791. Insurable Interest of Buyer.-One who purchases property under a conditional sale, the title to remain in the seller until full payment is made, has an insurable interest. Where the rule prevails that the destruction of the subject matter of the sale releases the buyer from further liability for the unpaid instalments of the price, it is held that, as the contract of insurance is one of indemnity only, the buyer cannot, on its destruction by fire, recover for the full value of the property, but only the sum which he has paid under the contract of sale, if there is nothing to show that he has suffered any damage other than the loss of his payments. It is otherwise, however, where the destruction of the property does not release the buyer from liability for the price. On the theory that a condition or warranty as to "unconditional and sole" interest or "ownership" merely requires that the interest of the insured be such that in case of the destruction of the property the entire loss will fall upon him, whether his title is legal or equitable, it has been held that, if the destruction of the subject matter of the sale will not release the buyer from liability for the unpaid part of the price, his interest is to be held sole and unconditional; it would be otherwise, however, where the rule prevails that the destruction of the property releases the buyer from further liability for the price; and, in a number of cases, the courts have held that the buyer could not be considered the sole and unconditional owner, even though his liability for the price would continue after the destruction of the property.9

792. Transfer by Buyer Generally.-Though it is the general rule that the buyer under contracts of sale by which the seller retains the title until the full price is paid cannot by a resale of the property,

Co., 94 Wash. 339, 162 Pac. 519, L.R.A.1917D 214 (explaining and distinguishing an earlier case to the above effect).

Note: L.R.A.1917D 218.

2. Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 52 So. 799, 138 A. S. R. 171; Tabbut V. American Ins. Co., 185 Mass. 419, 70 N. E. 430, 102 A. S. R. 353.

Notes: 20 Am. Dec. 513; 138 A. S. R. 670.

As to insurable interest in property generally, see INSURANCE, vol. 14, p.

910 et seq.

3. See supra, par. 788, as to the destruction of the property as affecting the buyer's liability for the price.

4. Tabbut v. American Ins. Co., 185 Mass. 419, 70 N. E. 430, 102 A. S. R. 353.

5. Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 52 So. 799, 138 A. S. R. 171.

6. See INSURANCE, vol. 14, p. 1052.

7. Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 52 So. 799, 138 A. S. R. 171; Lancaster v. Southern Ins. Co., 153 N. C. 285, 69 S. E. 214, 138 A. S. R. 665.

Note: 138 A. S. R. 670.

8. Tabbut v. American Ins. Co., 185 Mass. 419, 70 N. E. 430, 102 A. S. R. 353.

9. Dumas v. Northwestern Nat. Ins.

Co., 12 App. Cas. (D. C.) 245, 40 L.R.A. 358; Westchester v. Weaver, 70 Md. 536, 17 Atl. 401, 18 Atl. 1034, 5 L.R.A. 478; Dow v. National Assur. Co., 26 R. I. 379, 58 Atl. 999, 106 A. S. R. 728, 67 L.R.A. 479.

Notes: 138 A. S. R. 176; 7 Ann. Cas. 499.

And it has

even to a bona fide purchaser for value, affect the seller's rights,10 it is also held that the buyer has an interest which is capable of transfer so as to pass to his transferee his inchoate interest and enable the latter to perform the condition and perfect his title.11 been held that though the contract provides that if the buyer shall sell, mortgage or pledge the property or fail in payments, the seller may take immediate possession, and hold the property free of all claims from the buyer, the latter may confer an interest on an assignee which will enable him to perfect the title by full payment of the price, and the attempted assignment does not forfeit all rights under the contract.12 If the buyer before acquiring a perfect title by paying the stated instalments sells or mortgages the property to a third person, the moment the title is perfected by him it passes to such third person.18 And for this reason it has been held that where the buyer executes a chattel mortgage on the property, and thereafter executes to the seller a new note and mortgage for the amount of the unpaid price, the latter mortgage extinguishes the reserved title of the seller and perfects that of the buyer, which inures to the benefit of the first. mortgagee, giving his mortgage priority over the mortgage of the seller for the unpaid price, especially where the seller delays for some time in recording his mortgage.14 So where the seller takes judgment against the buyer for the price this confirms the title in the buyer and will enable one who has theretofore purchased the property from the buyer to hold the same as against the seller.15 After default, and the forfeiture of his rights under the contract, the buyer has no rights. in the property which he can himself enforce or which he can transfer to a third person; 16 and it has been held that the buyer's right to the possession before default may be personal purely, as in case of other special bailments importing a personal trust, and where such is the case he cannot, even before default, transfer any right to retain the possession to a third person, and where he attempts to do so the

10. See supra, par. 752 et seq. 11. Fosdick v. Schall, 99 U. S. 235, 25 U. S. (L. ed.) 339; Thornton v. Findlay, 97 Ark. 432, 134 S. W. 627, 33 L.R.A. (N.S.) 491; Vincent v. Cornell, 13 Pick. (Mass.) 294, 23 Am. Dec. 683; Dame v. Hanson, 212 Mass. 124, 98 N. E. 589, Ann. Cas. 1913C 329, 40 L.R.A. (N.S.) 873; People's Furniture, etc., Co. v. Crosby, 57 Neb. 282, 77 N. W. 658, 73 A. S. R. 504; Bailey v. Colby, 34 N. H. 29, 66 Am. Dec. 752.

Notes: 23 Am. Dec. 685; 89 Am. Dec. 128; 40 L.R.A. (N.S.) 873; Ann. Cas. 1913C 332.

98 N. E. 589, Ann. Cas. 1913C 329, 40 L.R.A. (N.S.) 873.

13. Thornton v. Findlay, 97 Ark. 432, 134 S. W. 627, 33 L.R.A. (N.S.) 491.

Notes: 89 Am. Dec. 128; 40 L.R.A. (N.S.) 874; Ann. Cas. 1913C 332.

14. Thornton v. Findlay, 97 Ark. 432, 134 S. W. 627, 33 L.R.A. (N.S.) 491.

15. Francis v. Bohart, 76 Ore. 1, 143 Pac. 920, 147 Pac. 755, L.R.A. 1916A 922. See supra, par. 776, as to the effect of suing for the price on the right of the seller to retake posses. sion.

12. Dame v. Hanson, 212 Mass. 124,

16. Note: 89 Am. Dec. 129.

seller may himself retake possession.17 If the buyer attempts to transfer the property as distinguished from his special interest therein this may be treated by the seller as a conversion; 18 and it is generally recognized that where the buyer makes a resale of the property as his own, and not a mere transfer of his interest subject to the superior title of the seller, he forfeits his right of possession, thereby enabling the seller to retake the chattel from the subpurchaser. 19

793. Execution by Third Persons against Buyer.-Some cases hold that before default the buyer has such an interest in the subject matter of the sale as may be sold on execution and the purchaser will acquire the right to pay the price as it falls due and perfect the title.20 Other cases take the view that, as the legal title is in the seller and the buyer's interest is at most an equitable one or in the nature of a chose in action, his interest is not subject to levy and sale on execution; and this is especially true where default in the stipulated payments has been made and the seller has retaken the possession, as the buyer has not even a possessory interest. If the buyer has completed the payments the title then vests in him and the property is then of course subject to sale at the instance of his execution creditors, and a levying creditor may, in replevin by the seller to recover possession, in order to prove full payment of the price, make any claim as to the misapplication of payments on a note given for the property levied on that could be made by the buyer.

794. Recovery by Buyer of Partial Payments.-The authorities are not in accord as to the right of the buyer to recover partial payments made by him, in case the seller asserts his right to retake the property on the buyer's default in making the further payments required by the terms of the contract. In a number of jurisdictions the general view is taken, irrespective of statute, especially where there is no provision for forfeiture of the instalments of the price paid, that the buyer has a right to recover such payments, if the seller exercises his right to retake possession; though in such a case

17. Dunlap v. Gleason, 16 Mich. 389, 15 L.R.A. (N.S.) 127. 158, 93 Am. Dec. 231.

18. See supra, par. 781.

19. Dunlap v. Gleason, 16 Mich. 158, 93 Am. Dec. 231. See also Emerson v. Fisk, 6 Greenl. (Me.) 200, 19 Am. Dec. 206.

20. Hervey v. Dimond, 67 N. H. 342. 39 Atl. 331. 68 A. S. R. 673; Rose v. Story, 1 Pa. St. 190, 44 Am. Dec. 121.

1. Note: 89 Am. Dec. 129. See LEVY AND SEIZURE, vol. 17, p. 154 et seq., as to the sale on execution of contractual rights in chattels.

2. Cavanaugh v. Marble, 80 Conn.

3. Notes: 89 Am. Dec. 128; 3 L.R.A.(N.S.) 785; 38 L.R.A. (N.S.) 891. As to the general right of the buyer to recover advance payments, see supra, par. 333.

4. Havs v. Jordan, 85 Ga. 741, 11 S. E. 833, 9 L.R.A. 373. See also Sunflower Oil Co. v. Wilson, 142 U. S. 313, 12 S. Ct. 235, 35 U. S. (L. ed.) 1025 (lease with option to purchase).

Notes: 89 Am. Dec. 128; 133 A. S. R. 570; 32 L.R.A. 465; 3 L.R.A. (N.S.) 785; 39 L.R.A. (N.S.) 892; Ann. Cas. 1917D 466.

it seems the seller should be allowed a reasonable deduction or credit for the use of the property by the buyer and its deterioration. Under the code practice, it has been held that this right may be worked out, where the seller resorts to replevin or the statutory substitute to recover the possession of the chattel on the buyer's default and upon giving bond has obtained the possession, by rendering judgment in favor of the buyer on the bond for the amount of the price paid which he is entitled to recover back. In other cases, and this would seem to be the better view, it is held that, where the buyer has made default in the stipulated payments and the seller has exercised his right to retake possession, the buyer has no right in an action at law to recover the instalments of the price theretofore paid, even though there is no express provision in the contract for the forfeiture of the partial payments theretofore made; and in this connection it has been said that to hold otherwise would be to offer a bounty for the violation of contracts. Of course an express provision that the buyer shall forfeit all payments theretofore made will prevent his recovery of the same in an action at law. The fact that the parties enter into a new contract for the sale of the property, after the seller has retaken possession under the prior contract and their contract relations have ccased, does not give the buyer any right to recover the payments made on the prior contract. 10 Where the seller wrongfully retakes the possession, the contract giving the buyer the right to possession until default on his part, he may treat this as a breach of contract by the seller justifying him in rescinding the contract so as to entitle him to recover back what he has paid directly and indirectly toward the price. So, if the parties mutually rescind the contract, it has been held that the buyer is entitled to recover his partial payments.19

5. Latham v. Sumner, 89 Ill. 233, 31 Am. Rep. 79. See also Miller v. Steen, 30 Cal. 402, 89 Am. Dec. 124. Notes: 89 Am. Dec. 128; 38 L.R.A. (N.S.) 898.

Latham v. Sumner, 89 Ill. 233, 31
Am. Rep. 79.

Notes: 89 Am. Dec. 128; 133 A. S. R. 570; 32 L.R.A. 466; 3 L.R.A. (N.S.) 785; 38 L.R.A.(N.S.) 891;

6. Hays v. Jordan, 85 Ga. 741, 11 51 L.R.A. (N.S.) 251; L.R.A.1916A S. E. 833, 9 L.R.A. 373.

7. Hine v. Roberts, 48 Conn. 267, 40 Am. Rep. 170; Loomis v. Bragg, 50 Cona. 228, 47 Am. Rep. 638; White v. Oakes, 88 Me. 367, 34 Atl. 175, 32 L.R.A. 592; Cole v. Hines, 81 Md. 476, 32 Atl. 196, 32 L.R.A. 455; Tufts v. D'Arcambal, 85 Mich. 185, 48 N. W. 497, 24 A. S. R. 79, 12 L.R.A. 446; Pfeiffer v. Norman, 22 N. D. 168, 133 N. W. 97, 38 L.R.A. (N.S.) 891; Seanor v. McLaughlin, 165 Pa. St. 150, 30 Atl. 717, 32 L.R.A. 467; Norman v. Meeker, 91 Wash. 534, 158 Pac. 78, Ann. Cas. 1917D 462. See also

922.

8. Pfeiffer v. Norman, 22 N. D. 168, 133 N. W. 97, 38 L.R.A. (N.S.) 891. 9. Note: 38 L.R.A. (N.S.) 892.

10. Pfeiffer v. Norman, 22 N. D. 168, 133 N. W. 97, 38 L.R.A. (N.S.) 891.

11. Madison River Livestock Co. v. Osler, 39 Mont. 244, 102 Pac. 325, 133 A. S. R. 558.

Note: 38 L.R.A. (N.S.) 895.

12. Pierce v. Staub, 78 Conn. 459, 62 Atl. 760, 112 A. S. R. 163, 3 L.R.A. (N.S.) 785.

Note: 38 L.R.A. (N.S.) 894

A court of equity will not enforce the stipulation that on default by the buyer in any of the credit payments, the seller may reclaim and take possession of the goods, and that all previous payments should be forfeited.18 In some instances statutes have been enacted requiring the seller upon retaking the property to sell the same within a certain time for the benefit of the buyer, accounting to him for the amount received above the unpaid price, and on his failure so to resell he is made liable for the amount paid by the buyer, or requiring the seller before retaking possession to tender to the buyer the amount paid by him less a reasonable sum for the use of the property or a certain proportion of such payments.14

795. Sale to Infant.-When an infant disaffirms a conditional sale contract, the parties stand in the same relation to each other and to the property sold as they would if it had been a disaffirmance of an ordinary sale. The title to the property bought by the infant remains in the seller, and ordinarily the right to recover partial payments is given the infant. 15 And where a bicycle was sold on the instalment plan the infant buyer has been permitted, after using it for some time, to restore it to the seller and recover back the full amount of the partial payment.16 This, however, has not met the universal approval of the courts, and the view has been taken that the infant must account to the buyer for the reasonable value of the use of the bicycle and for its deterioration.17 It has been held, where the seller sues to recover the property sold to the infant and infancy and partial payment are pleaded, that the right to recover the property, and the right of the infant to be repaid what he claims he has paid on the price, may both be tried in the same action.18

796. Buyer's Right of Redemption.-The view is taken in some jurisdictions that conditional sales under which the title is retained. in the seller until the full price is paid should, as far as the buyer's rights are concerned and especially where there is no express provision for the forfeiture of the partial payment, be placed on the footing of chattel mortgages, and it is held that the buyer after default in payment of instalments of the price has the right to redeem the property

13. Lincoln v. Quynn, 68 Md. 299, 11 Atl. 848, 6 A. S. R. 446.

14. Notes: 38 L.R.A.(N.S.) 900 et seq.; L.R.A.1916A 920; Ann. Cas. 1917D 467.

15. Gillis v. Goodwin, 180 Mass. 140, 61 N. E. 813, 91 A. S. R. 265; Ross P. Curtice Co. v. Kent, 89 Neb. 496, 131 N. W. 944, 52 L.R.A. (N.S.) 723; Whitcomb v. Joslyn, 51 Vt. 79, 31 Am. Rep. 678.

Note: 52 L.R.A. (N.S.) 723.

See INFANTS, vol. 14, p. 234, as to the avoidance of contracts by infants and the right arising therefrom generally.

16. Gillis v. Goodwin, 180 Mass. 140, 61 N. E. 813, 91 A. S. R. 265.

17. Rice v. Butler, 160 N. Y. 578, 55 N. E. 275, 73 A. S. R. 703, 47 L.R.A. 303.

18. Ross P. Curtice Co. v. Kent, 89 Neb. 496, 131 N. W. 944, 52 L.R.A. (N.S.) 723.