Elster's Sales v. El Bodrero Hotel, Inc.

FLEMING, J.

Elster’s, the seller of restaurant equipment, sought to recover in rounded figures $13,000 from El Bodrero, the buyer, on a defaulted conditional sales contract. El Bodrero cross-complained for $2,500, contending that on repossession and resale of the equipment Elster’s had realized a surplus above the amount of the debt El Bodrero owed under its contract. Judgment went for El Bodrero for $2,500 plus interest from the date of resale, and Elster’s appeals.

In May 1961 Elster’s had sold restaurant equipment under conditional sales contract to El Bodrero for $72,000. In July 1962 El Bodrero defaulted on its contract still owing $49,500, and in January 1963 Bister’s repossessed the equipment. In February 1963 Elster’s entered a new conditional sales contract with Growth Development for the sale of the repossessed equipment for $54,000 and paid a sales tax of $2,000, which on paper left it $2,500 ahead of the $49,500 owed it by El Bodrero. Had the resale of the equipment been completed according to the terms of the new contract both parties agree that the surplus of $2,500 would belong to El Bodrero.

But Growth Development, after making time payments of $4,000, likewise defaulted. Bister’s again repossessed and in December 1963 again sold the equipment on conditional sales contract, this time to Jack Cherniss for $36,000. Elster’s then sought a deficiency judgment against El Bodrero for $13,000 under the terms of their conditional sales contract: ‘‘ Should Purchaser [El Bodrero] fail to pay said indebtedness . . . Seller may resell the property at public or private sale, and apply the proceeds, after deducting expenses and liens, to the payment of said amount due hereunder and pay to Purchaser the surplus, if any, or in case of a deficiency Purchaser agrees to pay Seller the same at once. ’ ’ El Bodrero cross-complained under the same contract for payment of the surplus of $2,500.

[260]

Elster’s seeks to hold El Bodrero liable for the difference between the net amount realized for the equipment on its three sales and the amount of the original sales price.

1

El Bodrero claims it is entitled to collect the paper profit which resulted from the resale of the equipment to Growth Development. As seen by the parties, the controversy turns on whether liability of the parties to each other is determined by the purchase price promised by Growth Development, or by the net amount realized in the transaction by Elster’s ($2,000 net cash payments plus $36,000 promised in the third sale). But as we see the transaction, neither of these alternatives fully recognizes the various possibilities which are inherent in the case.