S. L. & J. H. Brewster vs. Baker, 16 Barb. 613

By the Court, Johnson, J. It is a well established principle, that where the owner of property stands by, and sees another sell it as his own to a bona fide purchaser, and makes no objection and gives no notice of his rights, he will be held to have sanctioned the sale, and will not afterwards be permitted to assert his title, as against such purchaser.

And the same rule I apprehend prevails, where the owner is informed of a sale of his property by another upon credit, and does not object to it or give the purchaser notice of his rights, but lies by and permits such purchaser to pay the purchase money as it becomes due, to the vendor, and receives the whole or a portion of it from the vendor. The defendant purchased the boat in question from Sidney B. Thompson, who had it in possession and who informed him that he, Thompson, was the owner and that there were no incumbrances upon it.

He gave Thompson another boat in exchange, and $660 or $670 as boot money, part of which was paid down and the residue secured by note payable at a future day. This was about the middle of June, 1850. On the 21st of June, Thompson sent the plaintiffs $200 of the money received, and on the third or fourth of July following saw one of the plaintiffs and informed him of the sale to the defendant, and that he was to have more money from the defendant, which he, Thompson, would send the plaintiffs. The defendant after this paid Thompson $200, which he paid the plaintiffs on the 13th of July.

The .plaintiffs made no objection to the sale, as far as appears, and gave no notice to the defendant of their claim until the 16th of October, when they demanded the boat. Under these circumstances it seems to me they must be held to have consented to the sale, and are estopped from asserting their title, against the defendant. When informed of the sale and that part of the purchase money was still to be paid by the purchaser, they should have objected, and given notice, and not lain by and permitted him to pay the money supposing he had acquired a good title.

Having done so, and received the money or a portion of it, it is too late for them to claim the property. Their remedy is upon Thompson, who was in privity with them and was ostensibly the owner. On this ground alone I am of opinion the judgment should be set aside and a new trial granted. But unless I have mistaken the character of the instrument under which the plaintiffs claim as assignees, it is in effect a chattel mortgage, and not a mere executory contract to sell and give title conditionally. It purports to be an instrument inter partes, although it is in fact signed by one only.

It is true it contains a stipulation that the party of the first part shall upon payment of the stipulated price, execute and deliver to the party of the second part a bill of sale of said boat. And there is also a stipulation that the instrument shall not be so construed as to give the party of the second part or his assigns any right in or title to the boat, furniture, &c. except the right to possess and use, until the payments shall be fully made. But we must see what is the legal effect of the various provisions of the instrument.

Courts are not bound by the construction the parties agree shall be put upon a contract, when such construction is manifestly contrary to the legal effect of all its provisions, and the rights of third persons have intervened. By the second clause of the instrument it is stipulated that the party of the second part shall have the possession and use of the boat, &c. unless he shall make default in the payment of the purchase price or some part thereof, or shall do or attempt to do any of the acts prohibited by the instrument.

In which case it is provided, the party of the first part may take possession of said boat, &c. and hold the same, subject to the. provisions thereinafter contained. These provisions are contained in the fifth clause, and give the party of the first part the right, .upon default in payment, to take and sell the boat, <fcc. at public vendue, on giving such notice as is required in cases of sales of personal property upon execution.

The proceeds of the sale ■are to be applied to the payment of the balance due for, the price of the boat, furniture, &c. and the costs, expenses and time spent about the sale, and the residue is to be paid over to the party of the second part. "Whose interest in the boat was to be sold under this provision 1 Clearly that of the party of the second part. The avails were to be applied for his benefit until the debt was canceled, and the surplus paid over to him.

Certainly the party of the first part was not stipulating that his property in which the other party had no interest should be sold to satisfy the default of such other party, and to give the latter the benefit of the surplus. And yet such would be the result if the instrument is to be held a mere conditional sale. It is just the case of a sale upon a chattel mortgage by a mortgagee. The instrument has all the essential characteristics of a chattel mortgage.

The party of the second part, as the necessary legal result of the arrangement, took the title to the property, which he immediately transferred or mortgaged back, and agreed that his interest, which was a mere right to redeem the title from the other party, might be foreclosed and cut off in case of his default. This determines the character of the instrument, and distinguishes it from a mere agreement to sell and give title upon a condition to be performed.

The provision in regard to how the instrument should be construed in reference to the person in whom the right and title remained, was either ignorantly inserted, or designedly, with a view of disguising the real nature of the transaction and evading the statute. ■ [Monroe General Term, December 5, 1853. Welles, Johnson and T. R.

Strong, Justices.] These contracts for the sale of personal property, by which the title is attempted to be retained by the vendor while the possession and right to use are transferred to the purchaser, are liable to all the objections, and attended with all the mischievous consequences, of a conveyance of the title to a chattel by a vendor while he retains the possession and control, which the statute has so carefully hedged about.

They are not entitled to any very favorable consideration, and courts are bound at least to see that the salutary provisions of the statute are not annulled or evaded by the mere form and phrase in which a transaction is committed to writing. The substance and essence of the transaction is to control. If this is nothing more or less than a chattel mortgage—as in my opinion it clearly is—it is void as against the defendant, there being no evidence that it was ever filed" or entered of record.

The judgment of the special term must therefore be set aside and a new trial granted, with costs to abide the event of the suit.