Edson & Co. v. Hudson Motor Car Co.

The plaintiff’s assignor entered into an agreement with one Gunyan in February, 1924, by which Gunyan purchased from it a certain Ford car, and agreed to make certain payments and do other specific acts mentioned in the agreement, which agreement further provided that on the nonperformance of these covenants the plaintiff’s assignor might elect to consider the entire balance unpaid and also retake the car. In June, 1924, one Bergeson sold the car to the Hudson Motor Car Company, and some time before August, 1924, the latter sold the car to someone else. Prior to August there had been no default in the payment of any installment of the purchase price required under that agreement.

The action is against Bergeson and the Hudson Motor Car Company in conversion. Under the agreement, which was for the sale of a specific chattel, title passed immediately to Gunyan. Although the document was called a conditional sales agreement, it did not provide for reservation of title in the seller, so that it was misnamed. Gunyan had title outright; plaintiff’s assignor had the right to accelerate the payment of the balance and retake the chattel in event of breach of condition.

Title being in Gunyan, it was passed on to Hudson Motor Car Company by the defendant Bergeson in June, 1924. It does not appear how Bergeson got title. However, from these facts the title of the Hudson Motor Car Company was good as against every one but Gunyan, who had the title at that time. Plaintiff’s assignor and plaintiff cannot complain unless there was a legal injury to its property or possessory rights at that time.

*225The transaction between plaintiff’s assignor and Gunyan was at most an outright sale to Gunyan, with the giving back of a purchase-money chattel mortgage. This was the nature, although not the substance, of the transaction. Even a chattel mortgagee has no legal title in the chattel until after default, under the rule in this State. The plaintiff says, however, that there had been default by reason of the sale out of Gunyan and the provision in the agreement as follows: “ (4) No right or interest of the buyer in, to or under this contract, or in the vehicle, shall be assignable or transferable by him,”— which was made a condition giving the seller the right under the ninth and tenth provisions of the agreement to accelerate the balance and retake the chattel. This condition, however, cannot be enforced. Title had passed to the buyer. Here was a restraint on his power of alienation. The agreement did not even provide how long this restraint was to continue. There is no provision, for example, that he was not to assign or sell until the full payment of the purchase price. Such a condition is violative of the statute against the restraint of the power of alienation and also the common-law rule of perpetuities.

This condition being ineffective, and there being no other evidence of a default prior to the purchase and sale by the defendants, the plaintiff cannot recover. I should also point out that the plaintiff has not proved in this action in conversion the value of the chattel at the time and place of the alleged conversion.

Judgment, therefore, for the defendants.