
    Speyer & Co. v. Baker.
    
      Sale of chattel property — To be paid for in instalments — Title to remain in vendor until certain amount paid — Rights of vendor and of vendee— Sections 7913-72, 73, Revised Statutes.
    
    1. Sales of chattel property, to be paid for in whole or in part in instalments, on condition that it shall belong to the purchaser when the amount paid thereon shall be a certain sum, or the value of the property, the title to remain in the vendor until such amount shall be paid, are, when made subsequent to the act of May 4, 1885, (82 Ohio Laws 238), now sections 7913 — 72, 73 of the Revised Statutes, governed by the provisions of that'statute ; and the rights of the purchaser, under the statute, are unaffected by the execution of a mortgage on the property, at the time of the sale, to secure instalments of the purchase price.
    2. Where a purchaser at such sale has made payments on the property, he is entitled to its possession, though in default as to other instalments, until there shall be refunded or tendered back the amount so paid, less a reasonable compensation for the use of the property and for any damage done to it while in his possession ; and the amount which he is so entitled to have refunded should be awarded him as damages when the property is taken in replevin at the suit of the vendor.
    (Decided October 11, 1898.)
    Error to the Circuit Court of Hamilton county.
    The original action was replevin brought by Speyer & Co., against Margaret Baker, before a justice of the peace in Hamilton county, to recover possession of a lot of household goods. In the court of common pleas, on appeal, where issue was joined on the plaintiffs’ right of possession, the verdict and judgment were in their favor. That judgment was reversed by the circuit court.
    The record shows that Speyer & Co., whose business was that of selling household furniture on the instalment plan, sold in that way, to the defendant, goods of that kind to the amount of $885.-55, on the thirty-first day of May, 1893, and, on the third of July, 1893, other goods of a like kind to the amount of $18.75. Upon the first of these purchases the defendant paid in cash the sum of $100.00, and agreed to pay the balance in weekly instalments of $7.50 each; and upon the other purchase she paid $5.00 in cash, the payment of the balance to be made in weekly instalments of $1.50 each. At the time of each sale a chattel mortgage was taken by the plaintiffs on the goods sold, which was duly filed in the proper office. These mortgages are alike in all respects except in the amounts and the description of the property. The following is a copy of the first one, omitting the description which is unimportant in the consideration of the case:
    “This agreement made and entered into this thirty-first day of May, 1893, by and between Margaret Baker, of Cincinnati, party of the first part, and Speyer & Co., of Cincinnati, Ohio, of the second part. Witnesseth, That the said party of the first part, in consideration of eight hundred and eighty-five and fifty-five one-hundreths dollars, to her paid by Speyer & Co., the receipt of which is hereby acknowledged, does hereby bargain, sell and convey to the said Speyer & Co., and assigns, the following described personal property, now situated and being in and located at 104 Garfield Place, city of Cincinnati, county of Hamilton, state of Ohio, to-wit: (Here follows a description of the property.)
    ‘ ‘ To have and to hold the same to the use of the said Speyer & Co., and assigns. Provided, nevertheless, that, whereas, the said party of the first part is indebted to the said Speyer & Co., in the sum of eight hundred and eighty-five and fifty-five one-hundredths dollars. Now, if the said party of the first part shall pay to said Speyer & Co., at their office in said city of Cincinnati, the said sum of eight hundred and eighty-five and fifty-five one-hundredths dollars; one hundred dollars thereof at once, and the balance in weekly instalments of seven and fifty one-hundredths dollars each, payable on Saturday of each and every week, commencing for the first payment on June 17, 1893, except as herein mentioned below. It is hereby understood and agreed that, aside from the above agreement, said Margaret Baker, party of the first part, shall, on September 1, 1893, pay to Speyer & Co., party of the second part, the sum of one hundred dollars, said amount to be credited to this mortgage, until the said sum of eight hundred and eighty-five and fifty-five one-hundredths dollars is paid, then this conveyance shall be void, otherwise to be and remain in full force. And the said party of the first part hereby agrees that in case of default of payment of any weekly instalment, on the day on which it shall become due, the whole sum then unpaid on this agreement shall in such case immediately become due and payable.
    “And the said party of the first part covenants and agrees that she will insure the said property for not less than eight hundred and eighty-five and fifty-five one-hundredths dollars, and keep the same insured during the continuance of this agreement, and if she neglects or fails to do so, then the said Speyer & Co., may insure the same at the expense of the undersigned; and in case of loss, if any, payment shall be made to the said Speyer & Co., for the uses and purposes herein mentioned; that she will not permit the said property, or any part thereof, to be injured, spoiled or damaged; that she will keep the same in good order and repair ; and that she will not sell, pledge or otherwise dispose of said property, or any part thereof, or attempt to do so. And the said party of the first part further covenants and agrees that on default of payment of any of said instalments or payments, or on any sale or pledge, or attempt to sell or pledge, or dispose of said goods and chattels, or any part of them, or to remove them, or any part of them, from the county, or from their location, or upon any seizure of them, or any part of them, by process of law, or upon any failure to comply with the said provisions as to insurance; or if the said Speyer & Co., shall at any time deem themselves in danger of losing the said property, or any part thereof, or if they shall at any time deem themselves insecure as to the safety or proper treatment of said property, or any part thereof, or upon any failure to keep such'Chattels in proper order and repair, or in case the said party of the first) part shall suffer such chattels to be injured, soiled or damaged, except the usual wear and tear; or in case said party of the first part shall fail or refuse to permit said Speyer & Co., or any of their agents, at any and all times, to see and examine said property; or upon any breach of any covenant or covenants of this agreement, then the said Speyer & Co. may, without demand, which is hereby waived, take the same into their possession, and dispose of them at any time thereafter, at public or private sale, as in their judgment may seem best, hereby waiving all demands for payment of the amount due on within agreement, and any and all notice of the time and place of said sale, and the said Speyer & Co. are hereby authorized at such sale to purchase such portion of said goods and chattels as they may deem best, and out of the proceeds of sale to pay : Fwst, The reasonable cost and expense of taking and keeping and selling the same, including attorney’s fees; Second, The amount of principal and interest that shall be due and unpaid thereon; Third, The balance, if any, to said party of the first part.
    “And the undersigned waives any and all notice of the exercise by Speyer & Co., of the rights reserved to them under this agreement.
    “In witness thereof, the said Margaret Baker has hereunto set her hand, the day and year first above written. Margaret Baker. ”
    The record also shows that the defendant paid her weekly instalments on both purchases, until her payments, including the amounts paid at the times of the purchases, amounted in the aggregate to the sum of $253.50. The last payment was made on the first day of November, 1893, when, becoming unable to pay further, she consulted counsel who sought an adjustment with the plaintiffs on the basis that she was entitled to a return of part of the amount she had paid before she could be compelled to surrender the property. The plaintiffs declined to entertain the proposition, and, without having paid or offered to pay the defendant any part of the sum they had received from her, brought the suit before the justice.
    
      It appears from the bill of exceptions that on the trial in the common pleas, evidence was given which fairly tended to prove that when the sales were made to the defendant, it was verbally agreed between the parties that the goods should remain the property of the plaintiffs until the purchase price should be fully paid, and should become the property of the defendant only upon such payment being made. Upon the conclusion of the testimony the defendant requested the court to give in charge to the jury each of the following instructions :
    “1. If the jury find from, the evidence that the transaction between the parties was in the nature of a conditional sale, i. e., that the goods were bought on the instalment plan, to be paid for in whole or in part in instalments, and that the purchaser, the defendant, was not to become the owner of them until paid for in full, even though, she did sign the instrument which purports to be a chattel mortgage, if signed at the time of the transaction; and if the jury find that she did actually pay for them in part in instalments, and that the plaintiffs took possession of the goods without tendering or refunding to the defendant the sum or sums of money so paid, or any part of them, you will find that the defendant was entitled to the possession of the property at the commencement of this suit, and your verdict shall be for the defendant.
    “2. If the jury find for the defendant — the right of possession in the property being the only interest claimed by the defendant — the jury will further determine the value of this possessory interest; and in estimating- the value of this interest, it will be necessary to consider the total amounts of money paid by the defendant to the plaintiffs in payment of the bill of goods, and deduct therefrom what the jury may consider, from the testimony, to be a reasonable compensation for the use of the geods, from the time the goods were purchased to the time they were taken from the defendant’s possession, which compensation shall in no ease exceed fifty per cent, of the total amount paid. The remainder, after the above deduction, will be the value of the defendant’s interest.
    “3. If the jury find for the defendant, they will also assess to her such damages for the taking and detention of said property as they think right and proper, and such other damages as the evidence may show were suffered by the defendant.”
    The court declined to give either of these instructions, and charged the jury:
    “That decisions had been rendered in the common pleas court holding that a chattel mortgage of the kind in this case does not come within the purview of sections 7913-72,73 of the Revised Statutes, and by which decisions the court felt itself bound, and therefore directed the jury to return a verdict for the plaintiffs with one cent (lc.) damages.”
    The defendant duly entered her exceptions to the charge, and to the refusal of the instructions requested. A verdict was returned in conformity with the charge, a motion for a new trial overruled, and judgment rendered on the verdict. That judgment was reversed by the circuit court for error:
    “In refusing to charge the jury as requested by the defendant below, and in directing the jury to return a verdict for the plaintiffs below.”
    
      The case is here for review on this record.
    
      Outcalt <& Graoiger and Barnsey, Maxwell do Barnsey, for plaintiff in error.
    In view of the decision of this court in Singer Sewing Machine Co. v. Caldwell, 55 Ohio St., 638, we submit this case in the belief that no abstract principle as to a chattel mortgage on every occasion of a credit sale was intended to be stated in the decision mentioned. Yet our own circuit court so understood that decision in deciding this case. Baker v. Speyer & Co., 12 C. C., 118; s. c., 5 Ohio Circ. Dec., 336.
    As we understand the decision of the circuit court in the Caldwell case (7 C. C., 460; s. c. 4 Circ. Dec., 680), the instrument it was construing, although called a mortgage, was essentially different from the instrument presented in our case.
    We think, therefore, that it is still an open question in this court whether the statute has reference to the familiar transaction which the Supreme Court of the United States in Heryford v. Davis, 102 U. S., 235, 243, in distinguishing a conditional sale contract, designates as £ £a mortgage back to the vendors. ”
    With the exception of the fifty per.cent, clause, and the reference to section 4152, our statute (O. L., 1885, vol., 82, p. 238), was copied substantially verbatim from the Missouri Statute of 1876, now sections 5180 and 5181 of the Missouri Statutes of 1889 ; and yet the Supreme Court of Missouri, has construed the act as not affecting a chattel mortgage. Wurmser v. Sivey, 52 Mo. App., 424; Daily v. Mfg. Co., 88 Mo., 301.
    It is a fact that it was many times decided by the common pleas court of Hamilton county, so as to have become an established precedent in that court, that the act of 1885 does not apply to a chattel mortgage.
    The title of the act declares its purpose to be to regulate “conditional sales,” and this court will presume that the legislature intended to use the phrase in its fixed legal sense. Turney v. Yoeman, 14 Ohio, 218.
    A purchase on condition that the title should remain in the vendor until payment of the stipulated price in full passed no interest to the buyer which was subject to execution for his debts; and if the vendor resumed possession, the vendee’s creditor could not acquire any additional right by tendering payment of the unpaid purchase money. Sage v. Sleutz, 23 Ohio St., 1.
    Not so with a mortgage. A mortgagor of chattels has an interest which is subject to execution and the execution creditor, by his levy upon the property, acquires a lien. He may redeem and may maintain an action to redeem and compel an account. Carty v. Fenstemaker, 14 Ohio St., 457; Morgan v. Spangler, 20 Ohio St., 38.
    A mortgagee of chattels who has obtained possession after condition broken is a debtor to the mortgagor for any surplus that may remain. Root v. David, 51 Ohio St., 29.
    A mortgagee may sue at law to enforce the agreement to pay by recovering judgment for theamount due, and satisfaction of such judgment restores the property to the mortgagor. But a vendor under a conditional sale contract has no such remedy ; his remedy is to take back the goods and keep as forfeited all that has been paid. Loomis v. Bragg, 50 Conn., 228.
    
      In trover by a mortgagee, the measure of damages would be the amount of the purchase price remaining unpaid ; but in trover by a conditional vendor the measure of damages would be “the whole value of the property. ” Collard v. McDonald 128 Mass., 470.
    It has long- been a principle of construction that when the question is whether the instrument is a conditional sale or a mortgage, whatever doubt there may be should be resolved in favor of its being a chattel mortgage. King v. Greves, 42 Mo. App., 168; Rapier v. Paper Co., 77 Ala., 126; Jones on Chattel Mortgages, 4th ed., sec. 30 ; Jones on Chattel Mortgages, 4th ed., sec. 33a; Tufts v. Haynie, 4 O. C. C., 494; s. c. 2 Circ. Dec., 668.
    That financial transactions of high importance, depending upon conditional sales of personal property, have heretofore occurred, and that credit sales of equal importance will have no adequate protection hereafter if such laws as our own statute of 1885 are to be held applicable to purchase money mortgag’es, may be well illustrated by the facts of such reported cases as: Rolling Stock Co. v. Railway, 34 Ohio St., 450 ; Case Mfg. Co. v. Garven, 45 Ohio St., 290; Hervey v. Locomotive Works, 93 U. S., 664; Fosdick v. Schall, 99 U. S., 233; Meyer v,. Car Company, 102 U. S., 1; Heryford v. Davis, 102 U. S., 235, and Harkness v. Russell, 118 U. S., 663.
    
      Chandes C. Benedict, for defendant in error.
    To determine who was entitled to the possession of the goods at the time the replevin proceedings were instituted, it is necessary to determine from the evidence what was the real nature of the transaction between the parties, and, if a sale of the goods within the statute be shown, either from the evidence offered or by construction of law, the plaintiffs’ right to them can not be maintained until at least fifty per cent, of the amount paid is refunded to the defendant as provided in the. conditional sale statute, unless the property was broken and actually damaged, when a reasonable compensation for such breakage and damage should be deducted. Weil v. The State, 46 Ohio St., 450.
    Now the record in this ease contains testimony tending to prove that this transaction was in fact a sale within the statute, the vendee never being vested with the absolute title; that such was the understanding of both parties at the time of the sale; that a statement was made by one of the vendors when the chattel mortgage was given, to the effect that the goods were theirs until paid for in full, when they would then belong to the defendant. Kendrick v. Beard, 81 Mich., 182; Jones on Chattel Mortgages, sections 23 and 24; Cornell v. Hall, 22 Mich., 377; McMillen et al. v. Bissell, 63 Mich., 69; Jones on Mortgages, section 324; Susman v. Whyard, 149 N. Y., 127; Pierce v. Robinson, 13 Cal., 116; Peugh v. Davis, 96 U. S., 332.
    From these cases and others to follow, it is evident that the form of a contract does not preclude inquiry into its real character, which may be only partly represented by the writing, or may be disguised or wholly concealed by it; and further that courts at all times seek to discover the intention of the parties, whenever that intention is not fully or truly represented by the written instrument. Coleman et al. v. Miller et al., 6 Bull., 199; s. c. 8 Dec. R., 179 ; Wilson v. Giddings, 28 Ohio St., 554; Patrick v. Littell, 36 Ohio St., 79; Sun Fire Office 
      v. Clark et al., 53 Ohio St., 414; Wright v. Bates & Miles, 13 Vt., 341.
    In some of the states these instalment houses have termed their contracts leases and the instalments paid as rent, and on default in payment, the lease should be deemed forfeited and possession of the property recoverable by the vendor without process of law, the purpose of such agreement being to prevent any creditor of the purchaser from levying on his interest in the goods. The courts have uniformly termed such contracts conditional sales. Cowan v. Singer Mfg. Co., 92 Tenn., 376; Hays v. Jordon, 85 Ga., 741; Preston v. Whitney, 23 Mich., 260; Hamilton v. Singer Mfg. Co., 54 Ill., 370; Hervey v. R. Is. Locomotive Works, 93 U. S., 672; Murch v. Wright, 46 Ill., 487; Gorham v. Holden, 79 Me., 317; Baldwin v. Van Wagner, 33 W. Va., 293; Lucas v. Campbell, 88 Ill., 447; Hine v. Roberts, 48 Conn., 267.
    From the foregoing we contend that if the courts have the power to look under the cover, as it were, and detect a device in one case, they have it in another, if the same can be discovered, especially when the object of the investigation in both cases is identical, viz., the intention of the parties; and that since the law permits proof to be offered and considered in al] cases in order to get at the real transaction, it was error in refusing to consider the testimony in the case at bar, tending to establish a sale within the statute, and this testimony should have been submitted to the jury under proper instructions.
    The court erred in charging that a chattel mortgagegivenunder the circumstances in this case does not come within the purview of the conditional sales statute. Smith v. De Vaughn, 82 Ga., 574.
    
      As conclusive authority upon this point we especially rely upon the case of Singer Mfg. Co. v. Caldwell, 55 Ohio St., 638. This case presents identically the same set of facts as does the ease at bar. Preston v. Whitney, 23 Mich., 260.
    To hold that the taking of a chattel mortgage under the circumstances of this case would take the transaction out of the statute, is to allow the vendor to defeat the operation of the statute by a mere makeshift, and to permit the continuance of the evil the legislature sought to remedy.
    What the law was before this conditional sale statute was passed, what the mischief and the necessity that called forth the act, are fully set out in the case of Weil v. The State, 46 Ohio St., 454.
    How all these devices should be dealt with by the courts is forcibly laid down by Maxwell on Statutes, chap. 4, section 1, on “Construction to Prevent Evasion.”
   Williams, J.

The contention in this case relates to the applicability to the transactions involved, of the act of Ma}?' 4, 1885 (82 Ohio Laws, 238), now sections 7913-72, 73, of the Revised Statutes.

The statute, in terms, applies to all sales of chattels, “to be paid for in whole or in part in instalments, on condition that the same shall belong to the person purchasing the same whenever the amount paid shall be a certain sum, or the value of the property, the title to remain in the vendor until such sum, or the value of such property or any part thereof shall have been paid.” And, it is made unlawful for any vendor of chattel property so sold, “or his agent or servant, to take possession of said property without tendering or refunding to the purchaser the sum or sums of money so paid after deducting therefrom a reasonable compensation for the use of such property, which shall in no ease exceed fifty per cent, of the amount so paid, anything in the contract to the contrary notwithstanding, and whether such condition be expressed in such contract or not, unless such property has been broken or actually damaged, and then a reasonable compensation for such breakage or damage shall be allowed.' ’

There was' evidence at the trial, though it was not without conflict, from which the jury mig'ht have found that the sales made by the plaintiffs to the defendant of the property in question were conditional sales of the character defined by the statute; and the instructions which were requested, but refused by the court, were to the effect that, if the jury should find the sales to be of that nature the defendant’s rights under the statute were unaffected by the mortgages given to secure instalments of the purchase price of the property. The refusal to so charge, and the charge given, appear to be placed upon the ground that the mortgages rendered the statuté inapplicable; and that is the position taken by counsel for the plaintiffs in error, who express some apprehension that any other holding would discourage sales on credit, and unsettle chattel mortgage securities. We see no good ground for giving the mortgages the effect claimed for them, nor any sufficient cause for the apprehension expressed. Bona fide absolute sales of chattel property are not within the operation of the statute; neither are mortgages made in good faith to secure the purchase price of property sold at such a sale, nor mortgages made in good faith on property owned by the mortgagor to secure a valid debt arising otherwise than upon a conditional sale of the property. But the rights of parties to all conditional sales of personal property, as defined by the statute, are controlled by its provisions ; and we find nothing in the statute which indica,tes an intention that those rights should be changed or affected in any way by the vendor taking a mortgage on the property. On the contrary, the statute appears to have carefully guarded against that result. It preserves in explicit terms, to the purchaser at such a sale, the benefits of its provisions even ag'ainst express stipulation in the contract to the contrary, and though the contract be put in such form that the conditional character of the sale is not shown. The policy of the statute in this respect seems manifest. Purchasers on this plan are usually persons of small means, and unable to pay except in instalments; and such sales are, partly on that account, made at prices in excess of those charged in other cases. Payment of part of the instalments may amount to more than the actual worth of the property; and, on account of the unconscionable advantage which the vendor would otherwise have, by takingthe property and retaining the money paid, the legislature deemed it proper to adopt the equitable rule of adjustment prescribed by the statute. That rule when properly observed will, we believe, be found fair and just to both parties. At all events, it enters into and becomes a part of every contract of conditional sale made after its adoption, as much so as if expressly embodied therein. And it is obvious that the statute would fail of its purpose if any instrument which the vendor might choose to exact at the time of the sale, could preclude an inquiry into the real nature of the transaction, or deprive the purchaser of the benefit of its provisions.

It is urged that the defendant in this case is sufficiently protected against a forfeiture of the property by accounting clauses in the mortgages which require the plaintiffs, on sale of the property by them, to pay the defendant any balance that may remain after the satisfaction of their claims. If these clauses were given that effect it is not perceived how they could prevent the application of the statute to the transactions between the parties, if they were in fact conditional sales within its meaning, or affect the rights of the parties under it. But, the accounting clauses are accompanied with others which authorize the plaintiffs to take the property from the possession of the defendant whenever they deem it necessary, and, without notice of any kind to sell the same at private sale to themselves for any price and upon any terms they may choose to fix. These necessarily render nug-atory the accounting clauses; for, as the sale would take place without notice there would be no bid but that of the plaintiffs, and it is unlikely that would exceed the balance of their claim. The formality of a sale could amount to nothing but an idle ceremony. Nor, is it apparent how, under any contract of conditional sale, the continued dominion and control of the vendor over the property could be more complete and absolute than was retained by the plaintiffs under these mortgages, nor what beneficial ownership was vested in the defendant beyond that of any conditional vendee. But these and other clauses of the mortgages are important only as they may serve to throw light on what was the true character of the sales.

The eases of Wurmser v. Sivey, 52 Mo. App., 424, and Dailey v. Singer Mfg. Co., 88 Mo., 301, cited by-counsel, do not raise the questions presented in this case. There was nothing present in either of those eases except an absolute sale and a mortgage for part of the purchase money. The holding is that: “Where there is an absolute sale and the vendor of chattels receives part of the purchase price and takes a chattel mortgage to secure the unpaid balance, sections 5180 and 5181, Revised Statutes, 1889, have no application to the transaction, and upon default the mortgagee can replevin the goods without tendering back the sum paid on the purchase price. ’ ’

By our statute, in cases of conditional sales, a purchaser who has made one or more payments upon the property is entitled to its possession, notwithstanding his failure to make further payment, until the seller refunds or tenders back the amount so paid, less a reasonable compensation for its use and for any damage to it. The compensation allowed the seller for the use of the property is in no case to exceed fifty per cent of the amount received by him from the purchaser. The sum which the purchaser is so entitled to have refunded, constitutes the value of his right of possession, and should be awarded him as damages when the property is taken in replevin at the suit of the vendor before the amount has been refunded.

Judgment affirmed.  