
    Common Pleas Court of Montgomery County.
    North British & Mercantile Insurance Company v. Uriah G. Garber.
    Decided, January 19, 1927.
   SNEDIKER, J.

This is an action in replevin in which the plaintiff claims to be the owner of and entitled to the possession of one 1925 Nash two-door sedan automobile, factory nnm-ber 64911, motor number 4906. Plaintiff claims that this automobile is wrongfully detained by the defendant. These allegations the defendant denies.

The plaintiff prays for the restoration and possés'sion of what it claims is its property, and for $250 damages, on account of detention.

The defendant prays that the action be dismissed; that he be declared and adjudged by the court to be the legal owner and entitled to the rightful possession of the machine, and for all other and proper relief.

We do not find it necessary to specially discuss' the questions which have been made in the case with respect to case number 51666 in this court, bearing the'same title as the instant case. We direct our attention, then, to the agreed statement of facts which has been filed by the parties, and which is to the following effect:

That on April 24, 1925, the Jackson Motor Car Company, of Provo, Utah, was the owner of the automobile referred to in plaintiff’s petition, and that it did on that date deliver this car to M. R. Yant, at that place, under a contract of what is termed by counsel a conditional sale. This contract is attached to the agreed statement of facts and will- be referred to in discussing the law of the case. There will be taken up particularly the provisions of that contract which include those contained in the agreed statement of facts.

The contract entered into by Yant and the Jackson Motor Car Company was assigned to the Auto Securities Company, and by the latter it was subsequently assigned to this plaintiff. It provides by its terms that Yant was to pay tó the vendor, the Jackson Motor Car Company or its assigns, the sum of $1,114.47 in monthly payments of $92.87, beginning on the date of the execution of the contract. None of these payments have ever been made. The assignment to the Auto Securities Company reads as follows :

“For value received we hereby guarantee the payment of the within note, and hereby waive presentment, demand, protest and notice of non-payment, and consent that the payment of this note may be extended from time to time without affecting our liability thereon, and we hereby assign, transfer, and set over unto the.- Auto Securities Company all our right, title, and interest in and to the within contract and the property described therein.”

Yant, without the knowledge or consent of the Jackson Motor Car Company or of the Auto Securities Company, removed the automobile from Utah to Ohio, contrary to the expressed provisions of his contract. Thereafter Yant sold and delivered the car in this state to C. W. Zimmerman for a valuable consideration.

Zimmerman had no knowledge or notice of the contract entered into between the Jackson Motor Car Company and Yant. On the 26th day of May, 1925, Yant’s bill of sale to Zimmerman was executed, and on the 12th day of August, 1925, Zimmerman sold the car to Uriah Garber, this defendant, giving him a bill of sale therefor. Both Zimmerman’s bill of sale and the Garber bill of sale were filed with the clerk of Miami county. Garber paid $1,150 to Zimmerman for his bill of sale.

It was the understanding of the original parties to the contract that it was to be performed in the state of Utah, where conditional sales contracts are not required to be filed or recorded and the retention of title and other provisions of such contracts are by the laws of Utah given full force and effect against all persons although such contracts are not filed or recorded. Under the laws of the state of Utah bills of sale are not required to be given when automobiles are transferred.

The title claimed by the plaintiff is in pursuance of the transfer and assignment made for a valuable consideration to it on the 8th day of September, 1925, by the Auto Securities Company. Garber, at the time of receiving the bill of sale, was put in possession of the automobile and so contnued until it was taken from him by the sheriff of this county in replevin. It was thereafter re-delivered to him upon his execution as required by law of a re-delivery bond. At the time of the purchase of the machine Yant paid to the Jackson Motor Car Company the sum of $500. At the commencement of this action the plaintiff tendered the defendant the sum of $250 on the theory that the contract entered into was a conditional sales contract, and one-half of the money paid ought to be returned under our statute at the time of the retaking of the property. This tender was refused.

It seems to us that the most important question in this case is as to the nature of the instrument of April 24, 1925; and, having determined that, the next question is as to the rights of the parties under that instrument.

It has been conceived by counsel for both plaintiff and defendant, and is so stated in the agreed statement of facts that the contract then entered into is a conditional sales contract. The original copy of this instrument has been attached to the agreed statement of facts, and we do not regard it as improper, therefore, for the court to make up his own mind as to the character of the document. In doing this we wish to call especial attention to certain of its terms, as follows:

“For value received I promise to pay to the Jackson Motor Car Company, or order, in gold coin of the United States of America, payable in installments as follows:” (Thereupon follows a recital of twelve different notes each for the sum of $92.87 due at monthly periods from May 24, 1925 to and including April 24, 1926.)
“Together with interest in like gold coin at the rate of twelve per cent per annum on each installment from its maturity.
“If any of the said installments are not so paid, the whole sum of both principal and interest to become immediately due and collectible at the option of the holder thereof. And in case suit or action is instituted to collect this note, or any portion thereof, I promise to pay such additional sum as the court may adjudge reasonable as attorney’s fees in said suit or action, and expressly waive the provisions of and all benefit and advantage from any and all appraisement, homestead, stay, and exemption laws now existing or hereafter made.
“The above note is given upon the purchase price of the following described automobile. * * *
“It is further understood and agreed that if default be made in the payment of any installment of principal or interest of the above note, or in case of failure to make any payment therein provided when due, or if the vendee shall fail to comply with any of the agreements thereof * * * the vendor or assigns may declare the entire amount unpaid upon said note at once due and payable, and may without notice or demand, at any time take .possession of said property wherever found and remove same to such place as the vendor or assigns may deem advisable, and retain the same as his own property, or may sell the same with or without notice at public or private sale, and apply the proceeds of such sale upon the above note, less the expenses of the taking possession of said property, removing and holding the same, and a reasonable attorney’s fee, and in such case'the vendee hereby agrees to immediately pay any balance then remaining unpaid upon the above note after the application of the proceeds of such sale.
“Should any loss, damage, or injury result to the said property from any cause whatever, such loss, damage or injury shall not relieve the vendee from the obligation to pay the above note in full.”

In view of the foregoing we have been unable to agree with counsel that the document of April 24, 1925, should be regarded as a conditional sales contract. The most recent case, and following a number of decisions in the same state bearing upon the same question, is that of the Burroughs Addition Machine Company v. Wieselberg, 230 Mich., p. 15; decided in 1925. In that case the Supreme Court of Michigan say:

“If an instrument presents a case of security in the nature of a chattel mortgage, then it is to be held,, when the rights of third parties intervene, ’ to come within the law relating to the recording of such an instrument.”
“The question as to whether an instrument is in the nature of a chattel mortgage turns upon whether, with rights and remedies thereunder, express or implied, or by operation of law, it provides security for the unconditional payment of an obligation assumed with reference to chattels.
“A pure conditional sale gives possession of chattels with the right to ownership upon payment of the agreed price, retaining title in the seller with right of reclamation in case of default, or the alternative of passing the title by suit for the purchase price.

The right to retake the property sold, retain payments made, estimate wear and tear, compute damage and look to the buyer.for deficiency in the agreed price is consonant only with remedies under instruments providing for security in the nature of chattel mortgage; for in such case the security is but an incident of a debt absolutely due from the buyer to the seller.

“The vendor is not entitled to the title and possession of the property sold, and to be paid for it also.
“The charcter of an instrument is to be determined from its terms, from a consideration of rights and remedies stipulated therein or allowed by law as between the parties, and to some extent in the light shed by the circumstances surrounding the transaction.
“If the seller is not limited to the right to retake the property and retain the payments made, but after reclamation may enforce payment of the remainder of the full agreed price, and the instrument is so worded as to permit this to be done, then the courts will recognize it for what it is in fact and law, security in the nature of a chattel mortgage.
“If the title is retained as security for the payment of the full price and the obligation to further pay is not abated by a retaking of the property and retention of partial payments, then i't is not a pure conditional sale, Put an undertaking in the nature of a chattel mortgage.
“Instruments giving the seller the rights and remedies of a mortgagee against the buyer and chattels the subject of sale if rights of third persons do not intervene, but so colored as to be employed in support of a claim of conditional sale only when rights of third persons do intervene are ab inito instruments in the nature of chattel mortgages.
“It is fair to assume that the seller intends to employ every available remedy open under the law, and it is equally fair to adjudicate with such in mind, in determining the nature of the sales instrument.”

These syllabi are amplified in the decision which closes as follows:

“A reading of our decisions will disclose that in the application of the rule we have determined the intent of the instrument in each case from the language employed, the rights and remedies granted, or open under the law to the vendor against the vendee and the chattels, and have considered concurrent and subsequent acts of the vendor indicative of the true purpose of the contract.”

This decision is clearly applicable to the contract before us, and we do not hesitate to regard it as the law of this case.

Let us now consider whether, if this contract be regarded in its essence as a chattel mortgage, the plaintiff may in this court say that at the commencement of this action it was entitled as against this defendant to the immediate possession of the automobile which is here the subject of controversy. One of the things disclosed by the agreed statement of facts and the instrument itself is that it has never been filed in the county where the mortgagor resided at the time of its execution or in any other place in the state of Utah; but there is nothing to inform us as to whether or not such filing is necessary to the validity of a chattel mortgage in that state. But whether it is or is not, the lack of such filing is a variance from the law of Ohio so important as to affect the right of the plaintiff to here enforce its contract as against a citizen of this state who has become a bona fide purchaser of the automobile.

It is hardly necessary for us to refer "to Sections 8560-8565 of the General Code, but we feel that it is important to quote Section 8560:

“A mortgage, or conveyance intended to operate as a mortgage, of goods and chattels, which is not accompanied by' an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, subsequent purchasers, and mortgagees in good faith, unless the mortgage, or a true copy thereof, be forthwith deposited as directed in the next succeeding section.”

It is axiomatic that no state will enforce a contract although valid where it was made, if its enforcement is contrary to the policy of the forum.

As stated in the case of Corbin et al v. Peter Houlehan, in the 100 Me. Rep., p. 246:

“It is a fundamental and elementary rule of the common law that courts will not enforce illegal contracts, or contracts which are contrary,to public policy, or which are in contravention of the positive legislation of the state. To the general rule that the question whether a contract is a legal or illegal one, is judged by the law of the state or country in which it was made, and that a contract good where made is good everywhere, there are some exceptions 'the most important of which is, that where the contract violates the positive legislation or the established public policy of the state of the forum, it will not be enforced in that state, although perfectly valid and legal according to the laws of the state or country where it is made.”

In the case of Emery v. Burbank, Executor, 183 Mass., page 326, Judge Holmes, then on the Supreme Bench of Massachusetts, and now a member of the Supreme Bench of the United States, said:

“A contract valid where it is made is valid everywhere, but it is not necessarily enforcable everywhere. It may be contrary to the policy of the law of the forum. Or, again, if the law of the forum requires a certain mode of proof, the contract, although valid, can not be enforced in that jurisdiction without the proof required there. This is as true between the states of this Union as it is between Massachusetts and England. Hoadley v. Northern Transportation Co., 115 Mass., 304, 306. Pritchard v. Norton, 106 U. S., 124, 134. Downer v. Chesebrough, 36 Conn., 29. Kleeman v. Collins, 9 Bush. (Ky.) 460. Fant v. Miller, 17 Grat., 47. Hunt v. Jones, 12 R. I., 265, 266. Yates v. Thomson, 3 Cl. & Fin., 544, 586, 587. Bain v. Whitehaven & Furness Junction Ry., 3 H. L., Cas., 1, 19. Leroux v. Brown, 12 C. B., 801.

In the 46 Okla., p. 453 (Marx et al v. Hefner), the second syllabus is:

“Where a contract in a foreign state is sought to be enforced in another state, the lex loci contractus controls the question of the legality of the contract, unless otherwise provided in the contract and in the laws of the state where the contract was made will be observed in determining the rights and obligations of the parties, and effect given thereto, unless such foreign laws are irreconciliable with the local law, or in conflict with the established policy of the enforcing state, provided such laws of the foreign states are pleaded and proven.”

The decisions we have just quoted are consistent with those of our own courts.

In the case of Kanaga v. Taylor, 7 O. S., p. 134-142, the language of the Supreme Court is:

“It is a general rule of international law, that the rights of the parties to a contract, as distinguished from their remedies, are to be determined by the law of the place where the contract is to be performed. If a contract be made in one state or country, and it appears upon its face that it is to be performed in another, it will be presumed that the contract was entered into with reference to the laws of the latter, and those laws will be resorted to in ascertaining the validity, obligation, and effect of the contract. This general rule, however, has its exceptions; one of which is, that where a contract is declared void by the law of the state or country where it is made, it can not be enforced as a valid contract in any other, though by its terms, it was to have been performed there. So, if the law of another government is in conflict with our own system of jurisprudence, or contravenes the policy of our government, there is no rule of comity or of international law which imposes on us the least duty to observe it.”

The third syllabus of this case reads:

“By the law of comity between different states, the lex loci contractus controls as to the validity and construction of personal contracts, though not as to the remedy or rule of evidence; nor where it clashes with the rights of our own citizens, or the policy of our own law.”

The case from which we have just quoted is further approved by the Supreme Court in the 106 O. S„ at page 466.

Consistent with the foregoing is the decision of the Ohio Circuit Court of Columbiana County in 15 O. C. C. Rep. (N.S.), p. 75-80, in which decision the Circuit Court refers to the 65 O. S., 321-340; the 183 U. S., 263; and quotes the syllabus in Wardsworth v. Harris, 129 U. S., 355, as follows:

“Although a court of one state will give effect to the law of domicile of another state, yet this is a mere principle of comity between the courts, which must give way when the statutes of a country where property is situated, or the established policy of its laws, prescribe to its court a different rule.”

And they say, in closing their case:

“The statute of Ohio which we have quoted above establishes a very different rule in this class of cases as we have seen, and such statute we think must be held to establish the policy o'f this state in regard to the same, and the law of West Virginia being in conflict with the settled policy of our own law, as enacted by the Legislature, can not be enforced by our own courts.”

It does not appear to us, therefore, that regarded as a chattel mortgage the plaintiff is entitled to a remedy on account of this contract in this state against this defendant.

The law of Ohio does not encourage a secret lien, which this becomes when subjected to the requirements of our code. On the face of this record, and considering the agreed statement of facts, we can only find that if this contract is valid at this time in the state of Utah, the law of Ohio is in irreconcilable conflict with the laws of that state. Comity does not require the court to make a finding for this plaintiff and against this defendant under these conditions.

Our finding is therefore for the defendant.  