282 N.W. 827 | Minn. | 1938
1. Defendant corporation challenges the right of the plaintiff to recover a deficiency judgment against it and contends that it did not assume the obligation of Ness's contract. On this point the trial court made the finding that it did assume the contract, and we believe this conclusion was justified by the evidence. The assumption of such an obligation is essentially a matter of contract. The undertaking need not be express but can be, as here, implied. Stevens, Corporations, § 188, p. 755. The evidence showed that the corporation used the cash register from December, 1935, to April, 1936. It also showed that the corporation paid the January 15 installment on the purchase price. At this time it was using the register. We think this is sufficient to sustain the finding below.
Since the plaintiff is a creditor beneficiary of a third party contract, it can recover on the obligation from the defendant. St. Paul Foundry Co. v. Evenson,
2-3. The further contention is made that by bringing the replevin action before it started foreclosure plaintiff made an election which precluded it from foreclosing, and defendant cites Ahlers v. Jones,
This conditional vendor's lien is equitable in nature rather than the conventional common-law seller's lien, which requires that the seller be in possession. See Ahlers v. Jones,
The essence of a conditional sale is security for the seller while the beneficial use is in the buyer. We see no reason why, upon default of the buyer, the seller cannot resort to this security interest as the basis to predicate a lien against the chattel. Consequently the remedy of foreclosure is available unless it was barred by the replevin action. Under our law as it now stands a suit by the conditional vendor in which actual possession of the property is gained is a bar to the assertion of his other remedies. Minneapolis Harvester Works v. Hally,
The conditional seller should not be prejudiced by his efforts to obtain the property in order to salvage all that can be realized. Such a procedure protects him from depreciation or abuse of the property in the hands of the buyer who is in default. It would be highly impractical for the seller to proceed by foreclosure without possession until the cause could be heard in the regular course of the district court calendar.
4. The lower court permitted the plaintiff to recover a deficiency judgment. We believe that the better view is that as an incident to the foreclosure a deficiency judgment may be recovered. Matteson v. Equitable M. M. Co.
5. It is argued, however, that the ordinary principles applicable to the usual conditional sales contract are not applicable because of the following clause in the contract:
"The purchase price, less any payment thereon, shall, at your option, immediately become due and payable, upon refusal of undersigned to accept the register when tendered, or to make any cash payment, or to execute and deliver the note or to make any payment provided for therein; you, or any person authorized by you, if you so elect, may immediately repossess the register, and retain as rental for use of said register while in the possession of undersigned, all payments, theretofore made."
The defendants contend that according to the contract plaintiff's rights are limited to a retention of the payments as rent where the vendor takes possession. We cannot agree. Contrary to the defendants' position, this provision did not operate to render the contract of sale simply a lease. The real intention of the parties is apparent from the instrument. It is evident a sale was intended.
The right to retake the property and retain the payments as "rental" was optional. The obvious purpose of the provision respecting "rental" was to accomplish by contract the right to retain payments made under the contract if and when the seller pursued the remedy of repossession of the chattel. Most courts hold that the buyer who defaults cannot recover payments made to the seller when the latter repossesses the property in satisfaction of his claim. Vold, Sales, p. 290, § 96; Livingstone v. Havens,
Therefore we hold that the clause does not constitute a limitation. The confusion evidenced by the defendants' argument arises from a misunderstanding of the nature of repossession when it is accomplished as an incident of the foreclosure. Possession is not obtained through the assertion of the remedy of repossession, although predicated upon the same right, but it is procured as one of the steps in the lien foreclosure proceedings. Consequently the clause respecting rental does not come into operation because the remedy to which it is applicable has never been invoked by the plaintiff.
It necessarily follows that the judgment of the trial court foreclosing the lien and allowing a deficiency judgment was correct.
Affirmed. *156