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HERVEY V. RHODE ISLAND LOCOMOTIVE WORKS, 93 U. S. 664 (1876)
U.S. Supreme Court
Hervey v. Rhode Island Locomotive Works, 93 U.S. 664 (1876)
Hervey v. Rhode Island Locomotive Works
93 U.S. 664
1. The doctrine announced in Green v. Van Buskirk, 5 Wall. 307, id., 139 [argument of counsel -- omitted] -- that the liability of property to be sold under legal process, issuing from the courts of the state where it is situated, must be determined by the law of that state rather than the law of the jurisdiction where the owner lives -- reaffirmed.
2. The real owner of personal property who vests another to whom it is delivered with an interest therein must, if desirous of preserving a lien on it in Illinois, comply with the requirements of the chattel mortgage act of that state.
3. Where personal property has been sold and delivered, secret liens, which treat the vendor as its owner until the payment of the purchase money, cannot be maintained in Illinois. They are held to be constructively fraudulent as to creditors, and the property, so far as their rights are concerned, is considered as belonging to the vendee holding the possession.
4. Nor is the transaction changed by the agreement assuming the form of a lease. The courts look to the purpose of the parties, and if that purpose be to give the vendor a lien on the property until payment in full of the purchase money, it is liable to be defeated by creditors of the vendee who is in possession of it.
On the twenty-first day of August, 1871, the Rhode Island Locomotive Works entered into a contract with J. Edwin Conant & Co., as follows:
"This agreement, made this twenty-first day of August, 1871, by and between the Rhode Island Locomotive Works of Providence, R.I., party of the first part, and J. Edwin Conant & Co., contractors for the Chicago & Illinois Southern Railroad Co., party of the second part, witnesseth:"
"That whereas the said party of the first part is the owner of one locomotive engine and tender complete, named Alfred N. Smyer, No. 3; and whereas the said party of the second part is desirous of using and eventually purchasing the same; now, therefore, in consideration of the sum of one dollar to the said party of the first part by the said party of the second part in hand paid, the receipt whereof is hereby acknowledged, and in consideration of the covenants and agreements hereinafter contained, the said party of the first part agrees to let and lease, and hereby does let and lease, to the said party of the second part, and the said party of
the second part agrees to have and take from the said party of the first part, the said one locomotive engine and tender, with the right to place the same upon its railroad, and to use the same in the usual manner in transacting the business of the said railroad; and in consideration thereof the said party of the second part hereby covenants and agrees to pay to the said party of the first part for the use and rent of the same the sum of $12,093.96 in notes, as follows:"
10% cash . . . . . . . . . . . . $ 1,150.00
One note due Feb. 24, 1872. . . . 3,580.16
One note due May 24, 1872 . . . . 3,647.90
One note due Aug. 24, 1872. . . . 3,715.90
"And the said party of the second part hereby further covenants and agrees, during the time hereby demised, to keep and maintain the said one locomotive engine and tender in as good condition as it now is, reasonable and ordinary wear and tear excepted, but it is understood and agreed that any injury by collision, by running off the track, or by fire, or by destruction from any cause is not to be considered reasonable and ordinary wear and tear."
"And the said party of the first part, in consideration of the foregoing, further covenants and agrees that in case said party of the second part shall pay the said notes promptly, as hereinbefore set forth, upon payment of the last-mentioned note, viz., $3,715.90, and all renewals of same, it will grant, sell, assign, transfer, and convey to the said party of the second part the said one locomotive engine and tender in the condition it then is, to have and to hold the same to the said party of the second part, its legal representatives, successors, and assigns forever. And the said party of the second part further covenants and agrees that if it shall fail to make any of the said payments when due, then the said party of the first part shall be at liberty, and it shall be lawful for it, to enter upon and take possession of the said one locomotive engine and tender, and to that end to enter upon the road and other property of said party of the second part."
"And the said party of the second part further covenants and agrees that in case of any default on its part in any of the payments as hereinbefore provided, it will, within thirty days thereafter, deliver the said one locomotive engine and tender to the said party of the first part. "
"And the said party of the first part shall thereafter, upon thirty days' written notice to the said party of the second part of the times and place of sale, proceed to sell the said one locomotive engine and tender, and shall apply the proceeds of such sales first to the payment of the expenses of the sale; second, to the payment of any balance then due, or thereafter to become due, for or on account of the rent, as hereinbefore provided; and, if after these payments there shall remain any balance of the proceeds of the sale, the same shall be paid to the said party of the second part."
"And the said party of the second part further covenants and agrees that they will not in any way exercise or claim the right to release, encumber, or in any way dispose of said one locomotive engine and tender, or employ them during the term of this lease in any other way than in the service of J. Edwin Conant & Co., contractors for the Chicago & Illinois Southern Railroad Company, or in any way or manner interfere with the said party of the first part in repossessing and retaking said one locomotive engine and tender, should default be made in any of the hereinbefore provided for payments, but the full legal right and title of said one locomotive engine and tender shall and does remain in the Rhode Island Locomotive Works, as fully, to all intents and purposes, as though the lease had not been made."
"And the said party of the first part hereby covenants and agrees that if the said party of the second part shall and do well and truly make each of the payments aforesaid at the times hereinbefore specified, without any let or hindrance or delay whatever as to any or either of said payments, that upon the last-mentioned payment, viz., $3,715.90, and all renewals being made, as well as each and all of the other said payments, the said party of the first part will and shall convey the said one locomotive engine and tender to the said party of the second part, and give them a full acquittance for the same, and that the title thereto shall ipso facto, by the completion of such payment, vest in the said J. Edwin Conant & Co., contractors for the Chicago & Illinois Southern Railroad Company."
"In witness whereof, the parties hereto have hereunto set the corporate seal, by the respective officers duly authorized."
"RHODE ISLAND LOCOMOTIVE WORKS"
"EDW. P. MASON, Treasurer"
"J. EDWIN CONANT & Co.,"
"Contractors C. & Ill. So. R.R."
"SEAL RHODE ISLAND"
Which agreement was endorsed as follows:
"STATE OF ILLINOIS, CUMBERLAND COUNTY:"
"I hereby certify that the within instrument was filed in this office for record on the twenty-eighth day of January, 1873, at two o'clock P.M., and duly recorded in book D of mortgages, page 485, and examined."
"Clerk and Ex-Officio Recorder"
It was admitted that the agreement was executed at its place of business, in Rhode Island, by the Rhode Island Locomotive Works, and in New York by Conant & Co., where they resided; that Conant & Co. paid no part of the principal of the purchase money, except the amount admitted on the face of the agreement; and that they obtained possession of said engine and its tender under said agreement, and took it to Illinois.
On the 28th of October, 1871, by virtue of a writ of attachment issued out of the Court of Common Pleas of Coles County, Illinois, in an action of assumpsit wherein Conant & Co. were defendants, the sheriff seized the Smyser as their property, and sold it to the plaintiff in error, Hervey.
On the 29th January, 1873, the Marshal of the United States for the Southern District of Illinois took possession of the Smyser under a writ of replevin sued out of the Circuit Court of the United States for that district by the Rhode Island Locomotive Works against Hervey, and the Paris and Decatur Railroad Company.
At the trial, the court below found a special verdict as follows:
That the lease offered in evidence by plaintiff was a subsisting executory contract between the parties thereto.
That the plaintiff had not parted with the legal possession of the locomotive in controversy.
That the plaintiff had never received payment for the locomotive in controversy other or further than as stated in the face of their lease.
That the plaintiff delivered to Conant & Co. the said locomotive to be used by them in Illinois, and that said locomotive was so used in that state.
That the possession of Conant & Co. was the possession of the plaintiff.
That the defendant obtained possession of the locomotive in controversy in due form of law, under execution, levy, and sale, in pursuance of a valid judgment obtained in a court of competent jurisdiction after due service upon the parties thereto in a suit against Conant & Co.
That a sale under said execution was, by an officer duly authorized thereto, made to the defendant Robert G. Hervey, and that payment was made, in the full amount bid at said sale, by said Hervey to said officer, and that the said officer delivered the said locomotive to said Hervey.
That subsequent to such sale and delivery by said officer to said Hervey, plaintiffs placed upon record, in the proper recorder's office in the county of Coles in the State of Illinois, where the said property was held, the said lease in the chattel mortgage records in said county.
That such recording of said lease was more than one year subsequent to the sale of said locomotive under said execution and levy.
That said sale by said officer to said Hervey was under a special execution, as shown by the public records of said Coles County.
Wherefore the court found for the plaintiff and gave judgment accordingly.
The defendants thereupon brought the case here.
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