Earle v. Robinson

There does not seem to be any dispute in regard to the facts upon which the judgment appealed from was founded. It appears that in the year 1893 the defendant Ferdinand P. Earle, haying become lessee of an hotel in this city, known as the “ New Netherland,” bought of the defendant com-pony W. & J. Sloane carpets, hangings, draperies, and upholstery for that hotel, which goods were delivered to Earle under an agreement .which contained the following provision :

“ It is hereby agreed that these goods, described as above, are the property of and belong to W. & J. Sloane until paid for in full.”

Earle gave to W. & J. Sloane certain promissory notes, having considerable periods to run, for the purchase price of said goods.

“That none of the present security now held by said three corporations, or either of them, is to be changed in any respect; but that this extension of the terms of payment is in consideration of the payment of one dollar ($1) and the giving of this mortgage as further collateral security thereto.”

The new notes exceeded the amount of the old notes by the amount of the interest added. At the time of the making and delivery by Earle of the Normandie mortgage and the new notes, none of the old notes were surrendered, and by express agreement the old notes were to be retained by the three companies, but were not. to be negotiated by them, and nob to be surrendered to .Earle until the new notes were paid. The day after the execution of the Normandie mortgage, Earle paid $2,000, which was distributed among the defendant companiés. Earle was .dispossessed

“ We further notify you that we shall, in due course, and within the time allowed by law, sell all of said property so retaken by us for the best price we can obtain, and give you credit for the proceeds of such sale. We shall be pleased to receive any suggestions which you may desire to make regarding the sale of said property, as we desire to do in all respects what is best for both parties.”

On the 30th of July, 1894, the Phoenix and Sloane Companies sold the chattels which they had thus retaken at private sale to Robert Stafford and H. P. Whittaker, the present lessees of the Netherland; the Phoenix Company realizing $75,000, and the Sloane Company $35,000. A bill of sale of the furniture was executed by the Phoenix Company, and purported to grant and convey “all the furniture at present located in the Hotel New Netherland, now designated as the ‘Hotel Netherland,’” and contained covenants upon the part of the vendor as follows:

“And said party of the first part does hereby, for itself, its successors and assigns, expressly covenant that said furniture, and the whole thereof, is free and clear of and from all claims, demands, liens, and incumbrances of every kind, and that said party ■of the first part is the sole and exclusive owner thereof, free from any demand or claim on the part of any person or presons whatsoever. And said party of the first part does hereby, for itself, its successors and assigns, expressly covenant and agree to and with said parties of the second part to warrant and defend the sale of the said furniture, and the whole thereof, hereby sold unto the said parties of the second part, their executors, administrators, and assign, against all and every person and persons whomsoever.”

A bill of sale with similar covenants was executed by the Sloane Company for the carpets, curtains, drapery, bedding and chairs in said hotel. Subsequently, the trustee of the Normandie mortgage gave notice of an intention to foreclose, sell, and dispose' of all the property mentioned and included in that mortgage, whereupon this action was brought to restrain the foreclose of the mortgage, upon the ground that there was nothing due thereon. The foregoing facts apppearing upon the trial, the court held that the mortgage could not be foreclosed, and that there was nothing due thereon, and gave judgment for the plaintiff; and from such judgment this appeal is taken.

“The vital error of the learned justice is that he wholly overlooks the circumstances under which the new notes were given by Earle to the three companies. He erroneously assumes that the consideration for the new notes was simply the original purchase price of the property agreed to be sold aud delivered by the companies to Earle.”

In this it seems to be assumed that, if no recovery could be had upon the old notes because the consideration therefor had failed, a recovery could be had upon the new notes because there was incorporated in the new notes the interest upon the amount secured by the old notes, and the time for payment extended. This is the only new consideration, if it may be called such, which was incorporated into the new notes. It seems to us that the learned counsel loses sight of the fact that interest is a mere appurtenant, to a debt, and when the debt is destroyed there is nothing upon which interest can stand. The extension of time to pay a debt which becomes extinguished by the act of the owner of such debt-can never be a sufficient consideration of itself, to support a promise to pay the debt. If the position of the learned counsel is correct, then when a note is renewed and interest is added, no matter if the consideration for the first note- entirely fails, the renewal notes can be enforced. It it* not necessary to cite authorities for the purpose of establishing the proposition that renewal notes, although interest may be added and time extended, are subject, in the hands of the original holders, tp the same defenses as the original debt, and that if by the act of the creditor the debt ceases to be enforceable, such defense is applicable to all renewals or extensions of such debt, whether interest is included or not; and when the learned court held that there could be no recovery for .the original indebtedness, the structure upon which the whole of this security rested failed, as payment of a collateral can never bo enforced where the original debt is extinguished.

’The question therefore resolves itself into that which was determined by the learned justice below against the appellants. Upon an examination of the case and a consideration of the arguments presented upon this appeal, we think that the learned counsel for the-appellants has mistaken the relations existing between these contracting companies and Earle. They are endeavoring to claim rights such as they would have had, had they simply a vendor’s lien upon goods sold, the title to which had passed to the vendee, but which had never been delivered. The case of Van Brocklen v. Smeallie, 140 N. Y. 70 ; 55 St. Rep. 263 , describes the vendor’s lien as arising under these circumstances :

“That the vendor of personal property has a lien, or something more than a lien, upon it for the purchase price, while it remains in his possession awaiting delivery, although the tight of property has passed to the vendee. The right of the unpaid vendor is deemed, sometimes analogous to the pawnee’s right of sale, and sometimes to the right of.stoppage in transitu. Whatever it be it is at least a lien upon the property sold for the purchase price so long as it remains undelivered, which lien the vendor may en

The appellants jn this action seek to claim rights such as a person would have who stands in that relation to the transaction. It is a familiar principle that the vendor’s lien is gone the moment the property is delivered. The right of stoppage in transitu is only exercised where the property can be seized before it reaches the consignee. It is undoubtedly true that, where the vendor’s lien exists, the right of the vendor in enforcing the same is threefold : He may store the property for the buyer and sue for the purchase price, or. he may sell the property as agent for the vendee and recover any deficiency resulting, or he may keep the property as his own and recover the difference between the contract and the market price at the time and place of delivery.

None of these rules apply to the case at bar or to any conditional sale where the title to the property remains in the vendor. And this is the relation which by express contract existed between the defendant companies and' Ferdinand P. Earle. They expressly reserved to themselves the title of this property, with right to take possession of it and to forfeit all payments which had been previously made, upon default in the payment of any of these notes. “ The agreement between the Phoenix Company and Earle was more formal and broad than that between Earle and the Sloane Company. But, as far as this question of title was concerned, they amounted to the same thing, — that Earle was to get no title to the property until he had paid for it; and it was upon this theory that these companies acted when Earle made default. They took possession of the property and sold it as their own. They guaranteed, in the bills of sale to the purchaser, that they were the owners. Now, if they had understood that the title had passed to Earle how could they have given such a guaranty? They understood at that time that they were the owners ; not that they had a lien upon the property and were foreclosing that lien. They sold it as owners, having a complete and full title, and Earle having no right or interest therein. Under such circumstances, can these defendant companies, after,they have asserted the rights given them by the instruments above quoted, which they thought better protected them than a mortgage upon the property, now come into court and be heard to say that all they had was a lien which they foreclosed? It seems to ns not. They were not contented with the lien. They wanted to have the right of taking this property in default of payment of the last note, even if all the rest had been paid, and of forfeiting all the payments which had previously been made; the Phoenix Company, however, making an agreement that, as a certain portion of the payments were made, Earle should get title to such portion of the furniture as they might select according to schedule prices. It is not at all likely that that these companies, in case a large proportion of these payments had been paid, would have insisted upon their strict legal rights; but they had the power so to do, and it depended entirely upon their charity whether, after a default was made in the payment of the last note, Earle should not lose all that he had paid, with the

This relation between the vendor and vendee on conditional sales is recognized by the legislation of 1893 and 1895. In 1893, by chapter 684, it was enacted that, when articles conditionally sold are retaken by the vendor or his successor in interest, such property sold and taken shall be retained for thirty days by the person by whom or on whose behalf the same has been so taken, during which time the purchaser or his successor in interest may fulfill such contract of purchase, and shall be entitled thereupon to receive such property; and that after .the expiration of such time all interest of the purchaser or his successor in interest in the property shall cease. And in 1895, by chapter 523, it was provided that if, on the retaking and resale of goods conditionally sold, there should'be a surplus realized by the vendor, such surplus should be paid to the vendee. If, in conditional sales, there is any such thing as a vendor’s lien, there was absolutely no necessity for such statutes. The statutes were enacted for the purpose of alleviating.hardships such as would have existed in the case at bar had Earle paid all his notes but one, and then unfortunately failed to pay that note, and these companies had taken the goods in question, forfeited all payments made by Earle, sold the goods for much more than was due, and pocketed the proceeds. It-is urged that, had the companies sued on the notes after retaking and -selling the property, Earle would simply have had the right to make them account for the value of the property taken. In other words, he would have had a partial defense by way of counterclaim for the value of the.property; and the cases of Payne v Cut ler, 13 Wend. 605 ; Spalding v. Vandercook, 2 id. 431; Stacy v. Kemp, 97 Mass. 166 ,—are cited to support that proposition. All that these cases decide is that where there is a partial failure of consideration the party may recoup on an action on the promissory note, and they seem to have no application whatever to a case where the whole original indebtedness is wiped out by the action of the creditor. It is urged that the case of Brewer v. Ford, 54 Hun, 11 ; 26 St. Rep. 888 ; 59 Hun, 17 ; 35 St. Rep. 967 ; 126 N. Y. 643 ,—is conclusive authority for the proposition that, in this state, a conditional vendor has, upon the vendee’s default, unless there he something to the contrary in the contract between the parties, the right to retake the property and apply it to the payment of the debt, and may thereafter recover any deficiency from the vendee. Upon an examination of this case we fail to

It does not seem necessary to say anything further upon the questions involved on this appeal. As has already been stated, the extension of time or the promise to pay the interest, which had accrued upon the old notes and was incorporated in the new, did not and could not form any independent consideration. Such consideration was based upon the validity of the debt represented by the old notes, and when that consideration failed there was nothing left to which interest could attach.

The judgment should be affirmed, with costs.

All concur.