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by paying the amount due, with interest and costs,19 and in default of such payment to have the property sold and the proceeds applied to the payment of the debt and interest thereon and the costs, and the surplus, if any, paid to him.20 A right of redemption, or in the nature thereof, is expressly conferred by the more modern statutes in a number of jurisdictions,1 and it has been held to be against public policy to permit the buyer, by an agreement entered into at the time of the sale, to waive his statutory right. This is the same principle which is applied in equity as to the waiver by a mortgagee of his right of redemption. And it has been said that the reasons for the rule in reference to common mortgages are still stronger in the application of it to conditional sales of personal property, which are made so commonly by shopkeepers in supplying householders of small means with furniture and other similar articles. Though the provision of the statute is that the right of redemption shall exist notwithstanding a provision in the contract of sale to the contrary, this will not permit the parties by a separate instrument executed at the time of the sale to defeat the right of redemption. Where the seller exercises his right to retake possession on the buyer's default in making payment, and the latter's promise to pay is absolute, it has been held that the seller may resell the property on account of the buyer, crediting the proceeds of the sale on the unpaid balance of the price, and recover of the buyer the deficiency, making a distinction in such a case between the one where the seller retakes the possession and thereafter treats and uses the property as his own.

Vesting of Title in Buyer

797. In General.-The taking at the time of the sale of the notes of the buyer for the price is not regarded as payment so as to constitute a waiver or render the provision for the retention of the title

19. Miller v. Steen, 30 Cal. 402, 89 Am. Dec. 124; Tufts v. D'Arcambal, 85 Mich. 185, 48 N. W. 497, 24 A. S. R. 79, 12 L.R.A. 446; Hamilton v. Highlands, 144 N. C. 279, 56 S. E. 929, 12 Ann. Cas. 876.

Note: L.R.A.1916A 922.

20. Puffer, etc., Mfg. Co. v. Lucas, 112 N. C. 377, 17 S. E. 174, 19 L.R.A. 682; Hamilton v. Highlands, 144 N. C. 279, 56 S. E. 929, 12 Ann. Cas. 876. Note: 38 L.R.A.(N.S.) 893.

1. Desseau v. Holmes, 187 Mass. 486, 73 N. E. 656, 105 A. S. R. 417; Davis v. Bliss, 187 N. Y. 77, 79 N. E. 851, 10 L.R.A. (N.S.) 458.

Notes: 32 L.R.A. 470; 38 L.R.A. (N.S.) 899; Ann. Cas. 1917D 467. 2. Desseau v. Holmes, 187 Mass. 486, 73 N. E. 656, 105 A. S. R. 417. 3. See CHATTEL MORTGAGES, vol. 5, p. 472; MORTGAGES, vol. 19, p. 502.

4. Desseau v. Holmes, 187 Mass. 486, 73 N. E. 656, 105 A. S. R. 417.

5. Desseau v. Holmes, 187 Mass. 486, 73 N. E. 656, 105 A. S. R. 417.

6. Dederick v. Wolfe, 68 Miss. 500, 9 So. 350, 24 A. S. R. 283. As to the general right of the seller after retaking possession to resell on account of the buyer and hold him liable for any deficiency, see supra, par. 786.

until the price is paid inefficient." In such a case the seller may be bound to account for the notes, if negotiable, which he may have taken so as to save the buyer harmless, before he can recover the goods or the price for which he sold them. But if he does this, and the sale was upon the condition that the buyer should acquire no title until the price was fully paid, the fact that notes were given for the price would not defeat the seller's right to recover the goods or their price, if the purchase money was not paid according to agreement.8 The parties after the execution of the contract and delivery of the property may waive the performance of the condition on which the vesting of the title in the buyer is dependent, and thereby render the sale absolute. The question of waiver in such a case, when put in issue, is ordinarily one for the determination of the jury.10 The buyer and seller may rescind a transaction which operated as a performance of the condition, and thus revest the title in the seller.11 It has been held that a seller holding a conditional sale instalment note against his buyer, and al. o a demand note, is bound, in the absence of express directions, to presume that subsequent payments are intended to be applied to the first note, where the conditional sale will be broken if the instalments are not paid, where two instalments are paid before the demand note is given, and where no demand of payment of the second note is made.12

798. Transfer by Seller of Purchase Money Note.-There is a decided conflict among the authorities as to the effect of a transfer of a purchase money obligation upon the title reserved in a conditional contract of sale. There seem to be three distinct views as to the effect of such a transfer: (1) that it constitutes an election to treat the obligation as a debt, and that such an election vests the title to the property in the buyer; (2) that a transfer of the obligation transfers the security, and vests the title to the property in the transferee; (3) that such a transfer leaves the legal title in the seller.13 Thus it has been held that the mere indorsement by the seller of the purchase money note to a bank as collateral security for a loan to him is an election to treat the note as an absolute debt of the buyer, vesting the title to the property in the buyer, which is not affected by the

7. Heinbockle v. Zugbaum, 5 Mont. 344, 5 Pac. 897, 51 Am. Rep. 59; Bristol v. Pearson, 107 N. C. 562, 12 S. E. 451, 22 A. S. R. 900. As to the effect of taking the buyer's unconditional obligation to pay as giving to the transaction the character of a mortgage, see supra, par. 745.

8. Heinbockle v. Zugbaum, 5 Mont. 344, 5 Pac. 897, 51 Am. Rep. 59. 9. Wilson v. Soper, 13 B. (Ky.) 411, 56 Am. Dec. 573;

man, Miller, etc., Co. v. Mallory, 5 Neb. 178, 25 Am. Rep. 478.

10. Aultman. Miller, etc., Co. v. Mallory, 5 Neb. 178, 25 Am. Rep. 478.

11. Bolling v. Kirby, 90 Ala. 215, 7 So. 914, 24 A. S. R. 789.

12. Cavanaugh v. Marble, 80 Conn. 389, 68 Atl. 853, 15 L.R.A. (N.S.` 127. And see PAYMENT, vol. 21, p. 88 et seq.

Mon.
Ault- 13. Note: 37 L.R.A. (N.S.) 7.1.

seller's redemption of the pledge.14 And if the seller transfers the note taken by him for the price without recourse and without a transfer of the title retained by him, this will, it would seem on principle, operate to vest in the buyer the absolute title, for the reason that the seller's right to the debt is entirely gone and the transaction operates in effect as a payment of the debt in so far as the title is concerned. 15 Other cases refuse to consider the transfer by the seller of the purchase money note either as collateral security or by an ordinary indorsement as vesting the title in the buyer, and hold that the transferee will acquire by subrogation the title of the seller, and in case of a transfer as collateral security that the seller may on redemption of the security enforce his title and right to possession on the default of the buyer in making payment.16 And it has been held, where the reservation of title appeared in the contract but not in the purchase money notes, that the seller, after transfer of the notes by an ordinary indorsement, may on default of the buyer replevin the subject matter of the sale, as he is interested in the payment of the notes so as to relieve him from liability as indorser, and the right to retake possession is not solely in the holder of the notes.17 The seller may on principle, and it is generally so held, transfer his right to receive the price and at the same time his title and thereby transfer all his rights to his transferee.18

799. Renewal of Obligation for Price; Collateral Security.-As a general rule the taking of a note of the debtor for a pre-existing indebtedness does not constitute payment of such indebtedness. 19 And it is generally held that the taking of new notes for the amount of the price unpaid will not of itself constitute a payment of the price or novation, and convert the transaction, which in its inception constituted a sale with retention of title in the buyer until the price is

14. Winton Motor Carriage Co. v. Broadway Automobile Co., 65 Wash. 650, 118 Pac. 817, 37 L.R.A. (N.S.)

71.

Note: 37 L.R.A. (N.S.) 72. This is analogous to the general rule that an action by the seller for the price is inconsistent with his retention of title and right to retake possession. See supra, par. 776.

17. McDonald Automobile Co. V. Bicknell, 129 Tenn. 493, 167 S. W. 108, Ann. Cas. 1916A 265.

In the above case the court speaks of the right of the seller as in the nature of a lien merely, and it would seem that if the reservation of title is to be given its ordinary and full effect the seller could not himself retake possession after the transfer of the notes and before regaining them, as 15. Burch v. Pedigo, 113 Ga. 1157, such retaking would under the gen39 S. E. 493, 54 L.R.A. 808, distin- eral rule release the buyer from guished in Townsend V. Southern liability for the price. See supra,

Product Co., 127 Ga. 342, 56 S. E.

436, 119 A. S. R. 340.

Note: 37 L.R.A. (N.S.) 72.

16. Note: 37 L.R.A. (N.S.) 72.

par. 785.

18. See supra, par. 772.

19. See PAYMENT, vol. 21, p. 70.

8

paid, into an absolute sale or confirm the title in the buyer.20 This is especially true where the renewal note contains a similar provision retaining the title in the seller as that contained in the original note; 1 and the fact that the original purchase money note was surrendered and marked paid has been held insufficient to confirm the title in the buyer where the new note expressly recited that it was given "to extend the old note only and to stand in lieu thereof." On the other hand it has been held that the taking of a new note for the price will operate to vest the title in the buyer if it does not itself contain a provision reserving the title in the seller. The better view is that the taking by the seller, after the sale or after the price has become due and payable, of collateral security for the unpaid price does not affect his reservation of title and right to retake possession, as where a new note is given for the unpaid price with an additional surety. It is held, however, that if the seller on the maturity of the price takes a note secured by mortgage on the chattel for the amount of the unpaid price he thereby waives his reserved title under the contract of sale and vests the title in the buyer. In such a case the taking of the mortgage is inconsistent, it would seem, with title remaining in the seller. On the theory, however, that the chattel mortgage covered only the special interest of the buyer, it has been held that the taking of the mortgage did not vest the title in the buyer.7

20. Segrist v. Crabtree, 131 U. S. 287, 9 S. Ct. 687, 33 U. S. (L. ed.) 125; Monitor Drill Co. v. Mercer, 163 Fed. 943, 90 C. C. A. 303, 16 Ann. Cas. 214, 20 L.R.A. (N.S.) 1065; A. Leschen & Sons Rope Co. v. Mayflower Gold Min., etc., Co., 173 Fed. 855, 97 C. C. A. 465, 35 L.R.A. (N.S.) 1; Triplett v. Mansur, etc., Co., 68 Ark. 230, 57 S. W. 261, 82 A. S. R. 284; Carlton Supply Co. v. Battle, 142 Ga. 605, 83 S. E. 225, L.R.A.1916A 926; Reed v. Upton, 10 Pick. (Mass.) 522, 20 Am. Dec. 545; International Harvester Co. of America v. Pott, 32 S. D. 82, 142 N. W. 652, Ann. Cas. 1916A 327; McDonald Automobile Co. v. Bicknell, 129 Tenn. 493, 167 S. W. 108, Ann. Cas. 1916A 265; Freed Furniture, etc., Co. v. Sorensen, 28 Utah 419, 79 Pac. 564, 107 A. S. R. 731, 3 Ann. Cas. 634.

Notes: 33 L.R.A. (N.S.) 492; 35 L.R.A.(N.S.) 90; L.R.A.1916A 927; Ann. Cas. 1916A 335.

1. Freed Furniture, etc., Co. V. Sorensen, 28 Utah 419, 79 Pac. 564, 107 A. S. R. 731, 3 Ann. Cas. 634.

2. Carlton Supply Co. v. Battle, 142 Ga. 605, 83 S. E. 225, L.R.A. 1916A 926.

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

Note: Ann. Cas. 1916A 335.

4. McDonald Automobile Co. V. Bicknell, 129 Tenn. 493, 167 S. W. 108, Ann. Cas. 1916A 265; Kimball v. Costa, 76 Vt. 289, 56 Atl. 1009, 104 A. S. R. 937, 1 Ann. Cas. 610.

Notes: Ann. Cas. 1916A 266; Ann. Cas. 1917D 467.

5. McDonald Automobile Co. V. Bicknell, 129 Tenn. 493, 167 S. W. 108, Ann. Cas 1916A 265.

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

7. Note: Ann. Cas. 1916A 266.

XXIV. NEGLIGENCE IN SALE OF DANGEROUS ARTICLES

Seller's Liability to Buyer

800. In General.-It is well established that one who sells and delivers to another an article which he knows to be dangerous or noxious, without giving notice of its perilous qualities and nature, is liable for an injury that may result therefrom to the buyer. If the dealer knows that the article is inherently or imminently dangerous, or is highly explosive, or if he conceals or misrepresents its qualities, or warrants or represents it to be safe for the use intended; when it is not, there is no reason why he should not be held chargeable with the reasonable and proximate consequences of his act in selling it without notice of the danger in its use. The rule has been applied in many cases and to a great variety of subjects, such as sales of explosives, 10 illuminating oils,11 drugs and medicines, 12 food for human

10. Smith v. Clarke Hardware Co., 100 Ga. 163, 28 S. E. 73, 39 L.R.A. 607; Carter v. Towne, 98 Mass. 567, 96 Am. Dec. 682; Cunningham v. C. R. Pease House Furnishing Co., 74 N. H. 435, 69 Atl. 120, 124 A. S. R. 979, 20 L.R.A. (N.S.) 236.

8. Smith v. Clarke Hardware Co., 9. Peaslee-Gaulbert Co. v. McMath, 100 Ga. 163, 28 S. E. 73, 39 L.R.A. 148 Ky. 265, 146 S. W. 770, Ann. Cas. 607; McEldon v. Drew, 138 Ia. 390. 1913E 392, 39 L.R.A. (N.S.) 465. 116 N. W. 147, 128 A. S. R. 203; Carter v. Towne, 98 Mass. 567, 96 Am. Dec. 682; French v. Vining, 102 Mass. 132, 3 Am. Rep. 440; Craft v. Parker, etc., Co., 96 Mich. 245, 55 N. W. 812, 21 L.R.A. 139; Schubert v. J. R. Clark Co., 49 Minn. 331, 51 N. W. 1103, 32 A. S. R. 559, 15 L.R.A. 818; Wright v. Howe, 46 Utah 588, 150 Pac. 956, L.R.A.1916B 1104 and note; Hasbrouck v. Armour, 139 Wis. 357, 121 N. W. 157, 23 L.R.A.(N.S.) 876; Clark v. Army, etc., Co-operative Soc., [1903] 1 K. B. 155, 72 L. J. K. B. 153, 88 L. T. N. S. 1, 19 Times L. Rep. 80, 3 British Rul. Cas. 435 and

note.

Note: 5 Ann. Cas. 181.

See EXPLOSIONS AND EXPLOSIVES, vol. 11, p. 700 et seq.

11. Note: 19 L.R.A. (N.S.) 929.

12. Blood Balm Co. v. Cooper, 83 Ga. 457, 10 S. E. 118, 20 A. S. R. 324, 5 L.R.A. 612; Howes v. Rose, 13 Ind. App. 674, 42 N. E. 303, 55 A. S. R. 251; Gwynn v. Duffield, 61 Ia. 64, 15 N. W. 594, 47 Am. Rep. 802; Fleet v. Notes: 111 A. S. R. 701; 19 L.R.A. Hollenkemp, 13 B. Mon. (Ky.) 219, (N.S.) 927; L.R.A.1916B 879; 5 Ann. 56 Am. Dec. 563; Norton v. Sewall, Cas. 181; 15 Ann. Cas. 1008; Ann. 106 Mass. 143, 8 Am. Rep. 298; Brown Cas. 1913C 804; Ann. Cas. 1914A 877. v. Marshall, 47 Mich. 576, 11 N. W. One who manufactures and another 392, 41 Am. Rep. 728; Thomas v. who sells a dangerous article, knowing Winchester, 6 N. Y. 397, 57 Am. Dec. it to be such, without warning to the 455; Goodwin v. Rowe, 67 Ore. 1, 135 consumer, may be sued jointly for Pac. 171, Ann. Cas. 1915C 416 and injury which the consumer receives note; Wright v. Howe, 46 Utah 588, through an attempt to make use of it. Clement v. Crosby, 148 Mich. 293, 111 N. W. 745, 12 Ann. Cas. 265, 10 L.R.A. (N.S.) 588.

150 Pac. 956, L.R.A.1916B 1104 and note; Peters v. Johnson, 50 W. Va. 644, 41 S. E. 190, 88 A. S. R. 909, 57 L.R.A. 428.

Note: 111 A. S. R. 713.

See DRUGS AND DRUGGISTS, vol. 9,

As to the general duty of a seller to disclose latent defects in the subject matter of the sale, see supra, par. 621. p. 702 et seq.

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