Damage to Chattel in Possession of Mortgagor or Conditional Vendee.--When a chattel is mortgaged or sold pursuant to a conditional sales contract and is subsequently damaged by a third party while in possession of the mortgagor or conditional vendee, it is generally agreed that either party to the chattel mortgage' or conditional sales contract has a sufficient interest in the chattel to allow him to maintain an action against the wrongdoer. In Ellis v. Snell, the court allowed recovery by the mortgagor for the full amount of damage to the'mortgaged automobile, even though he was in default on the mortgage at the time the automobile was damaged by the defendant. In the course of its opinion the court stated a rather broad rule, as follows:
"A conditional vendor or conditional vendee can prosecute an action for damages, the result of negligence of third party, to property involved in a conditional sales contract. The same rule applies where the relationship is mortgagor and mortgagee, as well as the relationships of bailor and bailee, and a recovery by either will prevent a recovery by the other."
Claude E. Bankester,
Personal Property and Sales--1959 Tennessee Survey,
12 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol12/iss4/19