Harden, Ralph B.

English

University of Denver

Denver Law Review Volume 30 Issue 12 Article 8 June 2021 Contracts, Agency and Partnership, Personal Property, Sales and Corporations Ralph B. Harden Follow this and additional works at: https://digitalcommons.du.edu/dlr  Part of the Law Commons Recommended Citation Ralph B. Harden, Contracts, Agency and Partnership, Personal Property, Sales and Corporations, 30 Dicta 470 (1953). This Article is brought to you for free and open access by the Denver Law Review at Digital Commons @ DU. It has been accepted for inclusion in Denver Law Review by an authorized editor of Digital Commons @ DU. For more information, please contact jennifer.cox@du.edu,dig-commons@du.edu. Dec., 1953CONTRACTS, AGENCY AND PARTNERSHIP,PERSONAL PROPERTY, SALES ANDCORPORATIONSRALPH B. HARDENof the Fort Collins BarIt would be impossible in the space available to this article todetail all of the cases of interest relating to the above subjects de-cided in the past year. The following are selected because theyshould have the widest application to the general practice of law.Ferry-Morse Seed Co. v. Board of County Commissioners ofEl Paso County:' Question as to ownership of personal property(seeds) for tax purposes. The Seed Company contended that titleto the property passed to merchants with whom it dealt, who weretherefore liable for the tax. The county contended that the trans-actions between the Seed Company and its merchants were con-signments or bailments and that title remained in the Seed Com-pany rendering them liable for the tax.The so-called contracts of the Seed Company with the merch-ants were order forms of varied terminology signed only by themerchants and providing for re-purchase of seeds unsold by themerchants with consequent credit to merchants on invoice price.Some of the forms contained the words "title passes at Detroit."It was held that title did not pass from the Seed Company andthat the real natlire of the transactions were sales on consignmentand not "sale or return" transactions or absolute sales. The Su-preme Court observing that "there is nothing mystifying about theword 'sell' and plaintiff was not prevented from its use in thesecontracts which would have ... removed all doubt" based its opin-ion on the following: (a) The so-called contracts were unilateral,signed only by the merchants, and therefore appeared to be con-tracts of bailment or consignment. (b) The contracts should beconstrued against the maker thereof, the Seed Company. (c) Thecourse of dealing between the Seed Company and the merchantsindicated that the transactions were sales on consignment and thiscourse of dealing was held to overcome the statement on some ofthe contracts that "title passes at Detroit." (d) That the merchantshad to return unsold seed to the Seed Company, they having no op-tion to keep the unsold seed, which indicated a control and rightof property remaining in the Seed Company.Lerner v. Stone :2 Previous to this action the plaintiff had beensuccessful in an unlawful detainer suit against the defendant andthe plaintiff here sought treble damages under the statute for theunlawful detainer. The defendant counterclaimed and sought dam-ages on the ground that the plaintiff had breached the terms of a1 126 Colo. 426, 250 P. 2d 1003 (1952)......... Colo .......... 252 P. 2d 533, 1952-53 C.B.A. Adv. Sb. No. 9.DICTA470Dec., 1953contract of sale of a partnership interest previously made betweenthe plaintiff and the defendant. It appeared that there had existeda partnership between the plaintiff, the defendant and oneSchwartz which did business under a lease of certain premises inDenver. The plaintiff notified the defendant that he desired the dis-solution of the partnership and in conformity with the partnershipagreement made an offer to buy the defendant's interest, includinggoodwill, for a certain sum or to sell his interest to the defendant,including goodwill, for the same amount. The defendant acceptedthe offer to sell and apparently a written agreement was made rela-tive thereto, which agreement did not specifically mention goodwill.Subsequently the defendant acquired the interest of Schwartz andoperated the business as the sole owner. Subsequently also the plain-tiff acquired ownership of the leased premises in which the defend-ant was doing business, gave the defendant notice to vacate whichwas not complied with and brought the unlawful detainer actionabove mentioned. Upon the defendant's eviction from the premisesunder this unlawful detainer action the plaintiff moved into thepremises, established a similar business and sent advertising cir-culars to old customers of the partnership. It was upon these actsthat the defendant's counterclaim was based.The decision in this case turned upon the trial courts' rulingrespecting a motion for the joinder of the party, but the SupremeCourt in a matter which did not seem to be necessary to supportthe decision, commented upon the defendant's counterclaim as fol-lows:It is clearly established that Lerners (plaintiffs),upon eviction of Stone (defendant), entered into posses-sion of the premises; sought to establish a competitivebusiness; and by such action totally and wholly destroyedthe goodwill for which he offered and received a considera-tion. As hereinbefore stated the "buy or sell" offer made bythe Lerners included "goodwill." While the final writtenagreement representing the acceptance by Stone of Ler-ners' offer is silent as to the matter of "goodwill," it fol-lows as a necessary implication that the "goodwill" as of-fered was accepted and paid for, unless specifically ex-cluded .... [I]n some jurisdictions the rule seems to befirmly settled that one who voluntarily sells the goodwillof a business thereby precludes himself from setting up acompeting business which will derogate from the goodwillwhich he has sold. That rule has particular applicationhere because of the circumstances that the "goodwill"here impliedly conveyed, carried with it the name and lo-cation of the business ... it follows that there is merit toa counterclaim, in some measure, as against the Ler-ners ....DICTADec., 1953This is certainly new, and perhaps surprising, law in Coloradoand should be of interest to any lawyer contemplating a contractfor the sale and purchase of a going business.Trans-American Corporation v. Merrion:3 In this case the Su-preme Court points out that consent to sale of mortgaged personalproperty given by a mortgagee to to his mortgagor will bar themortgagee from setting up his mortgage as against a purchaserfrom the mortgagor and that such consent may be inferred; butthat nonetheless such consent depends upon the intent of the par-ties and is a question of fact for the jury.This case is also of interest because it treats with the adequacyof a description of livestock in a chattel mortgage.Burkhardt v. Bank of America Nat. Trust and Savings Asso-ciation:4 One Horn was the lessor under a lease upon which thedefendant was one of two guarantors of the rental payments. Theguaranty was not made contemporaneously with the lease, but wassubsequent thereto, and by its terms was binding upon the heirs ofthe guarantor. Horn died prior to any default of payments underthe lease, but after his death default occuurred and his testamen-tary trustee brought action against the defendant upon the guar-anty.The trial court entered judgment for the plaintiff which wasreversed by the Supreme Court and remanded with instructionsto dismiss the complaint. The Supreme Court held that the guar-anty by its terms was a special guaranty addressed to a particularperson to which person only the guarantor is liable. Further thatsuch a guaranty cannot be transferred or assigned to any otherperson until a right of action has accrued thereunder, in which casethe right of action would be assignable. Since in this case therewas no default prior to the guarantee's death, no right of actionhad accrued and the unaccrued cause of action did not survive theguarantee's death. This decision was aided by the pronouncementthat a guarantor is like a surety, a favorite of the law.Rogers v. Fitzsimmons:5 Here the Supreme Court affirmed ajudgment for rescission of a real estate sales contract in favor ofa purchaser against :his vendor on the ground of misrepresenta-tion. In respect to the vendor's defense of waiver by reason of thepurchaser having made two monthly payments on the contract afterdiscovery of the alleged misrepresentation the Supreme Court heldthat the purchaser was not guilty of laches for there was no show-ing of a change of position of the parties that would make rescis-sion inequitable and that the purchaser was entitled to preserve thestatus quo by making payments due under the contract in the eventrescission was denied the purchaser.Kuper v. Scroggins:6 In an action by a purchaser against his--- ----- Colo .-....... 255 P. 2d 391, 1952-53 C.B.A. Adv. Sh. No. 11.4 ........ Colo .......... 256 P. 2d 234, 1952-53 C.B.A. Adv. Sh. No. 15.5-........Colo .......... 257 P. 2d 420, 1952-53 C.B.A. Adv. Sh. No. 19.* .------- Colo .......... 257 P. 2d 412, 1952-53 C.B.A. Adv. Sb. No. 20.DICTADec., 1953vendor for specific performance of a real estate sales contractwherein the purchaser asked for abatement of the purchase priceto compensate him for the vendor's inability to convey mineralrights which were not excepted from the contract the SupremeCourt stated that a purchaser has a right, if he sees fit to do so,to accept less than he bargained for and to seek compensation forthe loss of that which he does not obtain.Eitel v. Alford:7 In a contract for sale of realty providingthat the vendors should deliver abstracts of title to the purchaserfor examination and further providing that in event said abstractsshow good and marketable title the balance of purchase price shallbe paid, there is no specific covenant and promise on the part ofthe vendors to insure marketable title. In such a case the burdenis upon the purchaser to satisfy himself with the title, and if not, torefuse further performance until the title is perfected. If the pur-chaser completes the payments under the contract without exam-ining the title and takes the fruits of the contract for many monthswithout inquiring as to the title when the facts concerning thesame were known to him or readily ascertainable, his right torescission is thereby lost.Self v. Watt:8 This case confirms an interesting and recentdevelopment in Colorado Law respecting forfeiture or foreclosureunder real estate sales contracts.For a time there existed some doubt in Colorado as to whetheror not a defaulting purchaser under a real estate sales contract wasto be treated as a mortgagor and be entitled to a six month periodof redemption. This doubt was apparently resolved in Miller v.Temple 9 which held that the sales contract there involved was nota mortgage and that the purchaser could not be treated as a mortga-gor relative to the statutory period of redemption. However, thecourt, upon equitable principles, gave the purchaser a 30 day re-demption period.In this case (Self v. Watt) the plaintiff had sold certain realproperty to the defendant under a contract providing for termi-nation of the contract upon default and a retention by the vendorof all payments made as liquidated damages. Approximately $18,-700.00 was paid on this contract which called for a total purchaseprice of $35,200.00 when the defendant defaulted in his payments.The plaintiff brought this action for a decree directing the defend-ant to pay the balance within such time as determined by theCourt and upon defendant's failure to comply, for termination ofthe contract and for delivery of possession to the plaintiff. Thedefendant made no appearance and the trial court entered an orderas prayed for, giving the defendant 30 days to pay the balance dueunder the contract, and upon his failure so to do, ordered the con-........ Colo ......... 257 P. 2d 955, 1952-53 C.B.A. Adv. Sh. No. 18.3 ........ Colo .......... 259, P. 2d 1074 (1953), 1952-53 C.B.A. Adv. Sh. No. 26, p. 413.1120 Colo. 546, 211 P. 2d 989 (1949).DICTADec., 1953tract to be null and void and possession to be awarded to the plain-tiff. The defendant's motion for relief from this default judgmentwas denied and the case was appealed to the Supreme Court whichaffirmed the judgment.In sustaining the 30 day redemption period ordered by thetrial court over the claim of the defendant that he had a six months'redemption period the Supreme Court said:An application for a strict foreclosure under an execu-tory contract to shut out the iights of a purchaser isaddressed to the sound discretion of the Court, and thetime allowed the purchaser to make payment of the ar-rears is largely within the discretion of the trial court.... Equity will take into consideration all the attendantfacts and circumstances in fixing the time. We concludethat such a period is not the six month's provided in thestatute regarding redemption under mortgage foreclosure.In the instant case the trial court did not abuse its dis-cretion in fixing the time which was, under the facts ofthe case, both reasonable and equitable.... [T] here are atleast these two cases in our jurisdiction. [Miller v. Temple,supra, and Gordon-Tiger Mining and Reduction Co. v.Brown 10] where we have recognized the propriety of a 30day period within which to make payment of the arrears.We see no reason in the instant action to depart from ourholding in these cases.While the period of time may still be within the jurisdictionof the Court depending upon the equities in the case, this case maytend to solidify the 30 day time limit, thereby providing by judi-cial legislation a 30 day period of redemption.It is interesting to note that it does not appear from the opin-ion whether or not the contract in question made time of the es-sence. Prior cases in Colorado and cases in other jurisdictionshave often made this provision determinative in cases of this kind.First National Bank of Ogallala, Nebraska v. Chuck Lowen,Inc. :11 In this case the plaintiff bank had taken a chattel mortgageon a new automobile from one Harney, a car dealer in Ogallala,Nebraska, and had received therewith the manufacturer's certifi-cate of origin showing Harney's ownership. This chattel mortgagewas not recorded in Nebraska or elsewhere. Subsequently Harneysold the automobile to the defendant, a licensed car dealer in Colo-rado, giving a bill of sale therefor. The defendant then sold theautomobile giving a dealer's bill of sale to the purchaser. The plain-tiff bank brought this action for conversion and the trial court en-tered summary judgment for the defendant on the ground of10 56 Colo. 301, 138 Pac 51 (1913)......... Colo ......... 261 P. 2d 158 (1953) C.B.A. Adv. Sh. No. 28, p. 440.DICTADec., 1953plaintiff's failure to record the mortgage and a lack of actual orconstructive notice of the mortgage by the defendant prior to thesale of the automobile by the defendant.The Supreme Court reversed and remanded the case for rea-sons as follows:(a) The failure to record the mortgage in Nebraska did notrender it invalid here because under Nebraska Law the mortgagewas valid by delivery of and retention of the manufacturer's cer-tificate by the bank and under Colorado Law 12 recording in an-other state is not constructive notice rendering a mortgage validagainst a subsequent purchaser without actual notice. Hence, re-cording in Nebraska would have been "vain and fruitless by thelaws of both states" and thereby not a necessary act. (b) Colo-rado has no statute or settled policy rendering such a mortgageinvalid. Respecting our certificate of title act the Court points outthat the import of this act is that acquiring valid title against aprior mortgagee depends upon delivery of a certificate of titleshowing no lien, which in this case would be the manufacturer'scertificate which was never delivered by Harney to the defendant,except in case of transfer of a new automobile from a dealer uponthe dealer's bill of sale. This latter exception was held not to applyin -this case because Harney was not a licensed dealer under Colo-rado Law, an important consideration because if he were a licenseddealer, his bond would have protected the parties here.The essence of this case is that clear title to an automobile inColorado can be obtained only by possession of a certificate oftitle free of lien or in case of a new automobile by bill of sale froma licensed Colorado dealer.12 (Chapter 16, Section 13 (31) '35 C.S.A.).JUDGE PHILLIPS TO SPEAK ON EVIDENCEAt a meeting of the Denver Chapter of the American Statisti-cal Association on January 19, 1954, Judge Orie L. Phillips is goingto be the speaker and his subject will be "Statistics as AdmissableEvidence in the Courts." All lawyers and Bar Association membersare invited. The meeting will feature a dinner at 6:30 P. M. inthe Pioneer Room of the Student Union Building on the UniversityPark Campus of the University of Denver.Reservations may be made by mail to the Secretary of theAssociation, Mr. Henry Mosher, c/o Mountain States Tel. & Tel.Co., P. 0. Box 960, Room 1101, Denver 1, Colorado. Telephonereservations may be made by calling TAbor 4171, Ext. 7188.DICTALunch Withof Denver24 Hour Breakfast andLunch ServiceAt 1649 Broadway DenverDicta Advertisers Merit Your PatronageTo Be Sure-The ColoradoFrank A. Mancini. PublisherFOR LEGAL ADVERTISINGGRand 07683630 OSAGE ST.DENVER ABSTRACT COMPANYComplete Abstract and Title Service for Denver and SurroundingCounties and Title Insurance for All of ColoradoRepresentingLAWYERS TITLE INSURANCE CORPORATION"Assets over $10,000,000.00"FRANK D. HEDRICK, JR., President1650 Glennrm TAbor 5307FOR 97 years we have beenstriving continually to provide thelegal profession with the best in re-search tools. . . . MAY WE BEOF SERVICE TO YOU SOON?BANCROFT-WHITNEY COMPANYLawbook Publishers Since 1856McAllister & Hyde San Francisco 1, California

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