Opinion
Decided June 8, 1931.
Conditional sales — Tender or refund upon repossessing property — Section 8570, General Code — Inapplicable to property taken by constable in replevin — Substantive rights governed by law of state where contract made — Ohio statute, requiring refund, inapplicable to Pennsylvania bailment lease — Storage costs improperly assessed in attachment, when — Pleading — Demurrer admits material averments true.
1. Reviewing court determining whether court properly sustained demurrer must assume material averments of petition were true.
2. Where conditionally sold property has been taken by a constable against whom replevin is brought by seller or his assignee, no tender of amounts paid on contract is necessary, since rights of parties to moneys involved are determinable in the replevin action (Section 8570, General Code).
3. Substantive rights of parties to contract are governed by law of state where made.
4. Statute of Ohio requiring refund to purchaser under conditional sales contract by one taking possession of goods held inapplicable to bailment lease made in another state (Section 8570, General Code).
5. Where plaintiff in attachment case did not recover in municipal court and did not file appeal bond which would take up attachment, court improperly assessed costs of storing attached property against defendant.
ERROR: Court of Appeals for Lucas county.
Messrs. Meck Meck and Mr. W.C. Knisely, for plaintiffs in error.
Mr. A.J. Croll, for defendants in error.
These causes grow out of the same transaction and have been argued together.
August 19, 1929, Emma L. Jenkins and William G. Jenkins brought suit in the municipal court of Toledo against E.L. Nichols for damages for breach of a contract for cartage. Personal service of summons was made upon the defendant. On the day of the filing of the petition, an order of attachment was issued, and on the same day attachment was levied upon two trucks, a Reo and a Willys-Knight. A motion to dissolve the attachment was thereafter overruled, and upon trial to a jury, a verdict was returned and judgment entered in favor of the defendant in the sum of $143.74 on September 18, 1929. On appeal taken to the court of common pleas, that court dismissed the appeal for the reason that the appeal bond had not been given in at least double the amount of the appraised value of the property attached. Error was prosecuted to this court, and in the case of Jenkins v. Nichols, 36 Ohio App. 267, 173 N.E. 47, this court reversed the judgment of the court of common pleas for the reason that, as an appeal bond had been given for more than twice the amount of the judgment and costs, but less than the appraised value of the attached property, the court of common pleas could not lawfully dismiss the appeal but could only order the attachment dissolved and the attached property released. After reversal and remander to the court of common pleas, that court ordered that an additional bond should be given within a named period, and that in default thereof the attached property should be released from detention and returned to the defendant. The additional bond was not given. Upon retrial of the cause in the court of common pleas there was a verdict and judgment in favor of the plaintiff in the sum of $2 and costs, but the court included in the judgment for costs expense of storage incurred in the attachment proceedings in the municipal court.
September 5, 1929, the C.I.T. Corporation brought an action against Wilbur S. Morse, as marshal of the municipal court of Toledo, and Emma L. Jenkins and William G. Jenkins, and on the same day the Reo truck was taken under a writ of replevin. After appraisement, the plaintiff gave a replevin bond and took possession of the Reo truck and still has possession thereof, no redelivery bond having been given. Upon trial of the replevin cause in the municipal court, there was a judgment against the plaintiff in favor of the defendant Wilbur S. Morse in the amount of $1,600, for the value of the chattel property taken on replevin, and against the plaintiff and in favor of Emma L. Jenkins and William G. Jenkins in the amount of $800, as damages, on the ground that the right of possession and property was found by the jury to have been in the defendants. An appeal bond was filed and the replevin cause taken to the court of common pleas, and in that court a demurrer was sustained to the second amended petition, and final judgment was entered in favor of the defendants.
The plaintiff in error the C.I.T. Corporation prosecutes error to the judgment of the court of common pleas in the replevin case, contending that the court of common pleas committed prejudicial error in sustaining the demurrer to the second amended petition, and the plaintiff in error E.L. Nichols prosecutes error to the judgment in the attachment case, contending that the court of common pleas erred in adjudging against him expense for storage of the attached property.
In the former proceeding in error the question is presented whether the second amended petition states facts sufficient to constitute a cause of action. It appears from that pleading that the Arbuckle Company, of Erie, Pennsylvania, leased and delivered to one E.L. Nichols, in the city of Erie, Pennsylvania, one Reo truck under a written lease for one year, wherein said E.L. Nichols agreed to pay as rental for said truck the sum of $2,639.84, and the said E.L. Nichols paid upon the rental the sum of $815 in money and trade allowance, and executed a promissory note for the balance, payable in twelve equal monthly installments, it being agreed in said lease that the title to said property was to remain in the Arbuckle Company until the payments were made, provided, however, that E.L. Nichols could exercise the option to purchase said property. The lease also contained a provision for the acceleration of the payments by lessor's electing to declare all of them due upon default in one or more payments, or in case the chattel was removed or attempted to be removed from the state of Pennsylvania. It further alleges that the Arbuckle Company, for a valuable consideration, assigned and transferred its interest in the contract of lease to the C.I.T. Corporation, at Erie, Pennsylvania, and that a certificate of title evidencing the amount due the C.I.T. Corporation in the sum of $1,824.84 was duly filed on August 13, 1929, with the department of revenue of the commonwealth of Pennsylvania, in accordance with the laws of the state of Pennsylvania. Then follows the allegation that E.L. Nichols did remove the property, without the consent or knowledge of the plaintiff the C.I.T. Corporation, to the state of Ohio, and that said property was thereupon attached on August 19, 1929, under a writ of attachment issued by the municipal court of Toledo, and was seized by the defendant Wilbur S. Morse as marshal of the municipal court. The second amended petition also contains the following averments with reference to Pennsylvania law:
"Plaintiff says that it is provided by statute duly enacted and in force in the State of Pennsylvania, and known as the Uniform Conditional Sales Act, that said lease agreements, as contained herein, are valid and binding upon all the parties thereto, or other persons, and that said lease agreements are not governed by the laws governing conditional sales agreements, but that the title to said property remains at all times in the lessor.
"It is further provided by the decisions of the courts of the State of Pennsylvania, to-wit: Stern Co. v. Paul, 96 Pa. Super. 112 (decided March 1, 1929), that said lease agreements are defined as a bailment lease, and are clearly distinguishable from a conditional sale agreement, and that the title to property under said agreements remains in the lessor.
"Similar to the holding of the court in the above entitled case has been the decision of the Supreme Court of the State of Pennsylvania in the cases of Leitch v. Sanford Motor Truck Company, 279 Pa., 160, [123 A. 658]; Root v. Republic Acceptance Corp., 279 Pa., 55, 57 [123 A. 650]; Hoeveler-Stutz Company v. Cleveland Motor Sales, 92 Pa. Super., 425; Comm. v. Williams, 93 Pa. Super., 92, and other decisions of the Supreme Court of said state. Said cases further held, and it is not (now) the law of said State of Pennsylvania as promulgated by its court of last resort and its statutes, that the mere fact that the bailee has an option to purchase the property during or at the expiration of the lease, does not transform the transaction into a conditional sale.
"It is further provided that no tender back of a portion of the lease price is necessary upon the lessor retaking the property from the lessee."
The plaintiff then further sets forth in the pleading that E.L. Nichols, under the laws of the state of Pennsylvania, was merely a bailee of the truck, and that the defendants unlawfully withheld the truck from the possession of the plaintiff, and also sets out that the attachment was dissolved by failure to give proper appeal bond in the municipal court, and that the defendants have no right to retain possession of the property.
For the purpose of determining whether prejudicial error was committed in sustaining the demurrer, we must assume the material averments of the second amended petition to be true. It is contended that this pleading is insufficient in law, because it is not alleged therein that plaintiff made tender or refund as required by Section 8570, General Code. By the terms of this section, a vendor under a contract of conditional sale, or one standing in his shoes, may not take possession of the property sold without tendering or refunding to the purchaser the money paid on the purchase price, after deducting therefrom a reasonable compensation for the use of the property and damage thereto, if any, which in no case should exceed 50 per cent. of the amount paid; but no such tender or refund is necessary unless the amount paid exceeds 25 per cent. of the contract price. The rule is the same where the property is leased with provisions in the lease permitting the lessee to gain title to the property upon payment of a given number of installments of rent. Such a lease is, under the law of Ohio, a conditional sale. It is claimed that under the law of Pennsylvania the contract alleged was not a contract of conditional sale.
We shall first assume, for the purpose of inquiry, that the contract was a contract of conditional sale, and that Section 8570 applies, because it relates to the procedure only, as has been held. Wurzel v. S. Delph's Sons, 15 C.C. (N.S.), 75, 23 C.D., 365, affirmed without opinion, S. Delph's Sons v. Wurzell, 89 Ohio St. 445, 106 N.E. 1076.
It has generally been held in Ohio that where the legal proceeding in which possession is taken by one retaining title under a contract of conditional sale is of such a nature that the rights of the party entitled to a tender or refunder can be determined in that action, a tender or refunder is not necessary, because the retaking referred to in the statute does not apply to a retaking in a court action of such a character. Weil v. State, 46 Ohio St. 450, 455, 21 N.E. 643; Speyer Co. v. Baker, 59 Ohio St. 11, 51 N.E. 442; National Cash Register Co. v. Cervone, 76 Ohio St. 12, 80 N.E. 1033; Parker Appliance Co. v. Co-Operative Machinery Co., 110 Ohio St. 255, 143 N.E. 891; Tischler v. Seeley, 14 C.C. (N.S.), 236, 238, 12 C.D., 750.
This rule has been held to apply in a replevin case. In Tischler v. Seeley, supra, the court uses the following language: "Now, so far as Section 4155-3, Revised Statutes, and under that Section 2 is concerned, which provides that the vendor of property conditionally sold can not retake possession without repaying part of the price paid, that is, he must tender or refund the sum or sums of money so paid after deducting therefrom a reasonable compensation for the use of such property, which shall in no case exceed fifty per cent. of the amount so paid, Tischler was not the purchaser of the property, but, assuming that he stood in the shoes of Searle, so far as the repaying of these sums is concerned, the Supreme Court in Weil v. State, 46 Ohio St. 450, 455 [21 N.E. 643], expressly hold that the requisites of this section of the statute as to the refunder of the money paid do not apply where the property is taken by legal process; it only applies where the party takes possession of the property without resorting to the courts. Where it is by legal process, by replevin suit, foreclosure of chattel mortgage, or by suit on contract or conditional sale contract, where the rights of the parties can be adjudicated by the court, that tender is not necessary." That cause was affirmed by the Supreme Court, without opinion, in 60 Ohio St. 629, 54 N.E. 1110.
We think it makes no difference in the instant case that the possession of the property was in the constable. E.L. Nichols was a party to the attachment case, and money tendered or refunded to the constable and accepted by him would have been held in the stead of the attached property.
In the case of Albright v. Meredith, 58 Ohio St. 194, 50 N.E. 719, a suit was brought for the amount due upon the conditional sale contract, judgment obtained, and levy made upon the property covered by such contract, and in such a case there would be no opportunity to adjust the amount which should have been tendered or refunded.
The failure to make tender or refunder before beginning the replevin suit is not fatal, as such matter can be taken care of and the amount to be refunded determined in that suit.
Was the contract of lease made in Pennsylvania a contract of conditional sale, so that Section 8570, General Code, would apply where possession of the goods is taken in Ohio?
We have considered the question as if Section 8570 applied, and have found that, if it does, replevin lies without making tender or refund previous to bringing suit. Let us now consider whether that section does apply.
In the instant case the contract was made in Pennsylvania, and so far as the substantive rights of the parties were concerned they would be regulated by the law of that state. Plaintiff, in the second amended petition, avers that under the law of Pennsylvania the transaction was not a conditional sale, but a bailment lease, under which the lessee holds the property as bailee with option to purchase the same. The law thus pleaded as a fact was admitted by the demurrer. For the purpose of determining the demurrer, the contract was not a conditional sale under the law of the state where made, and therefore Section 8570, although procedural, can have no application.
For the reasons given we think the court committed prejudicial error in sustaining the demurrer as to the second amended petition.
As to the case of E.L. Nichols v. Emma L. Jenkins et al., here under consideration, we are of the opinion that the court erred in assessing costs of storing the attached property against the defendant below E.L. Nichols. The plaintiff in the attachment case failed to recover in the municipal court and did not file an appeal bond which would take up the attachment. After the court of common pleas ordered that upon failure to give additional bond in the amount of $1,300, within the time named, the attached property should be released from further detention and returned to the defendant, the additional bond was not given, and the attachment was therefore discharged. The plaintiff, having failed to sustain the attachment, was not entitled to recover costs made on the attachment.
In the case of C.I.T. Corporation v. Wilbur S. Morse et al., the judgment of the court of common pleas will be reversed for the reasons given, and the cause will be remanded with directions to overrule the demurrer to the second amended petition and for further proceedings according to law.
In the case of E.L. Nichols v. Emma L. Jenkins et al., the judgment of the court of common pleas, in so far as it relates to adjudging costs of storage in the sum of $119.50 against the defendant E.L. Nichols, will be reversed for the reasons given, and the cause remanded for further proceedings not inconsistent with this opinion.
Judgments reversed and causes remanded.
LLOYD and RICHARDS, JJ., concur.