Opinion
03-13-1901
HIOBIE v. ROGERS.
John D. Carton, for complainant. C. E. Cook, for defendant.
Injunction by Samuel Higbie against William J. Rogers to restrain a sale of chattels under a mortgage and to be allowed to redeem. Injunction denied.
John D. Carton, for complainant.
C. E. Cook, for defendant.
EMERY, V. C. (orally). The bill in this case is filed by the mortgagor of chattels for an injunction to stay the sale under a chattel mortgage given to secure the payment of part of the purchase money, on account of the failure of title to some of the chattels, and to redeem the mortgage after settling in this court the amount to be deducted by reason of this alleged failure of title. The property sold and mortgaged consisted of the stock of goods in a drug store at Asbury Park, or connected with its business, and the claim for deduction includes three classes of items, covered by the bill of sale and mortgage: (1) A deficiency in the number of bottles; (2) failure of title to one of four soda-water sprays; and (3) failure of title to a soda-water apparatus called "Tufts Apparatus."
For the reasons I have already intimated. I do not think there is any defense to the chattel mortgage by reason of the claim for deduction on account of a deficiency in the number of bottles, or on account of the soda-water spray alleged to belong to Mrs. Harris. As to the number of bottles, I hold that the defense cannot be sustained, for the reason that, if there had been the deficiency alleged, that deficiency should have been called to the attention of the seller within a reasonable time after the purchaser's taking possession, so that the seller could have had the opportunity to verify in some way the number of bottles, and so protect himself. The seller does not seem to have ever had such opportunity. He says that he did not know of any question of this kind until more than two years after the sale, and certainly did not know of the objection in time to make an examination for verification. It is not a very large amount, but, if there was any deficiency (and the complainant may be perfectly honest in his claim that there was a large deficiency), the complainant has not established it in a way that entitles him, after this lapse of time, to make a deduction from the mortgage. So in reference to one of the soda sprays which is included within the four soda sprays mentioned in the schedule. This is a written bill of sale, and it contains an express warranty of title of all these goods. It is not necessary to go into the question of what was said at the time of the sale about whether the vendor owned it or whether he did not own it. The vendor had in his possession at the time of the sale four sprays, and he delivered them all overto the purchaser, and he warranted his title to all four. Now, it is said by the purchaser that the title to one of them is not in the vendor, and was not at the time of the sale, but the purchaser still has the spray in his possession, and has not been disturbed in such possession. No demand has been made on him by anybody to return it, and under the case of Wanser v. Messier, 29 N. J. Law, 256, decided by the supreme court, there cannot be any deduction from the purchase price, in an action for the purchase price, unless eviction is shown or possession disturbed by title paramount. That deduction cannot be allowed, but failure to allow it here will be without prejudice to the action for breach of warranty of title, if it ever comes in question.
There is more question about the Tufts soda-water apparatus, because that was not in the possession of the complainant at the time. But, on the other hand, it was not understood to be in his possession. It was known then to both parties that the apparatus was at Belmar, in the possession of other parties, and that it originally came into their possession under a contract of purchase made between them and the vendor. The complainant says that the defendant assured him that it was originally put there on an agreement for purchase by installments, and that the proposed purchasers had failed to make the payments of installments as agreed upon, and that, therefore, the agreement was broken, and the apparatus belonged to the vendor. I do not understand the vendor's statement to be very substantially different from the complainant's, except that the defendant (the vendor) now says that the agreement of purchase was forfeited because, by the agreement, the payment was to be made in July, and the payment was not made until September. Well, that is a pretty sharp way of construing a contract of forfeiture, and it would not receive much consideration from a court of equity, because, if the agreement was forfeited for nonpayment in July, the defendant had no right to accept payment in September, after the due date relative to forfeiture, and still claim the forfeiture. I think, so far as relates to the warranty of title to chattels which were not in possession, the rule in reference to the purchaser's obligation to show an eviction or disturbance of his title cannot be extended in his favor further than this. In an action for the purchase price, or on a bill to foreclose a mortgage given for the purchase price, of the property not in the possession of the vendor, and the title of which is warranted, if the purchaser is not required to show that the title has been decided adversely to the warranty, by an action in which the title was involved, and that the seller has had notice of that action, so that he could have defended it, the purchaser's rights cannot go further than to claim that, if he is entitled to set up the defense in the action for the price, he must show satisfactorily in this action that there is a failure of title, and that he cannot hold the property against the true owner. The difficulty in doing that in this case is this: The purchaser himself took a payment after the date of this sale from these persons who held the machine. Complainant says that he demanded the machine. I do not know whether that demand was made before or after this payment,— the evidence on this point is not definite,— but he took that payment. Now, the question of title depends upon the character of that payment, and whether it was paid to the complainant as rent, or whether it was paid to him as part of the purchase money of the machine by the persons who claimed to have bought it on installments. The Belmar Company are not parties to this suit, and are not bound by it at all, and it does not appear just exactly what their situation was in reference to these payments. I mean, how much had been paid before. According to Mr. Higbie's evidence, they claimed to have paid $200 before, and this payment to Higbie was, as they claimed, the last payment on that machine. Kissner, a former officer of the company, says that there is still $100 due. Now, the fact that the complainant himself, after this purchase, dealt with this property, as to which he now says he had no title under this bill of sale, as if it was in some respects, at least, his own, changes the situation that the vendor and purchaser occupied at the time of the sale and under the bill of sale. If the complainant did not get title to the apparatus by the bill of sale, then on the failure of title he had a right to sue his vendor for breach of warranty of title. As to liability on the covenant of warranty, it did not make any difference that the property was out of vendor's possession, for there was a written warranty. If vendor has property in his possession, and delivers it on a verbal sale, then there would be a warranty, without any writing, by implication; but, if there is a written warranty, the seller may, if he chooses, warrant the title to something that is out of his possession, and that the warranty was intended to reach. The statements made ouside of the bill of sale, if they can be considered in this case, show that both parties meant the warranty to reach this property in question, and to guaranty the vendor's title to that, and that, if there was any trouble about the title, the seller would defend it. But, that being the case, the vendor has the right to a defense of his title as it stood at the time of the sale, and if there has been any change in the title by reason of what has occurred since, and has been done by the complainant himself, the vendor has a right to have the effect of that tried in an action between the Belmar Company and his purchaser. For that reason, in this case I shallhave to send the complainant to the trial of his title at law to the apparatus by an action to recover the machine as his machine, and to be brought against the Belmar Company, of which he can give the defendant notice, in order to hold him on his warranty, if it is not delivered. If, on such action, it appears that the complainant has not changed the status of the title by reason of his own transactions since the sale, and he has no title by the bill of sale, why, then, he will be entitled to hold the defendant on his warranty of title, and to recover damages. If the complainant's present statement is right, that he got that $50 as rent for that machine, and as rent only, and not as advancement on account of a purchase, then he has got the title already, for the payment of rent admits his title. There is, as it seems to me, if this be the whole case, no difficulty about complainant's getting the machine at once from his tenants. His title is admitted by the payment of rent, and the person who has got the machine, if he paid money to complainant as rent, and rent only, cannot any more refuse to deliver the property than a tenant could contest the title of his landlord, and refuse to deliver possession to his landlord at the end of the term, after paying rent. The payment of rent is an admission of title that is absolutely conclusive, and tenants are estopped after they pay rent from saying to the person to whom they pay the rent that he has no title to the property. So that if the complainant's statement is true, that this was paid as rent and rent only, and under no other agreement, then his title to the property is admitted, and, no failure of title being shown, no deduction should be made. If, on the contrary, it is claimed by the Belmar Company that the payment of the $50 was a payment made and received in continuance of the original agreement of purchase, which was still an outstanding valid agreement binding upon Rogers and the Belmar Company, and that it was a payment which Higbie was either bound or entitled to receive, without affecting Rogers' warranty of title, this is evidently a question which Rogers is entitled to have decided in an action on his warranty. In such action he may, as I am now inclined to think, require that eviction or failure of title be shown by an adverse action. But, without undertaking to decide or express an opinion in advance as to the proofs necessary in an action at law, I only say now that the failure of title to the Tufts apparatus has not been satisfactorily shown, and therefore there can in this suit be no deduction on that account from the purchase-money mortgage. This conclusion, proceeding, as it does, upon an examination of the character of the evidence relating to the title, in the absence of an eviction shown by adverse proceedings, is more liberal to the complainant than the rule applied in reference to deductions from purchase-money mortgages, on failure of title to real estate conveyed with warranty. As to these, the rule is settled that eviction, actual or constructive, or suit pending at the time, must be shown in order to defend against or stay the foreclosure of such mortgages. See O'Brien v. Huffish (Err. & App.) 22 N. J. Eq. 471, and cases cited in Zabriskie v. Baudendistel (N. J. Ch.) 20 Atl. 163, 165, affirmed on appeal (1802) 50 N. J. Eq. 453, 26 Atl. 455. Different considerations may govern, perhaps, as to the mortgages of personal property, but no rule can be adopted less strict than that the failure of title must be so satisfactorily shown that the vendor has no right to try the title at law in an action for breach of warranty. In Hoffman v. Chamberlain (Err. & App.; 1885) 40 N. J. Eq. 663, 5 Atl. 150, the evidence as to failure of title was of this character, and the court passed upon the question of title, and made a deduction, without any previous adverse adjudication of the title at law; the question of the necessity of such adjudication apparently being, however, not raised or considered. This case also decides that the rule of deduction, where title to part of the property has failed, is the difference between the value of the entire lot and the value of the remaining portion after deducting those articles, title to which did not pass. The complainant's evidence in this case proceeds upon the theory that the deduction is for the value of the articles as to which title has failed, but, inasmuch as the point was raised by the defendant, I do not rest my conclusions on the ground that there is no proper evidence on which to base the deduction to be made.
The evidence in this case is not sufficient to establish satisfactorily any such failure of title to the Tufts apparatus as relieves the complainant from the duty of establishing the defective title regularly by proceedings at law, in an action on the warranty or otherwise, and therefore no deduction can be made from the mortgage on that account. The bill in this cause being a bill to redeem the chattel mortgage, and offering to pay the balance found due, a decree will be advised fixing the amount due on the mortgage, that the complainant pay the amount due within a time to be fixed, and that, on failure so to pay, the bill be dismissed. The complainant must pay defendant's costs.