230 P. 374 | Mont. | 1924
delivered the opinion of the court.
In 1911 T. H. Thibodeau and Sue R. Thibodeau, his wife (now Sue R. O’Brien) executed and delivered to the First National Bank of Missoula a deed for certain real property situated in Missoula county, and later executed and delivered to the bank a correction deed. There is not anything before us to indicate what error was intended to be corrected by the second deed, and a further reference to it need not be made. The original deed was duly acknowledged and recorded and, though it purported to convey the property absolutely, it was in fact intended as security only; but for what debt or obligation does not appear. The Garden City Garage, a corporation of which Thibodeau and wife were directors and the principal stockholders, became indebted to the bank, and later Thibodeau and wife sold their interest in the garage to one Hugh Kennedy. This was the situation on February 28, 1919, when Thibodeau and wife executed and delivered to the bank an instrument in writing designated herein “Exhibit X,” in form a letter addressed to the bank in which reference is made to the deeds, the book and page where the original deed is recorded, which declares that the bank held the property as security for the debts of the Garden City Garage, and contained the following provision: “It is further understood and declared that you hold said property in said deeds described in the same way and to the same extent as if said property had been duly and regularly mortgaged to secure said debts, obligations, claims and demands aforesaid.”
Later Thibodeau and wife repurchased the business of the Garden City Garage and were conducting it and selling automobiles at retail when the transactions out of which this litigation arose were had. During August, September and October, 1919, wholesale dealers in automobiles shipped ears to the Garden City Garage, and in each instance sent to the bank the bill of lading with a draft attached, with instructions to de
“In consideration of the sum of one dollar to them in hand paid by the First National Bank of Missoula, it is hereby agreed by the undersigned, that the property referred to in the within letter is and shall be held by said bank as security for the payment of the indebtedness referred to in said letter and also as security for the payment to said bank of all debts and obligations, either direct or indirect or to become due, or which may be, at any time hereafter, be created from the Garden City Garage, a corporation, or from the undersigned individuals to said bank and that said property referred to in said letter shall be held by said The First National Bank of Missoula as security for all present and future advances to and indebtedness from said the Garden City Garage, and the undersigned individuals. The term indebtedness includes all liability, either direct or collateral, as maker, endorser, or otherwise.
“Dated this 6th day of September, 1919.
“T. H. Thibodeau.
“S. It. Thibodeau.”
On November 22, 1919, the bank took possession of some of the automobiles and advertised them for sale at public auction, but before the date of sale arrived an agreement was entered into by which the Garden City Garage was constituted the agent of the bank and authorized to sell the property at private sale, paying over the proceeds to be credited upon the notes. The automobiles were sold and the proceeds
The trial court held that plaintiff is entitled to recover the balance due upon the notes; that the original deed and Exhibits X and Z constitute a mortgage which secures such balance; and that plaintiff is entitled to have the mortgage foreclosed. From the judgment defendants appeal and present for review two questions only: (1) What effect is to be given to each of the notes, and (2) what right, if any, did plaintiff secure by Exhibit Z when considered with Exhibit X and the original deed?
I. It is the contention of counsel for defendants that each note is a conditional sale contract, that plaintiff had an election of remedies, and, when it elected to retake the property and sell it, it abrogated the contract, hence may not maintain this action for any deficiency.
When we speak generally of a “conditional sale,” we refer to a sale in which possession is delivered to the buyer but the seller retains title until some condition is performed, usually the payment of the purchase price. (24 R. C. L. 440.) Under this simple character of contract, upon a default by the buyer, the seller (a) may treat the contract as abrogated and retake the property, or (b) he may retake the property, treat the contract as existing, but broken by the buyer, and maintain an action for damages occasioned by the breach, or (c) he may waive the breach and insist upon payment of the purchase price. (Madison River Live Stock Co. v. Osler, 39 Mont. 244, 133 Am. St. Rep. 558, 102 Pac. 325.) But there is no prescribed form for a conditional sale contract, and experience
In each of the notes before us the parties in express terms declared that upon a breach by the maker, the bank might treat the sale as absolute and recover the purchase price, or it might retake the property, sell it and apply the net proceeds of sale upon the note, and if it chose the second alternative and the net proceeds realized were insufficient to discharge' the debt represented by the note, the maker would “immediately pay any balance then remaining unpaid upon said note, as the agreed balance due as and for the use, rental and depreciation of said property up to the time of its taking as aforesaid.” This last provision is not contrary to any statute, nor does it contravene any principle of public policy. Since the parties were competent to contract and did so freely, it is not the province of this court to act as guardian for the maker and say it shall not be bound to do what it agreed to do. Indeed, the provision is strictly in accordance with the rule of damages in such cases. (Harkness v. Russell, 118 U. S. 663, 30 L. Ed. 285, 7 Sup. Ct. Rep. 51 [see, also, Rose’s U. S. Notes].)
Counsel for defendants direct our attention to court decisions from other jurisdictions which hold that, by taking possession of the property and selling it, the conditional vendor elects to treat the contract as at an end, hence may not recover for the balance remaining unpaid even though the conditional vendee agrees to pay such deficiency. But it is idle to cite those authorities, for whatever may be the rule in other states, our statute expressly recognizes the right of a conditional vendor to enforce a provision of this character. (Sec. 7597, Rev. Codes.)
Jordan v. Peek, 103 Wash. 94, 173 Pac. 726, cited and relied upon by counsel for defendants, is entirely in harmony with the view which we have expressed. In that case the Lindquists, conditional vendees, were constituted the agents of the Jordans; hence possession by the Lindquists was the possession of the Jordans, the conditional vendors.
The section cannot have any application here, for possession of the automobiles in question was delivered immediately to the Garden City Garage, the conditional vendee. ^
We direct attention to the fact that section 7597 was enacted after the decision in Madison River Live Stock Co. v. Osler was rendered; and whereas section 7599 refers to a conditional sale where possession of the property remains in the vendor, section 7597 refers to the rights and liabilities of the parties where possession is delivered to the vendee.
Upon the theory adopted by the defendants themselves, the plaintiff was entitled to maintain this action. But we agree with the trial court that each of the notes is essentially a chattel mortgage, rather than a conditional sale contract. Plaintiff, a national banking corporation, was engaged in loaning money — not buying and selling automobiles. The Garden City Garage was engaged in the automobile business, buying
When Exhibit X was executed, and likewise when Exhibit Z was written, the legal title to the property in controversy was in the bank, but held as security only, and no reason can be
But it is urged: (a) That the original deed, considered as a mortgage, had expired prior to the time Exhibit Z was executed; and (b) that the debts secured by the deed and Exhibit X had been paid prior to the execution of Exhibit Z. Section 8267, Revised Codes, provides that a mortgage of real property duly executed and recorded is good and valid as against the creditors of the mortgagor or owner of the land, or subsequent purchasers or encumbrancers from the date it is recorded until eight years after the maturity of the entire debt or obligation secured, and no longer, unless extended in the manner therein indicated. The section has been construed by this court in Berkin v. Healy, 52 Mont. 398, 158 Pac. 1020, and Morrison v. Farmers & Traders’ State Bank, 70 Mont. 146, 225 Pac. 123. The statute, however, has no application to the facts presented by this record, since there is not anything before us to indicate when the indebtedness secured by the original deed became due or that the debt secured by the original deed and Exhibit X had been paid; on the contrary, Exhibit Z recites that the land should be held
The judgment is affirmed.
Affirmed.