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, having become the lessee of a hotel in this city, known as the New Netherland, bought of the defendant company, 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.

On the same day the defendant, the Phoenix Furniture Company, sold and delivered to said Earle the furniture for said hotel, and Earle gave to that company, also, his promissory notes in payment therefor, having also considerable periods to run. This furniture was delivered to Earle under an agreement which contained the express provision that the title should not pass to Earle, but should remain in the company until Earle should have paid the said notes and all insurance premiums, and that, in default of payment, the company was to have the right to take possession of said furniture and remove it from the building, and, inasmuch as it might not be possible to sell it as new furniture, it was further agreed that all pay

Earle also purchased of the defendant, the Gorham Manufacturing Company, the silverware for said hotel, which said company took in payment therefor Earle’s promissory notes, secured by chattel mortgage on said silverware.

Earle failed to pay as they became due certain of the notes held by W. & J. Sloane and the Gorham Company. In consequence of such default the three companies demanded that Earle execute and deliver new notes, and that he secure such new notes by a mortgage upon the lease of, and the personal property in, the Hotel Normandie, of which Earle was the proprietor. In compliance with this demand, and for the purpose of securing an extension of time of payment, Earle, on the loth of January, 1891, executed and delivered to the three companies certain new promissory notes payable to their order. Contemporaneously with the delivery of such new promissory notes to the three companies, Earle executed and delivered to the defendant Robinson, as trustee, as further collateral security for the payment of the notes, a mortgage on the lease of, and the personal property in, the Hotel Normandie. The Normandie mortgage and also the written offer, signed by Earle, pursuant to which the mortgage and the new notes were given, both contained the following provision:

“ That none of the present security now held by you (said three corporations) 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 the aforesaid mortgage as further collateral security thereto.”

The amount of 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, as by express agreement the old notes were to be retained by the three companies, but were

The day after the execution of the Normandie mortgage Earle paid $2,000, which was distributed amongst the defendant compamies. Earle was dispossessed from the New Netherland Hotel on the 19th of March, 1894. He thereupon confessed judgment to certain creditors, and the plaintiff, under the execution sales which followed, purchased for a nominal consideration the right, title and interest of Earle, both in the New Netherland property and also in the lease and personal property covered by the Normandie mortgage.

On the 5th of April, 1894, Earle made default in paying the first of the new notes, which became due on that day, to W. & J. Sloane and the Phoenix Company. On the sixth of April the Sloane and Phoenix Companies retook the property which they had sold and delivered to Earle, and each sent, both to Earle and the plaintiff, a written notice containing this statement:

“We further notify you that we shall, in due coirrse 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 jou 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 Netherlands,’ 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 cmd exclusive owner thereof, free from any demand or claim on the part of any person or persons whatsoever.

“ And said party of the first part does hereby, for itself, its sue

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 foreclosure of the mortgage upon the ground that there was nothing due thereon.

The foregoing facts appearing upon the trial, the court held that the mortgage could not be foreclosed ; that there was "nothing due thereon, and gave judgment for the plaintiff ; and from such judgment this appeal is taken.

It is urged upon the part of the appellants that “ 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 and 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 note can be enforced. It is

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 ) describes the vendor’s lien as arising under these circumstances: “ 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 right 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 trcunsitu. 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 enforce by a sale, and then recover any balance of the contract price unrealized.”

The appellants in 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 trcunsitu is only exercised where the property can be seized before it reaches the consignee.

None of these remedies 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 the 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 so 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, 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 referred to, 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 us not. They were not contented with the lien; they wanted to have the right to take 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 proportion of the payments were made, Earle should get title to such portion of the

Now, these companies having taken this property as of their original title, where is there any consideration for the renewal notes which Earle gave ? He got nothing except the mere possession of this furniture during this time; he acquired no title or interest therein, and could not until he had paid the notes. He could not call the companies to account as to the manner in which they sold this property. They might have given it away and it would have made no difference to him, because he had no interest whatever in it, having made default in the payment of the notes, and the parties selling the property having exercised their right under the contract to resume possession. •

This relation between the vendor and vendee on conditional sales is recognized by the legislation of 1893 and 1895. In 1893, by chapter G8A, it was enacted that when articles conditionally sold are retaken by the vendor or his successor in interest, such property sold and retaken 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 pur-' chaser 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 retaken the goods in question, forfeited all payments made by

It is urged that the case of Brewer v. Ford ( 54 Hun, 116 ; 59 id. 17; 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 be something to the contrary in the contract between the parties, the right to retake the property and apply its proceeds to the payment of the debt, and may thereafter recover any deficiency from the vendee. Upon an examination of this case we fail to find any such question involved. The plaintiff had sold to the defendant’s assignor certain property consisting of machinery, and it was provided in the contract of sale that the machinery should be the property of the plaintiff until paid for. Payment was made by the giving of certain promissory notes. Thereafter certain of the machinery was assigned by the vendee to the defendant assignee and went into his possession ; the plaintiff demanded possession of the same, which was refused and an action of conversion was brought. Upon the trial it was insisted that the action could not be maintained -without a surrender of the notes, only one of which had become due and all of which were outstanding; and it was held that the plaintiff might recover his own property in that action irrespective of where the notes -were. In other words, if Earle had parted with the possession of some of this property, the Phoenix and Sloane Companies could retake it upon his making default in the payment of his notes.

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

The judgment should be affirmed, with costs.

Eollett and Parker, JJ., concurred.

Judgment affirmed, with costs.