The Brunswick and Balke Company versus Hoover et al.

Supreme Court of Pennsylvania1880-11-08

95 Pa. 508

Summary · law.co

Holding. The court affirmed the judgment, holding that the transaction constituted a conditional sale of personal property rather than a bailment, regardless of the parties' characterization, and that such conditional sales do not protect the vendor's interest against the vendee's creditors.

Brunswick and Balke Company entered into a transaction with Hoover involving billiard tables. The parties executed two documents: a January 1878 contract for sale of the tables on credit, followed by a February 1878 lease agreement intended to secure payment. The defendant argued this was a bailment, but the court found the documents together constituted a conditional sale—a sale with ownership retained by the vendor until full payment. The court rejected the attempt to disguise the transaction as a bailment, finding the form of the documents less significant than their substance.

The court applied established Pennsylvania law holding that creditors of a buyer may seize goods sold on conditional terms, rendering such arrangements ineffective against third-party creditors. The defendant relied on Rowe v. Sharp, arguing the cases were identical, but the court distinguished it on two grounds: Rowe v. Sharp contained no lease-as-security agreement, and it included an express stipulation requiring return of property at bailment's end. The present lease contained neither feature—the lessor could re-enter only upon breach, and if the lessee performed, the property need never be returned. These provisions proved fatal to any bailment characterization.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Distinction between conditional sales and bailments
Effect of contract form versus substance on characterization
Rights of creditors against conditionally sold personal property
Requirements for valid bailment agreements

Procedural posture

The judgment of the trial court was appealed, and the appellate court affirmed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Mr. Justice Paxson

delivered the opinion of the court,

In the recent case of Stadtfeld v. Huntsman, 11 Norris 53, we endeavored to point out with some care the distinction between a conditional sale and a bailment, and the line of cases commencing with Clow v. Woods, 5 S. & R. 275, and ending with Enlow v. Klein, 29 P. F. Smith 488, was considered and commented upon. We need not repeat what was there said.

The case in hand comes precisely within the ruling of Stadtfeld v. Huntsman. The transaction was a conditional sale. The attempt to disguise it under the cloak of a bailment was too clumsy to have the merit of being clever. The contract of January 28th 1878 was a sale of the billiard tables upon a credit, with a stipulation that payment should be secured by a lease of the tables and an insurance thereon. When the tables were delivered the subsequent agreement of 22d of February 1878 was executed. This paper is in form a lease, and it was not denied that it was executed in pursuance of and in strict compliance with the contract of sale of the preceding January. The feeble attempt to prove that the tables were delivered under the lease and not under the contract, will not avail, for the reason, among others, that the two papers must be regarded as one transaction. Taken together they amount to a sale of the billiard tables upon credit accompanied with a lease thereof as a security for the payment of the price. Such a contract, while good between the parties, will not keep creditors at bay. It is worthless as to them. There is no principle of law better settled in Pennsylvania than that a sale and delivery of personal property, with an agreement that the ownership shall remain in the vendor until the purchase-money is paid, enables creditors of the vendee to seize and sell the. same for the payment of his debts. ’ It would be a needless labor to cite the numerous cases in which this doctrine has been asserted.

It was urged, however, that the case in hand is upon all fours with Rowe v. Sharp, 1 P. F. Smith 27, and that we cannot affirm this judgment without overruling that case. Rowe v. Sharp, like Enlow v. Klein, was a close ease and stands upon the border. It differs from the present one in two important particulars. While in Rowe v. Sharp there was evidence of a sale of the billiard tables by Sharp to Goff a few days prior to the lease, there was no agreement for a lease as security. And again, in Rowe v. Sharp there was an express stipulation for a return of the property at the end of the bailment. This important part of a contract of bailment is wholly omitted in the lease between the parties to this contention. The lessors may re-enter and take possession of the property upon a breach by the lessee of the covenants contained in the lease. Rut if the lessee fulfils his covenants, that is to say if he pays the several instalments as they mature, the lessors cannot reclaim the property, nor is the lessee bound to restore it after the bailment is over.

There is not a single element of a bailment in this transaction. It is immaterial what the parties call it; the law pays little heed to the label; it looks beneath and examines the nature and character of the contract between the parties.

Judgment affirmed.