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Gateway Discount Corp. v. Reed

March 26, 1954

GATEWAY DISCOUNT CORP.
v.
REED



Per Curiam

In essence this case involves the effectiveness of a full release of liability by a conditional vendee to a tort-feasor who settled an automobile damage claim with the conditional vendee without making the conditional vendor a party thereto. The tort-feasor had actual notice of the interest of the conditional vendor in the automobile. The trial court found the release by the conditional vendee barred the claim of the conditional vendor against the tort-feasor in the absence of any contrary agreement between the tort-feasor and the conditional vendor, or of bad faith on the part of the tort-feasor.

This court has adhered to the view that conditional sales contracts are essentially security transactions in the nature of chattel mortgages. Farmers & Depositors Bank v. Taylor, 290 Ky. 774, 162 S.W.2d 764; Taylor Motor Sales Co. v. Automobile Ins. Co. of Hartford, Connecticut, 220 Ky. 6, 294 S.W. 773. On that theory, the tort-feasor was entitled to settle with the conditional vendee, and, consequently, is protected by a release in full from the conditional vendee unless a specific understanding to the contrary, as alleged here, had been entered into with the conditional vendor, or unless the element of bad faith appears in the picture -- which was neither charged nor suggested here.

Finding no prejudicial error and less than $2,500 being involved, the motion for an appeal is overruled and the judgment is affirmed.

19540326

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