125 Wash. 255 | Wash. | 1923
This is a replevin suit. The facts have been stipulated and are as follows: On September 21,
At the time of the delivery of this note to the bank, the Vulcan Manufacturing Company-Miller conditional sale contract was physically delivered to the bank, Waterhouse & Company, indorsing its name on the back thereof. The Millers, being informed that the contract had been assigned to the bank, made two or three payments to it, according to the terms of their
The case now stands as though Waterhouse & Company were the original vendors, and no further mention need be made of the Vulcan Manufacturing Company.
Since the appellant greatly relies on the case of State Bank of Black Diamond v. Johnson, 104 Wash. 550, 177 Pac. 340, 3 A. L. R. 235, we go at once to it. It is not necessary to here recite the controlling facts of that case. Unusual as they were, they are completely duplicated here, except as to the parties and except in that case the assignee of the contract was a purchaser,
We held in that case that the assignee took not only the contract and all of the assignor’s interest therein, but also the title to the automobile itself. We also held that the assignor, having no title to the automobile and no right to its possession, had nothing which it could sell to the innocent purchaser, and consequently the latter took nothing by the attempted sale, and that the assignee, being the owner of the title to the automobile, and also being entitled to the possession because the contractual payments had not been made, was entitled to possession.
We are convinced that the mere assignment for security of a conditional sales contract does not vest in the assignee the title to the property covered by the contract, and which title is reserved in the vendór. There is, it seems to us, a clear-cut distinction between a purchaser of such a contract and one who receives it only as security. One who purchases outright places himself in the stead of him from whom he purchases. The money he pays represents the value of the property itself, plus the rights of the vendor in the contract. The assignee, being in the shoes of the vendor, must be considered as having taken the title to the property in order that he may comply with the terms of the contract made between the vendor and vendee. The very transaction itself indicates that it was the intention of the parties to transfer the title to the property covered by the contract. Such is the rule of the case of the State Bank of Black Diamond v. Johnson, supra. An assignment of such a contract to a purchaser is, in effect, in the nature' of a bill of sale cover
But one who takes an assignment of the contract only for the purpose of security is in no true sense a purchaser either of the contract or of the property covered by it. He receives only the right to collect and apply to the payment of the debt secured the money which the vendee has obligated himself to pay. When the debt which the assignment is given to secure has been discharged, the interest of the assignee in the contract is also discharged, and he must surrender it to his assignor. The purpose of the assignment having been accomplished, the interest of the assignee in the contract necessarily ceases. The very nature and purpose of the transaction negatives the idea that the assignee receives the actual title. It follows from what we have said that the appellant could not maintain this action on the ground of its ownership of the truck as alleged in its complaint.
But it is argued by the appellant that, since the contract itself provided that Waterhouse & Company should have the right to retake possession of the truck in the event the Millers failed or refused to make the payments, and since this contract was assigned to the appellant, the latter must have taken the right which previously existed in Waterhouse & Company to take possession on default of the Millers. This argument is plausible, but we think it is not sound. The right of possession of the truck belongs to the person holding-the reserved title, and the one right is necessarily tied to and follows the other. Because the appellant
But appellant cites the case of Western Lumber Exchange v. Johnson, 110 Wash. 200, 188 Pac. 388, as holding directly to the contrary of what we have said. Let us see if it does. That case involved the sale of an automobile under conditional sale contract and the assignment of the contract to the Western Lumber Exchange, which was the plaintiff in the action. Among other things in the opinion, we said:
“It is next contended that the court erred in rendering judgment for respondent as the testimony showed the conditional sale contract was taken as security only. The conditional sale contract reserved the title in the vendor; and the fact that respondent guaranteed the payments neither added to nor detracted from the rights and obligations of appellant under the contract. By the terms of the contract the vendee [appellant] agreed that the vendor had the right to assign the contract; and when the vendor, for a valuable consideration, assigned his right under the contract, that assignee became entitled to all the rights of the former owner. That is according to the terms of the contract, and the only defense here, as already noticed, is one of general denial.” •
We have re-examined the record of that case with a view of applying its law to the facts of this case. One English sold the automobile to Johnson, the defendant in the case, the sale being by the usual conditional sale contract. English assigned the contract to the Western Lumber Exchange, as a purchaser and not for se
But appellant argues that an assignment of such a contract is at least in effect a pledge or mortgage of the truck itself. We think what we have already said disposes of this contention. But if the assignment could be construed to be a pledge it would not be good as against the respondent because there was no delivery of the thing pledged, and there can be no valid pledge; without delivery. As a mortgage, it could not be good as against an innocent purchaser, because the lien would be a secret one, there being no mortgage executed and none, of course, put of record to furnish either actual or constructive notice. We must, therefore, bold that the appellant had no such interest in the truck or contract as that it could maintain this suit.
The appellant asserts that “these contracts are very widely used in. this state and they are almost universally accepted by the banks of the state as security for advances,” and that “the greater part of the automobile business of this state is undoubtedly transacted in this manner,” and that, “in view of this universal reliance upon the validity of such assignments,” we should be slow to make them ineffectual. Our answer is two-fold; first, that we do uphold such assignments, but not to the extent contended for by the appellant;
For the reasons given, the judgment is affirmed.
Main, C. J., Mackintosh, Holcomb, and Mitchell, JJ., concur.