Hamilton v. . Highlands
56 S.E. 929
N.C.
1907
Check Treatment
WalKEr, J.,

after stating the case: This ease has some peculiar features. The plaintiff has recovered a sum of money greatly in excess of the value of the property involved, and, in the second place, the judgment is directly contrary to his own theory of his rights, as stated in the complaint. A demand so extortionate as the one he now *283 mákes should not receive any favor from the Court, nor should the judgment recognizing and enforcing it be permitted to stand for one moment, unless the law most clearly sanctions it and imperatively requires, that it should be upheld. We are fully convinced that it does not, for it looks to the real intention of the parties and construes their contract accordingly, without much, if any, regard to the name by which it is designated or to the particular language employed. It seeks to do equity ■ and avoid oppression. Its motive is justice and not generosity. It follows that the courts, in determining whether or not a contract is one of bailment or one of sale, with an attempt to retain a lien for the price, in effect a mortgage, do not consider what description the parties have given to it, but what is its essential character. It was a mere subterfuge to call this transaction a lease, and' the application of that term to it in the written agreement of the parties does not in law change its real meaning. A contract like the one upon which this suit was brought has been held by a very large majority of the courts of this country to be, in substance, a conditional sale, although in the form of a lease (and so called) or of a bailment for use, with an option to purchase. 6 Am. and Eng. Enc. Law (2 Ed.), 447, and note 6. Special reference is made to the following cases as being directly in point: Baldwin v. Wagner, 33 W. Va., 293; Kimball v. Post, 44 Wis., 471; Murch v. Wright, 46 Ill., 487; Ott v. Sweatman, 166 Pa. St., 217. This Court has steadily adhered to this just and equitable construction of such contracts. Puffer v. Lucas, 112 N. C., 377; Crinkley v. Egerton, 113 N. C., 444; Clark v. Hill, 117 N. C., 11; Barrington v. Skinner, ibid., 47; Manufacturing Co. v. Gray, 121 N. C., 168; Thomas v. Cooksey, 130 N. C., 148; Wilcox v. Cherry, 123 N. C., 79. In the case last cited, at pp. 82 and 83, it is said: “We are *284 satisfied from a bare inspection of tbe paper itself that it was intended to be a conditional sale, and was put in the form of a lease to avoid the registration laws, or possibly to work an unjust forfeiture, neither of which can meet our approval. Both are frauds in law. The common intent was evidently a sale of the machinery in such a way .as to secure the purchase-money. This seems evident to us from the face of the instrument itself, even if we exclude all testimony. We cannot imagine that a business man of common sense would rent property upon exactly the same Terms upon which he could buy it, and we do not find any rule of interpretation which requires us to place upon a contract a construction which would indicate that at least one of the contracting parties was mentally incapable of contracting.” And in Hervey v. Locomotive Works, 93 U. S., 664, the principle is thus stated: “The transaction (is not) changed by the agreement assuming the form' of a lease. In determining the real character of a contract, courts will always look to its purpose rather than to the name given to it by the parties.” A similar contract was held in Thomas v. Goohsey, supra, to be a conditional sale, although it did not expressly confer any right to purchase. If the contract between the parties, as expressed in the writing, be substantially one of conditional sale, the fact that the purchase-money is denominated as “hire” or as “rent,” and divided into sums payable at various periods throughout the term of credit, will not render the transaction one of bailment for hire, so as to subject it to the law of bailments instead of the law of conditional sales or mortgages. Cottrell v. Bank, 89 Ga., 508.

The contract described in the pleadings is substantially like the one which was construed in Wilcox v■ Cherry, and we hold now, as was held then, that it was clearly intended to be a conditional sale. This being so, the case of Puffer v. Lucas is direct authority for holding that the defendant *285 has the right to redeem the property by paying the amount due, with interest and costs, and in default of such payment to have the property sold and the proceeds applied to the payment of the debt and interest thereon and the costs, and the surplus, if any, paid do him, thus treating the contract as, in equity, a mortgage. "Whether it be considered as a contract of sale with a clause of forfeiture or defeasance, a mortgage or a conditional sale, the proper relief is that demanded by the plaintiff upon the allegations of his complaint, by which it is properly construed as giving the defendant the right to redeem.

But it is contended by the plaintiff’s counsel that the defendant had the right to elect to treat the contract as a lease and to terminate it or to avail himself of the forfeiture at any time by surrendering the property and refusing to pay the instalments (Puffer v. Baker, 104 N. C., 148; Puffer v. Lucas, 112 N. C., 377) ; that he had elected to do so in this case and was bound by that election, so that he could not now ask to redeem. The answer to this contention is that the election had to be made before the full time for payment of the instalments had expired (Puffer v. Baker, supra), and it was not, in fact, made until after the expiration of that time, nor until the answer in this case was filed. Besides, the Court did not grant the motion by which the election is said to have been made, nor did the plaintiff accept the proposition contained therein, that the defendant be permitted to surrender the property and lose what he had paid and then be discharged from any further liability. On the contrary, the Court submitted issues which were framed upon a theory of liability quite different from that by which the defendant proposed to settle the case and which went far beyond it. It cannot fairly be argued that he should be es-topped by his election to treat the contract as a lease, without considering the other branch of his offer, namely, that he *286 be released from further liability upon surrendering the juojDerty and giving up to the plaintiff what he had already paid. The two must be coupled and taken together. But neither the plaintiff nor the Court accepted his offer, and therefore there was no binding election. It would indeed be hard measure to hold him estopped by a rejected offer.

The verdict of the jury in its essential features is not unlike that in Puffer v. Lucas and the same relief should be awarded in this as was awarded in that case. There is this difference between the cases, which is in favor of the defendant, that in Puffer v. Lucas the plaintiff sued for the possession of the property, treating the contract as a lease, while in this case the plaintiff asks for a foreclosure, treating the contract as a mortgage. We are, therefore, giving him precisely the relief he has demanded and according to his own construction of the contract, as will appear from the allegations and prayer of his complaint.

We find, in considering this case and the authorities bearing upon it, that Foreman v. Drake, 98 N. C., 311, has been overruled, so- far as it is in conflict with the cases we have cited. Wilcox v. Cherry, 123 N. C., 79; Thomas v. Cooksey, 130 N. C., 148. In connection with the citation of that case, it may be well to add that we do not mean to imply by what we have said that parties, when acting in good faith, cannot make a valid lease with an option reserved by the lessee to purchase. Wilcox v. Cherry, supra. The form of the contract must not, though, be used merely as a cloak or cover to conceal the real nature of the transaction, which will always be determined by the Court according to the intent of the parties, to be gathered from their language or from what they really meant.

The jury have found that there has been “no damage to the property by detention or deterioration” — that is, that there has been none for which the defendant is liable. Apart *287 from this finding, there is no material fact found by the jury which is not admitted in the pleadings. The admitted facts of a case are, of course, not issuable. The value of the property at the time of the seizure by the Sheriff, in the view we take of the ease, becomes immaterial. The eighth issue embodied a question of law, or rather a conclusion of law, from the admitted facts. The verdict does not, therefore, stand in the way of the relief to be administered, but may be considered with the facts admitted.

. Our conclusion is that the property be sold by order of the Court below, and out of the proceeds there be paid the costs and expenses and the balance of the debt due by the defendant — that is, the purchase-money specified in the contracts ($605), less the payments thereon. The surplus will be paid to the defendant. If there is any deficiency, judgment will be entered against the defendant for it. Puffer v. Lucas, supra. Whatever damage the plaintiff may have suffered from the detention or deterioration of the property since the time to which the verdict relates, and for which the defendant is liable, may be recovered by him upon the bond given by the defendant. The plaintiff may have process issued to put him in possession of the property, if he desires it and thinks it will avail him anything, as he is entitled to the possession whether the contracts are conditional sales or mortgages, the term of credit having expired. Moore v. Hurt, 124 N. C., 27; Hinson v. Smith, 118 N. C., 503; Kiser v. Blanton, 123 N. C., 400. But whether he or the defendant has the possession, the property must be delivered, on demand, to the commissioner appointed by the Court to sell it.

Let the judgment of the Superior Court be modified so as to conform to this opinion. The plaintiff will pay the costs of this Court.

Error.