two canal boats, know, as “Jay Pettibone, of Buffalo,” and “Dr. M. S. Kittinger of Lock-port,” and their tackle and furniture. The Pettibone was the subject of an agreement of May 31, 1873, by which the plaintiff agreed to sell it to the defendant, upon payment of a sum represented by twelve promissory notes, made by the defendant to the plaintiff, the last one of which was payable November 1, 1875. And, until full payment, title was reserved to the plaintiff, with the right on default to retake the boat. As a further security for the payment of notes, the defendant gave to the plaintiff a chattel mortgage on, the boat Kittinger.

This action is founded upon the alleged default in payment of the moneys so secured. The agreement gave to. the defendant the right to take possession of the boat, Pettibone, and use it. This he did. But the sale was conditional. The right of the defendant was to complete the purchase, and take title by payment, and, until then, the title remained' in the plaintiff. This was the situation produced by force of the agreement. Strong v. Taylor, 2 Hill, 326 ; Ballard v. Burgett, 40 N. Y., 314 ; Austin v. Dye, 46 id., 500. And, unless the defendant was in some manner relieved from the effect of such condition, he acquired no title to the boat. His default in payment would permit the plaintiff to lawfully take the property from the possession of the defendant. It is contended, on the part of the defendant, that the instrument was or became in its nature a chattel mortgage, because it was treated as such in the use made of it by the plaintiff in filing and refiling it, and in subsequently advertising the boat for sale on taking it from the defendant. It is difficult to see, in this, any such effect upon the character of the agreement,as its terms clearly and unequivocally characterize it as an executory agreement of sale, and the payment of the purchase price as a condition precedent to-the change of title. It is also urged that such condition was waived by the plaintiff, because he did not avail himself of the default in payment of the lást note when it became due. in November, 1875, but received payments of the defendant from time to time thereafter, and did not seek to take the boat until in July following, when this action was commenced. While that was a waiver of the forfeiture, so far as to permit the defendant to complete his payments- and perfect title to the boat, it did not have the effect to take the condition from the agreement or to change its character. But by such waiver that right of the defendant-was continued until demand and refusal. Hutchings v. Munger, 41 N. Y., 155 .

The doctrine of the cases, which go to support the propo

p. 517

sition of waiver of a condition in the transfer of property, has relation to the condition upon which delivery of possession is made dependent. Hennequin v. Sands, 25 Wend., 640 ; Osborn v. Gantz, 60 N. Y., 542 .

The defendant alleges payment of the notes. The referee has found that on the 7th day of July, 1876, the amount remaining due from the defendant to the plaintiff was $126.38, and on the twenty-first day of that month, the plaintiff took from the defendant, without the consent of the latter, four mules and harnesses, of the value of $770,, and appropriated them to his own use. This action was commenced the next day, and the property in question taken upon the requisition on two days after. And the referee further finds that the notes had been fully paid, and that the plaintiff was then indebted to the defendant; $643.38, the difference between the value of the mules and harness, and the amount due the plaintiff when he took them from the defendant.

The plaintiff claims, and evidence on his part was given tending to prove, that there was due him upon the notes, upwards of $3,000 at the time of the commencement of the action. The fact, as found by the referee in that respect, was based solely upon a record of judgment in an action between the same parties, brought by Hadcock against O’Rourke, on or about July 7, 1876, wherein the former alleged payment of the notes, sought an accounting with O’Rourke and the relief that the accounts between them be stated, and that the latter be restrained from taking the property. The issues were referred, and the referee found that on July 7, 1876, there was due from Hadcock to O’Rourke, on the notes, $126.38, and as conclusion of law determined that the latter was entitled to judgment dismissing the complaint. The judgment thereupon entered, in terms, adjudged that the report be confirmed; that the sum so found, was due the defendant therein from the plaintiff upon such notes, and that the complaint be dismissed with costs. By that record there seems to have been a determination upon the merts of the issues presented by the pleadings, in which was directly involved the inquiry into the state of the accounts between the parties, with a view to relief or redemption of the property from the alleged right and claim of the defendant therein, founded upon the agreement of sale and mortgage. As a rule, the consequence of a litigation between the same parties is, that when determined upon the merits, it is conclusive as to all matters within the issues, and that such .is the effect of the adjudication upon the same questions in a subsequent action between them, although the form or purpose of it may differ from the former action. Jordan v. Van Epps,

p. 518

85 N. Y., 427 ; Pray v. Hegeman, 98 id., 351; Castle v. Noyes, 14 id., 329; Smith v. Smith, 79 id., 634; Leavitt v. Wolcott, 95 id., 212. It is contended by the plaintiff’s counsel that the only question legitimately involved in the issue for the determination in the former action was, whether the notes had been paid, and the property thus relieved from the claim of O’Rourke upon if, and that when Hadcock failed to establish such payment., it was the only fact for the referee to find, and the conclusion of law that the complaint be dismissed, necessarily followed. But we think the issues presented by the pleadings, and the purpose of the former action, may be deemed to have been broader than that, and to have embraced the inquiry, which was litigated, as to the situation of the claim and amount unpaid upon it. The plaintiff, in that action at the time of its commencement, so far as appears, had the right to pay whatever remained due, and perfect his title to the boat, Pettibone, and redeem the other from. the operation of the mortgage. If he had tendered to O’Rourke a sum equal to the amount so found due, and the fact had so appeared on the trial of that action, the referee could properly have directed judgment for him.

And, if the situation had been such as to render it practicable for Hadcock to do so, and relieve the property from the claim, we think he might, for the purpose of payment, have treated the adjudication, founded upon such report of the referee, as effectually fixing the amount required to perfect and restore his title to the property. This was within the purpose expressed in the complaint. The issues related to the amount paid and unpaid upon the notes, as well as to the alleged fact of payment. In this respect, the present action may be distinguished from Campbell v. Consalus ( 25 N. Y., 613 ), where the only question for determination within the issues, was, whether the mortgage sought to be cancelled had been paid. The considerations of economy, as well as policy, require that repose be given to controversies between parties as to matters within issues, which have been once litigated and legitimately determined upon the merits, while the adjudication remains unreversed and unvacated. Otherwise, parties might be subjected to hardship and embarrassment. The doctrine of res adjudícala is, not, however, applicable to matters merely collateral or incidental to the questions presented by the pleadings, and litigated, although they are the subject of controversy on the trial. People v. Johnson, 38 N. Y., 63 . The plaintiff, in the former action, having alleged his readiness to pay any sum found remaining due the defendant therein, the referee could properly have directed judgment, giving leave to the former to pay the amount so found unpaid, in satisfaction of the notes. But his omission to do so, inasmuch as the complaint was dismissed on the merits, did not deny legitimate and con-

p. 519

elusive effect to the finding of fact within the issues, and declared by the judgment. People v. Smith, 51 Barb., 360 ; Steinbach v. Relief Fire Ins. Co., 77 N. Y., 498 . Ana the fact that the dismissal was on the merits, is not dependent upon an express declaration to that effect by the referee. It is sufficient that it so appears by the judgment record. Code Civil Procedure, section 1209; Van Derlip v. Key ser, 68 N. Y., 443 . Treating, as we do, the former adjudication, as determining the amount due the plaintiff herein, the inquiry arises whether such amount was paid. The report of the referee indicates that he treated the taking and appropriating by the plaintiff, of the mules and harnesses, as a satisfaction of the plaintiff’s claim. It is not seen how the taking and appropriation of that property, as represented by the evidence, could be given such effect. If the defendant’s right to take title to the mules and harness, was subject to the same condition as that relating to the boat Pettibone, the plaintiff may, by reason of the default, have had the right to reclaim them as his property. Bnt it is by no means clear that he had, by the agreement, reserved the title to that property in himself, or that he had the right to take it. The agreement does not, in terms, apply the condition to the sale of the mules and harness. And, assuming that it was not applicable to them, the title to that property passed on delivery of it to the defendant.

Upon that assumption the plaintiff became liable for the conversion of that property when he took and appropriated it to his own use, without the consent of the defendant. But as it does not appear that he disposed of the property or changed its condition, no opportunity seems to have been furnished the defendant to waive the tort and make any claim against the plaintiff in the nature of assumpsit on account of the property so taken. That right arises out of the disposition of the property tortiously taken or converted. And then the party thus deprived of his property may charge the wrongdoer as for money had and received to his use. Sturtevant v. Waterbury, 2 Hall, 449 ; Cobb v. Dows, 9 Barb., 230 ; Berly v. Taylor, 5 Hill, 577 ; Osborn v. Bell, 5 Denio, 370 ; Jones v. Hoar, 5 Pick., 285 ; Cushman v. Jewell, 7 Hun, 525 ; Stearns v. Dillingham, 22 Vt., 624 ; S. C., 54 Am. Dec., 88 ; Batch v. Patten, 45 Me., 41 ; S. C., 71 Am. Dec., 526 .

It is not unreasonable to suppose that the doctrine may be so extended as to permit the waiver of the tort and the maintenance of an action as for goods sold and delivered,, when the wrongdoer has, by using the property for his own benefit, changed its condition and character, as held in Abbott v. Blossom ( 66 Barb., 353 ). But that question does not arise and is not considered here. There is no evidence that the plaintiff did anything with the mules and harness.

p. 520

further than to take them into his possession, which he did without the consent of the defendant. Whatever claim the latter appears to have had against the plaintiff, for taking the property, was in tort as for trespass or conversion. It is difficult to see that for the purpose of the question here, the effect, before stated, of taking the mules and harness by the plaintiff, was modified by the fact that they, with the boat “Pettibone,” were covered by the notice of sale. The taking of them cannot be treated as payment upon the debt, unless they were or may be deemed taken as such. There is nothing indicating such purpose on the part of the plaintiff. And assuming that his purpose, when he caused the notice of sale to be posted, was to sell them, the unaccomplished design to do so did not give to the taking of them the effect of payment. These view’s lead to the conclusion that it could not be treated as payment or satisfaction of the balance remaining due upon the notes. It follows that in view of the default in payment, the plaintiff, upon demand and refusal, had the right, at the time of the commencement of this action, to take the boat Pettibone, by force of the condition in such agreement of sale, or to take the other boat, by virtue of the chattel mortgage. But he had no right to take both, because the taking of the former by the plaintiff as owner, would have the effect to rescind the contract of sale or put an end to it, and this would terminate his right to seek payment or to avail himself of the security given for it.

The plaintiff did at the same time proceed to take both boats. They were taken together upon his requisition in this action, July twenty-fourth, and delivered to him, July twenty-seventh. On July 22, 1876, he advertised them for sale by separate notices, and sold both of them on the twenty-eighth day of that month. The .plaintiff had the legal title to the boat Kittinger, subject to such right as the defendant had of redemption. Mattison v. Baucus, 1 N. Y., 295 . And the right of the plaintiff was to take it on the mortgage and publicly sell it on notice, by way of foreclosure of the equity of redemption, or not sell it, as he pleased. In case of such sale he could account for the net proceeds. And if he did not sell it, the taking and appropriation would operate to satisfy the claim, if its value was sufficient for the purpose. Case v. Boughton, 11 Wendell, 106; Charter v. Stevens, 3 Denio, 33 ; Coe v. Cassidy, 72 N. Y., 133 , 138; Bragelman v. Dane, 69 id., 69; West v. Crary, 47 id., 423.

When the plaintiff, by the action and requisition, sought to obtain, ana did take the boat Pettibone, he was denied the right to the possession of the other boat, for the reason before given. I should be inclined to give the defendant the benefit of the recovery of the Pettibone and damages

p. 521

for its retention, as that produced the larger amount, if that were practicable. And as the defendant did not answer the complaint until after the sale of the Kittinger, it may be that it could have been done on the ground of satisfaction of the debt by such sale of the time of payment as alleged in the answer, as a defense found by_ the referee had not been confined to that before the action was commenced. Bendit v. Annesley, 42 Barb., 192 ; Rice v. Childs, 28 Hun, 303 ; Willis v. Chipp, 9 How., 568 ; Carpenter v. Bell, 19 Abb., 258 ; Beebe v. Dowd, 22 Barb., 255 .

These views lead to the conclusion that the plaintiff was entitled to the possession of the boat Pettibone, and that the defendant had the right to that of the boat Kittinger and to recover it, with damages for detention. The value of the property was properly determined as of the time of the trial. Brewster v. Silliman, 38 N. Y., 423 ; N. Y. Guaranty, etc., Co. v. Flynn, 55 id. 653. And the value of the use of the boat adopted as the measure of the damages for its detention, was in accordance with the rule in that respect, announced in Allen v. Fox, 51 N. Y., 562 .

The judgment, therefore, should be reversed and a new trial granted, costs to abide the event, unless the defendant stipulate that the judgment entered upon the report of the referee be modified, by striking from it so much as awards the return to the defendant of the boat Pettibone, and damages for its detention, and by inserting a recovery by the plaintiff of the possession of that boat. And, in case the defendant so stipulates, the judgment in other respects and so modified, be affirmed, without costs of this appeal to either party.