Tierney, Joseph E., Jr.

English

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Security-Conditional Sale-Distinction Between Mortgage and Conditional Sale

Marquette University Law School

Marquette Law ReviewVolume 24Issue 4 June 1940 Article 9Security-Conditional Sale-Distinction BetweenMortgage and Conditional SaleJoseph E. Tierney Jr.Follow this and additional works at: http://scholarship.law.marquette.edu/mulrPart of the Law CommonsThis Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion inMarquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contactmegan.obrien@marquette.edu.Repository CitationJoseph E. Tierney Jr., Security-Conditional Sale-Distinction Between Mortgage and Conditional Sale, 24 Marq. L. Rev. 224 (1940).Available at: http://scholarship.law.marquette.edu/mulr/vol24/iss4/9THE MARQUETTE LAW REVIEWan implied promise may arise from its use. Robbins v. Eaton, 10 N.H. 561 (1840).Besides an express promise, acts which manifest an intention to be bound mayconstitute ratification. Edgerly v. Shaw, 25 N.H. 514, 57 Am. Dec. 349 (1852).A mere acknowledgement that a contract was made during infancy is not sucha manifestation. Thompson v. Lay, supra.There may also be a conditional ratification but, until the condition is ful-filled, no action can be maintained. State v. Binder, 57 N.J.L. 374, 31 Atl. 215(1894). And it has been held that the promise must be unconditional. Bresee v.Stanley, 119 N.C. 76, 25 S.E. 870 (1896).Part payment of an agreement after reaching majority without any otherevidence of an intent to ratify is no ratification. This is true because the partpayment is at best an ambiguous manifestation of intent. The payor may regardhis part payment as being all which, in fairness, he should pay. Robbins v. Eaton,supra International Accountants Society v. Santana, 166 La. 671, 117 So. 768,59 A.L.R. 276 (1928).Therefore, where there was part payment, but the person "wrote nothing,said nothing, and did nothing which bore on the question of intention," therewas no ratification. International Text Book Co. v. Connelly, 206 N.Y. 188, 99N.E. 722, 42 L.R.A. (N.s.) 1115 (1912); Hook v. Harmon Nat. Real EstateCorp., 295 N.Y.S. 249, 250 App. Div. 689 (1937).Courts are divided on the question whether there must be knowledge on thepart of the infant that his contract is voidable. The majority of the courts holdthat the infant need not have knowledge of his legal right to disaffirm sincesuch knowledge will be presumed by his acts. Rubin v. Strandberg, 288 Ill. 64, 122N.E. 808, 5 A.L.R. 133 (1919); Clark v. Van Court, 100 Ind. 113, 50 Am. Rep.774 (1884); Anderson v. Seward, 40 Ohio St. 325, 48 Am. Rep. 687 (1883);Bestor v. Hickey, 71 Conn. 181, 41 Atl. 555 (1898). However, some courts holdthat the knowledge of the right to repudiate must be shown. Smith v. Mayo,9 Mass. 62, 6 Am. Dec. 28 (1812) ; Tolar v. Marion County Lwnrber Co., 193 S.C.274, 75 S.E. 545 (1912).JOHN A. CALLAHAN.Security-Conditional Sale-Distinction Between Mortgages and ConditionalSale.-C advanced money to A, an oil prospector. A assigned his drillingequipment to C. This assignment was not to become operative unless a certainoil well did not produce. It did not produce. A died. B, a judgment creditor ofA, levied execution on the drilling equipment. A's administrator sued to restrainexecution alleging that the judgment was obtained by fraud. C intervened andclaimed title under the assignment. The court held this assignment to be, ineffect, a conditional sale which passed title to C upon the failure of the well toproduce, not a chattel mortgage as the defendant contended. Stroup v. Meyers,(Indiana, 1939) 21 N.E. (2d) 75.There is a difference in form between a conditional sale and a chattel mort-gage which becomes important in determining the recording or filing require-ments which must be observed. Differences in substantive rights exist also,although it has been argued that since a conditional sale is simply a short cutto a purchase money chattel mortgage and both transactions have the same pur-pose-security for the vendor-there should be no distinction in substantiverights. Note (1922) 36 HARV. L. REv. 740; note (1929) 14 IOwA L. Rev. 329, 337.The character of the instrument is determined by the intent of the partiesas manifested by the instrument itself and the surrounding circumstances. If[Vol. 24RECENT DECISIONSthere is a debt independent of the security transaction and if it is clear that nosale was intended, the instrument is a chattel mortgage. Keystone Finance Corp.v. Krueger, 17 F. (2d) 904 (C.C.A. 3d, 1927). A transaction which provided fora deficiency judgment has been held a chattel mortgage even though the par-ties labelled the instrument a conditional sale contract. The instrument was heldto come within the chattel mortgage recording statute. Weber Showcase andFixture Co. v. Waugh, 42 F. (2d) 515 (W.D. Wash. 1930). Conversely, a condi-tional vendor was refused a deficiency judgment. Mills Novelty Co. v. Morett,266 Mich. 451, 254 N.W. 164 (1934). But the Uniform Conditional Sales Actwhich has been adopted in Wisconsin provides that if the proceeds of the resaleare not sufficient to pay the balance due on the purchase price the vendor mayrecover the deficiency from the purchaser. Wis. STAT. (1939), §§ 122.22. Douglassv. Ransont, 205 Wis. 439, 237 N.W. 260 (1931).An equity of redemption is an incident of a chattel mortgage but not of aconditional sale. Panchoff v. Heller, 176 Minn. 493, 223 N.W. 911 (1929). Buthere also the Uniform Conditional Sales Act narrows the difference betweenchattel mortgages and conditional sales, since under it the purchaser has anequity of redemption of ten days after retaking the goods if the vendor failsto give at least twenty days notice of his intention to retake the goods. Wis.STAT. (1939) §§ 122.18, 122.19, 122.20.The transaction in the principal case was hardly the usual type of conditionalsale, but it seems clear that a sale rather than a mortgage was intended. Althoughthe transaction was designed to secure a person who had advanced money, it doesnot appear that a debt had been created. Rather, there was an alternative pro-vision contemplated by the instrument. If the well produced, those who hadhelped to finance the project were to share in the profits; otherwise, they were toget a certain amount of the equipment which their money had bought. Title wasto pass to them on the happening of a certain event. There was no debt. Neithera deficiency judgment nor an equity or redemption was contemplated.JosEPH E. TnmEY, Ja.Wills-Adopted Son as "Lawful Issue."--An appeal was taken from an orderdenying appellant's claim as the adopted son of the adopted son of the testatrixto take under her will, as the "lawful issue" of the adopted son. The Minnesotastatutes defined "issue" as meaning the lineal descendants of an ancestor. Thecourt held that adoption gave the adopted child the status of issue under astatute (Mason Minn. St. 1927 § 8630) which provides that "Upon adoptionsuch child shall become the legal child of the persons adopting him, and theyshall become his legal parents, with all the rights and duties between them ofnatural parents and legitimate child. By virtue of such adoption he shall inheritfrom his adopting parents or their relatives the same as though he were thelegitimate child of such parents . . .". The court reasoned that the statute con-ferred upon the adopted child the status of a natural one and, referring toIn re Sutton's Estate, 161 Minn. 426, 201 N.W. 925 (1925), added that theadopted child is a "lineal descendant." It re Holden's Trust, (Minn. 1940) 291N.W. 104.Generally, whenever the question of the rights of adopted children to inheritfrom their adoptive parents has arisen, the courts have been very liberal andhave treated such children as natural children. In O'Connell v. Powers, 291 Mass.153, 197 N.E. 162 (1935), the court declared that the word "issue" includes19401

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Security-Conditional Sale-Distinction Between Mortgage and Conditional Sale

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