tf 9 '5.S4 C |W- f . %Ubrary Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018830319 BENJAMIN'S SALE OF PERSONAL PROPERTY. VOLUME ONE. BENJAMIN'S Treatise on the Law OF SALE OF PERSONAL PROPERTY WITH REFERENCES TO THE AMERICAN DECISIONS. THIRD ENGLISH EDITION. !K BOYD, WITH THE PUBLISHERS' RESPECTFUL COMPLIMENTS. COUNSELOR-AT-LAW. IN TWO VOLUMES. VOL: I. JERSEY CITY: FREDERICK D. LINN & CO. 1883. BENJAMIN'S Treatise on the Law OP SALE OF PERSONAL PROPERTY WITH REFERENCES TO THE AMERICAN DECISIONS. THIRD ENGLISH EDITION. WITH THE AUTHOR'S SANCTION AND REVISION. BY ARTHUR BEILBY PEARSON, B. A., and HUGH FENWICK BOYD, OF THE INNER TEMPLE, BABRISTERS-AT-LAW. FOURTH AMERICAN EDITION. BY C KC -A- IE! Hi IE S Xa. COEBI1T, COUNSELOR-AT-LAW. IN TWO VOLUMES. VOL: I. JERSEY CITY : FREDERICK D. LINN & CO. 1883. Copyright, 1883, by P. D. LINN & CO. The W. S. Sharp Printing Oo., Printers and Stereotypers, Trenton, N. J. TO THE HONORABLE DAVID A. DEPUE Justice of the Supreme Court of New Jersey, h: v THE AMERICAN NOTES TO THIS WORK ARE RESPECTFULLY DEDI- CATED, AS AN EXPRESSION OP ADMIRATION FOR HIS PROFOUND RESEARCH, EXTENSIVE LEARNING AND ACCURATE DISCRIMINATION AS A JURIST. THE AMERICAN EDITOR. A CARD. The English publisher of " Benjamin on Sales " recommends to the American bar the fourth American edition, published by F. D. Linn & Co., of Jersey City. This edition is published from advance sheets of the third English edition, purchased from me, and is the only edi- tion printed or to be printed in the United States from the English- advance sheets or with authority from me. HENKY SWEET. 3 Chancery Lane, London, April 6th, 1883. AMERICAN EDITOR'S PREFACE. The American decisions on the law of sales are very numerous, and no attempt has been made by the American editor to cite them all. Preference has been given in making a selection to the decisions of the United States Supreme Court and to the recent decisions of the state courts and of the courts in Ontario Province. More than two-thirds of the cases cited were decided within the last fifteen years. The law of sales embodied in these cases differs in many important particulars from the law as established by the older authorities. In many of them the work of Mr. Benjamin, first published in 1868, is cited, and there can be no doubt that it has contributed greatly to harmonize conflicting views. The law of sales is chiefly common law, and has been little varied by legislation in the United States. English decisions on this subject are, therefore, of special value to us and are daily cited in our courts. Mr. Benjamin's treatise collects the most authoritative English cases, states them with clearness and classifies them with accuracy. In this accuracy of classification consists a striking merit of the work, the subject being one that requires careful discrimination to avoid confusion. The American decisions usually lend themselves readily to our author's division of his subject, and on most points accord with the text. Some important differences exist. These arise from a preference often given to ancient English authorities over modern decisions over-ruling them, from the more liberal remedies afforded by the American courts, and in some few instances, from a deliberate refusal to follow English precedents, because not adapted to our institutions or circumstances. The following is a statement of the most important of these differences : vii Vlii AMERICAN EDITOR'S PREFACE. 1. Markets overt do not exist in the United States, and therefore no title can be acquired by purchase of any stolen property excepD negotiable securities. See p. 15. 2. As to the competency of married women to contract, the American cases follow the older and reject the later English authorities, and hold that desertion of a wife by her husband removes her disability. See p. 44. But the statutes in both countries have so far removed the disabilities of married women that this difference has become unim- portant. See p. 48, et seq. 3. Whether the section of the statute of frauds relative to execu- tory contracts for the sale of goods, applies to a case where goods are manufactured or a chattel is made to order for the purchaser, is a ques- tion which our author regards as settled in 'England, after much con- troversy, in the affirmative, by the case of Lee v. Griffin, 1 B. & S. 272. Our courts for the most part have refused to follow Lee v. Griffin, though it has been recognized in several states and in Ontario Province. See pp. 125-127. 4. In England an executory contract for the sale of growing timber or other natural products of the soil to be severed, is regarded as a sale of goods under the statute of frauds, and this view is taken in Massa- chusetts and several other states. See p. 136. But American authorities for the most part support the proposition that such a sale is a sale of an interest in land within the meaning of the statute. See p. 139. 5. In general, on an unconditional sale of specific personal property, the title passes by force of the contract, without delivery or payment, the seller having merely a lien for the price while the goods continue in his possession. The American decisions recognize, in addition to this lien, the right of the seller to rescind the sale on default of pay- ment by the buyer. See p. 339. 6. The rule called " Lord Blackburn's second rule," stated on page 359, that where goods are to be weighed or measured to ascertain the price, the property does not pass until the price has been thus ascer- AMERICAN EDITOR S PREFACE. IX tained, has been so little regarded in America that it can hardly be called a rule here. See pp. 378, 390. 7. There is a class of contracts, very common in this country, where the possession of a chattel sold, or contracted to be sold, on credit, is given to the buyer, under an agreement that the ownership shall re- main in the seller until the price is paid. It is universally held that such an agreement is valid between the parties. But where the party thus in possession sells to a bona fide purchaser for value, without no- tice, in many of the states it is held that such purchaser obtains title. This is the view taken in the United States Supreme Court, where contracts of sale, accompanied by delivery, but reserving title to secure the price, are regarded as chattel mortgages, and void unless recorded as such under the chattel mortgage acts. Many American courts, however, still enforce the law of England, that one in possession, un- der such a conditional sale, having no title, can confer none. See pp. 405-421. 8. That the property in goods cannot pass until they are identified and set apart from the bulk of which they form part, our author says is clear. See p. 323. But the American decisions hold that where the property sold is part of a specific mass of uniform character and quality, title will pass in the portion sold though not separated from the bulk. See pp. 428-440. 9. In England, when a chattel is made to order, the property does not, in general, pass to the purchaser until acceptance by him. See pp. 461-463. The recent American decisions seem to warrant the statement that the seller may, on the due completion of a chattel or- dered, consider it as the property of the buyer, and maintain a suit for the price, even though the buyer has refused to accept it. See pp. 463, 476-478, 980, 981. 10. In Massachusetts and some other states, the courts have adopted an opinion formerly held, but now overruled in England, that the buyer of a warranted chattel may avoid the contract of sale for breach of the warranty. In most of the states, however, the modern Eng- lish doctrine has been preferred. See pp. 546-551. X AMERICAN EDITOR S PREFACE. 11. It was formerly held in nearly all the states, and in the United States Supreme Court, that where one who bought goods permitted them to remain in the seller's possession, the transaction was a fraud in law as to the creditors of, and purchasers from, the seller. This opinion was based on public policy and on the authority of the case of Edwards v. Harben, 2 T. E. 587. In most of the states the law is now held to be as in England, that the retention of possession is presumptive evidence of fraud, but that the presumption may be re- butted by proof of good faith, and that the question is one of fact and not of law. Many courts of high authority, however, hold to the old rule. See pp. 641-647. 12. Our author says, on page 787 : " In America the law seems to be fairly settled in accordance with the decision in Simpson v. Crippen, viz., that in the absence of any expressed intention of the parties, a contract for the sale of goods by successive deliveries is severable, and the failure to accept or deliver one installment does not entitle the other party to refuse delivery or acceptance of the installments that remain." And our author applies this to cases where the considera- tion is entire, and not severable. From this view of the law in America, as to the effect of a default in the delivery or acceptance of an installment, this editor dissents, although not very confidently. The subject will be found discussed in the note, pp. 787-790. 13. In England a warranty of title is implied in all sales of per- sonal property. It is generally laid down in American text-books that no warranty of title is implied on a sale of personal property not in the seller's possession at the time of sale. Few recent decisions will be found upholding this proposition, and it is not improbable that the recent English decisions on this subject will be followed in our courts. See pp. 840, 841. 14. Our author insists that where a chattel is sold by description, and the article sold does not answer the description, the case is not to be regarded as one of breach of warranty, but of breach of a condition precedent. Therefore the buyer cannot accept property not answering the description and recover damages, but must reject the chattel. See AMERICAN EDITOR'S PREFACE. XI pp. 799, 844. But the American decisions place sales by descrip- tion on the same footing as sales by sample, and without denying the remedy of rejection of goods not answering the description, afford ad- ditional remedies by treating words of description as words of war- ranty. See p. 799, note 32, (language of Depue, J.,) and p. 844, note 24. 15. Where one who has contracted to deliver goods under an entire contract of sale, makes a partial delivery, and fails as to the residue, the question arises whether he has any remedy. Our author says that the buyer may refuse a delivery of part ; but if 'he accepts part, he must pay for it or return it, after the time for delivery of the whole has ex- pired. See p. 901. But in New York, the decisions hold that the seller can recover nothing for partial delivery, unless the buyer has waived complete delivery, and such waiver is not inferred from the mere receipt and consumption of the goods by the buyer, pursuant to the contract. This harsh rule has been followed in several other states. But the modern American rule, sustained by strong au- thority, permits the seller who has made a partial delivery, to recover its value, deducting therefrom damages for breach of his contract to deliver the residue; and this remedy he has, even though his default was willful. See pp. 901-903. 16. In England, payment of the price of goods by bill of ex- change, note, or other negotiable security, is presumptively conditional, and the right to the price revives on the non-payment of the security. This is the law in most of the states, and in the Supreme Court of the United States. See pp. 938-942. But in Maine, Vermont, Massachusetts, and Indiana, such payment is presumptively an abso- lute satisfaction of the debt. The English editors erroneously suppose the same rule to prevail in Illinois, Wisconsin, and other states. See pp. 965, 966. 17. Our author elaborately reviews the English decisions as to the seller's remedy of resale in cases where the buyer has failed to accept, and pay for the goods sold or contracted for. This remedy seems never to have been fully settled and defined in England, and it would appear, from recent decisions, that the courts there do not recognize Xll AMERICAN EDITORS PREFACE. any such right unless reserved to the seller by agreement, although the buyer being in default cannot maintain trover against the seller be- cause of such resale. In the United States the seller's remedy by resale on the buyer's failure to accept and pay, is generally recog- nized, and the principles which govern its exercise are well settled. See pp. 1013, 1019-1023. It is believed that the foregoing summary includes most of the topics under the law of sale, on which the American and the English courts disagree ; and it will be observed that there is high American authority to be found in accord with the English decisions on many of these points. On the whole, considering the wide range of the subject, the differences are remarkably few. The work of the American editor will be found in the notes dis- tinguished by numbers, the English notes being designated by let- ters. Besides these notes, the American editor has introduced into the text an addition to each of Chapters II., III., IV., V., andjVL; Book II., stating the American law on the subjects considered in those chap- ters, the questions there discussed having given rise to much recent litigation in this country. An addition has also been made to Chap- ter I., Book III., treating of Avoidance for Breach of Warranty, a right not recognized in England. Mr. Benjamin has not divided his work into numbered paragraphs. These have been added by the American editor for convenience of cross-reference. The index and table of contents refer to the pages. New York, April, 1883. Charles L. Corbln. PREFACE TO THE THIRD EDITION. In presenting a new edition of " Benjamin on Sales," the editors must crave a full measure of indulgence, by reason of the difficulties with which they have had to contend through the enforced retirement of the learned author from the profession. It was Mr. Benjamin's intention to have revised the work throughout as it passed through the press, and he had accordingly revised and approved the editors' labors up to the end of the chapter on Delivery (p. 913 ,) when his health gave way, and he was interdicted by his physicians from any further work, and ordered absolute repose and cessation from all intellectual fatigue. Under these circumstances the editors are compelled to issue the work as completed by themselves. In accordance with the author's desire, the text of the last edition has been retained, and all fresh matter, other than that inserted in the notes, is included in brackets. This course, whilst entailing the re- tention of some portions of the work, — particularly in the chapter on Parties, — the subject matter of which has been rendered obsolete by later decisions and statutes, is in the opinion of the editors justified, by reason of the high value which has attached to the text of the treatise. It must also be remembered that the learned author had not at his disposal the leisure time necessary for re-casting the work. The passing of the Bills of Sale Acts, J 878 and 1882, and the numerous decisions following upon the earlier statute, made it neces- sary to re-write the portion of the work dealing with the subject of Bills of Sale. Owing to the unavoidable delay attending publication, it was im- possible to consider in the text the effect of the Married Women's xiii XIV PREFACE TO THE THIRD EDITION. Property Act of 1882. It has, therefore, been set out, so far as ma- terial, with a few observations, in the supplementary pages at the end of the chapter on Parties. The more important decisions of the Supreme Court of the United States, and of the Court of Appeals in the State of New York, together with some decisions of the other states on the subject of the book, have been noticed. The index, in the compilation of which the editors are indebted for assistance to their friend Mr. F. J. Frankau, barrister-at-law, has been very much enlarged, and will, it is thought, be found complete. In conclusion, the editors express the earnest hope that their work may not have impaired the high reputation which "Benjamin on Sales " has won in America, as well as in this country. Temple, February, 1883. A. B. P. H. F. B. PREFACE TO THE SECOND EDITION. In this second edition, the numerous important decisions which have been given since the publication of this treatise in 1868, have been carefully noted, and some anterior authorities which had escaped the author's research have been added. The favorable reception given to the work in the United States has encouraged the insertion of a larger number of American decisions; but in order to avoid an unnecessary increase in the bulk of the volume, reference has generally been confined to the latest leading case in the Reports of the Supreme Court of the United States, and of the Court of Appeals in the State of New York. This will suffice to guide the reader to the authorities in the courts of the other states. Temple, July, 1873. xv PREFACE TO THE FIRST EDITION. If the well-known treatise of Mr. Justice Blackburn had been designed by its learned author to embrace the whole law on the subject of sale of goods, nothing further would now be needed by the prac- titioner than a new edition of that admirable work, incorporating the later statutes and decisions, so as to afford a connected view of the modifications necessarily introduced by lapse of time into the law of a contract so perpetually recurring as that of sale. But unfortunately for the profession, Blackburn on Sale was intentionally restricted in its scope, and is confined to an examination of the effect of the contract only, and of the legal rights of property and possession in goods. This treatise is an attempt to develope the principles applicable to all branches of the subject, while following Blackburn on Sale as a model for guidance in the treatment of such topics as are embraced in that work. An effort has been made to afford some compensation for the imperfections of the attempt, by references to American decisions, and to the authorities in the civil law, not elsewhere so readily accessible. Temple, August, 1868. xvi TABLE OF CONTENTS. BOOK I. Formation of the Contract. PART I. — At Common Law. CHAPTER I. PAGE. The Contract of Sale of Personal Property, its form, and essential elements 1 CHAPTER H. The Parties. 12 Sec. 1.— Who may Sell 12 2.— Who may Buy 31 CHAPTER III. Mutual Assent 52 Sec. 1. — At Common Law 52 2.— Civil Law 82 3. — American Law 84 CHAPTER TV. The Thing Sold 94 CHAPTER V. The Price 102 xvii XV111 TABLE OF CONTENTS. PAET II. — Under the Statute of Frauds. CHAPTEE I. PAGE. What Contracts are -within the Statute 108 CHAPTEE II. What are Goods, Wares and Merchandise 129 CHAPTEE III. " Of the price or value of ten pounds," 155 CHAPTEE IV. Acceptance and Eeceipt 159 Sec. 1. — What is an Acceptance 160 2. — What is an actual Eeceipt 190 CHAPTEE V. Earnest and Part Payment 204 CHAPTEE VI. The Memorandum or Note in Writing 213 Sec. 1. — What is a Note or Memorandum in Writing 236 2. — What is a sufficient Note of the Bargain made. . . . 246 CHAPTEE VII. Signature of the Party to be charged 279 CHAPTEE VHI. Agents duly authorized to sign 289 TABLE OF CONTENTS. XIX BOOK II. Effect of the Contract in Passing Property. CHAPTER I. PAGE. Distinction between Contracts Executed and Executory 321 CHAPTER II. Sale of Specific Chattels Unconditionally 326 Sec. 1.— Buyer's Risk 330 2.— Effect of Seller's Agreement to Deliver 333 3. — Effect of Payment in Passing Property 338 CHAPTER III. Sale of Specific Chattels Conditionally 358 Sec. 1. — First Rule— American Decisions 382 2. — Second Rule — American Decisions 390 3. — Third Rule — American Decisions 396 4 — Third Rule — Rights of- Purchasers and Creditors, 405 CHAPTER IV. Sale of Chattel not Specific 422 American Decisions 428 CHAPTER V. Subsequent Appropriation 441 American Decisions 463 >. CHAPTER VI. Reservation of the jus disponevdi 480 American Decisions 503 CHAPTER VII. Nature and Effect of a Sale by the Civil French and Scotch Law, 516 XX TABLE OF CONTENTS. BOOK III. Avoidance of the Contract. CHAPTER I. PAGE. Mistake, and Failure of Consideration 528 Sec. 1. — Mistake, and Failure of Consideration 528 2. — Avoidance for Breach of Warranty — American Decisions 546 CHAPTER II. Fraud 552 Sec. 1. — In General 554 2.— On the Vendor 568 3.— On the Buyer 591 4.— On Creditors— Statute of Elizabeth 636 5.— " " Bills of Sale 648 6. — " " Fraudulent Preference 675 CHAPTER III. Illegality 679 Sec. 1. — At Common Law 679 2.— By Statute 707 BOOK IV. Performance of the Contract. PART I.— Conditions 735 TABLE OP CONTENTS. XXI PART II.— Vendor's Duties. CHAPTER I. PAGE Warranty 807 Sec. 1. — Express Warranty 808 2.— Implied Warranty of Title 828 3. — Implied Warranty of Quality 842 CHAPTER H. Delivery 880 PART III.— Buyer's Duties. CHAPTER I. Acceptance 913 CHAPTER II. Payment and Tender 919 BOOK V. Breach of the Contract. PART I. — Rights and Remedies of the Vendor. CHAPTER I. Personal Actions against the Buyer 971 Sec. 1. — Where Property has not passed 971 2. — Where Property has passed 980 XX11 TABLE OF CONTENTS. CHAPTER II. PAGE. Remedies against the Goods — General Principles 985 CHAPTER ni. Remedies against the Goods — Resale 1008 CHAPTER IV. Remedies against the Goods — Lien 1024 CHAPTER V. Remedies against the Goods — Stoppage in transitu 1056 Sec. 1. — "Who may exercise the right 1059 2. — Against whom may it be exercised 1068 3. — When does the transit begin : and end 1069 4. — How is the Right exercised 1094 5. — How may it be defeated 1100 6. — What is the Effect of Stoppage in transitu 1112 PART II. — Eights and Remedies of the Bitter. CHAPTER I. Before obtaining Possession of the Goods 1118 Sec. 1. — Where the Contract is Executory 1119 2. — Where the Property has passed 1143 CHAPTER II. After receiving Possession' of the Goods 1150 ADDENDA ET CORRIGENDA. Page 42, note (Q, add " but see In re Weaver, 21 Ch. D. 615, C. A." 63, note (b), after "post p." add " 88.'' 64, note (ft.) after "post p." add "68." 98, on Belding v. Reed, add reference to Lazarus v, Andrade, 5 C. P. D, 318, and Re D'Epineuil, 20 Ch. D. 758. 253, 2d line from foot of page, after words "in its nature and effects is," *idd "in some respects; 1 ' and see Cassaboglou v. Gibb, 9 Q,. B. D. 220, (under appeal.) 459, note (d), add "the last case on this subject is Stock v. Inglis, 9 Q. B. D. 708, 717." 563, note (ft.)— Heaven v. Pender is now under appeal, (see, also, p. 565.) 597, note 33, for " g738 " read "g 638." 648, at close of note 61, for " ante note 6 " read " ante note 60." 674, note (/), add "and an unregistered bill of sale, executed before the act of 1882 came into operation, is not void as between the parties. Hickson v. Darlow, 31 W. R. 361." 746, note 7, for "neurainem" read " neminem," and for " sen " read u seu.'' 784, note (h) — The remarks of Bowen, L. J., are now reported in 9 Q. B. D., at p. 671. 786, note (o)— The Mersey Steel and Iron Co. ». Naylor is now reported in 9 Q,. B. D. 648, C. A. SALE OF PERSONAL PROPERTY. BOOK I. FORMATION OF THE CONTRACT. PART I. AT COMMON LAW. CHAPTER I. OF THE CONTRACT OF SALE OF PERSONAL PROPERTY, ITS FORM, AND ESSENTIAL ELEMENTS. Definition of a bargain and sale of The elements of the contract.. Parties Mutual assent SEC. Transfer of absolute property 1 Price in money 2 Form at common law 3 Form by statute of frauds 4 § 1. By the common law a sale of personal property is usually termed a " bargain and sale of goods." It may be de- or Hence it follows, that to consti- Definition of a fined to be a transfer of the absolute or general property sale of goods. in a thing for a price in money, (a) 1 (a) Blackstone's definition is, " a trans- transfer of property from one person to mutation of property from one man to another for a valuable consideration." 2 another in consideration of some price." Kent 468, (12th ed.) This definition 2 Bl. 446. Kent's is, " a contract for the would include barter, which, though in 1. Definition of Sale. — The term "sale" as used in a statute, was defined by the United States Supreme Court in the case of Williamson v. Berry, 8 How. 544, as follows : "We remark that 'sale' is a word of precise legal import, both at law and in equity. It means at all times a contract between parties to give and to 1 2 FORMATION OP THE CONTRACT. [BOOK I. tute a valid sale, there must be a concurrence of the following ele- The elements ment s, viz. : (1st) Parties competent to contract; (2d) of the contract. Mutual assent ; (3d) A thing, the absolute or general property in which is transferred from the seller to the buyer • aud (4th) A price in money paid or promised. That it re- quires (1st) parties competent to contract, and (2d) mutual assent, in order to effect a sale, is manifest from the general principles which govern all contracts. The third esaen- Transfer of tial is that there should be a transfer of the absolute or crty. general property in the thing sold ; for in law, a thing may in some cases be said to have in a certain sense two owners, one of whom has the general, and the other a special property in it ; and a transfer of the special property is not a sale of the thing. An Jenkins v illustration of this is presented in the case of Jenkins v. Brown. Brown, (6) where a factor in New Orleans bought a cargo of corn with his own money, on the order of a London correspondent. He shipped the goods for account of his correspondent, and wrote let- ters of advice to that effect, and sent invoices to the correspondent, and drew bills of exchange on him for the price, but took bills of lading to his own order, and endorsed and delivered them to a banker most respects analogous, is certainly not ion of the school of Proculus, that price identical, with sale. Whether the con- was of the essence of the contract of sale ; tracts of barter (permutatio) and sale and barter was relegated to the class of (emptio-venditio) were essentially different, real contracts. Vide Gams, lib. iii., 140 ; was for a long time a moot point with Inst., lib. iii., c. 23 ; D., lib. xviii., c. 3. the two rival schools of Koman jurists. The dispute was one of some practical Gaius, professing to be a Sabinian, main- importance, owing to the consequences tained, from the purely historical point which flowed from the distinction in the of view, that there was no distinction, Roman law between real and consensual barter being only the most ancient form contracts. of the contract of sale. Justinian, how- (6) 14 Q. B. 496 ; 19 L. J., Q. B. ever, adopted and promulgated the opin- 286. pass rights of property for money, which Patlen v. Smith, 5 Conn. 196, 199, Hos- tile buyer pays, or promises to pay, to the mer, C. J., said : " The sale of goods and seller for the thing bought and sold." chattels is a transmutation of property This definition was approved in Huth- from one to another, accompanied, when- macher v. Harris, 38 Penna. 498 ; Macka- ever it is practicable, with a delivery of ness v. Long, 85 Penna. 158, 163 ; and the articles to the purchaser." This limi- Edwards v. Cottrell, 43 Iowa 194, 204. tation, as to delivery, is against the The definition in the text was cited in weight of authority, except where the Wittowsky v. Wasson, 71 N. C. 451. contract of sale provides for delivery by See De Fouclear v. Shottenkirk, 3 Johns, the vendor. See infra, ffl 315, 325, 170 ; Gardner v. Lane, 12 Allen 39. In et seq. PART I.J ELEMENTS AND FORM OF THE CONTRACT. 3 to whom he sold the bills of exchange. This transaction was held to be a transfer of the general property to the London merchant, and therefore a sale to him ; and a transfer of a special property to the banker by the delivery to him of the bills of lading, which repre- sented the goods. And in like manner when goods are delivered in pawn or pledge, the general property remains in the pawnor, and a special property is transferred to the pawnee, (c) 2 § 2. So in relation to the element of price. It must be money, paid or promised, accordingly as the agreement may be for a Price _ muBt cash or a credit sale ; 3 but if any other consideration than be mone y- money be given, it is not a sale. If goods be given in exchange for goods, it is a barter. 4 So also goods may be given in consideration of work and labor done, or for rent, or for board and lodging, (d) or any valuable consideration other than money ; all of which are con- tracts for the transfer of the general and absolute property in the thing, but they are not sales of goods. The legal effects of such special contracts, as well as of barter, on the rights of the parties are generally, but not always, the same as in the case of sales, (e) If no valuable consideration be given for the transfer, it is a gift, (/) not a sale. 5 (c) Halliday v. Holgate, L. E., 3 Ex. 3. It is not necessary that the price 299 ; Harper v. Goodsell, L. E., 5 Q. B. should be fixed to constitute a sale, pro- 424. vided the property is delivered. The 2. Property in a Pledge. — Gibson v. law in such case implies a promise to pay Boyd, 1 Kerr (N. B.) 150 ; Jarvis v. the value. "A delivery in consideration Eogers, 15 Mass. 389. " Where property of being paid the value is a sale." Hill is pledged, the pledgee acquires a special v. Hill, 1 N. J. L. (Coxe) 261. See \ 85, property in the goods, and we are aware infra. of no reason or principle that would pre- 4. See note 4, p. 5. vent a transfer, nor can we perceive any (d) See an example in Keys v. Har- reason why the mere transfer of the wood, 2 C. B. 905. pledged property should destroy the (e) For cases showing distinction be- -original lien." Craig, J., Belden v. Per- tween sale and barter, see Harris v. Fowle, kins, 78 111. 449, 451; Talty v. Freed- cited in Barbe v, Parker, 1 H. BI. 287; men's Savings Co., 3 Otto 321. In like Hands v. Burton, 9 East 349; Harrison v. manner the pawnor can sell his interest, Luke, 14 M. & W. 139 ; Sheldon v. Cox, subject to the rights of pawnee. Jack v. 3 B. & C. 420 ; Guerreiro v. Peile, 3 B. & Eagles, 2 Allen (X. B.) 95; Van Blar- Aid. 616; Forsyth v. Jervis, 1 Stark. 437; com v. Broadway Bank, 37 N. Y. 540 ; Eead v. Hutchinson, 3 Camp. 352. •Carrington v. Ward, 71 N. Y. 360. (/) Parol gifts of personal chattels do 5. See note 5, p. 5. 4 FORMATION OF THE CONTRACT. [BOOK 1 In Ex parte White, In re Neville, (g) is an interesting exposition, by James and Mellish, L. JJ., of the principles by which to distin- guish between a contract of " sale or return " and a contract of del credere agency; and in the South Australian Insurance Company v. Randell, (A) the distinction between a sale and a bailment is eluci- dated. 6 § 3. By the common law, all that was required to give validity to- Form at com- a sa ^ e °f personal property, whatever may have been the mon law. amount or value, was the mutual assent of the parties to the contract. As soon as it was shown by any evidence, verbal or written, that it was agreed by mutual assent that the one should trans- fer the absolute property in the thing to the other for a money price, the contract was completely proven, and binding on both parties. If, by the terms of the agreement, the property in the thing sold passed immediately to the buyer, the contract was termed in the common law " a bargain and sale of goods ;" but if the property in the goods was to remain for the time being in the seller, and only to pass to the buyer at a future time, or on the accomplishment of certain conditions, as, for example, if it were necessary to weigh or measure what was sold out of the bulk belonging to the vendor, then the contract was called in the common law an executory agreement. The distinction between a bargain and sale of goods aud an executory agreement is the subject of Book II. of this Treatise. § 4. A very important modification of the common law in respect statute of to a bargain and sale of goods, and to an executory con- frauds. tract, was introduced by the statute 29 Car. II., c. 3, com- monly called the Statute of Frauds, and an amendment thereof, the not pass the property, if there be no actual declaration of trust; but this decision,, delivery to the donee. Irons v. Small- although approved by Malins, V.-C, in piece, 2 B. & A. 551 ; Shower v. Pilch, 4 Baddeley v. Baddeley, 9 Ch. D. 113, is Ex. 478 ; Douglas v. Douglas, 22 L. T. opposed to the current of recent authori- (N. S.) 127 ; Power*. Cook, 4 Ir. R. C. L. ties. Warriner v. Rogers, 16 Eq. 340 ; 247. As to gifts of money by cheque, see Richards v. Delbridge, 18 Eq. 11 ; Moore- Bromley v. Brunton, 6 Eq. 275, and cases v. Moore, Id. 474; Heartley v. Nicholson, there cited : Jones v. Lock, 1 Ch. 25 ; In 19 Eq. 233; In re Breton's Estate, 17 Ch. re Beak's Estate, 13 Eq. 489 ; Rolls v. D. 416. Pearce, 5 Ch. D. 730. And as to gift of ( g) 6 Ch. 397 ; S. C. in H. L., 21 W. a bond without delivery, see Morgan v. R. 465; and see Ex parte Bright, In re Malleson, 10 Eq. 475, and cases there Smith, 10 Ch. D. 566, C. A. cited. In Morgan v. Malleson, the Court (A) L. R., 3 P. C. C. 101. treated a gift, which was imperfect by 6. See note 6, p. 6. reason of non-delivery, as an effectual PART I.J ELEMENTS AND FORM OP THE CONTRACT. 9 Geo. IV., e. 14, § 7, known as " Lord Tenterden's Act," which are very fully considered, post, Book I., Part 2. 4. Sale or Barter. — The chief practi- cal importance of the difference between barter and sale, lies in the different form of pleading required in case of breach. In an action for breach of an agreement to exchange, the declaration must contain a special count on the agreement. The common counts will not suffice. An aver- ment of sale will not be sustained by proof of an exchange. Vail ». Strong, 10 Vt. 457 ; Weart v. Hoagland, 2 Zab. 517; Mitchell v. Gile, 12 1ST. H. 390. But if the contract is to pay an agreed price for goods received in specific arti- cles of which the quantity is not fixed, the contract is a sale, and suit will lie for the price if the articles are not delivered, and will not lie for breach of agreement to deliver the articles. Weiss v. Mauch Chunk Iron Co., 58 Penna. 295, 301; White i. Tompkins, 52 Penna. 363; Herrick v. Carter, 56 Barb. 41; Butcher v. Carlile, 12 Gratt. 521 ; Crockett v. Moore, 3 Sneed (Tenn ) Ho; Picard o. McCormick, 11 Mich. 68, 77. An agreed price indicates a sale, not being essential to » barter. Loomis v. Wain- wright, 21 Vt. 520. But, of course, the fact that a price was fixed is not con- clusive, and where a fixed price for goods delivered is to be paid in a fixed quan- tity of some other goods, or in some other goods at a certain price per yard, pound or bushel, the transaction is an ex- change and must be sued on as such. Butcher v. Carlile, 12 Gratt. 520, 522; Beirne v. Dunlap, 8 Leigh 514. One on whom the owner confers authority to sell property obtains no authority to barter it. " A mortgage of a chattel with power of sale confers no right to ex- change the mortgaged property for other property." Edwards v. Cottrell, 43 Iowa 194, 204. 5. Gifts.— Actual delivery and accept- ance are necessary to pass title by gift. Mahan v. United States, 16. Wall. 143 ; Grover v. Grover, 24 Pick. 261 ; Young v. Young, 80 N. Y. 422, 430. The law pre- sumes acceptance of a beneficial gift, so that a gift to an infant or lunatic is valid. Binker v. Einker, 20 Ind. 185 ; De Levil- lain v. Evans, 39 Cal. 120. The mere promise to make a gift, though in writing, is void. A gift of the giver's own note does not bind him to pay it, for want of con- sideration, unless it is purchased by some third person bona fide. Phelps v. Pond, 23 N. Y. 69, 78 ; Walsh v. Kennedy, 9 Phil. 178 ; Starr v. Starr, 9 Ohio St. 74. Even money or property delivered to an attorney or trustee for the benefit of a third person, or for a charitable purpose, may be reclaimed before it reaches the beneficiary. 2 Kent Com. 439 ; People v. Johnson, 14 111. 342 ; Picot v. Sanderson, 1 Dev. (N. C.) 309. But when the trustee has changed his character and become, with the assent of the donor, agent or trustee for the donee, the gift is beyond recall. Blanchard v. Sheldon, 43 Vt. 512 ; Dresser v. Dresser, 46 Me. 48. But death revokes an agency ; therefore, if the agent has not made delivery, or become agent for the donee in the donor's lifetime, the gift fails. Phipps *. Hope, 16 Ohio St. 586 ; Sessions v. Mosely, 4 Cush. 87 ; Trough's Estate, 75 Penna. 115 ; Helfen- stein's Estate, 77 Penna. 328. No formal delivery is needful where the donee is already in possession of the chattel as bailee for the donor. Wing v. Merchant, 57 Me. 383 ; Champney v. Blanchard, 39 N. Y. Ill; Tenbrook v. Brown, 17 Ind. 410. "Gifts inter vivos and gifts causa mortis differ in nothing except that the latter are made in expectation of death, become effectual only upon the death of the donor and may be revoked. Other- wise the same principles apply to each." Davis, J., in Dresser v. Dresser, 46 Me. 48, 67. In the case of Betts v. Francis, FORMATION OF THE CONTRACT. [BOOK I. 30 N. J. L. 152, a father bought furni- ture and put it in the house of his son, upon the latter's marriage, saying noth- ing about its ownership, and it was mort- gaged by the son. Thereupon the father claimed the goods and brought replevin against the mortgagee and testified that he did not intend to give the property to his son. Held, that the facts raised a strong presumption of a gift to the son. Whelpley, C. J., said : " Mere delivery of the goods will not, in general, pass the title ; there must be an intention to give, or the circumstances accompanying the delivery of the goods must be such as ordinarily accompany a gift, inducing the donee to believe that a gift was intended ; if that be the case, the title to the goods will pass, although it may not be the secret intention of the donor to make a gift." A gift of all one's property is not a valid donatio mortis causa. It cannot take the place of a will. Headley v. Kirby, 18 Penna. St. 326. Otherwise, as to a par- ticular chattel, though forming the bulk of the estate. Michener v. Dale, 23 Penna. St. 59. 6. Sales distinguished from Bail- ments. — Certain conditional contracts of sale closely resemble bailments. The distinction between a bailment and a sale was stated in Mallory v. Willis, 4 N. Y. 85, by C. J. Bronson in these words : " When the identical thing delivered, although in an altered form, is to be re- stored, the contract is one of bailment and the title to the property is not changed; but when there is no obligation to restore the specific article, and the re- ceiver is at liberty to return another thing of equal value, he becomes a debtor to make the return, and the title to the prop- erty is changed ; it is a sale.'' Approved, Foster v. Pettibone, 7 N Y. 435. In the application of these principles there is much diversity. The following are some of the decisions classified according to the bailment in question. Sale or Deposit — Storage Receipts Grain Elevators. — In Norton v. Wood- ruff, 2 N. Y. 153, a miller agreed "to take " certain wheat and give one barrel of superfine flour for every four and thirty-six-sixtieths bushels ; the flour to be delivered at a fixed time " and as much sooner as I can make it." The wheat was delivered at the mill and ac- cidentally destroyed by fire. Held, that the miller's contract was satisfied by a delivery of flour from any wheat, and therefore the delivery of the wheat was- not a bailment, but passed title to th& miller and left it at his risk. To the- same effect see Smith v. Clark, 21 Wend. 83; Carlisle v. Wallace, 12 Ind. 252;. Eicketts v. Hays, 13 Ind. 181. In Mal- lory v. Willis, 4 N. Y. 76, wheat was de- livered under a contract " to be manu- factured into flour,'' and one barrel to be delivered for every four bushels and fifteen pounds of wheat. Held, by a divided court, that this was a bailment and not a sale, and the miller having seventy-five- barrels left after delivering flour in the- required proportion, it was held that the surplus was the property of the bailor^ This case was followed in Foster v. Pettibone, 7 N. Y. 435. See, also,. Slaughter v. Green, 1 Rand. 3, (criticised in Norton v. Woodruff, 2 Comst. 155) ;. Inglebright v. Hammond, 19 Ohio 337. The case of South Australian Insurance- Company v. Eandall, L. E., 3 P. C. 101, involved the same question. Wheat was delivered by the farmers to millers, who gave storage receipts, and were bound either to return other wheat of the same quality, or to pay at the market rate when demanded. Held, that title passed to the millers on delivery. Cases of this char- acter are very frequent in the United States with reference to grain stored in grain elevators. The leading case is Chase v. Washburn, 1 Ohio (N. S.) 244, in which Bartley, J., said: "When the- owners of wheat consent to have their wheat, when delivered at a mill or ware- house, mixed with a common mass, each PART I.] ELEMENTS AND FORM OF THE CONTRACT. becomes the owner in common with others of his respective share in the com- mon stock. And this would not give the bailee any control over the property which he would not have if the wheat of each one was kept separate and apart. If this wheat, thus thrown into a common mass, be delivered for the purpose of be- ing converted into flour, each owner will be entitled to the flour manufactured from his proper proportion in the com- mon stock. If a part of the wheat held in common belong to the bailee himself, he could not abstract from the common stock any more than his own appropriate share without a violation of the terms of the bailment ; and such a breach of his engagement could not be cured by his procuring other wheat to supply the place of that thus taken. But if the wheat be thrown, into the common heap, with the under- standing that the person receiving it may take from it at pleasure, and appropriate the same to the use of himself or others, on the condition of his procuring other wheat to supply its place, the dominion over the- prop- erty passes to the depositary, and the trans- action is a sale and not a bailment." This case has been repeatedly followed. Lon- ergan v. Stewart, 55 111. 44 ; Richardson v. Olmstead, 74 111. 213; Bailey v. Beas- ley, 87 111. 556 ; Grier v. Stout, 2 111. App. 602 ; Johnston v. Beaver, 37 Iowa 200 ; Kelson v. Brown, 44 Iowa 455 ; Irons v. Kentner, 51 Iowa 88 ; Carlisle v. Wallace, 12 Ind. 252 ; Rahilly v. Wilson, 3 Dill. 420. The case of Butterfield v. Lathrop, 71 Penna. St. 225, is similar in principle. Milk was delivered by farmers at a cheese factory to be manufactured into cheese and sold, and the proceeds divided in pro- portion to amount of milk sent. Held, that there was no bailment. " It was a, sale of the milk to the factory, for which they were to pay at a certain time and in a certain manner." In the recent cases of Sexton v. Graham, 53 Iowa 181, and Nelson v. Brown, 53 Iowa 555, there is a marked departure from the previoui decisions in that state above cited, and from the rule in Chase v. Washburn above quoted. In Sexton v. Graham the proprietor of an elevator having received grain and given receipts, intermingled the grain with his own, sold most of the bulk, and pledged the rest to a bank for loans. Held, that the delivery was a bailment, and so continued, notwithstanding that an entire changejin identitywas contemplated and made ; that the grain remaining was the property of those who held receipts for grain delivered, as tenants in common, in proportion to their respective deliveries, and that the bank took no interest. This decision cannot be considered very high authority, two out of five judges dis- senting, but as a practical rule it has much to recommend it. See 6 Am. Law Rev. 450, for an argument in favor of the view since taken in Sexton v. Gra- ham. In Nelson v. Brown, supra, the same court by the same vote carried out logically the principle adjudged in Sex- ton v. Graham, and where an elevator was destroyed by fire, threw the loss on the farmers holding receipts, although the identical grain delivered by them had been removed. A recent decision in Michigan Supreme Court (Ledyard v. Hibbard, June, 1882, not reported,) seems to follow guardedly in this new path. Sale on Trial. — Where a chattel is de- livered on trial, this is a bailment, but may become a sale by acceptance or by delay beyond a time limited for return. Huntu. Wyman, 100 Mass. 198; Colton v. Wise, 7 Bradw. 395. See Book IV., Part I., infra. Sale or Return.— See Book IV., Part I., infra. In Westcott v. Thayer, 1 8 N. Y. 363, a brewer sold ale in barrels, and the buyer agreed that the barrels should be returned, but if not, then the buyer should pay $2 each. Held, that this did not pass the title to the buyer, nor authorize him to sell the barrels, but fixed the dam- ages in case of loss or destruction. This decision was based upon the express FORMATION OP THE CONTRACT. [BOOK I. agreement of the buyer that he would make return. Sale or Consignment to Sell. — Where goods were delivered by plaintiffs to be sold at a price fixed by them, and paid for at fixed rates by the consignee after sale, accounts to be given monthly — Held, a consignment for sale, not a sale. Auden- ried v. Betteley, 8 Allen 302. And in the similar case of Walker v. Butterick, 105 Mass. 238, the court said: "The terms of the contract that A & Co. are to take goods from plaintiffs, and return to them every thirty days the amount of sales at the prices charged by the plain- tiffs, who will furnish A & Co. all goods in their line, imports a consignment and not a sale." But in Nutter v. Wheeler, 2 Low. 346, where goods were delivered on an agreement that they should be paid for at a certain price within thirty days after they were sold by the consignee, who fixed the terms of his own sales, Lowell, J., said that the consignee " should be considered as the purchaser, subject only to the understanding that he was neither the owner of the goods nor liable to pay for them until he had suc- ceeded in finding a purchaser; but when he did sell, he immediately became the principal, and the defendants ceased to have the rights of a consignor, and could not follow the goods or their proceeds as undisclosed principals." Followed in In re Linforth, 4 Sawy. 370. A consignment of goods to be paid for as sold, but at all events to be paid in twelve months, is a present sale. Fish v. Benedict, 74 N. Y. 613. Where a piano was sold, title not to pass till paid for, but the buyer having power to sell — Held, that no title passed until payment was made. Cole v. Mann, 62 N. Y. 1. See, also, Bayliss v. Davis, 47 Iowa 340 ; Brothers v. Davis, 47 Iowa 363, (where a delivery was held a con- signment to sell and not a sale, although the consignor gave his note for the price, such being the intent of the parties.) Dodds v. Denant, 5 U. C. Q. B. 623 ; Mar- latt v. Gooderham, 14 Id. 221. See Eldridge v. Benson, 7 Cush. 483, criti- cised in note, Book IV., infra. Sale or Pledge — Sale or Mortgage. — The question whether a transaction is a sale or is a pledge or mortgage usually arises — first, where possession of goods is transferred on account of an existing in- debtedness ; second, where a right to have a return of the goods on making a cer- tain payment is reserved to the seller. The principles are the same whether land or personalty is in question. 2 Lead. Cas. in Eq. 1990 (4th Am. ed.) First. The test applied in these cases is this : if the debt, on account of which the transfer is made, is not satisfied by the delivery, the transaction is a pledge or mortgage; if it is extinguished, it is a sale, and the agreement for repurchase is an independent contract. Smith v. Beat- tie, 31 N. Y. 542 ; Houser v. Kemp, 3 Penna. St. 208 ; Todd v. Campbell, 32 Id. 250; Beeves v. Sebern, 16 Iowa 234; Cooper v. Brock, 41 Mich. 488 ; Musgat v. Pumpelly, 46 Wis. 660 ; Slowey v. Mc- Murray, 27 Mo. 113 ; Hickox v. Lowe, 10 Cal. 197 ; Bobinson v. Willoughby, 65 N. C. 520; Burner v. Womack, 30 Tex. 332; Moore v. Murdock, 26 Cal. 514; Blodgett v. Blodgett, 52 Vt. 32; Wil- merding v. Mitchell, 13 Vr. 476. In Sutphen v . Cushman, 35 111. 186, 196, Beckwith, J., said : " The appellant was indebted to the appellee at the time the conveyance was made, and there is no evidence whatever of the discharge of that indebtedness. The bond and note, by which the greater portion of it was evidenced, were retained by the appellee, and the payment of the indebtedness might have been enforced. Until the contrary is shown the presumption is that the debt was not satisfied by the conveyance." Therefore the transaction was held a mortgage. In Turner v. Kerr, 44 Mo. 429, 432, Currier, J., said: "That the amount of money to be paid as a con- dition to the right to demand a recon- PART I.] ELEMENTS AND FOEM OF THE CONTRACT. veyance is measured by the amount of the debt and interest, is a circumstance of no controlling importance. It may often happen that a creditor would con- Bent to take an absolute title, stipulating for a reconveyance, when he would reject a mortgage, because of the delay and ex- pense upon a foreclosure. Such arrange- ments operate beneficially to the debtor, securing him additional time to extricate himself from embarrassment. Where the parties intend a conditional sale and not a mortgage, and make their contracts in accordance with their in- tentions, it is not the province of the courts to circumvent their intentions. It is, nevertheless, true that neither the intention of the parties nor their express contracts can change the essential nature of things. A conveyance to secure a debt is a mortgage, and the stipulations of the parties cannot make it otherwise. But a conveyance to pay a debt is a totally different affair. If the conveyance ex- tinguishes the debt and the parties so in- tend, so that a plea of payment would bar an action thereon, a subsequent or cotemporaneous stipulation in the inter- est of the debtor, securing to him an op- portunity to re-acquire the title, ought not to be construed to the creditor's preju- dice. Such a transaction is no mortgage, but a conditional sale." Second. Where a right is reserved on de- livery of goods for money, to reclaim them on payment of a fixed price, the inquiry is whether the transaction creates a debt. If the purchaser can compel the repayment, the transaction will be held a loan on pledge of the goods, especially if the fixed price is the same amount paid on delivery. But if it is optional with the vendor whether or not he will pay the price and reclaim the goods, the transaction is a sale and title passes, the vendor holding only a right to repurchase, which he will lose if he does not exercise in the time limited. The leading case is Conway v. Alexander, 7 Cranch 218, where the trans- action was held a sale. C. J. Marshall Baid: "It is a necessary ingredient in a mortgage that the mortgagee should have a remedy against the person of his debtor. If this remedy really exists, its not being reserved in terms will not affect the case. But it must exist in order to justify a construction which overrules the express words of the instrument." See Sluiz v. Desenberg, 28 Ohio St. 371 ; Magee v. Catching, 33 Miss. 672 ; Moore v. Sibbald, 29 U. C. Q. B. 487 ; Mahler v. Schloss, 7 Daly 291 ; Henry v. Houghtaling, 41 Cal 22. In Glover v. Payne, 19 Wend. 518, Bronson, J., said : " Where there is no debt and no loan, it is impossible to say that an agreement to resell will change an absolute conveyance into a mortgage." Sale or Hiring of Services upon Chattels (Locatio Operis Faciendi.) — Where the owner of goods delivers them to be manufactured and returned to him for sale, the transaction is sometimes a sale and sometimes a bailment to the manufacturer. The test is usually this : if the contract provides that the goods, when delivered, shall be charged to the manufacturer, and that, when returned and sold, the proceeds of sale of the manufactured goods shall be credited to him, it is a sale to the manufacturer with a return to the vendor to sell as agent. But if the goods are to be returned when manufactured, to be sold by the bailor for his own account, the original delivery is a bailment, and the mere fact that the goods are charged to the manufacturer when delivered to him, will not make it a sale. Somewhat at variance with this statement of the law, however, is the case of Schenck v. Saunders, 13 Gray 37. A shoe dealer made an agreement with a manufacturer to furnish him materials to be made into boots, and consigned to the dealer, who was to sell the same for cash, on a commission of five per cent, and to make returns as fast as sold. No provision was made as to payment for materials, but the dealer sent bills with 10 FORMATION OF THE CONTRACT. [BOOK I. the goods and deducted the price from the proceeds. The manufacturer having pledged some of the boots to defendant, the dealer brought trover. Held, that the title was in the dealer, and the pledge was void, the manufacturer being but a bailee. This decision may be sustained on another ground, for it appeared that the pledgee had notice of the agreement, and therefore knew that the pledge was in fraud of the dealer's rights under the contract. The facts that the manufac- turer took all chances of profit and loss on the manufactured product, indicated a transfer of title to him. This view is supported by the case of Dittmar v. Nor- man, 118 Mass. 319, which seems, in effect, to overrule the grounds of the de- cision in Schenck v. Saunders, and the similar case of Eldridge v. Benson, 7 Cush. 483. In Dittmar v. Norman an inventor of " dualin " agreed with a dealer that the latter should furnish materials and money to be employed by the inventor in manufacturing dua- lin, the product to be consigned to the dealer, who should have the exclusive sale, cost of materials and advances to be charged to the manufacturer against the proceeds of the manufactured goods, net profits to be equally divided. Held, that title to the dualin was in the manufac- turer, and that the dealer was selling agent only. To the same effect is Prit- chett v. Cook, 62 Penna. 193, where plain- tiffs furnished hides at their cash prices to defendant, who agreed to tan them and deliver the leather to plaintiffs, who were to sell it for five per cent, commission, and account to defendant, deducting the price of the hides. Held, a sale of the hides to defendant and not a bailment. See, also, Jenkins v. Eichelberger 4 Watts 121 ; Butterfield v. Lathrop, 71 Penna. 225. Sale or Lease with Privilege of Pur- chase. — Transactions of this character are very frequent on sales of sewing ma- chines, pianos, safes, railroad cars and furniture. They usually provide for the payment of monthly rent, and that wheu the amount of rent paid equals a certain sum, being the price of the property leased, a bill of sale shall be given. In case of default the lessor may retake the property, and the payments being in form, rent, are forfeited. No doubt the chief design in these transactions is to effect a sale, with the price payable in install- ments, and the form of lease is used to reserve to the vendor a more summary and efficient remedy in case of non-pay ment than a chattel mortgage would give. The hardship of a forfeiture, where nearly all the price has been paid under the name of rent, has led to much litiga- tion, in which the claim for the buyer is always made, that the transaction is in fact a sale with a lien for price reserved. Generally, however, the courts have en- forced these contracts according to then- plain terms, and have held that if the buyer saw fit to sign a lease, he must be regarded as bailee and not as purchaser. Chamberlain v. Smith, 44 Penna. St. 431 ; Crist v. Kleber, 79 Id. 290; Enslow .. Klein, 79 Id. 488 ; Rose v. Story, 1 Id. 190 ; Myers v. Harvey, 2 Penna. 479 ; Sumner v. Cottey, 71 Mo. 121 ; Sargent v. Giles, 8 N. H. 325 ; Rowe v. Sharp, 51 Penna. 26 ; Bailey v. Colby, 34 N. H. 29 ; Austin v. Dye, 46 N. Y. 500; Clark v. Jack, 7 Watts 3i"5 ; Henry v. Paterson, 57 Penna. St. 346 ; Bean v. Edge, 84 NY. 510 ; Haviland v. Johnson, 7 Daly 297. See cases under head of conditional sales of specific chattels, Book II., Chap. III. But the doctrine of these cases must be considered as shaken by two recent deci- sions in the United States Supreme Court, Hervey v. B. I. Locomotive Works, 93 U. S. 664, and Heryford v. Davis, 102 U. S. 235. In the former case the court re- fused to consider the installments to be paid for a locomotive as rent, although expressly so declared in the agreement between the parties, but held the case one of sale reserving a secret lien which was- PART I."J ELEMENTS AND FORM OP THE CONTRACT. 11 declared void as against creditors of the buyer under the Illinois chattel mortgage act. Justice Davis said : " It is true that the instrument of conveyance purports to be a lease, and the sums to be paid are for rent ; but this form was used to cover the real transaction. It was evidently not intended that this large sum should be paid as rent for the mere use of the engine for one year. If so, why agree to sell and convey the full title on the pay- ment of the last installment ? " As be- tween the contracting parties the same court afterwards sustained a similar agree- ment according to its terms, in the case of Fosdick o. Schell, 99 V. S. 235. Both of these cases may be distinguished from those above cited, by the fact that the court held itself bound by the law as settled in the courts of Illinois, but the same cannot be said of Heryford v. Davis, 102 U. S. 235, from Missouri. In this case car manufacturers delivered cars to a railroad company under a written con- tract, "to be used on the railroad for hire." No rent was named, but it was agreed that notes should be given for the estimated value, and that the railroad company should have the right to pur- chase the cars for a fixed price within four months, but until payment in full was made the company should have no interest in the cars " except as to their use or hire." The cars having beep levied on by a creditor of the company, were claimed by the manufacturers. Jus- tice Strong said : " Though the contract industriously and repeatedly spoke of loaning the cars to the railroad company for hire, it is manifest that no mere bail- ment for hire was intended. No price for the hire was mentioned, and in every bailment for hire a price is essential. The amount may not be stipulated, but the contract must contemplate payment for the use of the thing bailed." " It is quite unmeaning for parties to a contract to say it shall not amount to a sale when it contains every element of a sale." "Notwithstanding the efforts to cover up the real nature of the contract, its sub- stance was an hypothecation of the cars to secure a debt due to the vendors for the price of a sale." Held, that as against the execution creditor the contract was void for want of filing as a chattel mort- gage. From this decision Justice Brad- ley emphatically dissents. In Illinois and Kentucky it is held that leases of the class in question are in fact chattel mort- gages, in spite of their terms. Murch j;. Wright, 46 111. 487, cited and followed in Hervey v. R. I. Locomotive Works, supra / Lucas v. Campbell, 88 111. 447 ; Greer «* Church, 13 Bush 430. 12 FORMATION" OF THE CONTRACT. [BOOK I. CHAPTER II. OF THE PARTIES TO THE CONTRACT. SECTION I. — WHO MAY SELL. SEC. In general, none but owner 6 Effect of outstanding writ on own- er's power to sell 7 Exceptions to general rule 8 Market overt 8 Exceptions 9 Sale by sample 10 Purchase by shop-keeper in London 10 Stolen goods, when felon is prosecuted 11 Case of false pretences 12 Reimbursement of innocent pur- chaser 13 Sale, horses in market overt 14 Negotiable securities 15 Goods pawned 16 Goods taken by sheriffs 17 Goods in wrecked ships 18 Factors and consignees 19 Agent entrusted with and in pos- session 19 Persons entrusted with possession by owner 21 Law doubtful 22 SECTION II. — WHO MAY BUY. SEC. Persons generally incompetent 24 Infants 25 Necessaries 26 Question of fact or law? 27 Married infant 28 Infant tradesman 29 Ratification after majority 30 Infants' relief act, 1874 31 Infant seller 31 Lunatics 32 Drunkards 33 Married women — 1. At common law 34 Husband civiliter morluus 35 Husband alien, abroad 35 Sole trader in London 35 2. By statute 36 Protection order 36 Property acts, 1870 and 1874 36 Cases under the acts 36 Bankruptcy 36 3. Inequity 37 § 5. So far as the general capacity to contract is concerned, and the rules of law relating to persons either totally incompetent to contract, or protected from liability by reason of infancy, coverture, and the like causes, the reader must be referred to treatises which embrace the subject of contracts in general. Such rules and principles as are specially applicable to sales of goods will be examined in this chapter. SECTION I. — WHO MAY SELL. § 6. In general, no man can sell goods and convey a valid title to them unless he be the owner, or lawfully represent the owner. Nemo dot quod non habet. (a) 1 A person, there- None but the owner. (a) Peer v. Humphrey, 2 Ad. & E. 495; Whistler v. Foster, 32 L. J., C. P. 161. 1. One wrongfully in possession of goods cannot sell them. — The Fanny, 9 Wheat. 658 ; Ventress v. Smith, 10 Pet. PART I.J PABTIES. 13 fore, however innocent, who buys goods from one not the owner> obtains no property in them whatever (except in some special cases presently to be noticed) : and even if, in ignorance of the fact that the goods were lost or stolen, he resell them to a third person in good faith, he remains liable in trover to the original owner, who may main- tain his action without prosecuting the felon, (b) 2 But a man may make a valid agreement to sell a thing not yet his, and even a thing not yet in existence ; this executory contract will be examined in the next chapter, which treats of the things sold. 176 ; Wooster v. Sherwood, 25 N. Y. 278, 286; Brown v. Peabody, 13 N. Y. 121; Saltus v. Everett, 20 Wend. 267; Faw- cett v. Osborn, 32 111. 411 ; Creighton v. Sanders, 89 111. 543 ; Pearce v. Bowker, 115 Mass. 129; Moody o. Blake, 117 Mass. 23 ; Prime v. Cobb, 63 Me. 200 ; Ruckman o. Decker, 8 C. E. Gr. 283; Hoffman v. Carow, 22 Wend. 285, 290; McGoldrick v. Willets, 52 N. Y. 612. The owner may sell his goods though in possession of a trespasser. — It was formerly held that no transfer could be made of goods held by another under an adverse claim of title, because such claim was considered a mere chose in action and therefore not assignable. Overton v. Williston, 31 Penna. 160; Gardner v. Adams, 12 Wend. 297 ; Mc- Goon v. Ankenny, 11 111. 558 ; O'Keefe v. Kellogg, 15 111. 347 ; Young v. Fergu- son, 1 Litt. 298 ; Stogdel v. Fugate, 2 A. K. Marsh. 136; Dunklin v. Wilkins, 5 Ala. 199. These eases seem to be against the modern authorities which proceed upon the theory that the owner is not bound to treat an invasion of his right of property as a tortious conversion, but may waive the tort and sell and convey good title. Tome v. Dubois, 6 Wall. 548 ; Hall v. Robinson, 2 N. Y. 293, (criticising Gardner v. Adams, supra) ; Cartland v. Morrison, 32 Me. 190 ; Webber v. Davis, 44 Id. 147 ; Carpenter v. Hale, 8 Gray 157. Notwithstanding the owner of » chattel tortiously taken has sold it, he may afterwards maintain an action for damages for the tort. Clark v. Wilson, 103 Mass. 219. (6) Stone v. Marsh, 6 B. & C. 551 ; Marsh v. Keating, 1 Bing. N. C. 198, and 2 CI. & Fin. 250 ; White v. Spettigue, 13 M. & W. 603; Lee v. Bayes, 18 C. B. 559. 2. Vermilye v. Adams Express Co., 21 Wall. 138; Ventress v. Smith, 10 Pet. 161 ; Pease v. Smith, 61 N. Y. 477 ; Wil- liams v. Merle, 11 Wend. 180 ; Heckle v. Lurvey, 101 Mass. 344 ; Breckenridge v. McAfee, 54 Ind. 141. One who inno- cently assists a trespasser in effecting a sale of chattels is liable to the true owner, and on this principle an auctioneer who innocently sells stolen goods is liable. Knapp v. Hobbs, 50 N. H. 476 ; Dudley v, Hawley, 40 Barb. 397 ; Hoffman v. Carew, 22 Wend. 285 ; Cobb v. Dows, 10 N. Y. 335 ; Story on Agency, | 312 ; Sharp v. Parks, 48 111. 511. A mere de- positary, who in good faith returns the goods to the depositor, is not liable, though the depositor stole the goods. Hill v. Hayes, 38 Conn. 532 ; Dudley v. Hawley, 40 Barb. 397 ; Loring v. Mul- cahy, 3 Allen 575. And in Spooner v. Holmes, 102 Mass. 503, it was held that one who innocently sells stolen negoti- able securities for the thief incurs no lia- bility. 14 FORMATION OF THE CONTRACT. [BOOK I. § 7. In general, also, any person competent to contract may sell Effect of out- goods °f which he is owner, and convey a perfect title to standing writ against owner. the purchaser. 3 But if the buyer has notice that any writ, by virtue of which the goods of the vendor might be seized or attached, has been delivered to and remains unexecuted in the hands of the sheriff, under-sheriff, or coroner, the goods pur- chased by him are liable to seizure in his hands under such writ, by virtue of the statutes 29 Car. II., c. 3, and 19 and 20 Vict., c. 97, § 1. The delivery of the writ to the sheriff binds the property from the date of delivery, but does not change the ownership ; so that the ven- dor's transfer is valid, but the purchaser takes the goods subject to the rights of the execution creditor, (c) If, however, the purchaser had no notice of the existence of the writ in the sheriff's hands, the first section of the act 19 and 20 Vict., c. 97, called the " Mercantile Law Amendment Act," protects him, by providing that no such writ "shall prejudice the title to such goods acquired by any person bona fide and for a valuable consideration before the actual seizure or attachment thereof by virtue of such writ." (d) 4 3. The owner of goods mortgaged may sell subject to the mortgage. Under the chattel mortgage acts a purchaser bona Jide will take title clear of a mortgage not filed. But if filed it binds the goods, though removed to another state and sold there to a bona fide purchaser. Parr v. Brady, 8 Vr. 201 ; Runyon v. Groshon, 1 Beas. 86. The owner's sale is voidable if made in fraud of the buyer, or of the vendor's creditors. See " Fraud," chap- ter II., book III. In some of the states it is held that after a sale sufficient to pass title between the parties, but without delivery, a subsequent bona fide purchaser from the same vendor, acquires good title if he is the first to gain possession. Wins- low v. Leonard, 24 Penna. fct. 14 ; Veazie v. Somerby, 5 Allen 280. These decisions rest on the theory that possession retained by the vendor after sale is conclusive proof of fraud against creditors and subsequent purchasers. See the chapter on " Fraud," infra, and notes. (c) Woodland v. Fuller, 11 Ad. & E. 859. (d) This section is not retrospective in its operation, and does not affect pre-ex- isting rights. Williams v. Smith, 26 L. J., Ex. 371 ; 2 H. & N. 443, and in error, 28 L. J., Ex. 286 ; 4 H. & N. 559 ; Flood v. Patterson, 30 L. J., Ch. 486 ; and Jack- son v. Woolley, 8 E. & B. 778 ; 27 L. J., Q. B. 181, 448. The subsequent statutes of 23 and 24 Vict., u. 38, and 27 and 28 Vict., o. 112, furnish the rules on this subject, in respect of land, including leasehold titles to land. 4. Goods may be sold by the owner, though in the custody of the sheriff on execution or attachment, or of the land- lord on distress for rent, such sale being subject to the creditor's lien. Klinck v. Kelly, 63 Barb, 622 ; Mumper v. Bush- more, 14 Hun 591 ; Cooke v. Woodrow, 1 Cranch C. C. 437 ; Storey v. Agnew, 2 Brad. 353 ; Coghill v. Boring, 15 Cal. 213 ; Fettyplace v. Dutch, 13 Pick. 388 ; First Ward Nat. Bank v. Thomas, 125 Mass. 27S ; Hooker v. Jarvis, 6 U. C. Q. B. (O. S.) 439 ; Wheeler v. Nichols, 32 Me. 233 ; Home v. Briggs", 98 Mass. 510; Arnold v; Brown, 24 Pick. 89. PART I.] PARTIES. 15 § 8. The first and most important exception to the rule that a man cannot make a valid sale of goods that do not belong Bxce p tions to to him, is presented in the case of sales made in market owne^foniy overt. ° Market overt in the country is held on special days, provided by charter or prescription ; (e) but in London every day ex- n -i • i i / « -r i ,i Market overt. cept (Sunday is market day. (/) In the country the only place that is market overt is the particular spot of ground set apart by custom for the sale of particular goods, and this does not include shops ; but in London every shop in which goods are exposed pub- licly for sale is market overt for such goods as the owner openly pro- fesses to trade in. (g) As a London shop is not a market overt for any goods except such as are usually sold there, it was held in the leading case (g) that a scrivener's shop was not a market overt for plate, though a gold- smith's would have been. So Smithfield was held not to be a market overt for clothes, but only for horses and cattle ; (h) and Cheapside not for horses ; (i) and Aldridge's not for carriages. (lc) A wharf is not a market overt, even in the city of London. (Z) In Crane v. The London Dock Company in the Queen's Bench, the common law doctrine of market overt was much discussed, and the Chief Justice expressed the opinion that a sale could not be consid- ered as made in market overt " unless the goods were exposed in the market for sale, and the whole transaction begun, continued and com- pleted in the open market ; so as to give the fullest opportunity to 5. There are no markets overt in the (e) See Benjamin v. Andrews, 5 C. B. United States. (Whether any in the (N. S.) 299 ; 27 L. J., M. C. 310. province of Ontario, quwre. Bowman v. (/) Case of Market Overt, 5 Kep. 83 Yielding, 1 Rob. & J. Dig. 2226.) There- b ; L'Evesquede Worcester's Case, Moore fore a buyer from a thief acquires no 360; Poph. 84; Comyn's Dig., " Market," title. Ventress d. Smith, 10 Pet. 161 ; E ; 2 Bl. Com. 449 ; Lyons v. De Pass, 11 Dana v. Baldwin, 8 Mass. 518 ; Hoffman Ad. & E. 326 ; Crane v. The London v. Carow, 22 Wend. 285 ; Easton v. Wor- Dock Company, 33 L. J., Q. B. 224 ; S. thington, 5 Serg. & R. 130 ; Browning v. O, 5 B. & S. 313 ; Anon., 12 Mod. 521. Magill, 2 Harr. & J. 308 ; Bryant v. Whit- (g) 5 Rep. 83 b. cher, 52 N. H. 158 ; Black v. Jones, 64 (h) Moore 360. N. C. 318 ; Dawson v. Swong, 1 Heisk. (i) lb. See also Taylor v. Chambers, 243; Roland v. Gundy, 5 Ohio 202; Cro. Jac. 68. Coombs v. Gordon, 59 Me. Ill ; Fawcetta. (k) Marner v. Banks, 17 L. T. (N. S.) Osborn, 32 111. 425 ; Jones v. Nellis, 41 147 ; 16 W. R. 62. 111. 482. {1) Wilkinson v. King, 2 Camp. 335. 16 FORMATION OP THE CONTRACT. [BOOK I. the man whose goods have been taken to make pursuit of them, and prevent their being sold." (m) [The doctrine of sale in market overt exists for the protection of the innocent purchaser : it was therefore held in a recent Irish case that an innocent vendor was not relieved from liability by such a sale and was responsible in an action of trover by the rightful owner for the value of the goods sold, (n)] § 9. The exceptions to the validity of sales made in market overt by Sales in mar- one who is not the owner, and the rules of law governing are not valid, the subject, are fully treated by Lord Coke, in 2 Inst. 713, and have been the subject of numerous decisions. A sale in market overt does not give a good title to goods belonging to the sovereign ; nor protect a buyer who knew that they were not the property of the seller, or was guilty of bad faith in the transaction. The purchaser is not protected if the sale be made in a covert place, as a back room, warehouse or shop with closed windows ; or between sunset and sunrise ; or if the treaty for sale be begun out of market overt. The privilege of market overt does not extend to gifts, (o) nor to sales of pawns taken to any pawnbroker in London, or within two miles thereof; (p) and if the original vendor, who sold without title, come again into possession of the goods after any number of intervening sales, the right of the original owner revives, (q) § 10. A sale by sample is not a sale in market overt, and in Hill v. Sale by sample Smith, (r) Sir James Mansfield, C. J., said: "All the market overt, doctrine of sales in market overt militates against any Hiii v. smith, idea of a sale by sample ; for a sale in market overt re- quires that the commodity should be openly sold and delivered in the market." This decision was approved and followed by the Queen's Bench in Crane v. The London Dock Company, (s) (m) Per Cockburn, C. J., in Crane v. (p) 1 Jac. I., c. 21, § 5 ; Hartopp v. The London Dock Company, 5 B. & S Hoare, 3 Atk. 44. 313; 33 L. J., Q. B. 224. (q) 2 Bl. Com. 450; 2 Inst. 713; and (to) Ganley v. Ledwidge, 10 Ir. R. C. see per Best, J., in Freeman v. East India L. 33. Company, 5 B. & A. 624. (o) 2 Inst. 713; 2 Bl. Com. 499; Hartop (r) 4 Taunt. 532. v. Hoare, 2 Str. 1187 ; Wilkinson v. King, (s) 33 L. J., Q. B. 224 ; 5 B. & S. 313. 2 Camp. 335 ; Packer v. Gillies, 2 Camp. See Bailiffs, &c, of Tewkesbury v. Dis- 336, note; cases cited in Crane v. The ton, 6 East 438; Newtownards Commis- London Dock Company, 33 L. J., Q. B. sioners v. Woods, 11 Ir. B. C. L. 506. 224; 5B. & S. 363. PART I.] PARTIES. 17 In Lyons v. De Pass, (t) a sale was held to be entitled to the privi- lege of market overt where made in a shop in the city Purchaaehy of London to the shopkeeper who dealt in such goods : fn^^don er but the point was not raised, and the existence of the Lyons „. i> e privilege in such a case was strongly questioned by the a8S ' judges in Crane v. The London Dock Company, (u) § 11. The security of a purchaser in market overt who innocently buys stolen goods, is affected by the statute 24 and 25 whe^t,™. Vict., c. 96, § 100, which re-enacts and adds to the 7 l^'tilT" and 8 Geo. IV., c. 29, § 57. (x) By the terms of this M and 25 V j Ct> section, it is provided that, — " If any person guilty of °' 96, * 100 ' any such felony or misdemeanor, as is mentioned in this act, in steal- ing, taking, obtaining, extorting, embezzling, converting, or disposing of, or in knowingly receiving any chattel, money, valuable security, or other property whatsoever, shall be indicted for such offence, by or on the behalf of the owner of the property, or his executor or admin- istrator, and convicted thereof, in such case the property shall be re- stored to the owner or his representative ; and in every case in this section aforesaid, the court before whom any person shall be tried for any such felony or misdemeanor, shall have power to award from time to time writs of restitution for the said property, or to order the restitution thereof in a summary manner." It has been settled, that on the true construction of this statute, the property in the chattel becomes revested in the original owner upon the conviction of the felon, even though no writ or order of restitu- tion has been made by the court, (y) But [even where the goods had been stolen] an action was held not to be maintainable against an innocent purchaser in market overt, who had disposed of the stolen goods before the conviction of the thief; although he was, while the goods still remained in his possession, notified of the robbery by the original owner, (z) § 12. [It has recently been decided that the statute has no applica- tion in cases of false pretences (i. e., where the property in v "es not 1 v ' l x j apply in cases the goods has passed), and therefore that the title of a bona "J^^ (0 11 Ad. & E. 326. 506 ; 19 L. J., Q. B. 447. See, also Peer, («) See note (s), p. 16. v. Humphrey, 2 Ad. & E. 495. (*) See, also, 21 Henry VIII., c. 11, (z) Horwood v. Smith, 2 T. K. 750; and Parker v. Patrick, 5 T. R. 175. Lindsay v. Cundy, 1 Q. B. D. 348. (y) Scattergood v. Sylvester, 15 Q. B. 18 FORMATION OF THE CONTRACT. [BOOK I. Lindsay v. fide purchaser from the person who has obtained the goods by false pretences is paramount to the title of the original Moves v Newingion. owner, even after the conviction, (a) It should be observed, however, that in Lindsay v. Cundy, (6) upon the authority of which case Moyce v. Newington was decided, Lush, J., was careful to say (p. 362) : " The plaintiffs may, upon conviction, acquire a fresh title to the goods, but then they must get the goods from the person in whose hands they can find them, or what may be the substitute for the goods." All that Lindsay v. Cundy seems to decide is that, until conviction, a bona fide purchaser from the person who had obtained the goods by false pretences had a good title ; and if, before conviction, he had parted with the goods, no action of trover could be maintained against him. In other words, the title to the goods revests in the original owner as from the date of the conviction, and does not relate back to the time of the fraudulent taking. It is otherwise where the possession only of the goods has been ob- tained by some trick, or by theft, without the property passing ; and the earlier cases of Scattergood v. Sylvester, 15 Q. B. 506, and Peer v. Humphrey, 2 Ad. & E. 495, are in this way reconcilable with Lindsay v. Cundy and Moyce v. Newington. In Walker v. Matthews, (o) two cows in calf had been stolen from walker v the plaintiff's farm on the 7th of June, 1880. On the Matthews. nth of June they were sold in market overt to a dealer, who afterwards resold them to the defendant, who was a bona fide purchaser. After the conviction of the thief, on the 5th of April, 1881, the plaintiff demanded back the cows from the defendant, who refused to give them up. Meantime the cows had calved. In an action for the return of the cows, the defendant set up a counter-claim for the cost of their keep between the time of the sale and the convic- tion ; held, that as the cows were the defendant's property up to the time of the conviction of the thief, the counter-claim was not maintainable. The defendant, it is to be observed, did not dispute the plaintiff's title to the calves, although they were born during the time when the prop- erty in the cows was vested in the defendant.] § 13. When an innocent purchaser of stolen goods has been forced (a) Moyce o. Newington, 4 Q. B. D. ble exposition of the statutes, and ex- 32, where the sale was not in market pressly dissents from Nickling v. Heaps, overt. 21 L. T. (N. S.) 754. (6) 1 Q. B. D. 348, not overruled on (c) 8 Q. B. D. 109. this point. Blackburn, J., gives a valua- PAF.T I.'J PARTIES. 19 to make restitution to the prosecutor of the thief, the 30 Eeimb urse- and 31 Vict., c. 35, § 9, enacts that upon the conviction of Sn"c^tpur- the thief it shall be lawful for the court to order that any chaser money taken from him on his apprehension shall be applied to reim- bursing the purchaser the price paid by him. It was at one time supposed that where goods had been stolen, an owner could not recover them from an innocent vendee who owner not had bought them, not in market overt, until he had done seeute before I'll* • i i • /» -r» i i* s~i- recovering his duty in prosecuting the thief. Hut the cases of (iim- ftom inno- son v. Woodfall (d) and Peer v. Humphrey (e) were over- person goods . TTT1 . ~ ™°< sold in ruled in White v. Spettigue, (/) where it was held, on the marketovert. authority of Stone v. Marsh, (g) and Marsh v. Keating, (h) that the obligation of the plaintiff to prosecute the thief does not apply where the action is against a third party innocent of the felony. And in Lee v. Bayes (i) the law was stated to be settled in conformity with the decision in White v. Spettigue. (/) In Wells v. Abrahams, (k) on the trial of an action of trover, the evidence established & prima fade case of felony, and after -^n,,,, verdict for plaintiff a new trial was moved for on that Abrahams - ground and on the further ground shown by affidavit, that since ver- dict the plaintiff had prosecuted the defendant criminally. But held that the judge was bound to try the cause on the record as it stood at Nisi Prius, and could not nonsuit the plaintiff — and the verdict was upheld. [In Ex parte Ball, In re Shepherd, (I) the doctrine in question was very fully considered, and the Court of Appeal, while hesitating to say that the alleged rule had no existence in practice, expressed a de- cided opinion that the disability to sue was confined to the person injured by the felony, and therefore had no application to the case before them, so as to bar a claim made by the injured party's trustee in bankruptcy against the felon's estate. Bramwell and James, L. JJ., dwelt strongly upon the difficulties which from every point of view beset the application of the doctrine.] § 14. For more than three centuries it has been found necessary to (d) 2 C. & P. 41. (k) L. E., 7 Q. B. 554. (e) 2 Ad. & E. 495 ; 4 N. & M. 430. (1) 10 Ch. D. 667, C. A. See, also, Mid- (/) 13 M. & W. 603. land Insurance Company v. Smith, 6 Q. (g) 6 B. & C. 551. B. D. 561, where all the cases are re- . Bayes, 18 C. B. 599 ; Moran v. C. 310. Pitt, 42 L.J., Q. B. 47; 21 W. R. 554. (o) Ganley v. Ledwidge, 10 Ir. E. C. L. 33. 22 FORMATION OF THE CONTRACT. [BOOK I. according to the usage of trade ; provided the buyer has been guilty of no fraud in taking them, for in that case he would be forced to bear the loss, (p) 6 § 16. Another case, in which one not the owner of goods may make valid sale of them, is that of the pawnee. He has the legal power to sell goods pledged to him, if the pawnor make default in payment at the stipulated time ; and this he may do without taking any legal proceedings against the pawnor, (q) 7 § 17. The sheriff, as an officer on whom the law confers a power, may sell the goods of the defendant in execution, and con- fer a valid title on the purchaser : and this title will not be affected, although the writ of execution be afterwards set aside, (r) 8- Sale by pawnee By public officers. (p) Grant v. Vaughan, 3 Burr. 1516; Lang v. Smith, 7 Bing. 284 ; Gagier v. Mieville, 3 B. & Cr. 35 ; Crook v. Jadis, 5 B. & Ad. 909 ; Backhouse v. Harrison, 5 B. & Ad. 1105; Bank of Bengal v. M'Leod, 7 Moo. P. C. 35 ; Goodman v. Harvey, 4 Ad. & E. 870 ; TJther v. Kich, 10 Ad. & E. 784; Raphael v. Bank of England, 17 C. B. 161 ; 25 L. J., C. P. 33 ; Seal ». Dent, 8 Moo. P. C. 319 ; Gill a, Cubitt, 3 B. & Cr. 466 ; Whistler v. For- ster, 32 L. J., C. P. 161. See, also, numer- ous other cases cited in notes to Miller v. Race, 1 Sm. L. C. 516 (ed. 1879) ; Byles on Bills, 165 (13th ed.) 6. Goodman v. Simonds, 20 How. 343 ; Newton v. Porter, 69 N. Y. 133, 137 ; Spooner v. Hughes, 102 Mass. 503 ; Jones v. Nellis, 41 111. 482 ; Matthews v. Poyth- ress, 4 Ga. 287 ; Brush v. Scribner, 11 Conn. 388 ; Seybel v. Nat. Currency Bank, 54 N. Y. 288. But, otherwise, as to over-due paper. Vermilye v. Adams Ex- press Co., 21 Wall. 138. (q) Pothonier v. Dawson, Holt 385; Tucker v. Wilson, 1 P. Wms. 261 ; Lock- wood v. Ewer, 9 Mod. 278; Martin v. Bead, 11 C. B. (N. S.) 730, and 31 L. J., C. P. 126 ; Johnston v. Stear, 15 C. B. (N. S.) 330, and 33 L. J., C. P. 130; Pigot v. Cubley, 15 C. B. (N. S.) 701, and 33 L. J., C. P. 134; 1 Sm. L. C. 227, (Ed. 1879); Halliday v. Holgate, L. B., 3 Ex. 299. By the above case of Martin v. Bead, and by Beeves v. Capper, 5 Bing. N. C. 136, and Langton v. Waring, 18 C. B. (N. S.) 315, it appears that there may be a valid pledge although the goods remain in, or are returned to, the actual possession of the pawnor as trustee for the pawnee. 7. Stearns u. Marsh, 4 Denio 227; Bryan v. Baldwin, 52 N. Y. 233 ; Gay v. Mass, 34 Cal. 125 ; Donohue v. Gamble, 38 Cal. 340 ; Cushman v. Hayes, 46 111. 145 ; Stevens v. Hurlbut Bank, 31 Conn. 146 ; Davis v. Funk, 39 Penna. 243 ; Con- yngham's Appeal, 57 Penna. 474 ; Wil- son v. Little, 2 N. Y. 443; Alexandria Bailroad v. Burke, 22 Gratt. 254 ; Potter v. Thompson, 10 B. I. 1 ; Stokes v. Fra- zier, 72 111. 428 ; City Bank of Racine v. Babcock, 1 Holmes (U. S. Cir.) 180; Wheeler o. Newbould, 16 N. Y. 392; Strong *. Nat. Banking Assoc, 45 N. Y. 718; Washburn v. Pond, 2 Allen 474; Ainsworth v. Bowen, 9 Wis. 348 ; Lewis v. Mott, 36 N. Y. 395 ; Hamilton v. State Bank, 22 Iowa 306. (r) Anon., Dyer 363 a, pi. 24 ; Turner v. Felgate, 1 Lev. 95 ; Manning's Case, 8 Co. 91 ; Doe, d. Emmett, v. Thorn, 1 M. & S. 425 ; Doe v. Murlass, 6 M. & S. 110 ; Farrant v. Thompson, 5 B. & Aid. 826; Lock v. Sellwood, 1 Q. B. 736. 8. Bank of United States v. Bank of Washington, 6 Pet. 8 ; Williams *. Cum- PART I.] PARTIES. 23 This protection, however, was held by the Court of Queen's Bench not to be available in favor of a purchaser of goods distrained under a warrant issued by two justices of the peace to the constable, where the warrant was on the face of it illegal, (s) 9 § 18. Another instance of the power of one who is not owner to transfer the property in goods held in his possession, is MaBters of that of the master of a vessel, who is vested by law with sUps - authority to sell the goods of the shippers of the cargo in case of absolute necessity ; as where there is a total inability to carry the goods to their destination, or otherwise to obtain money indispensable for repairs to complete the voyage. But the purchaser acquires no title, unless such necessity exists, (t) 10 § 19. By the factors' act (6 Geo. IV., c. 94, § 2,) "persons en- mins, 4 J. J. Marsh. 637 ; Barney v. Pat- erson, 6 Harr. & J. 182 ; McLagan v. Brown, 11 111. 519 ; Herrick v. Graves, 16 Wis. 157; Stinson v. Ross, 51 Me. 556 ; Wilkinson's Appeal, 65 Penna. 189 ; Spade v. Bruner, 72 Penna. St. 57 ; Hays v. Shannon, 5 Watts 548 ; Duff v. Wyn- koop, 74 Penna. 300; Jermon v. Lyon, 81 Penna. 107. There is no implied war- ranty on execution sale, either of quality or title. If the judgment debtor has no interest the buyer gets none. Griffith v. Fowler, 18 Vt. 390 ; Islay v. Stewart, 4 Dev. & B. 163 ; McGhee v. Ellis, 4 Litt. 244 ; Champney v. Smith, 15 Gray 512 ; Walker v. Moody, 65 N. C. 599 ; Walton v. Beager, 20 Tex. 103 ; Barrett v. Lock- ard, 60 111. 164 ; Bodgers v. Smith, 2 Ind. 526; Cameron v. Logan, 8 Iowa 434; Boggs v. Fowler, 16 Cal. 559 ; Bartholo- mew v. Warren, 32 Conn. 98 ; Smith v. Painter, 5 Serg. & B. 223 ; Freeman v. Caldwell, 10 Watts 9 ; Staats v. Bristow, 73 N. Y. 264. (s) Lock v. Sellwood, 1 Q. B. 736. 9. Sales under a satisfied judgment, or a judgment void for want of jurisdiction, are void. Wood v. Colvin, 2 Hill 566; Laval v. Bowley, 17 Ind. 36 ; State v. Salyers, 19 Ind. 432 ; Caldwell v. Wal- ters, 18 Penna. 79 ; Camp v. Wood, 10 Watts 118 ; Kennedy u. Dunckles, 1 Gray 65 ; Redmond v. Packenham, 66 111. 434. But in Pennsylvania it is held that a purchaser at an execution sale will not be aflected by satisfaction of the judg- ment unless he knew of it. Samms v. Alexander, 3 Yeates 268 ; Hoffman v. Strohecker, 7 Watts 86 ; Gibbs v. Neely, 7 Id. 305. {t) The Gratitudine, 3 Rob. Adm. 259 ; Freeman v. East India Company, 5 B. & A. 621 ; Vlierboom v. Chapman, 13 M. & W. 239 ; Underwood v. Robertson, 4 Camp. 138 ; Cannan v. Meaburn, 1 Bing. 243 ; Tronson v. Dent, 8 Moo. P. C. 419 ; Cammell . Sewell, 3 H. & N. 617, and S. C. in Cam. Seacc, 5 H. & N. 728 ; 29 L. J., Ex. 350 ; The Australasian Steam Navigation Company v. Morse, L. R., 4 P. C. 222 ; Acatos v. Burns, 3 Ex. D. 289, C. A. ; The Atlantic Insurance Company v. Huth, 16 Ch. D. 474, 481, C. A.; Maude & Poll, on Shipping (ed. 1881) 580. 10. New England Ins. Co. v. The Sarah Ann, 13 Pet. 387 ; The Amelia, 6 Wall. 18; Post v. Jones, 19 How. 150; Smith v. Martin, 6 Binn. 262 ; Myers v. Bay- more, 10 Penna. 114; Butler v. Murray, 30 N. Y. 88 ; Gates v. Thompson, 57 Me. 442. 24 FORMATION OF THE CONTRACT. [BOOK I. Factors and trusted with, and in possession of, any bill of lading, consignees. Indian warrant, dock warrant, warehouse-keeper's cer- tificate, warrant, or order for the delivery of goods, shall be deemed and taken to be the true owner of the goods so far as to give validity to sales " made by them to buyers without notice of the fact that such vendors are not owners. By the fourth section of the same act, pur- chasers from " any agent or agents entrusted with any goods, wares, or merchandise, or to whom the same may be consigned," are pro- tected in their purchases, notwithstanding notice that the vendors are agents ; provided the purchase and payment be made in the usual and ordinary course of business, and the buyer has not notice at the time of purchase and payment, of the absence of authority in the agent to make the sale or receive the payment. And by the amendment act, 5 and 6 Vict., c. 39, the possession of the goods themselves is treated as having the same effect as that of bills of lading, or "other docu- ments of title;" and a "document of title" is defined to be "any document used in the ordinary course of business, as proof of the possession or control of goods, or authorizing, or purporting to authorize, either by endorsement or delivery, the possessor of such documents to transfer or receive goods thereby represented." 11 11. Similar statutes have been passed or a pledgee for an antecedent debt, takes in many of the states, and in Canada, no interest beyond that of his pledgor. Pennsylvania, Brightly's Purd. Dig. 664 ; See Macky v. Dillinger, 73 Penna. 85. .New York, 3 Kev. Stat. 76 ; Ohio, Rev. Galveston cotton factors have no au- Stat. 1880, $ 3216, &c. ; Massachusetts, thority except to sell for cash. Kauff- Rev. 1882, 417 ; Rhode Island, Kev., man v. Beasley, 54 Tex. 563. At com- 1882, 332 ; Maine, Rev. Stat. 326 ; Mary- mon law, factors cannot pledge goods, and land, Kev. Code 291 ; California, Civ. a bona fide pledgee, without notice that Code 2369. " Historically, the necessities the factor is not owner, gets no title. of trade and the custom of merchants Insurance Co. v. Kiger, 13 Otto 352 ; had, in both countries, anticipated the Gray v. Agnew, 95 111. 315 ; Wright v. statute." Gould, J., in Cartwright v. Solomon, 19 Cal. 64. The consignee of Wilmerding, 24 N. Y. 529. The act goods is presumptively the owner. So -does not protect a purchaser who knows held in a suit for loss of goods by a con- that the factor in possession is without signee against a carrier. McCauley v. authority. Stevens v. Wilson, 3 Denio Davidson, 13 Minn. 162. Where a factor ■472. A factor sold and took his own sold by one entire- contract goods of him- «heck in part payment. Held, that the self and those of his principal — Held, owner was bound, the buyer not knowing that only the factor could sue for the that the factor was not owner. Traub v. price. Roosevelt v. Doherty, 129 Mass. Milliken, 57 Me. 63. In the Pennsylvania 301. A purchaser buying from a factor act and in most of the statutes already cited in the belief that he is owner, may set it is expressly provided that a, pledgee, off a debt due him from the factor to a with notice that his pledgor is not owner, suit for the price by either factor or PART I.] PARTIES. 25 [And by a further amendment act passed in the year 1877 (40 and 41 Vict., c. 39,) the effect of certain decisions which had created hard- ship is annulled. This act is set out and considered, Book V., Part I., ch. 4, lien. The majority of cases under the factors' acts have turned upon the meaning of the words " agent entrusted with and in possession." The expression varies slightly in the different sections of the acts, but the construction put upon it by the courts has been Agent en _ virtually the same, viz., "factor or agent entrusted as such and^p^seea- and ordinarily having as such factor or agent a power of slon ' sale or pledge;" per Bramwell, B., in Cole v. North Western Bank, L. R., 10 C. P. 375 ; and the definition of Willes, J., in Heyman v. Flewker, 13 C. B. (N. S.) 519, at p. 527. The reader is also referred to the judgments of Willes, J., in Fuentes v. Montis, L. R., 3 C. P., at p. 275, and of Blackburn, J., in delivering the judgment of the Exchequer Chamber in Cole v. The North Western Bank, L. R., 10 C. P., at p. 357, where very full expositions of the law relating to the factor's power of sale and pledge will be found. 12 § 20. The following summary of the effect of the decisions upon the words " agent entrusted with and in possession " will, it is hoped, be found correct and useful. The word "person," in 6 Geo. IV., c. 94, § 1, must be read as "agent," (Johnson v. Credit Lyonnais Co., 3 C. P. D., at p. 45.) The " agent " must be an agent in a mercantile transaction, (Monk v. Whit- ten bury, 2 B. & Ad. 484 ; Wood v. Bowcliffe, 6 Hare 183.) A clerk or servant is not such an agent, (Lamb v. Attenborough, 1 B. & S. 831 ; Jaulerry v. Britten, 5 Scott 655 ; S. C, 4 Bing. N. C. 242.) 13 The agent must have been entrusted for the purpose of sale, (Monk v. Whittenbury, ubi supra; Wood v. Bowcliffe, ubi supra,) or for some object connected with the sale, (Baines v. Swainson, 4 B. & S. 270 ; Vickers v. Hertz. L. R., 2 Sc. App. 113.) 14 If a person carries on principal. Merrick's Estate, 5 W. & S. 9 ; Leggett, 71 N. Y. 387. If the factor Gardner v. Allen, 6 Ala. 187. who sells without authority, has not the 12. The agent must have been en- documentary evidence of title, he must trusted with the goods by the owners to have actual, not merely constructive, pos- come within the statute. Covill v. Hill, session of the goods to estop the owner. 4 Denio 323 ; S. C, N. Y 374 ; Dows v. Howland v. "Woodruff, 60 N. Y. 73. Perrin, 16 N. Y. 325; First National 13. Warner v. Martin, 11 How. 209. Bank of Toledo v. Shaw, 61 N. Y. 283 ; But see Loomis v. Simpson, 13 Iowa Wooster v. Sherwood, 25 N. Y. 278; 532. Hazard v. Fiske, 18 Hun 277 ; Kinsey v. 14. "The statute pre-supposes that the 26 FORMATION OP THE CONTRACT. [BOOK I. two businesses, one that of an agent, such as is contemplated by the act, the other not so, and if he has been entrusted in the latter capacity, he is not an " agent entrusted " within the meaning of the act, (Monk v. Whittenbury, ubi supra ; Cole v. North Western Bank, L. B,., 9 C. P. 470 ; aff. in Ex. Ch., 10 C. P. 354.) But if he has been en- trusted as agent for sale, although it is an isolated instance of such employment, he is an " agent entrusted " within the act, (Heyman v. Flewker, 13 C. B. (N. S.) 519.) To constitute an entrustment with a document of title under 6 Geo. IV., c. 94, it was held that the owner must have intended the agent to be entrusted with the document actu- ally pledged. It was not sufficient that he had entrusted him with some other document of title, by means of which he had obtained possession of the document pledged, (Close v. Holmes, 2 Moo. & Rob. 22 ; Phillips v. Huth, 6M.&W. 572 ; S. C, in Ex. Ch., sub nomine Hatfield v. Phillips, 9M.&W. 647 ; and in the House of Lords, 14 M. & W. 665; 12 CI. & Fin. 343.) 15 But this has now been altered by the definition of entrustment given in 5 and 6 Vict., c. 39, §4. A vendor allowed by the purchaser to retain possession of the docu- ments of title to goods was held not to be an agent entrusted under 5 and 6 Vict., c. 39, § 1, (Johnson v. Credit Lyonnais Co., 2 C. P. D. 224; aff. on appeal, 3 C. P. T>. 32) ; but this has now been altered by 40 and 41 Vict., c. 39, § 3. 16 relation of principal and factor already factor's act. Cal. Civil Code, § 2369 ; subsists when the trust or confidence is Green v. Campbell, 52 Cal. 586, followed, reposed. In other words, the relation of Hayes v. Campbell, 55 Cal. 421. And to factor is not created by the mere posses- the same effect, see Western Trans. Co. v. sion of the instrument." Dwight, Com'r Marshall, 4 Abb. (N. Y.) App. Dec. 575. in First Nat. Bank of Toledo, v. Shaw, 15. Hazard v. Fiske, 18 Hun 277. An 61 N. Y. 299. See Collins v. Ealli, 20 agent to buy and ship goods, took the Hun 246 ; affirmed by Ct. of App., Stot- bill of lading in his own name and tenwerck v. Thacher, 115 Mass. 224; Me- pledged the shipment for a loan to him- chanics' and Traders' Bank v. Farmers', sell Held, that the pledgee was pro- Ac, Bank, 60 N. Y. 40. Where a factor tected by the law of Louisiana, which con- was entrusted with wheat to be forwarded trolled the case. Henry v. Philadelphia by a certain vessel to Europe and sold Warehouse Co., 81 Penna. 76. But see by the factor there, the factor loaded the Ins. Co. v. Kiger, 13 Otto 352, where the wheat as his own on another vessel. The United States Supreme Court held that a owner claiming the wheat from the ship- pledge by a factor for his own debt of owner — Held, that the ship-owner could negotiable warehouse receipts for cotton, hold it for freight and charges, under his was void in Louisiana, contract with the factor by force of the 16. Hazard v. Fiske, 18 Hun 277. PART I.] PARTIES. 27 A purchaser obtaining possession of the documents of title to the goods was held not to be an agent entrusted under 5 and 6 Vict., c. 39, § 1, (Jenkyns v. Usborne, 7 M. & G. 678 ; S. C, 8 Scott N. R. 505; Yan Casteel v. Booker, 2 Ex. 691); but the law has now been altered by 40 and 41 Vict., c. 39, § 4. 17 Again, under 5 and 6 Vict., c. 39, it was held that the agent must have been actually entrusted at the time of the pledge, and if the en- trustment had been withdrawn, no matter though secretly and though possession remained, yet the pledgee was not protected, (Fuentes v. Montis, L. R, 3 C. P. 268.) But this has now been altered by 40 and 41 Vict., c. 39, § 2. 18 Finally, if the owner really entrusts the agent with the document of title, it is immaterial, so far as the safety of the purchaser or pledgee is concerned, that the entrustment was obtained in consequence of the agent's false and fraudulent representations to the owner, (Shep- pard v. Union Bank of London, 7 H. & N. 661.) But this case must be carefully distinguished from cases where there is no real entrustment as agent of the owner, but the possession only of the document has been obtained by fraud. In such case the person obtaining possession has no title at all, either as principal or agent, and can convey none to anyone else, (Kingsford v. Merry, 11 Ex. 577; 1 H. & N. 503; Higgons v. Burton, 26 L. J., Ex. 342.)] 19 17. Where a purchaser obtaining pos- delivery. But see Spring u. Coffin, 10 session of the goods under an agreement, Mass. 31. that title shall not pass until payment of 19. Where a purchaser, for cash on de- the price, sells to a bona fide purchaser, livery, obtained possession without the such purchaser obtains title under the vendor's knowledge and without payment, factor's act. Bates v. Cunningham, 12 and made a sale and delivery — Held, that Hun 21; Bawls v. Deshler, 4 Abb. (N. the purchaser obtained no title. Brower Y.) App. Dec. 12. See Brundage v. Camp, v. Peabody, 13 N. Y. 121. In Barker u, 21 111. 330 ; M. C. K. K. Co. v. Phil- Dinsmore, 72 Penna. 427, wool was ob- lips, 60 111. 190; W. U. R. K. v. tained by one falsely professing to be Wagner, 65 Id. 197. But see, contra, agent for the buyer, and sold by him, Deshonu. Bigelow, 8 Gray 159; Hirschorn falsely professing to be agent for the v. Canney, 98 Mass. 149 ; Benner v. Puf- seller. Held, that no title passed. In fer, 114 Mass. 376. The leading case in this case the wool had been shipped by Massachusetts is Coggill v. Hartford, &c, rail to the buyer, and the possession ob- R. B., 3 Gray 545. tained by the pretended agent was un- 18. In Jones v. Hodgkins, 61 Me. 480, authorized by the seller. Williams, J., a buyer from a commission merchant was said : " The law is well settled that the held protected in his title as against a owner cannot be divested of his property prior purchaser from the owner without without his consent, unless he has placed 28 FORMATION OF THE CONTRACT. [BOOK I. § 21. These acts apply solely to persons entrusted as factors or com- mission merchants, not to persons to whose employment a power of sale is not ordinarily incident, as a wharfinger who receives goods usually without power to sell, (u) 20 The statute is limited in its scope to mer- cantile transactions, to dealings in goods and merchandise, and does not embrace sales of furniture or goods in possession of a tenant or bailee for hire. A purchaser in good faith from such vendors would be liable in trover to the true owner, (a;) Mr. Chitty, in his "Treatise Persons en- on Contracts," (y) has the following passage : " It is said, prasession'by however, that if the real owner of goods suffer another to owners. have possession thereof, or of those documents which are the indicia of property therein, thereby enabling him to hold himself forth to the world as having not the possession only but the property, a sale by such person to a purchaser without notice will bind the true owner, (per Abbott, C. J., Dyer v. Pearson, 3 B. & C. 38 ; per Bayley, J., Boyson v. Coles, 6 M. & S. 14.) But probably this proposition ought to be limited to cases where the person who had the possession of the goods was one who, from the nature of his employment, might be taken prima facie to have had the right to sell." 21 This limita- tion suggested by Mr. Chitty to the rule propounded in the dicta of the two learned judges was approved by the barons of the exchequer in Higgons v. Burton, (2) and when thus limited, the principle does it in the possession or custody of another, deprived of his property by the act of a and given him an apparent or implied third person, without his assent, under the right to dispose of it." See Dows v. rule now considered : first, the owner Greene, 24 N. Y. 638 ; Western Transpor- must clothe the person assuming to dis- tation Co. *. Marshall, 4 Abb. (N. Y.) pose of the property with the apparent App. Dec. 575. title to, or authority to dispose of it; (m) Monk v. Wittenbury, 2 B. & Ad. 484. and second, the person alleging the es top- 20. Dows v. Nat. Exch. Bank, 1 Otto pel must have sold and parted with value 618 ; Kusenberg v. Brown, 42 Penna. 173 ; on the faith of such apparent ownership. Quinn v. Davis, 78 Penna. 15; Kopp v. In this respect it does not differ from Palmer, 3 Watts 178 ; Lecky v. McDer- other estoppels in pain." See Marine mott, 8 Serg. & B. 500; McMahon v. Bank v. Fiske, 71 N. Y. 353; Weaver i>. Sloan, 12 Penna. 229. Barden, 49 N. Y. 286; McGoldrick v. (x) Loeschman v. Machin, 2 Stark. 311 ; Willits, 52 N. Y. 612 ; McNeil v. Tenth Cooper 0. Willomat, 1 C. B. 672. National Bank, 46 N. Y. 345. (y) Page 362, 11th ed., 1881. (2) 26 L. J., Ex. 342. See, also, Pick- 21. This rests on the principle of estop- ering v. Busk, 15 East 38 ; Cole v. North- pel. Nixon v. Brown, 57 N. H. 34. In western Bank, L. R., 9 C.P. 470 ; affirmed Barnard v. Campbell, 55 N. Y. 456, Allen, in Ex. Ch., 10 C. P. 354 ; and per Cock- J., said : " Two things must concur to ere- burn, C. J. in Johnson v. Credit Lyonnais, ate an estoppel by which an owner may be 3 C. P. D. at p. 39. Baines v. Swainson. PART I.J PARTIES. 2& not differ substantially from the provisions of the factor's act, as amended by the 5 and 6 Vict., c. 39. § 22. But the cases decided under the factor's acts leave this state- ment open to grave doubt, and show the extreme difficulty Law doubtful _ of defining the subject matter to which it applies. In Heyman v. Flewker, (a) a picture-dealer was held to be an, " agent " entrusted with the goods under the act, whose Heyman ti ordinary business was not to sell pictures, but who was Flewker -* authorized to sell the particular pictures in controversy, and instead of so doing pledged them. In Baines v. Swainson, (o) the circumstances were that one Emsley,, who carried on business at Leeds as factor and commission merchant, falsely represented to the plaintiffs that he could sell some of their goods to one Sykes. The plaintiffs thereupon sent to the premises of Emsley the goods, to be by him " perched," or stretched on poles, so that the purchaser could examine them, and then to deliver them. The goods were sent in several successive lots. Emsley sold them to the defendant at a less price than he represented he could get from Sykes. The plaintiffs brought trover, and Martin, B., directed the jury to give them a verdict. The Queen's Bench directed a new trial, Wightman and Crompton, JJ., holding Emsley to be an agent within the meaning of the act, and Blackburn, J., thinking that at all events there was a case for the jury to determine that fact, and also to decide whether the sale had taken place in the ordinary course of business. Crompton and Blackburn, JJ., were of opinion that the agencies referred to by the act are such as are mer- cantile only, and of persons who, as mercantile agents, would have to make sales in the ordinary course of business, as had previously been held by ~V ice-Chancellor Wigram, in Wood v. Rowcliffe. (c) Cromp- ton, J., said it was impossible to define what was meant, and "it is one of those loose enactments which conveys much difficulty. When you get to these acts of parliament the difficulty is immense." § 23. In Fuentes v. Montis, (d) the court of Common Pleas gave judgment (affirmed in Ex. Ch.) in favor of the plaintiffs, Fuentes „ wine merchants, in Spain, for certain casks of sherry, Montls - (a) 13 C. B. (N. S.) 519 ; 32 L. J., C. (d) L. E., 3 C. P. 268 ; 37 L. J., C. P. P. 132. 137 ; L. E., 4 C. P. 93. See, also, Shep- (6) 4 B. & S. 270 ; 35 L. J., Q. B. 281. pard v. The Union Bank of London, 7 H. («) 6 Hare 183. & N. 661 ; 31 L. J., Ex. 154. 30 FORMATION OF THE CONTRACT. [BOOK I. which they had consigned for sale to a London factor, who had pledged them as security for advances made by the defendant after revocation of the factor's authority, although the defendant was in good faith, and ignorant of the revocation, and although the wine remained in the factor's possession ; the court holding that the words " entrusted with and in possession of," must be construed as referring to the time when the factor made the pledge, and that he was no longer " en- trusted with " the goods after he had been ordered to deliver them to another factor for account of the consignor, although he had dis- obeyed the order, and remained " in possession." Under this decision, which the judges, Willes, Keating, and Smith, expressed regret at being constrained to deliver, the confidence felt by merchants in dealing with factors in relation to goods consigned to them, and in their possession, must be greatly shaken ; and there seems certainly to be no mode of making advances safely to a factor on the security of goods on consignment, for a merchant or banker in London or Liverpool has no means of finding out whether the for- eign consignor has or has not revoked the factor's authority. In this case also Willes, J., expressed his entire concurrence in the following dictum of Blackburn, J., reported in Baines v. Swainson : " I do not agree with the counsel for the defendant, that the mere fact of an agent being found in possession of goods, although they have been handed to him by the owner knowing that he carries on such a busi- ness, amounts to an ' entrusting ' him as agent ; though I think that under that part of. § 4 of statute 5 and 6 Vict., c. 39, to which I have referred, the fact of a person being put in possession of goods, calls upon the person who gave him possession to explain and show that it was not an entrusting " It would seem to result from this that a purchaser, even from a factor, would get no title to goods if the con- signor could show that he had sent them to the factor merely to be kept in storage, or to be forwarded to another place, although the factor was in possession of them with the consent of the consignor and was a person whose ordinary business consisted in selling goods sent to him on consignment. [The law has now been altered as to secret revocations of entrust- ment by 40 and 41 Vict., c. 39, § 2.] Although this case was affirmed in the Ex. Ch., the dicta that the act has reference only to factors for sale of the goods are disapproved PART I.] PARTIES. 31 by Lord Westbury in Vickers v. Hertz, (e) so that no one would venture^ in the present state of the authorities, to give a positive opinion as to the true construction of this statute. The subject is further discussed vost, Book V., Part I., ch. IV., on Lien. SECTION II. — WHO MAY BUY. § 24. There are certain classes of persons incompetent to contract in general, but who under special circumstances may make valid pur- chases. Infants, insane persons, and married women, are usually pro- tected from liability on contracts, as also drunkards when in such a state as to be unable to understand what they are doing ; such per- sons being considered to be devoid of that freedom of will, combined with that degree of reason and judgment, that can alone enable them to give the assent which is necessary to constitute a valid engagement. The exceptions to this general disability, so far as concerns the com- petency to purchase, will now be considered. 22 § 25. Infants, that is, persons under the age of twenty-one years, are protected by law from liability on purchases made by them, unless for necessaries. Infants. (e) L. E., 2 So. App. 113, 118 ; but see remarks of Blackburn, J., in Cole v. North Western Bank, L. E., 10 C. P., at p. 374, where he shows that Willes, J., in Fuentes v. Montis, L. E., 3 C. P., at p. 284, . (e) Whywall v. Champion, Stra. 1083 ; Hodges, 9 Bing. 365. Dilk v. Keighley, 2 Esp. 480. 38 FORMATION OP THE CONTRACT. [BOOK I. purposes of trade, is absolutely void, not voidable only. The law considers it against good policy that he should be allowed to bind himself by such contracts." Littledale, J., concurred in this view. But in the previous case of Warwick v. Bruce, (h) (not cited in Warwick v Thornton v. Illingworth,) where the infant was plaintiff by Bruce. liis next friend, it appeared that the infant had paid £40, part of the total price of £87 10s., which he had agreed to give for a quantity of potatoes, and Lord Ellenborough non-suited the plaintiff on the objection that the contract was a trading contract. A new trial waa granted, Lord Ellenborough saying : " It occurred to me at the trial,, on the first view of the case, that as an infant could not trade, and as this was an executory contract, he could not maintain an action for the breach of it ; but if I had adverted to the circumstance of its- being in part executed by the infant, for he had paid £40, and there- fore it was most immediately for his benefit that he should be enabled to sue upon it, otherwise he might lose the benefit of such payment, I should probably have held otherwise. And I certainly was under a mistake in not adverting to the distinction between the case of an infant plaintiff or defendant. If the defendant had been the infant, what I ruled would then have been correct ; but here the plaintiff is- the infant, and sues upon a contract partly executed by him, which it is clear that he may do." This case is not reconcilable with the dicta of the judge in Thorn- ton v. Illingworth, for it is plain that if a contract is absolutely void,, no action can be maintained on it or for the breach of it by anybody. The facts and circumstances of the two cases are widely dissimilar, and the decision in the earlier case seems to be more in accordance with general principles than the reasoning in the later case. The lan- guage of the learned judges in Thornton v. Illingworth was wider than was required for the decision of the case before them, and another proposition contained in the same opinion has been overruled, as shown by Lord Denman in Bateman v. Pinder, (i) decided in 1842.. [The infants' relief act, 1874, post, applies to the trading contracts of an infant ; and an infant trader cannot be adjudicated a bankrupt on the petition of a person who has supplied him with goods on credit for the purposes of trade. (&)] (h) 2 M. & S. 205. 227 ; and a decision to the same effect in (i) 3 Q. B. 574. Ireland, in In re Rainys, 3 Ir. L. E., Ch. (A) Ex parte Jones, 18 Ch. D. 109, C. 459; and see Reg. v. Wilson, 5 Q. B. D.. A., overruling Ex parte Lynch, 2 Ch. D. 28, C. C. R. PART I.J PARTIES. 39 § 30. The infant may, on arriving at the age of twenty- one years, ratify and confirm a purchase made during infancy, but only in writing. By the 9 Geo. IV., c. 14, § 5, (usually after "° called Lord Tenterden's act), it is provided, "that no i n i • -ill [Law now action shall be maintained whereby to charge any person altered since upon any promise made after full age, to pay any debt contracted during infancy, or upon ratification after full age, of any promise or simple contract made during infancy, unless such promise or ratification shall be made by some writing signed by the party to be charged therewith." 30 The legal interpretation of the words (also used in the statute of frauds), " some writing signed by the party to be charged therewith," is treated of in Part II., ch. VI., of this book. On the question of the sufficiency of the words used in the written promise to satisfy the requirement of the statute, Rolfe, B., in delivering the judgment of the Exchequer of Pleas in Harris v. Wall, (I) held, that the act distin- guished between a new promise and a ratification : and in the case before the court, the defendant was held liable on the letters written by him, as amounting to a ratification, though not a new promise. And the test of a ratification was given in these words : "Any written instrument which in the case of adults would have amounted to the adoption of the act of a party acting as agent, will, in the case of an infant who has attained his majority, amount to a ratification." In the report of that case, the reader will find all the previous cases cited and reviewed in the arguments of the counsel, (m) 30. In some of the states (Maine, New infancy. Any exercise of ownership of Jersey, Kentucky, and perhaps others,) a chattel after coming of age ratifies the similar statutes have been passed ; in purchase of it. Robinson v. Hoskins, 14 most a parol ratification is still sufficient. Bush 393; Boody v. McKenney, 23 Me. There must be an acknowledgment of 525 ; Cheshire v. Barrett, 4 McCord 241 ; liability and an express promise to pay, Minock v. Shortbridge, 21 Mich. 318; to ratify an executory contract made by Walsh v. Powers, 43 N. Y. 23. the infant, with knowledge that he is lia- (I) 1 Ex. 122. ble. Turner v. Gaither, 83 N. C. 357 ; (m) Hartley v. Wharton, 11 Ad. & E. Fetrow v. Wiseman, 40 Ind. 148; Curtin 934; Hunt v. Massey, 5 B. & Ad. 902; v. Palton, 11 Serg. & E. 305; Hinely v. Lobb v. Stanley, 5 Q. B. 574; Williams Margaritz, 3 Barr 428. But see King v. v. Moor, 11 M. & W. 256 ; Cohen v. Arm- Jamison, 66 Mo. 424, and Morse v. strong, 1 M. & S. 724 ; Tanner v. Smart, Wheeler, 4 Allen 570, that when one 6 B. & C. 603 ; Whippey v. Hillary, 3 B. comes of age he must be presumed to & Ad. 399 ; Koutledge v. Ramsay, 8 Ad. know the law, and therefore to know that & E. 221. he is not liable on his contracts made in 40 FORMATION OF THE CONTRACT. [BOOK I. But the writing must do more than merely acknowledge the correct- ness of an account as set forth, and the satisfaction of the party with the prices charged. It must further contain something to recognize the contract as an existing liability, in order to constitute a ratification. On this principle the Queen's Bench in Rowe v. Hopwood (n) held insufficient to bind the defendant his signature to a writing at the foot of the account in these words : " Particulars of account to end of year 1867, amounting to £162 lis. Qd., I certify to be correct and satisfactory." Nothing in the words indicated the intention to pay the account, or to admit it as an existing liability. § 31. [Previously to the year 1874 an infant might, on arriving at the age of twenty-one years, ratify and confirm a purchase made during infancy, the reason being that such contract was voidable, not void. The ratification must, under 9 Geo. IV., c. 14, § 5, (usually called Lord Tenterden's act), have been in writing. But that section has been repealed by the statute law revision act, 1875, (38 and 39 Vict., c. 66.) And now, by the infants' relief act, 1874, (37 and 38 Vict., c. 62,) infants' relief ** ' s provided by section 1 as follows : " All contracts act, 1874. whether by specialty or by simple contract henceforth entered into by infants for the repayment of money lent or to be lent, or for goods supplied or to be supplied, (other than contracts for neces- saries,) and all accounts stated with infants, shall be absolutely void; provided, always, that this enactment shall not invalidate any contract into which an infant may by any existing or future statute, or by the rules of common law or equity, enter, except such as now by law are voidable." And by section 2 it is provided as follows : " No action shall be brought whereby to charge any person upon any promise made after full age to pay any debt contracted during infancy, or upon any rati- fication made after full age of any promise or contract made during infancy, whether there shall or shall not be any new consideration for such promise or ratification after full age." The second section has been held to apply to a ratification after the passing of the act of a contract made during infancy before it. (o) It would probably also be held that a ratification could not be used (n) L. R., 4 Q. B. 1. (o) Ex parte Kibble, In re Onslow, 10 Ch. 373. PART I.J PARTIES. 41 as a set-off. (p) The ratio decidendi of Rawley v. Rawley, which was decided under 9 Geo. IV., c. 14, § 5, was that a set-off under the statutes of set-off must be of an actionable debt ; and that the debt in that case, not having been ratified in writing so as to comply with the provisions of the statute, and therefore, not being actionable, could not be used by way of set-off. Mr. Pollock points out in his work on Contracts, 3d ed., at p. 62, that the expression contracts " for goods supplied or to be supplied " is not free from obscurity. Had the words been instead "for payment for goods supplied, &c," the meaning would have been clear. No ■cases relating to sales and purchases of goods (g) appear to have been as yet decided under the act, but, from a consideration of its language, the effect of the act with reference to this class of contracts seems to be as follows : When the infant is the purchaser (except where he contracts for the purchase of necessaries) by the first section the contract is Infant pur . absolutely void ; it therefore follows that the second chaser - section is superfluous. When the infant is the seller the first section seems to have no ap- plication, and the legal effect of the contract remains the '. p ... Infant seller. same as it was at common law before the act, i. e., it is voidable at the infant's option, and he may adopt and enforce it upon attaining his majority, or even before. (?•) But the second section, where the words " No action shall be brought whereby to charge any person, &c," are to be observed, will have the effect of protecting the infant seller against an action by the purchaser, although the infant may have ratified the contract after reaching full age.] 31 (p) Eawley v. Rawley, 1 Q. B. D. 460, case they are voidable, either before or C. A. after he arrives at his majority. Stafford (g) Cf. Coxhead v. Mullis, 3 C. P. D. v. Roof, 6 Cowen 626, is the leading case. 439 ; Northcote v. Doughty, 4 C. P. D. Chapin v. Shafer, 49 N. Y. 407 ; Cogley 385; Ditcham n. Worrall, 5 C. P. D.410; v. Cushman, 16 Minn. 401; Miller v. all cases of breach of promise of mar- Smith, 26 Minn. 248. On avoidance he riage. may recover the chattel sold, but on con- (r) Warwick v. Bruce, 2 M. & S. 205. dition that he restore the consideration 31. Sales by an Infant. — No such received if in his power ; if not, he may statute is in force in any of the states, still recover. Price v. Furman, 27 Vt. An infant may avoid his sales as well as 268 ; Carpenter v. Carpenter, 45 Ind. 142 ; his purchases. His contracts of sale are White v. Branch, 51 Id. 210 ; Chandler absolutely void unless he makes actual v. Simmons, 97 Mass. 508 ; Betts v. Car- delivery of the chattel sold, in which roll, 6 Mo. App. 518. 42 FORMATION OP THE CONTRACT. [BOOK I, § 32. As to lunatics and persons non compotes mentis, the rules of law regulating their capacity to purchase do not differ Lunatics. . = , „ ° , , . , , materially from those which govern such contracts when made by infants. There is no doubt that it is competent for the lunatic or his representatives to show that when he made the purchase his mind was so deranged that he did not know nor understand what he was doing. Still, if that state of mind, though really existent, be unknown to the other party, and no advantage be taken of the luna- tic, the defence cannot prevail ; especially where the contract is not merely executory, but executed in the whole or in part, and the parties cannot be restored altogether to their original position. In the case cited in the note, all the authorities will be found quoted and ex- amined, (s) So far as relates to supplies of necessaries to a person of unsound mind, there can be no question that where no advantage is taken of his condition by the vendor, the purchase will be held valid, (t) 32 § 33. A drunkard, when in a complete state of intoxication, so as not to know what he is doing, has no capacity to contract in general, (w) but he would be liable for absolute neces- saries supplied to him while in that condition ; and Pollock, C. B., put the ground of the liability as follows : "A contract may be im- plied by law in many cases, even where the party protested against any contract. The law says he did contract, because he ought to have done so. On that ground the creditor might recover against him when sober, for necessaries supplied to him when drunk.'' (x) (s) Molton v. Camroux, 2 Ex. 487 ; can Tract Soc, 84 N. Y. 330 ; McCor- and in error, 4 Ex. 17. See, also, Niell mick o. Littler, 85 111. 62 ; Matthiessen v. v. Morley, 9 Ves. 478 ; Beavan v. M'Don- McMahon, 38 N. J. L. 536. Contracts nell, 9 Ex. 309. with lunatics for necessaries or things (() Marby v. Scott, 1 Sid. 112 ; Lane v. suitable to their condition in life, if fair, Kirkwall, 8 C. & P. 679 ; Wentworth v. will be sustained. Kichardson v. Strong, Tubb, 1 Y. & C. N. C. 171 ; Nelson v. 13 Ired. 106 ; Pearl v. McDowell, 3 J. J. Duncombe, 9 Beav. 211 ; Baxter v. Earl Marsh. 658 ; Van Horn v. Hann, 39 N. of Portsmouth, 5 B. & C. 170. J. L. 207. 32. An execu4ed sale of goods, before (u) Molton v. Camroux, 4 Ex. 17 ; inquest as to sanity, to a lunatic, cannot Pitt v. Smith, 3 Camp. 33 ; Fenton v. be avoided, unless fraud or knowledge of Holloway, 1 Stark. 126 ; Gore v. Gibson, the insanity is shown. Beals v. See, 10 13 M. & W. 623 ; Cook v. Clayworth, 18. Penna. 56 ; Lancaster County Bank v. Ves., Jr., 12. Moore, 78 Id. 407 ; Mutual Life Ins. Co. {%) Gore v. Gibson, 13 M. & W. 623. ■„. Hunt, 79 N. Y. 541 ; Kiggs v. Ameri- PART I.] PARTIES. 43 [But a contract entered into by a person who is so drunk, as not to know what he is doing, is voidable only and not void, Contraot and may therefore be ratified by him when he becomes voldable - sober. (?/)] 33 § 34. A married woman is absolutely incompetent to enter into- contracts during coverture, and has in contemplation of law no separate existence, her husband and herself form- women. ing but one person, (z) 34 She cannot even, while living i. Atcom- apart from her husband and enjoying a separate mainte- nance secured by deed, make a valid purchase on her own account, even for necessaries, and when credit is given to her there is no remedy but an appeal to her honor, (a) The contract with her is not, as in the case of an infant, voidable only, but it is absolutely void, and therefore incapable of ratification after her coverture has ceased. (6) 35 § 35. The common law exceptions to the general and very rigid rule as to the incapacity of a married woman to bind herself whenhua . as purchaser are well defined. The first is, when the hus- ££.#«„ band is civiliter mortuus, dead in law, as when he is under m0Ttuus - sentence of penal servitude, or transportation, or banishment, (e) The disability of the wife in such cases is said to be suspended, for her own benefit, that she may be able to procure a subsistence. She may (y) Matthews v. Baxter, L. R., 8 Ex. 35. Walker v. Simpson, 7 Watts & S. 132, where the use of the word " void " 83 ; Blake v. Hall, 57 N. H. 373 ; Eaton in Gore v. Gibson is commented on. v. George, 40 N. H. 258 ; Howe v. Wil- 33. French v. French, 8 Ohio 214 Van Wyck v. Brasher, 81 K Y. 260 Warnock v. Campbell, 25 N. J. Eq. 485 ders, 34 Me. 566 ; Pond v. Carpenter, 12 Minn. 430 ; Pippen v. Wesson, 74 N. C 442; Mallett v. Parham, 52 Miss. 922. Foss v. Hildreth, 10 Allen 76, 79. An But a married woman may purchase inquisition finding a man an habitual necessaries on the credit of her husband, drunkard is prima' facie, but not conclu- if he neglect to provide them ; but not sive evidence of incapacity to contract, if he provides them. Jolly v. Bees, 15 Noel v, Karper, 53 Penna. 97 ; Klohs v. C. B. 628. Followed by House of Lords Klohs, 61 Id. 245. in Debenham v. Mellon, L. R., 5 Q. B. D. (s) Co. Littleton 112 d. 394; Eames v. Sweetser, 101 Mass. 78; 34. Young v. Paul, ION. J. Eq. 401; Hultz v. Gibbs, 66 Penna. 360; Rea v. Dorrance v. Scott, 3 Whart. 309 ; Jacob Lurkee, 25 111. 503 ; Clark v. Cox, 32 v. Featherstone, 6 Watts & S. 346; Mich. 204; Seaton v. Benedict, 2 Sm. Stephenson v, Osborne, 41 Miss. 119; Lead. Cas. 439. Johnston v. Jones, 12 B. Mon. 376. (c) Ex parte Franks, 7 Bing. 762;. (a) Marshall v. Button, 8 T. R. 545. Sparrow v. Caruthers, cited in n., 1 T. R.,, (6) Zouch v. Parsons, 3 Burr. 1794, p. 6 ; De Gaillon u. L'Aigle, 1 B. & P. 1805 ; Com. Dig., Baron and Feme (W.) 357. 44 FORMATION OF THE CONTRACT. [BOOK I. therefore bind herself as purchaser when her husband, a convict sen- tenced to transportation, has not yet been sent away, (d) and also when he remains away after his sentence has expired, (e) But not if he abscond and go abroad in order to avoid a charge of felony. (/) 36 It was held in some early cases that where a woman's husband was an alien, and resided abroad, and she lived in England, jjiien, a resi- and contracted debts here, she was liable ; Lord Kenyon, in one case, putting the decision "on the principle of the old common law, where the husband had adjured the realm." (g) But this principle was held not to apply to the case of Englishmen who voluntarily abandoned the country, (h) 37 More modern cases seem to throw very strong doubt on the earlier doctrine as regards the •capacity of a woman, whose husband is an alien, residing abroad, to contract debts for which she can be sued in England. In Kay v. Duchesse de Pienne, where Lord Ellenborough's ruling at Nisi Prius was confirmed by the court in banco (3 Camp. 123), his Lordship con- fined the doctrine of Lord Kenyon to cases where the husband has never been in the kingdom, not simply residing abroad separate from his wife. And in Boggett v. Frier, 11 East 303, the court observed to counsel, that all these old cases were, so far as opposed to Marshall v. Button, 8 T. R. 545, overruled by that case. In Barden v. Keverberg, where the defendant pleaded coverture, plaintiff replied that defendant's husband was an alien residing abroad, and had never been within the (d) Ex parte Franks, 7 Bing. 762. tract while the desertion lasts. In Rhea (e) Carroll v. Blencow, 4 Esp. 27. v. Bhenner, 1 Pet. 107 ; Justice Duval (/) "Williamson v. Dawes, 9 Bing. 292. said: "The law seems to be settled that 36. Gregoryj;. Paul, 15 Mass. 31 ; Rhea when the wife is left without maintenance v. Bhenner, 1 Pet. 105, 108 ; Smith v. or support by the husband, has traded as Silence, 4 Iowa 321. a. feme sole and has obtained credit as such, (g) Walford v. Duchesse de Pienne, 2 she ought to be liable for her debts. And Esp. 553 ; Pranks v. De Pienne, 2 Esp. the law is the same, whether the husband 587; Burfield v. De Pienne, 2 B. & P., is banished for his crimes, or has volun- N. B. 380 ; De Gaillon v. L'Aigle, 1 B. tarily abandoned his wife." Gregory v. & P, 357. Paul, 15 Mass. 31 ; Rose v. Bates, 12 Mo. (h) Farrar v. Countess of Granard, 1 47 ; Love v. Moynehan, 16 111. 277 ; Hazel- B. & P. N. B. 80 ; Marsh v. Hutchinson, baker v. Goodfellow, 64 111. 238, (statute) ; 2 B. & P. 226 ; Williamson v. Dawes, 9 Ahem e. Easterby, 42 Conn. 546 ; Law- Bing. 292. rence v. Spear, 17 Cal. 421 ; Tobin v. 37. Effect of Abandonment.— The Galvin, 49 Id. 34; Osborn v. Nelson, 59 American cases follow the older English Barb. 375 ; Wilson v. Brown, 13 N. J. authorities and hold that abandonment Eq. 277 ; Frary v. Booth, 37 Vt. 78. by the husband enables the wife to con- PART I.] PARTIES. 45 United Kingdom ; and that the debt was contracted by the defendant in England, where she was living separate and apart from her hus- band, as a feme sole, and that the plaintiff gave credit to her as a feme sole; and that she made the promise in the declaration mentioned as a feme sole. There was no demurrer, but the case was tried on the facts alleged by the replication, and denied by rejoinder, and the ver- dict for plaintiff was set aside by the court in banco. Parke, B., said : — " Supposing the replication good, although I have a strong opinion that it is not (because the cases in which the wife has been held liable, her husband being abroad, apply only where he is civiliter mortuus), you are bound under it, to make out that the husband was an alien, that he was resident abroad, and never in this country, which facts are now admitted — and also that the defendant represented her- self as a feme sole, or that the plaintiff dealt with her believing her to be a feme sole;" and the same learned judge threw doubt upon the report of what Lord Ellenborough said in Kay v. Duchesse de Pienne. (i) More recently the case of De Wahl v. Braune (k) came before the Exchequer. The declaration was on an agreement to pur- De Wahl v chase the interest of the plaintiff in the benefit of a lease Braune - and school for young ladies. Plea in abatement, plaintiff's coverture. Replication, that her husband was an alien, born in Russia, did not reside in this country at the commencement of the action, was never a subject of this country ; that the cause of action accrued to plaintiff in England, while she was a subject of our lady the queen, residing here separate and apart from her husband ; that defendant became liable to her as a single woman, and that before and at the time of the commencement of the suit war existed between Russia and this country, and that her husband resided in Russia, and adhered to the said enemies of our lady the queen. On demurrer, held that the wife could not sue as a. feme sole; that her husband was not civiliter mor- tuus, and that the contract made during coverture was the husband's. In this case the action was by the wife, but the reasoning of the court would have been equally applicable if her condition had been reversed, and she had been the defendant instead of the plaintiff. The only remaining exception to the absolute incapacity of a mar- (i) Barden v . Keverberg, 2 M. & W. (A) 1 H. & N. 178, and 25 L. J., Ex. 61. 343. 46 FORMATION OF THE CONTRACT. [BOOK I. Married v ^ woman to bind herself as purchaser during coverture, tra^r'io cuy * s one which arises under the custom of London, and is confined to the city of London. By that custom, a, feme covert may be a sole trader, and when so, she may sue and be sued in the city courts, in all matters arising out of her dealings in her trade Beard *. m London. In the well-known case of Beard v. Webb, (I) Webb. where Lord Eldon, C. J., delivered the judgment of Cam. Scacc, reversing that of the King's Bench, this custom is elaborately considered, in connection with the general law on the subject of the wife's capacity to contract as a. feme sole during marriage; and the cus- tom is described in the pleadings as a custom " that where a feme covert of a husband useth any craft in the said city on her sole account, whereof her husband meddleth nothing, such a woman shall be charged as feme sole concerning everything that touched her craft." 38 § 36. But recent legislation has made considerable changes in these rules of the common law. By the 20 and 21 Vict., c. 85, Married woman; 8 21, a wife "deserted by her husband'' may obtain 2. By statute. , , , «. an order to protect her earnings and property, the effect of which order during its continuance is to place her " in the like Protection position in all respects with regard to property and con- order, tracts as she would be under this act if she obtained a decree of judicial separation." And the effect of such a decree is stated by the twenty-sixth section to be that '' the wife shall, while so separated, be considered as a feme sole for the purposes of contract, and wrongs and injuries, and suing and being sued in any civil pro- ceeding." (m) Further provision is made by the 21 and 22 Vict., c. 108, §§ 8, 9, 10, for the protection of persons dealing with wives who have obtained the order above described. By 33 and 34 Vict., c. 93, (married women's property act, 1870,) [amended by 37 and 38 Vict., c. 50, (married women's Property acts, 1870 and property act amendment act, 1874,)] the rights of mar- ried women to acquire property are greatly extended, and by the first section [of 33 and 34 Vict., c. 93,] especially, her " wages (I) 2 B. & P. 93 ; see, also, Macq. Hus- Lemon, 3 Rich. 131 ; Blythwood v. Ever- band and Wife 361 (ed. 1872), where this ingham, 3 Rich. 285. In Pennsylvania custom is set out at length. a similar custom was sanctioned by stat- 38. This system was recognized as in ute as far back as 1718. See Cleaver v. force in South Carolina, restricted, how- Scheetz, 70 Penna. 496. ever, as to trade and commerce. Mc- (m) See Ramsden v. Brearley, L. R., Daniel v. Cornwell, 1 Hill 428 ; Hobart v. 10 Q. B. 147. PART I.] PARTIES. 47 and earnings acquired or gained in any employment, occupation, or trade in which she is engaged or which she carries on separately from her husband, and also any money or property so acquired by her through the exercise of any literary, artistic, or scientific skill, and all investments of such wages, earnings, money or property, shall be deemed and taken to be property held and settled to her separate use, inde- pendent of any husband to whom she may be married, and her receipts alone shall be a good discharge for such wages, earnings, money and property." [And by the eleventh section, " a married woman may maintain an action in her own name for the recovery of any wages, earnings, money and property by this act declared to be her separate property, or of any property belonging to her before marriage, and which her husband shall, by writing under his hand, have agreed with her shall belong to her after marriage as her separate property ; and she shall have in her own name the same remedies, both civil and criminal, against all persons whomsoever, for the protection and security of such wages, earnings, money and property, and of any chattels or other property purchased or obtained by means thereof, for her own use, as if such wages, earnings, money, chattels and property belonged to her as an unmarried woman ; and in any indictment or other proceeding it shall be sufficient to allege such wages, earnings, money, chattels and property to be her property." Under these two sections, it was decided that a married woman can maintain an action in her own name for damages against i • Summers v. her bankers for dishonoring cheques drawn by her in the The city course of a trade carried on by her separately from her husband, or for not duly presenting or not giving due notice of dishonor of a bill of exchange acquired by her in such trade, and entrusted to them by her for presentment, (w) The decision was given on the special ground that the plaintiff's remedy was one for the pro- tection of her earnings within the meaning of the eleventh section, and it does not, therefore, follow that a married woman can in every case maintain an action of damages in her own name, for a breach of a contract made in reference to her separate trade. As to what constitutes a married woman's separate trade or busi- ness, within the meaning of the act, the reader is referred Ajhworthu. to the eases of Ashworth v. Outram, 5 Ch. D. 923, C. ' ' Lovell v. A., and Lovell v. Newton, 4 C. P. D. 7. Newton. (n) Summers v. The City Bank, L. K., 9 C. P. 580. 48 FORMATION OF THE CONTRACT. [BOOK I. It is not necessary that the wife should live apart from her husband in order to entitle her to the protection afforded by the act, but if her husband reside with her in the same house where the business is car- ried on, she must have the sole control over and management of the stock-in- business, (o) The protection of the act extends to the trade. stock-in-trade of the wife's separate trade or business, for without it the " wages" and " earnings," which it is the object of the act to protect, cannot be made. (j>) But except under the custom of London, or when her husband is Liabint of civiliter mortuus, or when she is living apart from him woman to under a protection order, (p) a married woman is not bankruptcy. ]; a t,} e to be made a bankrupt even although she has sepa- rate estate, and has contracted engagements after her marriage. The married women's property act, 1870, has made no difference in this respect, (q) 39 (o) Ashworth v. Outram, ubi supra; Lovell v. Newton, ubi swpra; Laporte v. Costick, 31 L. T. (N. S.) 434. (p) Ashworth v. Outram, ubi supra; Lovell v. Newton, ubi supra. (p) See Ramsden v. Brearley, ubi supra. (g) Ex parte Jones, 12 Ch. D. 484, C. A. The doubt expressed by Mellish, L. J., in Ex parte Holland, 9 Ch. 307, at p. 311, is solved by this decision. See, also, on this subject, Kobson on Bankruptcy, (ed. 1881), p. 99. 39. Capacity to purchase under the Married Women Statutes. — Statutes similar to those stated in the text are in force in all the United States. All provide that the property of a married woman at the time of her marriage, or the property acquired by her after marriage, shall be her separate estate, as if she were a feme sole. In some of the states express capac- ity to contract is given within certain limits. Where no express power to con- tract is given, a married woman has the same power to contract with reference to her separate estate as she had before the statute, in equity, as to her separate estate, but no power aside from such estate to bind herself personally; the act being held to operate only on the right of property, not on the power to dispose of it. Yale i>. Dederer, 18 N. Y. 265 ; Owen v. (Jaw- ley, 36 N. Y. 600; Todd v. Lee, 15 Wis. 365, 380 ; Jones v. Crosthwaite, 17 Iowa 393 ; Shonk v. Brown, 61 Penna. St. 320 ; Kantrowitz v. Prather, 31 Ind. 92 ; Tracy v. Keith, 11 Allen 215; Whitworth v. Carter, 43 Miss. 61 ; Dunbar v. Meyers, 43 Id. 679 ; Pond v. Carpenter, 12 Minn. 430 ; Bauer v. Bauer, 40 Mo. 61 ; Eckert r. Keuter, 33 N. J. L. 266 ; Glyde v. Keister, 1 Grant 465. Whether a married woman who has no separate estate can purchase property on her personal credit, thus ac- quiring an estate and incurring a debt by the same act, is a question on which courts have differed. Mr. Kelly, in his work on Contracts of Married Women, (1882), says that the true doctrine is that a married woman having no separate estate, may acquire one by purchase on credit, and sustains his position by abund- ant citations. See ch. VI., \ 17. In Pennsylvania, however, the law has been adjudged to be as follows : " The wife's earnings belong to her husband, and if she purchases property with PART I.] PARTIES. 49 § 37. In equity, where a married woman has a separate estate, [not subject to a restraint upon anticipation, (r)] she is to a cer- Married tain extent considered as a feme sole with respect to that woman: property, and may so contract as to render it liable for the 3 ' In equlty - borrowed money, or on credit, it be- longs to her husband as respects his creditors and is liable for his debts." Buchan v. Ream, 68 Penna. 421 ; Bobin- son v. Wallace, 39 Id. 129. But if she has a separate estate which is the founda- tion of the credit, she may buy on credit, and hold against her husband and his creditors. Sixbee v. Bowen, 91 Penna. 149 ; Silvens v. Porter, 74 Id. 448 ; Seeds v. Kahler, 76 Id. 262. See, also, Dunbar v. Meyer, 43 Miss. 679 ; Carpenter v. Mitchell, 50 111. 470. The New York Court of Appeals sustains the right to create a separate estate by purchase on credit. In Ackley v. Westervelt, 86 N. Y. 448, Earl, J., said : " It is no longer open to dispute in this state that a married woman, although she carries on no busi- ness on her own account, and has no separate estate, is liable, like a feme sole, for debts contracted in the purchase of real estate or other property.'- It must be observed, however, that a married woman in New York cannot contract, except with reference to her separate estate. In Manhattan B. & M. Co. v. Thompson, 58 N. Y. 83, the following are enumerated as the only contracts the wife can make : First. When they are made in or about carrying on a trade or business. See Freeking „. Eolland, 53 N. Y. 422. Second. When the contract relates to or is made for the benefit of the separate estate. Owen v. Cawley, 36 N. Y. 600. Third. When the intention to charge is expressed in the instrument or contract by which the liability is created. Yale v. Dederer, 22 N. Y. 450. It was accordingly held in Manhattan B. & M. Co. v. Thompson, supra, that the wife's writing stating that her husband was authorized to contract for her, and that she would be responsible for the fulfillment of any contract made by him, is not binding on her. In New Jersey the statutes and decisions are similar to those of New York, with the notable exception that a married woman cannot bind herself by any form of con- tract to pay the debt of another. She may, however, mortgage or pledge specific lands or chattels or personalty to secure the debt of another, but will not become personally liable. Van Kirk v. Skill- man, 34 N. J. L. 109 ; Perkins v. Elliott, 23 N. J. Eq. 526. In Illinois there was much conflict in the interpretation of the enabling act as to the extent of the powers of married women to contract, but in 1874 an act was passed providing that a married woman may own, manage and sell property, to the same extent and in the same manner that the husband can property belonging to him. She may make contracts and incur liabilities as if unmarried, except that she may not enter into any partnership without her hus- band's consent. "As to the property of the wife, protected as her separate prop- erty by the statutes, in reference thereto the husband occupies the same relation as does a stranger." Tomlinson v. Math- ews, 98 111. 182 ; Bennett v. Stout, 98 111. 49. The foregoing cases will illustrate the questions arising under the various enabling acts. For a full and clear state- ment as to all of the states, see Kelly on Contracts of Married Women (1882.) (r) Pike v. Fitz Gibbon, 17 Ch. D. 454, C. A., where the extent to which equity treats a married woman entitled to sepa- rate estate as a feme sole is defined ; per Cotton, L. J., at p. 464. The court now has power to dispense with the restraint upon anticipation. 44 and 45 Vict., u. 41, \ 39, Conv. Act, 1881 ; Hodges v. Hodges, 50 FORMATION OF THE CONTRACT. [BOOK I. payment of her debts. In respect of her purchases, the law is that if she, " having separate property, [as to which there is no restraint upon auticipationj enters into a pecuniary engagement, whether by ordering goods or otherwise, which if she were a, feme sole would con- stitute her a debtor, and in entering into such engagements she pur- ports to contract not for her husband but for herself, and on the credit of her separate estate, and it was so intended by her and so under- stood by the person with whom she is contracting, that constitutes an obligation for which the person with whom she contracts has the right to make her separate estate liable." (s) 40 30 W. K. 483 ; Tamplin v. Miller, W. N. 1882, p. 44. (s) Mrs. Matthewman's Case, 3 Eq. 781, 787. See, also, Shattock v. Shattock, 2 Eq. 182 ; 35 L. J., Ch. 509 ; Johnson v, Gallagher, 3 D, F. & J. 404; 7 Jur. (N. S.) 373 ; 30 L. J., Ch. 298 ; The London Chartered Bank of Australia v. Lem- priere, L. K., 4 P. C. 572, and the con- clusive settlement of the law in Picard v. Hine, 5 Ch. 274. 40. At common law the only mode to preserve to a married woman a separate estate was to give it in trust for her use, which trust courts of equity would sus- tain and enforce. The text states in what manner she may bind this separate estate for her debts in England. The fact that she personally incurs a debt is of itself sufficient evidence that she means to charge her separate estate with it. In New York and Massachusetts the law varies little from that in England, the principal difference, perhaps, consist- ing in this, that where the debt is not in curred for the benefit of the separate estate, the intent to charge it must ex- pressly appear as a part of the contract, verbal or written, in order to bind the separate estate. Yale v. Dederer, 22 N. Y. 451; Maxon v. Scott, 55 Id. 247; Willard v. Eastham, 8 Gray 328. But in most of the states the powers of married women have been restricted, and it has been held that their contracts shall only bind the estate when the instrument creating it so authorizes. This is ex- pressed by Gibson, J., in Thomas v. Fol- well, 2 Whart. 11, as follows : " We hold it to be the settled law of Pennsylvania that instead of having every power from which she is not negatively debarred in the conveyance, [to her trustee], she shall be deemed to have none but what is posi- tively given or reserved to her." Ap- proved, Machir v. Burroughs, 14 Ohio St. 519 ; Wright v. Brown, 44 Penna. 224. This question by no means lost its interest by the passage of the " enabling acts.'' On the contrary, it became of greatly increased importance. In the language of Ch. J. Beasley, in New Jer- sey Court of Appeals, (referring to the New Jersey statute, which was a copy of the New York act of 1848) : " The entire effect of that act is, according to my con- struction, to create in favor of the mar- ried woman that kind of estate which would result if these same statutory words were inserted in a deed or will. The words here used are technical, having long been in use, and their meaning and legal effect have been in most respects fully established. They should have the same force whether found in a private instrument or in a public statute. The purpose of the law is entirely effectuated by putting in the wife that title to her property which is so well known to equity under the designation of her separate PART I.J PARTIES MARRIED WOMEN. 51tt The 45 and 46 Vict., c. 75 (The Married Women's Property Act, 1882,) which came into operation on the first of January Married of the present year, received the royal assent some time w °™5!ct s ltSsT after the sheets of the earlier part of this edition had been re pea]3 Acts of sent to the press. The new act, which repeals the earlier 18TOand1874 - acts of 1870 and 1874, except as to any rights or liabilities accruing under them, entirely alters the position of married women at common law, and in a great measure their position in equity. It enables them to acquire, hold and dispose of every species of property, to contraot, and to sue and be sued apart from their husbands, and confers upon them for these purposes an independent status. The following sec- tions of the act are those which seem more or less to bear upon the special subject of this treatise. The 1st section provides that (1) "A married woman shall, in ac- cordance with the provisions of the act, be capable of ae- sec. i, subsect. quiring, holding and disposing by will or otherwise, of any real or personal property as her separate property, in the woman to be same manner as if she were a feme sole, without the inter- holding prop- yl ic\\ a *i i n i erty and of con- vention oi any trustee, (z) A married woman shall be tractingaaa feme sole. capable of entering into and rendering herself liable in re- spect of and to the extent of her separate property on any contract, and of suing and being sued, either in contract or in tort, or otherwise, in all respects as if she were a feme sole, and her husband need not be joined with her as plaintiff or defendant, or be made a party to any action or other legal proceeding brought by or taken against her ; and any damages or costs recovered by her in any such action or proceed- ing shall be her separate property ; and any damages or costs recovered against her in any such action or proceeding shall be payable out of her separate property, and not otherwise. (3) Every contract entered into by a married woman shall be deemed to be a contract entered into by her with respect to and to bind her separate property, unless the contrary be shown. (4) Every contract entered into by a married woman with respect to and to bind her sepa- bind after- i n i . n i i acquired rate property shall bind not only the separate property separate prop- which she is possessed of or entitled to at the date of the contract, but also all separate property which she may thereafter acquire. (5) Every married woman carrying on a trade separately from her husband shall, in respect of her separate prop- man separate erty, be subject to the bankruptcy laws in the same way as to bank- .. V f i » ' ruptcy - if she were a jeme sole. And the 2nd section enacts that " Every woman who marries after the commencement of the act shall be entitled to have and Sect. 2. to hold as her separate property and to dispose of in man- 516 FORMATION OF THE CONTRACT. [BOOK I. woman ll" ner aforesaid all real and personal property which shall MH^eMd belong to her at the time of marriage, or shall be acquired as we 'l t0 investments in the name of any married rf J Scried meu woman jointly with any persons or person other than her others" and husband, as to investments in her sole name. PART I.] PARTIES MARRIED WOMEN. 51c By the 9th section it shall not be necessary for the husband <>f any married woman, in respect of her interest, to join in sect. 9. the transfer of any investment as aforesaid, which is, at as to stock, the commencement of the act, or shall be at any time in the joint' thereafter, standing in the sole name of any married married Wo- • 1 . . . man and woman, or in the joint names of such married woman and others. any person or persons not being her husband. By the 12th section "Every woman, whether married before or after the act, shall have in her own name against all persons Seot . i 2 . whomsoever, including her husband, the same civil reme- Remedies of dies * * * for the protection and security of her own men for pro- separate property, as if such property belonged to her as a security of feme sole, * * * and in any proceeding under this erty. section a husband or wife shall be competent to give evidence against each other, any statute or rule of law to the contrary notwithstanding." By the 19th section all existing and future settlements geot 19 are saved, and it is provided that the act shall not inter- Savmg of fere with, or render inoperative, any restriction against settlements. anticipation. From a consideration of these sections of the act it is manifest that for the future, where a married woman has property Effe0tO f tlie8e which is either settled to her separate use or created her seotlons - separate property by the provisions of the act, she will, unless restrained from anticipation, be, to the extent of that property, in the same position as if she were a feme sole. It is presumed that with regard to property acquired by her as a separate trader, she will be in the same position. The rights and liabilities acquired and incurred by married women under the Married Women's Property Acts, 1870 and 1874, are preserved by the new act. The question raised in Summers v. The City Bank (0) (ante § 36), as to a married woman's general right to maintain an action in her own name for damages for breach of contract, is settled by sect. 1, subsect. 2, of the new act, while the doctrine of Ashworth v. Outram (p) (ante § 36), as to stock-in-trade, is rendered obsolete by sect. 2. A married woman deserted by her husband, would seem no longer to require a protection order under 20 and 21 Vict., c. 85 (ante § 36.) As to a married woman's liability to bankruptcy, the act will probably give rise to some doubt. A married woman Married carrying on a trade separately from her husband is woman's Ha- J b r J biiity to bank- expressly made liable to bankruptcy by sect. 1, subsect. ruptcy under 5, and the natural inference is that as the act points out a (0) L. E., 9 C. P. 580. (p) 5 Ch. D. 923, C. A. 51d FORMATION OF THE CONTRACT. [BOOK I. particular case in which married women are to be liable, their liability is excluded in every other. It was held in Ex parte Jones (q) (ante § 36, note, (5) that before the Married Women's Property Act, 1 870, a married woman was not liable to bankruptcy, and that the act had not altered her position in that respect. But the ground of the decision of the Court of Appeal in that case was, that the act of 1870 had not rendered the married woman liable to be personally sued as a debtor. Now, under sect. 1, subsect. 2, of the act 1882, a married woman is liable to be sued in all respects as if she were a feme sole, but it is not clear from the context whether the liability is intended to be a per- sonal one or to be limited to the amount of her separate estate, in which latter case, it is submitted, she would not be personally liable. It is obvious that the exemption from bankruptcy is of no benefit to the married woman, for all her property can be taken in execution by her creditors, and it is certainly a hardship on them to be under the necessity of adopting so circuitous a method of reaching the property of a person who is now, for all practical purposes, sui juris. The great change which the act has introduced in the equitable doctrine of a married woman's capacity to contract is man's contract contained in sect. 1, subsect. 4, supra. It was held by to bind after- ' £. J acquired sepa- the Court of Appeal, in Pike v. Fitzgibbon (r) (ante § 37, note (r),) that a married woman could not bind by her contract any but the separate property of which she was possessed at the time of making the contract. But by the above subsection of the act every contract entered into by a married woman with respect to and to bind her separate property, will bind all her separate prop- erty, both that of which she is possessed at the time of the contract and any which she may have afterwards acquired. It is also to be noticed, with regard to a married woman contracting r ied as a g en '> whether for her husband or another, that by taactingas" sec k *> su bsect. 3, supra, her contract will be deemed to agent. have been entered into with respect to and to bind her separate property unless the contrary be shown. It ia not clear that this enactment will affect the husband's liability in cases where his wife would have been presumed to be his agent before the act, although it makes the wife liable unless she can prove that she did not contract on the faith of her separate estate, (s) (q) 12 Ch. D. 484, C. A. Mr. Thicknesse's book on The Married (r) 17 Ch. D. 454, 0. A. Women's Property Acts, who has kindly (s) On these and other questions sug- assisted the editors in the preparation of gested by the act the reader is referred to this note. PART I.] PARTIES. 51 estate." Perkins v. Elliott, 23 N. J. Eq. 526, 533. Accordingly we have a variety of decisions under these enabling acts, until, as remarked in the case last cited, " it is, perhaps, not too much to say that the law is not identical in any two of the United States." In New Jersey, by the same case, the law is settled as follows : " The true doctrine seems to me this, that to the extent that the feme does any act which enables her to use or enjoy her separate estate, the principles of equity will validate such act, but beyond this limit she is not discovert, and cannot bind herself or her possessions." 23 N. J. Eq. 533. This would probably be ac- cepted as a correct statement of the law in Pennsylvania. For a full statement as to each of the states separately, see Kelly on Contracts of Married Women. 52 FORMATION OF THE CONTRACT. LBOOK I. CHAPTER III. MUTUAL ASSENT. SECTION I. — OF MUTUAL ASSENT. SEC. Assent, express or implied 38 Must be mutual 38 And unconditional 38 And communicated 38 Inquiry as to terms not a rejec- tion 39 Agreement to be put in writing, 40 Proposal retracted before ac- ceptance 41 Promise to leave proposal open for acceptance 41 Retraction where parties in im- mediate communication 42 Assent by correspondence 44 Retraction of proposal by letter, 46 Revocation by death 46 Implied sale 48 Fraudulent third person 48 Sale implied by recovery in trover 49 Mistake in assent 50 As to thing sold 50 As to quantity 50 As to price 50 When language of agreement is unintelligible 51 As to collateral facts by one party 53 A party is estopped from deny- ing that an intention mani- fested by him was his real intention 53 SEC. Mistake by buyer in motive 54 Showing wrong sample by mis- take 55 As to person contracted with in general 56 When caused by fraud 60 Conditional assent 61 Sale or return 61 SECTION II. — CIVIL AND AMERICAN LAW ON THIS SUBJECT. Civil law — Quasi contracts 62 American law 64 Criticisms on Cooke v. Oxley..._ 64 Professor Bell's criticisms 64 Mr. Story's criticisms 64 Chancellor Kent's editor's criti- cisms 65 Mr. Duer 65 Review of the criticisms 65 American decisions as to bargains by correspondence 68 Civilians, on the same question. Pothier 70 His reasoning unsatisfactory 71 Distinction between sale by corres- pondence, and order for pur- chase or sale, to an agent by letter 72 Where a letter of acceptance and a subsequent letter withdrawing acceptance, reach proposer at the same time 74 SECTION I. — OF MUTUAL ASSENT. § 38. The assent of the parties to a sale need not be express. It Assent express ma 7 ^ e implied from their language, (a) or from their Con- or implied. fa^ . ^ ma y j^ s jg n jf5 e( j by a n od or a gesture, or may (a) See » curious case of what one of the judges termed a " grumbling " assent, in Joyce v. Swan, 17 C. B. (N. S.) 84. (b) Brogden v. Metropolitan Railway Company, 2 App. Cas. 666, where the parties had acted upon the terms of a draft proposed agreement, which was in- tended to form the basis of a formal con- tract, to be afterwards executed by them both. PART I.J MUTUAL ASSENT. 53 even be inferred from silence in certain cases ; as if a customer takes up wares off a tradesman's counter and carries them away, and noth- ing is said on either side, the law presumes an agreement of sale for the reasonable worth of the goods, (c) l But the assent must, in order to constitute a valid contract, be mutual, and intended to bind both sides. It must also MuBtbe ■co-exist at the same moment of time. A mere proposal by mutual > one man obviously constitutes no bargain of itself. It must be accepted by another, and this acceptance must be uncaa- and uncondi . ■ditional. If a condition be affixed by the party to whom tlonal . the offer is made, or any mo'dification or change in the offer be re- quested, this constitutes in law a rejection of the offer, and a new pro- posal, equally ineffectual to complete the contract until assented to by the first proposer. Thus, if the offer by the intended vendor be answered by a proposal to give a less sum, this amounts to a rejection of the offer, which is at an end, and the party to whom it was made (c) Bl. Com., Book II., ch. 30, p. 443 ; Hoadley v. M'Laine, per Tindal, C. J., 10 Bing. 482. 1. The acceptance of an offer may be signified by performance alone. " There is nothing more significant of the accept- ance of a proposition than compliance with it, especially where notice of accept- ance is not required." Thompson, C. J., in Patton i>. Hassinger, 69 Penna. 311, 314 ; Cooper v. Altimus, 62 Penna. 486 ; Crook v. Cowan, 64 N. C. 743 ; Lungstrass v. ■German Ins. Co., 48 Mo. 200 ; Fenton v. Braden, 2 Cranch C. C. 550. Such per- formance must strictly accord with the offer. So where the seller wrote asking B. to guarantee payment for lumber to be sold to C, and B. wrote that it might be charged to himself, but the seller deliv- ered it and charged it to C. — Held, that B. was not bound, his offer being to be- come principal debtor and not surety. Smith v. Wetherell, 4 111. App. 655. See Ueberoth v. Eiegel, 71 Penna. 280. So where a part of the offer is the signing ■of a written agreement, performance with- out signing will not bind the other party unless he accepts it. Morrill n Tehama Co., 10 Nev. 125 ; Nortbam v. Gordon, 46 Cal. 582. Otherwise if he knows of the performance and permits it without ob- jection, Miller v. McMains, 57 111. 126. But no contract can be implied where an ex- press agreement controls the terms which would otherwise be raised by implication. Wood v. Edwards, 19 Johns. 212 ; Commer- cial Bank v. Pfeiffer, 29 N. Y. Sup. Ct. 327 ; Walker v. Brown, 28 111. 378 ; Voorhees v. Combs, 33 N. J. L. 494. The delivery of goods or rendering of services will not raise an implied contract where the cir- cumstances indicate a gift. Cauble v. Ryman, 16 Ind. 207 ; Carpenter v. Wel- ler, 22 N. Y. Sup. Ct. 134; Whaley v. Whaley, 49 Mo. 80. But where the ven- dor claimed to have sold goods and sent them to the alleged buyer, who received and appropriated them knowing of the claim of sale, it was held that the buyer could not disclaim the purchase. Well- auer v. Fellows, 48 Wis. 105. 54 FORMATION OF THE CONTRACT. [BOOK I, cannot afterwards bind the intended vendor by a simple acceptance of the first offer. 2 [The assent must either be communicated to the other party, or some act must have been done which the other party has ex- pressly or impliedly offered to treat as a communication, as, e. g., in contracts by correspondence, the posting of the letter of and communi oated. 2. Bank v. Hall, 101 TJ. S. 43, 50 ; Elia- Boii v. Henshaw, 4 Wheat. 225 ; Carr v. Duval, 14 Pet. 77 ; Utley v. Donaldson, 94 TJ. S. 29; Gowing v. Knowles, 118 Mass. 232; Harlow v. Curtis, 121 Mass. 320; Borland v. Gufley, 1 Grant (Pa.) 394; Johnston v. Fessler, 7 Watts 48; Demuth v. American Institute, 75 N. Y. 502 ; Corning v. Colt, 5 Wend. 253 ; Potts v. Whitehead, 23 N. J. Eq. 512 ; Johnson v. Stephenson, 26 Mich. 63 ; Eberts v. Selover, 44 Mich. 519 ; Lanz v. McLaugh- lin, 14 Minn. 72 ; Plant Seed Co. v. Hall, 14 Kan. 553; Steel v. Miller, 40 Iowa 402; Bruner v. Wheaton, 46 Mo. 363; Esmay v. Gorton, 18 111. 483; N. W. Iron Co. v. Meade, 21 Wis. 474; Jenness v. Mount Hope Co., 53 Me. 20 ; Belfast, &c, Co. v. Unity, 62 Me. 148 ; Cumber- land Bone Co. v. Atwood Lead Co., 63 Me. 167 ; Penno v. Weston, 31 Vt. 345 Mcintosh v. Brill, 20 U. C. C. P. 426 Marshall v. Jamieson, 42 U. C. Q. B. 115 Carter v. Bingham, 32 TJ. C. Q. B. 615 Webb v. Sharman, 34 Id. 410. The Manner of Acceptance must Comply with the Offer. — The mode of acceptance must accord with the mode, if any, suggested in the offer. Thus where the answer was requested by " return of wagon" to Harper's Ferry, and instead was sent by mail to the residence of the proposer at Georgetown, it was held that there was no contract. Eliason u. Hen- shaw, 4 Wheat. 225. In this case, Jus- tice Washington said : "An acceptance communicated at a, place different from that pointed out by the plaintiffs, and forming a part of their proposal, imposed no obligation binding upon them, unless they had acquiesced in it, which they de- clined doing." This was followed in Carr v. Duval, 14 Pet. 77, where an an- swer was desired by return mail, and an acceptance later was held not to bind. On the same principle where it is part of the offer that the contract shall be put in writing, or the assent is given subject to a provision as to a contract in writing,, it will not be valid until written and signed by all parties. Add. on Cont., $ 20 ; Maitland v. Wilcox, 17 Penna. 231 ; Barber v. Burrows, 51 Cal. 404 ; Morrill v. Tehama, &c, Co., 10 Nev. 125 ; Eads v. City of Carondelet, 42 Mo. 113 ; Bourne v. Shapleigh, 9 Mo. App. 64. But see note 5, infra. Partial Assent. — There will be no- contract though an offer is accepted, if the offer or acceptance states that other details are to be thereafter arranged. Brown v. N. Y. Cent. R. B., 44 N. Y. 79 ; Northam v. Gordon, 46 Cal. 582 : Bigley v. Bisher, 63 Penna. 152. In Brown v. N. Y. Cent. B. E., Commissioner Earl quotes with approval the language of Judge Foster in Lyman v. Kobinson, 14 Allen 254, as follows: "A valid contract may doubtless be made by correspondence,, but care should always be taken not to construe, as an agreement, letters which the parties intended only as a. prelimi- nary negotiation. The question in such cases always is, did they mean to con- tract by their correspondence, or were they only settling the terms of an agreement into which they proposed to enter after all its particulars were adjusted, which was then to be formally drawn up, and by which alone they designed to be bound?" See Brown v. Finney, 53 Penna, 373; McKibbin v. Brown, 14 N. J. Eq. PAKT I.J MUTUAL ASSENT. 55 acceptance ; or the assent may be inferred from subsequent conduct ; but an assent which is neither communicated to the other party nor followed up by action, a mere " mental assent," -as it is termed, is in- sufficient, [dj] 3 The cases are very numerous (e) in support of these principles, 13 ; affirmed on appeal. But where the parties could not agree on the terms of a contract, when they undertook to reduce it to writing, but executed it by common consent, both are bound by the verbal contract. Peck v. Miller, 39 Mich. 594. See Blight v. Ashley, Pet. C. C. 15. No Assent Implied to an Unknown Offer. — There can be no assent, and there- fore no sale, where one party does not know of the other's offer. Ball v. New- ton, 7 Cush. 699. Therefore a bill of sale mailed to the vendee named therein, without his knowledge, will not take effect until received and accepted by him. McCutchin v. Piatt, 22 Wis. 561 ; Welch v. Sackett, 12 Wis. 243 ; Dudley t>. Dem- ing, 34 Conn. 169. An acceptance, how- ever, may sometimes take effect before it comes to the knowledge of the other party. See \ 44, infra. Sham Assent. — The forms of a sale will not operate as such if the parties in- tend otherwise. Cox v, Jackson, 6 Allen 108 ; Bradley v. Hale, 8 Id. 59 ; Bruce v. Bishop, 43 Vt. 161. An Assent will not be Nugatory because of an Immaterial Addition. — Of course the question will always arise whether an addition to an assent is a variance from the terms of an offer. If the assent merely expresses what the law would imply, the contract is binding, and so if to the assent is added a mere hope or wish. Clark v. Dales, 20 Barb. 42; Phillips v. Moor, 71 Me. 78 ; Matteson v. Seofield, 27 Wis. 671 ; Fitzhugh v. Jones, 6 Munf. 83 ; Brisban v. Boyd, 4 Paige 17 ; O'Neill v. James, 43 N. Y. 84. (d) Brogden v. Metropolitan Railway Company, 2 App. Cas. 666, where Lord Selborne, at p. 6»8, and Lord Blackburn, at p. 691, take occasion to dissent from some unreported expressions of opinion on this point by the judges of the Court of Common Pleas. 3. Beckwith v. Cheever, 21 N. H. 41 ; McDonald -o. Boeing, 43 Mich. 394; Lungstrass v. German Ins. Co., 48 Mo. 201. But in Yaeger, &c, Co. v. Brown, 128 Mass. 171, it appeared that flour was consigned to be, at the consignee's option, either a sale to him or a consignment to sell on commission. In a contest over the title he was allowed to testify that on receipt of the flour he elected to take it as purchaser. This case seems open to criticism. An option to buy is a mere offer. Hunt v. Wyman, 100 Mass. 198. The admission of such testimony implies that there is some value in an uncom- munieated assent to an offer. If competent at all, it is conclusive, unless the witness is impeached, for from its very nature it cannot be controverted. " The thought of man is not triable, for even the devil does not know what the thought of man is.'' Quoted from Brian, C. J., under Edw. IV., in Brogden v. Metropolitan Railway Co., 2 App. Cases 666, 692. See Jenness v. Mount Hope Iron Co., 53 Me. 20; Shupe v. Galbraith 32 Penna. 10; MeCulloch v. Ins. Co., 1 Pick. 278 ; Mc- Call o. Powell, 64 Ala. 254. (e) Champion v. Short, 1 Camp. 63 ; Routledge v. Grant, 4 Bing. 653 ; Hutch- inson v. Bowker, 5 M. & W. 535 ; Jordan v. Norton, 4 M. & W. 155 ; Wontner v. Sharp, 4 C. B. 404 ; Duke v. Andrews, 2 Ex. 290 ; Chaplin v. Clarke, 4 Ex. 403 ; Forster v. Rowland, 7 H. & N. 103, and 30 L. J., Ex. 376 ; Honeyman v. Marryat, 6 H. L. C. 112 ; Andrews v. Garrett, 6 C. B. (N. S.) 262; Proprietors Eng. & For. 56 FORMATION OF THE CONTRACT. [BOOK I. which are common to all contracts. A few only of those peculiarly illustrative of the rules as applied to contracts of sale need be specially noticed. § 39. In Hutchinson v. Bowker, (/) the defendant wrote an offer Hut«Mnson v. to se ^ a car g° of 9°°d barley ; the plaintiff replied : — Bowker. « Such offer we accept, expecting you will give us fine barley, and full weight." The defendant wrote back : " You say you expect we shall give you ' fine barley.' Upon reference to our offer you will find no such expression. As such, we must decline shipping the same." It was shown on the trial that good barley and fine bar- ley were terms well known in the trade, and that fine barley was the heavier. The jury, although finding that there was a difference in the meaning of the two words, found a verdict for plaintiff. The court held that it was for the jury to determine the meaning of the words, and for the court to decide whether there had been mutual assent to the contract ; and the plaintiff was nonsuited, on the ground that he had not accepted the defendant's offer. In Hyde v. Wrench, (g) defendant offered to sell his farm to plaintiff Hyde v. f° r £1000. The plaintiff, thereupon, offered him £950, Wrench. which defendant refused. Plaintiff then accepted the offer at £1000, but defendant declined to complete the bargain. Held, on demurrer, by Lord Langdale, that when plaintiff, instead of accept- ing the first offer unconditionally answered it by a counter-proposal to purchase at a lower price, " he thereby rejected the offer," and that no contract had ever become complete between the parties. [But a mere inquiry of the proposer whether he will agree to modify An inquiry as * ne terms 0I " n ' s offer, is not a counter-proposal entitling not' a 'rejection n ' m to treat ms °^ er as rejected. Thus, in Stevenson v. of the offer. McLean, (h) the defendant, being possessed of warranis for iron, wrote to the plaintiffs offering to sell them for " 40s. nett cash, open till Monday." On the Monday morning the plaintiffs tele- graphed to the defendant, " Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give." Held, not to be a refusal of the defendant's offer, and the Cr. Co. v. Arduin, L. K., 5 H. L. 64; Dowdeswell.L. R., 10 C.P. 102; Wynne's Addinel's Case, 1 Eq. 225, affirmed in H. Case, 8 Ch. 1002 ; Beck's Case, 9 Ch. 392 ; L., Slid nom. Jackson v. Turquand, L. R., Lewis v. Brass, 3 Q. B. D. 667, C. A. 1 H. L. 305 ; Crossley v. Maycock, 18 Eq. (/) 5 M. & W. 535. 180, and cases there cited ; Appleby v. (g) 3 Beav. 336. Johnson, L. B., 9 C. P. 158 • Stanley v. (h) 5 Q. B. D. 346. PART I.J MUTUAL ASSENT. 57 plaintiffs having afterwards accepted the offer while it remained. open, that the defendant was bound, and Hyde v. Wrench was distin- guished.] 4 In The Governor, Guardians, &c, of the Poor of Kingston-upon- Hull v. Petch, (i) plaintiffs advertised for tenders to sup- Governor &0i ply meat, stating, "all contractors will have to sign a Sp^lSi?"." written contract after acceptance of tender." Defendant Petoh - tendered, and received notice of the acceptance of his tender, and then wrote that he declined the contract. Held, that by the terms of the proposal, the contract was not complete till the terms were put in writing, and signed by the parties, and that the defendant had the right to retract. In Jordan v. Norton, (k) defendant offered to buy a mare, if war- ranted "sound, and quiet in harness." Plaintiff sent the Jordan v mare, with warranty that she was " sound, and quiet in Norton - double harness." Held, no complete contract. In Felthouse v. Bindley, (I) a nephew wrote to his uncle that he could not take less than thirty guineas for a horse, for Fe]thouse! , which the uncle had offered £30. The uncle wrote back Blndle y- 6aying, " Your price I admit was thirty guineas, I offered £30, never offered more, and you said the horse was mine ; however, as there may be a mistake about him I will split the difference, £30 15s., I paying all expenses from Tamworth. You can send him at your convenience between now and the 25th of March. If I hear no more about him, I consider the horse is mine at £30 15s." This letter was dated on the 2d of January ; on the 21st of February the nephew sold all his stock at auction, the defendant being the auctioneer, but gave special orders not to sell the horse in question, saying it was his uncle's. The de- fendant by mistake sold the horse, and the action was trover by the uncle. Held, that there had been no complete contract between the uncle and the nephew, because the latter had never communicated to the former any assent to the sale at £30 15s.; that the uncle had no right to put upon his nephew the burthen of being bound by the offer 4. Counter- Proposition. — A counter- Co., 53 Me. 20 ; Snow v. Miles, 3 Cliff, proposition to an offer is equivalent to a 608. refusal. After it, an acceptance of the (i) 10 Ex. 610, and 24 L. J., Ex. 23. original offer will not bind the other party (k) 4 M. & W. 155. ■without his consent. Fox v. Turner, 1 (I) 11 C. B. (N. S.) 869; 31 L. J., C. Bradw. 153 ; Baker v. Johnson Co., 37 P. 204. Iowa 186 ; Jenness v. Mount Hope Iron 58 FORMATION OF THE CONTRACT. [BOOK I. unless rejected; and that there was nothing up to the date of the auction sale to prevent the nephew from dealing with the horse as his own. The plaintiff, therefore, was nonsuited, on the ground that he had no property in the horse at the date of the alleged conversion, (m) § 40. [In Appleby v. Johnson (n) the plaintiff wrote to the defend- Appieb ant proposing to enter his service as salesman upon cer- johnson. ^ Q t ertaS) including, amongst others, a commission upon all sales to be effected by him : for which purpose a list of merchants with whom he should deal was to be prepared. The defendant re- plied as follows : " Yours of yesterday embodies the substance of our conversation and terms. If we can define some of the terms a little clearer, it might prevent mistakes ; but I think we are quite agreed on all. We shall, therefore, expect you on Monday ;" and in a postscript added, " I have made a list of customers, which we can consider to- gether." Held, not to be an absolute and unconditional acceptance of the defendant's proposal. This decision seems open to some criticism. The defendant's letter may fairly be read as a substantial acceptance of the plaintiff's offer, coupled with the expression of a desire that some of its terms should be more clearly defined and reduced into writing. It would then fall within the principle of that numerous class of cases (o) where the ex- istence of a bindiug contract has been upheld, although the parties to the contract have contemplated a subsequent formal expression of its terms. Brett, J., appears to have taken this view at the trial of the action : while Honeyman, J., expressed reluctance in concurring in the judgment of the court.] 5 (in) It was further held in this case or of an assent that the agreement shall that the nephew's acceptance of the offer be written, no contract is concluded until after conversion, but before the action that is done. But this must be distin- brought by plaintiff, did not relate back guished from that class of cases where the to the date of the offer, so as to enable the parties conclude an agreement, intending plaintiff to maintain the action. to be bound by it, but contemplate a more (») L. E., 9 C. P. 158. formal expression of their contract. To (o) Crossley v. Maycock, 18 Eq. 180; the English cases cited by our author may Brogden v. Metropolitan Railway Co., 2 be added Chinnock v. Marchioness of Ely, App. Cas., at p. 672 ; Lewis v. Brass, 3 Q. 4 De G., J. & S. 645, and Eidgway v. B. D. 667, C. A. ; Eossiter v. Miller, 3 Wharton, 6 H. of L. Cas. 264, 268. In a App. Cas. 1124; Bonnewell v. Jenkins, 8 recent case in the New Jersey Court of Ch. D. 70, C. A. Errors and Appeals the principle was- 5. Effect of Agreement to be put in affirmed. Wharton v. Stoutenburgh, 35 Writing. — We have already seen 'note N. J. Eq. 266, 273. Depue, J., said: 2, supra,) that where it is )>;irt of nn offer "The fact that parties negotiating a con- PART I.] MUTUAL ASSENT. m In Watts v. Ainsworth(p) will be found a good illustration by Bramwell, B., of the mode of construing a correspondence Wattsr when a contest arises as to the existence of mutual assent. AmsWOTth - See also the opinions delivered in the house of lords in the case of The Proprietors of the English and Foreign Credit Company v. Arduin, where the unanimous judgments of the Exchequer of Pleas, and of the Exchequer Chamber, were unanimously reversed, (q) § 41. It is a plain inference from these cases, that a proposer may withdraw his offer so long as it is not accepted ; for if P osa , ma there be no contract till acceptance, there is nothing by before'aooept- which the proposer can be bound; and the authorities anoe ' quite support this inference. Even when on making; the „ A *- x o Promise to offer the proposer expressly promises to allow a certain J ) ea ^ e P r ° t posal time to the other party for acceptance, the offer may ^hiJJS' con- nevertheless be retracted in the interval, if no considera- $ revocation"' 3 tion has been given for the promise, [and provided that cated'before the retractation is duly communicated to the other party aoce P tenoe - before he has accepted the offer, (r)] 6 tract, contemplated that a formal agree- ment should be prepared and signed, is some evidence that they did not intend to bind themselves until the agreement was reduced to writing and signed. But, nevertheless, it is always a question of fact, depending upon the circumstances of the case, whether the parties had not completed their negotiations and con- cluded a contract definite and complete in all its terms, which they intended should be binding, and which for greater certainty, or to answer some requirement of the law, they designed to have ex- pressed in some formal written agree- ment." And he proceeds to quote with approval the following language of Lord Westbury in Chinnock v. Marchioness of Ely : " As soon as the fact is established of the final mutual assent of the parties to certain terms, and those terms are evi- denced by any writing signed by the par- ties to be charged, there exist all the ma- terials which this court requires to make a legally binding contract. But, if to a proposal or offer an assent be given sub- ject to a provision as to a contract, then the stipulation as to the contract is a term of the assent, and there is no agree- ment independent of that stipulation,"' (Of course, signing by the party to be charged is necessary only in the cases of contracts within the statute of frauds.) See Blight v. Ashley, Pet. C. C. 15 ; Peck v. Miller, 39 Mich. 594 ; Bell v. Offutt, 10 Bush 632 ; Mackey v. Mackey, 29 Gratt. 158 ; Pratt v. Eailroad Co., 21 N. Y. 305 ; Blaney v. Hoke, 14 Ohio St. 292. (p) 1 H. & C. 83 ; 31 L. J., Ex. 448. (g) L. R., 5 H. L. 64. (r) Byrne v. Van Tienhoven, 5 C. P. D. 344; Stevenson v. McLean, 5 Q. B. D. 346. 6. Moline Scale Co. v. Beed, 52 Iowa 307; Bailroad Co. v. Bartlett, 3 Cush. 224; Brown v. Rice, 29 Mo. 322 ; Weiden v. Woodruff, 38 Mich. 130; Palls v. Gathier, 9 Porter 605 ; Water Comm'rs of Jersey City v. Brown, 32 N. J. L. 504 ; Haughwout v. Boisaubin, 18 N. J. Eq. 315 ; Belfast, &c, R. R. v. Unity, 62 Me. 148; Johnson v. Filkington, 39 Wis. 62. ■60 FORMATION OF THK CONTRACT. [BOOK I. Cooke v. Oxley (s) is the leading case on this point. The declara- cooker. ti° n was ^at * ne defendant had proposed to sell and de- oxiey. liver to the plaintiff two hundred and sixty-six hogsheads of tobacco on certain terms if the plaintiff would agree to purchase them on the terms aforesaid, and would give notice thereof to the de- fendant before the hour of four in the afternoon of that day. Aver- ment, plaintiff did agree, &c, and did give notice, &c, and requested delivery, and offered payment. Judgment arrested after verdict for the plaintiff. Kenyon, C. J., delivering judgment, said : " Nothing can be clearer than that, at the time of entering into this contract, the engagement was all on one side. The other party was not bound. It was, therefore, nudum pactum." Buller, J., said : " It is impos- sible to support this declaration in any point of view. In order to sustain a promise, there must be either a damage to the plaintiff, or an advantage to the defendant ; but here was neither when the con- tract (promise?) was first made. Then as to the subsequent time : the promise can only be supported on the ground of a new contract made at four o'clock ; but there is no pretence for that. It has been argued that this must be taken to be a complete sale, from the time when the condition was complied with ; but it was not complied with, for it is not stated that the defendant did agree at four o'clock to the terms of the sale; or even that the goods were kept till that time." Grose, J., said : " The agreement was not binding on the plaintiff before four o'clock ; and it is not stated that the parties came to any subsequent agreement; there is, therefore, no consideration for the promise." This decision was afterwards affirmed in the Exchequer Chamber, M. 32 Geo. III. (I) § 42. [The principle of Cooke v. Oxley has been affirmed in the most recent cases, with this limitation, that the retractation of the " Giving the refusal " for a specified time A Change of the Law may Operate is a mere offer, and may be withdrawn at to Retract an Offer. — The law in force any time. If not withdrawn it comes to when an offer is made forms part of it. an end at the close of the time limited, An acceptance after the law has been so such time being always of the essence of changed as to affect the terms, comes too an offer. Faulkner v. Hebard, 26 Vt. late. Mercer Co. v. Pittsburg, <&c, R. B., 452 ; Longworth v. Mitchell, 26 Ohio St. 27 Penna. 389. A revocation of an offer 534, 342 ; Larmon v. Jordan, 56 111. 204. is of no validity unless communicated. An offer to several persons jointly may Wheat v. Cross, 31 Md. 99. be withdrawn at any time before accept- (s) 3 T. R. 653. ance by all. Burton v. Shotwell, 13 Bush (t) So stated in note at the end of the 271. report, in 3 T. E. 653. PART I.J MUTUAL ASSENT. 61 offer must have been in some way communicated to the other party before his acceptance of it. (u) A tacit retractation is insufficient, (v) In Dickenson v. Dodds notice aliunde that the defendant Diokenson „. had agreed for the sale of the property in question to a Dodds ' third party was held to be sufficient notice to the plaintiff of the retractation of the defendant's offer, but there is nothing in the judg- ment to warrant the statement in the head-note ; " semble, the sale of property to a third person would of itself amount to a withdrawal of the offer, even although the person to whom the offer was first made had no knowledge of the sale." It should be observed that Cooke v. Oxley, which was a motion in arrest of judgment after verdict for plaintiff, turned solely upon the insufficiency of the plaintiff's allegation. Viewed in the light of subsequent decisions, it is clear that it would have been sufficient for the plaintiff to have alleged that at the time when he gave notice of acceptance of defendant's offer, no notice of its withdrawal had been communicated to him. It is to be observed that in no case has it yet been decided that, ' when the parties are in immediate communication with one another, a retractation of an offer, to be effectual, where parties i • t -r* t -r» tt m- * u immediate must be communicated. .Both .Byrne v. Van lienhoven communica- tion. and Stevenson v. McLean were cases where the parties had contracted by correspondence, but the language there used by the judges to the effect that an uncommunicated revocation is, for all practical purposes and in point of law, no revocation at all, is per- fectly general, and it is conceived that the rule would apply equally when the parties are in immediate communication with one another.] 1 (u) Dickenson v. Dodds, 2 Ch. D. 463, o. Collier Lead Co., 4 Dill. 431 ; Chicago, C. A. ; Byrne v. Van Tienhoven, 5 C. P. &c, K. E. v. Dane, 43 N. Y. 240 ; Maxley D. 344 ; Stevenson v. McLean, 5 Q. B. v. Maxley, 2 Mete. (Ky.) 309 ; Averill v. D. 346. Hedge, 12 Conn. 424 ; Martin v. Black, (v) Per Lush, J., in Stevenson v. Mc- 21 Ala. 721 ; Beekwith v. Cheever, 21 N. Lean, 3 Q. B. D. at p. 351 ; per Lindley, H. 41. And where the parties are in J., in Byrne v. Van Tienhoven, 5 C. P. immediate communication with each other, D. at p. 347. that reasonable time will ordinarily be 7. An offer, however, will not stand limited to the same interview. If an open forever. If no time is fixed within offer is made and not accepted, and the which it is to be accepted it must be parties separate without any further un- accepted within a reasonable time, con- derstanding, there is no offer outstand- sidering the nature of the contract. Judd ing. Story on Sales, ? 126. An offer by v. Day, 50 Iowa 247 ; Minnesota Oil Co. mail may by its nature or by its terms 62 FORMATION OF THE CONTRACT. [BOOK I. In Routledge v. Grant, (x) which was the case of an offer by de- Routiedgeu fendant to purchase a house, and to give plaintiff six Grant. weeks for a definite answer, Best, C. J., nonsuited the plaintiff, on proof that defendant had retracted his offer within the six weeks, and on the rule to set aside the nonsuit, said: "If six weeks are given on one side to accept an offer, the other has six weeks to put an end to it ; one party cannot be bound without the other." The Chief Justice in this case cited Cooke v. Oxley with marked ap- proval. In Payne v. Cave, (y) it was held that a bidder at an auction may retract his bidding any time before the hammer is down ; Payne v. Cave. . ° ■" . . ' and per curiam, " Every bidding is nothing more than an offer on one side, which is not binding on either side till it is assented to. But, according to what is now contended for, one party would be bound by the offer, and the other not, which can never be al- lowed." (s) 8 § 43. In Head v. Diggon, (a) the defendant, on Thursday, the 17th Headt; °f April, gave the plaintiff a written order in these Diggon. words : " Offered Mr. Head, of Bury, the under wool, &c, &c, with three days' grace from the above date." These words were put in by the defendant expressly as a promise to await three •days for the plaintiff's acceptance of the offer. The plaintiff went on Monday to accept, but the defendant refused, saying that the three days were out the day before — Sunday. Holroyd, J., nonsuited the plaintiff, on the authority of Cooke v. Oxley. In the course of the argument for a new trial, Lord Tenterden said : " Must both parties be bound, or is it sufficient if only one is bound ? You contend that require an acceptance by return of post special circumstances. See Sugden V. & to bind. Macklay v. Hervey, 90 111. 525 ; P. 11 (14th ed.,) and Dart V. & P. 124 Carr v. Duval, 14 Pet. 77, 82 ; Averill v. (ed. 1876.) Hedge, 12 Conn. 424 ; Batteman v. Mor- 8. Downing v. Brown, Hardin 181 ; ford, 76 N. Y. 622. G-rotenkemper v. Achtermeyer, 11 Bush (x) 4 Bing. 653. See, also, Humphries 222 ; National Bank of the Metropolis v. AET I.J MUTUAL ASSENT. 67 For the same principle, as applied to the posting of a letter contain- ing an offer, see Taylor v. Jones, 1 C. P. D. 87. And as to the prop- erty in a letter and its contents, see Ex parte Cote, 9 Oh. 27.] § 46. In both the above cases of Adams v. Lindsell and Dunlop v. Higgins it will be observed that the acceptance of the Proposa i re _ offer was complete by the posting of the answer before the Sfe?re b aches offer was retracted, in accordance with the principle which deatmatlon - makes the bargain complete at the moment when mutual and reciprocal assent has been given. But the language of the court in Adams v. Lindsell is broader than was needed for the decision of that case, for it would extend to an offer sent by mail and retracted by posting a second letter, before the first reached its destination. This point has not yet been presented directly for decision by our courts : and it will be considered in connection with the American cases referred to at the end of the chapter. [Two recent decisions have now covered the point in question, if) In Byrne v. Van Tienhoven, 5 C. P. D. 344, the defend- • i ■ /~i too i Proposal must ants, who earned on business at Cardiff, wrote to the be duly re- 3 t tracted before plaintiffs at New York offering goods for sale. Their the letter of r do acceptance la letter was posted on the 1st of October and received by posted, the plaintiffs on the 11th, who accepted the offer by tele- Byrne i>. van r . Tienhoven. gram on the same day and also by letter on the 15th. Meanwhile, on the 8th of October, three days previous to the arrival in New York of their letter of the 1st, the defendants wrote a second letter withdrawing their offer. This letter was not received by the plaintiffs until the 20th, several days after they had posted their letter of acceptance. Held, that the notice of withdrawal was too late. In considering the question whether a withdrawal of an offer had any effect until it is communicated to the person to whom it has been sent, Lindley, J., said : "I am aware that Pothier and some judgment other writers of celebrity are of opinion that there can be Llnaie y' J - no contract if an offer is withdrawn before it is accepted, although the withdrawal is not communicated to the person to whom the offer has been made. The reason for this opinion is that there is not in fact any such consent by both parties as is essential to constitute a contract between them. Against this view, however, it has been urged that a state of mind not notified cannot be regarded in dealings (0 Byrne v. Van Tienhoven, 5 C. P. B. D. 346. D. 344, and Stevenson v. McLean, 5 Q. 68 FORMATION OF THE CONTRACT. [BOOK I, between man and man ; and that an uncommuuicated revocation ie for all practical purposes and in point of law no revocation at all. This- is the view taken in the United States. * * * This view, more- over, appears to be much more in accordance with the general princi- ples of English law than the view maintained by Pothier." The learned judge then proceeded to consider the question whether the mere posting of the letter of revocation could be regarded as a com- munication of it to the plaintiff, and answered it in the negative on the ground that there was no analogy between the two cases of posting a letter of acceptance and one of withdrawal. It is a principle of law that a person who makes an offer by post must be taken to have assented " to treat an answer to him by a letter duly posted as a suf- ficient acceptance and notification to himself; " but there is neither principle nor authority to show that the party accepting has assented to treat the posting of a letter of withdrawal in the same way. But an offer is effectually revoked by the death of the party mak- TOked 8 by r the ' D S ^ > nor ^ s *' necessary, it would seem, for the» fact of p?oposer the death t0 be notified to the other party, (w) H § 47. The second proposition submitted in the text, namely, that a Can acceptor P ar ty accepting cannot retract his acceptance after posting hisTcceptance n ^ s letter, although prior to his correspondent's receipt of cehredbythe it, nor, indeed, if it never be received, has not yet been proposer? directly decided. In Dunmore v. Alexander, (v) before the Court of Sessions in Scot- Dunmore v land, it was held that there was no contract where the let- Aiexander. j. erg £ acce pt ance an( ] revocation arrived together. In the English courts, however, the principle is now firmly established that the contract is complete and irrevocable upon the posting of the letter of acceptance. It follows, then, that the acceptor, as well as the proposer, is bound from that time and cannot afterwards escape from his obligation. There are dicta to support this view. Lord Blackburn says, in Brogden v. Metropolitan Hailway Company, 2. (u) Per Mellish, L. J., in Dickenson v. was held to terminate with the death of Dodds, 2 Ch. D. at p. 475. the promisor, and his executor was not 11. Death or insanity of the person liable for expenses incurred after the making an offer, before its acceptance, death, though he gave no notice of it. revokes it. Pratt v. Trustees, &c, 93 111. Browne v. McDonald, 129 Mass. 66. See 475; The Palo Alto, Daveis 343. A Scruggs v. Alexander, 72 Mo. 134. contract, unlimited as to time, to pay the (v) 9 Shaw & Dunlop 190, referred to expenses of a niece at a boarding-school, post p. PART I.J MUTUAL ASSENT. 69 App. Cas. at p. 691, that the acceptor by posting his letter has "put it out of his control and done an extraneous act which clenches the matter, and shows beyond all doubt that each side is bound." " The moment one man has made an offer," says James, L. J., in Harris' Case, 7 Ch. at p. 591, " and the other has done something binding himself to that offer, then the contract is complete, and neither party can afterwards escape from it," and this passage was cited with approval by Thesiger, L. J., in The Household Fire Insurance Com- pany v. Grant, 4 Ex. D. at p. 219. It is true that the argument ab inconvenienti has no weight here as in the case of the withdrawal of an offer. The acceptor may notify the revocation by a letter reaching the proposer at the same time as the letter of acceptance, or by means of a telegram the revocation of the acceptance might be the first inti- mation to the proposer that his offer had been originally accepted, and in neither case would the proposer sustain any loss or inconvenience from the other party's change of intention. This is the view of Eramwell, L. J. : " The arrival of the letter of acceptance might," he says, " be anticipated by hand or telegram, and there is no case to show that such anticipation would not prevent the letter from bind- ing." (a;) Consistently, however, with the view of the finality of the contract consequent upon the posting of the letter of acceptance, a view adopted in a series of cases closing with the decision of the Court of Appeal in The Household Fire Insurance Company v. Grant (from which Bramwell, L. J., dissented,) there can be little doubt that the proposition now being considered will, when occasion arises, receive judicial sanction.] § 48. Contracts of sale are implied under certain circumstances without any expression of the will or intention of the i m p Ued0OI ,. parties; as where, for example, an express contract has tr » otsof she- been made, and goods are sent, not in accordance with it, but are nevertheless retained by the purchaser. In such a case a new contract is implied that the purchaser will pay for them their value : as where the purchaser retained 130 bushels of wheat furnished on a contract to supply 250 bushels ;(y) and where 152 tons of coal were delivered (x) See The Household Fire Insurance in Newcombe v. De Roos, 2 E. & E. 271. •Company v. Grant, 4 Ex. D. 216, C. A., (y) Oxendale v. Wetherell, 9 B. & C. :at p. 235. See, also, per Cockburn, C. J., 386. 70 FORMATION OF THE CONTRACT. [BOOK 1^ Hart v . Mills. and retained on an order for 200 or 300 tons, (z) The rule was fully recognized by Parke, J., in Read v. Runn, (a) and was well exempli- fied in the case of Hart v. Mills in the Exchequer, in 1846. 12 In Hart v. Mills, (6) the facts were that the defendant ordered two- dozen of port and two of sherry, to be returned if not ap- proved. Plaintiff delivered next day four dozen of each. Defendant not being satisfied with the quality, sent back the whole ex- cept one bottle of port and one dozen of sherry, with a note, saying :. " I should not have been particular about keeping the four dozen if the quality had suited me. I return the four dozen of port, minus one bottle which I tasted ; also three dozen of sherry, as neither suit my palate." The plaintiff contended that the defendant was liable for two- dozen of each kind, on the ground that the order was entire, and that he could not keep part and reject the rest. Alderson, B., said : " The- defendant orders two dozen and you send four ; then he had a right (z) Richardson v. Dunn, 2 Q. B. 222. (a) 10 B. & C. 441 ; and see Morgan v. Gath, 34 L. J., Ex. 165 ; 3 H. & C. 748. 12. Implied Sales. — Where the ven- dor delivers only part of the goods sold by him, and they are accepted, he may re- cover the value on an implied contract, subject to recoupment for damages for breach of contract to deliver the residue. Bowker v. Hoyt, 18 Pick. 555 ; Morse v. Brackett, 98 Mass. 207 ; Starr Glass Go. v. Morey, 108 Id. 574 ; Goodwin v. Mer- rill, 13 Wis. 658; Begole v. McKenzie, 26 Mich. 470; Andre v. Hardin, 32 Id. 324; Chapman v. Dease, 34 Id. 375; Dermott v. Jones, 23 How. 220, 2 Wall. 1 ; Richards v. Shaw, 67 111. 22.2 ; Shaw v. Badger, 12 Serg. & R. 275 ; Ruiz v. Norton, 4 Cal. 355; Booth v. Tyson, 15 Vt. 515; Sentell v. Mitchell, 28 Ga. 196. The recovery cannot exceed either the price or the true value. Chapman ■n. Dease, 34 Mich. 375; Carter v. Mc- Neeley, 1 lred. L. 448. But in New York the rule is that on an entire con- tract of sale there can be no recovery for part delivery. Kein v. Tupper, 55 N. Y. 550, 555. In this case Church, C. J., said: "The rule is well settled in this Btate that upon a contract for the deliver- ing of a specified quantity of property, payment to be made on delivery, no action will lie until the whole is delivered. The English rule that a recovery may be had for the portion delivered if retained until after the time for full performance (as held in 9 B. & C. 387, and other cases,) has never been adopted but expressly re- pudiated by the courts of this state. That rule rests on no solid foundation, and it enables courts to alter the terms of con- tracts as made by parties." But an im- portant modification of the New York doctrine is effected by the recent case of Avery v. Wilson, 81 N. Y. 341. In that case it was held that where all of a lot of goods were to be delivered at one time, and the buyer accepted a delivery of part only, he thereby waived the condition precedent of complete delivery, and the vendor could recover for the portion de- livered, though he made default as to the residue. Where shingles were ordered, and more were sent than the order called for, the buyer took the amount of his order but refused the excess. Held, that he was liable only for such as he had accepted. L^rkin v. Mitchell, &c, Co.,. 42 Mich. 296. (b) 15 M. & W. 85. PART I.J MUTUAL ASSENT. 71 to send back all : he sends back part. What is it but a new contract as to the part he keeps? If you had sent only two dozen of each wine, you would be right ; but what right have you to make him select any two dozen from the four?" Held, that the plaintiff could only recover for the thirteen bottles retained on the new contract re- sulting from his keeping them. It has been held that a plaintiff may recover, as on an implied con- tract of sale, from a third person who fraudulently in- implied sale duced him to sell goods to an insolvent purchaser, and against fraudu- then obtained the goods for his own benefit from the pur- person, chaser, (c) * 3 § 49. There is also one special case, in which a sale takes place by the operation of certain principles of law, rather than by sale implied the mutual assent of the parties, either express or im- trover, and plied. The rule is thus stated in Jenkins, 4th Cent. Ca. judgment. 88 : "A in trespass against B for taking a horse, recovers damages : by this recovery and execution done thereon, the property in the horse is vested in B." Cooper v. Shepherd (d) was an action in Cooper „ trover for a bedstead. Plea, a former recovery by plain- she P herd - (c) Hill v. Perrott, 3 Taunt. 274 ; Ab- bott v. Barry, 2 B. & B. 369 ; Corking v. Jarrard, 1 Camp. 37 ; Clarke v. Shee, Cowp. 197. 13. It has been held that the owner of goods wrongfully taken may waive the tort, and sue in assumpsit for goods sold and delivered. Hill v. Davis, 3 N. H. 384; Floyd t. Wiley, 1 Mo. 430; La- beaume v. Hill, Id. 643; 2 Green 1. Ev., $ 108 Also see Dalton v. Hamilton 1 Hannay (N. B.) 422. But it is now the received opinion that the right to waive the tort and sue in assumpsit exists only where the goods have been sold by the wrongful taker, in which case the action may be assumpsit for money had and re- ceived, not for goods sold. Jones v. Hoar, 5 Pick. 285; Ladd v. Bogers, 11 Allen 209, 212 ; Tolan v. Hogeboom, 38 Mich. 624 ; Kelty v. Owens, 4 Chand. 166 ; Johnston v. Salisbury, 61 111. 316 ; Dundas v. Muhlenberg, 35 Penna. 351 ; Pearsoll v. Chapin, 44 Id. 9; Gray v. Griffith, 10 "Watts 431; Bethlehem v. Perseverance Fire Co., 81 Penna. 445 ; Kimble v. Carothers, 81 Id. 494 ; Best v. Boice, 22 TJ. C. Q. B. 439. In Connecti- cut it was held that where by a fraudu- lent arrangement goods were procured by one party on the credit of another, the possessor could not be sued as on a sale but in trover. Bonnell v. Chamber- lin, 26 Conn. 487. Where an owner of lands warned a woodcutter not to cut on his land, and marked out the line, and the woodcutter cut trees where directed, and it appeared that the owner had mis- taken the boundary, and the trees had been cut on his land — Seld, that he could sustain assumpsit for the value of the trees on an implied contract of sale. Evans v. Miller, 58 Miss. 120. It is not easy to find here any elements of a contract, but neither was there any tort, the owner having licensed the cutting. (d) 3 C. B. 266. See, also, Adams v. Boughton, 2 Str. 1078, more fully reported 72 FORMATION OF THE CONTRACT. [BOOK tiff in trover, of the same bedstead, in an action against C, and that the conversion by C was not later than the conversion charged against the defendant, and that C being possessed of the bedstead, sold it to the defendant, and the taking by the defendant under such sale was the conversion complained of in the declaration. The court held that this plea averred a sale of the bedstead from the plaintiff to C, the vendor of the defendant. On principle, however, it is plain that the recovery in trover would only have this effect in cases where the value of the thing converted is included in the damages recovered, (e) But an unsatisfied judgment in trover does not pass the property, and is a mere assessment of damages on payment of which the prop- erty vests in the defendant. (/) 14 § 50. From the general principle that contracts can only be effected by mutual assent, it follows that where, through some mistake of fact, each was assenting to a different contract, there is no real valid agreement, notwithstanding the apparent mutual assent. 15 Assent by mistake. in Andrews 18 ; Holmes v. Wilson, 10 Ad. & E. 503 ; Barnett v. Brandon, 6 M. & G. 040, note. (e) See reasoning of the court in Chin- nery v. Viall, 5 H. & N. 288 ; 29 L. J., Ex. 180. (/) Brinsmead v. Harrison, L. R., 6 C. P. 584^affirmed in Cam. Seacc, L. R., 7 C. P. 547 ; Ex parte Drake, 5 Ch. D. 866, C. A. 14. Brady v. Whitney, 24 Mich. 154; Sharp v. Gray, 5 B. Mon. 4; Osterhout v. Roberts, 8 Cow. 43 ; Ball v. Liney, 48 N. Y. 6, 16 ; Marsden v. Cornell, 62 N. Y. 215, 220; Thayer „. Mauley, 73 N. Y. 305, 309. But in Pennsylvania the recovery of the judgment without payment has been held to transfer title. Floyd v. Browne, 1 Rawle 121 ; Marsh v. Pier, 4 Id. 2b6; Fox v. Northern Liberties, 3 Watts & S. 103, 107. In this last case Kennedy, J., says : " The authority in this state, so far as we have any evidence of it, seems to be in favor of the principle that the judgment alone in such case transfers the property." See White v. Philbrick, 5 Greenl. 147 ; Merrick's Estate, 5 Watts 6 S. 17 ; Fox v. Prickett, 34 N. J. L. 13. 15. Jennings v. Gratz, 3 Rawle 168 ; Gibson v. Pelkie, 37 Mich. 380 ; Sheldon v. Capron, 3 R. I. 171 ; Allen v. Ham- mond, 11 Pet. 63; Harvey v. Harris, 112 Mass. 32 ; Gardner v. Lane, 9 Allen 492 ; S. G, 12 Allen 44 ; Hitchcock v. Giddings, 4 Price 135 ; Rice v. Dwight Manufactur- ing Co., 2 Cush. 80, 86; Thompson v. Gould, 20 Pick. 139 ; Franklin v. Long, 7 Gill & J. 407; Suydam „. Clark, 2 Sandf. Super. Ct. 133 ; Ketchum v. Catlin, 21 Vt. 191. " The cases founded on mis- take seem to rest on this principle — that if parties believing that a certain state of things exist, come to an agreement with such belief for its basis, on discovering their mutual error they are remitted to their original rights." Ch. J. Savage in Mowatt v. Wright, 1 Wend. 355, 362. Ketchum v. Bank of Commerce, 19 N. Y. 499 ; Hills v. Snell, 104 Mass. 173 ; Ful- lerton *. Dalton, 58 Barb. 236; Cutts v. Guild, 57 N. Y. 229 ; Barfield v. Price, 40 Cal. 535, 542 ; Baker v. Lyman, 38 U. C. Q. B. 498. A sale of a drill machine by an administrator was held not to pass PART I.] MUTUAL ASSENT. 73 Thus, in Thornton v. Kempster, (g) the sale was of ten tons of sound merchantable hemp, but it was intended by the Mistake as to vendor to sell St. Petersburg hemp, and by the buyer to purchase Riga Rhine hemp, a superior article. The Kempster. broker had made a mistake in describing the hemp to the buyer, and the court held that there had been no contract whatever, the assent of the parties not having really existed as to the same subject matter of sale. So in Raffles v. Wichelhaus, (h) there was a contract for the sale of "125 bales of Surat cotton, guaranteed middling fair Eaffles!> merchants' Dhollerah, to arrive ex Peerless from Bom- wichelhaus - bay," and the defendant pleaded to an action against him for not accepting the goods on arrival, that the cotton which he intended to buy was cotton on another ship Peerless, which sailed from Bombay in October, not that which arrived in a ship Peerless that sailed in December, the latter being the cotton that plaintiff had offered to de- liver. On demurrer, held that on this state of facts there was no ■consensus ad idem, no contract at all between the parties, (i) [In Henkel v. Pape(&) there was a mutual mistake as to the quantity of the thing sold, but as the defendant did not rely on his right to have the contract rescinded, the de- quantity of cision does not involve the application of the principle now being considered.] In Phillips v. Bistolli, (I) the defendant, a foreigner, not understand- ing our language, was sued as purchaser of some earrings, at auction, for the price of eighty-eight guineas, and al- price, leged in defence that he thought the bid made by him pmhipsu. was forty-eight guineas, and that there was a mistake in knocking down the articles to him at eighty-eight guineas, and Abbott, C. J., left it to the jury to find whether the mistake had actually been made, as a test of the existence of a contract of sale. 16 ■valuables secreted in it by the decedent. Q. B. 446, a mistake as to charter-parties Huthmacher v. Harris, 38 Penna. 491. caused by the broker's fraud. The sale of a safe on execution passes (k) L. E., 6 Ex. 7. no title to its contents. Bay v. Light, 34 (I) 2 B. & C. 511. See, also, Cochrane Ark. 421. v. Willis, 1 Ch. 58. (g) 5 Taunt. 786. See, also, Keele v. 16. Mistake as to Price. — Bupley v. Wheeler, 7 M. & G. 665. Daggett, 74 111. 351 ; Calkins v. Griswold, (h) 2 H. & C. 906 ; 33 L. J., Ex. 160. 18 N. Y. Sup. Ct. 208 ; Hartford and N. (i) See, also, Smidt v. Tiden, L. B., 9 H. E. E. v. Jackson, 24 Conn. 514; Bo- 74 FORMATION OF THE CONTRACT. [BOOK I. § 51. And so if the parties have expressed themselves in language Unintelligible s0 va g ue an d unintelligible that the court find it impossi- agreement. ble to affix a definite meaning to their agreement, it can- not take effect. Thus, in Guthing v. Lynn, (m) the action was on an Guthi . alleged warranty on the sale of a horse, and the decla- Lynn. ration averred the sale to have been for "a certain price or sum of money, to wit, £63." The proof was of a sale for sixty guineas, and " if the horse was lucky to the plaintiff he was to give £5 more, or the buying of another horse." This was insisted on as a variance. On motion for nonsuit according to leave reserved, the court refused to nonsuit, on the ground that the additional clause was unintelligible; that no man could say under what circumstances a horse was to be considered " lucky," nor could any definite meaning be attached to the words " or the buying of another horse," as part of the price of the horse sold. The contract must therefore be consid- ered as proven for the price of £63, the remainder being looked on as some honorary understanding between the parties. 17 vengo v. Defferari, 40 Cal. 459. In Greene v. Bateman, 2 W. & M. 359, a bargain was made for the sale of shingles at $3.25. One party understood this to mean per bunch and the other per 1000. Held, no contract. (m) 2 B. & Ad. 232. See, also, Bourne v. Seymour, 24 L. J., C. P. 207; and Pearce v. Watts, 20 Eq. 492, the case of a sale of real estate. 17. Sales Void for Uncertainty. — In Cummer v. Butts, 40 Mich. 322, a contract was made to employ an agent to sell on commission, which stipulated that "for good cause this agreement shall be can- celed upon sixty days' notice by either party." The court held it impossible to give any definite meaning to the term "for good cause," saying : " It is impossi- ble to say that the wills of the parties concurred and that each meant exactly what the other did, or even to say what either meant." In Buckmaster v. Consu- mer's Ice Co., 5 Daly 313, the agreement was to sell ice at such price as to yield the seller a profit of not more than $1 per ton. Held, void for uncertainty. In Whelan v. Sullivan, 102 Mass. 204, a con- tract for a " piece of land " not otherwise described was held void, parol evidence not being admitted to show what land was meant. In Adams v. Adams, 26 Ala. 278, Chilton, C. J., said: "The defendant was to give to Mrs. Adams, his daughter, a 'full share of his property which then and there was worth $25,000.' Was the share or the whole property worth $25,000 ? How was the 'full share' to be ascer- tained ? It is as indefinite as if the de- fendant had agreed to pay 'a sum of money ' without mentioning any amount." See Sherman v. Kitzmiller, 17 Serg. & R. 45 ; Erwin v. Erwin, 25 Ala. 236 ; Rob- inson v. Bullock, 58 Id. 618 ; Shakespeare v. Markham, 72 N. Y. 400. Illusory Sales. — Where the seller is to make and deliver an article which shall be satisfactory to the buyer, there is no relief for him, if the buyer is not satis- fied. In McCarreo v. McNulty, 7 Gray 139, a, book-case was to be made for a society " to the satisfaction of the presi- dent." Merrick, J., said : " It may be that the plaintiff was injudicious or in- PART I-] MUTUAL ASSENT. 75 "written con- tract may be corrected. § 52. But an agreement is not to be deemed unintelligible because of some error, omission, or mistake in drawing it up, if the real nature of the mistake can be shown, so as to error* in ° r make the bargain intelligible. Thus, in Coles v. Hulme, (n) a bond to pay 7700 was allowed to be corrected by add- ing the word " pounds," the recitals in the condition showing that that must have been the meaning of the parties. So in Wilson v. Wilson, (o) Lord St. Leonards said that " both courts of law and courts of equity may correct an obvious wiIson v mistake on the face of an instrument without the slightest WUsou - difficulty ;" (p) and his Lordship cited a case in Douglas (q) where discreet in undertaking to labor and fur- nish materials for a compensation, the payment of which was made dependent upon a contingency so hazardous or doubtful as the satisfaction of a party particularly in interest. But of that he was the sole judge. Against the conse- quences resulting from his own bargain the law can afford him no relief." This case was followed in Brown v. Foster, 113 Mass. 136, Devens, J., saying : " Although the compensation of the plaintiff for valuable service and materials may thus be dependent upon the caprice of another who unreasonably refuses to accept the articles manufactured, yet he cannot be relieved from the contract into which he has voluntarily entered." On the au- thority of the two cases above cited, Za- leski v. Clark, 44 Conn. 218, was decided. In this case a bust was to be made by a sculptor to the satisfaction of defendant, who refused to take it, though a fine piece of workmanship. Carpenter, J., said : " A contract to produce a bust per- fect in every respect, and one with which the defendant ought to be satisfied, is one thing ; an undertaking to make one with which she will be satisfied is quite another thing. The latter can only be determined by the defendant herself. It may have been unwise in the plaintiff to make such a contract, but having made it he is bound by it." See, also, Gray v. N. J. Cent. B. E., 11 Hun 70 ; Gibson v. Cran- age, 39 Mich. 49. But on the other hand, see the cases of Manufacturing Co. v. Brush, 43 Vt. 528 ; Daggett v. Johnson, 49 Vt. 345. In the last case Eedfield, J., said: "The contract of the defendant requested plaintiffs to deliver the pans to the defendant, and he agreed to pay them therefor $80 on the first of July, ' if satisfied with the pans.' We think the ruling of the court that the defendant had no right to say, arbitrarily and without cause, that he was dissatisfied and would not pay for the pans, was sensible and sound. If a man orders a garment made of given material and fashion and prom- ises to pay if satisfied, he cannot say that the garment in material and manufacture is according to the order, and yet refuse to test the fit or pay for it. He must act honestly and in accordance with the rea- sonable expectations of the seller, as im- plied from the contract, its subject matter and surrounding circumstances. His dis- satisfaction must be actual, not feigned ; real, not merely pretended." See Gray v. N. J. Cent. E. E., 11 Hun 70, dissenting opinion of Judge Brady. (m) 8 B. & C. 568. (o) 5 H. L. C. 40; and see Bird's Trusts, 3 Ch. D. 214 ; Burchell v. Clark, 2 C. P. D. 88, C. A. (p) 5 H. L. C. at p. 66. (q) Anonymous, per Buller, J., in. Bache v. Proctor, Doug. 384. 76 FORMATION OF THE CONTKACT. [BOOK I. the condition of a bond declared that it was to be void if the obligor did not pay what he promised, and the court struck out the word not as a palpable error. And the same principle was established in Lloyd v. Lord Say and Seale, (r) in the King's Bench, and affirmed in House ■of Lords ; and in Langdon v. Goole : (s) the omitted name of the grantor being supplied by the court in the first case, and that of the obligee in the second. IS § 53. But care must be taken not to confound a common mistake Mistake by as *° * ne subject matter of the sale, or the price, or the to" rojfateraf terms, which prevent the sale from ever coming into ex- istence by reason of the absence of a consensus ad idem, with a mistake made by one of the parties as to a collateral fact, or what may be termed a mistake in motive. If the buyer purchases the ■very article at the very price and on the very terms intended by him and by the vendor, the sale is complete by mutual assent, even though it may be liable to be avoided for fraud, illegality or other cause ; or even though the buyer or the seller may be totally mistaken in the motive which induced the assent. 19 And when the mistake is that of one party alone, it must be borne in mind that the general rule of law is, that whatever a A party is es- topped from man s real intention may be, if he manifests an intention denying that J ^ an intention t another party, so as to induce the latter to act upon it manifested by r J ' r ria? intention m ma king a contract, he will be estopped from denying that the intention as manifested was his real intention, (t) 20 (r) 10 Mod. 46, and 4 Browne's P. C. C. P. 241 ; Carr v. London and North 73. Western Railway Company, L. R., 10 C. (s) 3 Lev. 21. P- 307, per Brett, J. ; Thomas v. Brown, 18. Marion v. Faxon, 20 Conn. 486 ; 1 Q. B. D. 714. Bickford v. Cooper, 41 Penna. 142 ; Cooke 20. So in Stoddard v. Ham, 129 Mass. v. Graham, 3 Cranch229; Jones v. Mcln- 383, where a manufacturer sold a quan- tosh, 2 Pug. (N. B.) 343; Sisson v. Don- tity of brick to a commission merchant, nelly, 34 N. J. L. 432. whom he erroneously supposed to be act- 19. Wheat v. Cross, 31 Md. 99 ; Mc- ing as such for the defendant, but who, in Lean v. Robinson, 2 P. & B. (N. B.) 83. fact, bought for himself and sold to the (t) Per Lord Wensleydale, in Freeman defendant — Held, that there was a valid v. Cooke, 2 Ex. 654 ; Doe v. Oliver, and sale and the manufacturer could not treat cases in notes, 2 Smith's L. C. (ed. 1879) it as void and recover the brick. Colt, 775; Cornish v. Abington, 4 H. & N. J., said: "A party cannot escape the 549 ; 28 L. J., Ex. 262 ; Alexander v. natural and reasonable interpretation Worman, 6 H. & N. 100; 30 L. J., Ex. which must be put on what he says and 198 ; Van Toll v. South Eastern Railway does, by showing that his words were used •Company, 12 C. B. (N. S.) 75 ; 31 L. J., and his acts done with a different and un- PART I.J MUTUAL ASSENT. 77 This point is treated under the subject of "estoppel," post, Book V., Part I., ch. 2. § 54. A mistake by the buyer in supposing that the* article bought by him will answer a certain purpose, for which it turns out to be unavailable, is not a mistake as to the subject matter buyer in y of the contract, but as to a collateral fact, and affords no ground for pretending that he did not assent to the bargain, whatever may be his right afterwards to rescind it, if the vendor warranted its adaptability to the intended purpose. Thus, in Chanter v. Hopkins, (w) Ollivant v. Bayley, (x) and Prideau v. Bunnett, (y) the purchasers had ordered specific machines from the patentees, and attempted to justify their refusal to pay, on the ground that the machines had totally failed to answer the purpose intended ; but it was held that in the absence of a warranty by the vendors, the contract was binding on the purchasers, notwithstanding their mistaken belief that the ma- chines would answer their purpose. 21 § 55. In Scott v. Littledale, (z) the vendor made a singular mistake. He sold a hundred chests of tea by a wrong sample. A Migt . ake in sale by sample imports, as will be seen hereafter, a war- Bampie SWrons ranty by the vendor that the bulk equals the sample. On Scott „ demurrer to a plea on equitable grounds, setting up this LlttledaIe - mistake as rendering the contract void for want of mutual assent, the Queen's Bench held that the contract was not void • that if the quality of the bulk was inferior to the sample, the buyer had the right to waive the objection ; and the court said : " Possibly a court of equity might have given the defendant some relief, but it certainly would not have set aside the contract." It is worth observing, that in this case the defendant made no mistake as to the subject matter of the contract. He sold the very tea, for the very price, and on the very terms which he intended, but he made a mistake in giving a warranty that it was of a particular quality. Now a warranty of quality is not an essential element of a sale, but a collateral engagement attached to disclosed intention." See Hartford, &c, 21. Dounce v. Dow, 64 N. Y. 411 ; E. R. v. Jackson, 24 Conn. 514 ; Starr Hight v. Bacon, 126 Mass. 10 ; Deming v. Glass Co. v. Longley, 64 Ga. 576 ; Schu- Foster, 42 N. H. 165 ; Simcoe Agr. Soc. chardt v. Aliens, 1 Wall. 359 ; Phillip v. v. Wade, 12 TJ. C. Q. B. 614. Gallant, 62 N. Y. 256. (s) 8 E. & B. 815 ; 27 L. J., Q. B. 201 ; (u) 4 M. & W. 399. Megaw v. Molloy, 2 Ir. L. R., C. P. D. (x) 5 Q. B. 288. 530, post. (y) 1 C. B. (N. S.) 613. 78 FORMATION OF THE CONTRACT. [BOOK I. or omitted from it, at the pleasure of the parties, (a) The assent to the sale was complete ; the assent to the warranty was given by one of the parties under a mistake, and this mistake might or might not give ground for other relief, but could not prevent the contract from coming into existence. § 56. A mistake as to the person with whom the contract is made, may ro may not avoid the sale, according to cireum- Mistake as to , -i- .1 n . -. T T1 P person con- stances. In the common case of a trader who sells tor cash, it can make no possible difference to him whether the buyer be Smith or Jones, and a mistake of identity would not prevent the formation of the contract. But where the identity of the person is an important element in the sale, as if it be on credit, where the solvency of the buyer is the chief motive which influences the assent of the vendor ; (6) or when the purchaser buys from one whom he supposes to be his debtor, and against whom he would have the right to set off the price : a mistake as to the person dealt with, pre- vents the contract from coming into existence for want of assent. 22 § 57. In Mitchell v. Lepage, (c) in 1816, the defendant sought to Mitchell v escape liability on a purchase of thirty-eight tons of Lepage. hemp, on the ground that he had not contracted with the plaintiff, but with other persons. The broker gave defendant a bought note stating the vendors to be Todd, Mitchell & Co. It (a) Chanter v. Hopkins, 4 M. & W. Van Syckel, J., said : " If one accepts or 399 ; Mondell v. Steel, 8 M. & W. 858 ; knowingly avails himself of the benefit Foster v. Smith, 18 C. B. 156. of services done for him without his (6) Ex parte Barnett, 3 Ch. D. 123. authority or request, he shall be held to 22. Winchester v. Howard, 97 Mass. pay a reasonable compensation for them ; S03 ; Boston Ice Co. v. Potter, 123 Mass. or if a person takes up wares from a 48, stated in the text \ 59 ; Orcut v. Nel- tradesman without any agreement as to son, 1 Gray 536, 542 ; Gregory v. Wen- price, the law implies a promise to pay dell, 40 Mich. 432, 443 ; Clark v. Imlay, their real value. But if in this case the 12 N. J. L. 137. Where a broker was defendant purchased ore of Chandler, employed to buy oil for future delivery, and the plaintiffs, without his knowledge it was held that the buyer was not bound or consent, delivered him their own ore, until he accepted the proposed vendor, the relation of vendor and purchaser and therefore the broker could not ratify does not exist between them. After de- a sale without disclosing the vendor's mand of the ore and refusal to return it, name. Sumner v. Stewart, 69 Penna. or after actual conversion, trover would 321. In Randolph Iron Co. v. Elliott, lie ; or after sale of the ore by defendant, 34 N. J. L. 184, the plaintiff had deliv- the tort might be waived and assumpsit ered ore to defendant on a contract for maintained." such delivery to be made by one Chandler. (c) Holt N. P. 253. Boulton w. Jones. PART I.] MUTUAL ASSENT. 79 turned out that, without the broker's knowledge, that firm had been dissolved some months before by the withdrawal of two of the part- ners, and succeeded by the plaintiff's firm of Mitchell, Armistead & Graabner, the last two taking the place of the withdrawn members of the old firm. Gibbs, C. J., told the jury: "I agree with the de- fendant's counsel that he cannot be prejudiced by the substitution. * * * If by this mistake the defendant was induced to think that he had entered into a contract with one set of men, and not with any other; and if, owing to the broker, he has been prejudiced or excluded from a set-off", it would be a good defence." Verdict for plaintiff. § 58. In Boulton v. Jones, id) the plaintiff had bought out the stock-in-trade and business of one Brocklehurst. The defendant, ignorant of the fact, sent to the shop a written order for goods, addressed to Brocklehurst, on the very day of the transfer to the plaintiff, and the latter supplied the goods. The goods were consumed by the defendant, he not knowing that they were sup- plied by the plaintiff instead of Brocklehurst. When payment of the price was afterwards demanded, the defendant refused, on the ground that he had a set-off against Brocklehurst, and had not contracted with the plaintiff. The Barons of the Exchequer were all of opinion that the action was not maintainable. Pollock, C B., said : " The rule of law is clear, that if you propose to make a contract with A, then B cannot substitute himself for A without your consent and to your dis- advantage, securing to himself all the benefit of the contract." Martin, B., said : " Where the facts prove that the defendant meant to contract with A alone, B can never force ;t contract upon him." Bramwell, B., said : " It is clear that if the plaintiff were at liberty to sue, it would be a prejudice to defendant, because it would deprive him of a set-off, which he would have had if the action had been brought by the party with whom he supposed he was dealing. And upon that my judgment proceeds. I do not lay it down, that because a contract was made in one person's name, another person cannot sue upon it, except in cases of agency. But when any one makes a con- tract in which the personality, so to speak, of the particular party contracted with is important for any reason, whether because it is to write a book, or paint a picture, or do any work of personal skill ; or (d) 2 H. & N. 564; 27 L. J., Ex. 117. 80 FORMATION OF THE CONTRACT. [BOOK I. whether because there is a set-off due from that party, no one else is at liberty to step in and maintain that he is the party contracted with ; that he has written the book, or painted the picture, or supplied the goods." Channell, B, said : " The case is not one of principal and agent ; it was a contract made with B, who had transactions with the defendant and owed him money, and upon which A seeks to sue. Without saying that the plaintiff might not have had a right of action on an implied contract, if the goods had been in existence, here the defendant had no notice of the plaintiff's claim until the invoice was sent to him, which was not until after he had consumed the goods, and when he could not, of course, have returned them." (d) 23 [In the important case of Johnson v. Raylton, (e) it was held by Johnsons ^ ne raa j 0r ' t y of the Court of Appeal that where goods of Rayiton. a particular description are ordered of a manufacturer, who is not otherwise a dealer in them, the contract is to be treated as a personal one, and is not fulfilled by the delivery of goods of the same quality as that contracted for, but made by another firm. The buyer in such a case is assumed to have contracted in reliance upon the reputation of the particular firm with whom he deals. § 59. The principle of Boulton v. Jones has been carried out to its Boston ice Co ^ u ^ extent in the case of The Boston Ice Company v. v. potter. Potter, (/) before the Supreme Court of Massachusetts, and the fact that the defendant had or had not a right of set-off against the plaintiff's claim, upon which Bramwell, B., rested his judgment in Boulton v. Jones, was treated as immaterial. It ap- peared that the defendant had previously bought ice of the plaintiffs, but, being dissatisfied with them, contracted to buy it from the Citi- zens' Ice Company. Subsequently the plaintiffs bought up the busi- ness of the Citizens' company, and delivered ice to the defendant with- out notifying to him that they had purchased the business until after the delivery and consumption of the ice. It was held that the plain- tiff company could not maintain an action for the price of the ice. It was endeavored to distinguish Boulton v. Jones, upon the ground (d) See further observations on this however, he was told that the store had case, post, Book III., ch. 1. changed hands. Held, that by going away 23. Mudge v. Oliver, 1 Allen 74. In with the goods he became liable to pay this case defendant bought goods on credit for them, and could not set off his debt, from a store whose supposed proprietor (e) 7 Q. B. D. 438, C. A., post. was his debtor. Before leaving the sicr..y (/) 123 Mass. (9 Lathrop) 28. PART I.] MUTUAL ASSENT. 81 that there the defendant had a set-off against Brockiehurst, but Endi- cott, J., in giving judgment, said, at p. 31, referring to Boulton v. Jones, " The fact that a defendant in a particular case has a claim in set-off against the original contracting party, shows clearly the injus- tice of forcing another person upon him to execute the contract with- out his consent, against whom his set-off would not be available. But the actual existence of the claim in set-off cannot be a test to deter- mine that there is no implied assumpsit or privity between the parties. Nor can the non-existence of a set-off raise an implied assumpsit. If there is such a set-off, it is sufficient to state that as a reason why the defendant should prevail ; but it by no means follows that, be- cause it does not exist, the plaintiff can maintain his action. The right to maintain an action can never depend upon whether the de- fendant has or has not a defence to it. * * * It is, therefore, immaterial that the defendant had no claim in set-off against the Citizens' Ice Company." In Ex parte Barnett (g) the appellants had executed an order sent to them by an undischarged liquidating debtor, under the mistaken belief that they were dealing with a firm with whom they had had previous business transactions, and whose name resembled that of the liquidating debtor. Held, by the Chief Judge in Bankruptcy, that they were entitled to the goods as against the trustee in the liquidation.] § 60. Where a person passes himself off for another, (h) or falsely represents himself as agent for another, for whom he pro- j. , i . i -i , Mistake as to fesses to buy, h) and thus obtains the vendor s assent to a person, caused J ' v ' by fraud. sale, and even a delivery of goods, the whole contract is void ; it has never come into existence, for the vendor never assented to sell to the persons thus deceiving him. The contracts in the cases cited below were held void, on the ground of fraud, but they were equally void for mistake, or the absence of the assent necessary to bring them into existence. 24 (g) 3 Ch. D. 123. (i) Higgons v. Burton, 26 L. J., Ex. (h) Hardman v. Booth, 1 H. & C. 803 ; 342. 32 L. J., Ex. 105 ; Lindsay v. Cundy, 3 24. Barker v. Dinsmore, 72 Penna. 427 ; App. Cas. 459, reported sub nom. Cundy Deccan v. Shipper, 35 Penna. 239 ; Moody v. Lindsay ; S. C, 2 Q. B. D. 96, C. A.; v. Blake, 117 Mass. 23; Downs v. Perrin, and 1 Q. B. D. 348, post, chapter on 16 N. Y. 325 ; Dean v. Yates, 22 Ohio St. Fraud. 388. In this case goods were bought by F 82 FORMATION OF THE CONTRACT. [BOOK I. The effect of mistake in preventing the contract from coming into existence, and therefore from being enforced, is the only branch of the subject that appertains to the formation of the contract. The effect of mistake on the rights of the parties after the contract has been per- formed or executed, will be considered post, Book III., ch. I., Of Mistake and Failure of Consideration. § 61. The assent to a sale may be conditional as well as absolute, Conditional an ^ then tne formation of the contract is suspended till assent. fae condition is accomplished. If A deliver his horse, on trial, to B, agreeing to take a specified price for him if B approve him after trial, B is merely bailee until the condition is accomplished, his assent to become purchaser not having been given when he ob- tained possession of the horse. Cases of sales " on trial," or of " sale or re- goods " to arrive " by a particular vessel, and the bar- turn " gains known as "sale or return "(&) are all instances where the assent is conditional. 25 Most of the reported cases, however, have arisen out of disputes as to the performance of the conditions, instead of the formation of the contract, and the subject can be more intelligibly treated as a whole. The reader is therefore referred to ch. I. of Book IV., Part I., post. CIVIL LAW. § 62. The principles of the common law upon the subject embraced in this chapter do not in general differ from those recog- nized in America and in countries governed by the civil law. There is, however, one striking exception. The civil law permits Quasi eon- what are termed quasi contracts, and enforces obligations tracts. resulting from them. The negotiorum gestor, the man who voluntarily assumed to take charge of another's business in his one falsely representing himself to be a not deliver or authorize any other person member of a firm, and were shipped to to deliver the goods to the fraudulent that firm by express. The fraudulent vendee." purchaser obtained them from the express (k) For instances of which, see Moss v. office and sold them. Held, that there Sweet, 16 Q. B. 493 ; Ex parte Wingfield, was no sale. Mcllvaine, J., said: "The In re Florence, 10 Ch. D. 591, C. A., court very properly and carefully distin- where it was held that goods sent to a guished between a case where the posses- person " on sale or return " do not pass sion is delivered by the owner to a fraudu- on his bankruptcy under the reputed lent purchaser, and it, case like the one ownership clause. put in the charge, where the owner did 25. See \ 2, supra, note 6. PART I.J MUTUAL ASSENT. 83 absence, or who, without authority of law, took under his control the person and property of an infant, was held entitled to rights as well as responsible for the obligations resulting from his unauthorized in- terference. If he spent money usefully in the business thus assumed, he was entitled to recover it back. If he furnished supplies, he was entitled to charge the price as though a contract of sale had inter- vened. If he paid a debt, he took the creditor's place. The quasi contract, in a word, produced the effect of creating obligations idtro citroque, in the language of the civilians. These principles of the Roman law still prevail unimpaired over Continental Europe, and are found expressly sanctioned in the French Civil Code, articles 1570— 1575. Pothier says that they are founded on natural equity, and bind even infants and insane persons who are incapable of consent. If, in France, a man should repair his absent neighbor's enclosure, (J) or furnish food to his cattle, without request, he could maintain an action on the quasi contract implied by the law there. At common law, it need hardly be said that no such action would lie. The count for money paid by the plaintiff for the defendant must aver a request by the defendant, and this request, express or implied, must be proven, (m) The principle in our law is invariable that no liability can be established against a man by the mere voluntary payment or expenditure of money in his behalf by a third person ; that no man can become the creditor of another without the latter's knowledge or assent. It is of course otherwise where the payment is under com- pulsion or in discharge of a liability imposed on the party paying, (n) § 63. The text of the Institutes laying down the principles of the Roman law on this point, was not an innovation but a condensation of the numerous texts of the pre-existing law. " Igitur cum quis absmtis negotia gesserit, ultro dlroque inter eos nasountur actiones quce appellantur negotiorum gestorum. Sed domino quidem rei gestae ad- (l) Pothier, Obi., gg 114, 115. p. 279. (m) But now, under the new rules of (m) Stokes v. Lewis, 1 T. R. 20 ; Child pleading, a simple averment of the re- v. Morley, 8 T. R. 610 ; Lord Galloway quest will only suffice where there has v. Matthew, 10 East 264 ; Durnford v. been an express request made by the de- Messiter, 5 M. & S. 446 ; 1 Wm. Saund. fendant. Where the request is to be im- 356, note on Osborne v. Rogers ; England plied from the facts arid circumstances of v. Marston, L. R., 1 C. J*. 529 ; 35 L. J., the case, those facts and circumstances, so C. P. 259. And see a very singular case, far as material, must be set forth. R. S. Johnson v. Royal Mail Steam Packet Co., C. 1875, Order XIX., rules 4, 27, and see L. R., 3 C. P. 38. Bullen & Leake Prec. of Plead, (ed. 1882), 84 FORMATION OP THE CONTRACT. [BOOK I. versus eum qui gessit, directa competit actio, negotiorum autem gestori, contraria. Quas ex nullo contractu proprie nasci, manifestum est, quippe ita nascuntur istce actiones, si sine mandato quisque alienis ne- gotiis gerendis se obtulerit; ex qua causa, ii quorum negotia gesta fuerint, etiam ignorantes obligantw." The equity of the law is then stated as follows : " Idque utilitatis causa receptum est, ne absentium qui subita festinatione coacti, nulli demandata negotiorum suorum ad- ministratione, peregre profecti essent, desererentur negotia, quia sane nemo curaturus esset, si de eo quod quis impendisset, nullam habiturus esset actionem." (o) Our action for money had and received, to re- cover back what has been paid by mistake, is one of those that the Roman lawyers considered as arising quasi-ex-contractu. " Item is cui quis per errorem non debitum solvit, quasi ex contractu debere videtur." (p) This action was termed condictio indebiti. "Is quoque qui non debitum accepit ab eo qui per errorem solvit, re obligatur ; daturque agenti contra eum propter repetitionem, condictitia actio." (q) AMERICAN LAW. § 84. In the text-books in America, there has been a singular American law. and almost unanimous attack upon the authority of Cooke criticisms on v. Oxl ey, (r) and Professor Bell, in his "Inquiries into oxiey. the Contract of Sale," also disapproves it, as contrary to the principles of the civil law and of the law of Scotland, (s) This is the more remarkable, as it is hardly contested that the de- cisions accord, in the United States at least, with the principles estab- lished in the English courts. Mr. Story, in his treatise on Sales, (t) while citing the American Mr story's authorities, (w) which are perfectly in accord with the Cooke™ ° n English law on this point, concurs with Professor Bell Oxiey. j n ^ e pi n ; on that the rule in Cooke v. Oxley (x) is unjust and inequitable. In bis strictures on the decision, he denies that the grant of time to accept the offer is made without considera- tion. He suggests, as one sufficient legal consideration, the expecta- tion or hope that the offer will be accepted. This appears to be more (0 Story on Sales, I 127. (m) Eskridge v. Glover, 5 Stew. & Port. 264 ; Faulkner v. Heberd, 26 Vt. 452 ; Beckwith v. Cheever, 1 Fost. (N. H.) 41. (x) 3 T. E. 653. (•) Inst., lib. 3, tit. 27, I 1. (p) Inst. , lib. 3, tit .27, .4 6. (9) Inst., lib. 3, tit. H 11. (r) 3T. : B. 653. W Bell's i Inq. 27. PART I.] MUTUAL ASSENT. 85 fanciful than serious. The hope of A that his offer will be accepted if he gives B time to consider it, is not a consideration moving from B to A, but is the spontaneous emotion of A arising out of his own act ; for in the case supposed, B is bound to nothing, does nothing, gives nothing, promises nothing to raise this hope. The second con- sideration suggested by Mr. Story is, that " the making of such an offer might betray the other party into a loss of time and money by inducing him to make examination, and to inquire into the value of the goods offered ; and this inconvenience assumed by him is a suffi- cient consideration for the offer." This argument assumes as a fact the exact reverse of the facts alleged in the declaration. It takes for granted that " an inconvenience is assumed " by the party to whom the offer is made ; and it is precisely on the absence of this considera- tion that the decision was put, Buller, J., saying : " In order to sus- tain a promise, there must be either a damage to the plaintiff, or an advantage to the defendant, but here was neither." § 65. In Kent's Commentaries it is said in the note to page 478 (12th edition), that the "criticisms which have been made upon the case of Cooke v. Oxley are sufficient Kent's com- to destroy its authority." (y) Mr. Duer, in his treatise on Insurance, (z) goes still further and says that' Cooke «. Oxley decides "that when a bargain has been proposed, and a certain time for closing it has been allowed, there is no contract even when the offer has not been withdrawn, and has been accepted within the limited period ; to constitute a valid agreement, there must be proof that the party making the offer assented to its terms after it was accepted." If this were indeed the decision, nothing could be more surprising than to find it upheld as sound law by a series of eminent English judges. But Cooker. Oxley has been Eeviewoft i le totally misapprehended by those who have thus criticised critiasm8 - it, and there is nothing to warrant the suggestion that it is misre- ported, or that Bayley, J., stated it to be misreported in the observa- tions made by him in Humphries v. Carvalho. (a) It is difficult to see how the case could be misreported, for it was a motion in arrest of judgment, which presents the question exactly as on a general de- (y) Other American decisions in which lock v. Commercial Ins. Co., 2 Dutcher the authority of Cooke v. Oxley is im- 268. pugned are Boston and Maine Eailroad (s) Vol. I., p. 118. v. Bartlett, 3 Cush. 224 ; McCulloch v. (a) 16 East 45. Eagle Ins. Co., 1 Pick. 281; and Hal- 86 FORMATION OP THE CONTRACT. [BOOK I. murrer, (b) and was decided on the ground that the declaration, which is copied in the report, showed no cause of action. An examination of it shows that the plaintiff alleged — First, an offer by the defendant to sell at a certain price ; Second, a promise to leave the offer open till four o'clock, if plaintiff would agree to purchase, and would give notice to the defendant before the hour of four o'clock ; Third, that the plaintiff did agree, and did give notice before four o'clock. There was no allegation that the defendant actually left the offer open till four o'clock, but only that he promised to do so. The plaintiff's action was tested by the court on two theories — First, that it was for a breach of promise to leave the offer open ; or, secondly, that it was for a breach of a contract, that became complete by the plaintiff's acceptance of an offer that had actually remained open. On the first theory, it was held that the declaration was insufficient, because it alleged no con- sideration for the promise. On the second theory, it was held that the declaration was insufficient, because it did not allege that the de- fendant had actually left the offer open for acceptance as he had promised. The court did not decide that the contract would not have been completed if the offer, remaining open, had been accepted ;. but that nothing showed that the offer was open when accepted. Lord Kenyon, C. J., construed the declaration as proceeding on the first theory, that is, breach of promise to keep the offer open, and he said that this promise was nudum pactum. Buller, J., took both grounds, saying that the promise in the morning was without consid- eration ; and that it was not stated that the defendant agreed after- wards, or even that the goods were kept ; in other words, that the plaintiff had not alleged a binding legal promise in the morning, nor a complete contract in the afternoon ; and Grose, J., also said that the defendant was not bound before four o'clock, and it is not stated that they came to a subsequent agreement. That this was really the decision is shown by what was said by Mr. Justice Bayley in Humphries v. Carvalho, (c) which is strangely con- strued by Mr. Duer into an assertion that Cooke v. Oxley was misre- ported. This is the language : " The question in Cooke v. Oxley arose upon the record, and a writ of error was afterwards brought upon the judgment of this court, by which it appears that the objec- tion made was, that there was only a proposal of sale by the one (6) Collins v. Gibbs, 2 Burr. 899 ; (c) 16 East 45. Bowdell v. Parsons, 10 East 359. PART I.] MUTUAL ASSENT. 87 party, and no allegation that the other party had acceded to the con- tract of sale." § 66. Both the learned American authors, Mr. Story and Mr. Duer, refer to Adams v. Lindsell, (d) as overruling Cooke v. Oxley, the latter writer saying that " its authority is directly overthrown " by Adams v. Lindsell. Certainly the King's Bench did not in this last case say a word in disparagement of Cooke v. Oxley ; and when this very point was urged by counsel in Routledge v. Grant, (e) Best, C. J., pointed out that there was no conflict between the cases, for Adams v. Lindsell proceeded expressly on the ground that a treaty by corres- pondence through the post rested on exceptional principles, because the separation of the parties prevented assent at the same instant, and ex necessitate rei, some point of time must be fixed when the contract should be considered complete ; for otherwise, the interchange of let- ters would go on ad infinitum. The court was therefore driven to determine either that no contract was possible by correspondence be- tween distant parties, or to fix some point at which the contract became perfect. The rule adopted was in entire accordance with sound prin- ciple, and declared that the oifer by letter was a continuing offer in contemplation of law until it reached the other party, so that when an answer of acceptance was placed in the post, addressed to the party making the offer, the aggregatio mentium, the mutual assent was com- plete. But in Cooke v. Oxley, it did not appear that this mutual assent ever took place. There was no continuing offer till four o'clock, but only a promise to continue it, not binding for want of considera- tion. The court held that Oxley had a right to retract, up to the moment when Cooke announced his assent to the ofier. So the court would no doubt have held in Adams v. Lindsell, that the latter had a right to retract up to the moment when Adams accepted ; but Lind- sell's withdrawal of his offer, and resale of the wood, occurred after acceptance, though he was ignorant of the fact of acceptance. In a word, Oxley withdrew his offer before acceptance, Lindsell after ac- ceptance, and the contract was held incomplete in the former case and complete in the latter, both decisions being consistent applications of one and the same principle, namely, that a contract becomes complete only when the mutual assent of the parties concurs at the same moment of time; and that no number of alternate offers and withdrawals, refusals and acceptances, can ever suffice to conclude a bargain. (d) 1 B. & Aid. 681. (e) 4 Bing. 653. 88 FORMATION OF THE CONTRACT. [BOOK I. To these remarks may be added the fact that in 1829 the King's Bench decided Head v. Diggon (/) on the authority of Cooke v. Oxley, without any intimation that it had been overruled, and in accordance with the point really decided in that case. (And see ante §§42,43.) § 67. In an American case (g) the principle under discussion re- ceived a further illustration. The defendant wrote an offer to carry for the plaintiffs " not exceeding 6000 tons gross, in and during the months of April, May, June, July and August, 1864, upon the terms and for the price hereinafter specified," and on the next day the plain- tiffs answered, " We assent to your agreement and will be bound by its terms." Held to be no binding contract, because the plaintiffs were not bound to furnish anything for carriage ; that the offer was a mere promise of an option to them, for which promise no considera- tion was given, and that the defendant had the right to withdraw from his offer at any time before such an acceptance as imposed some obli- gation on the company as a consideration ; the acceptance would have been good, if the company had agreed to furnish any specified quantity not exceeding the 6000 tons, but not otherwise, because the defendant could not be bound while the plaintiffs were left free. § 68. On the questions of the mode of completing a bargain by American de- correspondence, the American authorities are not only in accordance with the decisions of our own courts, but they pietingabar- have gone further, and covered the point left undecided fesuondenoe. in Adams v. Lindsell, though included in the dicta. 29 In Mactier's Adm's v. Frith; (A) the Court of Errors of New York decided, after a full review of the authorities, that where Maclier v. > ' Frith. ^ c ] ea li n g j s by correspondence, " the acceptance of a written offer of a contract of sale consummates the bargain, provided the offer is standing at the time of the acceptance." The point was still left open as to the effect of a revocation of the offer not communicated to the party accepting at the time of accept- ance. § 69. In the more recent case of Tayloe v. Merchants' Fire Insur (/) 3 M. & E. 97. Witham, L. B., 9 C. P. 16, ante \ 43. (g) Chicago and Great Eastern Kail- 26. See supra, \ 44, note 10. way Co. v. Dana, 43 N. Y. (4 Hand) 240; (h) 6 Wend. 104; Batteman v. Mor and see Great Northern Eailway Co. v. ford, 76 N. Y. 622. PART I.J MUTUAL ASSENT. 89 ance Company, (i) the Supreme Court of the United States T loe „ Mer . has closed this last point in America, by holding that un- in*" r anS re der such circumstances, " an offer prescribing the terms Com P an y- of insurance is intended and is to be deemed a valid undertaking by the company that they will be bound according to the terms ten- dered, if an answer is transmitted in due course of mail, accepting them; and that it cannot be withdrawn unless the withdrawal reaches the party to whom it is addressed before his letter of reply announcing the acceptance has been transmitted." Although this decision was given on an insurance contract, the reasoning of the court was quite applicable to all other bargains between parties. Nelson, J., who de- livered the opinion, said : " On the acceptance of the terms proposed, transmitted in due course of mail to the company, the minds of both parties have met on the subject, in the mode contemplated at the time of entering upon the negotiation, and the contract becomes complete. The party to whom the proposal is addressed, has a right to regard it as a continuing offer until it shall have reached him, and shall be in due time accepted or rejected. Such is the plain import of the offer. And besides, upon any other view, the proposal amounts to nothing, as the acceptance would be but the adoption of the terms tendered, to be in turn proposed by the applicant to the company for their approval or rejection. For, if the contract is still open until the company is advised of an acceptance, it follows of course that the acceptance may be repudiated at any time before the notice is received. Nothing is effectually accomplished by an act of acceptance. It is apparent, therefore, that such an interpretation of the acts of the parties would defeat the object which both had in view in entering upon the corres- ce. * * * ponden " The fallacy of the opposite argument, in our judgment, consists in the assumption that the contract cannot be consummated without a knowledge on the part of the company that the offer has been accepted. * * * But a little reflection will show that in all cases of contracts entered into between parties at a distance by correspondence, it is impossible that both should have a knowledge of it the moment it becomes complete. * * * The negotiation being carried on through the mail, the offer and acceptance cannot occur at the same moment of time; nor for the same reason can the meeting of the (i) 9 How. Sup. Ct. 390 ; approved by 5 C. P. D. 344, 347. Lindley, J., in Byrne v. Van Tienhoven, 90 FORMATION OF THE CONTRACT. [BOOK I. minds of the parties on the subject be known by each at the moment of concurrence. The acceptance must succeed the offer after the lapse of some interval of time, and if the process is to be carried further, in order to complete the bargain, and notice of the acceptance must be received, the only effect is to reverse the position of the parties, changing the knowledge of the completion from one party to the other." § 70. The civilians do not accord with these views. Pothier says : civilians on " ^ ^- wr ' te to a merchant of Leghorn a letter, in which correspond? I purpose to purchase of him a certain quantity of mer- enoe ' chandise at a certain price, and before my letter can have reached him I write a second letter withdrawing my pro- posal, although the merchant of Leghorn, in ignorance of the change of my intentions, answers that he accepts the proposed bargain, yet there is no contract of sale between us ; for my intention not having continued until the time at which my letter was received, and my pro- posal accepted, the assent or concurrence of our wills necessary to form, a contract of sale has not occurred. It must be observed, how- ever, that if my letter causes the merchant to be at any expense in proceeding to execute the contract proposed, or if it occasion him any loss, as, for example, if in the intermediate time between the receipt of my first and that of my second letter, the price of the merchandise falls, and my first letter has made him miss the opportunity to sell it before the fall of the price ; in all these cases I am bound to indem- nify him, unless I prefer to agree to the bargain as proposed by my first letter. This obligation results from that rule of equity that no person shall suffer for the act of another : Nemo ex alterius facto prosgravari debet I ought, therefore, to indemnify him for the ex- pense and loss which I occasion by making him a proposition which I afterwards refused to execute. For the same reason, if the mer- chant, on the receipt of my first letter, and before receiving the second, which contains a revocation of it, ships for my account and forwards the merchandise, though in that case there has not properly been a contract of sale between us, yet he will have a right to compel me to execute the proposed contract, not in virtue of any contract of sale, but of my obligation to indemnify him, which results from the rule of equity above mentioned." (k) (k) Pothier, Contrat de Vente, No. 32, Pothier's opinion is stated not to be in ac- and see the judgment of Lindley, J., in cordance with English law. Byrne v. Tienhoven, 5 C. P. 1). 344, where PART I.] MUTUAL ASSENT. 9"! § 71. It is impossible to read the reasoning of this eminent jurist in the passages just cited, without feeling that it fails to Not8atisfao . 'meet the difficulties of the case. He places the proposer tory - in the instances suggested under all, and more than all, the obliga- tions of a purchaser, while insisting that he has made no purchase. The ground suggested, that it is the act of the proposer which causes- damage to the other, and thus imposes an equitable obligation to re- pair that damage, is a petitio prinoipii. Ex hypothesi, the party- receiving the offer knows that it may legally be retracted by a second letter despatched to him before his acceptance, arid he accepts subject to this risk. If, therefore, before waiting the time necessary to learn whether the offer had been actually retracted at the date of his- acceptance, he incurs expense or loss in a premature attempt to exe- cute a non-existent contract, surely it is his own precipitancy, and not his correspondent's conduct, which is the real cause of the damage. So, too, if there be a fall in the market, on what ground is he entitled to make his correspondent suffer the loss, when plainly in the con- trary event the profit would accrue to himself? To make a mere negotiation not resulting in a bargain operate so as to place the pro- poser in duriori casu than he would be if bound by a perfect con- tract ; to render him liable for a fall in the market without the corre- lative chance of profit from a rise, is a proceeding which fails to awaken a response from that sense of equity to which Pothier appeals ; and notwithstanding the imposing authority of his name, it may be doubted whether the doctrine thus propounded would stand the test of discussion at the bar of a tribunal governed even by the civil law. (I) § 72. Both the common and the civil law, however, concur in re- lation to the case where an order for purchase or sale is transmitted by correspondence to an agent of the writer. oivSSw asto If A, in Liverpool, order his correspondent, B, in New chase by cor-" York, to purchase a cargo of flour for account of A, and B execute the order before receiving a countermand, A remains bound,, even though he may have posted the countermand before the execu- tion of the order. The civil law is express on this point : " Si mandassem tibi ut fundum emeres, postea scripsissem ne emeres, tu ante- quam scias me vetuisse, emisses, mandati tibi obligatus ero, ne damna (I) Mr. Story is of a contrary opinion, fairest and most intelligible rule that can, and lauds this doctrine 'as "by far the be found." $ 130, note. 92 FORMATION OF THE CONTRACT. [BOOK I. afficiatur is qui mandatum suseepit." Dig. L. 17, tit. 1, § 15. The contract here is one of agency, not of sale, and is governed by totally different principles ; for in agencies, a revocation of authority by the principal cannot take effect till it reaches the agent, (m) § 73. But although this is a different contract, the analogy is very strong between it and a bargain and sale by correspondence. If A send an agent to B with a proposal for sale, even the civilians admit that A cannot revoke the authority of the agent to make the offer until the revocation reaches him. So that if A despatched C with an order recalling the authority, even before the agent had made the offer, A would still remain bound by a bargain made before C's arrival with the countermand. Why should there be any difference when the proposer sends his proposal by the public post, which he authorizes to deliver it? A, by sending a letter from London, ad- dressed to B in Manchester, really gives to the public post authority to hand to B a written offer, and to receive an answer in behalf of A. Even on the doctrines of the civil law, it would seem to be permissi- ble under such circumstances to hold that A's revocation comes too late, if it only arrives after the completion of the bargain thus authorized to be made in his behalf. In reality the true theory of the case seems to be that an offer sent by mail is an authority to the party to whom it is sent to bind the sender by acceptance, and in- cludes an implied promise that no revocation is to take effect till received by the agent. § 74. The cases that arise in attempts to contract by correspondence Dunmorei) present at times very singular complexity. In Dunmore Alexander. ^ Alexander, (n) the party to whom the proposal was (m) Story on Agency, § 470, (9th ed.) 81, subs. 3 of the merchant shipping Per Bayley, J., in Salte v. Field, 5 T. E. act, 1854, (17 and 18 Vict., c. 104,) no 215. A revocation by the death of the sale of a ship bona fide made by an agent principal operates instantly at common under a certificate of sale to a purchaser law. (See cases in note to Smart v. San- for valuable consideration shall be im- dars, 5 C. B. at p. 917.) By the civil peached by reason of the death of the law, acts done by the agent while igno- principal before the making of the sale, rant of the principal's death are valid, By 22 and 23 Vict., c. 35, § 26, trustees, unless the other contracting party knew executors and administrators are dis- of the death. Dig. L. 17, tit. 1, L. 26, 58. charged from liability in respect of pay- The French code is to the same effect, ments made bona fide to an agent whose Acts 2008-9. The Bank of England pro- principal is dead, but whose death is at iects itself against the risk resulting from the time unknown. the common law rule by special clauses (n) 9 Shaw & Dunlop 190. See ante in its forms for powers of attorney. Kid- § 47. •dell v. Farnell, 26 L. J., Ch. 818. By in Bolding v. Reed, 3 H. & C. 955; 34 L. J., Ex. Eeed - 212, that the doctrine of Holroyd v. Marshall only ap- plies to subsequently-acquired property when so specifically described as to be identified. 5 § 82. In relation to executory contracts for the sale of goods not yet belonging; to the vendor, Lord Tenterden held, in an Goods not yet J 6 & ' ' belonging to early case (£) at Nisi Prius, that if goods be sold, to be delivered at a future day, and the seller has not the goods, nor any contract for them, nor any reasonable expectation of receiving them on consignment, but intends to go into the market and buy them, is not a valid contract, but a mere wager on the price of the commodity. But this doctrine is quite exploded, and Bryan v. Lewis was expressly overruled by the Exchequer of Pleas in Hibblewhite v. the authorities, only a license until a new v. Ellett, 19 Wall. 544. But in Phelps v. act intervenes." Dwight, Com'r, in Mc- Murray, 2 Tenn. Ch. 746, Chan. Cooper Caffrey v. Woodin. See Chynowith v. holds that equity will not enforce a mort- Tenney, 10 Wis. 397 ; Cressey v. Sabre, gage upon goods acquired after the mak- 17 Hun 120. ing of the mortgage and purporting to (i) 10 H. L. C. 191. And see judg- cover all additions to stock. " The con- ment in Beeves v. Whitmore, 33 L. J., tract is invalid at law and not enforceable Ch. 63, as to distinction between a present in equity.'' Holroyd v. Marshall, cited in transfer of future property, and a mere the text, is followed. See a full discussion, power to seize it. also, in Brett v. Carter, 2 Low. 458, and 5. Mitchell u. Winslow, 2 Story 644 ; see note 7 to this chapter. Apperson v. Moore, 30 Ark. 56 ; Smith- (k) Bryan v. Lewis, Ey. & Moo. 386, urst v. Edmunds, 14 N. J. Eq. 408 ; Butt in 1826. PAET I.J OF THE THING SOLD. 99 McMorrin, (I) and Mortimer v. McCallan, (m) after being questioned in the Common Pleas in "Wells v. Porter, (n) 6 The law in relation to time bargains tor the sale of chattels not be- ionging to the vendor, when merely colorable devices for gambling in the rise and fall of prices, is treated post, Book III., ch. III. § 83. In America it has been decided, that if a vendor sell a thing not belonging to him, and subsequently acquires a title to it before the repudiation of the contract by the purchaser, executory" the property in the thing sold vests immediately in the ST™- purchaser, (o) 1 So in a contract of " sale or return," as vendor where the vendor had no title at the time of sale, but acquired one afterwards, before the time limited for the return ; held, (0 5M.&W. 462. (m) 6 M. & W. 58. (») 2 Bing. N. C. 722, and 3 Scott 141. 6. Clarke v. Foss, 7 Biss. 541 ; Wolcott v. Heath, 78 111. 433; Pixley v. Boynton, 79 111. 351 ; Logan v. Musick, 81 111. 415 ; Whitehead v. Boot, 2 Mete. (Ky.) 584. But ■see Kirkpatrick v. Bonsall, 72 Penna. 155, which holds that whether a contract is a ■bona fide transaction or a mere gambling contract is a question of fact. " A con- tract, legal on its face, may become an instrument of illegal and ruinous schemes, injurious to the community and contrary to the highest policy of the state." See, also, Lyon v. Culbertson, 83 111. 33 ; In re John Green, 7 Biss. 338. The owner of goods may make a valid sale of them, although in the possession of one who has wrongfully taken them. See \ 6, note 1, supra. And one who has hired a chattel with the privilege of purchase may make a mortgage upon it, which will be a valid lien on such interest as he has. Chase v. Ingalls, 122 Mass. 381. (o) Frazier v. Hilliard, 2 Strobh. 309 ; Blackmore v. Shelby, 8 Humph. 439. But the prevailing American doctrine on this subject seems to be essentially the same as the English one. See Story on Sales, § 186, and cases cited in the notes. 7. The two cases cited hardly bear out this proposition, and it is probably not correct, except where the seller has actu- ally delivered possession of the goods, as in Hotchkiss v. Oliver, next cited by our author, in which case the implied war- ranty of title operates as an estoppel. In Frazier v. Hilliard there is a dictum which accords with the text, but Blackmore v. Shelby only decides that a man may make an executory contract to sell what he does not yet own. The following cases show the substantial accord of American with English law on this point. Sale of an Expectancy at Law. — In Wheeler v. Wheeler, 2 Mete. (Ky.) 474, it was held that a sale by a son of all his interest in the estate of his father, who was living, passed no title either then or' on the death of the father. To the same effect, see Needles' Ex'r v. Needles,- 7 Ohio St. 432. Sale of an Expectancy in Equity. — Equity will give effect to a sale of an ex- pectancy, as an agreement to convey, if no undue advantage was taken. In Stover a. Eycleshimer, 4 Abb. (N. Y.) App. Dec. 309, a son transferred the interest he then had or might thereafter have in the estate of his father (then living), to be applied to pay a debt due grantee from grantor. The court said that the grantor had no interest in his father's estate which could be the subject of a grant, and the instru- ment containing no warranty could not 100 FORMATION OF THE CONTRACT. [BOOK I. that the buyer who had allowed the time to elapse without returning the thing sold, could not set up the failure of consideration in the original contract, as a defence in an action for the price, (p) § 84. The civilians held that an expectation dependent on a chance may be sold, and the illustration usually given is that dependent "cm of the fisherman who agrees to sell a cast of his net for a given price ; (q) and this is adopted by Mr. Story. (?•). a chance. Venditio spci. The illustration is perhaps not very well chosen. The case supposed is rather one of work and labor done, than of sale. The fisherman owns nothing but the tools of his trade, i. e., his net. What is in the sea is as much the property of anybody else as of himself. If a third person gives him money to throw a cast of his net for the benefit of that person, the contract is in its nature an em- ployment of the fisherman for hire. If the contract were, that the fisherman should throw his net for a week or a month, at a certain sum per week or month, and that the catch should belong to him who operate as an estoppel, and did not effect a transfer of the legal title. Nevertheless, " If it was such an interest as a court of equity would enforce on the decease of the ancestor, it was effectual for the respondent's purpose. That it was such seems to me undeniable." "It is true Judge Co wen remarks in Munsell v. Lewis, 4 Hill 635, 642, that he was of the opin- ion that a simple expectancy in which the assignor had no interest, and which is unpurchasable, can neither be assigned nor would a contract for future assignment be valid. These remarks, however, with- out qualification, can hardly be deemed sound law to-day, for in Field v. Mayor, &c, of New York, 6 N. Y. 179, it was held that an assignment for a valuable consideration, of demands having at the time no actual existence, but which rest in expectancy merely, is valid in equity as an agreement, and takes effect as an assignment when the demands intended to be assigned are subsequently brought into existence." See, further, Fitzgerald v. Vestal, 4 Sneed 258 ; Martin a. Mar- low, 65 N. C. 695. On the same princi- ple a release by a son to his father of all future interest as heir, or an agreement between prospective heirs as to the future estate, has been sustained. See Powers' Appeal, 63 Penna. 443, 445. Read, J., said : " We have direct and positive authority in two cases in Massachusetts, Quarles v. Quarles, 4 Mass. 680, which is expressly re-affirmed in Kenney v. Tucker, 8 Mass. 143, where it was held that ' where a child, in consideration of a sum paid by his father by way of advance- ment, releases his claim to his share of the inheritance, although it may appear that the sum so paid was much less than his purparty of his father's estate at his death would have been worth, it shall bar him of his share or purparty.' " (p) Hotchkiss v, Oliver, 5 Denio 314. (c?) Dig. L. 8, \ 1, de Contr. empt. Pothier, Vente No. 6. (r) Story on Sales 191. But Low v. Pew, 108 Mass. 347, appears to be a direct decision to the contrary. There it was held that a contract to sell fish which might afterwards be caught did not vest the property in the fish, when caught, ia the purchaser. PART I.] OF THE THING SOLD. 101 paid the money, no one would call this a contract by the fisherman for the sale of his catch, but a contract of hire of his labor in fishing for an employer. It is no more a contract of sale when he is paid by the job or piece, for a single cast, than when he is paid by the month for all his casts, (s) But though the illustration may be questioned, the rule itself is correct in principle, and might be exemplified by supposing a sale by a pearl fisherman of any pearls that might be found in oysters already taken by him, and which had thus become his property. Such a contract would not be a bargain and sale at common law, but would be a valid executory contract, binding the purchaser to pay the price, even if no pearls were found ; for as was said by Lord Chief Baron Richards, in Hitchcock v. Giddings, (t) " If a man will make a purchase of a chance, he must abide by the consequences." (u) 8 The rules of law applicable to the sale of things immoral, noxious, or illegal, are discussed post, Book III., ch. III., on Illegality. (s) The vexed subject of the true test may be the subject of sale, (Hathaway v, by which to determine whether certain Bennett, 10 N. Y. 108,) or the good will -contracts are in their nature contracts of of a business, (Boon v. Moss, 70 N. Y. sale, or contracts for work and labor, and 465,) or a license to manufacture patented materials furnished, is discussed post, Part machines, or a copyright. Story on Sales, II., ch. I. § 187. An agreement by a shipper to (t) 4 Price 135. give the master of the vessel an interest (u) See, also, observations of Lord in the profits of the shipment, passes no Campbell, C. J., in Hanks v. Pulling, 6 property, either general or special, in the E. & B. 659 ; 25 L. J., Q. B, 375. goods. Fleming v. Bevan, 2 Penna. St. 8. The route of a, newspaper carrier 408. 102 FORMATION OF THE CONTRACT. [BOOK I. CHAPTER V. OF THE PRICE. Valuation is not arbitration.. Responsibility of valuers Civil law as to price . 88 . 88 , 8£ SEC. Where no price has been fixed 85 What is meant by " a reasonable price" 86 Price to be fixed by valuers 87 § 85. It has already been stated that the price must consist of money, paid or promised. The payment of the price in sales for cash or on credit will be the subject of future consideration, when the per- formance of the contract is discussed. We are now concerned solely with the agreement to make a contract of sale. Where the price has been expressly agreed on, there can arise no when no price they are liable in damages to the parties to the con- tract for neglect or default in performing their duties, (h) [And in an action against the valuer for negligence the plaintiff is entitled to interrogate him as to the basis of his valuation, (i)] § 89. In the civil law it was a settled rule that there could be no civil law as sa ' e without a price certain. ["It seems to be of the topnoe. ver y e g Sen ce of a sale," says Story, J., "that there should be a fixed price for the purchase. The language of the civil law on this subject is the language of common sense." (/«)] " Pretium autem constitui oportet, nam nulla emptio sine pretio esse potest ; sed et certum esse debet," was the language of the Institutes. (I) And it was a sub- ject of long contest among the earlier jurisconsults whether the neces- sity for a certain price did not render invalid an agreement that the price should be fixed by a third person ; but Justinian put an end to the question by positive legislation : "Alioquin si inter aliquos ita con- venerit, ut quanti Titius rem cestimaverit tanti sit ernpta, inter veteres satis abundeque hoc dubitabatur sive constat venditio, sive non. Sed nostra decisio ita hoc constituit, ut quoliens sic composita sit venditio, quanti ille aestimaverit, sub hac conditione staret contractus : ut si qui- dem ipse qui nominatus est pretiurn dejinierit, omnimodo secundum ejus cestimationem et pretium persolvatur et res tradatur, et venditio ad effec- tual perducatur, emptore quidem ex empto actione, venditore ex vendito agente. Sin autem ille qui nominatus est, vel noluerit vel non potuerit pretium definire, tunc pro nihilo esse venditionem quasi nuUo pretio statuto. Quod jus, cum in venditionibus nobis placuit, non est absurdum et in locationibus et conductionibus trahere." (I) (g) L. E., 2 Ex. 72; 36 L. J., Ex. worth, 25 L. J., Ex. 114. But see Re Hopper, L. B., 2 Q. B. 367 ; (t) Turner v. Goulden, L. R., 9 C. P. Be Anglo-Italian Bank, L. B., 2 Q. B. 57, where the distinction is drawn be- 452. tween a valuer and an arbitrator. (A) Jenkins v. Beetham, 15 C. B. 189 ; (k) Flagg v. Mann, 2 Sumner 538. 24 L. J., C. P. 94 ; Cooper v. Shuttle- {I) Lib. 3, tit. 23, \ 1 PABT I.] OF THE PRICE. 107 These rules have been adopted in the Code Napoleon : — Art. 1591— " Le prix de la vente doit etre determine et designe par les parties." 1592 — "Ilpeut cependant etre laisse d l' arbitrage d'un tiers: si le tiers Tie vent ou ne peutfaire I'estimation, il n'y a point de vente." 108 FORMATION OF THE CONTRACT. [BOOK I. PART II. SALES UNDER THE STATUTE OF FEAUDS. CHAPTER I. WHAT CONTRACTS ARE WITHIN THE STATUTE. SEC. History of the statute 90 The 17th section 91 What contracts embraced in it 92 Lord Tenterden's act 93 "Value" and "price" of £10 93 Distinction between " sales " and "work and labor done," &c 94 SEC. Furnishing a chattel to be affixed to a freehold 108 Law in America on this subject 109 Eule in Lee v. Griffin not generally- approved 110 Sales at auction 110 § 90. The common law which recognized the validity of verbal Hiatory of the contracts of sale of chattels, for any amount, and how- statute. ever p rovel)) was greatly modified by the statute of 29 Chas. II., c. 3. This celebrated enactment, familiarly known as the " Statute of Frauds," is now in force not only in England and most of our colonies, but exists, with some slight variations, in almost every state of the American Union. 1 Its history was but imperfectly known till the year 1823, when Lord Eldon gave to Mr. Swanston, the reporter of his decisions, the MSS. of Lord Nottingham, (a) 1. The seventeenth section of the statute of frauds, which is the one specially -affecting sales of chattels, is not in force in Pennsylvania, Illinois, Ohio, Rhode Island, Kansas, Kentucky, Tennessee, Texas, Mississippi, Delaware, North Car- olina or Virginia, and is modified in New York, California, Iowa and other states. See Browne on Statute of Frauds. The price at or above which oral contracts are not enforceable varies from $30 to $200 in the different states. The conflict of laws arising out of this difference in legis- lation is discussed in the next note. We may remark here that a sale made in one state will be controlled by the law of that state, though the goods sold may be in another, and so where a sale was made in New Jersey of goods in Pennsylva- nia which would have been enforceable if made in the latter state, it was held that no action would lie in New Jersey, because of the New Jersey statute of frauds. Dacosta v. Davis, 24 N. J. L. 319. See Allen v. Schuchardt, 1 Am. L. Reg. (N. S.) 13. (a) See note to Crowley's Case, 2 Swanst. 83. PART II.] CONTRACTS WITHIN THE STATUTE. - 109 among which was his Lordship's report of the case of Ash v. Abdy, (b) in which he said, on the 13th of June, 1678, less than two years after the passage of the law, that he overruled a demurrer to a bill which " was to execute a parol agreement, before the late act, for pre- vention of frauds and perjuries, but the bill itself was exhibited since the act." The ground of the decision was, that the statute was in- tended to be prospective solely, and not retrospective, " and I said, that I had some reason to know the meaning of this law, for it had its first rise from me, who brought in the bill into the Lords' House, though it afterwards received some additions and improvements from the judges and the civilians." (c) § 91. The section of the statute which is specially applicable to the subject of this treatise is the seventeenth. In the Theseven . examination of its provisions, and of the rules for its con- teenth section, struction and application, the arrangement of Lord Blackburn will be followed, as not susceptible of improvement. The language of the seventeenth section is as follows : "And be it enacted, that from and after the said four-and-twentietb day of June (a. d. 1677), no contract for the sale of any goods, wares, or merchandises, for the price (d) of £10 sterling, or upwards, shall be allowed to be good, except the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the bargain, or in part payment, or that some note or memo- randum in writing of the said bargain be made, and signed by the parties to be charged by such contract, or their agents thereunto law- fully authorized." 2 \b) 3 Swanst. 664, Appendix. In (c) As to the traditions of the aid and North's " Life of Lord Keeper Guild- co-operation of Lord Hale and Sir Leo- ford," vol. I., p. 108, he states of his line Jenkins, see Wain v. Warlters, 5 Lordship : " He had a great hand in the East 10 ; Windham v. Chetwynd, 1 Burr. statute of frauds and perjuries, of which 419 ; Wynn's Life of Sir Leoline Jen- the Lord Nottingham said that every line kins, vol. I., p. 3. was worth a subsidy. But at that time (d) This word changed to " value," the Lord Chief Justice Hale had the post \ 93. pre-eminence, and was chief in the fixing 2. Whether the seventeenth section of that law, although the urging part lay renders void a contract within its terms, upon him, and I have reason to think it or merely prevents an action upon it, had the first spring from his Lordship's leaving it in force for all other purposes, . notice." Lord Mansfield doubted the is an important question which has given statement as to Sir Matthew Hale, who rise to different opinions. The fourth died before the bill was introduced. 1 section (ji 112, infra,) provides that ''no Burr. '418. action shall be brought upon any contract or 110 FORMATION OF THE CONTRACT. [BOOK I. 92. The first question that obviously presents itself under this enactment is, what contracts are embraced under the words " contracts for the sale of any goods, &c." A con- tract may be perfectly binding between the parties, so as to give either of them a remedy against the person and general estate What con- tracts em- braced in it sale of lands," &c, unless in writing, and does not declare the contract void, and this has been held to affect the remedy and not to annul the contract. Leroux v. Brown, 12 C. B. 801; Haynes v. Nice, 100 Mass. 329. But the seventeenth sec- tion provides that no sale for £10 or upwards " shall be allowed to be good, ex- cept," &c. Does this mean that such sale shall not be allowed to be good for any purpose ? If so, it is void. Or does it mean only that no such sale shall be allowed to be good for the purpose of a recovery under it? If so, then it will be good for all other purposes, and the stat- ute is a rule of evidence affecting the remedy only. The latter conclusion is supported by a consideration of the pur- pose of the act, to prevent perjury, and by the analogy of the fourth section. The importance of this question will be readily seen. Suppose suit is brought in Illinois upon a contract made in Massa- chusetts, within the seventeenth section, which is not law in Illinois, will the Illi- nois court enforce it? If it is void in Massachusetts, they will not, but if it is valid, the Illinois court being under no disabling rule of evidence, can enforce it, though not enforceable in Massachusetts, because not provable there. On the other hand, suppose an oral contract of sale made in Illinois and sued on in Massachusetts, can the Massachusetts court sustain the action ? On the princi- ple that a contract good where made is good everywhere, the suit would seem maintainable, but if the seventeenth sec- tion is a rule of evidence affecting the remedy, such suit cannot be maintained, for the court cannot change its rules of evidence, because the cause of action arose in another state, as perjury is no less to be feared in suits on foreign than in suits on domestic sales. Thus, under the fourth section, it has been held that a contract valid in France could not be sued on in England, because within that section. See Leroux v. Brown and Haynes v. Nice, supra. Another import- ant result of the determination of this question is to settle the validity of con- tracts within the seventeenth section when called in question by strangers. If the section relates only to the remedy, and does not make such contracts void, then they must be considered valid when they come collaterally in question ; that is, when no remedy is sought upon them. Decisions that the Seventeenth Sec- tion makes void the Contract. — An early decision is found in Low v. An- drews, 1 Story 38, where Judge Story charged a jury that a contract made in France was not within the statute of frauds of Massachusetts where the suit was brought. The same statement of the law was made in Allen v. Schuchardt, 1 Am. L. Beg. (N. S.) 13, in United States Circuit for New York, by Judge Nelson, who said : " The contract of sale in this case was made in Rhode Island, and though verbal is there valid, as no sale note is required as in our statute of frauds.'' But it must be observed that the New York act declares contracts within its terms void. In these two cases the question was not discussed, but it is in Houghtaling v. Ball, 20 Mo. 563, under a statute similar to that of England, and the same result is there reached. The question is intelligently discussed in Green v. Lewis, 26 TJ. C. Q. B. 618. Goods were sold in Illinois, and suit for PART II.] CONTRACTS WITHIN THE STATUTE. Ill of the other in case of default, but having no effect to transfer the property or right of possession in the goods themselves, and therefore giving to the proposed purchaser none of the rights, and subjecting him to none of the liabilities of an owner; and this is an "executory agreement." the price was brought in Upper Canada, where such a, sale would be within the seventeenth section. The court sustained the sale because valid in Illinois, and •distinguished Leroux v. Brown, 12 C. B. 801, as applicable only to the fourth sec- tion. See, also, Pollock's Principles of Contracts, 575, note (6), to the effect that sales within the seventeenth section are void, not only as between the parties, but for all purposes. Decisions that the Seventeenth Sec- tion makes void the Remedy only.— In Bailey v. Sweeting, 9 C. B. 843, 859, "Williams, J., said : " The effect of that enactment" (the seventeenth section) "is, that although there is a contract which is a good and valid contract, no action can be maintained upon it, if made by word of mouth only, unless something else has happened, e. g., unless there be a note or memorandum in writing of the bargain signed by the party to be charged. As soon as such a memoran- dum comes into existence, the contract becomes an actionable contract." Upon the strength of this opinion a carefully prepared argument was written and pub- lished in the American Law Review, vol. IX., p. 434, in support of the propo- sition that the seventeenth section of the English statute, like the fourth, does not validate contracts within its terms, but is •a rule of procedure applicable only to suits upon such contracts. The question being fairly raised came up before the Supreme Court of Massachusetts, where it received thorough consideration in the case of Townsend v. Hargreaves, 118 Mass. 325, 334. Colt, J., said : " Allowed to be good, means good for the purpose of a recovery under it." " In carrying out its purpose the statute only .affects the modes of proof as to all contracts within it. If a memorandum or proof of any of the alternative requirements peculiar to the seventeenth section be furnished, if ac- ceptance and actual receipt of part be shown, then the oral contract as proved by other evidence is established with all the consequences which the common law attaches to it." In Norton v. Simonds, 124 Mass. 19, 21, Endicott, J., quoted and applied the following language in Townsend v. Hargreaves : " The contract is treated as a subsisting valid contract, when it comes in question between other parties for purposes other than a recovery upon it." Amsnick v. Am. Ins. Co., 129 Mass. 185, was a suit for insurance of a vessel. The defence was that at the time of the insurance plaintiff had no title, having simply made an oral agreement to buy within the statute of frauds, which. was not carried out until afterwards. Endicott, J., said: "But the oral con- tract to purchase was not void or illegal by reason of the statute of frauds. In- deed, the statute presupposes an existing lawful contract; it affects the remedy only as between the parties, and not the validity of the contract itself; and where the oontract has actually been performed even as between the parties themselves it stands unaffected by the statute." These Massachusetts cases accord with Browne on Statute of Frauds, \ 115, and may probably be accepted as correctly express- ing the law in those states where the statute conforms in substance to the seven- teenth section of the English act. Rick- ard v. Cunningham, 10 Neb. 417 ; Smith. v. Smith, 14 Vt. 440 ; Davis v. Inscoe, 84 N. C. 396 ; Green v. N. C. E. E. Co., 77 112 FORMATION OF THE CONTRACT. [BOOK I. Or it may be a perfect sale, as already defined, conveying the abso- lute general property in the thing sold to the purchaser, entitling him to the goods themselves, independently of any personal remedy against the vendor for breach of contract, and rendering him liable to the risk of loss in case of their destruction ; and this is a " bargain and sale of goods." § 93. The distinction between these two agreements will be more Lord Tenter- f u ^y considered hereafter; but for the present it suffices den's act. j. Q remSLr \z ) that until the year 1828, the decisions were somewhat contradictory, and perhaps irreconcilable, on the question whether the words "contracts for the sale of any goods, &c," in this section, were applicable to agreements for future delivery, that is to- say, to executory agreements, or only to such as were equivalent to the common law contract, known as a bargain and sale. 3 The decisions excluding such contracts from the operation of the statute were princi- pally Towers v. Osborne, (e) in 1724, Clayton v. Andrews, (/) in 1767, and Groves v. Buck, (g) in 1814. Those which upheld the contrary rule, were Rondeau v. Wyatt, (A) in 1792, Cooper v. Elston, (i) in 1796, and Garbutt v. Watson, (A) in 1822. The question is no longer open, for the legislature intervened, and in 9 Geo. IV., c. 14, § 7, known as " Lord Tenterden's act," recited, that " it has been held that the said recited enactments " (i. e., the seventeenth section of the statute of frauds) " do not extend to certain executory contracts for the sale of goods, which nevertheless are within the mischief thereby intended to be remedied," and then proceeded to enact that the pro- N. C. 95 ; Chicago Dock Co. v. Kenzie, Trunk E. E., 48 Me. 379 ; Pitkin v . 49 111. 289. Noyes, 48 N. H. 297 ; Mixer v. Howarth, 3. The Statute Applies to Executory 21 Pick. 207. In Hardell v. McClure, 1 Contracts. — In Carman v. Smick, 15 N. Chand. 279, Hubbell, J., laying down the J. L. 252, Hornblower, C. J., said : " The rule for "this young state, where the case distinction between executory and exe- is presented somewhat as a case of first cuted contracts as respects this subject impressions," said : " We regard the act was overruled in Bondeau v. Wyatt and of 9 Geo. IV. as laying down no new in Cooper v. Elston, which cases have principle, but as containing in clear, ex- been considered as settling the rule in the plicit language the true construction of English courts, and in the language of the the original act." Supreme Court of New York, in Bennett (e) 1 Strange 506. v. Hull, 10 Johns. 364, contain the sound (/) 4 Burr. 2101. and just construction of the statute." See, (g) 3 M. & S. 178. also, Finney v. Apgar, 31 N. J. L. 270 ; (A) 2 H. Bl. 63. Jackson v. Covert, 5 Wend. 139 ; Cason v. (t) 7 T. E. 14. Cheely, 6 Ga. 554; Edwards v. Grand (k) 5 B. & Aid. 613. PART II.] CONTRACTS WITHIN THE STATUTE. 113 visions of the seventeenth section " shall extend to all contracts for the sale of goods of the value of ten pounds sterling, and upwards, notwithstanding the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured or provided, or fit or ready for delivery, or some act may be requisite for the making or completing thereof, or rendering the same fit for delivery." It is settled in Scott v. Eastern Counties Railway Company, (I) and in Harman v. Reeves, (m) that this enactment must be .. Value .. and construed as incorporated with the statute of frauds, and "P rioe " that its effect is to substitute the word " value " for " price " in the seventeenth section. § 94. There have been numerous decisions, and much diversity and even conflict of opinion, in relation to the proper principle by which to test whether certain contracts are " contracts between " for the sale," &c, under the seventeenth section, or con- "work and tracts for work and labor done and materials furnished, and material A review of the cases will exhibit the different lights in which the subject has presented itself to the minds of eminent judges. Towers v. Osborne (n) was on an agreement to make and furnish a chariot. Held, not within the statute. But the ground Towers „ of decision in this case was, that the seventeenth section Osborne - did not apply to executory agreements, and on this point the case is met by Lord Tenterden's act. In Clayton v. Andrews, (o) a contract for the future delivery of wheat not yet threshed was held not within the statute, clayton „ under the authority of the preceding case. Andrews. § 95. In Groves v. Buck, (p) the agreement was for the purchase by defendant of a quantity of oak pins, not then in exist- Q. roves „ ence, but that were to be cut by plaintiff out of slabs Buok ' owned by him, and to be delivered at a future time. This agreement was held not to be embraced in the seventeenth section of the statute of frauds. Lord Ellenborough put his opinion on the ground that "the subject matter of this contract did not exist in rerum natura; it was incapable of delivery and of part acceptance, and where that is (I) 12 M. & W. 33. (n) 1 Strange 506. (m) 18 C. B. 587, and 25 L. J., C. P. (o) 4 Burr. 2101. 67. (p) 3M. &S. 178. H 114 FORMATION OF THE CONTRACT. [BOOK I. the case, the contract has been considered not within the statute." 4 This ground is again met by the 9 Geo. IV., c. 14, § 7, but Dampier, J., in declining to apply the case of Rondeau v. Wyatt (presently noticed,) said that this last-mentioned case was distinguishable, because in the other cases cited "some work was to be performed." § 96. In Rondeau v. Wyatt, (5) where an executory contract was Eondeau v held ^° ^ e within the statute, Lord Loughborough said, Wyatt. that " the case of Towers v. Sir John Osborne was plainly out of the statute, not because it was an executory contract, as has been said, but because it was for work and labor to be done and mate- rials and other necessary things to be found, which is different from a mere contract of sale, to which alone the statute is applicable." His Lordship also disposed of the case of Clayton v. Andrews (r) subse- quently overruled in Garbutt v. Watson, (s) by saying that in that case also " there was some work to be performed, for it was necessary that the corn should be threshed before the delivery." § 97. In Garbutt v. Watson, (s) where a sale of flour, to be manu- Gartmttu factured out of wheat yet unground, was held to be watson. within the statute, Abbott, C. J., said, that in Towers v. Osborne, " the chariot which was ordered to be made, would never, but for that order, have had any existence." 5 This expression, as well as the similar one by Lord Ellenborough in Groves v. Buck (ante p. 90,) would imply that the distinction between a "contract for sale" and one for " work, labor, and materials," is tested by the inquiry, whether the thing transferred is one not in existence, and which would never have existed but for the order of the party desiring to acquire it, or a thing which would have existed, and been the subject of sale to some other person, even if the order had never been given. Bay- ley, J., however, put his opinion on the ground, that " this was sub- stantially a contract for the sale of flour, and it seems to me immaterial whether the flour was at the time ground or not. The question is, whether this was a contract for goods, or for work and labor and ma- 4. This case was followed in Gadsden 277, Garbutt v. Watson is stated as assert- v. Lance, 1 McMull. Eq. 91, but that case ing " the doctrine that all contracts were is no longer law in South Carolina. See within the scope and intent of the statute, Bird v. Muhlenbrink, 1 Rich. 199. when the result of the bargain was a sale (q) 2 H. Bl. 63. and transfer of chattels," and this prin- (r) 4 Burr. 2101. ciple is adopted for Wisconsin, being that (s) 5 B. & Aid. 613. afterwards ratified in Lee v. Griffin. 5. In Hardell 0. McClure, 1 Chand. PART II.] CONTRACTS WITHIN THE STATUTE. 115 terials found. I think it was the former, and if so, it falls within the statute of frauds." Holroyd, J., concurred " that this was a contract for the sale of goods," but neither of the judges gave a reason for this opinion (un- doubtedly correct), and thus no aid is afforded by their language in furnishing a test for distinguishing the two contracts from each other. § 98. In Smith v. Surman (t) an action was brought to recover the value of certain timber, under a verbal contract, by which Smith „ plaintiff agreed to sell to defendant at so much per foot Surman - the timber contained in certain trees then growing on plaintiff's land. Bayley, J., was of opinion, that " this was a contract for the future sale of the timber when it should be in a state fit for delivery. The vendor, so long as he was felling it and preparing it for delivery, was doing work for himself, and not for the defendant." § 99. In Atkinson v. Bell (m) the whole subject was much discussed. The action was in assumpsit for goods sold and delivered, Atkinson „ goods bargained and sold, work and labor done, and ma- BelL terials found and provided. The facts were, that one Kay had pat- ented a certain machine, and the defendants, thread manufacturers, desiring to try it, wrote him an order to procure to be made for them as soon as possible some spinning-frames in the manner he most ap- proved of. Kay employed Sleddon to make them for the defendants, informing Sleddon of the order received by him, and he superintended the work. After the frames were made they lay for a month on Sled- don's premises, while he was doing some other work for the defend- ants under Kay's superintendence. Kay then ordered Sleddon to make some changes in the frames, and after this was done, the frames were put into boxes by Kay's directions, and remained in the boxes for some time on Sleddon's premises. On the 23d of June, Sleddon "wrote to the defendants that the machines had been ready for three weeks, and asked how they were to be sent. On the 8th of August, Sleddon became bankrupt, and his assignees required the defendants to take the machines ; but they refused, whereupon action was brought. The judges were all of opinion that the property in the goods had not vested in the defendants, (x) and that a count for goods bargained and sold could not be maintained ; but Bayley and Holroyd, JJ., expressed the opinion that a count for not accepting would have supported the (0 9 B. & C. 568. (x) On this subject see post, Book II. («) 10 B. & C. 277. 116 FORMATION OF THE CONTRACT. [BOOK I verdict in the plaintiff's favor. On the count for work and labor and materials, the judges were also unanimous that these had been fur- nished by Sleddon for his own benefit, and not for the defendant's, that is to say, that the contract was an executory agreement for sale,. and not one for work, &c. Bayley, J., said, " If you employ a man to build a house on your land, or to make a chattel with your mate- rials, the party who does the work has no power to appropriate the produce of his labor and your materials to any other person. Having bestowed his labor at your request, on your materials, he may main- tain .an action against you for work and labor done. But if you employ another to work up his own materials in making a chattel, then he may appropriate the produce of that labor and materials to- any other person. No right to maintain any action vests in him dur- ing the progress of the work, but when the chattel has assumed the character bargained for, and the employer has accepted it, the party employed may maintain an action for goods sold and delivered ; or if the employer refuses to accept, a special action on the case for such refusal; but he cannot maintain an action for work and labor, because his labor was bestowed on his own materials, and for himself, and not for the person who employed him." The concluding passage of this opinion is no doubt too broadly ex- pressed, for although true generally, it is not universally the case that an action for work and labor will not lie when performed on materials that are the property of the workman. This inaccurate dictum had the effect for a time of weakening the authority of Atkinson v. Bell, (y) subjecting it to the criticisms of Maule and Erie, JJ., in Grafton v^ Armitage, (z) and of Pollock, C. B., in Clay v. Yates, (a) but it was fully recognized in the subsequent case of Lee v. Griffin, (b) § 100. Grafton v. Armitage (c) was a somewhat singular case. The Grafton v plaintiff was a working engineer. The defendant was the Armitage. inventor of a life buoy, in the construction of which curved metal tubes were used. The defendant employed plaintiff to- devise some plan for a machine for curving the tubes. The plaintiff made drawings and experiments, and ultimately produced a drum or mandrel, which effected the object required. His action was debt for (y) See remarks on another point de- (a) 25 L. J., Ex. 237 ; 1 H. & N. 73. cided in Atkinson v. Bell, post, Book II., (6) 30 L. J., Q. B. 252 ; 1 B. & S. 272. ch. V. (c) 2 C. B. 336 ; 15 L. J., C. P. 20. («) 2 C. B. 336 ; 15 L. J., C. P. 20. PART II.] CONTRACTS WITHIN THE STATUTE. 117 work, labor and materials, and for money due on accounts stated. The particulars were " for scheming and experimenting for, and making a plan-drawing of, a machine, &c, engaged three days, at one guinea per day, £3 3s. ; for workman's time in making, &c, and experi- menting therewith, £1 5s.; for use of lathe for one week, 12s./ for wood and iron to make the drum, and for brass tubing for the experi- ments, 5s." Defendant insisted, on the authority of Atkinson v. Bell, that the action should have been case for not accepting the goods, not debt for work and labor, &c, citing the dictum at the close of Bayley, J.'s, opinion. But Maule, J., said: "In order to sustain a count for work and labor, it is not necessary that the work and labor should be performed upon materials that are the property of the plaintiff (sie, plainly meaning defendant,) or that are to be handed over to him." Erie, J., said: "Suppose an attorney were employed to prepare a partnership or other deed, the draft would be upon his own paper, and made with his own pen and ink ; might he not maintain an action for work and labor in preparing it?" In delivering the decision, Tindall, C. J., pointed out as the distinction, that in Atkinson v. Bell, the substance of the contract was that the machines to be manufac- tured were to be sold to the defendant, but that in the case before the court the substauce of the contract was not that the plaintiff should manufacture the article for sale to the defendant, but that he should •employ his skill, labor and materials in devising for the use of de- fendant a mode of attaining a given object. Coltman, J., concurred, and said that the opinion of Bayley, J., was on " precisely the same ground as the Lord Chief Justice puts this case. The claim of a tailor or a shoemaker is for the price of goods when delivered, and not for the work or labor bestowed by him in the fabrication of them." § 101. In Clay v. Yates, (d) the subject was treated by Pollock, C. B., in 1856, as a matter entirely res nova. The contract was that the plaintiff, a printer, should print for the de- fendant a second edition of a work previously published by the de- fendant, the plaintiff to find the materials, including the paper. Held, that this was not a contract for the sale of a thing to be delivered at a future time, nor a contract for makiDg a thing to be sold when com- pleted, but a contract to do work and labor, furnishing the materials ; and that the case was not governed by Lord Tenterden's act. Pollock, C. B., said : " As to the first point, whether this is an action for gooda (d) 25 L. J., Ex. 237 ;1E4N. 73. 118 FORMATION OF THE CONTRACT. [BOOK I. sold and delivered, and requiring a memorandum in writing, within the seventeenth section of the statute of frauds, I am of opinion that this is properly an action for work and labor, and materials found. I believe it is laid down in the commencement of Chitty on Pleadings that that is the count that may be resorted to by farriers, by medical men, by apothecaries, and I think he mentions surveyors distinctly, and that is the form in which they are in the habit of suing. The point made in the case cited, in which Bayley, J., gave an opinion, (Atkinson v. Bell,) I think may be answered by the opinion of Maule, J., in the Court of Common Pleas, (Grafton v. Armitage); and then, we have to decide the matter as if it were now without any authority at all. It may be that in all these cases, part of the materials is found by the party for whom the work is done, and the other part found by the person who is to do the work. There may be the case where the paper is to be found by one, and the printing by the other, and so on - t the ink, no doubt, is always found by the printer. But it seems to me the true rule is this, whether the work and labor is of the essence of the contract, or whether it is the materials that are found. My impres- sion is, that in a case of work of art, whether it be silver or gold, or marble, or common plaster, that is a case of the application of labor of the highest description, and the material is of no sort of import- ance as compared with the labor, and therefore that all this would be recoverable as work and labor, and' materials found. I do not mean to say the price might not be recovered as goods sold and delivered if the work were completed and sent home. No doubt it is a chattel that was bargained for and delivered, and it might be recovered as goods sold and delivered ; but still it would not prevent the price being recovered as work and labor, and materials found. It appears to me, therefore, that this was properly sued for as work and labor, and materials found, and that the statute of frauds does not apply ; and I am rather inclined to think that it is only where the bargain is merely for goods thereafter to be made, and not where it is a mixed con- tract of work and labor, and materials found, that the act of Lord Tenterden applies; and one of the reasons why you find no cases on this subject in the books is, that before Lord Tenterden's act passed, the statute of frauds did not apply to the case of a thing begun, what- ever it might be." Alderson, B., concurred, and Martin, B., said : "There are three matters of charge well known in the law — for labor simply, for work PAKT II J CONTRACTS WITHIN THE STATUTE. 119 and materials, and another for goods sold and delivered. And I apprehend every case must be judged of by itself. What is the present case? The defendant having written a manuscript, takes it to the printer to have it printed for him. What does he intend to be done? He intends that the printer shall use his types, and that he shall set them up by putting them in a frame ; that he shall print the work on paper, and that the paper shall be submitted to the author ; that the author shall correct it and send it back to the printer, and then the latter shall exercise labor again, and make it into a perfect and complete thing, in the shape of a book. I think the plaintiff was employed to do work and labor, and supply materials for it, and he is to be paid for it ; and it really seems to me that the true criterion is this : Supposing there was no contract as to payment, and the plaintiff" had brought an action, and sought to recover the value of that which he had delivered, would that be the value of. the book as a book ? I apprehend not, for the book might not be worth half the value of the paper it was written on. It is clear the printer would be entitled to be paid for his work and labor, and for the materials he had used upon the work ; and, therefore, this is a case of work, labor and materials done and provided by the printer for the defendant." The learned baron also put this case: "Suppose an artist paints a portrait for three hundred guineas, and supplies the canvas for it worth 10s., surely he might recover on a count for work and labor." § 102. In Lee v. Griffin, (d) 6 the last reported case, the foregoing opinions of the Chief Baron and Baron Martin were questioned, and not followed, though the decision was approved. This action was brought by a dentist, to recover £21 for two sets of artificial teeth made for a deceased lady, of whom the de- fendant was executor. When Clay v. Yates was quoted by the plain- tiff in support of the position that the skill of the dentist was the thing really contracted for, that the materials were only auxiliary, and that the count for work and labor was therefore maintainable, Hill, J., said : " Clay v. Yates is a case sui generis. The printer, the plain- (d) 30 L. J., Q. B. 252 ; 1 B. & S. 272. shire, (Prescott v. Locke, 51 N. H. 94,) 6. This case, which is said to have set- and Connecticut, (Atwater v. Hough, 29 tied the law in England, has been fol- Conn. 508.) But in New Jersey Chief lowed in Ontario province, (Wolfenden v. Justice Beasley declared Lee v. Griffin Wilson, 33 U. C. Q. B. 442,) in Minne- "a wide divergence," and refused to fol- sota, (Burt v. Bailey, 21 Minn. 402,) and low it. Finney v. Apgar, 31 N. J. L. is received with favor in New Hamp- 266. See \\ 109, 110, infra. 120 FORMATION OF THE CONTRACT. [BOOK I. tiff there, in effect does work chiefly on the materials which the de- fendant supplied ; although, to a certain extent, the plaintiff may be said to supply materials ; moreover, the printer could not sell the booh to 'any one else." Cromptou, J., said : " When the contract is such that a chattel is ultimately to be delivered by the plaintiff to the defendant, when it has been sent, then the cause of action is goods sold and delivered. The case of Clay v. Yates turned, as my brother Hill pointed out, upon the peculiar circumstances of the case. I have some doubt upon the propriety of the decision, but we should be bound by it in a case pre- cisely similar in its circumstances, which the present is not. I do not agree with the proposition, that wherever skill is to be exercised in carry- ing out the contract, that fact makes it a contract for work and labor, and not for the sale of a chattel. It may be, the cause of action is for work and labor when the materials supplied are merely auxiliary, as in the case put of an attorney or printer. But in the present case, the goods to be furnished, viz., the teeth, are the principal subject matter ; and the case is nearer that of a tailor, who measures for a garment, and afterwards supplies the article fitted." Hill, J., said : " I think the decision in Clay v. Yates perfectly cor- rect, according to the particular subject matter of the contract in that case, which was not a case of a chattel ordered by one of another, thereafter to be made by the one and afterwards to be delivered to the other ; but vohen the subject matter of the contract is a chattel to be afterwards delivered, then the cause of action is goods sold and de- livered, and the seller cannot sue for work and labor. In my opinion, Atkinson v. Bell is good law, subject only to the objection to the dictum of Bayley, J., which has been repudiated by Maule, J., and Erie, J., in Grafton v. Armitage." Blackburn, J., said : " If the contract be such that it will result in the sale of a chattel, the proper form of action, if the employer refuses to accept the article when made, would be for not accepting. But if the work and labor be bestowed in such a manner as that the result would not be anything which could properly be said to be the subject of sale, then an action for work and labor is the proper remedy. In Clay v. Yates, the circumstances were peculiar ; but had the contract been completed, it could scarcely perhaps have been said that the result was the sale of a chattel. * * * I do not think that the relative value of the labor and of the materials on which it is bestowed can PART II.] CONTRACTS WITHIN THE STATUTE. 121 in any case be the test of what is the cause of action ; and that if Benvenuto Cellini had contracted to execute a work of art for another, much as the value of the skill might exceed that of the materials, the contract would have been nevertheless for the sale of a chattel." § 103. In reviewing these decisions, it is surprising to find that a rule so satisfactory and apparently so obvious as that laid Eemarks on down in Lee v. Griffin, in 1861, should not have been theoases - earlier suggested by some of the eminent judges who had been called on to consider the subject, beginning with Lord Ellenborough, in 1814, and closing with Pollock, C. B., in 1856. From the very definition of a sale, the rule would seem to be at once deducible, that if the con- tract is intended to result in transferring for a price from B to A a chattel in which A had no previous property, it is a contract for the sale of a chattel, and unless that be the case, there can be no sale. In several of the opinions this idea was evidently in the minds of the judges. Especially was this manifest in the decision of Bayley, J., in Atkinson v. Bell, and Tindal, C. J., in Grafton v. Armitage ; but it was not clearly and distinctly brought into view before the decision in Lee v. Griffin. The same tentative process for arriving at the proper distinctive test between these two contracts has been gone through in America, but without a satisfactory result, as will subse- quently appear. § 104. The principles suggested as affording a test on this subject prior to the case of Lee v. Griffin were the following : — 1st. — That if the subject matter of the contract was not in existence, not in rerum natura, as Lord Ellenborough expressed it, the contract was not " for the sale of goods." This was the opinion of Lord Ellenborough in Groves v. Buck ; (e) of Abbott, C. J., as shown by his comment on Towers v. Osborne, in the opinion delivered in Gar- butt v. "Watson ; (/) and may be inferred from Rondeau v. Wyatt(gr) to have been the opinion of Lord Loughborough. 7 That the decision in Towers v. Osborne was wrong, if it went upon the ground that Lord Loughborough states, viz., that the order for the chariot was not a contract or agreement for the sale of a chattel, is no longer questionable. The familiar example put by the judges in several of the cases, of an order to a tailor or shoemaker for a gar- (e) 3 M. & S. ITS. 7. This is substantially the rule in (/) 5 B. & A. 613. New York. See note to I 109, infra. (g) 2 H. Bl. 63. 122 FORMATION OF THE CONTRACT. [BOOK I. ment or pair of shoes, both of which are treated as undoubted cases of contracts for the sale of chattels, is exactly the same as the order in Towers v. Osborne. The intention of the parties was that the re- sult should be a transfer for a price, by Towers to Sir John Osborne, of a chattel in which Sir John had no previous property, and this was clearly a contract for a sale. § 105. 2d. — The second principle suggested as the true test was by Bayley, J., first in Smith v. Surman, (A) afterwards more fully devel- oped in Atkinson v. Bell, (i) viz., that if the materials be furnished by the employer, the contract is for work and labor, not for a sale ; but if the material be furnished by the workman who makes up a chattel, he cannot maintain " work and labor," because his labor was bestowed on his own materials and for himself, and not for the person who employed him. The first branch of this rule is undoubtedly correct, as shown by the principles settled in Lee v. Griffin, because where the materials are furnished by the employer, there can be no transfer to him of the property in the chattel, he being previously possessed of the title to the materials, so that nothing can be due from him save compensation for labor; and this will be equally true where the employer has furnished only part of the materials, for the contract in such case cannot result in a sale to him of what is already his, and the only other action possible would be for work and labor done, and materials furnished. But the second part of the rule is inaccurate, as pointed out in Grafton v. Armitage and Lee v. Griffin. A man may be responsible for damage done to another's chattel, as, for example, to a coachmaker's vehicle, and may employ the latter to repair the injury, in which case an action would plainly lie against the employer for the work and labor done, and materials furnished by the coachbuilder, although bestowed on a thing which is his, and is to remain his after being repaired at another's expense. § 106. 3d. — The third attempt to supply the true test on this mat- ter previously to its satisfactory settlement in Lee v. Griffin, was made by Pollock, C. B., in Clay v. Yates, (k) The proper rule, in his opinion, is this, " Whether the work and labor is of the essence of the contract, or whether it is the materials that are found. This test was decisively rejected by Crompton and Blackburn, JJ., in Lee v. Griffin. It cannot be supported, even in the extreme case put by (A) 9 B. & C. 568. {k) 25 L. J., Ex. 237 ; 1 H. & N. 73. (i) 10 B. & C. 277. PAET II.] CONTRACTS "WITHIN THE STATUTE. 12S Martin, B , of a portrait worth three hundred guineas on a canvas worth 10s. If the employer owned nothing whatever that went into the composition of the picture — if neither materials, nor skill, nor labor were supplied by him, it is obvious that he cannot get title to the picture or any property in it, except through a transfer of the chattel to him by the artist for a price, and this is in law a contract of sale. It cannot make the slightest difference in what proportions the elements that compose the chattel, namely, the raw material and the skill, are divided ; it is not the less true, that none of these elements were owned by the employer before the contract, and that the chattel composed of them is by the terms of the contract to be transferred for a price by the former owner to the employer. The test suggested by Martin, B., in his opinion as found in the Law Journal Report, is accurate as far as it goes, but it does not cover more than the point in the case before the court. The learned baron said : " Suppose the plaintiff had brought an action to recover the value of that which he had delivered, would that be the value of the book ? I apprehend not, for the book might not be worth half the value of the paper it was written on." This is true, and why ? Because a part of the materials of the book — its chief materials, indeed — to wit, the compo- sition, had been furnished by the employer, belonged to him already, and therefore could not be sold to him by the printer. The only remedy then remaining was an action for work and labor and materials. § 107. Cases are sometimes put, as a test of principles, that are so extreme as to be best disposed of by the application of the familiar rule, " de minimis non curat lex." Thus the example of an attorney employed to draw a deed, is dismissed by Blackburn, J., in Lee ». Griffin, with the simple remark that it is an abuse of language to say that the paper or parchment are goods sold and delivered. So, if a man send a button or a skein of silk to be used in making a coat, it would be mere trifling to say that he was part owner of the materials, and that an action for goods sold would not therefore lie in favor of the tailor who furnished the garment. Such matters cannot be con- sidered as having entered into the contemplation of parties when con- tracting, nor as forming any real part of the consideration for the mutual stipulations. § 108. Where a contract is made for furnishing a machine or a 124 FORMATION OF THE CONTRACT. L 3005 *■ a chattel in- movable thing of any kind and fixing it to the freehold, future toa" ** ^ s D0 * a contract for the sale of goods. In such con- freehoid. tracts the intention is plainly not to make a sale of mov- ables, but to make improvements on the real property, and the con- sideration to be paid to the workman is not for a transfer of chattels, but for work and labor done and materials furnished in adding some- thing to the land. (I) [And the same rule applies when the substance of the contract is to make improvements to a chattel already in existence, e. g., to make and fix boilers to a ship, (m)] § 109. In America, as before observed, the same perplexity has Law in keen exhibited as marks the history of the subject in our America. own ] aw ^ an( j m Lamb, v. Crafts, (n) Chief Justice Shaw said: "The distinction we believe is now well understood. When a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essen- tially a contract of sale and not a contract for labor ; otherwise when the article is made pursuant to the agreement." This opinion seems to have been deduced from some observations of Abbott, C. J., in ■Garbutt v. Watson, and rests on no satisfactory principle. Mr. Story, whose treatise in the edition of 1862 contains no reference to the then recent case of Lee v. Griffin, avows his difficulty, and suggests that it would probably be held " that where the labor and service were the -essential considerations, as in the case of the manufacture of a thing not in esse, the contract would not be within the statute ; where the labor and service were only incidental to a subject matter in esse, the statute would apply." (o) Thus is the rule suggested by Pollock, C. B., in Clay v. Yates, and rejected in Lee v. Griffin. In Mr. Hilliard's treatise on Sale, the contradictory decisions are given without any attempt on the part of the learned author to recon- cile them or deduce any general principles applicable to the contro- verted question, (p) 8 (I) Cotterell v. Apsley, 6 Taunt. 322 ; Company, 4 Keyes 180, in which all the Tripp v. Armitage, 4 M. & W. 687 ; Clark authorities are reviewed. «. Bulmer, 11 M. & W. 243. (o) Story on Sales, § 260 c. See, how- (m) Anglo-Egyptian Navigation Com- ever, note to 4th edition (1871.) pany v. Rennie, L. R., 10 C. P. 271. (p) Hilliard on Sales, 464, 467. (n) 12 Mete. 356. See, also, the case 8. This subject was thoroughly can- of Smith v. The N. Y. Central Railroad vassed by Commissioner Dwight in Cooke PAET II. J CONTRACTS WITHIN THE STATUTE. 125 § 110. [The rules adopted by the courts of the different states for determining whether a contract is one of sale or for work Kule in Lee and labor directly conflict with one another; and it will general?/ * suffice to mention that in Massachusetts the established a PP roved - v. Millard, 65 N. Y. 352. He cites Lee ■v. Griffin and Benjamin on Sales as show- ing the English rule. Massachusetts Rule.— Commissioner Dwight says : " The Massachusetts rule as applicable to goods manufactured or modified after the bargain for them is made, mainly regards the point whether the products can at the time stipulated for delivery be regarded as 'goods, wares and merchandise' in the sense of being gene- rally marketable commodities, made by the manufacturer. In that respect it agrees with the English rule. The test is not the non-existence of the commodity at the time of the bargain. It is rather whether the manufacturer produces the article in the general course of his busi- ness or as the result of a special order. Goddard v. Binney, 115 Mass. 450. In this very recent case the result of their decisions is stated in these terms : ' A contract for the sale of articles then ex- isting or such as the vendor in the ordi- nary course of his business manufactures or procures for the general market, whether on hand at the time or not, is a contract for the sale of goods to which the statute applies. But on the other hand, if the goods are to be manufactured especially for the purchaser and upon his special order, and not for the general market, the case is not within the statute.' Under this rule it was held in Gardner v. Joy, 9 Mete. 177, that a contract to buy a certain number of boxes of candles at a fixed price per pound, which the vendor said he would manufacture and deliver in about three months, was a contract of sale. On the other hand, in Goddard v. Binney, supra, the contract with a carriage manufacturer was, that he should make a buggy for the person ordering it, that the color of the lining should be drab and the outside seat of cane, and have on it the monogram of the party for whom it was made. This was held not to be a contract of sale within the statute. See, also, Mixer v. Howarth, 21 Pick. 205 ; Lamb v. Crafts, 12 Mete. 353 ; Spencer v. Cove, 1 Mete. 283."' This is probably the rule in New Jersey. Finney v. Apgar, 31 1ST. J. L. 266. In that case C J. Beasley reviews the English authori- ties, pronounces Lee v. Griffin " a wide- divergence from the grounds upon which rest the original decisions," and lays down the rule : " That when a contract is made for an article not existing at the time in solido, to use the expression of the old cases, and when such article is to be made according to order, and as a thing distin- guished from the general business of the maker, then such contract is, in substance and effect, not for a sale, but for work and materials." The case before the court was a contract to finish and deliver " small pieces of wood in the rough, which, could be conveniently turned into wagon spokes," and it was held to be a, sale. " In principle the case seems to fall within the boundaries of that class of cases which exemplify the distinction be- tween a mere preparation or slight altera- tion of the form of a thing which in substance exists at the time the contract is made, and the conversion of the raw material into the perfected form of tha manufactured article." In Maine the law accords in substance with that of Massachusetts. Abbott v. Gilchrist, 38 Me. 260; Crockett v. Scribner, 64 Me. 447. See, also, Barbour v. Disher, 11 Rich. 347 ; Phipps v. McFarlane, 3 Minn. 109 ; O'Neil ■/. N. Y. and Silver Peak Min- ing Co., 3 Nev. 141. In Iowa the Mas- 126 FORMATION OF THE CONTRACT. [book I. rule is based upon the distinction referred to by Shaw, C. J., in Lamb v. Crafts, supra, and in the most recent case on the subject in that sachusetts rule is established by stat- ute, providing that executory contracts for sale shall not be within the statute "when the article sold is not ready for delivery, but labor, skill or money are to be expended in procuring or producing the same.'' Bennett v. Nye, 4 Greene 410 ; Partridge v. Wilsey, 8 Iowa 459 ; Brown v. Allen, 35 Id. 306. The New York Rule. — Commissioner Dwight having set forth the Massachu- setts rule, as above quoted in Cooke v. Millard, continues: "The New York rule is still different. It is held here- by a long course of decisions that an agree- ment for the sale of any commodity not in existence at the time, but which the vendor is to manufacture or put in a con- dition to be delivered, such as flour from wheat not yet ground, or nails to be made from iron belonging to the manufacturer, is not a contract of sale. The New York rule lays stress on the word sale. The latest and most authoritative expression of the rule is found in a recent case in this court. Parsons v. Loucks, 48 N. Y. 17, 19. The contrast between Parsons v. Loucks, in this state, on the one hand, and Lee v. Griffin, in England, on the other, is that in the former case the word sate re- fers to the time of entering into the con- tract, while in the latter, reference is had to the time of delivery as contemplated by the parties. If at that time it is a chattel, it is enough according to the Brit- ish rule." " The case at bar does not fall within the rule in Parsons v. Loucks. The facts in that case were that a manu- facturer agreed to make for the other party to the contract two tons of bciok paper. The paper was not in existence, and, so far as appears, not even the rags. So in Sewall v. Fritch, 8 Cow. 215, the nails which were the subject of the con- tract were not then wrought out, but were to be made and delivered at a future day. Nothing of this kind is found in the present case. The lumber was all in ex- istence when the contract was made. It only needed to be prepared for the pur- chaser, dressed and put in condition to fill his order. The court, accordingly, is not hampered in the disposition of this cause by authority, but may proceed by principle. Were this subject now open to full discussion upon principle, no more convenient and easily understood rule could be adopted than that enumerated in Leeu. Griffin. It is too late to adopt it in full in this state. The court, however, in view of the present state of the law should plant itself, so far as it is not precluded from so doing by authority upon some clearly intelligible ground, and introduce no more nice and perplexing distinctions. I think that the true rule to be applied in this state is, that when the chattel is in existence so as not to be governed by Parsons v. Loucks, the contract should be deemed to be one of sale, even though it may have been ordered from a seller who is to do some work upon it to adapt it to the uses of the purchaser. Such a rule makes but a single distinction, and that is between existing and non-existing chat- tels. There will still be border cases where it will be difficult to draw the line, and to discover whether the chattels are in existence or not. The mass of the cases will, however, be readily classified." The following cases support this rule. Downs v. Boss, 23 Wend. 270 ; Smith v. Cent. R. R., 4 Keyes 180 ; Bates v. Cos- ter, 3 N. Y. Sup. Ct. (T. & C.) 580; Wright v. O'Brien, 5 Daly 54 ; Flint v. Corbitt, 6 Daly 429 ; Deal v. Maxwell, 51 N. Y. 652 ; Higgins . Morris, 83 X. C. 251, 251. brick became, and which, but leaves title Here the owner of land from which brick where it was, in the owner of the soil." PART II. J WHAT ARE GOODS, WARES AND MERCHANDISE. 151 class of products of the soil, not annual, as emblements, not perma- nent, as grass or trees, but affording either no crop till the second or third year, or affording a succession of crops for two or three years before they are exhausted, such as madder, clover, teasles, &c. The only reported case on this subject is Graves v. Weld, (6) Gravesr , which was argued by very able counsel, and decided, after Weld- consideration, by Lord Denman, who delivered the unanimous judg- ment of the court, consisting of himself and Littledale, Parke and Patteson, JJ. The facts were that the plaintiff was possessed of a close under a lease for ninety-nine years, determinable on three lives. In the spring of 1830, the plaintiff sowed the land with barley, and in May he sowed broad clover seed with the barley. The last of the three lives expired on the 27th of July, 1830, the reversion being then in defendant. In January, 1831, plaintiff delivered up the close to the defendant, but in the meantime had taken off, in the autumn of 1830, the crop of barley, in mowing which a little of the clover plant, that had sprung up, was cut off, and taken together with the barley, According to the usual course of good husbandry, broad clover is sown about April or May, and is fit to be taken for hay about the be- ginning of June of the follovjing year. The clover in question was cut by defendant about the end of May, 1831, more than a twelve- month after the seed had been sown. The defendant also took, accord- ing to the common course of husbandry, a second crop of the clover in the autumn of the same year, 1831. The jury found, on questions submitted by the judge: 1st. — That the plaintiff did not receive a benefit from taking the clover with the barley straw sufficient to com- pensate him for the cost of the clover seed, and the extra expense of sowing and rolling. 2d. — That a prudent and experienced farmer, knowing that his term was to expire at Michaelmas, would not sow clover with his barley in the spring, where there was no covenant that he should do so ; and would not in the long run and on the average, repay himself in the autumn for the extra cost he had incurred in the spring. The case was argued by Follett for plaintiff, and Gambier for de- fendant, and Lord Denman, in delivering the judgment of the whole court, said : " In the very able argument before us, both sides agreed as to the principle upon which the law which gives emblements was originally established. That principle was that the tenant should be (6) 5 B. & Ad. 105. 152 FORMATION OF THE CONTRACT. [BOOK I. encouraged to cultivate by being sure of the fruits of his labor ; but both sides were also agreed that the rule did not extend to give the tenant all the fruits of his labor, or the right might be extended in that case to things of a more permanent nature, as trees, or to more crops than one ; for the cultivator very often looks for a compensation for his capital and labor in the produce of successive years. It was therefore admitted by each that the tenant would be entitLed to that species of product only which grows by the industry and manurance of man, and to one crop only of that product. But the plaintiff in- sisted that the tenant was entitled to the crop of any vegetable of that nature, whether produced annually or not, which was growing at the time of the cesser of the tenant's interest; the defendant contended that he was entitled to a crop of that species only which ordinarily repays the labor by which it is produced within the year in which that labor is bestowed, though the crop may, in extraordinary seasons, be delayed beyond that period. And the latter proposition we consider to be law." Again, " the principal authorities upon which the law of emble- ments depends are Littleton, § 68, and Coke's Commentary on that passage. The former is as follows : ' If the lessee soweth the land, and the lessor, after it is sowne and before the corne is ripe, put him out, yet the lessee shall have the corne and shall have free entry, egresse and regresse to cut and carrie away the corne, because he knew not at what time the lessor would enter upon him.' Lord Coke says (Co. Litt. 55 a) : ' The reason of this is, for that the estate of the lessee is uncertaine, and therefore lest the ground should be unmanured, which should be hurtful to the commonwealth, he shall reap the crop which he sowed, in peace, albeit the lessor doth determine his will before it be ripe. And so it is if he set rootes or sow hempe or flax or any other annuall profit, if after the same be planted, the lessor oust the lessee, or if the lessee dieth, yet he or his executors shall have that yeare's crop. But if he plant young fruit trees or young oaks, ashes, elms, &c, or sow the ground with acornes, &c, there the lessor may put him out notwithstanding, because they will yield no present annuall profit' These authorities are strongly in favor of the rule contended for by defendant's counsel ; they confine the right to things yielding present annual profit, and to that year's crop which is grow- ing when the interest determines. The case of hops, which grow from ancient roots, and which yet may be emblements, though at first sight PART II.] WHAT ARE GOODS, WARES AND MERCHANDISE. 153 ft an exception, really falls within this rule. In Latham v. Attwood, (c) they were held to be like emblements, because they were ' such things as grow by the manurance and industry of the owner, 'by the making of hills and setting poles:' that labor and expense, without which they would not grow at all, seemed to have been deemed equivalent to the sowing and planting of other vegetables." § 131. According to the principles here established, it would seem that the crop of the first year in such cases would be fructus industri- ales, but that of subsequent years, like fruit on trees planted by ten- ants, would be fruetus naturales, unless requiring cultivation, labor, and expense for each successive crop, as hops do, in which event they would he fructus industriales till exhausted. 13 But the law as to the application of the statute of frauds to sales of growing crops of this character, especially of crops subsequent to the first gathered, cannot be considered as settled. § 132. A singular case of the sale of crop not yet sown was deter- mined ha Watts v. Friend, (d) 14 The bargain was, that the plaintiff should furnish the defendant with turnip sown"° tyet seed to be sown by the latter on his own land, and that wattst>. the defendant should then sell to the plaintiff the whole "' of the seed produced from the crop thus raised at a guinea a bushel. The contract was held to be within the seventeenth section of the statute of frauds. The amount of the seed produced turned out to be two hundred and forty bushels, and as the agreement was that the crop should be severed before the property was transferred, it was clearly not a sale of an interest in land ; but the reporter, in a note to the case, calls attention to a point not discussed in it, viz., that when the bargain was made, it was uncertain whether the value of the seed (c) 1 Cro. Car. 515. " This," says Stewart, J., " we think, is to 13. In Parner v. Piercy, 40 Md. 212, be taken with some qualification, and that 223, a sale of peaches unripe on the trees a growing crop of peaches or other fruit for a lump sum, to be gathered by the requiring periodical expense, industry purchaser as ripened, was held not within and attention, in its yield and production, the fourth section. Stewart, J., cites Ben- may be well classed as fructus industriales, jamin on Sales and quotes Taylor's Law and not subject to the fourth section of of Evidence to this effect : " Third. An the statute.'' agreement respecting the sale of a grow- (d) 10 B. & C. 446. ing crop of fruit or grass, or of standing 14. Cited and followed in the similar underwood, growing poles or timber, is cases of Brown v. Sanborn, 21 Minn. 402, within the fourth section, and a written and Bowman v. Conn, 8 Ind. 58, (stated contract of sale cannot be dispensed with.'' note 7, supra.) 154 FORMATION OF THE CONTRACT. [BOOK I. to be produced would reach £10, and that under the fourth section it has been held, that cases depending on contingencies which may or may not happen within the year, are not within that section, though the event does not in fact happen within the year. § 133. In the Earl of Falmouth v. Thomas, (e) where a farm was oo 3 when leased, and the tenant agreed to take the growing crops sorie3to°the an( ^ tne l aDOr an & materials expended, according to a land. valuation, it was held that the whole was a contract for mouth f i> Fal " an interest in land under the fourth section, and that plaintiff could not maintain an indebitatus count for goods bargained and sold to recover the price of the crops according to' the valuation. Littledale, J., expressed the same opinion in Mayfield v. Wadsley, (/) saying that " where the land is agreed to be sold, the vendee takes from the vendor the growing crops, the latter are con- sidered part of the land." This rule seems founded on sound princi- ples, for in such cases the fact of his having acquired an interest in the land is part of the consideration which moves the purchaser to buy the crops ; or as it is put in Blackburn on Sale, (g) the purchaser pays for an abandonment by the lessor or vendor of the right to injure the freehold. He buys an interest "concerning land," and that is covered by the language of the fourth section. In the early case of Waddington v. Bristow, (h) in 1801, an agree- waddin ton - men t f° r tne purchase of growing hops at £10 per cwt., Bnstow. t k e p U j. j n pockets and delivered by seller, was held to require a stamp, and not to come within the exemption of agreements for the sale of goods, wares, and merchandise. The case is quite irreconcilable with the principles settled in the more modern deci- sions, and in Rodwell v. Phillips, (i) Parke, B., said of it : " Hops are fructus industriales. That case would now probably be decided differently." It may therefore be considered as overruled. 15 (e) 1 C'rom. & M. 89. 15. But see Purner v. Piercy, 40 Md. (/) 3 B. & C. 366. 212, quoted in note 13, supra, where (g) Page 20. peaches are held fructus industriales, be- (h) 2 Bos. & P. 452. cause requiring annual cultivation, (i) 9 M. & W. 503. PART II. J PEICE OR VALUE OF TEN POUNDS. 155 CHAPTER III. WHAT IS A CONTRACT FOR THE PRICE, OR OF THE VALUE OF £10. SEC. Several articles sold on one occa- sion 134 Auction sales of several lots 135 SEC. Uncertain value 136 Different contracts for a single con- sideration 137 § 134. In several cases, questions have been raised as to the con- struction of the words, "for the price of £10 and upwards," and " of the value of ten pounds and upwards," as used in the seventeenth section of the statute of frauds, and in Lord Tenterden's act. In Baldey v. Parker, (a) the plaintiffs were linen-drapers, and the defendant came to their shop and bargained for several Several ti , articles. A separate price was agreed for each, and no t?Jf e atsame one article was of the value of £10. Some were measured B aideyu. in his presence, some he marked with a pencil-, others he Parker - assisted in cutting from a larger bulk. He then desired an account of the whole to be sent to his house, and went away. The account as sent amounted to £70, and he demanded a discount of £20 per cent, for ready money, which was refused. The goods were then sent to his house, and he refused to take them. Held, that this was one entire contract within the seventeenth section. All the judges, Abbott, C. J., Bayley, Holroyd, and Best, JJ., gave Separate opinions. Abbott, C. J., said, " Looking at the whole transaction, I am of opinion that the parties must be considered to have made one entire contract for the whole of the articles." Bayley, J., said, " It is conceded that on the same day, and indeed at the same meeting, the defendant contracted with the plaintiffs for the purchase of goods to a much greater amount than £10. Had the entire value been set upon the whole goods to- gether, there cannot be a doubt of its being a contract for a greater amount than £10 within the seventeenth section ; and I think that the circumstances of a separate price being fixed upon each article makes no such difference as will take the case out of the operation of that law." Holroyd, J., said, "This was all one transaction, though (o) 2 B. & C. 37. See Price v. Lee, 1 B. & C. 156 156 FORMATION OF THE CONTRACT. [BOOK I. composed of different parts. At first it appears to have been a con- tract for goods of less value than £10, but iu the course of the deal- ing it grew to a contract for a much larger amount. At last, there- fore, it was one entire contract within the meaning and mischief of the statute of frauds, it being the intention of that statute, that where the contract, either at the commencement or the conclusion, amounted to or exceeded the value of £10, it should not bind, unless the requisites there mentioned were complied with. The danger of false testimony is quite as great where the bargain is ultimately of the value of £10, as if it had been originally of that amount." Best, J., said, " Whatever this might have been at the beginning, it was clearly at the close one bargain for the whole of the articles. The account was all made out together, and the conversation about discount was with reference to the whole account." 1 § 135. But where at an auction, the same person buys several suc- cessive lots as they are offered, a distinct contract arises Auction sales ** ' «f several lots. f or eacn \ ^ an( j the decision to this effect in Emmerson v. Heelis (b) was not questioned in Baldey v. Parker. 2 1. This case of Baldey v. Parker was cited and followed in Allard v. Greasert, 61 N. Y. 1, 4. See Brown v. Hall, 5 Lans. 177. But in Aldrich v. Pyatt, 64 Barb. 391, a farmer sold at one time his barley for $1 per bushel, and apples for $2.50 per barrel, the apples to be de- livered immediately, and the barley at a later time, payment to be made when de- livered. The apples were delivered and paid for, but the buyer refusing to accept the barley, suit was brought for damages. It appeared that the barley amounted to over fifty bushels. The sale of barley was held separate and within the statute, Judge Smith quoting Mills v. Hunt, 20 Wend. 434, stated in note 2, infra. See Gilman v. Hill, 36 N. H. 311, 318 ; Gault v. Brown, 48 Id. 183. (6) 2 Taunt. 38. Also per Le Blanc, J., in Bugg v. Minett, 11 East 218 ; Boots v. Lord Dormer, 4 B. & Ad. 77, and per the law lords in Couston v. Chapman, L. R., 2 H. L. Sc. 250. 2. In Mills v. Hunt, 20 "Wend. 431, a bidder at auction bought five parcels, which were billed to him, the whole amounting to over $200. By the terms of sale approved notes were to be taken for sums over $100. Four parcels only were delivered to the buyer, who brought suit for the value of the fifth. Chancellor Walworth gave the opinion of the Court of Errors, saying that the bill of parcels " is to be regarded as evidence that the several articles purchased by Hunt at the same auction sale, although in different bids and upon different catalogues, were considered by the vendors as embracing one contract, and upon which the vendee was entitled to credit for six months. He was in the situation of a purchaser who goes to a store and buys different articles at separate prices for each article upon approved paper for the aggregate amount of such sales ; in which case there can be no doubt that a delivery of part of the articles so purchased, without any objection at the time to the delivery ot the residue, is sufficient to take the case PAET II.] PRICE OR VALUE OF TEN POUNDS. 157 § 136. Although at the time of the bargain it may be uncertain whether the thing sold will be of the value of £10 accord- Uncertain ing to the terras of the contract, yet, if in the result it value - turn out that the value actually exceeds £10, the statute applies. 3 This point was involved in the decision in Watts v. Friend, (e) where the sale was of a future crop of turnip-seed which might or might not amount to £10, the price stipulated being a guinea a bushel. But the point was not argued nor mentioned by counsel or by the court. § 137. Where a contract includes a sale of goods, and other matters not within the statute, if the goods included in the con- Different oon . tract be of the value of £10, the seventeenth section of eoMWe°aSSl the statute will apply. 4 In Harman v. Reeve, (d) the HalMn „ plaintiff had sold a mare and foal to defendant, with the Eeeve - out of the statute as to the whole goods purchased." " The case would be differ- ent where the purchaser, either at a pub- lic or private sale, paid for and took a delivery of some of the separate articles only, leaving the residue undelivered and wholly unpaid for ; or where several articles were purchased at the same time, to be paid for on delivery, and the pur- chaser afterwards received and paid for some of the separate articles only." Baldey v. Parker is cited, and a recovery sustained. Mills v. Hunt was followed in Pennsylvania in Coffman v. Hampton, 2 W. & S. 377, and in Tompkins v. Haas, 2 Penna. St. 74. And in Kerr a, Shrader, 1 W. N. C. 33, a horse and mare were sold at auction on separate bids to the same purchaser, and it was held that the vendor need not deliver one without an acceptance of the other. But in Barclay v. Tracy, 5 W. & S. 45, where several pur- chases were made at auction on different terms, each is deemed a distinct contract. In Jenness v. Wendell, 51 1ST. H. 63, de- fendant bought at an auction of hotel furniture a number of articles, none for more than $15, all amounting to about $200. It was held an entire contract on the authority of Mills v. Hunt, but the point was not involved in the decision. On sales of land in lots each sale is sepa- rate. Jenness v. Wendell, 51 N. H. 63 ; Wells v. Day, 124 Mass. 38. 3. Brown v. Sanborn, 21 Minn. 402; Bowman v. Conn, 8 Ind. 58 ; Carpenter v. Galloway, 73 Ind. 418. In this case the court cites Brown on Statute of Frauds, \ 312, to the effect that the parties seek- ing to enforce a contract uncertain as to price should show that the price did not exceed the amount named in the statute. Buskirk v. Cleveland, 41 Barb. 610. (c) 10 B. & C. 446. 4. Lamb v. Crafts, 12 Mete. 353 ; Irvine v. Stone, 6 Cush. 508. In this case plaintiff sued for the price of coal shipped by him from Philadelphia to Boston on a parol order from defendant, and sued also for the expense of trans- portation, which, by the same oral order, defendant had agreed to pay. Metcalf, J., said: "The position taken for the plaintiff is that an agreement which is void in part by the statute of frauds is not necessarily void in toto ; but that another part thereof, which would be valid if it stood alone, may be held valid if it can be separated from the part which is void. And this position is not (d) 25 L. J., C. P. 257 ; 18 C. B. 586. 158 FORMATION OF THE CONTRACT. [BOOK I. obligation to agist them at his own expense till' Michaelmas, and also to agist another mare and foal belonging to defendant, the whole for £30. Averment of full performance by plaintiff, and breach by defendant. It was admitted that the mare and foal agreed to be sold were above the value of £10. Held, that the contract for the sale was within the seventeenth section of the statute. Semble, however, that although the contract was entire, and the price indivisible, plain- tiff might have recovered the value of the agistment of defendant's mare and foal. Per Jervis, C. J., and Williams, J. (e) only correct in principle and conformable to the analogies of the law, but is also sustained by authority. The remaining question is whether the good part of the contract before us can be separated from the bad, so that the plaintiff can enforce the part which is good on his general counts. And we are of opinion that, from the nature of the contract, this cannot be done. It is, in its nature, entire. The transporting of the coal apart from the sale of it, was of no benefit to the de- fendants, and could not have been con- templated by either party as a thing to be paid for, or to be done, except in con- nection with the sale. The good part of the contract cannot practically be severed from the bad and separately enforced." Cites Lea v. Barber, 2 Anst. 425, note. See Read v. Mather, 11 Cush. 1, 7; Noyes % Humphreys, 11 Gratt. 636 ; Thayer v. Rock, 13 Wend. 53. This was on an oral contract for sale of real and personal property, and, being void as to the realty, was held wholly void. Cited and fol- lowed in Harsha v. Reid, 45 N. Y. 420, and in De Beerski v. Paige, 36 N. Y. 537; Dock v. Hart, 7 W. & S. 172; Fuller v. Reed, 38 Cal. 99 ; Haynes v. Nice 100 Mass. 327 ; Warren v. Chapman, 105 Mass. 87. (e) See, also, Wood v. Benson, 2 Cr. & J. 95 ; and Astey v. Emery, 4 M. & S. 263; Cobbold v< Caston, 1 Bing. 399; 8 Moo. 456 PART II.] OF ACCEPTANCE AND EECEIPT. 159 CHAPTER IV. OF ACCEPTANCE AND EECEIPT. SECTION I. — ACCEPTANCE. SEC. General observations 139 American law the same 140 Acceptance of sample as part 141 Constructive acceptance 144 When buyer does an act of owner- ship 144 Dealing with bill of lading 147 Formation of contract distinct from performance 149 Acceptance may precede receipt 158 Acceptance after action brought 160 Carrier has no authority to accept... 161 Curtis v. Pugh reviewed 162 fcilence and delay as proofs of ac- ceptance 163 Marking the goods 166 Where part of the goods not in ex- istence 167 Where goods are of different kinds.. 168 Where the bargain is for sale and resale 169 SEC. Effect of proof of acceptance and re- ceipt...... 170 Acceptance after disaffirmance by vendor 171 SECTION II. — WHAT IS AN ACTUAL BECEIPT. When goods are already in buyer's possession 173 When goods are in possession of a third person 174 When goods are on premises of third persons not bailees 178 When goods are in possession of vendor 180 When goods are delivered to a com- mon carrier 181 Vendor may become bailee of pur- chaser 182 Actual receipt tested by loss of ven- dor's lien 187 OF THE CONSTRUCTION OF THE "WORDS "EXCEPT THE BUYER SHALL ACCEPT PART OF THE GOODS SO SOLD, AND ACTUALLY RECEIVE THE SAME. v § 138. Having considered the meaning of the words "no contract for the sale of any goods, wares, or merchandise for the price of £10 or upwards," so as to ascertain what contracts are within the seven- teenth section, the next step in the investigation is to inquire into the several conditions required by the law before such contracts " shall be allowed to be good." The language is that they shall not be allowed to be good " except — 1. "The buyer shall accept part of the goods so sold, and actually receive the same." 2. " Or give something in earnest to bind the bargain, or in part payment." 3. " Or that some note or memorandum in writing of the said bar- 160 FORMATION OF THE CONTRACT. [BOOK I. gain be made and signed by the parties to be charged by such eon- tract or their agents thereunto lawfully authorized." The first of these exceptions is the subject of the present chapter. SECTION 1. WHAT IS AN ACCEPTANCE. § 139. In commenting on this clause, Lord Blackburn makes the following remarks : — (a) "If we seek for the meaning of the enactment, judging merely General from its words, and without reference to decisions, it observations. see ms that this provision is not complied with, unless the two things concur: the buyer must accept, and he must actually re- ceive part of the goods ; and the contract will not be good unless he does both. And this is to be borne in mind, for as there may be an actual receipt without any acceptance, so there may be an acceptance without any receipt. In the absence of authority, and judging merely from the ordinary meaning of language, one would say that an accept- ance of part of the goods is an assent by the buyer, meant to be final, that this part of the goods is to be taken by him as his property under the contract, and as so far satisfying the contract. So long as the buyer can, without self-contradiction, declare that the goods are not to be taken in fulfillment of the contract, he has not accepted them. And it is immaterial whether his refusal to take the goods be reasonable or not. If he refuses the goods, assigning grounds false or frivolous, or assigning no reasons at all, it is still clear that he does not accept the goods, and the question is not whether he ought to ac- cept, but whether he has accepted them. The question of acceptance or not is a question as to what was the intention of the buyer, as signified by his outward acts." * (a) Blackburn on Sale 22, 23. ined the lumber piled on a public dock, 1. Some Act of the Buyer is Es- and made an offer for it. Plaintiff said : sential to Acceptance. Mere Words " The lumber is yours." Defendant then are not Enough. — The reports of the told plaintiff to get the inspector's bill Massachusetts Supreme Court, and of the and carry it to the agent of defendant, New York Court of Appeals, are particu- who would pay for it. The next day larly full on the subject discussed in this payment was refused, and suit was chapter, and the decisions are, in the brought and was sustained in the Su- main, harmonious with each other, and preme Court on the ground that there with the English decisions, as stated in had been such delivery and acceptance as the text. An often cited case is that of was practicable of ponderous articles. Shindler v. Houston, 1 N. Y. 261. This But the Court of Appeals reversed the was a sale of lumber Defendant exam- Supreme Court. Gardiner, J., said: PART II.] OF ACCEPTANCE AND BECEIPT. 161 § 1 40. " The receipt of part of the goods is the taking possession of them. When the seller gives to the buyer the actual control of " Mere words are not sufficient." Bron- son, J., said : " There was nothing but mere words, and the statute plainly re- quires something more ; it calls for acts. Per Cowen, J., in Archer v. Zeh, 5 Hill 205, ' Mere words of contract, unaccom- panied by any act, cannot amount to a de- livery. To hold otherwise would be re- pealing the statute.' " This case was fol- lowed in Kirby v. Johnson, 22 Mo. 354, 361, Ryland, J., quoting the words of Wright, J., as follows : " This delivery and acceptance can only be evinced by unequivocal acts, independent of the proof of the contract." See Harvey v. St. Louis Butchers', &c, Assoc, 39 Mo. 211. In Caulkins v. Hellman, 47 N. Y. 449, 452, wine was sold by parol, and sent by rail to the buyer, who, being dissatis- fied with it, refused to accept. Kapallo, J., said : " The receipt of the goods with- out acceptance is not sufficient. Some act or conduct on the part of the vendee, or his authorized agent, manifesting an intention to accept the goods as a per- formance of the contract, and to appro- priate them, is required to supply the place of a written contract." In Stone v. Browning, 68 N. Y. 601, the language of Blackburn, in the text, is quoted and approved. Rapallo, J., said : " It perhaps was not the intention of the plaintiffs that the defendants should have the option of rejecting the goods, unless some just reason for so doing should be developed upon the examination ; but, nevertheless, so long as the plaintiffs re- posed upon a verbal contract, void under the statute, they exposed themselves even to an unjust refusal to accept. The in- justice of the refusal, if it were unjust, could not supply the place of an accept- ance or of a written contract." See Stone v. Browning, 51 N. Y. 211 ; Brewster v. Taylor, 63 N. Y. 587. In Shepherd v. Pressey, 32 N. H. 57, it was claimed that oral agreements by the buyer subsequent to the sale, showed an acceptance by him. Bell, J., said : " There is in this case no direct evidence of any act of the defend- ant, from which an acceptance and actual receipt of the articles agreed for can be inferred, and the only evidence to be con- sidered is his declarations. As mere words constituting a part of the original contract do not constitute an acceptance, so we are of opinion that mere words afterwards used, looking to the future, to acts afterwards to be done by the pur- chaser towards carrying out the contract, do not constitute an acceptance or prove the actual receipt required by the statute." This language is quoted and approved in Cooke v. Millard, 65 N. Y. 352, 373. In Dole v. Stimpson, 21 Pick. 384, an engine on the premises of the vendor was sold, the seller saying, " You consider the en- gine yours," and the buyer assenting — Held, within the statute. In Knight v. Mann, 118 Mass. 143, the seller of a lot of calf skins prepared them for delivery, the buyer calling and ratifying orally what was done. Before removal by the buyer they were destroyed by fire. On suit for the price, Endicott, J., said : " When the seller has done all that is re- quired of him by the oral agreement, it is for the buyer to determine whether he will accept. He may refuse or neglect to do so ; he may do this unreasonably, as- signing insufficient reasons, or giving no reasons at all ; the question is not why he did not, or whether he ought to accept, but whether he did accept." Cites Ben- jamin on Sales, above section. See same case, 120 Mass. 219. Safford v. Mc- Donough, 120 Mass. 290, follows Knight v. Mann, and also holds that there is no acceptance and receipt while the vendor retains a lien for the price. Bodgers v. Jones, 129 Mass. 420, was like Knight v. Mann, a sale of calf skins, destroyed by 162 FORMATION OP THE CONTRACT. [BOOK I. the goods, and the buyer accepts such control, he has actually received them. Such a receipt is often evidence of an acceptance, but it is not the same thing ; indeed, the receipt by the buyer may be, and often is, for the express purpose of seeing whether he will accept or not. If goods of a particular description are ordered to be sent by a car- rier, the buyer must in every case receive the package to see whether it answers his order or not : it may even be reasonable to try part of the goods by using them; but though this is a very actual receipt, it is no acceptance so long as the buyer can consistently object to the goods as not answering his order. It follows from this that a receipt of goods by a carrier, or on board ship, though a sufficient delivery to the purchaser, is not an acceptance by him so as to bind the con- tract, for the carrier, if he be an agent to receive, is clearly not one to accept the goods." 2 fire before they left the premises of ven- dor, and it was held that there was no acceptance and receipt. See Phillips v. Hunnewell, 4 Me. 376 ; Doley v. Marks, Berton (N. B.) 316 ; Dullard v. Potts, 6 Allen (N. B.) 443; Carman v. Smick, 15 N. J. L. 352 ; Kellogg v. Witherhead, 6 N. Y. Sup. Ct. (T. & C.) 525 ; Brabin v. Hyde, 32 N. Y. 519 ; Hallenbeck v. Fran- cis, 20 Hun 416 ; Young v. Blaisdell, 60 Me. 272. Shindler v. Houston and Ben- jamin on Sales are quoted and followed in Bowers v. Anderson, 49"Ga. 143; Gor- ham v. Fisher, 30 Vt. 428. In Scotten v. Sutter, 37 Mich. 527, an oral sale of cigars of a certain class to be manufactured was made for $500, no specific goods being set apart, and some were sent to the buyer's store. The buyer said he would take them as soon as he could, that he was taking stock and had no time then, but as soon as he should need them he would send for them. Thereupon, they were taken back to the seller's store. Sub- sequently, the buyer sent for and received certain cigars of the same class included in the oral purchase, but without recog- nizing that purchase, and finally he re- fused to accept the whole. Cooley, C. J., said : " It is to be observed of this evi- dence (as to the part first sent) that it does not indicate an understanding that the goods were then accepted and taken, and merely left in plaintiff's hands for convenience, but rather a promise to send for them as the defendant should need them. Now if the first promise was in- valid because not in writing, the second promise, which was also not in writing, could be no better ; it would be invalid on the same grounds precisely as the first." It is not very clear why the court did not recognize the subsequent deliv- eries as acceptance and receipt of part. See \ 167, infra, and notes thereto. Per- haps the explanation is that the court did not find any evidence in the case that the subsequent acceptance of small lots was with reference to the oral contract. 2. The Acceptance must be Pur- suant to the Contract of Sale, and with Intent to Take Possession as Owner. — Shepherd v. Pressey, 32 N. H. 49, 55 ; Cunningham v. Ashbrook, 20 Mo, 553; Kirby v. Johnson. 22 Mo. 354, 361; Rickey v. Tenbroeck, 63 Mo. 563 ; Davis v. Eastman, 1 Allen 422. In Atherton u, Newhall, 123 Mass. 141, an oral sale of leather was made in Boston to a customer living in Lynn. A small part of it was taken by an expressman accustomed to transport the buyer's purchases, but with- PART II.] OF ACCEPTANCE AND RECEIPT. And this is also the law in the United States — Caul kins v. Hellman, 47 N. Y. 449. 163 American law the same. out any request in this instance, but be- fore it reached the buyer the remainder was destroyed in the great Boston fire. Immediately on receipt of the lot deliv- ered by the carrier, the buyer notified the vendor that he would pay only for the part received. Gray, C. J., said : " The acceptance by the buyer of the part brought by the expressman was not a sufficient acceptance to take the sale of the whole out of the statute, because it appears that it was not with an intention to perform the whole contract, and to as- sert the buyer's ownership under it, but, on the contrary, that he immediately in- formed the seller's clerk that he would be responsible only for the part received." Rodgers v. Jones, 129 Mass. 420. In Townsend v. Hargraves, 118 Mass. 333, Colt, J., said : " The acceptance which the statute requires to give validity to the contract must be with intention to perform the whole contract, and assert the buyer's ownership under it, but it is sufficient if it be of part of the goods only." And in that case the court held such .partial acceptance to bind the pur- chaser to pay for the whole, although the rest of the goods not accepted had been destroyed before the acceptance took place. This was on the theory that the statute affects the remedy only, and that the oral contract is valid from its date, although the acceptance is subsequent. See | 91, note. Van Woert v. Albany and Susquehanna R. R., 67 N. Y. 538, was an oral sale of one thousand cords of wood, of which part was delivered and paid for. Defendant refusing to receive the residue, suit was brought for breach. It was held that it was properly left to the jury to determine whether the de- liveries were made upon the contract. Garfield v. Paris, 96 U. S. 557, 566 ; Mo- Knight v, Dunlop, 5 N. Y. 537 ; Safford v. McDonough, 120 Mass. 290 ; Remick v. Sandford, 120 Mass. 309; Stone v. Browning, 68 N. Y. 598; Caulkins v. Hellman, 47 N. Y. 449 ; Marsh v. Rouse, 44 N. Y. 643. In Shindler v. Houston, 1 N. Y. 261, the facts of which are stated in the last note, Gardiner, J., said: "I am aware that there are cases in which it has been adj iidged that where the articles sold are ponderous, a. symbolical or con- structive delivery will be equivalent in its legal effect to an actual delivery. The delivery of a key of a warehouse in which goods sold are deposited, furnishes an example of this kind. But to aid the plaintiff an authority must be shown that a stipulation in the contract of sale for the delivery of the key, or other indicia of possession, will constitute -a, delivery and acceptance within the statute." And the court approves Phillips v. Bis- tolli, stated by our author in \ 142. In Wisconsin the law on this subject is stated in Bacon v. Eccles, 43 Wis. 227. The court was somewhat hampered by the previous decision of Smith v. Stoller, 26 Wis. 671, in which it was held that " where tea valued at more than $50 was sold by sample and a chest of it delivered to the buyer as in pursuance of the con- tract, which, after opening it, he under- took to return, it was not error to instruct the jury in substance that if he received the tea with intent to accept it in case it should agree with the sample, and if they found that it did in fact agree with the sample, then there was a complete ac- ceptance, and he was liable for the price." In Bacon v. Eccles, Lyon, J., said that Smith v. Stoller is " an advance," and that the court could go no farther without disregarding the language and purpose of the statute. " In this case it is mani- fest that plaintiffs received the sugar for the express purpose of seeing whether 164 FORMATION OF THE CONTRACT. [book § 141. The decisions upon the question what constitutes an accept- ance have been numerous. In a leading case, Hinde v. sample as part. Whitehouse, (6) where sugar had been sold by auction, Hinde v. the defendant, as highest bidder, had received the sample Whitehouse. of sugar knocked down to him, and it was proved that at such sales the samples were always delivered to the purchasers as part of their purchase to make up the quantity. This was held to be an they would accept or not, that they re- fused to accept, and that they did no act in respect to the sugar, inconsistent with the continued ownership of the defend- ants. And the plaintiffs having refused sugar delivered to them on an oral sale, brought suit for breach of contract to sell, but were held, by their own refusal to accept, to have prevented the contract from coming in force. In the New Jer- sey Court of Errors, (Matthiessen, &c, Co. v. McMahon, 38 N. J. L. 538,) Depue, J., said: "The judge charged the jury that a delivery, to validate a contract within the statute of frauds, must be a delivery under the contract and in pur- suance of it. This instruction was cor- rect. Delivery and acceptance of the goods sold, or some part of them, or part payment of the contract price, whether at the time of making the contract or sub- sequently, are the acts of part perform- ance which are prescribed by the statute as necessary to the validity of a contract of which no written evidence has been provided. To have this effect, the de- livery and acceptance or payment must obviously be referable to and be in part execution of the contract, which is thereby to be made valid." See Danforth v. Walker, 40 Vt. 257 ; Gibbs v. Benjamin, 45 Vt. "124 ; Kider v. Kelley, 32 Vt. 268 ; Brand v. Focht, 3 Keves 409 ; Gilman v. Hill, 36 N. H. 311. In Maine, Shindler v. Houston was cited and followed in Maxwell v. Brown, 39 Me. 98, and in Ed- wards v. Grand Trunk Railway Co., 48 Me. 379 ; same case, 54 Me. 105 ; Young v. Blaisdell, 60 Me. 272. In Maryland, the law is the same. Belt v. Marriott, 9 Gill 331 ; Jones v. Mechanics' Bank, 29 Md. 287, 293 ; Hewes ». Jordan, 39 Md. 472. Both Seller and Buyer must Ac- quiesce in Acceptance. — An interesting case illustrating the principle that both seller and buyer must acquiesce in accept- ance to constitute a valid contract, is that of Washington Ice Co. v. Webster, 62 Me. 341. An oral sale of four thousand tons of ice was made, but the seller, whose oral offer was accepted by telegraph, sent a written memorandum, signed by himself, slightly varying the previous terms, for signature by the buyer, and before it was signed sold his ice to another purchaser. The buyer replevied the ice. Appleton C. J., said : '' It is urged that the plain tiffs have accepted and received the ice To constitute an acceptance there must first, be a delivery by the seller with in tent to give possession of the goods to the purchaser. Here no act on the part of the defendant is shown indicating such intention in the slightest degree. The taking possession of the ice without or against his consent is not a receipt or acceptance binding him. The forcible seizure of properly sold, when the sale is void by the statute of frauds, cannot be deemed an acceptance or receipt, within its provisions. If it were so it would be to affirm judicially the rule that might makes right. Nor does the seizure of the ice by this writ of replevin, and a deliv- ery of the same by an officer to the plain- tiffs, constitute a statutory receipt, and an acceptance by the purchaser.'' (6) 7 East 558. PAHT II. J OF ACCEPTANCE AND RECEIPT. 165 acceptance of part of the goods sold, Lord Ellenborough saying, " Inasmuch as the half-pound sample of sugar out of each hogshead in this case is, by the terms and conditions of sale, so far treated as a part of the entire bulk to be delivered, that it is considered in the original weighing as constituting a part of the bulk actually weighed out to the buyer ; and to be allowed for specifically if he should chuse to have the commodity weighed ; I cannot but consider it as a part of the goods sold under the terms of the sale, accepted and actually re- ceived as such by the buyer. And although it be delivered partly alio intuitu, namely, as a sample of quality, it does not therefore prevent its operating to another consistent intent, also in pursuance of the pur- poses of the parties as expressed in the conditions of sale, namely, as a part delivery of the thing itself, as soon as in virtue of the bargain, the buyer should be entitled to retain, and should retain it accordingly." 3 § 142. In Phillips v. Bistolli, (e) where a purchaser of some jewelry at an auction sale held it in his hands a few minutes and p hmi p S „ tendered it back to the auctioneer, saying there had been BlstoUl - a mistake, the court set aside a verdict for plaintiff, and ordered a new trial, saying, "to satisfy the statute there must be a delivery of the goods by the vendor, with an intention of vesting the right of pos- session in the vendee ; and there must be an actual acceptance by the latter, with an intention of taking to the possession as owner." 3. Acceptance of Samples. — Ordi- are such in a case of any doubt, must be narily, taking samples cannot be consid- left to the jury. Garfield v. Paris, 96 U. ered as an acceptance to satisfy the statute S. 557, 565. In this case suit was brought of frauds. " If a symbolical delivery is for liquors bought in New York and sent relied on, it must appear to be a delivery to the buyers in Michigan. The defence by the vendor and an acceptance by the was that the acceptance took place, and vendee, with a view to change the pos- therefore the contract was made in Michi- session." Carver v. Lane, 4 E. D. Smith gan, and such sales were void under the 168, 170. " Where samples are treated liquor laws of that state. The plaintiffs by the parties as specimens only of the ■ relied on the fact that by the contract of goods sold, a delivery of them to the sale their copyrighted labels were to be buyer does not satisfy the statute.'' dial- furnished with the liquor, and were re- nters, J., in Moore v. Love, 57 Miss. 765, ceived and accepted by defendant in New 767, citing Benjamin on Sales, supra. And York, and the court held, on the author- he says that the burden of showing that ity of Hinde v. Whitehouse, cited in the samples are accepted as part of goods sold text, that the question was properly sub- is upon him who asserts it. If the goods mitted to the jury. accepted are a substantial part of those (c) 2 B. & C. 511. See, also, Klinitz v. sold, and are to be paid for as such, the Surrey, 5 Esp. 267. acceptance will suffice. Whether they 166 FORMATION OF THE CONTRACT. [BOOK I. § 143. In Gardner v. Grout, (d) after the sale agreed on, the buyer Gardner v. went to the vendor's warehouse and got samples of the Grout. goods sold, which he promised to pay for when he took away the bulk ; and the samples so taken were weighed and entered against him in the vendor's book. The vendor then refused to com- plete the sale, but held that there had been a part acceptance making the bargain complete. In this case the defendant cited Simonds v. Fisher, not reported, in simondsi) which Wightmau, J., had nonsuited the plaintiff, the facts Fisher. being that plaintiff showed defendant samples of wine which the latter agreed to buy, and after the bargain was concluded, the buyer asked for the samples and wrote on the labels the prices agreed on ; and this taking of the samples was relied on as a part ac- ceptance, so as to take the case out of the statute. But the court, in deciding Gardner v. Grout, distinguished it from Simonds v. Fisher, saying, " There the buyer never saw the bulk : the things handed to him really were mere samples, (e) But here the plaintiff receives part of the very things which he has already bought." So in Foster v. Frampton, (/) the drawing of samples by a vendee Foster v from hogsheads of sugar forwarded to him by the vendor, Frampton, when the sugar was in the carrier's warehouse at the place of destination, was held to be a taking possession of part of the goods, "a complete act of ownership" (per Littledale, J.,) putting an end to the vendor's right of stoppage in transitu. In Gilliat v. Roberts, (g) the defendant having purchased one hun- Giiiiati; ^red quarters of wheat, sent his servant for three sacks Eoberts. f j^ which were delivered, but the contract was for wheat " not to weigh less than nine and a half stone neat imperial measure, to be made up eighteen stone neat," and the sacks sent had not been tested according to imperial measure, nor had the wheat re- ceived the usual final dressing before delivery. On these facts, the defendant, who had not returned the three sacks, maintained that he had kept them under a new implied contract to pay for their value, and not as part of the one hundred bushels bought, with which the three sacks did not correspond in description. But held that there (d) 2 C. B. (N. S.) 340. See, also, 14, where the sample was not part of the Klinitz v. Surrey, 5 Esp. 267 ; Talver v. bulk. West, Holt 178. (/) 6B.&C. 107. (e) See, also, Cooper v. Elston, 7 T. R. (g) 19 L. J., Ex. 410. PART II.] OF ACCEPTANCE AND KECEJPT. 167 was but one contract, and that the buyer had actually received and accepted part of the goods sold, so as to take the case out of the statute. § 144. It is quite well settled that the acceptance of the goods, or part of them, as required by the statute, may be con- structive only, and that the question whether the facts J y e becon- proven amount to a constructive acceptance is one "of fact for the jury, not matter of law for the court." (h) fact, not of The acceptance must be clear and unequivocal, but " it is a question for the jury whether, under all the circumstances, the acts which the buyer does, or forbears to do, amount to an acceptance." (i) All the cases proceed on this principle. 4 (A) Per Denman, C. J., in Eden v. Dudfield, 1 Q. B. 302. (i) Per Coleridge, J., in Bushel v. "Wheeler, 15 Q. B. 442, quoted and ap- proved by Campbell, C. J., in Morton v. Tibbett, 15 Q. B. 428, and 19 L. J., Q. B. 382. See, also, Parker v. Wallis, 5 E. & B. 21. 4. Constructive Acceptance. — Brown v. Wade, 42 Iowa 647, is a case of con- structive acceptance by mere words, held sufficient as an oral sale of cattle. Day, J., said : " The evidence shows that the cattle were running out on the range. All that was necessary to complete the sale was that the right of dominion over them should be transferred from Brown to Davis. To this end it could not be necessary that Davis should take them into his manual custody, and drive them off the range, or remove them to another part of it. The interest and the con- venience of the purchaser required that the cattle should remain where they were, and he had a right to leave them there. It was only necessary that the cattle should be pointed out, that Brown should agree that Davis might have them in part pay for the land, and that Davis should agree to take them as such pay- ment where they were and as they were, and then the delivery was complete." This case does not accord with those set forth in note 1, supra. See, also, Shind- ler v. Houston, quoted in note 2. If the case is one where no acceptance is practi- cable, the remedy is easy — make part payment or write and sign the contract. In King v. Jarman, 35 Ark. 190, an oral sale was made by sample of cotton in a warehouse, and the seller gave the buyer a written order on the warehouseman. The buyer sent an agent with the order to the warehouse to have the "ticket changed," but, owing to the lateness of the hour, was told to wait till morning, and did not produce the order. During the night the cotton was burned. The warehouseman testified that he consid- ered the cotton to be the buyer's, having re- ceived notice from both parties. The court held that there was an acceptance. " Having the intention to accept, did he actually receive ? The statute has never been in this state, nor in England, con- strued to abolish the doctrine of symboli- cal delivery. With regard to bulky arti- cles, or those not immediately accessible, symbolical delivery, by something which may be proved in pais of a satisfactory nature, satisfies the reason and policy of the statute. In Gray v. Davis, 10 N. Y. 285, an oral sale was made of a stock of goods, of which the parties proceeded to make an inventory, on completing which, the buyer told the seller's clerk to take 168 FORMATION OF THE CONTRACT. [BOOK I. When buyer does an act of ownership. The constructive acceptance by the buyer may properly be inferred by the jury when he deals with the goods as owner, when he does an act which he would have authority to do as owner, but not otherwise. In the language of an emi- nent judge, (k) " if the vendee does any act to the goods, of wrong if he is not owner of the goods, and of right, if he is owner of the goods, the doing of that act is evidence that he has accepted them." 5 the keys for him from the vendor till the next morning. On the next morning the buyer repudiated the transaction. Suit was brought for not accepting. Gardi- ner, J., said : " I think the question of delivery should have been submitted to the jury. The plaintiff's clerk testifies that after the inventory of stock was taken, and it had been arranged that plaintiff should copy the bill of goods and hand it to defendant in the morning, he 'told the witness to give the keys of the store to the defendant ; Davis said he did not want to take them until morning ; that his rent did not commence until then, and he had no insurance ; Gray re- plied, "I will give you my policies of in- surance on the stock ;" Davis then told me to take the keys for him until morn- ing, and I took them, and we all left together.' " There is no doubt that Gray intended to give possession of the goods, and whether the defendant designed to accept them, by the direction above men- tioned, to Kenworthy to take the keys for him until morning, was a question for the jury." In Calkins v. Lockwood, 17 Conn. 154, 174, iron was sold by an oral con- tract, the seller saying : " I deliver this iron to you at that price." The iron being afterwards seized by the seller's creditor, the court held the sale valid, the delivery being all that the ponderous nature of tfce article sold made practica- ble. See Benford v. Schell, 55 Penna. 393 ; Atwell v. Miller, 6 Md. 10 ; Carter v. Willard, 19 Pick. 1, 9. Acceptance by one of two or more Joint Purchasers Binds All. — Vincent v. Germond, 11 Johns. 283; Field v. Punk, 22 N. J. L. 525 ; Smith v. Mini- ken, 7 Lans. 336. But see Chamberlin v. Dow, 10 Mich. 319, where it is held that a verbal contract by two jointly, within the statute, cannot be made effectual to bind both by a subsequent ratification by one only, having no authority from the other outside of the verbal contract. Ap- proved, Grimes v. Van Vechten, 20 Mich. 410. (k) Erie, J., in Parker v. Wallis, 5 E. & B. 21. 5. Acts of Ownership. — Garfield v. Paris, 96 U. S. 5-57 ; Pinkham v. Mattox, 53 N. H. 600 ; Stone v. Browning, 68 N. Y. 600 ; Dollard o. Potts, 6 Allen (N. B.) 443 ; Bacon v. Eccles, 43 Wis. 238. In Vincent v. Germond, 11 Johns. 283, cat- tle were sold to two purchasers by an oral sale, and left in the possession of vendor, to be called for. One of the buyers after- wards came and took them without com- munication with vendor. Held, an act of ownership which validated the contract as to both buyers. In Barkalow v. Pheif- fer, 38 Ind. 214, gravestones were or- dered, and when finished the buyer ap- proved them, and ordered the seller to set them up in a cemetery. After they had been set up he became dissatisfied and re- fused to pay the price. The court held that his approval expressed before and after the stones were set up was sufficient evidence of acceptance. Walker v. Boul- ton, 3 U. C. Q. B. (O. S.) 252, was a case where the buyer selected plate and di- rected his crest engraved on it, and that it should then be forwarded to his house, PART II.] OF ACCEPTANCE AND RECEIPT. 169 Thus, in Chaplin v. Rogers, (l) where the purchaser of a stack of hay resold part of it, and in Blenkinsop v. Clayton, (m) where the purchaser of a horse took a third person to the Rogers. vendor's stable, and offered to resell the horse to the third Blenkinsop ». ' Clayton. person at a profit, the buyer was held in both instances to which was done. Held, a sufficient accept- ance and receipt to satisfy the statute. In In re Safford & Downing, 2 Lowell 563, a buyer of leather left it on the premises of the vendor marked with the buyer's name, to be delivered when sent for by him. The goods were destroyed by fire. It was held that the buyer had lost his lien, the goods being sold on sixty days' credit, that there was acceptance when they were selected and marked, and that they were deliv- ered by putting them apart for the buyer, the seller thenceforth holding as bailee. Some stress was laid on the fact that the buyer wished the vendor to protect the goods by insurance. An acceptance of part coupled with a declaration at the time that the buyer will be responsible only for the part received, is not an ac- ceptance which will take the whole con- tract out of the statute. Atherton v. Newhall, 123 Mass. 141. In Townsend v. Hargraves, 118 Mass. 332, Colt, J., said that there was evidence that the warehouseman, in whose hands the goods sold were, after being notified of the sale, undertook at the buyer's request to deal with it for him. " Such an arrangement the jury may have found constituted a. sufficient acceptance and receipt." The act of ownership must be clear and un- equivocal. In Delventhal v. Jones, 53 Mo. 460, the buyer furnished sacks for oats bought, and they were filled with oats and delivered at a place agreed upon, but the buyer refused to receive them. It was held that there could be no recov- ery under the contract, the court saying that they would not "sanction such a latitudinous construction as would give rise to all the evils that the statute was enacted to prevent." Acceptance implied by Resale. — If the buyer resells all or part of the goods, this is such an unmistakable act of own- ership that it has often been held an ac- ceptance. Phillips v. Ocmulgee Mills, 55 Ga. 633 ; Marshall v. Ferguson, 23 Cal. 65, 69 ; Hill v. McDonald, 17 Wis. 97, 101. In this case Paine, J., said : " The defendants had the right to have the shingles inspected by their inspector be- fore they were obliged to accept them. But they might waive this right, and by selling them to other parties they did waive it and accepted them beyond any possibility of refusal." But a sale or offer for sale by the buyer of goods which he has not yet examined, will not amount to an acceptance, if, on examination, he rejects the goods. Jones v. Mechanics' Bank, 29 Md. 287, 297. And in Clark- son v. Noble, 2 U. C. Q. B, 361, which was a suit for the price of iron sold, Rob- inson, C. J., said : " There was nothing proved here at all equivalent to what was proved in the case cited of Chaplin v. Rogers, for there the vendee had actually 6old again part of the hay purchased by him, and his vendee had taken some of it away. Here, this defendant had done nothing more than offer to sell to a third party some of the iron which had been knocked down to him ; but the mere offer to sell has not been deemed such a deal- ing with the goods as constitutes an ac- ceptance. Smith v. Surman, 9 B. & C. 561." See Flintoft v. Elmore, 18 U. C. C. P. 274. (0 1 East 195. (m) 7 Taunt. 597. See, also, Lilly- white v. Devereux, 15 M. & W. 285, and Baines v. Jevons, 7 C. & P. 288. 170 FORMATION OF THE CONTRACT. [BOOK I. have done an act inconsistent with the continuace of a right of prop- erty in his vendor, and to have accepted within the meaning of the statute. § 145. In Beaumont v. Brengeri, (n) where the defendant bought a Beamonto. carriage from plaintiff, and ordered certain alterations Brengen made, and then sent for the carriage and took a drive in it, after telling plaintiff that he intended to take it out a few times so as to make it pass for a second-hand carriage on exportation, held, that the defendant had thereby assumed to deal with it as his own, had accepted it, and could not refuse to take it, although it had been sent back and left in the plaintiff's shop. But in Maberley v. Sheppard, (o) the action was for goods sold and Maberiy v. delivered, and it was proven that the defendant ordered a sheppard. wagon to be made for him by plaintiff, and during the progress of the work furnished the iron work and sent it to plaintiff, and sent a man to help plaintiff in fitting the iron to the wagon, and afterwards bought a tilt, and sent it to the plaintiff to be put on the wagon. It was insisted by plaintiff that the defendant had thereby exercised such dominion over the goods sold as amounted to accept- ance. The court took time to consider, and Tindal, C. J., delivered the decision that the plaintiff had been rightly nonsuited, because the acts of the defendant had not been done after the wagon was finished and capable of delivery, but merely while it was in progress ; so that it still remained in plaintiff's yard for further work till it was finished. " If the wagon had been completed and ready for delivery, and the defendant had then sent a workman of his own to perform any addi- tional work upon it, such conduct on the part of the defendant might have amounted to an acceptance." § 146. In Parker v. Wallis, (p) the defendants received some turnip- Parker v see( l ur >der a verbal contract of sale, but sent word at once waiiis. to plaintiff that it was " out of condition ;" this was de- nied by plaintiff, who refused to receive it back. The defendants then took the seed out of the bags, and laid it out thin, alleging that it was hot and mouldy, and that plaintiff had given them authority to do so ; both these facts were denied by plaintiff. Plaintiff was nonsuited by Wightman J., and leave reserved to enter a verdict for £140, the price of the seed, if the evidence sufficed to show acceptance and (m) 5 C. B. 301. ( p) 5 E. & B. 21. (o) 10 Bing. 99. PART H.] OF ACCEPTANCE AND EECEIPT. 171 actual receipt of any part of the goods. The court made the rule ab- solute for a new trial, but refused to enter verdict for plaintiff. Held, that the act of taking the seed out of the bags was susceptible of various constructions. It might have been because the seed was hot, or because the plaintiff had authorized it. But, as the evidence stood, when the nonsuit was ordered, these were not the facts. There re- mained a third construction, namely, that spreading out the seed was an act of ownership, a wrongful act, if the defendants had not ac- cepted as owners. This was a question for the jury. In Kent v. Huskisson, (q) there was an actual receipt, but no ac- ceptance. The buyer gave an order for sponge, at lis. Kent „ per pound. On arrival of the package it was examined, Hu9klsson - and judged to be worth not more than 6s. per pound. He at once returned it by the same carrier. Held, no acceptance. § 147. A dealing with goods, so as to justify a jury in finding a constructive acceptance, may take place as effectively with Dea]ing with the bill of lading, which represents the goods, as with the bm of ladi " e - goods themselves, (r) 6 § 148. Very deliberate consideration was given to the whole subject by the Queen's Beuch, in the important case of Morton Morton ,, v. Tibbett. (s) The facts were that on the 25th of August, Tibbett - defendant made a verbal agreement with plaintiff for the purchase of fifty quarters of wheat according to sample, each quarter to be of a certain specified weight. Defendant, by agreement, sent a general car- rier next morning to a place named, and the wheat was then and there received on board of one of the carrier's lighters, for conveyance by canal to Wisbeach, where it arrived on the 28th. In the meantime, on the 26th, the defendant resold the wheat by the same sample, and on the understanding that it was to be of the same weight per quarter as had been agreed with plaintiff, and the wheat upon arrival was ex- amined and weighed by the second purchaser and rejected, because found to be of short weight. Defendant thereupon wrote to plaintiff on the 30th, also rejecting the wheat for short weight. The wheat remained in possession of the carrier, who had received it without its (>/) 3 B. &. P. 233. Garfield v. Paris, 96 U. S. 557, 563 ; (r) Currie v. Anderson, 29 L. J., Q. B. Adoue v. Seeligson, 54 Tex. 593 ; Quin- 87, and 2 E. & E. 592 ; Meredith v. tard v. Bacon, 99 Mass. 185 ; Frostburg, Meigh, 22 L. X, Q. B. 401, and 2 E. & B. Ac, Co. v. N. E. Glass Co., 9 Cush. 118. 364. (s) 19 L. J., Q. B. 382, and 15 Q. B. 6. Rodgers ». Phillips, 40 N. Y. 519 ; 428. ' 172 FORMATION OF THE CONTRACT. [BOOK I. being weighed, and neither defendant, nor any one in his behalf, had seen it weighed. The action was debt for goods sold and delivered, and goods bargained and sold. Verdict for plaintiff, with leave re- served to move for nonsuit. The judgment of the court was unani- mous after taking time for consideration, the point for decision being whether the verdict was justified by any evidence that defendant had accepted the goods, and actually received the same, so as to render him liable as buyer. Lord Campbell said that it would be very difficult to reconcile the cases on the subject, and that the exact words of the 17th section had not always* been kept in recollection. After referring to the language, he added : " The acceptance is to be something which is to precede, or at any rate to be contemporaneous with, the actual receipt of the goods ; and is not to be a subsequent act after the goods have been actually received, weighed, measured, or examined. As the act of parliament expressly makes the acceptance and actual receipt of any part of the goods sold sufficient, it must be open to the buyer to ob- ject, at all events, to the quantity and quality of the residue; and even where the sale is by sample, that the residue offered does not cor- respond with the sample." His Lordship then continued, by announc- ing that: "We are of opinion that there may be an acceptance and receipt within the meaning of the act without the buyer having examined the goods, or done anything to preclude him from contend- ing that they do not correspond with the contract. The acceptance to let in parol evidence of the contract appears to us to be a different ac- ceptance from that which affords conclusive evidence of the contract hav- ing been fulfilled." 7 7. In Garfield v. Paris, 96 U. S. 557, dum, but the same statute concedes that 562, stated in note 3, supra, it was argued the party becomes liable for the whole by counsel for the buyer that the mere amount of the goods if he accepts and receipt of labels for liquor bought, was receives part." Therefore, he says, the not a part acceptance, because it could not contract may be held good by part ac- prevent the buyer from rejecting the liquor ceptance however small though it does if, when received, it proved inferior to the not preclude the purchaser from refusing stipulated quality. Justice Clifford said : the residue of the goods if they do not " Authorities, almost numberless, hold accord with the contract. In Remick v. that there is a hroad distinction between Sandford, 120 Mass. 309, 316, Devens, J., the principles applicable to the formation said: "There may, undoubtedly, be an of the contract and those applicable to acceptance which will not afford condu- its performance, which appears with suffi- sive evidence that the contract has been cient clearness from the language of the fulfilled and its terms complied with, and statute. There must be some memoran- which will yet satisfy the statute and let PART II. J OF ACCEPTANCE AND RECEIPT. 173 § 149. The distinction pointed out in this last clause is important, and should not be lost sight of. The question presented , T . Distinction be- tO the court may be, whether there was a contract, or it tweenforma- 111, i • tlon an< * per * may be whether the contract was fulfilled. It is sufficient formance of J the contract. to show an acceptance and actual receipt of a part, how- ever small, of the thing sold (as, for instance, the half-pound of sugar, in Hinde v. Whitehouse), (t) in order that the contract may " be al- lowed to be good ;" and yet the purchaser may well refuse to accept the delivery of the bulk, not because there is not a valid contract proven, but because the vendor fails to comply with the contract as proven. The decision of Lord Campbell then closed with declaring : " We are therefore of opinion that although the defendant had done nothing which would have precluded him from objecting that the wheat de- livered to the carrier was not according to the contract, there was evi- dence to justify the jury in finding that the defendant accepted and received it." § 150. There was very plain evidence that the defendant received it, but the only proof of acceptance was the fact of the resale before examination. The decision, therefore, goes no farther, it would seem, than to determine that this was such an exercise of dominion over goods bought as is inconsistent with a continuance of the right of property in the vendor, and therefore evidence to justify a jury in finding accceptanee as well as actual receipt by the buyer. Bemarks of Martin, B., in Hunt v. Hecht, (u) declared that this was j^^on the whole scope of the decision ; and again, in Coombs v. T^eu,."' in evidence of those terms which other- of the goods when offered in fulfillment wise could only be proved by writing. If of the contract, to object that they are not the buyer accepts the goods as those such, in quantity and quality, as the con- which he purchased, he may afterwards tract requires." But, except with this reject them, if they are not what they qualification, he demurs to the dictum of were warranted to be, but the statute is Lord Campbell, in Morton v. Tibbett, satisfied." See McMaster v. Gordon, 20 that there may be an acceptance and re- U. C. C. P. 16; Pinkham u. Mattox, 53 ceipt without the purchaser having done N. H. 600. In Hewes v. Jordan, 39 Md. anything to preclude him from contend- 472, 483, Alvey, J., said: "The effect of ing that the goods actually received do the acceptance and actual receipt of part not correspond with the contract. See of the goods, however small, is to prove Bacon v. Eccles, 43 Wis. 227, 236. the contract of sale, and it is not incon- (() 7 East 558. sistent with this that the vendee should (it) 8 Ex. 814. Lave the right with respect to the residue 174 FORMATION OF THE CONTRACT. [BOOK I. Bristol and Exeter Railway Company, (x) expressed his dissent from the principles maintained in the opinion pronounced by Lord Campbell. In Castle v. Sworder, (y) Cockburn, Cockburn ^ - ^ •> sa '^ : " ■"■* mus * ; n °t be assumed that I assent to ^ J the decision in Morton v. Tibbett." § 151. On the other hand, Blackburn, J., in delivering the opinion of the court in Cusack v. Robinson, (z) on the 25th of Bla«kbum, J. , May, 1861, just ten days after this oDservation of the Chief Justice in Castle v. Sworder, cites Morton v. Tibbett as author- ity for the proposition — " that the acceptance is to be something which is to precede, or at any rate to be contemporaneous with, the actual receipt of the goods, and is not to be a subsequent act, after the goods have been actually received, weighed, measured, or examined." The court, on this occasion, was composed of ooly two judges, Blackburn and Hill, JJ. In the same court, in February, 1860, Crompton, J., crom ton j nac ^ stated, in the case of Currie v. Anderson, (a) " that before the case of Morton v. Tibbett, there was authority for saying that there could have been no acceptance and receipt within the statute of frauds until the vendee had been placed in such con- nection with the goods that he could not object to them on account of their quantity and quality; and in that case Lord Campbell says, if that is the law, it would be decisive against the plaintiff, but after a careful review of the cases, the court came to the conclusion (which, in this court, must be considered to be the law of the land), that in order to make an acceptance and receipt within the statute of frauds, it is not necessary that the vendee should have done anything to preclude himself from objecting to the goods. That was the decision in Morton v. Tibbett, and from the discussion to-day, I have more reason than ever to be satisfied with it." It is fair to assume from the foregoing review, that, notwithstand- ing the observation of Cockburn, C. J., in Castle v. Sworder, the law is considered to be settled in the Court of Queen's Bench in con- formity with the decision in Morton v. Tibbett, and that the authority of that case remains unshaken in that court. § 152. In the Exchequer, however, the leaning of the judges is evidently adverse to the construction placed in the Queen's Bench (x) 3 H. & N. 510 ; 27 L. J., Ex. 401. 261. (y) 6 H. & N 832; 30 L. J., Ex. 310. (o) 2 E. & E. 592; 29 L. J., Q. B. 87. (*) 1 B. & S. 299, and 30 L. J., Q. B. PAKT II.] OF ACCEPTANCE AND KECEIPT. .175 upon this clause of the statute, though in no case has there been a de- cided rejection of the authority of Morton v. Tibbett. Hunt v. Hecht (b) was decided in 1853, and, therefore, prior to the more recent cases in which the judges of the Queen's _ . . n , .,..„, , Hunt v. Hecht. .Bench showed what was, in the opinion of that court, the full extent of the decision in Morton v. Tibbett. The facts were, that a number of bags of bone were sent by defendant's order to his wharfinger, in compliance with a verbal contract with plaintiff. The defendant went to plaintiff's warehouse, and there inspected a heap of ox bones mixed with others inferior in quality. Defendant ob- jected to the latter, but verbally agreed to purchase a quantity of the others, to be separated from the rest, and ordered them to be sent to his wharfinger. The bags were received on the 9th, and examined next day by the defendant, as soon as he heard of their being sent to the wharf, and he at once refused to accept them. Held, no accept- ance. All the judges put the case on the ground of the goods sold having been mixed in bulk with others, so that no acceptance was pos- sible till after separation, and there was no pretence that there had been an acceptance after separation, otherwise than by the wharfinger's receipt, which was insufficient for that purpose, but Martin, B., said : " There are various authorities to show that for the purpose of an ac- ceptance within the statute, the vendee must have had the opportunity of exercising his judgment with respect to the articles sent. Morton v. Tibbett has been cited as an authority to the contrary, but in reality that case decides no more than this, that where the purchaser of goods takes upon himself to exercise dominion over them, and deals with them in a manner inconsistent with the right of property being in the vendor, that is evidence to justify the jury in finding that the vendee has accepted the goods, and actually received the same. The court, indeed, there say that there may be an acceptance and receipt within the statute, although the vendee has had no opportunity of examin- ing the goods, and although he has done nothing to preclude himself from objecting that they do not correspond with the contract. But in my opinion, an acceptance, to satisfy the statute, must be something more than a mere receipt ; it means some act done, after the vendee has exercised, or had the means of exercising, his right of rejection." § 153. In the case of Coombs v. The Bristol and Exeter Railway (6) 8 Ex. 814; 22 L. J., Ex. 293. 176 FORMATION OF THE CONTRACT. [BOOK I. Coombs v. Company, (c) decided in 1858, the same court had occa- IxetoEaii- sion to review the subject, and Pollock, C. B., said that way Company. Hunt p> Hech( . ha( j decided « that the vendee shou j d haye an opportunity of rejecting the goods. The statute requires not only delivery but acceptance." Martin, B., said, " No doubt in Morton v. Tibbett the Court of Queen's Bench carried out the principle of con- structive acceptance to an extent which in that case was correct : but I adhere to that which I said in Hunt v. Hecht, that much that was there said is doubtful, and that acceptance, to satisfy the statute, must be after the opportunity of exercising an option, or after the doing of some act waiving it." Bramwell, B., said without qualification, " The cases establish that there can be no acceptance where there has been no opportunity of rejecting." Watson, B., concurred. § 154. The subject of acceptance under the statute again arose in smithu Smith v. Hudson, (d) decided in the Queen's Bench in Hudson. Easter Term, 1865. All the cases were reviewed by able counsel, and commented on by the judges in the course of the argument. The plaintiffs were assignees of Willden, a bankrupt. The defendant, on the 3d of November, 1863, sold to Willden by ver- bal contract a quantity of barley, according to sample. The bulk was conveyed by the vendor in his own wagons to the railway station, on the 7th of November, and he gave orders to convey and deliver it to the purchaser. It was admitted that by the custom of the trade the purchaser, notwithstanding the delivery of the bulk at the station, had the power of rejecting the goods if found not equal to sample. On the 9th of November Willden was adjudicated a bankrupt on his own petition, without having given any orders or directions about the barley, which still remained at the railway station, nor had he ex- amined it or given any notice whether he accepted or declined it. Nothing had been paid on account of the price, and on the 11th of November the vendor gave notice to the railway company not to de- liver the goods to any one but himself. The corn was given up to the vendor by the company, and the assignees of Willden claimed it as the property of the bankrupt. On the question whether there had been an acceptance under the statute of frauds, held by all the judges, Cockburn, C. J., Blackburn, Mellor, and Shee, JJ., that the contract could not be allowed to be good. The Chief Justice held Hunt v. Hecht to be binding on the court as an authority, that where the (c) 3 H. & N. 510 ; 27 L. J., Ex. 401. (d) 6B.&S. 431 ; 34 L. J., Q. B. 145. PART II.] OF ACCEPTANCE AND RECEIPT. 177 buyer has a right to inspect the articles sold to see whether they are in accordance with the contract, there is no acceptance till he has time to make the inspection. Blackburn, J., said, " There must be both acceptance and receipt to bind both purchaser and vendor under the statute." And in all the opinions it was held that the countermand of the vendor before the goods had been delivered according to his order, and before acceptance, put an end to the contract, and deprived the assignees of the power to accept, on behalf of the bankrupt. § 155. [The authority of Morton v. Tibbett was fully recognized, and its principle adopted by the Court of Appeal in the Kibble „ case of Kibble v. Gough, decided* in 1878. (e) The plain- Goueh - tiff verbally agreed to sell barley to the defendant, the same to be well dressed and equal to sample. In the defendant's absence his foreman received the barley, which was delivered in several installments, ex- amined it, and gave a receipt for each installment, with the words, " not equal to sample." The defendant afterwards personally ex- amined the barley, and rejected it on the ground that it was not prop- erly dressed and not equal to sample. In an action for goods sold and delivered the jury found, in answer to questions left to them by Pollock, B., at the trial : 1st, that there was an acceptance by the defendant of part of the barley ; and 2dly, that the barley was equal to sample and properly dressed. Upon the argument of a rule for a new trial, obtained on the ground of mis- direction, and that the verdict was against the weight of evidence, it was argued for the defendant that there was misdirection on the part of the judge in holding that there was any evidence to go to the jury of acceptance under the statute of frauds, upon the ground apparently (/) that the defendant's foreman having given a receipt with the words " not equal to sample " upon it, could not be held to have accepted it within the meaning of the statute, and that the ques- tion, therefore, whether it was equal to sample or not, never arose, because there was no valid contract between the parties. The authority of Morton v. Tibbett was attacked, but all the Lords Justices (Bram- well, Brett, and Cotton) referred with approval to the principle there laid down, and held that there was evidence for the jury of an accept- ance sufficient to satisfy the statute. That being so, the question (e) 38 L. T. (N. S.) 204. See, also, another point. Grimoldby v. Wells, L. R., 10 C. P. 391, (/) The report is somewhat involved, where, however, the decision turned upon M 178 FORMATION OF THE CONTRACT. [BOOK I. whether the barley was equal to sample or not was clearly one for the jury to decide, and they had answered it in favor of the plaintiff. Lord Justice Brett refers in these terms to the acceptance necessary under the statute : " There must be an acceptance and an actual re- ceipt ; no absolute acceptance but an acceptance which could not have been made except on admission of the contract, and that the goods were sent under it. I am of opinion there was a sufficient acceptance under the statute of frauds, although there was (still) a power of rejection." And then, after reviewing the cases and referring with approval to Morton v. Tibbett, he adds : " The goods then were sold by valid con- tract, actually delivered and received, and after this the vendee objects to them. If they had not been equal to the sample, I say that it was not even then too late to object ; but they were equal to sample and they were (properly) dressed." And Cotton, L. J., says, "All that is wanted is a receipt, and such an acceptance of the goods as shows that it has regard to the contract : but the contract may yet be left open to objection." 8 § 156. In Bickard v. Moore, (g) decided in the same year, the plain- Riekardti tiff verbally sold by sample to the defendant six bales of Moore. wool. The goods were sent off by the plaintiff, and de- livered at a railway station, and were received there and taken home by the defendant, who then unpacked the wool, and wrote the same day to the plaintiff that two bales were inferior to sample, asking what was to be done in the matter. Plaintiff replied denying that the bales were not equal to sample. The defendant was away from home when this letter arrived. Four days afterwards he returned home, and after reading the plaintiff's letter sent the goods back to the railway station, and telegraphed to the plaintiff rejecting them. During these four days the defendant admitted that he had offered the goods for sale in the market, stating, however, that he had not ac- cepted them, and that he would have to make other arrangements before he could sell. In an action for goods sold and delivered the defendant (inter alia) pleaded, first, that there was no acceptance or actual receipt to take the case out of the statute of frauds ; and, sec- ondly, that he had properly rejected the goods as not equal to sample. The jury found at the trial that two of the bales were not equal to sam- ple, and Hawkins, J., thereupon directed a verdict, and gave judg- 8. That the acceptance must be with (g) 38 L. T. (>\ S.) 841, C. A. regard to the contract, see note 2, supra. PAET II. J OF ACCEPTANCE AND EECEIPT. 179" ment for the defendant. On appeal, Bramwell, L. J., held both, points in the defendant's favor, distinguishing Kibble v. Gough upon the question of acceptance within the statute of frauds, .upon the. ground that in that case the jury had found that there was in fact an acceptance of the goods by the defendant, and that there was evidence to justify that finding. In this judgment Baggallay, L. J., concurred. Thesiger, L. J., while not differing from the judgment of Bramwell, L. J., preferred to rest his judgment upon the second point taken, viz., that whether or not there was an acceptance to satisfy the statute, the defendant had done nothing to waive his right to reject the goods as not equal to sample, and the jury had found as a fact that the goods were not equal to sample. Morton v. Tibbett, though cited in the argument, is not directly referred to in the judgments, but it is quite clear from what was said by Bramwell and Thesiger, L. JJ., that both recognized and adopted the distinction between an accept- ance such as would satisfy the statute of frauds, in other words a con- ditional acceptance, and an acceptance of the goods as equal to sample.] § 157. The case of Smith v. Hudson, (h) already referred to, ante % 154, is worthy of note, also, on another ground. It Acceptance clearly recognizes and maintains the long-established doc- receipt'"?! trine that the acceptance and actual receipt are distinct dl8tmot - things, both of which are essential to the validity of the contract. This would seem sufficiently clear from the language of the statute, but on more than one occasion remarks had been made by eminent judges suggesting doubt upon the question. Thus, in Castle v. Sworder, (i) Crompton, J., said, " I have sometimes doubted whether there is much distinction between receipt and acceptance ;" and Cock- burn, C. J., said, " I think those terms (i. e., acceptance and receipt) are equivalent." In Marvin v. Wallace, (j) also, Erie, J., said, ac- cording to one report, " I believe that the party who inserted the words had no idea what he meant by acceptance. That opinion I found on the everlasting discussion which has gone on, as if possession according to law could mean only manual prehension." It is prob- able, however, both from the context and from the point in dispute, that his Lordship is more correctly represented in another report, as saying, "I believe that the persons who framed the statute, and in- (h) 5 B. & S. 431 ; 34 L. J., Q. B. 145. (j) 6 E. & B. 726 ; 25 L. J., Q. B. 369. (i) 6 H. & N. 832; 30 L. J., Ex. 310. 180 FORMATION OF THE CONTRACT. [BOOK I. serted the words ' actually received the same,' had no clear idea of their meaning," &c. It may confidently be assumed, however, that the construction which attributes distinct meanings to the two expres- sions, " acceptance " and " actual receipt," is now too firmly settled to be treated as an open question, and this is plainly to be inferred from the opinions delivered in Smith v. Hudson. 9 § 158. Acceptance by the vendee may be prior to the actual receipt of the goods, as for instance, when he has inspected and Acceptance t x may precede approved the specific goods at or before the time of pur- chasing. 10 Thus, in Cusack v. Robinson, (I) where the buyer was shown a lot of one hundred and fifty-six firkins of butter, in the vendor's cellar, and had the opportunity of inspect- ing as many of them as he pleased, and did in fact open and inspect six of the firkins, and then agreed to buy them, and the Cusack v. Robinson 9. In Cooke v. Millard, 65 N. Y. 368, the court says of these remarks of Cromp- ton, J., and Cockburn, C. J. : " These re- marks cannot be regarded as of any weight, being contrary to the decided current of authority." See Stone v. Browning, 68 N. Y. 598 ; Cross i>. O'Don- nell, 44 N. Y. 661. 10. Acceptance may precede Receipt. —Cross v. O'Donnel), 44 N. Y. 661 ; Gar- field v. Paris, 96 U. S. 566 ; Ex parte Safford, Ee Downing, 2 Low. 563 ; Hewes v. Jordan, 39 Md. 472, 484; Byassee v. Beese, 4 Mete. (Ky.) 372; Jackson v. Watts, 1 McCord 288. In United States Beflector Co. v. Eushton, 7 Daly 410, plaintiffs clerk testified that he sold de- fendant four reflectors for $150, to be paid as soon as put up, and that they were delivered and not paid for. Both parties rested and both claimed judgment, the defendant on the ground that there was no evidence of acceptance. Daly, C. J., said that the purchase being of specific articles which defendant saw, ac- ceptance would be presumed before re- ceipt. " If a man goes into a store and selects an article of furniture at a price which he agrees to pay when it is deliv- ered, and the proof is that that particular article is delivered, it is, in the absence of evidence of any objection on his part, to be assumed that there was both a de- livery and acceptance within the mean- ing of the statute/' A case very similar to Cusack v. Eobinson, stated in the text, supra, is Heermance v. Taylor, 14 Hun 149. The plaintiff offered the defendant butter out of a lot of forty firkins in plaintiff's store in New York, for a certain price per pound. The buyer tried sev- eral firkins and then said he would take twenty ; and those tried with enough more to make twenty were sent to him at Albany and placed in his cellar. He offered them for sale soon after and then examined them, and being dissatisfied shipped them back to New York. The court held that there was no acceptance. The only circumstance to distinguish this case from that of Cusack v. Eobinson is that in the latter case the whole lot offered for examination was purchased, while in Heermance v. Taylor the seller selected twenty out of a lot of forty. But as the buyer authorized the seller to make this selection, and the seller did make it, the difference seems an imma- (l) 1 B. & S. 299 ; 30 L. J., Q. B. 261. PART II.] OF ACCEPTANCE AND RECEIPT. 181 goods were then forwarded to the purchaser by a carrier according to his directions; it was held that there was sufficient evidence to justify the jury in finding an acceptance, and that the acceptance before the bargain was concluded, was a compliance with the statute. This ques- tion was raised, but not decided, in Saunders v. Topp, (m) which is referred to by Blackburn, J., in delivering the opinion of the court in Cusack v. Robinson. § 159. In deciding Cusack v. Robinson, the court distinguished it from Nicholson v. Bower, (n) because in the latter case Nicllolslin „. there had been no specific goods selected and fixed on in Bower - advance. Bower had made a verbal sale of about one hundred and forty quarters of wheat, by sample, to be delivered by rail in London. The wheat was received at the London depot, and warehoused by the railway company, and the purchasers sent a carman to get a sample, and after inspecting it, told him not to cart the wheat home at pres- ent. The purchasers were really in insolvent circumstances, and im- mediately after the interview with the carman determined to stop pay- ment, and they therefore thought it would be dishonest to receive the wheat, although equal to sample, when they knew they could not pay for it. All the judges held, that there had been no acceptance in fact, and the assignees of the purchasers were not allowed to retain a ver- dict in their favor. In Saunders v. Topp, (o) the defendant had selected forty-five couple of ewes and lambs at the plaintiff's farm, and ordered Saunders „ them to be sent to his own farm, where they were received Topp - by his agent. He then ordered them to be sent to another place, where he saw them and counted them over, and said, " it is all right." The court declined to decide whether the previous selection was equiva- lent to an acceptance (a point subsequently decided in the affirmative in Cusack v. Robinson, ut supra,) but held that the subsequent action of the defendant was sufficient to justify the jury in finding an ac- ceptance after delivery. § 160. In one case, (p) Maule, J., seems to have been strongly of terial one. Apparently the possibility of the case of Cross v. O'Donnell, swpra. acceptance before receipt was not pre- (m) 4 Ex. 390. sented to or considered by the court, and (n) 1 E. & E. 172 ; 28 L. J., Q. B. 97. it seems probable that a different judg- (o) 4 Ex. 390. ment would have been rendered if the (p) Fricker v. Tomlinson, 1 M. & G, attention of the court had been called to 772. 182 FORMATION OP THE CONTRACT. [BOOK I. opinion that it was sufficient to prove acceptance of part Acceptance x L *■ * after action of the goods by the buyer, after action brought, but the court declined to decide the point without further argu- ment, and the case was settled. All the recent authorities are adverse to this dictum, which rested upon the assumption that the fact of ac- ceptance was a mere question of evidence, whereas the statute makes- it essential to the validity of the contract in a court of justice. The report of the case shows that the judges had not the language of the statute before them. The point is also ruled adversely to this opinion of Maule, J., in Bill v. Bament. (q) H § 161. It is settled that the receipt of goods by a carrier or whar- finger appointed by the purchaser does not constitute an acceptance, these ager>ts having authority only to receive, Carrier has no authority to accept. not to accept the goods for their employers, (r) 12 (g) 9 M. & W. 36. 11. In Townsend v. Hargraves, 118 Mass. 336, Colt, J., arguing that an oral sale is always valid, the statute only bar- ring the remedy, said : " Except that the statute provides that no action shall be brought, there would be no good reason to hold that a memorandum signed, or an act of acceptance proved, at any time before the trial, would not be sufficient." An Acceptance need not be Cotem- poraneous with the Sale. — This is taken for granted in the English cases, but the question has been often raised in America, probably because the statute of frauds in several states requires that part payment must be at the time of the sale, and it has been supposed that the courts might extend the principle to acceptance of part. See Seymour v. Davis, 2 Sandf. S. G. 239. But all the recent decisions hold that the acceptance may be subsequent to the sale, and that the length of time that inter- venes makes no difference, provided it appears satisfactorily that both parties act with intent to execute the oral con- tract. Sprague v. Blake, 20 Wend. 63, followed in Bickey v. Tenbroeck, 63 Mo. 563, 569, and Sale i>. Darragb, 2 Hilt. 184 ; McKnight v, Dunlop, 5 N. Y. 544. In this case Paige, J., said : " The oral contract may be considered good as a proposition ; and the subsequent delivery and acceptance of the whole or a part of the goods as an acceptance of the propo- sition, and the final conclusion of a valid agreement." (This it must be observed is said relative to the New York act, which makes the contract void, unless there is acceptance ; in Massachusetts the contract upon acceptance takes effect from the time of the oral sale, from which date the buyer takes the risk of loss of the goods. See Townsend v. Har- graves, supra.) See Van Woert v. Albany & S. B. E., 67 N. Y. 538 ; Field v. Bunk, 22 N. J. L. 525, 530 ; Matthiessen, &c, Co. v. McMahon, 38 Id. 536, 538 ; Damon v. Osborne, 1 Pick. 481 ; Marsh v. Hyde, 3 Gray 331 ; Davis v. Moore, 13 Me. 424,. 427; Bush v. Holmes, 53 Id. 417; Mc- Carthy v. Nash, 14 Minn. 127, 131 ; Phil- lips v. Ocmulgee Mills, 55 Ga. 633 ; Buck- ingham v. Osborne, 44 Conn. 133, 139 ; Anson v. Dreher, 35 Wis. 615, 618. ()■) Astey v. Emery, 4 M. & S. 262 ; Hanson v. Armitage, 5 B. & Aid. 557 ; Johnson v. Dodgson, 2 M. & W. 656 - r 12. The Receipt of Goods by a Buyer. — As to receipt by a carrier, see § Carrier is not an Acceptance by the 181, infra. Story, in his treatise on Sales, PART II.] OF ACCEPTANCE AND RECEIPT. 183 § 162. Among the numerous cases in which the courts have set aside verdicts on the ground that the jury had found acceptance by Norman v. Phillips, 14 M. & W. 276; Hunt v. Hecht, 8 Ex. 814; Acebal *■. Levy, 10 Bing. 376 ; Meredith v. Meigh, 2E.&B. 370, and 22 L. J., Q. B. 401, in which Hart v. Sattley, 3 Camp. 528, is overruled ; Cusack v. Robinson, 1 B. & S. 299, and 30 L. J., Q. B. 261 ; Hart v. Bush, E., B. & E. 494, and 27 L. J., Q. B. 271 ; Smith v. Hudson, 6 B. & S. 431, 34 L. J., Q. B. 145. says : " No receipt of goods by a carrier or middleman on their way to the buyer is a sufficient acceptance, unless such carrier or middleman be the general agent of the vendee having authority finally to ac- cept them." This is approved by Wood- ruff, J., in Rodgers v. Phillips, 40 N. Y. 530. And he further says : " It has some- times been argued that delivery to a car- rier designated by the buyer will suffice, although delivery to a general carrier will not; but this distinction cannot be sustained where the carrier has no other authority than to transport the goods." This last sentence was a dictum, and two of the judges would not assent to it. But the principle stated is now well estab- lished. In Allard v. Greasert, 61 N. Y. 1, 5, the buyer had designated an express company as the carrier, to whom the goods were delivered. Earl, C, said : " There is every reason for holding that a designated carrier may receive for the buyer, because he is expressly authorized to receive, and the act of receiving is a i.iere formal act, requiring the exercise of no discretion. But there is no reason for holding that the buyer intended in such case to clothe the carrier, of whose agents he may know nothing, with au- thority to accept the goods, so as to con- clude him as to their quality, and bind him to take them as a compliance with a contract of which such agents can know nothing. The goods were boxed, the carrier could know nothing about them. and its agents had no right to inspect and handle them. Its sole duty and authority was to receive and transport them. In such a case it would be absurd to hold that the carrier had an implied authority from the buyer to accept the goods for him. * * * It will be found that in most of the cases where a delivery to a carrier has been held to satisfy the stat- ute, there had been a prior acceptance of the goods by the buyer or his agent." Wilcox, &c, Co. v. Green, 72 N. Y. 17 ; Lloyd v. Wright, 20 Ga. 574 ; S. G, 25 Oa. 215 ; Denmead v. Glass, 30 Ga. 637 ; Hausman v. Nye, 62 Ind. 485 ; Keiwert v. Meyer, 62 Id. 587, citing Allard v. Greasert, supra; Jones v. Mechanics' Bank, 29 Md. 287 ; Frostburg Mining Co. *. New Eng. Glass Co., 9 Cush. 115; Quintard v. Bacon, 99 Mass. 185; John- son v. Cuttle, 105 Mass. 447 ; Atherton v. Newhall, 123 Id. 141 ; Maxwell v. Brown, 39 Me. 98 ; Grimes v. Van Vechten, 20 Mich. 410; Tower „. Tudhope, 37 U. C. Q. B. 200, 210. In Spencer v. Hale, 30 Vt. 315, it was held that a carrier desig- nated by the buyer to receive the goods bought was thereby authorized to accept. But the case was also put upon the more solid ground of unreasonable delay in re- jecting the goods after receipt of them by the buyer. See § 163, infra. An Authorized Agent may Accept. — Outwater v. Dodge, 6 Wend. 397; Baikley v. Rensselaer & S. R. R., 71 N. Y 205; Gray v. Davis, 10 N. Y. 285; Allard v. Greasert, 61 N. Y. 1 ; Rogers v. Gould, 6 Hun 229 ; Snow v. Warner, 10 Mete. 132 ; Quintard v. Bacon, 99 Mass. 185 ; Tower v. Tudhope, 37 U. C. Q. B. 200, 210. But the Same Person Cannot be Agent Both to Sell and to Accept. — In Caulkins v. Hellman, 47 N. Y. 449. 184 FORMATION OF THE CONTBACT. [BOOK I. the buyer without sufficient evidence, some may be found which are not readily reconcilable with the principle that a dealing with the article in a manner inconsistent with the continuance of the right of property in the vendor is a constructive acceptance. Curtis v. Pugh (»•) is an instance of this class. The action was Curtis v pu E h debt, for goods sold and delivered. The purchaser had reviewed. given a verbal order for three hogsheads of Scotch glue, to be of the description called " Cox's best." The plaintiff, the ven- dor, sent two hogsheads, all that he was able to deliver at the time, to a wharf in London. Defendant removed them to his own ware- house, and there unpacked the whole of the glue and put it into twenty bags. On examination, the defendant considered the glue in- ferior to the quality ordered, and so informed plaintiff's agent on the next day. The plaintiff's brother admitted, on inspection two days later, that part of the glue, but not an unusual proportion, was in- ferior, and offered to make an allowance, but refused to take it back because it had been unpacked and put into bags, which was not neces- sary for the purpose of examination, and because the glue, when once unpacked, could not be replaced in the same condition in the hogs- heads. Lord Denman, C. J., was of opinion that the defendant had not in fact intended to accept the glue, but told the jury that "if the defendant had done any act altering the condition of the article, that was an acceptance, and that the question for them was whether or not the act of putting the glue into bags had altered its condition." The Lord Chief Justice then left it to the jury to say "whether the glue was ' Cox's best,' and whether the defendant had dealt with it so as to make it his own," or had done no more than was necessary to examine the quality. All these questions were decided in plaintiff's favor by the jury, but the court, on motion, pursuant to leave reserved, directed a nonsuit, Lord Denman saying, " In what I stated I certainly car- the buyer requested the seller's agent to diet, but the Supreme Court reversed it. make the best bargain he could for the 14 Hun 330. Talcott, P. J., said : " The freight of the goods sold, on their ship- agreement for the sale and the acceptance ment to the buyer. The court held that by the vendee of the thing sold are too this did not give the agent any authority intimately connected as parts of the to accept for the buyer. On a new trial same transaction, in this case, to author- it was further in evidence that the buyer ize one person to act as agent of both said to the seller's shipping agent : " I parties." And he further reasons that want you to be very particular and see the language used was a mere caution, that this wine corresponds with the sam- and did not authorize the agent to accept, pie." On this, plaintiff obtained a ver- (r) 10 Q. B. 111. PAET II.] OF ACCEPTANCE AND RECEIPT. 185 ried the doctrine, as to acceptance, a step further than I ought.' Patteson, J., said, " My Lord Chief Justice went a step further in his ruling than the authorities warrant," and Coleridge and Wightman, JJ., concurred. This case appears to be identical in principle with Parker v. Wallis, 5 E. & B. 21, and the two decisions to be irreconcilable. Parker „. The jury having found the facts in favor of plaintiff, Wallls - there was ample evidence of a dealing with the goods which was wrongful unless the buyer was owner, and the constructive acceptance was therefore complete, according to the more recent decisions. § 163. The cases are not entirely consistent on the point whether mere silence and delay of the purchaser in notifying re- Si i ence and fusal of goods forwarded by his order suffice to constitute pfoJtJtt constructive acceptance. The fair deduction from the acoe P tance - authorities seems to be that this is a question of degree, that a long and unreasonable delay would afford stringent proof of acceptance, while a shorter time would merely constitute some evidence to be taken into consideration with the other circumstances of the case. I 3 In Bushel v. Wheeler, (s) in the Court of Queen's Bench, defend- ant ordered certain machinery to be sent to him at Here- Bushe i„ ford by the Hereford sloop. It was sent on the 23d of wheeler - April, and an invoice for the goods at three months' credit was for- warded in a letter of advice to defendant on the 25th of April. The carrier placed the goods in a warehouse on his own wharf on their arrival at Hereford, and notice was given to defendant. No com- munication on the subject of the goods was made by defendant till the 7th of October, when they were rejected. The defendant proved, however, that after the arrival of the goods at the warehouse, he had seen them, and informed the warehouseman that he did not intend to take them. Erskine, J., directed a verdict for defendant, with leave to move to enter a verdict for plaintiff. The court refused to enter a verdict for plaintiff, but held that there was evidence of acceptance to go to the jury, and ordered a new trial. Lord Denman said that the " lapse of time, connected with the other circumstances, might show 13. It is a question for the jury whether 409 ; Tower v. Tudhope, 37 U. C. Q. B. unreasonable delay in rejecting goods, or 200, 212 ; Spencer v. Hale, 30 Vt. 314 ; negligence in dealing with them so that Goff v. Homeyer, 59 Mo. 345 ; "Wilcox they are lost or damaged, amounts to an Silver Plate Co. 0, Green, 72 N. Y. 17 acceptance. Borrowscale v. Bosworth, 99 (s) 15 Q. B. 442. Mass. 381 ; Downs a. Marsh, 29 Conn. 186 FOEMATION OF THE CONTRACT. [BOOK I. an acceptance, and this was a question of fact for the jury." Wil- liams, J., said that there might be a constructive receipt as well as delivery : and " it being once established that there may be an actual receipt by acquiescence, wherever such a case is set up, it becomes a question for the jury." Coleridge, J., said that the goods were car- ried by vendee's orders within a reasonable time to a particular ware- house. " That comes to the same thing as if they had been ordered to be sent to the vendee's own house, and sent accordingly. In such a case, the vendee would have had the right to look at the goods and return them if they did not correspond to order. But here the ven- dee took no notice of the arrival, and makes no communication to the party to whom alone a communication was necessary." § 164. In Norman v. Phillips, (t) in the Exchequer, the court felt Norman*. bound by Bushel v. Wheeler, but declined to apply it to Phiihps. tne cage b e f ore them. Defendant ordered from plaintiff certain yellow deals, with directions to send them to a specified station of the Great Western railway, to be forwarded to him as on previous occasions. The order was given on the 17th of April, the deals ar- rived at the station on the 19th, on which day the defendant was in- formed of the arrival by the railway clerk, and said he would not take them. An invoice was sent on the 27th of April, which defend- ant received and kept, but it did not appear that he had ever seen the deals. On the 28th of May, defendant informed plaintiff that he de- clined to take the goods. Pollock, C. B., refused to nonsuit, and directed the jury to find for plaintiff, with leave reserved to defendant to move for nonsuit or verdict for him. All the judges concurred in making the rule absolute. Alderson, B., remarked during the argu- ment that it was difficult to distinguish the case from Bushel v. Wheeler, and it is perceptible, from the language of all the judges, that they did not yield entire assent to that case. Bushel v. Wheeler was, however, mentioned as a " well-considered case " in Morton v. Tibbett (ante § 148) : and in Parker v. Wallis, (m) Lord Campbell said arguendo, that " detention of the goods for a long and unreason- able time by the vendee is evidence that he has accepted them." In Smith v. Hudson, 34 L. J., Q. B. 145, Blackburn, J., refers to Mor- ton v. Tibbett as establishing that lapse of time is some evidence of acceptance; and observations to a similar effect are to be found in the opinion delivered by Parke, B., in Cunliffe v. Harrison, 6 Ex. 906. (t) 14 M. & W. 277. (u) 5 E. & B. 21. PART II.] OF ACCEPTANCE AND RECEIPT. 187 § 165. In Nichols v. Plume, (a;) a quantity of cider was sent to defendant, who had ordered it verbally, but he refused to Njohols „ receive it, and caused it to be lodged in a warehouse in Plume - the neighborhood not belonging to him. The cider was not returned to plaintiff, nor did defendant send him any notice of his intention not to use it. Best, C. J., held that there had been no acceptance under the statute. The report does not show the length of the delay which elapsed, nor was the question raised whether there had been constructive acceptance by unreasonable delay. § 166. When goods are marked with the name of the purchaser, by his consent, this constitutes an acceptance of the goods, Markin the if all the terms of the contract have been agreed on, but s° od3 - not an actual receipt, and the sale cannot be allowed to be good, with- out further proof of delivery, (y) 14 The acceptance of part of the goods bought makes the con- tract good for the whole, even in cases where some of the ,~ o ? wnere some goods are not yet in existence, but are to be manufac- not'yeUn" 33 tured. 15 existence. (a;) 1 C. & P. 272. (y) Bill v. Bament, 9 M. & W. 36 ; Baldey v. Parker, 2 B. & C. 37 ; Proctor v, Jones, 2 C. & P. 532 ; Hodgson v. Le Bret, 1 Camp. 233 ; Boulter v. Arnott, 1 C. & M. 334 ; Anderson v. Scott, in note to Hodgson v. Le Bret, 1 Camp. 235, in which Lord Ellenborough held, that the cutting off the pegs by which the wine in casks was tasted, and the marking of de- fendant's initials on the cask in his pres- ence, was an incipient delivery, sufficient to take the case out of the statute. But this case was disapproved by Best, C. J., in Proctor v. Jones, supra, and by Alder- son, B., in Saunders v. Topp, 4 Ex. 390. In Mr. Chitty's valuable treatise on Con- tracts, he cites the foregoing authorities in support of the principle, that, " in no case can the marking of goods with the name of the purchaser by his consent constitute an acceptance within the act, unless it appear from the evidence that the goods have been delivered to the pur- chaser." P. 375, 11th ed. It is sub- mitted that a thorough examination of the cases will show the true principle to- be more accurately stated as fjiven in the text above, than in the foregoing passage in the treatise on contracts. 14. In Rappleye v. Adee, 1 N. Y. Sup. Ct. (T. & C.) 127, sheep were caught and marked with the name of the buyer, who assisted, and were then returned to the field of the seller, who agreed to keep them a few days. Held, an acceptance and receipt. Woodford v. Patterson, 32 Barb. 630 ; Dyer v. Libby, 61 Me. 45. 15. McKnight v. Lunlop, 5 N. Y. 537 ; Gault v. Brown, 48 N. H. 183 ; Boss v. Welch, 11 Gray 235 ; Sloan Saw Mill Co. v. Guttshall, 3 Col. 8 ; Bobinson v. Gor- don, 23 U. C. Q. B. 143. Scott v. Eastern Counties, cited in the text, was followed in O'Brien v. Credit Valley B. W. Co., 25 U. C. C. P. 275 ; affirmed, on appeal, Id. 283. It was a suit on an oral contract by a railway company with the plaintiff to draw and deliver stone at a certain price per "toise," until he was told to stop. Part having been accepted, the court held the company liable for the rest afterwards 188 FORMATION OF THE CONTRACT. [BOOK I. In Scott v. The Eastern Counties Railway Company, (z) the defend- Scotto. East- an ^ s ordered a number of lamps from the plaintiff, a E5iway nUes manufacturer, of which one, a triangular lamp, was of a pmpany very peculiar construction, and was not ready for delivery until nearly two years after the order. In the meantime, and in the same month when the order was given, all the other lamps were de- livered and paid for. The defendants rejected the triangular lamp, and it was objected on action brought that their acceptance of the other lamps two years earlier, and when the triangular lamp was not in existence, could not be considered a part acceptance of that lamp. The court, however, held the contract entire for all the lamps, and that the acceptance and actual receipt of some of them, made the con- tract good for all. § 168. In Elliott v. Thomas, (a) there was a joint order for com- Where goods mon steel and for cast steel. The common steel was ac- k'indf dlfferent cepted, but there was a dispute about the cast steel, and Elliott i>. the question was, whether the acceptance of the former sufficed to make the whole contract valid, and it was so held. Parke, B., in giving the decision, explained Thompson v. Maceroni, (b) in which the language of the opinion seemed adverse to the view taken by the court, by showing that this last-named case turned entirely on the form of the action, which was for goods sold and delivered, an action clearly not maintainable for such part of the goods as had not been actually delivered to the buyer. 16 delivered. But see Sootten v. Sutter, 37 (a) 3 M. & W. 176. Mich. 527, which seems to hold part ac- (b) 3 B. & C. 1. See, also, Bigg v. ■ceptance of cigars not specific when sold, Whiskin, 14 C. B. 195. as having no effect to take the entire con- 16. In Grover v. Cameron, 6 U. C. Q. tract out of the statute ; but perhaps this B. (O. S.) 196, where the buyer accepted case may be explained on the principle part and rejected the rest of a lot of that the part deliveries were not accepted goods sold, it was held (one judge dis- with reference to the contract. See note senting) that the statute barred any action to case of Bohde v. Thwaites, stated by for the residue. But in Robinson v. Gor- our author in his chapter on " Subsequent don, 23 TJ. C. Q. B. 143, and McNeil t\ Appropriation." In Swigart v. McGee, Keleher, 15 U. C. C. P. 470, it was held 19 Ark. 473, it appeared .that three hun- that after part delivery an action would wn0 are n °t bailees of them, as timber cut down and p a iraon°8 f not rd ty m g> at tne disposal of the vendor, on the land of the baiieea. person from whom he bought it, or lying, at his disposal, at a free wharf: and in such cases the delivery may" be effected by the vendor's putting the goods at the disposal of the vendee and suffering the latter to take actual control of them, as in the cases of Tansley v. Turner (m) and Cooper v. Bill, (n) post, Book II., Ch. III. 22 [In Marshall v. Green, (o) where the buyer of timber growing on Marsh ii v land in the possession of the seller's tenant cut down some Green. f j-^g t reeS) anc i agreed to sell the tops and stumps to a third person, and the seller afterwards countermanded the sale, before any of the trees had been removed from the land, it was held that there was evidence of actual receipt, as well as of acceptance of a part of the goods within the meaning of the seventeenth section. From the judgments of Coleridge, C. J., and Brett, J., it would appear that they relied solely upon the early Nisi Prius decisions of Hodgson v. Le Bret and Anderson v. Scott as to marking and acts of ownership which, as we have seen, (ante § 166, note (y),) have been practically overruled by the later authorities of Bill v. Bament and Baldey v. Parker, and Grove, J., at p. 44 of the report, alone, alludes to the true ground upon which it is submitted the decision must rest, viz., that the land was throughout in the possession not of the vendor, but of his tenant.] (m) 2 Bing. N. C. 151. McNeil v. Keleher, 15 U. C. C. P. 470; (to) 34 L. J., Ex. 161 ; 3 H. & C. 722. Cotterill v. Stevens, 10 Wis. 422; Brews- 22. Thompson v. Baltimore and Ohio K. " ter o. Leith, 1 Minn. ,56 ; Hallenbeck v. E., 28 Md. 396 ; Bass v. Walsh, 39 Mo. Cochran, 20 Hun 416. 192 ; Yale v. Seeley, 15 Vt. 221 ; Leo- (o) 1 C. P. D. 35. nard v. Davis, 1 Black (U. S.) 476, 482 ; PART. II.] OF ACCEPTANCE AND RECEIPT. 195 § 179. In America the language of the decisions is, that in such -cases there must be " acts of such a character as to place Law jn the property unequivocally within the power and under Amerlca - the exclusive dominion of the buyer, as absolute owner, discharged of all lien for the price," in order to take the contract out of the operation of the statute. Marsh v. Rouse, 44 N. Y. 643. 23 § 180. 3. Usually at the time of the sale the goods are in posses- sion of the vendor himself, and the dealings of men are • /* •, i t •/. n • , l j Goods in pos- so infinitely diversified, circumstances vary so much, and session of the acts of parties so frequently admit of more than one •construction, that it is extremely difficult to point out a priori at what precise period the goods sold can properly be said in all cases to have been actually received by the vendee. Of course, if the purchaser remove the goods from the vendor's possession and take them into his own, there is an actual receipt. And it is necessary here to renew the observation that the inquiry is now confined to the validity not the performance of the contract, and that the actual removal by the buyer of a part, however small, of the things sold, if taken as part of the bulk and by virtue of his purchase, ( p) is an actual receipt sufficient to make the contract good, although a serious question may and often does arise at a later period, whether there has been an actual receipt of the bulk. § 181. It is well settled that the delivery of goods to a common carrier, a fortiori to one specially designated by the pur- chaser, for conveyance to him or to a place designated by common him, constitutes an actual receipt by the purchaser. In such cases the carrier is, in contemplation of law, the bailee of the person to whom, not by whom, the goods are sent, the latter in em- ploying the carrier being considered as an agent of the former for that purpose, (q) It must not be forgotten that the carrier only represents the pur- chaser for the purpose of receiving, not accepting, the goods, (r) 23. See this case stated in note 21, W. 277, Meredith v. Meigh, 2 E. & B. supra. 364, and 22 L. J., Q. B. 401 ; Casack v. (p) Klinitz v. Surry, 5 Esp. 266. Robinson, 1 B. & S. 299, and 30 L. X, Q. (3) Dawes v. Peck, 8 T. K. 330 ; Waite B. 261 ; Hart v. Bush, E., B. & E. 494, . v. Baker, 2 Ex. 1 ; Fragano v. Long, 4 B. and 27 L. J., Q. B. 271 ; Smith v. Hud- & C. 219; Dunlop v. Lambert, 6 CI. & son, 34 L. J., Q. B. 145; 4 B. & S. 431. Fin. 600; Johnson v. Dodgson, 2 M. & (r) Supra, \ 161. W. 653; Norman v. Phillips, 14 M. & 196 FORMATION OF THE CONTRACT. [BOOK I. Decisions in America. The law in the United States is the same. Cross v. O'Donnell, 44 N. Y. 661 ; Caulkins v. Hellmann, 47 N. Y. 449. 24 § 182. It is also now finally determined, that the goods may remain in the possession of the vendor, if he assume a changed Vendor may 7 , i , 1 1 1 . become bailee character, and yet be actually received by the vendee of purchaser. T . . . J It may be agreed that the vendor shall cease to hold as owner, and shall assume the character of bailee or agent of the pur- chaser, thus converting the possession of the vendor into that of the vendee through his agent. 25 24. "A delivery of goods to a carrier designated by the purchaser is of the same legal effect as a delivery to the pur- chaser himself." Hunter u. Wright, 12 Allen 548, 550; Hall v. Eichardson, 16 Md. 396 ; Magruder v. Gage, 33 Md. 344 ; Allard v. Greasert, 61 N. Y. 1. In Wil- cox Silver Plate Co. v. Green, 72 N. Y. 20, Kapallo, J., said : "A delivery to a carrier pursuant to the direction of the purchaser is a good delivery to him. Though not sufficient to constitute an ac- ceptance under the statute of frauds, it is sufficient to constitute a delivery." In Spencer v. Hale, 30 Vt. 314, and Strong v. Dodds, 47 Vt. 348,. 356, held that a carrier designated by the buyer is his agent both to receive and to accept. 25. Gibson v. Stevens, 8 How. 384.' In Weld v. Came, 98 Mass. 152, 154, the seller agreed to store the article pur- chased. Chapman, J., said : "An agree- ment of the vendor to hold the goods sold in storage for the vendee, is equiva- lent to a delivery." See Barrett v. God- dard, 3 Mason 107 ; Beecher v. Wayall, 16 Gray 376 ; Ex parte Safford, 2 Low. 565; Knight v. Mann, 118 Mass. 147; Safford v. McDonough, 120 Mass. 290; Kodgers v. Jones, 129 Mass. 420, 422. In this last case, Gray, C. J., said that to constitute an acceptance and receipt of goods under the statute of frauds, the buyer " must have assumed the legal pos- session of them, either by taking them into the custody or control of himself, or of his authorized agent, or by making the seller or a third person his bailee, to hold them for him, so as to terminate the seller's possession of the goods, and lien for their price." Boynton v. Veazie, 24 Me. 286 ; Waldron v. Chase, 37 Me. 414 ; Means v. Williamson, 37 Id. 556 ; God- chaux v. Mulford, 26 Cal. 316; Walker v. Bonlton, 3 U. C. Q. B. (O. S.) 252; Bappleyee v. Adee, 65 Barb. 589 ; Wylie v. Kelly, 41 Id. 594, 598. In Green ,.. Merriam, 28 Vt. 801, the buyer of sheep at auction asked and. obtained leave to put them" in a yard of the seller, promib- ing to come and get them and pay all bills on a certain day, but on that day de- clined to take them. Bennett, J., said: "The vendor became the bailee of the vendee, and his possession, by means of the agreement, became the possession of the vendee, and the sheep were at his risk and to be maintained at his expense." And it was held that there was such de- livery of the sheep as to take the case out of the statute. In Janvrin i>. Max- well, 23 Wis. 51, the same principle is held, though with reluctance. Paine, J., said : " Parties contract, without writing, for the sale of goods exceeding $50 in value. There is no payment and no de- livery. The contract is void by the stat- ute. But the vendor says to the vendee, 'I deliver the goods,' and the latter re- plies, ' I accept them, and desire you to- PART II.] OP ACCEPTANCE AND RECEIPT. 197 The first case was that of Chaplin v. Rogers, (s) in 1800, where a stack of hay remaining on the vendor's premises was held chaplin „. to have been actually received by the purchaser, on the E °e era - ground that he had resold part of it to a sub-vendee, who had taken away the part so purchased by him. store them for me as my bailee,' and the contract is good ! * * * Yet it is true that if such delivery and acceptance are actually made, it satisfies the letter of the statute. Mere words cannot constitute the seller bailee. — In New York, however, it is held on the authority of Shindler v. Houston, 1 N. Y. 261, and other cases, (see note 1, supra,) that mere words cannot constitute a sale within the statute, and therefore it seems that mere words can- not establish a bailment to validate such sale ; though the question seems never to have been adjudicated directly in that state. See Ely ». Ormsby, 12 Barb. 570 ; Hallenbeck v. Cochran, 20 Hun 416. In Missouri, on the authority of Shindler v. Houston, supra, it has been held that a mere verbal agreement, constituting the seller bailee for the buyer, will not satisfy the statute. Kirby v. Johnson, 22 Mo. 354. Ryland, J., says that Elmore v. Stone is not now law, (citing Best, J., in Proctor v. Jones, 2 Carr. & P. 532,) and that in Chaplin v. Rogers, 1 East 192, and Vincent v. Germonds, 11 Johns. 284, there were acts of delivery, and concludes : " If the courts should decide that such facts are sufficient to take the case out of the statute of frauds, then it is difficult to find what will come within that statute. Nay, we had better blot the statute from our books at once, and not fritter away its vitality by constructive deliv- eries and acceptances." A similar con- clusion was reached in Malone v. Plato, 22 Cal. 103. In this case horses were offered for $2200, and, after trial, the buyer returning to the stable of the seller, said : " Put them in the stable ; do not let them ; I will take them ; I will be back in half an hour and pay for them." On this a suit for non-acceptance was commenced. The court said that Elmore ■v. Stone was a doubtful case, sustained only on the ground that the seller having, at the buyer's request, Removed the horse brought from his sale stable to his livery stable, had by an act changed his posses- sion from that of owner to that of livery stable keeper. And it was held (citing Shindler v. Houston) that the case before the court included no act, and that mere words could never satisfy the statute.'" In Bowers v. Anderson, 49 Ga. 143, cotton was sold, to remain at the seller's gin-house free of storage, at the buyer's risk until hauled away by him ; and the buyer proceeded to insure. The seller repudiated the sale. On a suit for damages, Trippe, J., said : " It has been often stated as being now finally deter- mined, that the goods, may remain in the possession of the seller, if he assumes a changed character, and yet be actually re- ceived by the buyer ; that it may be agreed that the seller shall cease to hold as owner, and shall assume the character of bailee or agent for purchaser, thus converting the possession of the seller into that of the buyer, through his agent. This is so laid down by Mr Benjamin in his work on Sales. On examining the cases referred to, it will be found that there was something in nearly every one be- sides the mere verbal agreement of the parties that the seller should assume a (s) 1 East 195, referred to with ap- Green, 1 C. P. D. at p. 41. proval by Coleridge, C. J., in Marshall v. 198 FORMATION OF THE CONTRACT. [BOOK I, § 183. But the case usually cited as the leading one on this point is Elmore v Elinore v. Stone, {t) where the purchaser of horses from a stone. dealer, left them with the dealer to be kept at livery for him^ the purchaser. Sir James Mansfield delivered the judgment of the Common Bench, holding that as soon as the dealer had consented to keep them at livery his possession was changed, and from that time he held not as owner, but as any other livery-stable keeper might have done. 26 § 184. Nearly half a century later, in 1856, the case of Marvin v. Marvin^ "Wallis, (u) on facts almost identical with those in Elmore Waihs. v ^ gt, one) was decided by the Queen's Bench on the author- ity of the latter. The facts as found by the jury were that after the completion of the bargain, the vendor borrowed the horse for a short time, and, with the purchaser's assent, retained it as a borrowed horse. Held, that there had been an actual receipt by vendee ; that there had been a change of character in the vendor, from owner to bailee and agent of the purchaser. The Bench on this occasion was composed of Campbell, C. J., and Coleridge and Erie, JJ. So in Beaumont v. Brengeri, (v) the carriage bought by the defend- Beaumont» ant remained in the shop of the plaintiff the vendor, but Brengen. ^ ne c ; rC urnstances showed that this was at the request of the defendant, and that plaintiff had changed his character from owner to warehouseman of the carriage for account of the vendee. Held, an actual receipt. 27 § 185. Two cases decided in the King's Bench, in 1820 and 1821, changed character. There was an act Kobinson is quoted as sustaining this ex- performed by one or the other of the par- planation. ties, or by both, which formed a marked (t) 1 Taunt. 458. feature in the transaction.'' Distinguishes 26. Elmore v. Stone is approved by the English cases cited in the text, and Lowell, J., in Ex parte Safford, 2. cites and follows Shindler v. Houston, Low. 565, who says that it was ap- supra. As to this case of Bowers v. An- proved by Shaw, C. J., in Arnold v. De- derson, it must be observed that the seller lano, 4 Cush. 90. But see Malone u. Plato, avoided the sale. The buyer having in- Kirby v. Johnson and Bowers v. Ander- euredithe property would no doubt have son, stated in last note, supra. been held bound by reason of that act of (u) 6 E. & B. 726 ; 25 L. J., Q. B. 369. ownership. In the well-considered case (u) 5 C. B. 301. of Matthiessen, &c, Co. v. McMahon, 38 N. 27. Marvin v. Wallis and Beaumont v. J. L. 536, 541, the same principle is sup- Brengeri are explained in Matthiessen, ported, and the two cases cited by our &c, Co. v. McMahon, 38 N. J. L. 541, and author in \ 184 were explained as in- Cusack v. Robinson is quoted and volving acts of ownership. Cusack v. approved. PART II.] OP ACCEPTANCE AND RECEIPT. 199 may seem at first sight to trench upon the doctrine established iu Elmore v. Stone and Marvin v. Wall is. In the first, Tem tv Tempest v. Fitzgerald, (x) the purchaser of a horse agreed, Mtz s erald - in August, to give forty-five guineas for it and to take it away in September. The parties understood it to be a ready-money bargain. The purchaser returned on the 20th September, ordered the horse out of the stable, mounted and tried it, had it cleaned by his servant, or- dered some change in the harness, and asked plaintiff's son to keep it for another week, which was assented to as a favor. The purchaser said he would call and pay for the horse about the 26th or 27th. He returned on the 27th with the intention of taking it, but the horse had died in the interval, and he refused to pay. Held, that there was no actual receipt. The ground of the decision was that defendant had no right of property in the horse until the price was paid ; that if he had gone away with the horse vendor might have maintained trover; and the case was distinguished by the judges from Chaplin v. Rogers, (y) and Blenkinsop v. Clayton, (z) on this basis. Iu the sec- ond case, Carter v. Toussaint, (a) the plaintiffs, who were Carter h farriers, sold defendant a racehorse which required firing, Toussalnt - and this was done in defendant's presence and with his approbation. It was agreed that the horse should be kept by plaintiffs for twenty days without charge. At the end of that time, by defendant's orders, the horse was taken by plaintiffs to a park to be turned out to grass. It was entered in plaintiff's name, and this was also done by the di- rection of defendant, who was anxious that it should not be known that he kept a racehorse. No time was specified in the bargain for the payment of the price. Held, that there had been no actual receipt, because the seller was not bound to deliver the horse without payment of the price, and that he had never lost possession or control of the horse. If the horse had been put in the park-keeper's books iu the name of defendant and by his request, that would have amounted to an actual receipt of it by the purchaser ; but on the facts the purchaser could not have maintained trover against the park-keeper on tender- ing the keep. It is apparent, from the reasoning of the judges in both the above cases, that there is nothing irreconcilable between the principles on which they were decided and those which had been sanctioned in the (x) 3 B. & Aid. 680. (z) 7 Taunt. 597. (y) 1 East 192. (a) 5 B. & Aid. 855. 200 FORMATION OF THE CONTRACT. [BOOK I. cases previously quoted. Both these cases went distinctly upon the ground that in a cash sale the vendor has a right to demand payment of the price concurrently with delivery of possession ; and that as nothing had been assented to by the vendors which impaired this right, there has been no actual receipt by the vendees. (6) 28 § 186. In Cusack v. Robinson, (c) the court treated the rule as Cusacku settled that "though the goods remain in the personal Robinson. possession of the vendor, yet if it is agreed between the vendor and vendee that the possession shall thenceforth be kept, not as vendor, but as bailee for the purchaser, the right of lien is gone, and then there is a sufficient receipt to satisfy the statute." The subject was very thoroughly discussed in Castle v. Sworder, (d) Castie v i Q which an unanimous decision of the Exchequer of sworder. Pleas, composed of Martin, Channell and Bramwell, BB., was reversed by a decision, also unanimous, of the Exchequer Cham- ber, composed of Cockburn, C. J., and Crompton, J., of the Queen's Bench, and Willes, Byles and Keating, JJ., of the Common Pleas. This was an action to recover £80 2s. 2d., the price of some rum and brandy, for which the defendant gave a verbal order at a price agreed on, with six months' credit. The plaintiff's clerk wrote off, and transferred into the defendant's name, in the books kept in plain- tiff's bonded warehouse, two specific puncheons of rum and a hogs- head of brandy, marked, and described in an invoice sent by post to defendant. These packages the plaintiffs had among their goods in their own bonded cellar, of which they kept one key and the custom- house officers another. This was the usual mode of selling in bond in Bristol, where plaintiffs were carrying on business as spirit mer- chants. An invoice, describing the marks of the packages, the ships by which they had been imported, and the contents, was enclosed to defendant in a letter, saying : " The above remain in bond, and which you will find of a very good quality, and hope will merit the continu- ance of your favors." After the credit had expired, the defendant, when applied to for payment, requested that the goods might continue a further time in bond, and asked plaintiff's traveler to sell the goods for him. He was referred to plaintiffs, and wrote to them, saying : (6) See, also, Holmes v. Hoskins, 9 Ex. (c) 30 L. J., Q. B. 264 ; 1 B. & S. 299. 753. (d) 29 L. J., Ex. 235 ; 30 L. J., Ex. 28. Safford v. McDonough, 120 Mass. 310, and 6 H. & N. 832. 290. PART II.] OF ACCEPTANCE AND RECEIPT. 201 "You will oblige by informing me of the present value of the rum and brandy, that is to say, what you are willing to give for it." On these facts, Bramwell, B., directed a non-suit, with leave to plaintiff to move, the defendant having objected that there was no delivery nor acceptance to satisfy the statute of frauds. Held, by the Court of Exchequer, that there had been no delivery nor actual receipt; that as the goods remained under control of the vendor, and in his possession till after the credit had expired, his lien had revived ; and that in the interval while the credit was running, there had been nothing done to constitute actual receipt by the purchaser. On the appeal to the Exchequer Chamber, Cockburn, C. J., in giv- ing his opinion said, that " for six months the buyer was entitled to claim the immediate delivery of the specific goods appropriated to him. The question then arises, whether the possession which actually remained in the sellers, was a possession in the sellers by virtue of their original property in the goods, or whether it had become a possession as agents and bailees of the buyers." The learned Chief Justice then went on to point out that there was sufficient evidence of a change of character in the possession to go to the jury, in the facts proven, that is, that the purchaser "dealt with the goods as his own, first, in the request that the sellers would take back the goods, and failing in that request, in asking the plaintiffs to sell the goods for him." Crompton, J., pointed out that the court did not differ from the Court of Exchequer save on one point, namely, that " there was some evidence that the character of plaintiffs was changed to that of ware- housemen," and said that " according to the authorities there may be such a change of character in the seller as to make him the agent of the buyer, so that the buyer may treat the possession of the seller as his own." § 187. It will already have been perceived that in many of the cases, the test for determining whether there has been an Actual receipt actual receipt by the purchaser, has been to inquire ^^dor's 88 whether the vendor has lost his lien, (e) Receipt implies hen ' delivery, (/) and it is plain that so long as vendor has not delivered, there can be no actual receipt by vendee. The subject was placed in a very clear light by Holroyd, J., in his decision in Baldey v. (e) See post, Book V., Part L, ch. IV., (/) Per Parke, B., in Saunders v. Topp on Lien of Vendor. 4 Ex. 394. 202 FORMATION OF THE CONTRACT. [BOOK I. Parker : (g) " Upon a sale of specific goods for a specific price, by parting with the possession the seller parts with his lien. The statute contemplates such a parting with the possession, and, therefore, as long as the seller preserves his control over the goods so as to retain his lien he prevents the vendee from accepting and receiving them as his own within the meaning of the statute." No exception is known in the whole series of decisions to the propositions here enunciated, and it is safe to assume as a general rule, that whenever no fact has been proven showing an abandonment by the vendor of his lien, no actual receipt by the purchaser has taken place. This has been as strongly insisted on in the latest as in the earliest cases. The princi- pal decisions to this effect are referred to in the note. (A) 29 § 188. It may be useful here to advert to one case in which the circumstances were very peculiar. In Dodsley v. Varley, (i) wool was bought by the defendant from Dodsi the plaintiff. The price was agreed on, but the wool Variey. would have to be weighed. It was sent to the warehouse of a person employed by the defendant, was weighed, and packed up with other wools in sheeting provided by the defendant. It was the usual course for the wool to remain at this warehouse till paid for, and this wool had not been paid for. The defendant insisted that the vendor's lien remained, and that the wool therefore had not been actu- ally received by him as purchaser. But the court held that the prop- erty had passed, that the goods had been delivered, and were at the (g) 2 B. & C. 37. det v. Belknap, 1 Cal. 399 ; Green v. Mer- (h) Howe v. Palmer, 3 B. & Aid. 321 ; riam, 28 Vt. 801 ; Marsh v. Rouse, 44 N. Tempest v. Fitzgerald, 3 B. & Aid. 680 ; Y. 643 ; Maxwell v. Brown, 39 Me. 98, Carter v. Toussaint, 5 B. & Aid. 855 ; 103. Judge Wright, in Shindler v, Hous- Baldey v. Parker, 2 B. & C. 67 ; Smith v. ton, 1 N. Y. 269, says : " The best-consid- Surman, 9 B. & C. 561 ; Bill o. Bament, 9 ered cases hold that there must be a M. & W. 37 ; Phillips v. Bistolli, 2 B. & vesting of the possession of the goods in G. 511 ; Hawes v. Watson, 2 B. & C. 540 ; the vendee as absolute owner, discharged Maberley v. Sheppard, 10 Bing. 101; of all lien for the price on the part of the Holmes v. Hoskins, 9 Ex. 753 ; Cusack v. vendor." This is quoted and approved Robinson, 30 L. J., Q. B. 264; Castle v. in Stone v. Browning, 51 N. Y. 211, 215. Sworder, 29 L. J., Ex. 235 ; S. C, 30 L. But in Wegg v. Drake, 16 U. C. Q. B. J., Ex. 310, and 6 H. & 1ST. 832 ; Morton 252, it was held that whether or not the v. Tibbett, 15 Q. B. 428, and 19 L. J., Q. vendor had parted with his lien was not B. 382. the test to determine whether there had 29. Safford v. McDonough, 120 Mass. been a receipt by the buyer to satisfy the 290 ; Dodge v. Morse, 129 Mass. 420, 422 ; statute. Ex parte Safford, 2 Low. 563, 565; Gar- (i) 12 Ad. & E. 632. PART II.] OF ACCEPTANCE AND EECEIPT. 203 risk of the purchaser. In relation to the vendor's right, the court said : " The plaintiff had not what is called a lien, determinable on the loss of possession, but a special interest, sometimes, but improperly, called a lien, growing out of his original ownership, and consistent with the property being in the defendant. This he retained in respect of the term agreed on, that the goods should not be removed to their ultimate place of destination before payment." It is plain that there is nothing in this case which conflicts with the rule, that there can be no actual receipt by purchaser while vendor's lien continues, for the court held that the lien was gone. 30 It may, however, be remarked, that the effect attributed by the court to the special agreement, that the goods should remain in the defendant's warehouse without removal till paid for, is much greater than was accorded to a similar stipula- tion, in the case of Howes v. Ball, (k) where the question ... .. , . , .t-^ii Howes v. Ball. was raised in a more direct form than in .Dodsley v. Varley. In this last-mentioned case, where the litigation was between the vendor and the administrator of the deceased purchaser, the court held that the property had passed in the thing sold, and that the special stipulation between the parties might, perhaps, amount to a personal license in favor of the vendor to retake the thing sold, if not paid for at the expiration of the credit allowed ; but that such license could not be available against a transferee of the thing, as a sub-ven- dee, or the administrator of the vendee. 30. See Pinkham v. Mattox, 53 N. H. and follows it. 600, which resembles Dodsley v. Varley, (*) 7 B. & C. 484. 204 FORMATION OF THE CONTRACT. [BOOK I. CHAPTER V. OF EARNEST OR PART PAYMENT. Earnest and part payment distinct things 189 Either suffices to make the contract good 190 Something must be actually given to constitute earnest 191 Part payment 192 Agreement to set off debt due to the buyer 192 Analogous decisions under statute of limitations 193 Goods supplied "on account" of a debt 193 Board and lodging supplied in part payment 193 Giving a bill or note on account 194 Civil law doctrine of earnest 195 Pothier 199 French code 200 § 189. The giving of earnest, however common in ancient times, has fallen so much into disuse, that the two expressions in partpayment this clause of the statute, " giving something in earnest " and "giving something in part payment," are often treated as meaning the same thing, although the language clearly intimates that the earnest is " something " that " binds the bargain," whereas it is manifest that there can be no part payment till after the bargain has been bound, or closed. 1 Earnest may be money, or some gift or token (among the Romans usually a ring,) given by the buyer to the vendor, and accepted by the latter to mark the final conclusive assent of both sides to the bargain ; and this was formerly a prevalent custom in England, (a) Examples are found in Bach v. Owen, (6) in 1793, and Goodall v. 1. In Noakes v. Morey, 30 Ind. 103, 110, it was held that a check delivered as a forfeiture in case of non-performance, was neither part payment nor earnest. The same question arose in Howe v. Hay- ward, 108 Mass. 54. It was admitted that the check was not part payment, but it was claimed that it amounted to earn- est. Chapman, C. J., said : " The idea of earnest in connection with contracts was taken from the civil law. It is not necessary to consider its precise effect un- der that law. As used in the statute of frauds, earnest is regarded as part pay- ment of the price." In Krohn v. Bantz, 68 Ind. 277, Worden, J., cites Howe v. Hayward and Benjamin on Sales, and says . " Conceding that earnest may be something distinct from part payment, it is quite clear that it must have some value." And it was held that the buyer's own note for the price was of no value as earnest or part payment, being void for want of consideration. (a) Bracton 1, 2, c. 27. (6) 5 T. K. 409. PART II. J OF EARNEST OR PART PAYMENT. 205 Skelton, (c) in 1794, in the former of which a half-penny, and in the latter a shilling, was given in earnest of the bargain. § 190. Whether giving earnest has the effect of passing the prop- erty in the thing sold from vendor to vendee will be considered in a subsequent part of this treatise, (d) but for the present we are only concerned with the question of its effect in giving validity to a parol contract. The giving of earnest, and the part tomakeVe 63 payment of the price, are two facts independent of the n ra g ° bargain, capable of proof by parol, and the framers of the statute have said in effect that either of them, if proven in addition to parol proof of the contract itself, is a sufficient safeguard against fraud and perjury to render the contract good without a writing. § 191. The former of these facts, that of giving something in earn- est to " bind the bargain," has been the subject of only Somethiu one reported case, that of Blenkinsop v. Clayton, (e) in JSJuaUy given which the buyer drew a shilling across the vendor's hand, ear°neS tatute and which the witness called "striking off the bargain" Blenkinsop v. according to the custom of the country ; but as the buyer clayton - then returned the coin to his own pocket, instead of giving it to the vendor, the court necessarily held that the statute had not been satis- fied. There is another case, (/) in which the plaintiff was nonsuited in an action on a contract of sale, where a shilling earnest g^o^u,,, money was actually given by the buyer to bind the bar- skelton - gain, but the case turned entirely on the form of action, which was for goods sold and delivered, under circumstances where the court was of opinion that there had been no delivery. A count for goods bar- gained and sold would no doubt have been sustained. § 192. On the subject of part payment, there is but one important decision under this clause of the statute ; but the cases .... . .. 1 . . Part payment. which have arisen under analogous clauses in the statutes of limitations and the bankruptcy acts may be considered with advan- tage in this connection. An agreement for the purchase of goods exceeding £10 in value, was made with the understanding, and as part of the con- Agreementto tract, that the vendor should deduct from the price the due°to £ the ebt amount of a debt previously due by him to the purchaser. buyer - (c) 2 H. Bl. 316. (e) 7 Taunt. 597. (d) Post, Book II, ch. IV. (/) Goodall v. Skelton, 2 H. Bl. 316. 206 FORMATION OF TUE CONTRACT. [BOOK I. The vendor then sent the goods to the purchaser with an invoice charging him with the price £20 18s. lid., under which was written, " By your account against me, £4 14s. lid." The purchaser re- turned the goods as inferior to sample. It was contended, on behalf of the vendor, who brought an action for goods sold and delivered, that this credit of £4 14s. lid. was a part payment of the price of the goods, sufficient to take the case out of the statute. Held, not to be so. Piatt, B., said, " You rely on part of the contract itself, as being part performance of it." Pollock, C. B., said, " Here was nothing but one contract, whereas the statute requires a contract, and if it be not in writing, something besides." Parke, B., said, " Had there been a bargain to sell the leather at a certain price, and subse- quently an agreement that the sum due from the plaintiff was to be wiped off from the amount of that price, or that the goods delivered should be taken in satisfaction of the debt due from the plaintiff, either might have been equivalent to part payment, as an agreement to set off one item against another is equivalent to payment of money. But as the stipulation respecting the plaintiff's debt was merely a portion of the contemporaneous contract, it was not a giving some- thing to the plaintiff by way of earnest or in part payment then or subsequently." Alderson, B., said, " The seventeenth section of the statute of frauds implies that to bind a buyer of goods of £10 value without writing he must have done two things — first, made a contract; and next, he must have given something as earnest, or in part pay- ment or discharge of his liability. But where one of the terms of an oral bargain is for the seller to take something in part payment, that term cannot alone be equivalent to part payment." (g) From this case it may be inferred that an agreement to set off a debt due to the buyer would be held to be a part payment, taking the case out of the statute, if made subsequently to the sale, or by an independent contract at the time of the sale, such as the giving of a receipt by the buyer for the debt previously due to him, but the de- cision is express on the point that such an agreement, when part of the bargain for the purchase, one of the terms of the contract of sale itself, is not such a part payment as is required to make a parol sale valid for an amount exceeding £10. 2 (g) Walker v. Nussey, 16 M. & W. 302. ject will be found in the case of Matthies- 2. Payment by credit on existing sen, &c, Co. v. McMahon, 38 N. J. L. debt. — A very full discussion of this sub- 536, in the N. J. Court of Errors and PART II.] OP EARNEST OR PART PAYMENT. 207 § 193. Under the statute of limitations, it has been held that where goods are supplied by agreement " on account " of a debt, this is part payment of the debt. The decision to this effect given by the Exchequer in Hart v. Nash, (A) was followed by the Queen's Bench in Hooper v. Stephens, (i) And the decisions under the bankruptcy acts have been to the same effect, (k) Analogous decisions under statute of limitations. Goods "on account'' of a debt. Appeals. In that case the buyer claimed title to certain goods by virtue of an oral purchase in satisfaction of a certain in- debtedness of the seller to the buyer. Depue, J., said that the question was " whether an agreement in parol by the seller to sell, and the buyer to buy goods to the value of an existing debt, and thereby satisfy and pay the debt, is a valid sale within the statute, though there be no delivery of the goods, and no re- ceipt or voucher be given as evidence of the discharge of the indebtedness. The charge of the judge was in accordance with the decision of the Court of Ex- chequer in Walker v. Nussey, 16 M. & W. 302. * * * Walker ». Nussey has been adopted without dissent in the text- books. Benjamin and Story on Sales and Chitty and Parsons on Contracts. Sub- stantially the same doctrine was held by the Supreme Court of New York in a case earlier in point of time, Artcher v. Zeh, 5 Hill 200, and it has been re- affirmed in cases decided since. Ely v. Ormsby, 12 Barb. 570 ; Clark o. Tucker, 2 Sandf. Sup. Ct. 157 ; Brabin v. Hyde, 32 N. Y. 519 ; Teed v. Teed, 44 Barb. 96 ; Mattice v. Allen, 3 Keyes 492 ; Walruth «. Ritchie, 5 Lans. 362. * * * An effort was made to distinguish this case from the cases cited, in the fact that, in some of them at least, the agreement that the debt should be paid by the goods sold was not wholly in praesenti, and it was contemplated by the parties that some- thing should be done in the future, such as a credit entered, or endorsement made ; whereas, in the present case, the testi- mony showed that the agreement was, that the goods sold should operate at once as payment without qualification or contingency. In Dow v. Worthen, 37 Vt. 108, observations to this effect were made upon Walker v. Nussey. I see no efficacy in this distinction. The prin- ciple which underlies the cases cited, and on which they rest, is th&Uwhere no written evidence of the contract is made, and pay- ment is relied on as the compliance with the statute, mere words are not sufficient ; some act in part performance or part execution of the contract, such as the surrender or can- cellation of the evidence of the debt, or a re- ceipt or discharge of. the indebtedness, is necessary to make the contract valid. * * * I concur in the observations of Gardner, J., that 'the acts of part payment, of delivery and acceptance mentioned in the statute, are something over and beyond the agreement of which they are part performances, and which they assume as already in existence.' Shindler v. Hous- ton, 1 N. Y. 264." To the New York cases cited by Justice Depue we may add Wylie v. Kelly, 41 Barb. 594 ; Brand v. Brand, 49 Barb. 346; Pitney v. Glen's Falls Ins. Co., 65 N. Y. 6, 27. In Mat- tice u. Allen, 3 Keyes 493, Grover J., said : " The counsel for the respondent insists that the agreement of the parties to apply the debt in payment discharges the debt, and therefore it must be re- garded as a payment upon the contract (A) 2 Cr., M. & R. 337. (t) 4 Ad. & E. 71. (4) Wilkins v. Casey, 7 T. R. 713; Cannan v. Wood, 2 M. & W. 465. 208 So, also, Blair v. Or- mond. Board and lodging sup- plied in part payment. FORMATION OP THE CONTRACT. [BOOK I. in Blair v. Ormond, (l) it was held, under the statute of limitations, that an agreement by the debtor to board and lodge the creditor at a fixed price per week in deduction of the debt, was a part payment constituting a sufficient acknowledgment of the debt to take it out of the statute. and cites Davis v. Spencer, 24 N. Y. 386, in support of the position. It is true that when mutual debts exist, an agree- ment by the parties to apply the same in satisfaction of each other, will operate as a satisiaction of both. But that doctrine has no application to the present case, for the reason that the statute makes void the entire agreement, when there was nothing but mere words." See Brown v. Wade, 42 Iowa 647, 651 ; Cotterill v. Stevens, 10 Wis. 442. Payment Subsequent to the Oral Agreement. — Payment on the contract of sale will suffice to validate it, though made subsequently, under the English statute. Marsh v. Hyde, 3 Gray 331 ; Thompson v. Alger, 12 Mete. 428 ; Town- send v. Hargraves, 118 Mass. 325 ; Gault v. Brown, 48 N. H. 183, 189 ; Brady v. Harrahy, 21 U. C. Q. B. 340. But it must be made to appear that the part payment refers to and is in execution of the contract. See Matthiessen, &c, Co. o. McDonald, 38 N. J. L. 536, 538, stated ante \ 140, note 2 ; Organ v. Stewart, 60 N. Y. 413. The New York statute of frauds expressly provides that the part payment must be at the time of making the contract to satisfy the statute, and the Wisconsin statute contains the same pro- vision. Several decisions have been made in each state interpreting these words. In Bissell v. Balcom, 39 N. Y. 275, 282, a. contract of sale of vendor's cattle was made, and the next day the buyer paid a small sum to the seller, who asked for it, saying, " it is best that we bind the bar- gain so that there will be no chance to back out." Woodruff, J., said : " Here is a distinct, intelligent reference by both parties to the negotiation of the previous day ; a recognition of its want of validity ; a declared intent to make the bargain valid and binding, assented to ; a request for the payment of the money for that purpose, and a payment in compliance with that request." " Before that time there had been treaty and words of agree- ment, but having no legal force. Now by plain reference, though not by recital, the agreement is re-enacted." The sale was therefore sustained as having been made at the time of the payment. See Thomp- son v. Alger, 12 Mete. 428, which was upon the New York act ; McKnight v. Dun- lop, 5 N. Y. 537 ; Allis v. Bead, 45 N. Y. 142 ; Hawley v. Keeler, 53 N. Y. 114, 120. In Hunter v. Wetsell, 57 N. Y. 375, 377, Earl, C, said: "The con- tract was made September 27th, 1867, and no portion of the price was then paid. Subsequently the defendants paid the plaintiff $300 upon the price. There is no proof of what was said about the hops or the contract when these payments were made. The evidence does not even show that the contract was mentioned or re- ferred to. It is simply that the payments were made toward the hops." The court shows the distinction between the English and the New York statute, and says that the sale in question is not established. " The following points may be regarded as established: (1) When a contract of sale has been made, good at common law, but void under the statute of frauds, and the parties subsequently meet, and for the (I) 17 Q. B. 423, and 20 L. J., Q. B. 444. PAET II.] OF EARNEST OE PAKT PAYMENT. 209 194. There seems, therefore, no reason to doubt that the part pay- ment required by the statute of frauds as an act in addition to the parol contract, in order to make a sale good, need not be made in money, but that any thing of value which by mutual Billornote agreement is given by the buyer and accepted by the *' ' ' ! in part pay- ment. seller " on account " or in part satisfaction of the price will be equivalent to part payment. 3 The transfer to the vendor express purpose of then complying with the statute and making the contract valid, a payment is made by the purchaser upon the contract, at the request of the seller, such payment is made at the time of making the contract, within the meaning of the statute. (2) Where, in case of such a void contract, the parties subse- quently come together and substantially restate, re-affirm or renew its terms, so as then and there, by the meeting of their minds to make a contract, and there pay- ment is made upon the contract, the stat- ute is complied with." After a new trial the same case came again before the New York Court of Appeals. Hunter v. Wet- sell, 84 N. Y. 549. On the new trial there was evidence, and the jury found that the contract was restated at the time of the partial payment, and their verdict was sustained. The defendant raised a new question, showing that the payment was by check, and claiming that the part payment was not made until the check was paid at the bank, and the sale was not then recognized ; but the court said that the delivery of the check was such an act of part payment as satisfied the statute. See Hallenbeck v. Cochran, 20 Hun 416, where the sale was held void, although at the time of the part payment the buyer referred to the bargain, saying that he " had a hard bargain." This is not easily reconciled with Bissell v. Balcom, supra. In Bates v. Chesebro, 32 Wis. 594, a pay- ment subsequent to the contract of sale was held insufficient. Cole, J., said : "It must appear that the parties understood and assented to the terms of the contract at the ' time of payment, so as to make such payment apply on a present and not a past agreement of sale." This was cited and followed in Paine v. Fulton, 34 Wis. 83, where the part payment was made, subsequently to the oral sale, to a third person at the request of the seller. Payment must be Accepted to be Effectual to Satisfy the Statute.— Ed- gerton v. Hodge, 41 Vt. 676 ; Kaitling v. Parkin, 23 U. C. C. P. 569 ; Walrath „. Ingles, 64 Barb. 265. When made and accepted, both parties are bound. Fur- niss v. Sawens, 3 U. C. Q. B. 77 ; White v. Ailen, 9 Ind. 561. Payment to an agent, or to a third person by direction of the seller, is sufficient to satisfy the stat- ute, but the agent must be authorized, or his receipt ratified by some act of his principal. Hawley v. Keeler, 53 N. Y. 114, 120; Brady v. Harrahy, 21 U. C. Q. B. 340 ; Cotterill v. Stevens, 10 Wis. 442. 3. The earnest or part payment re- quired by the statute is not necessarily money. In White v. Drew, 56 How. Pr. 53, 57, the plaintiff gave the defendant information showing that a rise in certain stock was probable, in consideration for which defendant agreed to hold five thou- sand shares already in his possession for plaintiff's account. A profit having been realized plaintiff 'claimed the benefit of it, but defendant disputed this claim un- der the statute of frauds. Pratt, J., said : "The knowledge of a fact cannot be called mere words. * * * This in- formation was concededly of great value and was just as effective to take the case out of the statute of frauds as if a cash payment had then been made." 210 FORMATION OF THE CONTRACT. [BOOK I. Civil law. of a bill or note "on account" or in part payment, would seem also to suffice to render the bargain valid, (to) 4 In Maber v. Maber, in) a gift of the interest due was held to be a part payment. § 195. The Roman law on the subject of earnest was very peculiar, and the texts which govern it might readily be misunder- stood unless careful discrimination be observed. Earnest was of two kinds : one was an independent contract anterior to the agreement of sale; the other was accessory to the contract of sale after it had been agreed on, and was, like the earnest of the common law, a proof that the bargain was concluded, argumentum contractus facti. § 196. The independent contract of earnest was an agreement by which a man proposed to another to give him a sum of money for what we should term the option of purchase. If the sale afterwards took place, the earnest money was deducted from the price. If the purchaser declined completing the purchase, he forfeited the earnest money. If the party who had received earnest did not choose to sell when the option was claimed, he was bound to return the earnest (m) Chamberlyn v. Delarive, 2 Wils. 253 ; Kearslake v., Morgan, 5 T. R. 513 ; Griffiths v. Owen, 13 M. & W. 58. 4. Giving the Buyer's own Note for the Price is not Payment. — In Krohn v. Bantz, 68 Ind. 277, the buyer complained for breach of an oral contract of sale of two hundred and fifty hogs, on account of which he had given his note for $100. The seller demurred. Worden, J., said : " The note, we think, cannot be regarded as part payment within the [meaning of the statute. It was but the plaintiff's agreement to pay in the future a part of the purchase money for the hogs before the arrival of the time for their delivery. It was no more effective for the purpose of taking the contract out of the statute as part payment, than would have been the plaintiff's parol promise to do the same thing." " The note was of no value whatever, because it had no consideration to support it, and its payment could not therefore have been enforced. * * * The promise of one party may be a good consideration for the promise of the other. But if the promise of one is not valid and binding, because not made in accord- ance with the requirements of law, it can furnish no valid consideration for the promise of the other. The element of mutuality is entirely lacking in such case." To the same effect, see Hooker v. Knab, 26 Wis. 511 ; Nichols „. Mitchell, 30 Wis. 329 ; Combs v. Bateman, 10 Barb. 573. See, also, Scott o. Bush, 26 Mich. 418 ; Grimes o. Van Vechten, 20 Mich. 410. Payment by check, which is hon- ored, is considered payment at the time it is given. Hunter v. Wetsell, 84 K. Y. 549 ; Gould v. Town of Oneonta, 71 K. Y. 298, 307. A payment of the price was held to satisfy the statute, notwithstand- ing the fact that the seller gave back to the buyer a note for the money received. The court said they would treat the note as a receipt for the money. Smith i>. Bowley, 34 N. Y. 367. (n) L. R., 2 Ex. 153. PART II. J OF EARNEST OR PART PAYMENT. 211 money and an equivalent amount by way of forfeiture for disappoint- ing the other in his option, (o) § 197. The other species of earnest of the Roman law was the same as that of the common law. It might consist of a thing, as a ring, ■annullus, which either party, but generally the buyer, gave to the other as a sign, proof, or symbol of the conclusion of the bargain (p) — and when money was given in earnest it was considered as being in part payment of the price, (q) Varro gives this as the etymology of the word : (r) " Arrhabo sic dicta, ut reliquum reddatur. Hoc verbum a Grceco arrabon, reliquum, ex eo quod debitum reliquit;"- — and the Institutes of Gaius (s) give its true nature, " Quod scepe arrce nomine pro emptione datur, non eo pertinet quasi sine arra conventio nihil pro- fidat; sed ut evidentius probari possit convenisse de pretio." § 198. At a latter date, however, the Emperor Justinian made by statute an important change in the law of earnest, by providing that in all cases where it was given, whether the sale was in writing or not, and whether there was any stipulation to that effect or not, either party might rescind the sale by forfeiting the amount of the earnest money. The whole text is a remarkable one, giving full rules as to form of the sale, the assent, the giving of earnest, and the right of rescis- sion. " JEmptio et venditio contrahitur simul atque de pretio convenerit, quamvis nondum pretium numeratum sit ac ne arra quidem data fuerit ; nam quod arroz nomine datur argumentum est emptionis et venditionis oontractce. Sed hose quidem de emptionibus et venditionibus qua sine jscriptura consistunt obtinere oportet, nam nihil a nobis in hnjusmodi venditionibus innovatum est. In his autem quae scriptura conficiuntur, non alitur perfectam esse venditionem et emptionem constituimus, nisi et instrumenta emptionis fuerint conscripta, vel manu propria contrahen- tium, vel ab alio quidem scripta, a contrahentibus autem subscripta ; et si per tabelliones fiunt, nisi et completiones acceperint et fuerint partibus absoluta. Donee enim aliquid deest ex his, et pcenitentice locus est, et potest emptor vel venditor, sine poena recedere ab emptione. Ita tamen impune eis recedere concedimus. nisi jam arrarum nomine aliquid (o) L. 17, Cod. de Fid. Instr. ; Pothier, The Greek dopaBdiv and the Latin arra Vente, Nos. 497, 8, 9. are both modifications of the Hebrew (p) Dig. 19, 1, de Act. Emp. et Vend, 'erabon, a pledge, Gen. xxxviii. 17. This 11, J 6, Ulp. word was introduced by the Phoenicians (q) Dig. 18, 3, de Lege Commissoria, 8 into both Greece and Italy. See Skeat's Scsev. Etm. Diet., p. 184. (r) De Lingua Latina, lib. 5, \ 175. (a) Com. 3, jj 139. 212 FOBMATIOX OP THE CONTRACT. [BOOK I. fuerit datum. Hoc etenim subsecuto, sive in scriptis, sive sine scriptis venditio celehrata est, is qui recusat adimplere contractual, si quidem est emptor, perdit quod dedit : si vero venditor, duplurn restituere compel- litur, licet super arris nihil expressum est." (t) This text not only- changed the antecedent law, by allowing either party to rescind the bargain by forfeiting the value of the earnest, but it made a further innovation by providing that when the parties had agreed to draw up their sale in writing, either might recede from the bargain until all the forms of a written contract had been finally completed ; in dero- gation of the ante-Justinian law, which made the contract perfect by mutual assent before the writings were drawn up. (u) § 199. Pothier struggles, on the authority of Vinnius, to escape from the apparently plain meaning of this text of the In- stitutes, and maintains the old distinction, that after earn- est given to bind the bargain, neither party can escape from his obli- gations as vendor or purchaser, by the sacrifice of the amount of th& earnest, (x) But his reasoning is scarcely satisfactory, and later authors consider the language of the text too absolute to be explained away, (y) § 200. The French civil code seems to reject Pothier's doctrine and provides, art. 1590, "Si la promesse de vente a ete faite- French code. ,,, , , avec des arrh.es, chacun des contradants est maitre de s en departir, celui qui les a donnees en les perdant, et celui qui les a recues en restituant le double" Singularly enough, however, the same dis- cussion has sprung up under this text as under that of Justinian, and the commentators are divided, Toullier, Maleviile, Duranton, and some others taking the side of Pothier, while Duvergier, Coulon, Devilleneuve, and Ortolan, are of the contrary opinion, (z (t) Inst. lib. iii., tit. xxiii., 1. (y) Ortolan, Explication Hist, des Inst. («) Dig. 18, 1, de Contrail. Empt. 2, I vol. 3, p. 269. 1, Paul ; Gaius, Comm. 3, \ 139. (z) The references are given in Sirey (i) Pothier, Vente, No. 508. & Gilbert, Code AnnotS, art. 1590. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 213 CHAPTER VI. OF THE MEMORANDUM OR NOTE IN WRITING. SEC. Law of evidence as to written con- tracts not changed by the statute.. 201 Common law principles 202 Parol evidence, when admissible where there is a written note of the bargain 207 True theory of the statute 208 Parol evidence admissible to show that the writing is not a note of any bargain at all 209 Or that it is not a note of the whole bargain 209 Inadmissible to supplement an imperfect note 210 Inadmissible to connect separate written papers 210 Admissible to identify the sub- ject matter of the note 211 Admissible to show the situation and circumstances, and to ex- plain mercantile language, and show date 211 Also to show the meaning of words, according to a. trade usage 211 Also mistake in omitting goods in bought and sold notes 212 Also to show that writing was intended only to take effect conditionally 212 And to explain latent ambiguity 212 As to particular commercial usages 213 Admissibility of parol evidence to change or annul written note 214 Admissible to show buyer's order for alterations in chattel to be manufactured 214 Admissible to prove substituted mode of performance 215 Decisions as to postponement of de- livery 215 ie en ^ )U * ; tne examination of this clause of the statute would TwrlttSfnote De very incomplete without some reference to the de- o t e bargain. c j s j orls w jjj cn determine in what cases, for what purposes, and to what extent, parol evidence is admissible to affect the rights of the parties, when there exists a note or memorandum in writing of the bargain sufficient to satisfy the seventeenth section. § 208. It must be steadily borne in mind that the statute was not enacted for cases where the parties, either in person or by of this clause agents, have signed a written contract; for in those cases of the statute. , . „ . . . . . ~, . the common law affords by its rules quite a sufficient guaranty against frauds and perjuries as is provided by the statute. The intent of the statute was to prevent the enforcement of parol contracts above a certain value, unless the defendant could be shown to have executed the alleged contract by partial performance, as mani- fested by part payment, or part acceptance, or unless his signature to some written note or memorandum of the bargain — not to the bargain itself — could be shown, (e) The existence of the note or memorandum pre-supposes an antecedent contract by parol, of which the writing is a note or memorandum. 3 § 209. [It is a simple deduction from this theory of the statute Parol evidence tnat P ar °l evidence is always admissible to show that the admissible to wr iti n g which purports to be a note or memorandum of (e) See the remarks of Erie, J., in Cas. 305. The statement in the text is to Sievewright v. Archibald, 17 Q. B. 124; be found passim in the cases on this sub- 20 L. J., Q. B. 529 ; of Williams, J., in ject. Bailey ». Sweeting, 9 C. B. (N. S.) 843 ; 3. Townsend v. Hargraves, 118 Mass. 30 L. J., C. P. 150 ; and of Lord Wens- 325 ; Bird v. Munroe, 66 Me. 337 ; leydale in Ridgwav i>. Wharton, 6 H. L. Learned v. Wannemacher, 9 Allen 412. PART. II. J OP THE MEMORANDUM OR NOTE IN WRITING. 219 the bargain is not a record of any antecedent parol con- ^u^gpro! 16 tract at all, (/) for, as was said by Lord Selborne in Jervis ? e u c o e r d d ^ f n °^ v. Berridge, (g) the statute of frauds "is a weapon of de- oontraot at a11 ' fence, not offence, and does not make any signed instrument a valid contract by reason of the signature, if it is not such according to the good faith and real intention of the parties.] 4 On the same principle parol evidence is admissible for the purpose of showing that the written paper is not a note or memo- randum of the antecedent parol agreement, but only of thatthe 8 ° w part of it, and the decisions are quite in accordance with anote^.f'the ... whole bargain. this view. Thus, if the writing offered in evidence contains no reference to the price at which the goods were sold, parol evidence is admissible to prove that a price was actually fixed, and the writing is thus shown not to be a note of the agreement, but only of some of its terms. (A) ■> So where a sale of wool was made by sample, and one of the terms of the bargain was that the wool should be in good dry condition, parol evidence was admitted to show this fact, and thus to invalidate the sold note signed by the broker, which omitted that stipulation, (i) 6- (/) Pym v. Campbell, 6 E. & B. 370 ; Wake v. Harrop, 6 H. & N. 768 ; Clever v. Kirkman, 24 W. R. 159 ; 33 L. T. (N. S.) 672 ; Hussey v. Horne-Payne, 4 App. Cas. 311, per Lord Cairns, at p. 320. (g) 10 Ch. at p. 360. 4. Hildreth o. O'Brien, 10 Allen 104; Rennell v. Kimball, 5 Id. 356 ; Hazard v. Loring, 10 Cush. 267 ; Butler v. Smilh, 35 Miss. 457, 463; Leppoc v. Bank, 32 Md. 136, 144; Blake v. Coleman, 22 Wis. 415; Shughart v. Moore, 78 Penna. 469; James v. Muir, 33 Micb. 223 ; Deshon v. Ins. Co., 11 Mete. 199 ; Earle v. Rice, 111 Mass. 17, 20 ; G-rierson v. Mason, 60 N. Y. 394 ; McKesson v. Sherman, 51 Wis. 303, 312 ; Wright v. McPike, 70 Mo. 175, 179. But see Wemple v. Knopf, 15 Minn. 440. In Kalamazoo, &c, Co. v. McAllis- ter, 40 Mich. 84, Graves, J., said: "In order to exclude oral evidence of a con- tract, it must be first settled that there is a subsisting written contract, between the parties, and where the immediate issue is whether there is or was a writing cover- ing the contract, it is not competent to exclude oral testimony bearing on that issue upon an assumption of such writ- ing. To do so is to beg the question.'' (h) Elmore u. Kingscote, 5 B. & C. 583 ; Goodman v. Griffiths, 1 H. & N. 574 ; S. C, 26 L. J., Ex. 145 ; Acebal v. Levy, 10 Bing. 376. 5. See I 251, infra. (t) Pitts v. Beckett, 13 M. & W. 743. 6. A Broker's Memorandum is In- sufficient if it Omits a Warranty which was Given. — Peltier v. Collins, 3 Wend. 459. In this case, the memorandum of sale made by a broker omitted the sell- er's warranty, and it was held to be fatal to the action for damages for not accept- ing. See Sale v. Darragh, 2 Hilt. 184, 198. In Boardman v. Spooner, 13 Allen 353, 359, the memorandum omitted a pro- vision of the oral sale that one of the buyers should judge of the quality. Fos- ter, J., said : " The omission of the condi- tion that the purchase was subject to the approval of the vendees as to the quality, 220 FORMATION OF THE CONTRACT. [BOOK I. [And in a recent Irish case, where the writing offered in evidence was the auctioneer's sales-book which contained no statement that the sale was by sample, parol evidence was admitted, on behalf of the defendant, to prove that the sale was by sample, and that therefore the auctioneer's book was not a memorandum of the whole contract. (&)] § 210. And the same principle which permits the defendant to offer inadmissible parol evidence, showing that the written note is imperfect, inlmperfecT' an ^ therefore not such a note as satisfies the statute, for- bids him who sets up the writing for the purpose of bind- ing the other from supplementing the writing by parol proof of terms or stipulations not contained in it; for it is manifest, that by offering such proof, he admits that the writing does not contain a note of the bargain, but only of part of it. (I) 7 constitutes a material variance between the contract as made and as written down in the broker's book." He cites Peltier v. Collins, supra, and says : " That a con- temporaneous agreement of warranty can- not be engrafted by oral evidence on a written instrument, is well settled in this state." Cites Warren v. Wheeler, 8 Mete. 97; Dutton v. Gerrish, 9 Cush. 89; Raymond v. Raymond, 10 Cush. 131; Howe v. Walker, 4 Gray 318. In Pike v. Fay, 101 Mass. 134, the buyer, when sued for not accepting under .i written contract, was permitted to prove that the sale was by a sample shown, and that the goods offered were rejected as not corresponding with the sample. The price, however, was less than $50. See Mayer v. Adrian, 77 N. C. 83, 91. It must be observed that, in the above- stated cases of Peltier v. Collins, Board- man v. Spooler, and Mayer v. Adrian, the memorandum was made by an agent Had the parties signed the memorandum as a contract, neither would have been permitted to question its completeness by parol evidence. Etheridge v. Palin, 72 N. C. 213. Thus, in Frost v. Elan- chard, 97 Mass. 155, defendants ordered and accepted goods in writing, but at- tempted to defend for breach of an oral warranty. Foster, J., said : " A previous or contemporaneous warranty cannot be engrafted by parol evidence on a written contract." (It would seem that a subse- quent warranty might be oral, but if so, a new consideration would be essential to its validity.) And even though the con- tract was signed by an agent, it does not follow that its terms can be questioned. If he is a general agent, his principals are bound by the terms of his contract as expressed in the writing. But if he is an ordinary broker, negotiating a sale, he has no authority except what is derived from that single contract. '' A broker is authorized to sign only that contract into which the vendor has entered, not another different contract. If he omits to include in the memorandum special exceptions and conditions to the bargain, he signs a contract which he has no authority to make, and the party relying upon it must fail, because it is shown that the broker was not the agent of the vendor to sign that contract." Bigelow, C. J., in Cod- dington v. Goddard, 16 Gray 436, 445. (k) M' Mullen v. Helberg, 4 L. R., Ir. 94, on app. 6 L. R., Ir. 463. (1) Boydell v. Drummond, 11 East 142 ; Fitzmauiice v. Bayley, 9 H. L. Cas. 78 ; Holmes v. Mitchell, 7 C. B. (N. S.) 361, and 28 L. J., C. P. 201 ; Harrow v. Groves, 15 C. B. 667 ; 24 L. J., C. P. 53. 7. The whole Contract Sued upon must be in Writing. — See note 17, in- PART II. J OF THE MEMORANDUM OR NOTE IN WRITING. 221 [And this statement of the law was approved by O'Brien, J., in the Irish ease of M'Mullen v. Helberg, 4 L. R., Ir. 94, at p. 110.} fra. " A contract required by the statute of frauds to be in writing cannot be partly in writing and partly in parol." Frank v. Miller, 38 Md. 450, 460 ; La- zear v. National Union Bank, 52 Md. 78, 120 ; Langa. Henry, 54 N. H. 57 ; Kandall v. Rhodes, 1 Curt. 90 ; Jenness v. Mount Hope Iron Co., 53 Me. 20, 24 ; Dana v: Hancock, 30 Vt. 616; Millett v. Marston, 62 Me. 477 ; Stevens ti. Haskell, 70 Me. 202 ; Keller v. Webb, 126 Mass. 393 ; Spence v. Bowen, 41 Mich. 149 ; Caulkins v. Hellman, 14 Hun 330 ; Marks v. Cass Co. Mill Co., 43 Iowa 146. Parol evidence to add the .word " sold " to a written memorandum of a sale, thereby making it an intelligible contract, was held not admissible, though the word was omitted by mistake. Lee u. Hills, 66 Ind. 474, 481: But the law will supply whatever is fairly to be implied from the writing though not expressed. Thus when the memorandum recited that A had sold cer- tain property to B, the United States Su- preme Court held that this sufficiently showed that B had bought the property from A. Butler v. Thomson, 92 U. S. 412. See, also, Salmon Falls, &c, Co. v. Goddard, 14 How. 446. Parol evidence is not admissible to add a warranty of quality or quantity to a written contract of sale. Etheridge v. Palin, 72 N. C. 213 ; Frost v. Blanchard, quoted in note 6, ante. But where a memorandum had been made, and part of the price paid also, it was held that the buyer might show a mistake in the writing, the part payment having satisfied the statute. Hicks v. Cleveland, 48 N. Y. 84, 91. See post, \ 212, note 12. See, also, Kribs v. Jones, 44 Md. 396, 408. On the other hand, in Wiener v. Whipple, 53 Wis. 298, the plaintiff bought barley and made a partial payment, and stated the terms in writing signed by both parties. After- wards he brought suit for damages, al- leging that the sale was by sample, and that the barley tendered was not equal to the sample. The writing did not men- tion that the sale was by sample. It was held that the plaintiff could not prove that fact by oral testimony. Taylor, J., said: " It has been often held that the party not assenting to the making of such memorandum is not bound thereby, and may prove the terms of the parol con- tract for the very purpose of showing that the memorandum does not state the real contract between the parties, and so defeat a recovery upon it under the stat- ute of frauds for want of a sufficient note or memorandum thereof in writing. See Benjamin on Sales, \ 209. It is evident that the principle of these cases can have no application to a case where it is shown that both parties have assented to and signed the writing." In Chapin v. Dob- son, 78 N. Y. 74, a written agreement was. made to sell three machines for $300 each. On a suit for the price, defendant set up that the purchase was made in consideration of an oral agreement by the sellers to take back the machines without requiring payment if they did not work to the buyer's satisfaction, and the de- fence was sustained. Danforth, J., said that the general rule requiring the rejec- tion of parol evidence where the contract is written, "does not apply where the original contract was verbal and entire, and a part only reduced to writing." The statute of frauds is not referred to in the opinion. The suit was upon a. Pennsylvania contract, and in that state the seventeenth section is not law ; but this does not explain the case, for the court expressly assumes the lex loci to be the same as the lex fori. It is not easy to reconcile this case with the general principle that makes a written contract conclusive as to all the terms. See Van Syckel v. Dalrymple, 32 N. J. Eq. 233, 222 FORMATION OF THE CONTRACT. [BOOK 1. It is also on this principle that when the bargain is to be made out inadmissible by se P arate written papers, parol evidence is not allowed separatewrit- to connect them, but they must either be physically at- ten papers. tached together, so as to show that they constitute but one instrument, or they must be connected by reference in the contents of one to the contents of the other, (m) as will be fully seen, infra, (§§ 220 to 231.) 3 But where a purchaser agreed to pay by a cheque (n) on his brother, the court held that this was not one of the terms which need appear in the writing ; and further, that parol proof that under the contract certain candlesticks were to be made with a gallery to receive a shade, did not affect the sufficiency of the writing which described them as " candlesticks complete." (o)] § 211. Although parol evidence is not admissible to supply omis- sions or introduce terms, or to contradict, alter, or vary a Admissible to . . ..,..,,„, „ identify the written instrument, it is admissible tor the purpose ot subject matter, , . i i • identifying the subject matter to which the writing re- fers, (p) 9 Thus, where the written letter contained an agreement to Wilson v. Deen, 74 N. Y. 531, stated ante, {j 202, note 1. The case of Greenawalt v. Kohne, 85 Pa. 369, is very similar in facts and in the conclusion reached, with Chapin v. Dobson, but, as before stated, the statute of frauds in Pennsylvania does not affect sales of goods. One not a Party to a Written Agree- ment may controvert it by Parol Evi- dence. — There is an important excep- tion to the rule that an agreement in writing is the best evidence, namely, that ■one not connected with the agreement may show by oral evidence what the real transaction is. Brown v. Thurber, 77 N. Y. 613 ; Crowley v. Pendleton, 46 Conn. 62 ; Talbot v. Wilkins, 31 Ark. 411, 420 ; Smith v. Moynihan, 44 Cal. 53 ; Huss- man v. Wilke, 50 Cal. 250 ; Reynold v. Magness, 2 Ired. 30 ; Coleman v. First National Bank of Elmira, 53 N. Y. 388 ; McMaster v. Ins. Co., 55 N. Y. 222, 234. Parol Evidence of a Sale within the Statute, if admitted without Ob- jection, will sustain a Verdict. — Montgomery v. Edwards, 46 Vt. 151. (m) Hinde v. Whitehouse, 7 East 558 ; Kenworthy v. Scofield, 2 B. & C. 945 ; Pierce v. Corf, L. R., 9 Q. B. 210 ; Rish- ton v. Whatmore, 8 Ch. D. 467. But see Baumann v. James, 3 Ch. 508 ; Long i>. Millar, 4 C. P. D. 450, C. A.; Cave v. Hastings, 7 Q. B. D. 125. 8. See note to § 220, infra. (n) Secus, as to payment by a bill. Mahalen v. The Dublin and Chapelizod Distillery Co., 11 Ir. R. C. L. 83. (o) Sari v. Bourdillon, 26 L. X, C. P. 78; 1C. B. (N. S.) 188. (p) Bateman v. Phillips, 15 East 472 ; Shortrede v. Cheek, 1 Ad. & E. 57 ; Mum- ford v. Gething, 7 C. B. (N. S.) 305, and 29 L. J., C. P. 105 ; Chambers v. Kelly, 7 Ir. R. C. L. 231. 9. Thus in Wright v. Deklyn, Pet. C. C. 199, evidence was admitted of the auctioneer's declarations to show what the properly mentioned in the note was. See Barry v. Coombe, 1 Pet. 640 ; Swett v. Shumway, 102 Mass. 365; Keller v. Webb, 125 Mass. 88; Noyes v. Canfield, 27 Vt. 79 ; Sandford «. Newark, &c, B. PART II.] OF THE MEMORANDUM OR NOTE IN WHITING. 223 purchase " your wool," parol evidence was admitted to apply the let- ter, and to show what was meant by " your wool." (q) Parol evidence is also admitted to show the situation of the parties at the time the writing was made, and the circumstances ; (r) 6 ', ' v ' Alsi.to show to explain the language, as for instance, to show that the situation of bought and sold notes have the same meaning among mer- chants, though the language seems to vary ; (s) and to show the date when the bargain was made, (t) 10 [It is also admissible to show that alterations which have been made in the document signed by one of the parties were Aj80 altera . assented to by the other party ; the effect of the evidence to°byth e ented being not to vary the written instrument but to show other P art y- what was its condition when it became the memorandum of the con- tract, (w)] 11 Parol evidence was likewise admitted to show that a sale of ** fourteen pockets of Kent hops, at one hundred shillings," Al90 the mean . meant one hundred shillings per hundredweight, accord- j£*° f word ing to the usage of the hop trade, (a;) according to trade usage. E., 37 N. J. L. 1 ; Ball „. Benjamin, 73 111. 39 ; Bickett v. Taylor, 55 How. Pr. 126. (q) Macdonald v. Longbottom, 28 L. J., Q. B. 293 ; S. C. on appeal, 1 E. & E. 977, and 29 L. J., Q. B. 256 ; and see Shard- low v. Cotterell, 20 Ch. D. 90, C. A. ; re- versing S. C, 18 Ch. D. 280, a case of a sale of real estate, where the word " prop- erty " was held to be a sufficient descrip- tion. (r) Per Tindal, C. J., in Sweet v. Lee, 3 M. & G. 466. (s) Bold v. Eayner, 1 M. & W. 342 ; and per Erie, C. J., in Sievewright u. Archibald, 17 Q. B. 124; 20 L. J., Q. B. 529. (t) Edmunds v. Downs, 2 C. & M. 459 ; Hartley v. Wharton, 11 Ad. & E. 934 ; Lobb v. Stanley, 5 Q. B. 574. 10. Circumstances, Date and Mean- ing may be Explained by Parol. — Sal- mon Falls Manfg. Co. v. Goddard, 14 How. 446 ; Dana v. Fiedler, 12 N. Y. 40 ; Hagan ii. Domestic, &c, Co , 9 Hun 73 ; Pollen v. Le Boy, 30 N. Y. 549 ; Mess- more v. N. Y. Shot and Lead Co., 40 N. Y. 422 ; Blossom v. Griffin, 13 N. Y. 569 ; Draper v. Snow, 20 N. Y. 331 ; Moore v. Meacham, 10 N. Y. 207 ; Eeynolds v. Insurance Co., 47 N. Y. 605 ; Peisch *. Dickson, 1 Mason 9, 11 ; Gately v. Irvine, 51 Cal. 172; Cole „. Howe, 50 Vt. 35; Polk v. Anderson, 16 Kan. 243; Cham- berlain v. Black, 64 Me. 40. " The rule which admits extrinsic evidence for the purpose of applying a written contract, to its proper subject matter, extends beyond the mere designation of the thing on which the contract operates, and em- braces within its scope the circumstances under which the contract concerning that thing was made." Barbour, J., in Brad- ley v. Washington, &c, Co., 13 Pet. 89, 102. In an action for breach of a warranty in a written contract of sale, parol evi- dence was admitted to show that the de- fect waB known to plaintiff, and therefore the warranty was not intended to cover it. Bennett v. Buchan, 76 N. Y. 386, 391. («) Stewart v. Eddowes, L. E., 9 C. P. 311. 11. Hicks v. Cleveland, 48 N. Y. 84, 91. (x) Spicer v. Cooper, 1 Q. B. 424. 22 ^ FORMATION OF THE CONTRACT. [BOOK I. [But it should be remembered that when the evidence in support Evidence °f a tra de usage seeks to alter the natural meaning and SnTcons°iL- ar construction of the words as written, it must in every case be clear and consistent.] (y) § 212. Parol evidence is also admissible to show a mistake in draw- Aiso mistake m & up ^ e bought an & s °ld notes (whereby certain goods ^oS'in" 8 were om ' tte ^) i n an action of trover by the vendors soid e not a es d against the purchaser for the goods so omitted after they had been paid for, and taken into possession by the pur- chaser. («) 12 Also to show that a written document, purporting to be an agree- Also to sho ment > aQ d signed by the parties, was executed, not with ^writing the intention of making a present contract, but like an conditoSiiy. escrow > or wr 't' n g to take effect only on condition of the happening of a future event; (a) or was even to be modi- fied upon some future contingency, (b) 13 Also to explain a latent ambiguity in a contract of sale, as where a bargain was made for the sale of cotton, " to arrive ex To explain ° ' latent ambi- ' Peerless ' from Bombay," parol evidence was held ad- missible to show that there were two ships " Peerless " from Bombay, and that the ship " Peerless " intended by the vendor (y) Bowes v. Shand, 2 App. Cas. 455. teberry v. Miller, 76 111. 355. (z) Steele v. Haddock, 10 Ex. 642 ; 24 (a) Pym *. Campbell, 6 E. & B. 370 ; L. J., Ex. 78. 25 L. J., Q. B. 277 ; Furness v. Meek, 27 12. In Hicks v. Cleveland, 48 N. Y. 91, L. J., Ex. 34 ; Davis v. Jones, 25 L. J., the plaintiff claimed certain property, C. P. 91. only part of which was mentioned in his (6) Rogers v. Hadley, 2 H. & C. 227; written agreement of purchase, but for 32 L. J., Ex. 241. all of which he claimed to have paid. 13. See {! 209, note 4, ante. It is a Earl, C, said : " As it was of the value of familiar principle in equity that a con- more than $50 he was simply required to tract of sale, absolute by its terms, may be comply with the statute of frauds ; and shown by oral evidence to be intended as this he did by paying the whole or a part security for a debt. " The rule which of the purchase money. If, therefore, by excludes parol testimony to contradict or mistake, as now claimed, the writing did vary a written instrument, has reference not express the intention of the parties, to the language used by the parties. That and did not cover the property really cannot be qualified or varied from its sold, the plaintiff did not lose the prop- natural import, but must speak for itself, erty, but can show by parol precisely The rule does not forbid an inquiry into what it was that he bought." But where the object of the parties in executing and by mistake each party signed the wrong receiving the instrument." Brick v. Brick, note of sale, it was held that the papers 98 U. S. 514, 516 ; Peugh v. Davis, 96 Id. could not be admitted as evidence. Can- 336. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 225 was a different ship " Peerless " from that intended by the buyer, so as to establish a mistake defeating the contract for want of a concensus ad idem, (c) I 4 § 213. The admissibility of parol evidence of particular commercial usages to engraft terms into the bargain, or even to intro- , ,. . As to partieu- duce conditions apparently at variance with the implica- lar commercial L L * L usages. tion resulting from the written stipulations (as was done in Field v. Lelean,(d) where evidence was admitted of a usage in the sale of mining; shares, not to make delivery before pay- f • - 11 Field o.Lelean. ment, although the written terms were for a price payable in futuro,) is too large a branch of the subject to be here treated in detail, and the reader must be referred to the decisions which are col- lected and classed in the notes to Wigglesworth v. Dallison, in the first volume of Smith's Leading Cases, (e) 15 [Alexander v. Vanderzee, L. R., 7 C. P. 530, and Ashworth v. Redford, L. R., 9 C. P. 20, are recent cases, which illustrate the method of construing particular mercantile terms apart from any trade usage.] § 214. After a contract has been proven by the production of a written note or memorandum sufficient to satisfy the Parol evidenee statute, the question often arises as to the admissibility of jJu^fagree- parol proof of a subsequent agreement to change or STimui'th? annul it. written note. At common law it is competent to the parties at any time after an agreement (not under seal) has been>reduced to writing and signed, to make a fresh parol agreement, either to waive the written bargain altogether, to dissolve and annul it, or to subtract from, vary, or (c) Baffles v. Wichelhaus, 2 H. & C. 438, C. A. 906 ; 33 L. J., Ex. 160. 15. See Boardman v. Spooner, 13 Allen 14. Robinson v. United States, 13 Wall. 353, 359, 360 ; Haskins v. Warren, 115 363; Heineman v. Heard, 39 N. Y. 98. Mass. 514, 536; Whitney v. Boardman, In Thorington v. Smith, 8 Wall. 1, 12, 118 Id. 242 ; Salmon Falls Manfg. Co. v. parol evidence was admitted to show that Goddard, 14 How. 446 ; Miller v. Stevens, the word " dollars " in a written contract 100 Mass. 518 ; Steward v. Scudder, 24 meant confederate dollars. To the same N. J. L. 96; Barnard v. Kellogg, 10 Wall, effect see Atlantic, &c, R. R. Co. *. Caro- 383; Oelrichs v. Ford, 23 How. 49; Rob- Una, &c, Bank, 19 Wall. 548. inson v. United States, 13 Wall. 365. An (d) '6 H. & N. 617 ; 30 L. J., Ex. 168. express contract cannot be contradicted See, also, Bissell v. Beard, 28 L. T. (N. by proof of usage or custom. Schenck v. S.) 740. Griffin, 38 N. J. L. 462, 471 ; Spears v. (e) Vol. I. (8th ed.), p. 602, et seq. ; Ward, 48 Ind. 541. and see Johnson v. Raylton, 7 Q. B. D. 226 FORMATION OF THE CONTRACT. [BOOK I. qualify its terms, and thus to make a new contract, to be proven partly by the written agreement, and partly by the subsequent verbal terms engrafted upon what is left of the written agreement. (/) 16 But this principle of the common law is not applicable to a con- tract for the sale of goods under the statute of frauds. No verbal agreement to abandon it in part, or to add to, or omit, or modify any of its terms, is admissible. Thus parol evidence is not admissible to change the place of de- livery fixed in the writing, (g) nor the time for the delivery ; (/) nor to prove a partial waiver of a promise to furnish a good title ; (g) nor a modification of a stipulation for a valuation ; (h) nor a change in any of the terms; for the courts can draw no distinctions between stipulations that are material and those that are not. (i) I 7 (/) Per Denman, C. J., in Goss v. Lord Nugent, 5 B. & Ad. 65. 16. In Thurston v. Ludwig, 6 Ohio St. 1, 5, Bartley, C. J., said : " II appears to be well settled that subsequent to the exe- cution of a written contract, it is compe- tent for the parties by a new contract, al- though not in writing either to abandon, Waive or annul the prior contract, or vary or qualify the terms of it in any manner. And where the verbal contract only changes or modifies some of the terms of the original contract, it embraces by refer- ence all the written stipulations of the original undertaking, and is to be proved by the verbal agreement taken in its con- nection with the written contract. But where a written contract is thus either totally abandoned and annulled, or sim- ply altered or modified in some of its terms, it is done, and can only be done by a distinct and substantive contract be- tween the parties founded on some valid consideration.' ' In Swain v. Seamens, 9 Wall. 254, 271, Clifford, J., said: "In cases not within the statute of frauds, and which fall within the general rules of the common law, it is held that the parties to an agreement, though it is in writing, may at any time before the breach of it, by a new contract not in writing, modify, waive, dissolve or annul the former agree- ment, if no part of it was within the statute of frauds." Emerson v. Slater, 22 How. 28, 41, citing Goss v. Nugent; Brown v. Everhard, 52 Wis. 207; Mus- selman v. Stoner, 31 Penna. 263 : Miller v. Fichthorn, 31 Id. 252; Allen t,. Sowerby, 37 Md. 410; Seamen v. O'Hara, 29 Mich. 66 ; Khodes v. Thomas, 2 Ind. 638; Westchester Ins. Co. v. Earle, 33 Mich. 143, 153 ; Bank v. Woodward, 5 N. H. 99; Willey v. Hall, 8 Iowa 62 ; Hew- itt v. Brown, 21 Minn. 163 ; Wiggin v. Goodwin, 63 Me. 389; Heatherly v. Record, 12 Tex. 49 ; Flanders *. Fay, 40 Vt. 316. (g) Moore v. Campbell, 10 Ex. 323, and 23 L. J., Ex. 310 ; Stowell v. Robin- son, 3 Bing. N. C. 928 ; Marshall v. Lynn, 6 M. & W. 109 ; Stead v. Dawber, 10 Ad. & E. 57. (/) Noble ». Ward, L. R., 1 Ex. 117; 35 L. J., Ex. 81. (g) Goss v. Lord Nugent, 5 B. & Ad. 65. (h) Harvey v. Grabham, 5 Ad. & E. 61. (i) Per Parke, B., in Marshall v. Lynn, 6 M. & W. 116. See, also, Emraelt v. Dewhirst, 21 L. J., Ch. 497. The cases in the notes to this paragraph overrule Cuff v. Penn, 1 M. & S. 21 ; Warren v. Stiigg, cited in Littler v. Holland, 3 T. R. 591, and Thresh v. Rake, 1 Esp. 5>; cf. Sanderson v. Graves, L. P., 10 Ex. 234, a case under the fourth section. 17. The principle stated in the text PART n.] OF THE MEMORANDUM OR NOTE IN WRITING. 227 But where there was an executory contract for the building of a landaulet described in the agreement, parol evidence was admitted of alterations and additions ordered by the pur- chaser from time to time, Gaselee, J., saying that " other- wise every building contract would be avoided by every addition." (k) Alterations ordered by buyer in chattel manu- factured for him. has not been unquestioned in this country, Massachusetts courts adopting Cuff v. Penn as authority, though over- ruled in England, as stated in our author's note, (i) supra. The weight of authority sustains the principle of the text. A Written Contract within the Statute cannot be Varied by an Oral Contract. — The question was raised in the United States Supreme Court in Emerson v. Slater, 22 How. 28, 42, but the court said it was unnecessary to de- termine it. It was raised again in Swain i,. Seamens, 9 Wall. 254, 272. Clifford, J., said : " The better opinion is that a written contract falling within the stat- ute of frauds cannot be varied by any subsequent agreement of the parties, un- less such new agreement is also in writ- ing." Refers to Marshall v. Lynn, cited by our author. There is an older case (1799) in the same court which would seem to settle the question, (Clarke v. Russell, 3 Dall. 415, 424,) where Ells- worth, C. J., said : " The undertaking declared upon must, to save it from the statute of frauds, be in writing and wholly so. The two letters, therefore, which are relied upon as the written agreement, cannot be added to or varied by parol testimony. Nor can they be so far explained by parol testimony as to affect their import with regard to the supposed undertaking. The charge, then, of the judge that they might be explained by parol testimony, expressed as a gen- eral rule, and without any qualifications or exceptions, was too broad, and may have misled the jury." In Blood v. Goodrich, 9 Wend. 68, 79, Savage, C. J., said : " There are cases when the time of performance of a, written contract may be enlarged by parol ; but I apprehend that doctrine does not apply where the contract itself would not have been valid if made by parol." In Vicary v. Moore, 2 Watts 451, 457, Gibson, C. J., said: "The altering of a written contract by parol makes it all parol." In Mussel- man v. Stoner, 31 Penna. 265, 269, evi- dence was offered to show an oral agree- ment subsequent to a written contract of sale of horses that they should be de- livered at a certain place. Lowrie, C. J., said: "Is this admissible? Its purpose is not to put the court into position to construe the transaction. It is to take the place of construction and execute its functions by supplying the deficiencies in the express agreement. Can this be allowed ? Of course it cannot in cases where the law requires the contract to be in writing, for then essential defects that cannot be supplied by construction are fatal." In Dana v. Hancock, 30 Vt. 616, 619, Rerlfield, C. J., said : " If any of the terms of such contract are altered by contract not in writing, the entire contract is thereby reduced to the grade of a mere unwritten contract, upon which the statute expressly declares that no action shall be maintained. * * * It seems to us that a moment's reflection must satisfy every one that if the action is only to be maintained upon the oral evidence offered at the trial, the action is (k) Hoadley v. M'Lain, 10 Bing. 489 ; this dictum, in Sanderson v. Graves, L. R., but see remarks of Bramwell, B., upon 10 Ex., at page 237. 228 FORMATION OP THE CONTRACT. [BOOK I. In Brady v. Oastler, (I) the action was for damages for breach of Brad v contract iu not delivering certain goods within the time oastier. fixed by a written contract, and the plaintiff offered parol evidence to prove, as an element of consideration for the jury in not maintained upon any contract in writing." In Ladd v. King, 1 K. I. 224, there is a clear statement of the whole question, and the Massachusetts case of Cummins v. Arnold, infra, is keenly criticised. Greene, C. J., says: "Upon the principle adopted by the Supreme Court of Massachusetts the purchaser, under a written contract, may be de- prived of the land he agreed for, and compelled, upon the strength of a subse- quent verbal agreement of which per- formance has been tendered, to accept other land. We think if the perform- ance is changed, the contract is changed; that when there is a substituted perform- ance agreed upon, whether as to time or subject matter, there is a substituted con- tract, and, if it relates to land, it must be in writing." The principle is the same as to sales of goods by contract in writ- ing. See Hasbrouck r>. Tappen, 15 Johns. 200; Schultz „. Bradley, 57 N. Y. 646; Kribs v. Jones, 44 Md. 396 ; Carpenter v. Galloway, 73 Ind. 418 ; Cooper v. Cleg- horn, 50 Wis. 113. In Massachusetts the Performance of Contracts Within the Statute may be Varied by Parol Agreement. — In Cummings v. Arnold, 3 Mete. 486, 491, Cuff v. Penn is approved and followed, Wilde, J., saying: "The statute requires a memorandum of the bargain to be in writing, that it may be made certain, but it does not undertake to regulate its per- formance. It does not say that such a contract shall not be varied by a subse- quent oral agreement for a. substituted performance. That is left to be decided by the rules and principles of law in re- lation to the admission of parol evidence to vary the terms of written contracts." In this case a parol agreement changing terms of payment was admitted in evi- dence. Following this case, in Stearns v. Hall, 9 Cush. 31, the same court sustained as valid an oral enlargement of time to perform a written contract to purchase a house and lot. These cases were followed in Whittier v. Dana, 10 Allen 326, but it is held that the action can only be on the written instrument. In Blanchard v. Trim, 38 N. Y. 225, Hunt, C. J., approved Cummings v. Arnold and Cuff v. Penn, but he seemed to be unaware that Cuff v. Penn had been overruled, and besides his language is mere dictum. In Organ v. Stewart, 60 N. Y. 413, 419, Andrews, J., said it was not necessary to consider the doctrine laid down in Cuff v. Penn, and approved in the three cases last above stated, though overruled in England, be- cause in the case before the court the claim was to engraft on the original con- tract a distinct subject matter by parol, which could not be supported without disregarding the statute. Cuff v. Penn was followed in Watkins v. Hodges, 6 Harr. & J. 38, 46. This case has been often cited in Maryland, but not as to parol variation of a contract within the statute. In Richardson v. Cooper, 25 Me. 450, Cummings v. Arnold is cited and followed, and it is cited with approval in Negley v. Jeflers, 28 Ohio St. 90, 100. Those Terms which the Law adds by Implication to a Written Con- tract Within the Statute, cannot be Varied by Parol. — Thus a clean bill of lading imports a contract to stow goods under the deck, and parol evidence cannot be admitted of a different agreement. The Delaware, 14 Wall. 679. But see Chalfant v. Williams, 35 Penna. 212. (I) 3 H. & C. 112; 33 L. J., Ex. 300. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 229 estimating damages, that the price fixed in the contract was above the market price, and that he had assented to pay this extra price because of the short term allowed for delivery ; but the evidence was rejected by Bramwell, B., at Nisi Prius, and his ruling was approved by Pol- lock, C. B v and Channel, B. ; a strong dissenting opinion, however, was delivered by Martin, B. § 215. [Parol evidence to prove, not a substituted contract, but the assent of the defendant to a substituted mode of perform- ing the original contract, when that performance is com- pleted, is admissible. 18 Thus, in The Leather Cloth Co. v. Hieronimus, (m) the contract was for the sale of goods to be forwarded to the purchaser by Ostend, and the goods were afterwards forwarded by Rotterdam, and evidence was Parol evi- dence to prove substituted mode of per- formance. Delivery by altered route. 18. Effect of Substituted Perform- ance Accepted. — Swain v. Seamens, 9 Wall. 254; Sovereign v. Ortman, Mich. Sup. Ct., October, 1881; McCombs v. McKennan, 2 W. & S. 216; Miles v, Boberts, 34 N. H. 245 ; Courtenay v. Ful- ler, 65 Me. 156; Allen v. Sowerby, 37 Md. 410. In Malone v. Dougherty, 79 Penna. 46, Woodward, X, said: "It is well settled that in a case of a simple contract in writing, oral evidence is per- missible to show that by a subsequent agreement the time of performance was enlarged, or the place of performance changed, the contract having been per- formed according to the enlarged time or at the substituted place, or the perform- ance having been prevented by the act of the other party." The last clause is applicable only to contracts not within the statute, except where the Massachu- setts rule, stated in last note, is in force. In Long v. Hartwell, 34 N. J. L. 116, 127, Van Syckel, J., refers to Cummings v. Arnold, and the English cases overruling Cuff v. Penn, and says : " But in none of these cases, so far as my investigation has reached, has it ever been doubted that a substituted performance, actually executed and accepted, would dispense the defend- ant from liability on the contract. What- ever may be thought of the correctness of the rule in Stead v. Dawber and Mar- shall v. Lynn, it may be safely said that if the substituted performance in those cases had been actually executed and accepted, the result would have been dif- ferent." In Marsh v. Bellew, 45 Wis. 36, 52, Taylor, J., said that in cases where an oral extension of time for payment on a written contract has been given, " either by parol or otherwise, and the purchaser has acted upon the faith of such exten- sion or waiver, the courts have held the vendor bound by his contract." The grounds of these decisions are that time is not of the essence of the contract, and estoppel, and Heed v. Chambers, 6 Gill & J. 490, is cited to that effect. Most of the foregoing cases relate to sales of land. The notion of a "substituted perform- ance" is borrowed from equity cases re- lating to contracts for lands, which by the fourth section of the statute of frauds must be in writing. The expression is misleading, used with reference to sales of chattels within the statute. Every contract of sale is an agreement to perform something; and an agreement for a sub- stituted performance is an agreement to (m) L. R., 10 Q. B. 140. 230 FORMATION OF THE CONTRACT. [BOOK I. admitted to show that the defendant by his conduct had assented to the substituted mode of delivery. And so, although neither party Postponed ^° ^ le cor, t rac t ma J avail himself of a parol agreement to delivery. var y or eu ] ar g e t ne n me f performance, yet, if the seller has postponed delivery at the verbal request of the buyer, or the buyer has forborne to claim delivery at the verbal request of the seller, neither the seller in the former, nor the buyer in the latter case is precluded from afterwards suing on the original contract. In Ogle v. Earl Vane, (n) the defendant contracted to sell to the Ogier. Earl plaintiff five hundred tons of iron, delivery to extend to Yane - the 25th of July, 1865. Owing to an accident to the defendant's furnaces he had delivered none of the iron by that date. Afterwards negotiations passed between the parties, but eventually, in February, 1866, the plaintiff went into the market. The price of iron had risen since July, and the plaintiff sought to recover from the de- fendant the difference between the contract and the market price in February. The defendant paid into court the difference between the contract and the market price in July. The judge at the trial left it to the jury to say whether on the evidence they thought that the defendant had held out that he should be able to deliver the iron, and that the plaintiff had waited accordingly, in which case they might return a verdict for damages beyond the amount paid into court. The jury returned a verdict for the full amount claimed. Upon the argu- ment of a rule to enter the verdict for the defendant, on the ground that there was no evidence to go to the jury of the plaintiff being en- titled to more damages than were represented by the sum paid into court, it was objected, on behalf of the defendant, that any agreement for postponement ought to have been in writing to satisfy the statute perform something else ; in other words, it and note 16. See Hicks v. Cleveland, 48 is a new contract. See Ladd v. King, 1 N. Y. 84, 91, stated ante $ 212, note 12 ; R. I. 224. If that new contract is oral it Krebs v. Jones, 44 Md. 396, 408. Such is within the statute, but by payment or substituted contract must be established by acceptance and receipt it is relieved by showing that the part payment or the from the bar of the statute, and may be acceplance and receipt relate to the oral proved. We then have two contracts, one contract and not to the written contract, written and one oral, and as neither of as shown in the preceding chapters IV. them is within the statute, the oral con- and V. See ante \ 140, note 2, \ 155, tract may be proved, though it modifies language of Cotton, L. J., and {< 192, or sets aside the written contract, or note 2. though it adopts it and adds new terms, («) L. E., 3 Q. B. 272, in Ex. Ch. as we have already seen. See ante \ 214 affirming S. C, L. R., 2 Q. B. 275. PART II. J OF THE MEMORANDUM OR NOTE IN WRITING. 231 of frauds; but it was held by the Court of Queen's Bench, and affirmed by the Exchequer Chamber, first, that there was evidence from which the jury might infer that the plaintiff's delay in going into the market was at the defendant's request ; and, secondly, that as the evidence went to show, not a new contract, but simply a forbearance by the plaintiff at the request of the defendant, the statute of frauds did not apply. § 216. The cases bearing upon this point are considered in the judgment of the Court of Common Pleas in Hickman v. „. , J © Hickman «. Haynes. (n) The contract was for the sale by the plain- Ha y nes - tiff to the defendants of one hundred tons of pig-iron by monthly deliveries of twenty-five tons, in March, April, May, and June, 1873. Seventy-five tons of iron were delivered during the months of March, April, and May respectively, in accordance with the contract, but early in June the defendants verbally requested the plaintiff, and the plain- tiff consented, to postpone delivery of the remaining twenty-five tons. Upon the expiration of the contract time the plaintiff tendered the residue of the iron, but the defendants then refused to accept it. In an action for damages for breach of contract the plaintiff was held entitled to succeed. It was contended, on behalf of the defendants, that a new agreement for the delivery and acceptance of the remain- ing twenty-five tons of iron had been substituted for the original writ- ten contract, and that this new agreement being verbal could not be enforced; but the court held that the original contract still subsisted, and that the plaintiff could maintain an action upon it, that the assent to the defendants' request to give time was not a valid agree- ment binding the plaintiff, but a voluntary forbearance on his part ; and the same distinction was drawn between a substitution of one agreement for another, and a voluntary forbearance to deliver at the request of another, which had already been recognized in Ogle v. Earl Vane. On the other hand, in Plevins v. Downing, (o) the plaintiffs con- tracted to deliver one hundred tons of pig-iron, " twenty- Plevins „ five tons at once, and seventy-five tons in July next." Downin e- By the end of July the plaintiffs had delivered, and the defendant had accepted, seventy-five tons in all. There was no evidence that the defendant had requested the plaintiffs, before the end of July, to withhold the delivery of the remaining twenty-five tons, but there (m) L. K., 10 C. P. 598. (o) 1 C. P. D. 220. 232 FORMATION OF THE CONTRACT. [BOOK I. was evidence that in October the defendant verbally requested the plaintiffs to forward twenty-five tons, which, when forwarded, he de- clined to accept. Held, that the plaintiffs could not sue on the origi- nal contract, inasmuch as they were unable to prove that they were ready and willing to deliver the twenty-five tons at the end of July, and had only withheld delivery at the defendant's request, neither could they rely upon the request to deliver made to them by the de- fendant in October, as that would have been to substitute a parol for a written agreement. " It is true," said Brett, J., (at p. 225,) in delivering the judgment judgment of °^ *" ne court > " 'hat a distinction has been pointed out and Brett, j. recognized between an alteration of the original contract in such cases, and an arrangement as to the mode of performing it. If the parties have attempted to do the first by words only, the court cannot give effect in favor of either to such attempt ; if the parties make an arrangement as to the second, though such arrangement be only made by words, it can be enforced. The question is, what ie the test in such an action as the present, whether the case is within the one rule or the other. Where the vendor, being ready to deliver within the agreed time, is shown to have withheld his offer to deliver till after the agreed time, in consequence of a request to him to do so, made by the vendee before the expiration of the agreed time, and where after the expiration of the agreed lime, and within a reasonable time, the vendor proposes to deliver, and the vendee refuses to accept, the vendor can recover damages * * * but if the alteration of the period of delivery were made at the request of the vendor, though such request were made during the agreed period for delivery, so that the vendor would be obliged if he sued for a non-acceptance of an offer to deliver after the agreed period, to rely upon the assent of the vendee to his request, he could not aver and prove that he was ready and willing to deliver according to the terms of the original contract The statement shows that he was not. He would be driven to rely on the assent of the vendee to a substituted time of delivery, that is to say, to an altered contract or a new contract. This he cannot do, so as to enforce his claim. This seems to be result of the cases which are summed up in Hickman v. Haynes." In Tyers v. The Rosedale Iron Co., (p) the defendants were the Tyerssn Eose- se 'l ers an d the plaintiffs the purchasers of iron deliverable daieiron Oo. j n montn ly quantities over 1871. The defendants with- (p) L. E., 10 Ex. 195, Ex. Ch., reversing S. C, L. E., 8 Ex. 305. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 233 held delivery of various monthly quantities at the plaintiff's' request. Afterwards, in December, 1871, the last month fixed in the contract for delivery, the plaintiffs demanded immediate delivery of the whole of the residue of the iron deliverable under the contract. The de- fendants refused to deliver any more than the monthly quantity for December. In an action by the plaintiffs for non-delivery, it was held by the Exchequer Chamber, reversing the decision of the major- ity of the Court of Exchequer, that the defendants were not entitled to refuse to deliver more than the monthly quantity. It became un- necessary, in the Exchequer Chamber, to decide whether the defend- ants were bound to deliver in December all that remained to be deliv- ered under the contract, or whether they had a reasonable time within which to deliver, because the plaintiffs agreed to have the damages assessed at the market price of iron in December, and this arrange- ment, in a rising market, was more favorable to the defendants. The opinion of the Exchequer Chamber evidently was in favor of their having a reasonable time within which to deliver, but Martin, B., in delivering a dissentient judgment in the Court of Exchequer, which on the main point was upheld by the Exchequer Chamber, took the opposite view. § 217. The following propositions may fairly be deduced from the foregoing authorities where, in contracts for the delivery General of goods by installments, there have been applications for propositions, postponement of deliveries by seller or purchaser, and a subsequent tender of or request for delivery : — (A.) Where the tender or request is within the contract time. (1) The defendant is bound to accept or deliver, although there has been postponement at the plaintiff's request. (Tyers v. Rosedale Iron Co.) (p) (2) It has not yet been decided whether the defendant is bound to accept or deliver all the quantities within the contract time, or only within some reasonable time afterwards, though the latter appears to be the better opinion. (Tyers v. Rosedale Iron Co.)(p) (B.) Where the tender or request is after the contract time. (1) If the postponement has taken place at the defendant's request, he is estopped from denying that the plaintiff was ready and (p) L. E, 10 Ex. 195, in Ex. Ch., reversing S. C, L. E., 8 Ex. 305. 234 FORMATION OF THE CONTRACT. [BOOK I. willing to deliver or accept within the contract time. (Ogle v. Earl Vane, (q) Hickman v. Haynes.) (?•) (2) If the postponement has taken place at the plaintiff's request, he cannot maintain his action on the original contract, because he cannot prove that he was ready and willing to deliver or accept pursuantto the contract. (Plevins v. Downing.) (s) (3) In the last case, if suing on a substituted contract, such contraot must have been reduced to writing, in order to satisfy the stat- ute of frauds. (Plevins v. Downing.) (s) The contrary dictum of Martin, B., in Tyers v. Rosedale Iron Co. {t) must, it is submitted, be considered as overruled in Plevins v. Downing, (s) («) Proof of approval, after performance, of a substituted mode of performance is a different thing from proof of a substituted con- tract, and may be given by parol. (Leather Cloth Co. v. Hier- onimus.) (x) ] § 218. Whether or not parol evidence is admissible to show a sub- Paroievi- sequent agreement for a waiver and abandonment of the abaSdoniSST wAofe contract, proven by a written note or memorandum of contract. un der the statute, has not been decided, and the dicta on the subject are uncertain and contradictory, (y) Where, however, the agreement to rescind the first contract forms part of or results from a new parol agreement which itself is invalid, and cannot be enforced under the statute, it is held that the new parol agreement cannot have the effect of rescinding the first bargain, (z) 19 [It is a settled rule of equity that a contract required to be in Admissible in writing to satisfy the statute may be rescinded by a parol equity. agreement ; and such rescission would be a sufficient de- fence to an action by either party for specific performance, (vj] 20 (q) L. E., 3 Q. B. 272, in Ex. Ch., (z) Moore v. Campbell, 10 Ex. 323; affirming S. C, L. E., 2 Q. B. 275, and 23 L. J., Ex. 310 ; Noble v. Ward, (r) L. E., 10 C. P. 59S. L. E., 1 Ex. 117 ; L. E., 2 Ex. 135, in (s) 1 C. P. D. 220. error; 35 L. J., Ex. 81. (0 L. E., 8 Ex., at p. 319. 19. Buel v. Miller, 4 N. H. 196 ; Bow- (u) See interlocutory remarks of Brett man v. Cunningham, 78 111. 48 ; Willey and Grove, JJ\, 1 C. P. T>., at p. 223. v. Hall, 8 Iowa 62 ; Cummings v. Arnold, (%) See remarks of Blackburn, J., L. 3 Mete. 494 ; Bryan v. Hunt, 36 Tenn. L. E., 10 Q. B., at p. 146. 543 ; Murray v. Harway, 56 N. Y. 3S7 ; (y) Dicta of Lord Denman in Goss v. Eichardson v. Cooper, 25 Me. 450; Bird Lord Nugent, 5 B. & Ad. 65, and in Har- v. Munroe, 65 Me. 337, 346. vey v. Grabham, 5 Ad. & E. 61 ; of Sir (v) See Fry on Specific Performance Wm. Grant in Price v. Dyer, 17 Ves. (2d ed.), 1881, p. 445. 356; and of Lord Hardwicke in Bell v. 20. "Oral evidence is admissible to re- Howard, 9 Mod. 305. PART II. J OF THE MEMORANDUM OR NOTE IN WRITING. 235 § 219. Parol evidence may be offered to show that a signature to a note or memorandum, though made by A in his own wherenotei8 name, was really made in behalf of B, his principal, afenunhii when the action is brought for the purpose of charging ownname ' B ; (w) 21 but it is not admissible in behalf of A in such a contract, for the purpose of showing that he is not personally bound, and had acted only as agent of B. (x) 22 Where the paper was signed " D. M. & Co., Brokers," and purported to be a purchase by them for " our principals," not naming the principals, parol evidence was held ad- missible of a usage in such cases, that the brokers became personally liable, (y) [So, in a later case, where the contract was expressed to be made and was signed by the defendants " as agents to merchants," parol evidence was admitted of a usage by which the agent became form a written instrument, or to subvert or overthrow it entirely, but not to vary or alter it." Van Fleet, V. C, in Van Syckel v. Lalrymple, 32 N. J. Eq. 233. See Phelps v. Seely, 22 Gratt. 573, 585. (w) Trueman v. Loder, 11 Ad. & E. 589. 21. Dykers v, Townsend, 24 N. Y. 57; Briggs v. Munchon, 56 Mo. 467, 472; Briggs v. Partridge, 64 N. Y. 357, 362 ; Chandler v. Coe, 54 N. H. 561 ; York County Bank v. Stein, 24 Md. 447, 463 ; Sanborn v. Flagler, 9 Allen 474 ; 2 Smith's Leading Cases *358, *373. The Seller may Sue for the Price on a Memorandum made by his Agent, and may Show by Parol the fact of Agency. — Salmon Falls, &c., Co. v. Goddard, 14 How. 446; New Jersey Steam Nav. Co. v. Merchants' Bank, 6 How. 344, 381; Hubert v . Borden, 6 Whartl 79, 92 ; Sanderson v. Lam- berton, 6 Binney 129 ; Ford v. Williams, 21 How. 287 ; Stowell v. Eldred, 39 AVis. 614; York County Bank v. Stein, 24 Md. 447, 464; Huntington ». Knox, 7 Cush. 371; Hunter v. Giddings, 97 Mass. 41. But in Winchester t>. Howard, 97 Mass. 303, the agent represented a pair of oxen to be his own, when in fact they belonged to one with whom the buyer would have no dealings, and it was held that the buyer might repudiate the sale on learning the truth. Chapman, J., said : " Every man has a right to elect what parties he will deal with." (x) Higgins v. Senior, 8 M. & W. 834 ; Cropper v. Cook, L. B., 3 C. P. 194; Fawkes «. Lamb, 31 L. J., Q. B. 98 ; Cal- der v. Dobell, L. B., 6 C. P. 486. 22. " Parol evidence can never be ad- mitted for the purpose of exonerating an agent who has entered into a written con- tract in which he appears as principal, even though he should propose to show, if allowed, that he disclosed the agency and mentioned the name of his principal at the time the contract was executed." Clifford, J., in Nash v. Towne, 5 Wall. 689, 703; Chandler v. Coe, 54 N. H. 561, 575; Titus v. Kyle, 10 Ohio St. 444; Mills v. Hunt, 20 Wend. 431, 434 ; Bab- bett v. Young, 51 N. Y. 238, 242; 2 Smith's Leading Cases *358, *373. (y) Humfrey v. Dale, 7 E. & B. 266 ; and 26 L. J., Q. B. 137; E., B. & E. 1004 ; 27 L. J., Q. B. 390 ; Mollett v. Kobinson, L. B., 7 H. L. 802, reversing L. B., 5 C. P. 646; L. E., 7 C. P. 84; Fleet v. Murton, L. E., 7 Q. B. 126; Southwell v. Bowditch, 1 C. P. D. 374, C. A., reversing Id. 100. See, also, 2 Sm. L C. (8th ed.) 377, for the authorities on this subject ; and see post \\ 239, 241. 236 FORMATION OP THE CONTRACT. [BOOK I. personally liable, if the principal's name was not disclosed within a Wake v reasonable time. (2)] And in Wake v. Harrop (a) (not Han-op. under statute of frauds), it was held, that parol evidence was admissible to show that by mistake the written contract described the agent as principal, contrary to express agreement between the parties. We may now proceed to the examination of this clause of the statute, dividing the inquiry into two sections : — 1. What is a note or memorandum in writing? 2. When is it a sufficient note of the bargain made? SECTION I. WHAT IS A NOTE OR MEMORANDUM IN WRITING? § 220. It may be premised that the note or memorandum must be one made and signed before the action brought. To before aouon satisfy the statute, there must be a good contract in exist- ence at the time of action brought. (6) 23 But the statute does not require that the whole of the terms of the contract should be agreed to at one time, nor that they written°at one should be written down at one time, nor on one piece of o'nepiece of paper; and accordingly it is settled, that where the memo- randum of the bargain between the parties is contained in separate pieces of paper, and where these papers contain the whole bargain, they form together such a memorandum as will satisfy the (z) Hutchinson v. Tatham, L. R., 8 C. where it was said : " Strictly speaking, P. 482. the statute does not make the contract (a) 6 H. & N. 768 ; 1 H. & C. 202 ; 30 void, except for the purpose of sustaining L. J., Ex. 273 ; 31 L. J., Ex. 451. an action upon it to enforce it." In (6) Bill v. Bament, 9 M. & W. 36. Phillips v. Ocmulgee Mills, 55 Ga. 633, See remarks of Willis, J., in C4ibson v. 636, Jackson, J., said : " If the contract Holland, L. E., 1 C. P. 1 ; 35 L. J., C. be reduced to writing, signed by the P. 5. party to be charged, any time before suit 23. The Memorandum Must be brought, it is enough ; especially if dated Signed Before Suit is Begun. — In by him at the time of the contract. It Bird v. Munroe, 66 Me. 337, 347, Peters, relates back and becomes part of the con- J., said: "There is no actionable con- tract, and it does not matter that it was tract before memorandum obtained. The written and signed after the thing sold contract cannot be sued until it has been was destroyed, if there was no fraud in legally verified by writing ; until then procuring the note, and if the party there is no cause of action, although there charging himself, knew the destruction is a contract. The writing is a condition of what he bought." See Townsend v. precedent to the right to sue." Quotes Hargraves, 118 Mass. 325, 336. from Philbrook v. Belknap, 6 Vt. 383, PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 237 statute, provided the contents of the signed paper make such reference to the other written paper or papers, as to enable the court to construe the whole of them together as constituting all the terms of the bar- gain. And the same result will follow if the other papers were at- tached or fastened to the signed paper at the time of the signature. But if it be necessary to adduce parol evidence, in order Separate to connect a signed paper with others unsigned, by reason {J^connedSf of the absence of any internal evidence in the contents of bypar ° 1, the signed paper to show a reference to, or connection with, the unsigned papers, then the several papers taken together do not consti- tute a memorandum in writing of the bargain so as to satisfy the stat- ute, ante § 210. 24 § 221. [But where the reference contained in the signed paper is ambiguous, parol evidence will be admitted to explain the ambiguity and identify the document to which the signed enoeisamSgu- paper must and does refer. Thus, parol evidence was held den'ofTadmtesi- admissible to identify the documents which were respec- thatadocu- tively referred to by the following ambiguous expressions : ferred to and " instructions," (c) " terms agreed upon," (d) " purchase," (e) 24. Separate Papers Must be Con- nected by Reference in a Signed Writing. — Johnson v. Buck, 35 N. J. L. 338, 343. In this case the conditions of sale were read at an auction, but the memorandum signed did not show price or terms. The conditions were offered to supply full evidence of the sale, but were rejected. Depue, J., said: "It is not essential that the whole bargain be con- tained in one memorandum. It will be sufficient if its terms can be gathered from two or more detached papers, if the signed memorandum contains such refer- ence to the other papers as to make the latter part of the former. The connection cannot be made by parol evidence that they were actually intended by the parties to be read together. The connec- tion between them must appear by in- ternal evidence derived from the signed memorandum." Newton v. Bronson, 13 N. Y. 587, 595 ; Newbery v. Wall, 65 Id. 484; Jenness v. Mount Hope Iron Co., 53 Me. 20, 24 ; Oakman v. Eogers, 120 Mass. 214 ; McGuire v. Stevens, 42 Miss. 724 ; Fisher v. Kuhn, 54 Id. 480; Ide v. Stan- ton, 15 Vt. 685; Frank v. Miller, 38 Md. 450; Bhoades v. Castner, 12 Allen 130; Morton v. Dean, 13 Mete. 385 ; Lerned v. Wannemacher, 9 Allen 417 ; O'Donnell v. Leeman, 43 Me. 158 ; Smith v. Arnold, 5 Mason 416 ; Kaitling v. Parkin, 23 U. C. C. P. 569. In Bidgway v. Ingram, 50 Ind. 145, a stricter rule is laid down th.an that of the text, holding that the court would not read an order of sale upon which the memorandum of sale was en- dorsed to ascertain the subject matter of sale, YVorden, J., saying : " The memo- randum endorsed upon the order of sale, but without any reference to it for the ascertainment of the thing sold, is no better than if it had been made on any other piece of paper." See Jelks v. Bar- rett, 52 Ind. 315. (c) Bidgway v. "Wharton, 6 H. L. C. 238. (d) Baumann v. James, 3 Ch. 508. (e) Long v. Millar, 4 C. P. D. 450, C. A. 238 FORMATION OF THE CONTRACT. [BOOK I. Doctrine now " our arrangement," (/) "purchased."^) It is admitted, therefore, that since the decision in Baumann v. James, the principle of which case has been adopted in the most recent cases illustrating this subject, and cited in the notes infra, the rule as laid down by the earlier authorities must be taken to have been enlarged to the following extent: it is no longer necessary for the signed paper to refer to any unsigned paper as such ; it is sufficient to show that a particular unsigned paper and nothing else can be referred to, and parol evidence is admissible for this purpose. In Lonu; v. Long 11. Millar. ,.-.,, / 7 > > i • • 1 • ^ "~ ■ i Millar, (/i) where the same principle was earned even still further than in Baumann v. James, Thesiger, L. J., on the question of the admissibility of parol evidence in these cases, says (at page 456) : " When it is proposed to prove the existence of a contract by several documents, it must appear upon the face of the instrument, signed by the party to be charged, that reference is made to another document, and this submission cannot be supplied by verbal evidence. If, however, it appears from the instrument itself that another docu- ment is referred to, that document may be identified by verbal evi- dence. A simple illustration of this rule is given in Ridgway v. Wharton ; there ' instructions ' were referred to ; now instructions may be either written or verbal ; but it was held that parol evidence might be adduced to show that certain instructions in writing were intended. This rule of interpretation is merely a particular application of the doctrine as to latent ambiguity."] 25 (/) Cave v. Hastings, 7 Q. B. D. 125. cases in which it would be a violation of (g) Shardlow v. Cotterell, 18 Ch. D. reason and common sense to ignore a 280 ; S. C, 20 Ch. D. 90, C. A. reference which derives its significance (h) 4 C. P. D. 450. from such proof. If there is ground for 25. An Ambiguous Reference in one any doubt in the matter, the general rule Writing to another may be explained should be enforced. But where there is by Parol Evidence. — An illustration of no ground for doubt its enforcement an ambiguous reference to an agreement, would aid instead of discouraging fraud, identified by parol evidence, is found in Suppose an agreement be made out aud Beckwilh t;. Talbot, 95 TJ. S. 289, 292. signed by one of the parties, the other Bradley, J., said: "It is undoubtedly a being absent. On the following day the general rule that collateral papers ad- latter writes to the party who signed it, duced to supply the defect of signature as follows : ' My son informs me that you of a written agreement, under the statute yesterday executed our [jroposed agree- of frauds, should on their face sufficiently ment, as prepared by J. S. I write this demonstrate their reference to such agree- to let you know that I recognize and ment without the aid of parol proof. But adopt it.' Would not this be a sufficient the rule is not absolute. There may be recognition, especially if the parties should PAKT II.] OF THE MEMORANDUM OR NOTE IN WRITING. 239 § 222. Further, in order to satisfy the statute, when the memoran- dum relied on consists of separate papers, which it is at- tempted to connect by showing from their contents that papers must *■ ■' ° be consistent. they refer to the same agreement, these separate papers must be consistent and not contradictory in their statement of the terms, for otherwise it would be impossible to determine what the bar- gain was, without the introduction of parol testimony to show which of the papers stated it correctly. 26 act under the agreement ? And yet parol proof would be required to show what agreement was made." In this case the memorandum of the contract was signed by plaintiff alone, and given to defendant, and the contract was not to be performed within a year. But, subsequently, de- fendant wrote to plaintiff, and in his let- ter said he would keep his agreement about the cattle." Parol evidence was held properly admitted to show that the agreement referred to in the letter was the one given by plaintiff to defendant. It will be observed that Justice Bradley treats the admission of the parol evidence as an exception to the general rule ex- cluding it, but a far more satisfactory explanation of it is that of Thesiger, L. J., in the text, supra, namely, that such testimony is offered to explain an am- biguity, or to apply a reference to its sub- ject matter. See ante, $ 211. See Lee v. Mahony, 9 Iowa 344. See, also, Salmon Falls Manufacturing Co. v. Goddard, 14 How. 446, 457, where the memorandum of sale was very meagre and did not show which party was buyer and which seller. The court held that a bill of par- cels sent with the goods might be proved to supply any defects. Nelson, J., said : " Although we admit, if it was necessary for the plaintiffs to rely upon the bill as the note or memorandum within the stat- ute, they must have failed, we think it competent, within the principle of the cases on the subject, from its connection with and relation to the contract, to refer to it as explanatory of any obscurity or indefiniteness of its terms, for the pur- pose of removing the ambiguity. Take for example, as an instance, the objection that the price is uncertain, the figures 7\ opposite the three hundred bales given without any mark to denote what is in- tended by them. The bill of parcels carries out these figures as so many cents per yard, and the aggregate amount footed up ; and after it is received by the defendant, and with a knowledge of this explanation, he orders the goods to be forwarded." Three justices dissented. Salmon Falls, &c, Co. v. Goddard is an extreme case, and in Grafton v. Cum- mings, 99 U. S. 100, 111, Justice Miller referring fo it, said : " It may be doubted whether the opinion of the majority in all it says in reference to the use of parol proof in aid of even mercantile sales of goods by brokers, is sound law." 26. The Separate Papers Must be Consistent. — Jenness v. Mount Hope Iron Co., 53 Me. 20. In Phippen v. Hyland, 19 V. 0. C. P. 416, one memo- randum of sale provided for delivery of goods ''when called for," and the other for delivery " on Thursday." The court held that these provisions were not in- consistent, and that they were to be read as if in one paper, and the fair interpre- tation was that the goods must be deliv- ered on Thursday, or sooner, if called for. In Calkins v. Falk, 1 Abb. App. Dec. 291, there were two signed notes of sale, in one of which the seller was named Falk, and in the other Falleck. The court, in the absence of proof, said it 240 FORMATION OF THE CONTRACT. [BOOK I, § 223. The authorities are believed to be quite consistent in main- Fourth and taining these principles. In citing them, it will be ob- ^ctlonTcom- served, that some of the cases were under the fourth sec- tion of the statute, the language of which is, on this subject, almost identical with that of the seventeenth. The two clauses are here placed in juxtaposition for comparison. Fourth section. — " Unless the agreement on which such action shall be brought, or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." Seventeenth section. — " Except that some note or memorandum in writing of the said bargain be made, and signed by the parties to be charged with such contract, or their agents thereunto lawfully authorized." It will be noticed hereafter that the question, whether there is any distinction in meaning between the respective words quoted in italics, viz., " agreement " and " bargain," on the one hand, and " party " and " parties," on the other hand, has been mooted on several occasions. § 224. The leading case in which it was held that the intention of Cases re- tne s ig° er to connect two written papers, not physically viewed. joined, and not containing internal evidence of his pur- pose to connect them, could not be proven by parol, occurred early in the present century. Hinde v. Whitehouse, (i) in 1806, was the case of a sale by auction. Hinder ^ ne auctioneer, .who, as will be shown hereafter (post, Ch. whitehouse. VIII.), is by law an agent authorized to sign for both parties, had a catalogue, headed " To be sold by auction, for particu- could not say that these names were on be signed by such party, it is sufficient, identical, and the memorandum was held if their connection and relation to the insufficient; and the court further held same transaction can be ascertained and that coincidence in place and date and determined by inspection and compari- terms was not evidence that they related son. In this case, though no reference to the same subject matter. But in is made in either to the other, we find with Thayer v. Luce, 22 Ohio St. 62, 74, Mc- reasonable certainty that they do relate Ilvaine, J., said: "If one only of such to the same transaction, and contain fully papers be signed by the party to be the terms. The coincidences of names, charged in the action, the rule seems to dates, amount of purchase money and de- be that special reference must be made scription are quite sufficient." therein to those papers which are not so (i) 7 East 558 ; and see Peirce v. Corf, signed; but if the several papers relied L. K., 9 Q. B. 210, post, \ 229. PART II. J OP THE MEMORANDUM OR NOTE IN WRITING. 241 lars apply to Thomas Hinde," and wrote down opposite to the several lots on the catalogue the name of the purchaser. The auctioneer also had a separate paper containing the terms and conditions of the sale, which he read, and placed on his desk. The catalogue contained no reference to the conditions. Held, that the signature to the catalogue was not sufficient to satisfy the statute, on the ground that it did not contain the terms of the bargain, nor refer to the other writing con- taining those terms. Kenworthy v. Schofield, {k) in the King's Bench in 1824, was de- cided in the same way, on circumstances precisely the same. Lord Westbury recently stated the general prin- schofieid. y "' ciple, in a case which arose under a similar clause in the Peek ». North railway and canal traffic act, in these words, " In order Railway li-ii ii Company. to embody in the letter any other document or memoran- dum, or instrument in writing, so as to make it part of a special con- tract contained in that letter, the letter must either set out the writing referred to, or so clearly and definitely refer to the writing, that by force of the reference, the writing itself becomes part of the instru- ment it refers to." (I) [Which refers to it ?] 27 § 225. The first reported case decided in banc, in which a signed paper referring to another writing was deemed sufficient Saunders. Padgett, 26 Md. 228, and cases until finally the law, as there established, cited ; Jones v. Palmer, 1 Doug. 379 ; was made statutory. Rears v. Brink, 3 Underwood v. Campbell, 14 N. H. 393 ; 248 TOKMATION OF THE CONTRACT. [BOOK I. § 233. But under the 17th section of the statute the decisions seventeenth have not maintained so rigorous a construction, and the i?b°eran™con e - judges have repeatedly referred to the distinction between "''""' the word "agreement" in the fourth section and " bar- gain" in the seventeenth. The cases will now be considered with reference exclusively to the contract of sale under the latter section, and to the inquiry whether, and to what extent, it is necessary that the writing should show, 1st, the names of the parties to the sale ; 2ndly, the terms and subject matter of the contract. On the first point, it is settled to be indispensable that the written Names or de- memorandum should show not only who is the person to p C a r rtfeL°mu°t be charged, but also who is the party in whose favor he "'" is charged. The name of the party to be charged is re- quired by the statute to be signed, so that there can be no question of the necessity of his name in the writing. But the authorities have equally established that the name or a sufficient description of the other party is indispensable, because without it no contract is shown, inasmuch as a stipulation or promise by A does not bind him, save to the person to whom the promise was made, and until that person's name is shown it is impossible to say that the writing contains a memorandum of the bargain. 31 Buckley v. Beardslee, 5 N. J. L. 570, 573 ; v. Kibler, 5 Humph. 19 ; Colgin •«,. Hen- Laing v. Lee, 20 N. J. L. 337 ; Taylor v. ley, 6 Leigh 85 ; Ellett v. Britton, 10 Tex. Pratt, 3 Wis. 674; Soles v. Hickman, 20 '208; Wills v. Boss, 77 Ind. 1. Some of Penna. 180; Nichols v. Allen, 23 Minn, the foregoing decisions are founded on 542; Ellison v. Jackson Water Co., 12 the use of the word "promise" in the Cal. 542. On the other hand, in Massa- statute interpreted, instead of the word chusetts, in the case of Packard <>. Kich- " agreement," which is used in the Eng- artlson, 17 Mass. 122, an exhaustive lish act. opinion was read, refusing to follow 31. The Writing must Show who the Wain v. Warlters, and holding that a Parties are. — In Grafton v. Cummings, promise is sufficient, though the consid- 99 U. S. 100, 107, it appeared that the eration is not expressed in writing. This purchaser of property at auction signed was followed in Maine and in many other an agreement which did not mention the states. Williams v. Robinson, 73 Me. seller. Miller, J., said: "The name of 186, 195; Gillighan v. Boardman, 29 Me. the vendor, or some designation of him, 79, 81 ; Sage v. Wilcox, 6 Conn. 81 ; Pat- which could be recognized without parol mor v. Haggard, 78 III. 607 ; Little v. proof extraneous to the instrument, was Nabb, 10 Mo. 3; Ashford v. Robinson, 8 an essential part of that instrument to its Ired. 114; Reed v. Evans, 17 Ohio 128; validity." See Beckwith v. Talbot, 95 Smith v. Ide, 3 Vt. 290 ; Patchin v. Swift, U. S. 289 ; McConnell v. Brillhart, 17 111. 21 Vt. 292 ; Gregory v. Gleed, 33 Vt. 405 ; 354, 360; Wood v. Davis, 82 Id. 311. In Lorman v. Richard, 1 Fla. 281 ; Gilman Sanborn v. Flagler, 9 Allen 474, the con- PAKT II.J OF THE MEMORANDUM OR NOTE IN WRITING. 249 § 234. In Champion v. Plummer, (/) the plaintiff, by his agent, wrote down in a memorandum-book the terms of a verbal champion „ sale to him by the defendant, and the defendant signed P lumm « r - the writing, but the words were simply " Bought of W. Plummer, &c," with no name of the person who bought. Sir James Mansfield, C. J., said, "How can that be said to be a contract, or memorandum of a contract, which does not state who are the contracting parties ? By this note it does not at all appear to whom the goods were sold. It would prove a sale to any other person as well as to the plaintiffs." In Allen v. Bennett, (g) the agreement was written in a book be- longing to the plaintiff, and was signed by the defendant's Alle „ agent. But the plaintiff's name was not in the book, Bennett - and was not mentioned in the written memorandum. This was con- sidered insufficient, but the defect was afterwards supplied by other writings showing the plaintiff to be the person with whom the bargain was made. In Williams v. Lake, (h) which was under the 4th section, the defendant wrote a note binding himself as guarantor, William9B and gave it to a third person for delivery. But the name Lake ' of the person to whom the note was addressed was not written in the note. Held, by all the judges, insufficient to satisfy the statute, and this decision was approved and followed in Williams v. Byrnes, 1 Moo. P. C. C. (N. S.) 154. In Sari v. Bourdillon, (i) under the 17th section, the defend- ant signed an order for goods in the plaintiff's order-book, Sarl ,, and the plaintiff's name was on the fly-leaf of his order- Bourdlllon - book in the usual way, and this was held sufficient under the statute. 32 tract was to "deliver" to plaintiff cer- at a certain price imports a sale to him. tain iron. Bigelow, C. J., said: "It is Williams v. Eobinson, 73 Me. 186, 195; urged that the paper does not disclose Sherburne v. Shaw, 1 N. H. 157 ; Mayer which of the parties is the purchaser and v. Adrian, 77 N. C. 83, 89 ; Flintoft v. which the seller, and that no purchaser is Elmore, 18 U. C. C. P. 274. in fact named in the paper. This would (/ ) 3 B. & P. 252. be a, fatal objection if well founded. (g) 3 Taunt. 169. See, also, Cooper v. There can be no valid memorandum of a Smith, 15 East 103, and Jacob v. Kirke, contract which does not show who are the 2 M. & B. 222. contracting parties." But he says there (A) 29 L. J., Q. B. 1 ; 2 E. & E. 349. is no such defect, for delivery of goods at (i) 26 L. J., C. P. 78 ; 1 C. B. (N. S.) a stipulated price constitutes a sale, and 188. therefore an agreement to deliver to one 32. Harvey v. Stevens, 43 Vt. 653, was 250 FORMATION OP THE CONTRACT. [BOOK I. Vandenburgh v. Spooner (k) was a case ia which the facts were Vandenburgh peculiar. The plaintiff had purchased a quantity of v. spooner. mar bl e at the sale of a wreck. He sold it to the defend- ant, the amount being more than £10. The defendant signed this memorandum, " D. Spooner agrees to buy the whole of the lots of marble purchased by Mr. Vandenburgh, now lying at the Lyme Cobb, at Is. per foot." After the defendant had signed this document, he wrote out what he alleged to be a copy of it, which, at his request, the plaintiff, supposing it to be a genuine copy, signed. This was in the following words : " Mr. J. Vandenburgh agrees to sell to W. D. Spooner the several lots of marble purchased by him, now lying at Lyme, at Is. the cubic foot, and a bill at one mouth." Held, that the note signed by the purchaser, although it contained the plaintiff's name, only mentioned it as a part of the description of the goods so as to identify them, but did not mention the plaintiff as seller of the goods, and that the memorandum was therefore in- sufficient. Newell v. Radford (I) was in the Common Pleas on these facts. Neweii v The defendant was a flour-dealer, and the plaintiff a Radford. baker. The defendant's agent entered in the plaintiff's book the following words : — " Mr. Newell, 32 sacks, culasses, at 39s. 280 lbs. To await orders. John Williams." The defendant insisted, on the authority of Vandenburgh v. Spooner, that as it was impossible to tell from this memorandum which was buyer and which was seller, the memorandum was insuffi- cient, but the court held that parol evidence had been properly ad- mitted to show the trade of each party, and thus to create the inference from the circumstances of the case that the baker was the buyer of the flour. There was also some correspondence referred to, showing who was the buyer and who the seller. 3S a case where the buyer's name was en- Party is Buyer and which is Seller.— tered by the auctioneer's clerk with terms This statement seems to be sustained by of sale in a book, on the cover of which authority, but as will be seen it has been was written " John Harvey's auction conlroverted. Bailey v. Ogdens, 3 Johns, book," and this was held a sufficient 399, 419, is the case usually cited in sup- designation of ihe seller on the authority port of this proposition. There the of Sari v. Bourdillon stated in the text. memorandum of a sale merely stated two (k) L. R., 1 Ex. 316 ; 35 L. J., Ex. names, and terms and prices of a sale. 201. Kent, C. J., said: "The memorandum is (I) L. E., 3 C. P. 52; 37 L. J., C. P. 1. unintelligible. It has not the essentials 33. The Writing- must Show which of the contract or memorandum of a con- PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 251 § 235. But although the authorities are consistent in requiring that the memorandum should show who are the parties to the Deaor i pt ; on f contract, it suffices if this appear by description instead Sifateadrf*" 88 of name. If one party is not designated at all, plainly name ' the whole contract is not in writing, for '' it takes two to make a bar- gain." In such a case the common law would permit parol testimony to show who the other is, but this is forbidden by the statute. But if the writing shows by description with whom the bargain was made, then the statute ^s satisfied, and parol evidence is admissible to apply the description : that is, not to show with whom the bargain is made, but who is the person described, so as to enable the court to under- stand the description. This is no infringement of the statute, for in all cases where written evidence is required by law there must be parol evidence to apply the document to the subject matter in con- troversy. 34 § 236. [The difficulty arises in determining upon the sufficiency of the description given in each particular case. There have r ° L " Proprietor." been numerous decisions on this point. Thus, it was held by the present Master of the Rolls, in a case under the fourth section, that a vendor was sufficiently described by the "Vendor." term '* proprietor," there being but one. (m) 35 On the other hand, the description "vendor" was held by the same learned tract. No person can ascertain from it 476. Newell v. Radford, cited in the text,. which of the parties was seller and which was cited and followed in Coate v. Terry, was buyer, nor whether there was any 24 U. C. C. P. 571, and parol evidence actual sale between them." See Calkins was allowed to show which of two parties v. Falk, 1 Abb. App. Dec. 291, 294 ; named was buyer and which seller. Nichols v. Johnson, 10 Conn. 192, 199. 34. Gowen v. Klous, 101 Mass. 449 ; In Salmon Falls Manfg. Co. v. Goddard, Lang v. Henry, 54 N. H. 57. 14 How. 446, the memorandum was (ro) Sale v. Lambert, 18 Eq. 1 ; and signed by both parties, but did not state Kossiter v. Miller, 46 L. J., Ch. 228 ; 5 which was buyer and which was seller ; Ch. JD. 648, C. A. ; S. C, 3 App. Cas». but the court held that " it was competent 1124, reversing the C. A. upon another to show by parol proof that Mason signed point. for the firm of Mason & Lawrence, and 35. Sale v. Lambert, cited by our author,, that the house was acting as agents for was distinguished in Grafton v. Cummings, the plaintiffs, a company engaged in 99 U. S. 100, 110. A similar question manufacturing the goods which were the which often arises in contracts made by subject of the sale." But there was an agents is whether the designation of the able dissenting opinion by Justice Curtis, principal is sufficient to exonerate the and this case is doubted on this point in agent from personal liability. See § 241, Grafton v. Cummings, 99 U. S. 100, 111. note 42, post. See, also, Sanborn v. Flagler, 9 Allen 474, 252 FORMATION OF THE CONTRACT. [BOOK I. judge to be insufficient, (w) Again, when it appeared from conditions of sale that the vendors were a company in possession of the prop- erty, they were held to be sufficiently described ; (n) and so when the vendor was stated to be " a trustee selling under a trust for sale." (o) In every case there must be sufficient evidence to identify from the •description, and, to use the language of the present Master of the Rolls, in Commins v. Scott, (p) "the court ought to be careful not to manu- facture descriptions, or to be astute to discover descriptions which a jury would not identify."] § 237. The cases in which this principle has been most clearly illustrated are those which arise in a very common course of mercan- tile dealing, where an agent signs a contract in his own name and without mentioning his principal. It is settled that though in dealings of this kind it is not competent where agent f° r ^ e a E en ^ thus contracting to introduce parol proof to name" 3 st3 show that he did not intend to bind himself, because this of principal's. WQa \£ fr e t0 contradict what he had written, it is com- petent for the other party to show that the contract was really made with the principal who had chosen to describe himself by the name ■of his agent, just as it would be admissible to show his identity if he had used a feigned name. 36 (») Potter v. Duffield, 18 Eq. 4. See action can be maintained against a prin- the dicta of the judges in Thomas v. cipal upon a contract for the sale of goods Brown, 1 Q. B. D. 714, and the remarks made by an agent in his own name, to be of Jessel, M. R., dissenting therefrom in now [changed ; and this, as well where Bossiter v. Miller, reported in 46 L. J., the contract is within the statute of •Ch. 228, at p. 232. frauds, as where it is not." In Wiener v. (n) Commins v. Scott, 20 Eq. 11. Whipple, 53 Wis. 298, 302, Taylor, J., (o) Catling v. King, 5 Ch. D. 660, C. said : " Parol evidence is admissible to A. See, also, as to sufficiency of descrip- show the fact of agency, in order to tion of the property sold, Shardlow v. Cot- charge the principal, notwithstanding the terell, 20 Ch. D. 90, C. A., reversing S. writing is executed by the agent in his ■C., 18 Ch. D. 280 ; Beer v. London and own name. The signature of the agent Paris Hotel Co., 20 Eq. 412; Thomas v. in such case is deemed the signature of Brown, 1 Q. B. D. 714 ; Williams v. Jor- the principal, and is a sufficient signing dan 6 Ch. D. 517. to take the case out of the statute." See (p) 20 Eq. at p. 16. Meeker v. Claghorn, 44 N. Y. 349 ; Jes- 36. Parol Evidence is Admissible sup v. Steurer, 75 N. Y. 613 ; Hill «. to Charge the Principal of an Agent Miller, 76 - N. Y. 32. In Perth Amboy "Who Signs His Own Name.— In Ma'niif. Co. v. Condit, 21 N. J. L. 659, Dykers v. Townsend, 24 N. Y. 57, 61, 664, in Court of Errors, Carpenter, J., Hoyt, X, said : "It seems to have been said: "A principal cannot avoid his too long and too well settled that an legal liabilities by directions to his agent PART II. J OF THE MEMORANDUM OR NOTE IN "WRITING. 253 [But a commission agent acting here for a foreign principal is not, in the absence of express authority, entitled to pledge the foreign principal's credit. In such a case the agent foreign prin- renders himself personally liable, and the foreign princi- pal cannot sue or be sued upon the contracts entered into by the agent, (q) This apparent exception to the rule arises from the real character of the relationship existing between the commission agent and his foreign constituent, a relationship which in its nature and effects is one of vendor and vendee, and not one of principal and agent, (r) 37 Thus it is that the commission agent may exercise the to keep the purpose of his purchases a secret. When the agency is disclosed, the vendor, who has sold in ignorance thereof, may then elect whether he will resort to the agent or the principal." See ante % 219, note 21. But the undis- closed principal and the agent cannot be sued together ; an election must be made. Brainard v. Turner, 4 111. App. 61. Effect of Accepting the Signature of an Agent Known to be Such. — A distinction has been made between those cases where the party dealing with an agent, and accepting his signature, knows that he is such, and those where he does not, as to the principal's liability. In Chandler v. Coe, 54 N. H. 561, 575, Hib- bard, J., said : " We are of the opinion that where a principal is sought to be charged upon a contract in writing, made in the name of his agent, the rule of evi- dence which prohibits the parties to a written contract from contradicting or varying its terms by parol testimony, ap- plies, if the principal was known, but not if he was unknown." The theory of this principle is that when a party accepts the agent's signature, he elects to hold the agent instead of the principal. Where an agent contracts in his own name under seal, the party accepting such contract cannot resort to an undisclosed principal. Mahoney v. McLean, 26 Minn. 415. 37. Is an Agent Dealing for a For- eign Principal Personally Liable ? — The law stated in the text is not the law in the United States. The question arose in the New York Court of Errors and Appeals, in Kirkpatrick v. Stainer, 22 Wend. 244, 263. and, after a, full discus- sion, Senator Verplanck, giving the opin- ion of the majority of the court, said : " No usage or course of business analo- gous to that prevalent in England, being notorious or well established by former evidence as existing here, and no proof having been offered of any special or local usage, or common understanding, charging the agent alone, and not his for- eign principal, for purchases or contracts made avowedly for such known principal, the case must be governed by the general law as to the contracts of a private agent, clothed with full authority and acting openly in behalf of his principal." In Taintor v. Prendergast, 6 Hill 72, the plaintiff, who lived in Connecticut, sued in New York on a contract made by his agent in his own name for the purchase of goods in New York. Monell, J., said that no doubt the agent would be liable personally on such contract, and, in the (5) Armstrong *. Stokes, L. R, 7 Q. L. R., 9 Q. B. 572. B. 598, per cur., at p. 605 ; Elbinger Co. (r) See the opinion of Blackburn, J., v. Claye, L. R., 8 Q. B. 313 ; Hutton 0. in Ireland v. Livingston, L. R., 5 H. L. Bullock, Ibid. 331, affirmed in Ex. Ch., at p. 408. 254 FORMATION OF THE CONTRACT. [BOOK I. Trueman v Lodor. right of stoppage in transitu upon the insolvency of his foreign con- stituent. See post, Book V., Part I., ch. V., § 1, Stoppage in Transitu , In Trueman r. Lodor, (s) the defendant was sued on a broker's sold note in these words: "London, 28th April, 1835. Sold for Mr. Edward Higginbotham, &c, &c." The proof was, that in 1832 the defendant, a merchant of St. Petersburgh, had established Higginbotham to conduct the defendant's business in Lon- don in the name of Higginbotham, which was painted outside the counting-house and employed in all the contracts. The agent had no business, capital, nor credit of his own, but did everything with the defendant's money and for his benefit under his instructions. The case was argued by very able counsel in Michaelmas Term, 1838, and the judges took time to consider till the ensuing term, when Lord Denman delivered the opinion of the court, composed of himself, and Patteson, Williams and Coleridge, JJ. On the question made, that the name of the defendant was not in the written contract, the court said : " Among the ingenious arguments pressed by the defendant's absence of a custom to the contrary, his principal, when discovered. " On the other hand, I am still in want of an authority that where an agent acquires rights in a course of dealing for his principal, whether the latter be foreign or domestic, and his name is kept secret, the principal may not sue to enforce those rights. I admit that defendant is not, by such form of action, to be cut off from any equities he may have against the agent. So far, the latter is considered as the exclusive principal, but no far- ther." In Oelrichs v. Ford, 23 How. 49, 64, the suit was brought by a resident of New York upon a sale made by his agent to a resident of Maryland. The court sustained the right to sue, citing the above cases. In Bray v. Kettell, 1 Allen 80, 83, Bigelow, C. X, after referring to the English rule, and to Story on Agency, !§ 268, 290, where it is adopted, said: "The more reasonable and correct doc- trine is, that when goods are sold to a domestic agent, or a contract is made by him, the fact that he acts for a foreign principal is evidence only that the agent and not the principal is liable. It is in reality, in all cases, a question to whom the credit was in fact given." See Ilsley v. Merriam, 7 Cush. 242; Barry v. Page, 10 Gray 398. But in the case of Mer- rick's Estate, 5 W. & S. 9, 14, Rogers, X, said: "The case falls within the excep- tion of foreign factors ; where exclusive credit is given to and by the agent, the principal cannot be treated as, in any manner whatsoever, a party to the con- tract, although he may have authorized it, or be entitled to the benefit of it." See, also, McKenzie v. Nevius, 22 Me. 138 ; Eogers v. March, 33 Me. 106. In Vawter v. Baker, 23 Ind. 63, it is held that the states of the Union are not for- eign to each other in any such sense as to render applicable the English rule that an agent is liable for his contracts on behalf of a foreign principal. See this subject discussed in 13 Am. Law Review 663. (s) 11 Ad. & E. 587. PART II.] OP THE MEMORANDUM OR NOTE IN WRITING. 255 counsel, there was one which it may be fit to notice; the supposition that parol evidence was introduced to vary the contract, showing it not to have been made by Higginbotham, but by the defendant, who gave him the authority. Parol evidence is always necessary to show that the party sued is the person making the contract and bound by it. Whether he does so in his own name, or in that of another, or in a feigned name, and whether the contract be signed by his own hand, or by that of an agent, are inquiries not different in their nature from the question who is the person who has just ordered goods in a shop. If he is sued for the price, and his identity made out, the con- tract is not varied by appearing to have been made by him in a name not his own. (t) § 238. The leading case for the converse proposition, namely, that the agent who has contracted in his own name will not be w^n^e,^ allowed to offer parol evidence for the purpose of proving responsFbief that he did not intend to bind himself, but only his prin- H igginsi-. cipal, is Higgins v. Senior, (w) decided in the Exchequer Senlor - in 1841, in which also the judges took time to consider until the ensu- ing term, when Parke, B., delivered the judgment of the court, com- posed of himself and Alderson, Gurney and Rolfe, BB. The opinion states the question submitted to be, " Whether in an action or an agreement in writing, purporting on the face of it to be made by the defendant, and to be subscribed by him, for the sale and delivery by him of goods above the value of £10, it is competent for the defend- ant to discharge himself on an issue on the plea of non assumpsit, by proving that the agreement was really made by him by the authority of, and as agent for, a third person, and that the plaintiff knew those facts at the time when this agreement was made and signed." Held, in the negative. The learned Baron then proceeded to lay down the principles on which this conclusion was reached, as follows : " There is no doubt that where such an agreement is made, it is competent to show that one or both of the contracting parties were agents for other persons, and acted as such agents in making the contract, so as to give the benefit of the contract on the one hand to, and charge with liability on the other, the unnamed principals ; and this, whether the agree- ment be or be not required to be in writing, by the statute of frauds : (*) See, also, 2 Sm. L. C, (ed. 1879,) in P. 486, 499. notes to Thompson v. Davenport, p. 407, («) 8 M. & W. 834. et seg. ; and Calder v. Dobell, L. B., 6 C. 256 FORMATION OF THE CONTRACT. [BOOK I. and this evidence in no way contradicts the written agreement. It does not deny that it is binding on those whom, on the face of it, it purports to bind ; but shows that it also binds another, by reason that the act of the agent, in signing the agreement, in pursuance of his authority, is in law the act of the principal. " But, on the other hand, to allow evidence to be given, that the party who appears on the face of the instrument to be personally a contracting party, is not such, would be to allow parol evidence to contradict the written agreement, which cannot be done." (x) 38 § 239. Where the broker bought expressly for his principals but Humfr without disclosing their names in the sold note, he was Dale ' held liable to the vendor on evidence of usage that the broker was liable personally when the name of the principal was not disclosed at the time of the contract, (y) Id Fleet v. Murton, (2) the contract note was, " We have this day Fleet* S0 ' C ' f° r y° ur account to our principal," (Signed) M. & Murton. -yp^ Brokers ; and the brokers were held personally liable on proof of usage of the trade to the same effect as that given in Humfrey v. Dale, (y) [And in Hutchinson v. Tatham, (a) where the defendants acting as Hutcbinson t agents for one Lyons had chartered a ship, and the Tatham. charter-party was expressed to be made, and was signed by them as " agents to merchants," without disclosing the name of (x) See 2 Sro. L. C, p. 404, in notes to v. McMillan, 42 Wis. 567 ; Welch v. Thompson v. Davenport, where the whole Goodwin, 123 Mass. 71; McClellan v. subject is more fully treated than com- Parker, 27 Mo. 162; Schell v. Stevens, 50 ports with the design of the present Mo. 375 ; Beymer v. Bonsall, 79 Penna. treatise. 298; Cobb v. Knapp, 71 N. Y. 348; 38. An Agent who Contracts in Writ- Knapp v. Simon, 86 N. Y. 311 ; Nixon v. ing as Principal, cannot Exonerate Downey, 49 Iowa 166 ; Bushings. Sebree, himself by proving his Agency.— See 12 Bush 198; Quigley v. De Haas, 82 ante \ 219, note 22 ; Chandler v. Coe, 54 Penna. 267, 273 ; Foster v. Smith, 42 N. H. 561, 576; Ford v. Williams, 21 Tenu. 474 ; Wheeler v. Reed, 36 111.81, How. 207 ; Coleman v. First Nat. Bank 89. of Elmira, 53 N. Y. 388 ; Meeker v. (y) Humfrey v. Dale, 7 E. & B. 266 ; Claghorn, 44 N. Y. 349, 351. In this E. B., & E. 1004 ; 26 L. J., Q. B. 137 ; 27 case Earl, C, said : " If the defendants L. J., Q. B. 390. See, also, Tetley v. were not known to be the principals, and Shand, 20 W. R. 206 ; 25 L. T. (N. S.) credit was at the time given to their un- 658. disclosed agent, then the vendors could (a) L. R., 7 Q. B. 126. hold for payment at their election either (o) L. R., 8 C. P. 482. the agent or the principals. See Weston PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 257 their principal. It was held, in an action by the ship-owners on the authority of Humfrey v. Dale and Fleet v. Murton, that evidence was admissible of a custom whereby the broker became personally liable when the principal's name was not disclosed within a reasonable time. According to the custom of the London Dry Goods Market, a broker, who contracts for the sale of goods without disclosing the name of his principal, becomes personally liable on his principal's default.] (6) § 240. In Mollett v. Robinson, (o) the circumstances were these : The plaintiffs, tallow brokers, were employed by the de- Mo i Iett „. fendant to purchase 50 tons of tallow in the London Kobinson - market ; and had like orders from other purchasers. The plaintiffs bought in their own names, without disclosing their principals, tallow enough for all the orders which they had received, and divided it among the principals who had employed them, — sending to the de- fendant a bought note, signed by themselves as "sworn brokers," stating 50 tons of tallow to have been bought "for his account," with quality, price, &c, but no vendor's name given. There was no cor- responding sold note delivered to any one, and no such purchase as was represented in the bought note. Proof was given that the execu- tion of the defendant's order in this manner was in accordance with the usage of the London market : but the defendant was not aware of the usage, and refused to accept the tallow when he learned how the business had been conducted. Held, in the Common Pleas, by Bovill, C. J., and Montague Smith, J., that the defendant was bound to accept : by Willes and Keating, JJ., that usage could not be in- voked to change the character of the contract, and that the broker could not make himself the principal in the sale to the defendant without the latter's consent, and there was no other principal than the plaintiffs. In the Exchequer Chamber, Kelly, C. B , Channel, B., and Blackburn, J., agreed in opinion with Bovill, C. J., and Smith, J., while Mellor and Hannen, JJ., and Cleasby, B., were of the op- posite opinion. [The judgments of the Court of Common Pleas and of the Ex- chequer Chamber were unanimously reversed by the House of Lords, (d) It is now, therefore, settled law that when the usage of (b) Imperial Bank a. London and St. inson v. Mollett. Of the judges sum- Katharine's Dock Co., 5 Ch. D. 195. moned by the House, who had not previ- (c) L. B., 7 H. L. 802, reversing S. C, ously expressed an opinion on the case, L. R., 7 C. P. 84, and L. E., 5 C. P. 648. Brett and Grove, JJ., dissented from, and (d) L. R., 7 H. L. 802, mb nom. Eob- Amphlett, J., supported the judgments 258 FORMATION OF THE CONTRACT. [BOOK I. trade set up is such as goes to alter the intrinsic character of the con- tract, as e. g., iu Mollett v. Robinson, by converting a broker, em- ployed to buy for his employer, into a principal to sell to him, (e) such usage will not bind a principal who, ignorant of its existence, employs a broker to transact business for him on the particular market where it prevails.] (/) § 241. Where a broker gives a contract note describing himself as in what cases acting f° r a named principal he cannot sue personally on or^sued 1 Bue *' le contract, (g) And semble, not even if principal was personally. undisclosed, (/l) 39 But if the broker contract in his own name, even though he is known to be an agent, he may sue or be sued on the contract, (i) And the same rules apply to auctioneers. (J) 40 of the court below. The opinion of Brett, J., will well repay perusal. (e) As to which see Waddell v. Blockey, 4 Q. B. D. 678, C. A., and per cur. in De Bussche v. All, 8 Ch. D. 286, C. A. (/) See per Lord Chelmsford in L. JR., 7 H. L., at p. 836. (g) Fawkes l. Lamb, 31 L. J., Q. B. 98 ; Fisher v. Marsh, 6 B. & S. 416, per Blackburn, J., 34 L. J., Q. B. 178; Bramwell v. Spiller, 21 L. T. (N. S.) 672 ; Fairlie v. Fenton, L. R., 5 Ex. 169. (h) Sharman v. Brandt, L. R., 6 Q. B. 720, in Ex. Ch. 39. An Agent Cannot Sue on a Sale Avowedly for His Principal, Unless He has a Special Interest in the Goods Sold. — A distinction is made between agents having the possession coupled with some special interest in goods, and those merely employed to make sale. The former can sue, the lat- ter cannot. In White v. Chouteau, 10 Barb. 202, 208, plaintiffs sold some indigo, not giving the owner's name, but stating that they were brokers. Held, that as they had no special interest in the goods they could not sue. " In none of the cases has the right to sue in his own name been extended to a mere ordinary broker." In Buckbee v. Brown, 21 Wend. 110, it was held that a dock-master appointed by a municipal corporation to collect dues could not sue for them in his own name. And see Dugan v. United States, 3 Wheat. 172. But factors, auction- eers intrusted with goods, and other agents having a peisonal interest, may sue. Kent v. Bornstein, 12 Allen 342; Graham v. Duckwall, 8 Bush 12; Min- tnrn v. Wain, 7 N. Y. 220; Beller v. Block, 19 Ark. 566. An Agent is not Liable if He Contracts as such, Unless Credit is Given to Him Expressly. — Whitney v. Wyman, 101 U. S. 392. In this case a committee of a company not yet com- pletely organized, ordered, " by direction of the officers," certain machinery, which was sent and accepted by the company afterwards organized. The members of the committee being sued, it was held that they were not liable. See I 246, and note 44, post. Watson v. Bickard, 25 Kan. 662; Gill v. Tison, 61 Ga. 161; Fleming v. Hill, 62 Ga. 751. (i) Short v. Spakeman, 2 B. & Ad. 962 ; Jones v. Litdedale, 6 Ad. & E. 486 ; Beid v. Draper, 6 H. & N. 813, 30 L. J., Ex. 268. ( j) Franklyn v. Lamond, 4 C. B. 637 ; Fisher v. Marsh, 6 B. & S. 411 ; 31 L. J., Q. B. 177 ; Woolfe v. Home, 2 Q. B. D. 355. 40. See ante \ 238, note 38. Mills v. PART II. J OF THE MEMORANDUM OR NOTE IN WRITING. 259 And if the broker, though signing as broker, be really the princi- pal, his signature will not bind the opposite party, (A) and he cannot sue on the contract, (h) 41 Where a person describes himself as agent in the body of the con- tract but signs his own name, he is personally liable on the con- tract. (Ic) 42 Hunt, 20 Wend. 433 ; Cobb v. Knapp, 71 N. Y. 348 ; Raymond u. Crown and Eagle Mills, 2 Mete. 39; Guernsey v. Cook, 117 Mass. 548. In Roosevelt v. Doherty, 129 Mass. 301, a factor sold goods of his prin- cipal in one lot with his own goods, and it was held that the factor possessed the sole right of action. Schell v. Stephens, 50 Mo. 375; Blakely v. Bennecke, 59 Mo. 193; Groover v. Warfield, 50 Ga. 644; Bedford, &c, Ins. Co. v. Covell, 8 Mete. 442 ; Taber v. Cannon, 8 Id. 456, 460. 41. An Agent Who Contracts With- out Authority is Liable for Breach of his Warranty of Authority. — It was formerly held that an agent who made a contract for a known principal without authority, was liable as principal on such contract. Walker v. Bank of New York, 9 N. Y. 582, 585 ; Weare v. Gove, 44 N. H. 196; Coffman v. Harrison, 24 Mo. 524; Byars v. Doore's Adm'r, 20 Id. 284; Foster v. Smith, 42 Tenn. 474, 479; Bay ■o. Cook, 22 N. J. L. 343, 352. But the later doctrine is that the remedy is either by action on the case for deceit, or by ac- tion for breach of an implied warranty that he has aulhority. Baltzen v. Nico- lay, 53 N. Y. 467 ; Bartlett v. Tucker, 104 Mass. 336 ; Noyes v. Loring, 55 Me. 408 ; Sheffield v. Ladue, 16 Minn. 388; White v. Madison, 26 N. Y. 117 ; Dung v. Parker, 52 N. Y. 494, 500; Johnson v. Smith, 21 Conn. 627 ; Duncan v. Niles, 32 111. 532. Where one Deals with an Agent Knowing his Authority, he cannot hold the Agent Liable if it Proves In- sufficient, — There is an important excep- tion to the principle first stated in this note to be noticed. Where the agent and the party with whom he deals, both knowing what the authority of the agent is, through ignorance of the law, enter into a contract beyond his authority, the agent incurs no liability. Thus in Abeles v. Cochran, 25 Kans. 405, 414, plaintiff sued the directors of a bank on a contract which he had made with them to sell to their bank one thousand shares of its own stock. The directors had no authority to make such a purchase. Brewer, J., said : " The doctrine is clear that where the contract is made in the name of the prin- cipal, and without any personal (tovenant on the part of the agent, and without any wrong on his part either in act, statement or omission, the latter is not responsible^ even though the former be not bound." Watson v. Rickard, 25 Kan. 662; Aspin- wall v. Torrance, 1 Lans. 381 ; Ogden v. Raymond, 22 Conn. 384 ; Walker v. Bank, 9 N. Y. 582, 587 ; Newman v. Sylvester, 42 Ind. 106, 112 ; Sanborn v. Neal, 4 Miim. 126; Murray v. Carothers, 1 Mete. (Ky.) 71; McCurdy v. Rogers, 21 Wis. 199; Mann v. Richardson, 66 111. 481. But if the agent has received and retains prop- erty, suit may be brought against him to recover it. Jeffs v. York, 10 Cush. 392. These cases must be distinguished from those where the agent represents himself as acting for a principal who in fact has no existence, as to which see \ 246, note. 42. What Words Sufficiently Ex- (h) Sharman ti. Brandt, L. R., 6 Q. B. and cases there cited ; but see Thomson 720, in Ex. Ch. v. Davenport, notes to 2 Sm. L. G, p. (k) Paice v. Walker, L. R., 5 Ex. 173, 398 (ed. 1879.) 260 FORMATION OF THE CONTRACT. [BOOK Paice w. Walker. Gadd v. Houghton 242. [This is the effect of the decision in Paice v. Walker, (I) where the sellers described themselves in the body of the contract "as agents for" named principals, but signed their own names, and were held to be personally liable on the con- tract, (to) But iu Gadd v. Houghton, (n) where brokers had given the purchaser a sold note in the following terras : " We have this day sold to you on account of John Moraud & Co., Valencia, 2000 cases Valencia oranges, &c," and signed it with- out any qualification, the Court of Appeal held that they were not liable. Paice t*. Walker was distinguished on the ground that the ratio decidendi there was that the words " as agents " were words of description only, and were not equivalent to a declaration by the de- fendants that they were making a bargain on another's account, but James, L. J., in commenting upon Paice v. Walker, said, " If that case were now before us, I should hold that the words ' as agents ' in that case had the same effect as the words 'on account of in the present case, and that the decision in that case ought not to stand." (n) press the Fact of- Agency. — In Siraonds v. Heard, 23 Pick. 120, a committee ap- pointed by a town to build a bridge, and furnished with money, were held per- sonally liable on a contract for building, in which they described themselves as committee of the 'town of Wayland, but signed their individual names. And in Bayliss v. Pearson, 15 Iowa 279, a com- mittee to erect a school-house signed a note with their individual names, wherein they " as committeemen " to erect the school-house, designating it, promised to pay ; and they were held individually liable. But in most cases in the United .States a statement of the fact of agency in the body of the instrument has been held more satisfactory evidence of intent to bind the principal than the addition of the term " agent " after the name, which lat- ter designation has sometimes been held mere description. In the case of Pratt v. Beaupre, 13 Minn. 187, a contract to transport flour was signed " Temple & Beaupre, agents steamer Flora.'' Mc- Millan, J., said that the words " agents, &c.,'' were prima facie descriptive of the person. " When a party who seeks to change the prima facie character of the contract, does so on the ground of agency in making the contract, the fact of his agency must be established ; for if he acted as an agent without authority, he is personally liable." In Hayes v. Brubaker, 65 Ind. 27, a note was sued on, signed by defendants, who added to their names "Trustees of Univ. Church of Pierceton." It was held incompetent to prove that they were agents for the church, and judgment was sustained against them. Tilden v. Barnard, 43 Mich. 376, is to the same effect. See Cruse v. Jones, 3 Lea (Tenn.) 66; Bryson v. Lucas, 84 N. C. 680 ; Lacy v. Dubuque Lumber Co., 43 Iowa 510; Anderton v. Shoup, 17 Ohio St. 125 ; De Witt v. Walton, 9 N. Y. 571. (I) L. E., 5 Ex. 173, and see Adams v. Hall, 37 L. T. (N. S.) 70; and Weidner „. Hoggett, 1 C. P. D. 533. (m) As to the principal's liability in such a case, see The Concordia Chemical Co. v. Squire, 34 L. T. (N. S.) 824, C. A. (n) 1 Ex. D. 357, C. A. [n) 1 Ex. D., at p. 359. PART. II.] OF THE MEMORANDUM OR NOTE IN WRITING. 261 In Ogden v. Hall (o) the words used were " on behalf of" and it was held by the Exchequer Division (diss. Kelly, C. B.,) „ dent , that the case was governed by Gadd v. Houghton, on the HaIL ground that the import of the expressions "on account of" and "on behalf of" was identical. In Hough v. Manzanos, (p) Pollock, B., followed Paice v. Walker, stating that he was unable to appreciate the distinction Houeh „ drawn by James, L. J., in Gadd v. Houghton, between the Manzanos expressions "as agent for" and "on account of" principals, but that that distinction left Paice v. Walker an authority binding upon him. The correctness, however, of the decision in Paice v. Walker remains questionable. In Southwell v. Bowditch, (q) it was held that a broker who had signed and sent to the plaintiff a contract note in the SouthweU „ following terms: "I have this day sold by your order Bowdltcl1 - and for your account, to my principals, 5 tons of anthracene (Signed) W. H. Bowditch," was not, in the absence of usage, personally liable on the contract.] § 243. An extremely able discussion of the subject of a broker's responsibility is found in the remarkable case of Fowler Fowler „ v. Hollins. (»•) The facts were that the plaintiffs, after Hollins - ' refusing to sell to a broker personally, sold thirteen bales of cotton to him on his stating that he was acting for a principal, and the sale note was made to the principal. This was a fraud of the broker who had no authority from the principal, and the broker immediately resold the cotton for cash to the defendants who were also brokers, and were really acting for principals, (s) but who took a purchase note in their own names, addressed to themselves as follows : " We sell you, &c." The defendants on the same day sent a delivery order for the cotton in favor of their principals, whom they named in the order, and paid for it. They were re-imbursed the price by their principals, together with their commissions and charges. All these transactions took place on the 23d of December, 1869. The cotton was at once sent by the defendants to the railway station, whence it (o) 40 L. T. (N. S.) 751. (s) This is not quite correct. At the ( p) 4 Ex. D. 104. time of the sale by Bay ley, the fraudu- (q) 1 C. P. D. 374, C. A., reversing the lent broker, to them, the defendants had decision of the Divisional Court, Id. 100. no principals. See post \ 245. (r) L. K., 7 Q. B. 616. 262 FORMATION OF THE CONTRACT. [BOOK I. was taken to the mills of the principals at Stockport, and there manu- factured into yarn. On the 10th of January, 1870, the defendants received a letter from the plaintiffs stating the fraud that had been committed on them, and demanding delivery back to themselves of the cotton. This was the first intimation to the defendants that any fraud had been committed on the plaintiffs, and they replied to the plaintiffs' demand, saying : " The cotton was bought by one of our spinners, Messrs. Micholls, Lucas & Co., for cash, and has been made into yarn long ago, and as everything is settled up, we regret we cannot render your clients any assistance." The plaintiffs thereupon brought trover, and it was left to the jury by Willes, J., to say whether the defendants had acted only as agents in the course of the business, and whether they had dealt with the goods only as agents for their principals. The jury found these facts in favor of the defendants, and a verdict was entered for them with leave reserved to the plaintiffs to move to enter a verdict for the value of the thirteen bales. The rule was made absolute in the Queen's Bench (Mellor, Lush, and Hannen, JJ.) ; and in the Exche- quer Chamber, the judgment was affirmed by Martin, Channell, and Cleasby, BB. (diss. Kelly, C. B., and Byles and Brett, JJ.) The reason given for affirming the judgment was, that although the defendants had acted as brokers, they had assumed the responsi- bility of principals by dealing in their own names for an undisclosed principal, Martin and Channell, BB., being also of opinion that the plaintiffs were entitled to recover whether the defendants had acted as principals or agents, and that the " facts found by the jury are im- material. The plaintiffs were strangers to the sale by Bayley [the fraudulent broker], whether it was to the defendants or to Micholls. I think they are entitled to treat the defendants as wrong-doers, wrongfully intermeddling with their cotton, which they had no legal right to touch : and that when they removed the cotton from the warehouse where it was deposited to the railway station, to be for- warded to Stockport to be spun into yarn, and received the price of it, they committed a conversion." Per Martin, B., pp. 634-5. § 244. Brett, J., on the other hand, delivered a powerful judg- ment, which the Chief Baron characterized as "logical and exhaus- tive," and in which both he and Byles, J., concurred. The following passages are extracted as a very instructive exposition of the subject PART II. J OF THE MEMORANDUM OR NOTE IN WRITING. 263 under consideration : " The true definition of a broker seems to be that he is an agent employed to make bargains and contracts between other persons in matters of trade, commerce, or navigation. Prop- erly speaking, a broker is a mere negotiator between the other parties. If the contract which the broker makes between the parties be a contract of purchase and sale, the property in the goods, even if they belong to the supposed seller, may or may not pass by the contract. The property may pass by the contract at once, or may not pass till a subsequent appropriation of goods has been made by the seller, and has been assented to by the buyer. Whatever may be the effect of the contract as between the principals, in either case no effect goes out of the broker. If he sign the contract, his signature has no effect as his, but only because it is in contemplation of law the signature of one or both of the principals. No effect passes out of the broker to change the property in the goods. The property changes either by a contract which is not his, or by an appropriation and assent, neither of which is his. In modern times in England, the broker has under- taken a further duty with regard to the contract of the purchase and sale of goods. If the goods be in existence, the broker frequently passes a delivery order to the vendor to be signed, and on its being signed, he passes it to the vendee. In so doing, he still does no more than act as a mere intervener between the principals. He himself, considered as only a broker, has no possession of the goods ; no power, actual or legal, of determining the destination of the goods ; no power or authority to determine whether the goods belong to buyer or seller or either; no power, legal or actual, to determine whether the goods shall be delivered to the one or kept by the other. He is throughout merely the negotiator between the parties; and, therefore, by the civil law, brokers were not treated as ordinarily in- curring any personal responsibility by their intervention, unless there was some fraud on their part. Story on Agency, § 30. And if all a broker has done be what I have hitherto described, I apprehend it to be clear that he would have incurred no personal liability to any one according to English law. He could not be sued by either party to the contract for any breach of it. He could not sue any one in any action in which it was necessary to assert that he was the owner of the goods. He is dealing only with the making of a contract which may or may not be fulfilled, and making himself the intermediary passer on or carrier of a document [i. e., the delivery order], without 264 FORMATION OF THE CONTRACT. [BOOK I. any liability thereby attaching to him towards either party to the con- tract. He is, so long as he acts only as a broker in the way described, claiming no property in or use of the goods, or even possession of them, either on his own behalf, or on behalf of any one else. Obedi- ence or disobedience to the contract, and its effects upon the goods, are matters entirely dependent upon the will and conduct of one or both of the principals, and is no way within his cognizance. Under such circumstances, and so far it seems to me clear, that a broker cannot be sued with effect by any one. If goods have been delivered under a contract so made and a delivery order so passed, still he has had no power, actual or legal, of control either as to the delivery or non- delivery, and probably no knowledge of the delivery, and he has not had possession of the goods. It seems to me impossible to say, that for such a delivery he could be held liable by the real owner of the goods for a wrongful conversion. But then in some cases, a broker, though acting as agent for a principal, makes a contract of sale and purchase in his own name. In such case he may be sued by the party with whom he has made such contract for a non-fulfillment of it. But so, also, may his undisclosed principal ; and, although the agent may be liable upon the contract, yet I apprehend nothing passes to him by the contract. The goods do not become his. He could not hold them even if they were delivered to him, as against his principal. He could not, as it seems to me, in the absence of anything to give him a special property in them, maintain any action in which it was necessary to assert that he was the owner of the goods. The goods would be property of his principal. And although two persons, it is said, may be liable on the same contract, yet it is impossible that two persons can each be the sole owner of the same goods. Although the agent may be held liable as a contractor on the contract, he still is only an agent, and has acted only as agent. He could not be sued, as it seems to me, merely because he had made the contract of purchase and sale in his own name with the vendor — even though the contract should be in a form which passes property in goods by the contract itself — by a third per- son, as if he, the broker, were the owner of the goods ; as if, for in- stance, the goods were a nuisance or an obstruction, or as it were trespassing, he would successfully answer such an action by alleging that he was not the owner of the goods, and by proving that they were the goods of his principal till then undisclosed. If he could not be sued for any other tort, merely on the ground that he had made PART H.] OF THE MEMORANDUM OR NOTE IN WRITING. 265 the contract in his own name with the vendor, it seems to me that he cannot be successfully sued merely on that ground by the real owner of the goods, as for a wrongful conversion of the goods to his own use." The learned judge then, after a review of the authorities upon the subject of conversion, (t) further held that the mere asportation of the goods through the agency of the defendants before knowledge of the plaintiffs' claim or rights was not sufficient to constitute a con- version, because unaccompanied with any intention to deprive the plaintiff of the goods, though that asportation would have been a conversion, if made after notice of the plaintiff's claim. § 245. [This case was carried on appeal to the House of Lords, (w) and the judges were summoned. Of the learned judges who at- tended, the majority (Blackburn, Mellor, and Grove, JJ., and Cleasby, B.) were in favor of affirming the decision of the courts below, while Brett, J., again delivered a dissentient opinion, in which Amphlett, B., concurred. Their lordships unanimously affirmed the judgments of the Court of Queen's Bench and of the Exchequer Chamber. Some difficulty arose in considering the effect which ought to be given to the findings of the jury at the trial. The jury had found, as we have already seen, that the cotton was bought by the defendants as agents in the course of their business as brokers, and that they had dealt with it only as agents to their principals. In point of fact the defendants had no principals at the time when they purchased the goods, although they intended them for Micholls & Co. ; but it was only after the completion of the contract that Micholls & Co. adopted it. There was evidence at the trial that in the course of their busi- ness, as brokers, the defendants purchased cotton in the expectation of being able to find a client to take it off their hands, although they never intended to retain the goods as principals, but to pass them on to the purchaser when found, receiving their brokers' commission on the sale. All their lordships explained the findings of the jury with regard to this course of dealing, (x) and held that as the defendants had at the time of the sale assumed the responsibility of principals, they had by the transfer of the goods to Micholls & Co., exercised an (() See on conversion, Stephens v. El- (u) L. E., 7 H. L. 757 ; reported sub wall, 4 M. & S. 259 ; Hardman v. Booth, nom. Hollins v. Fowler. 1 H. & C. 103 ; both of which cases were {%) Per Lord Chelmsford, at p. 794 ; approved and followed by the House of per Lord Cairns, at p. 796 ; per Lord Lords in Hollins v. Fowler, supra; and Hatherley, at p. 798; per Lord O'Hagan, see England v. Cowley, L. B., 8 Ex. 126. at p. 800. 266 FORMATION OF THE CONTRACT. [BOOK I. act of dominion over them which was inconsistent with the right of the plaintiffs, the true owners, to whom therefore they were liable for conversion. 43 Lord Cairns says (at p. 797,) " I agree with what is said by Mr. Justice Grove, that the jurors appear to have meant that the appellants never bought intending to hold or to make a profit, but with a view to pass the goods over to Micholls & Co., or, if Micholls & Co. did not accept them, to some other customer, and that therefore, in one sense, they acted as agents to principals, only intending to receive their commission as brokers, and never thinking of retaining the goods, or dealing with them as buyers and sellers. But, as Mr. Justice Grove continues, ' this would leave the question untouched, whether they did not exercise a volition with respect to the dominion over the goods, and whether, although they intended to act and did act, in one respect, as brokers, not making a profit by re-sale, but only getting brokers' commission, they did not intend to act and did not act, in relation to the sellers, in a character beyond mere intermediates, and not as mere conduit pipes.' In my opinion they did act, in relation to the sellers, in a character beyond that of mere agents ; they exercised a volition in favor of Micholls & Co., the result of which was that they trans- ferred the dominion over and property iu the goods to Micholls, in order that Micholls might dispose of them as their own ; and this, as I think, within all the authorities, amounted to a conversion." It should be remarked, iu regard to the judgment of Brett, J., de- livered in the Exchequer Chamber, that although their lordships differed from that learned judge in the interpretation which they put upon the findings of the jury, the effect of their decisions in no way goes to detract from the value of that judgment as an exposition of the law as to brokers' liabilities.] § 246. Where a party contracts in writing as agent for a non- a entsfor existent principal he will be personally bound, andnosub- princlp'ai'a 116 sequent ratification by the principal afterwards coming Keinem. Hlto existence can change this liability, nor is evidence Baxter. admissible to show that a personal liability was not in- tended. Thus in Kelner v. Baxter, (t) the plaintiff wrote to the three 43. Hollins v. Fowler is cited and the See, also, § 6, note 2. subject discussed in Pease v. Smith, 61 (J) L. R, 2 C. P. 174. See, also, Scott N. Y. 477. See Koch i>. Branch, 44 Mo. v. Lord Ebury, L. R, 2 C. P. 255. 542; Hoffman v. Carow, 22 Wend. 285. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 267 defendants, addressing them " on behalf of the proposed Gravesend Royal Alexandra Hotel Company Limited," proposing to sell certain goods for £900, which offer the defendants accepted by a letter signed by themselves, " on behalf of the Gravesend Royal Alexandra Hotel Company Limited," and the goods were thereupon delivered and con- sumed by the company, which was not incorporated till after the date of the contract, and which ratified the purchase made on its behalf It was held that the defendants were personally liable because there was no principal existing at the date of the contract, for whom they could by possibility be agents, and that for the same reason no ratifi- cation was possible : that the company might have bound itself by a new contract to buy and pay for the goods, but such new contract would require the assent of the vendor, who could not be deprived of hfs recourse against those who dealt with him by any action of the company to which he was no party : and that parol evidence was not admissible to affect the inferences legally resulting from the written contract. 44 § 247. We now come to the second point of the inquiry, and must consider to what extent it is necessary that the writing should contain the terms and subject matter of the con- noteo-nXe*" tract, in order to be deemed a sufficient note or memoran- contract dum " of the bargain." 44. One who Contracts in the Name machinery which was sent and accepted, of a Non-existing Principal is Per- The company's articles of association sonally Liable. — The principle stated in were not duly filed until afterward, and the text has been often applied where a the general law forbade any corporation debt is incurred in the name of a com- to do business until after such filing, pany not yet organized. In Allen v. But the court said that the members of Pegram, 16 Iowa 163, 171, the officers of the committee were not liable, the com- a bank, organized under a void charter, pany, when duly formed, having ratified were held liable for its obligation, and the contract, and being estopped to deny Dillon, J., said it was a well-settled rule its agents' authority, and the statutory "that where there is no principal who can restriction being a mere inhibition, im- be made legally responsible, the agent posing no penalty and not making the who undertakes to act for and bind such act forbidden, void. See Noe v. Gregory, a principal will himself be personally 7 Daly 283. No doubt, however, the responsible." See Booth ads. Wonderly, agent would be exempt from liability if 36 N.J. L. 250, 'loo ; Woodbury v. Wolff, both parties acted with full knowledge of 18 Iowa 572. Rockford, &c, E. E. u. the facts, and in ignorance of the law; Sage, 65 111. 328 ; New York, &c, E. E. for example, if both, being members of a v. Ketchum, 27 Conn. 170. Eut in Whit- company, know of facts which should ap- ney v. Wyman, 101 U. S. 392, a commit- prise them that its incorporation is void, tee of a company ordered for its use See ante \ 241, note 41. 268 FORMATION OF THE CONTRACT. [BOOK I. [In Mahalen v. Dublin and Chapelizod Distillery Company, (w) there was a parol agreement for the purchase of whiskey, the pur- chaser to have the option of paying in cash or by his acceptance at four months, and the exact quantity of the whiskey was to be ascer- tained by redip. Invoices were made out which represented the sale to be for " net cash," and of an ascertained quantity of whiskey. It was held, by the Court of Queen's Bench in Ireland, that the invoices did not contain the substantial and material terms of the bargain within the meaning of the statute. («)] § 248. It has already been seen that the decisions establish the Distinction necessity under the fourth section of proving the whole "agreement" "agreement" in writing, in order to satisfy the statute, and "bargain." independently of authority, one would think that "bar- gain" and "agreement" are words so identical in meaning, when applied to a contract for the sale of goods, as to admit of no possible distinction ; but the authorities do nevertheless distinguish them in a manner too plain to permit a doubt as to the law. 45 In Egerton v. Mathews, (x) the plaintiff had been nonsuited at e rtonn Guildhall, by Lord Ellenborough, on the authority of Mathews. "Wain v. Walters, (y) The writing was, " We agree to give Mr. Egerton 19d. per pound for thirty bales of Smyrna cotton, customary allowance, cash three per cent., as soon as our certificate is complete." It was signed and dated. Lord Ellenborough is reported, when granting a rule nisi, to have assented to a distinction between the two cases, and to have said on cause shown, "This was a memorandum of the bargain, or at least of so much of it as was sufficient to bind the parties to be charged there- with, and whose signature to it is all that the statute requires." This last expression would seem to indicate that the difficulty in his lord- ship's mind was, that the bargain was not complete because the plain- lu) 11 Ir. B. C. L. 83. followed in Massachusetts and in Maine. («) The 13th section of the Irish stat- See Williams v. Robinson, 73 Me. 186, uteof frauds (7 Will. III., c 12,) is similar 195, and cases there cited. See, also, in its terms to the 17th section of the notes to Wain v. Warlters in Smith's English act. Leading Cases. The effect of these lat- 45. This distinction between the words ter cases is that the consideration need " bargain " and " agreement " was recog- not be expressed in the writing, either in nized in Sears v. Brink, 3 Johns. 210, and cases within the 4th or in those within Leonard v. Vredenburgh, 8 Johns. 29, but the 17th section, was repudiated in Packard v. Richardson, (x) 6 East 307. 17 Mass. 122, which has been repeatedly (y) 5 East 10. PART II.] OF THE MEMORANDUM OR NOTE IN WRITING. 269 tiff had not signed (a point not fully settled by authority, till 1836, in Laythoarp v. Bryant, (2) as will be seen hereafter.) (a) But Law- rence, J., said : " The case of Wain v. Warlters proceeded on this, that in order to charge one man with the debt of another, the agree- ment must be in writing, which word agreement we considered as properly including the consideration moving to, as well as the promise made by, the party to be so charged." The learned judge, however, did not explain why the word " bargain " does not also include the terms on both sides, as was observed by Holroyd, J., when he said : " It appears to me that you cannot call that a memorandum of a bar- gain, which does not contain the terms of it ;" and by Bayley, J., when he held in the same case (b) that the language of the two sec- tions of the statute was in substance the same, and that the word " bargain " means " the terms upon which parties contract." In Hinde v. Whitehouse, (e) the memorandum consisted of the auctioneer's catalogue, signed by him as agent of both Hinde „ parties, showing the goods sold, their marks, weight, and whltehou8e - price ; but the court held this insufficient, because there was another paper containing the conditions of the sale, which had been read, but was not made a part of the written note of the bargain by internal evidence contained in the signed paper. In Laythoarp v. Bryant, (d) in 1836, which was on the 4th section, Tindal, 0. J., said: "Wain v. Warlters was decided on j^ya^™,, the express ground that an agreement under the 4th sec- Br y aQt - tion imports more than a bargain under the 17th." Park, J., said : " The cases on the 17th section of the statute might very much be put out of question, because the language of that section is different from the language of the 4th." In Sari v. Bourdillon (e) the written note was for the sale of " candlesticks, complete." It was proven that the parol Sarll , Bour . bargain was that the candlesticks should be furnished dlllon - with a gallery to carry a shade, and defendant insisted that the written note was insufficient ; but after time to consider, the decision of the court was delivered by Cresswell, J., who said: "We do not feel obliged to yield to this argument. The memorandum states all that (s) 2 Bing. N. C. 735. L. E., 9 Q. B. 210, ante \ 229 ; Eishton (a) Post I 255. v. Whatmore, 8 Ch. D. 467. (6) Kenworthy v. Schofield, 2 B. & C. (d) 2 Bing. N. C. 735. 948. (e) 26 L. J., C. P. 78 ; 1 C. B. (N. S.) (c) 7 East 558. See, also, Peirce v. Corf, 188. Price not stated where agreed on 270 FORMATION OF THE CONTRACT. [BOOK I. ivas to be done by the person charged, viz., the defendant, and accord- ing to the case of Egerton v. Mathews, (/) that is sufficient to satisfy the 17th section of the statute of frauds, though not to make a valid agreement in cases within the 4th section." § 249. In Elmore v. Kingscote, (g) there had been a verbal sale of a horse for 200 guineas, but the only writing was a letter from defendant to plaintiff, in ih following words : "Mr. Elmore v. Kingscote begs to inform Mr. Elmore that if the horse Kingscote. can be proved t0 be fiye years old Qn the 13th Q f tnis month in a perfectly satisfactory manner, of course he shall be most happy to take him : and if not most clearly proved Mr. K. will most decidedly have nothing to do with him." The court held this insuffi- cient, saying, " The price agreed to be paid constituted a material part of the bargain." In Ashcroft v. Morrin, (h) defendant ordered certain goods to be Ashcrofti> sen *' n ' m > savm e> "Let the quality be fresh and good, Momn. and on moderate terms." On objection made that the price was not stated, the court said : " The order is to send certain quantities of porter and other malt liquor, on moderate terms. Why is not that sufficient? That is the contract between the parties :" and set aside the nonsuit according to leave reserved. In Acebal v. Levy, (i) there was a special count alleging an agree- ment for the sale of a cargo of " nuts, at the then ship- Acebal v. Levy. . . „,. „ . ,, , . _ ping price at vjijon, in opain, and the parol evidence was to that effect. Plaintiff not being successful in establishing the validity of the contract by satisfactory proof of delivery and accept- ance, then attempted to support his case by a letter which did not state the price, and by insisting that a contract of sale was valid without statement of price, because the law would imply a promise to pay a reasonable price. But the court, declining to determine how this would be if no price had really been agreed on, held that where there had been an actual agreement as to price shown by parol, the written paper, which did not contain that part of the bargain, was insuffi- cient to satisfy the statute. § 250. In Hoadly v. M'Laine, (k) the same court was called on to if) 6 East 807. North British Oil Company, 8 Ir. R. C. ( Gea T »• Physic, 5 B. & C. 234 ; 4 or by stamping the name, Bennett v. Brumfitt, L. B,., 3 C. P. 28,) and it may be in the body of the writing, or at the beginning or end of it. But when the signature is not placed in the usual way at the foot of the written or printed paper, it becomes a question of intention, a ques- tion of fact to be determined by the other circumstances of the case, whether the name so written or printed in the body of the instrument was appropriated by the party to the recognition of the contract 5 § 259. In Saunderson v. Jackson, (I) the plaintiff, on giving to the Saunderson« defendants an order for goods, received from them a bill Jackson. £ p arce i s _ The heading of the bill was printed as fol- lows : " London : Bought of Jackson and Hanson, distillers, No. 8, was admitted to show that he did so merely to indicate by whom the employ- er's name was signed. In Augur v. Cou- ture, 68 Me. 427, defendant was held liable on a writing signed by him "Seam," that being a translation of his name "Cou- ture." In Brown v. Butchers' and Drovers' Bank, 6 Hill 443, a party placed the fig- ures 1, 2, 8 upon the back of a note, and was held thereby as endorser on proof of that intent. A signing of a memoran- dum of sale by initials was sustained in Salmon Falls Manufacturing Company v. Goddard, 14 How. 447, and in Sanborn v. Flagler, 9 Allen 474. See Smith v. Howell, 11 N. J. Eq. 349. 4. See ante # 231, note 29. See, also, Brown v. Butchers' and Drovers' Bank, 6 Hill 443 ; Hicks v. Whitmore, 12 Wend. 548, 554. 5. In Batturs v. Sellers, 5 Harr. & J. 117, acceptance by the buyer of a bill of parcels made out to him in his presence by a commission merchant was held a valid signing, though his name appeared at the head of the bill only. Hawkins v. Chace, 19 Pick. 502. In Penniman v. Hartshorn, 13 Mass. 87, 91, objection was made to a memorandum of sale that the names of defendants were written above and not below the body of the paper. But Parker, C. J., said : " We think this a slight objection." See Adams v. Field, 21 Vt. 256 ; Brink v. Spaulding, 41 Vt. 96; McConnell v. Brillhart, 17 111. 354; Fessenden v. Mussey, 11 Cush. 127 ; Cod- dington *. Goddard, 16 Gray 436, 444 ; Anderson v. Harrold, 10 Ohio 399 ; Smith v. Howell, 11 N. J. Eq. 349. But the sig- nature should be such as to amount to an authentication of the writing as the agree- ment of the party. Browne on Stat, of Frauds, \ 357. That a printed signature will suffice, see Commonwealth v. Bay, 3 Gray 441, 447 ; Lerned v. Wannemacher, 9 Allen 412, 416. But a printed signa- ture must be verified as coming from the party to be charged thereby. Brayley v. Kelly, 25 Minn. 160. In New York a printed name is not sufficient. Vielie v. Osgood, 8 Barb. 130. In that state the statute requires the memorandum to be subscribed, and this is held to require a signing at the end. Davis v. Shields, 26 Wend. 341 ; James v. Patten, 6 N. Y. 9. A signing by an agent in the presence of a party, and by his direction is equiva- lent to a signing by the party himself. See | 266, note 2, post. (1) 2 B. & P. 138. PART II. J OP THE SIGNATURE OP THE PAETY. 283 Oxford Street," and then followed in writing, "1000 gallons of gin, 1 in 5 gin, 7s., £350." There was also a letter, signed by the defend- ants, in which they wrote to plaintiff, about a month later, " We wish to know what time we shall send you a part of your order, and shall be obliged for a little time in delivery of the remainder. Must re- quest you to return our pipes." Lord Eldon said : " The single ques- tion is, whether, if a man be in the habit of printing instead of writing his name, he may not be said to sign by his printed name, as well as bis written name? At all events, connecting this bill of par- cels with the subsequent letter of the defendants, I think the case is clearly taken out of the statute of frauds." Thus far the case would not amount to much as an authority on the point under discussion. His lordship went on to say : " It has been decided, (m) that if a man draw up an agreement in his own handwriting, beginning ' I, A B, agree/ and leave a place for signature at the bottom, but never sign it, it may be considered as a note or memorandum in writing within the statute. And yet it is impossible not to see that the insertion of the name at the beginning was not intended to be a signatnre, and that the paper was meant to be incomplete until further signed. This last case is stronger than the one now before us, and affords an answer to the argument, that this bill of parcels was not delivered as a note or memorandum of the contract." This last sentence refers to the argument of Lens, Serjt., who admitted that the printed name might have amounted to a signature, if the bill of parcels had been intended to express the contract, qua contract, but contended that this was not the intention. § 260. In Schneider v. Norris, (n) the circumstances were exactly the same as in the preceding case, except that the name of Schneider „ the plaintiff as buyer was written in the bill of parcels Norrl3 - rendered to him in the defendant's own handwriting, and all the judges were of opinion that this was an adoption or appropriation by the defendant of the name, printed on the bill of parcels, as his signa- ture to the contract. Lord Ellenborough said : " If this case had rested merely on the printed name, unrecognized by and not brought home to the party, as having been printed by him or by his authority, so that the printed name had been unappropriated to the particular (m) The case referred to by his lord- 574, and Durrell v. Evans, 1 H. & C. 174, ship is Knight v. Cockford, Esp. N. P. and 31 L. J., Ex. 337. 190. See, also, Lobb v. Stanley, 5 Q. B. (n) 2 M. & S. 286. 284 FORMATION OF THE CONTRACT. [BOOK I. contract, it might have afforded some doubt, whether it would not have been intrenching upon the statute to have admitted it. But here there is a signing by the party to be charged, by words recognizing the printed name as much as if he had subscribed his mark to it, which is strictly the meaning of signing, and by that the party has incorporated and avowed the thing printed to be his : and it is the same in substance as if he had written ' Norris & Co.' with his own hand. He has, by his handwriting, in effect, said, I acknow- ledge what I have written to be for the purpose of exhibiting my recognition of the within contract." Le Blanc, J., compared the case to one, where a party should stamp his name on a bill of parcels. Bayley, J., put his opinion on the ground that the defendant had signed the plaintiffs' names as purchasers, and thereby recognized his own printed name as that of the seller. And Dampier, J., on much the same idea, that is, that the defendant by writing the name of the buyer on a paper in which he himself was named as the seller, recog- nized his name sufficiently to make it a signature. § 261. In Johnson v. Dodgson, (o) the defendant wrote the terms Johnson v °^ ^he bargain in his own book, beginning with the words : Dodgson. "Sold John Dodgson," and required the vendor to sign the entry. The court held this to be a signature by Dodgson, Lord Abinger saying that : " The cases have decided that though the signa- ture be in the beginning or middle of the instrument, it is as binding as if at the foot; the question being always open to the jury whether the party not having signed it regularly at the foot meant to be bound by it as it stood, or whether it was left so unsigned because he refused to complete it." Parke, B., concurred, on the authority of Saunder- son v. Jackson, and Schneider v. Norris, which he recognized and ap- proved. In Durrell v. Evans, in the Exchequer Chamber, (p) (post § 266,) the cases of Saunderson v. Jackson, Schneider v. Norris, and Johnson v. Dodgson were approved and followed. [In Tourret v. Cripps, (q) under the 4th section, a letter containing Tourretu. proposed terms of a contract between the defendant and Cripps. tne plaiutif^ written out by the defendant upon paper bearing a printed heading, " Memorandum from Richard L. Cripps," (o) 2 M. & W. 653. (q) 48 L. J., Ch. 567. ( p) 1 H. & C. 174 ; 31 L. J., Ex. 337. PART II.] OF THE SIGNATURE OF THE PARTY. 285 and sent by him to the plaintiff, was held to be a sufficient note in writ- ing to charge the defendant.] § 262. In Hubert v. Treherne, (r) which arose under the 4th sec- tion, it appeared that an unincorporated company, called Hubert „ The Equitable Gas Light Company, accepted a tender t™ 1 " 8 ™ 6 - from the plaintiff for conveying coals. A draft of agreement was prepared by the order of the directors, and a minute entered as fol- lows : " The agreement between the company and Mr. Thomas Hubert for carrying our coals, &c, was read and approved, and a fair copy thereof directed to be forwarded to Mr. Hubert." The articles began by reciting the names of the parties, Thomas Hubert of the one part, and Treherne and others, trustees and directors, &c, of the other part; and closed, "As witness our hands." The articles were not signed by anybody, but the paper was maintained by the plaintiff to be sufficiently signed by the defendants, because the names of defend- ants were written in the documeut by their .authority. On motion to- enter nonsuit, all the judges held that the instrument on its face, by the concluding words, showed that the intention was that it should be subscribed, and that it was not the meaning of the parties that their names written in the body of the paper should operate as their signa- tures. Maule, J., said : " The articles of agreement do not seem to me to be a memorandum signed by anybody. Before the statute of frauds, no one could have entertained a doubt upon that point. Since the statute, the courts, anxious to relieve parties against injus- tice, have not unfrequently stretched the language of the act. * * If a party writes, ' I, A B, agree, &c.,' with no such conclusion as is found here, ' as witness our hands,' it may be that this is a sufficient signature within the statute to bind A B. * * * But it would be going a great deal further than any of the cases have hitherto gone to hold that this was an agreement signed by the party to be charged. This is no more than if it had been said by A B that he would sign a particular paper." § 263. The most full and authoritative exposition of the law on this subject is to be found in Caton v. Caton, (s) decided itt f -r t-tij- i r,nM mi ,1 Caton v. Caton. m the House of .Lords in May, 1867. lhe paper there relied on was a memorandum of the terms of a marriage settlement, drawn up in the handwriting of the future husband, and taken to a solicitor's for execution, but the settlement was waived by the parties, (r) 3 M. & G. 743. I L. E., 2 H. L. 127. 286 FORMATION OF THE CONTRACT. [BOOK I. and the memorandum was subsequently set up as containing the agreement. There were numerous clauses, in some of which the name "Mr. Caton " was written in the body of the paper, and in others the initials " Rev. R. B. C," and some contained Heither name nor initials. It was held that although to satisfy the statute of frauds it is not necessary that the signature of a party should be placed in any particular part of a written instrument, it is necessary that it should be so introduced as to govern or authenticate every material part of the instrument ; and that where, as in the case before the court, the name of the party, when found in the instrument, appeared in such a way that it referred in each instance only to the particular part where it was found, and not to the whole instrument, it was insufficient. The language of Lord Westbury, whose opinion on this particular point was the most comprehensive of those delivered in the case, was as follows : " What constitutes a sufficient signature has been described by different judges in different words. In the original case upon this subject, though not quite the original case, but the case most frequently referred to as of the earliest date, that of Stokes v. Moore, 1 Cox 219, the language of the learned judge is that the signature must authenticate every part of the instrument; or, again, that it must give authenticity to every part of the instrument. Probably the phrases ' authentic/ and ' authenticity,' are not quite felicitous, but their meaning is plainly this, that the signature must be so placed as to show that it was intended to relate and refer to, and that in fact it does relate and refer to, every part of the instrument. The language of Sir William Grant, in Ogilvie v. Foljambe, 3 Mer. 53, is (as his method was) much more felicitous. He says it must govern every part of the instrument. It must show that every part of the instru- ment emanates from the individual so signing, and that the signature was intended to have that effect. It follows, therefore, that if a signature be found in an instrument incidentally only, or having re- lation and reference only to a portion of the instrument, the signa- ture cannot have that legal effect and force which it must have in order to comply with the statute, and to give authenticity to the whole of the memorandum." His lordship then criticised the different clauses of the memorandum for the purpose of showing the insuffi- ciency of the signature when tested by these rules, and proceeded : " Now an ingenious attempt has been made at the bar to supply that defect by fastening on the antecedent words, ' In the event of mar- PART II. J OF THE SIGNATURE OP THE PARTY. 287 riage the undernamed parties/ and by the force of these words of reference to bring up the signature subsequently found and treat it as if it were found with the words of reference. My lords, if we adopted that device, we should entirely defeat the statute. You can- not by words of reference bring up a signature and give it a different signification and effect from that which the signature has in the origi- nal place in which it is found. What is contended for by this argu- ment differs very much from the process of incorporating into a letter or memorandum signed by a party another document which is specifi- cally referred to by the terms of the memorandum so signed, and which, by virtue of that reference, is incorporated into the body of the memorandum. There you do not alter the signature, but you apply the signature not only to the thing (writing?) originally given, but also to that which, by force of the reference, -is, by the very con- text of the original, made a part of the original memorandum. But here you would be taking a signature intended only to have a limited and particular effect, and by force of the reference to a part of that document, you would be making it applicable to the whole of the document to which the signature in its original condition was not in- tended to apply, and could not, by any. fair construction, be made to apply." The effect of these principles seems to be substantially that the reference to connect two papers or two clauses so as to signature may make one signature apply to both, must be from what is f r omwhIt is signed to what is unsigned, not the reverse. 6 t^^ea?** § 264. [Signatures of directors to articles of associa- notthereverse - tion which contained a clause, in which it was stated that afflxecUiMo the plaintiff should be solicitor to the company, and mm should transact all the legal business of the company, Positive _. Assurance were held in Eley v. The Positive Assurance Company, (t) Company. not to be signatures to a memorandum of the contract within the statute of frauds, on the ground that they had been affixed alio intuitu. But in Jones v. The Victoria Graving Dock Company (m) the signature of the chairman of a company to the victoria minutes was held to be a sufficient signature, although Docks com- put alio intuitu, viz., to notify the proceedings of the board under the companies act, 1862, (25 and 26 Vict., c. 89, § 67.) 6. See ante \ 220, note 4; Thayer v. («) 1 Ex. D. 20. Luce, 22 Ohio St. 62, 74. (u) 2 Q. B. D. 314. 288 FORMATION OF THE CONTRACT. [book In this case, Eley v. The Positive Assurance Company was not cited and the two decisions appear to be irreconcilable. Both these cases were under the 4th section, and the reasoning upon which the later case proceeds, viz., that the requirements of the 4th section of the statute relate only to the evidence of the contract, (a;) is undoubtedly sound. But the same reasoning would not be applicable in the case of a signature to a memorandum of a contract under the 1 7th section, which, as distinguished from the 4th, seems to affect the intrinsic validity of the class of contracts to which it refers, (yj] 7 (x) Per Lush, J., in delivering the judgment of the court, at p. 323. (y) There is no conclusive authority for this, but the distinction between the two sections was drawn in Laythoarp v. Bryant, 2 Bing. N. C. 743 ; 3 Scott 238, and in Leroux, v. Brown, 12 C. B. 801 ; 22 L. J., C. P. 1, a decision which, although meeting with some disapproval, until it is overruled, settles the law that the 4th section applies only to procedure, and therefore forms a part of the lex fori. 7. Bat the well-considered case of Townsend v. Hargraves, 118 Mass. 325, holds that the statute of frauds affects the remedy only, and that an oral contract within the 17th as well as within the 4th section is valid, and this decision has been favorably received in the other states. See Bird „. Munroe, 66 Me. 337, 344. See ante § 91, note 2. Many cases in this country hold a signing of the min- utes of a corporation by its clerk, sufficient to satisfy the statute under the 4th sec- tion. See ante § 1, note 28. As to ad- mission of parol evidence to show that the signing was alio intuitu, see Palmer v. Stephens,. 1 Benio 471. PART II.J AGENTS DULY AUTHORIZED TO SIGN. 289 CHAPTER VIII. AGENTS DULY AUTHORIZED TO SIGN. SEC. Agent must be a third person, not the other contracting party 265 What evidence sufficient to prove authority 266 Auctioneer is agent of both parties to sign the contract at, public sale, 268 But is the agent of vendor alone at a private sale 269 Parol evidence admissible to rebut presumption of auctioneer's ■ agency for the buyer 269 Auctioneer's agency for the buyer only begins when goods are knocked down to him as last bidder 270 Signature, clerk of auctioneer 270 " " Telegraph Co 270 Signature of agent as a witness is not a signature of the party 271 Brokers — their general authority 272 Brokers in city of London 273 Contract notes 274 Brokers in London bound by cuh- toms of trade 274 Bought and sold notes, their form and purport 275 Signed en try in broker's book — con- flict of authority as to its real effect — cases reviewed 277 General propositions deduced from the authorities 293 Broker's signed entry constitutes the contract 294 SEC. The bought and sold notes do not 295 But they suffice to satisfy the statute when complete and not inconsist- ent 296 Either note will suffice, unless vari- ance shown 297 If plaintiff offers only one note, de- fendant may offer the other to show variance 298 Where there is variance between signed entry and bought and sold notes 299 Variance between written corres- pondence and bought and sold notes 300 Where there is variance between bought and sold notes, and there is no signed entry 301 Where note signed by party himself varies from that signed by his broker 301 Where sale is made by broker on credit, vendor may retract if dis- satisfied with buyer's solvency 302 Where sold note is delivered by broker employed by buyer only.... 303 No variance between bought and sold notes if meaning is the same, al- though language differs 304 Revocation of broker's authority 305 Alteration of bought or sold note after delivery 306 Broker's clerk 307 § 265. It is not within the scope of this treatise to enter into the general subject of the law of agency, which is in no way altered by the statute. The agency may be proven by parol as at common law, and may be shown by subsequent ratification as well as by antecedent delegation of authority, (a) 1 But such ratification is only possible in (a) Maclean v. Dunn, 4 Bing. 722 ; Gosbell v. Archer, 2 Ad. & E. 500 ; Ace- bal v. Levy, 10 Bing. 378 ; Fitzmaurice v. Bayley, 6 E. & B. 868 ; afterwards re- versed, 9 H. L. C. 78, but not on the point stated in the text. Sugd. V. & P. 145, (ed. 1862.) 1. Of course the agency and its extent may be questioned by parol, and it may be shown that the agent's authority is 290 FORMATION OF THE CONTRACT. [BOOK I. the case of a principal in existence when the contract was made [ante § 246.) 2 It is necessary that the agent be a third person, and not the other Agent must be contracting; party, (u) 3 a third person, ° L , . . „ not the other 8 266. The decisions as to the sufficiency of the evi- contractlng J party. dence to prove authority for the agent's signature have ^ffloientto 1106 not been numerous under the 17th section. 4 limited to signing a correct memoran- dum. In such case it may also be shown that the memorandum signed by the agent is not correct. See $ 210, note 7, ante. As to subsequent ratification, see note 3, infra. 2. See ante note 44, § 246. (m) Sharman v. Brandt, in Ex. Ch., L. E., 6 Q. B. 720. 3. Smith v. Arnold, 5 Mason 414 ; Bent v. Cobb, 9 Gray 397 ; Tull „. David, 45 Mo. 444. But where the auctioneer is owner his clerk may sign. Johnson v. Buck, 35 1ST. J. L. 338, 342. In Shaw v. Finney, 13 Mete. 453, a broker contracted to buy fish for his principal, but did so as principal. Held, that his memoran- dum, naming himself as buyer, did not bind the seller. 4. Evidence of Agency to Sign. — See ante f 237, note 36, § 241, note 42. In Hawkins v. Chace, 19 Pick. 502, the seller offered the buyer twenty barrels of flour at $5.50 per barrel. The buyer said he would take it, and asked for a memorandum. The seller asked a by- stander to make a memorandum, and he made out a bill naming both parties, the goods and the price and gave it to the buyer, who afterwards sued upon it for non-performance of contract. The court held that the memorandum was sufficient in form, but it should be left to the jury whether the agent had authority to sign the memorandum for the seller. In Bat- turs v. Sellers, 5 Harr. & J. 117, a buyer of goods from a commission merchant stood by him while he made out a bill of parcels writing the name of both parties at the head, and took the bill away with him. It was held that such writing of his name was equivalent to a, signature by himself through his agent. In Mu- tual Benefit Life Ins. Co. v. Brown, 30 N. J. Eq. 193, 202, Van Fleet, V. C, refer- ring to the signing of a mortgage, said : " The authorities hold that if the grant- or's name is written by the hand of another, in his presence, and by his direction, it is his act, and the signature, in point of principle, is as actually his as though he had performed the physical act of making it." See Gardner v. Gard- ner, 5 Cush. 483 ; Croy v. Busenbark, 72 Ind. 48. In Weaver v. Carnall, 35 Ark. 198, 204, an agent, authorized to sign an accommodation note for his principal re- quested a third person to write the name, which was done. This was held to bind the principal, on the ground that the agent could delegate his power to perform a mere mechanical act. See Williams v. Woods, 16 Md. 220, 250. Where the authority is in writing its interpretation and extent is a question of law for the court. Equitable Life Soc. v. Poe, 53 Md. 28, 34 ; Ferris v. Walsh, 5 Harr. & J. 306, 308. But where the writing is am- biguous it may be explained. Thus in Lacy v. Dubuque Lumber Co., 43 Iowa 510, the writing was signed " M. H. Moore, P. D. L. Co.," and evidence was admitted to show that these letters meant President Dubuque Lumber Co., and the company was held liable. In the ab- sence of such explanation the agent will be held individually liable, as was the case in Pratt v. Beaupre, 13 Minn. 187. PART II. J AGENTS DULY AUTHORIZED TO SIGN. • 291 In Graham v. Musson, (x) the plaintiff's traveler, p^ve author- Dyson, sold sugar to the defendant, and in the defend- Graham v. ant's presence, and at his request, entered the contract in Musson - the defendant's book in these words : " Of North & Co., thirty mats Maurs. at 71s. ; cash, two months. Fenning's Wharf. (Signed) Joseph Dyson." It was contended that this was a note signed by the defendant, and that Joseph Dyson was his agent for signing ; but the court held on the evidence that Dyson was the agent of the vendor, and that the request by the purchaser that the vendor's agent should sign a memo- randum of the bargain was no proof of agency to sign the pur- chaser's name ; that the purpose of the buyer was probably to fix the seller, not to appoint an agent to sign his own name. This case was decided by Tindal, C. J., Vaughan, Coltman and Erskine, JJ., in 1839, and was followed by the same court Graham „ in 1841, in Graham v. Fretwell, (y) with the concurrence Fretwe11 - of Maule, J., who had succeeded Vaughan, J., on the bench. The whole subject was fully discussed in Durrell v. Evans, decided in the Exchequer by Pollock, C. B., and Bramwell and Durrc]1 „ Wilde, BB., in 1861, (2) and reversed by the unanimous Evans - opinions of Crompton, Willes, Byles, Blackburn, Keating, and Mel- lor, JJ., in the Exchequer Chamber in 1862. (a) The facts were these : The plaintiff, Durrell, had hops for sale, in the hands of his factor, Noakes, and the defendant failed in an at- tempt to bargain for them with Noakes. Afterwards, the plaintiff and the defendant went together to Noakes' premises, and there con- cluded a bargain in his presence. Noakes made a memorandum of Subsequent Ratification. — The prin- who ratifies. In Roby v. Cassiit, 78 111. cipal cannot affirm what he cannot auth- 638, 642, an agent made a contract to sell orize. Armitage v. Widoe, 30 Mich. 124, land for a principal who was not the 129. In Newton v. Bronson, 13 N. Y. owner, but it was claimed that the real 587, a sale of land was made by an owner had ratified and adopted the sale, agent for an executor, who subsequently Held, that such ratification must be in ratified it in writing. The court said writing, though had the agent assumed to that the power to sell was a personal trust act for the real owner, a subsequent oral and therefore could not be delegated, that ratification would have been valid, a subsequent oral ratification would be of (a;) 5 Bing. N. C. 603. no avail ; but a letter ratifying the sale, (y) 3 M. & G. 368. and containing all the elements of the (s) 30 L. J., Ex. 154 ; S. C, noun. Dar- contract, was itself a sufficient memoran- rell v. Evans, 6 H. & N. 660. dum. No ratification will avail, unless (a) 31 L. J., Ex. 337 ; 1 H. & 0. 174. the agent assumed to act for the person 292 FORMATION OP THE CONTRACT. [BOOK I. the bargain in his book, which contained a counterfoil, on which he also made an entry. He then tore out the memorandum and deliv- ered it to the defendant, who kept it and carried it away. Before taking away the memorandum, the defendant requested that the date might be altered from the 19th to the 20th of October (the effect of this alteration, according to the custom of the trade, being to give to the defendant an additional week's credit,) and the plaintiff and Noakes- assented to this, and the alteration was accordingly made. The memorandum was in the following words : — " Messrs. Evans. •" Bought of J. T. & W. Noakes. " Bags. Pockets. T. Durrell. \ „, R , R 33 Ryarsh & Addington. / * ib Lm ' " Oct. 20th, 1860." The entry on the counterfoil was as follows : — " Sold to Messrs. Evans. " Bags. Pockets. T. Durrell. 1 „ ](!lft 33 Ryarsh & Addington. f ±10 lbs " " Oct. 20th, 1860." On the trial, before Pollock, C. B., the defendant contended that he had never signed or authorized the signature of his name as re- quired by the 17th section to bind the bargain. The plaintiff con- tended that the name " Messrs. Evans " written on the counterfoil was so written by Noakes as the defendant's agent ; that if written by himself, it would have been a sufficient signature according to the authority of Johnson v. Dodgson (ante § 261,) and that he was as much bound by the act of his agent in placing the signature there as if done by himself. The Court of Exchequer were unanimously of opinion that Noakes throughout had acted solely in behalf of the vendor, and that the re- quest of the defendant that the memorandum should be changed from the 1 9th to the 20th, was to obtain an advantage from the vendor, but in no sense to make Noakes the agent of the purchaser. They there- fore made absolute a rule for a nonsuit, for which leave had been re- served at the trial. The Court of Exchequer Chamber, with equal unanimity, distin- guished the case from Graham v. Musson (ante § 266,) and held, that there was evidence to go to the jury that Noakes was the agent of the defendant, as well as of the plaintiff, in making the entries ; and, if PAST II.] AGENTS DULY AUTHOBIZED TO SIGN. 293 so, that the writing of the defendant's name on the counterfoil was a sufficient signature according to the whole contract of authority. The grounds for distinguishing the case from Graham v. Musson were stated by the different judges : — Crompton, J. : "I cannot agree with my brother Wilde and Mr. Lush that the document in question was merely an invoice, and that all the defendant did was simply taking an invoice and asking to have it altered : and if the jury had found that, a nonsuit would have been right. But, on the contrary, I think that there was plenty of evi- dence to go to the jury on the question whether Noakes the agent was to make a record of a binding contract between the parties, and that there was at least some evidence from which the jury might have found in the affirmative." The learned judge then pointed out that the memorandum was in duplicate, one " sold," the other " bought," made in the defendant's presence ; that the latter took it, read it, had it altered, and adopted it, all of which facts he considered as evidence for the jury that Noakes was the agent of both parties. Byles, J. : " What does the defendant do ? First of all, he sees a duplicate written by the hand of the agent, and he knows it is a counterpart of that which was binding on the plaintiff. He knew what was delivered out to him was a sale-note in duplicate, and accepts and keeps it. The evidence of what the defendant did, both before and after Noakes had written the memorandum, shows that Noakes was authorized by the defendant." Blackburn, J. : " The case in the court below proceeded on what was thrown out by my brother Wilde, and I agree with the decision of that court, if this document were a bill of parcels, or an invoice in the strict sense, viz., a document which the vendor writes out, not on the account of both parties, but as being the account of the vendor, and not a mutual account. But in the present instance, I cannot as a matter of course look at this instrument as an invoice, a bill of par- cels ; as intended only on the vendor's account. Perhaps, I should draw the inference that it was, but it is impossible to deny that there was plenty of evidence that the instrument was written out as the memorandum by which, and by nothing else, both parties were to be bound. There certainly was evidence, I may say a good deal of evi- dence, that Noakes was to alter this writing, not merely as the seller's account, but as a document binding both sides. * * * In Gra- ham v. Musson, the name of the defendant, the buyer, did not appear 294 FORMATION OF THE CONTRACT. [BOOK I. on the document. The signature was that of Dyson, the agent of the seller, put there at the request of Musson, the buyer, in order to bind the seller ; and unless the name of Dyson was used as equivalent to Musson, there was no signature by the defendant : but in point of fact, ' J. Dyson ' was equivalent to ' for or per pro. North & Co., J. Dyson.' " § 267. [In Murphy v. Boese, (b) before the Court of Exchequer, in Murphy v. 1875, the plaintiff sought to recover the price of goods Boese. BQ ]ft fo fa e defendant. It appeared that the plaintiff'3 traveler wrote out the order for the goods in duplicate upon printed headings in the defendant's presence, handed to him the duplicate memorandum and retained the original. Held, that there was no evidence that the traveler had authority to sign the memoranda as the defendant's agent, so as to bind him within the 17th section. The court, bound of course by the decision of the Exchequer Chamber in Durrell v. Evans, distinguished it upon the ground that in that case there was some evidence of the factor's authority to sign on the de- fendant's behalf; at the same time Bramwell, B., who was a party to the judgment of the Court of Exchequer in Durrell v. Evans, which was afterwards reversed by the Exchequer Chamber, and Pollock, B., expressed their doubts as to the correctness of that decision. The latter learned judge said : (c) " I think Durrell v. Evans can only be supported if it decides that the agency did not commence till after the memorandum was written out, and that will "distinguish it from the facts before us. It might be said that the direction given by the de- fendant to Noakes the factor to alter the instrument, was an adoption of his act in preparing it, or a recognition ah initio of the whole docu- ment as containing the contract. Or one might go further and say that, from the nature of the transaction and the meeting of the parties at the office, it might be thought that there was evidence that it was meant that Noakes should act as the scribe of both parties, in drawing up a note of the contract. But here, there is an entire absence of any act of recognition by the defendant of the traveler as his agent."] § 268. It will have been observed, that in some of the cases already . .. . referred to, it is taken for granted that an auctioneer is an Auctioneer is > » ;a frties°it b a th a g ent f° r b otn parties at a public sale, for the purpose of jofsfcnto!' signing. This has long been established law. (d) Sir the note. James Mansfield, in Emmerson v. Heelis, (d) thus gave (6) L. E., 10 Ex. 126. (d) Hinde v. Whitehouse, 7 East 558 ; (c) At p. 131. Emmerson v. Heelis, 2 Taunt. 38 ; White PART II. J AGENTS DULY AUTHORIZED TO SIGN. 295 the reason for the decisions : " By what authority does he write down the purchaser's name ? By the authority of the purchaser. These persons bid, and announce their biddings loudly and particularly enough to be heard by the auctioneer. For what purpose do they do this? That he may write down their names opposite to the lots. Therefore, he writes the name by the authority of the purchaser, and he is an agent for the purchaser." 5 [It would seem that a contract signed by an auctioneer on behalf of an undisclosed proprietor is a valid contract under the statute, (e)] 6 § 269. It follows from this reasoning that the rule does not apply in a case where the auctioneer sells the goods of his prin- cipal at private sale, for then he is the agent of the ven- Sone'at pr^* dor alone, and in no sense that of the purchaser. And such was accordingly the decision of the Exchequer Court in Mews v. Carr. (/) And on the same principle it has been held, that the circumstances of the case may be used to rebut the general inference h^,,,™,, for that the auctioneer is agent to sign the name of the high- pJbifeTaiemay est bidder as purchaser, according to the conditions of the bedls P rOTed - sale. Thus, in Bartlett v. Purnell,^) the defendant bought goods at public auction, under an agreement with the plaintiff, who BartIett „ was the executor of the defendant's deceased husband, PurnelL that the defendant should be at liberty to buy, and that the price should go towards payment of a legacy of £200, to which the defend- ant was entitled under the will of the deceased. The conditions of the sale were, that the purchasers were to pay a certain percentage at v. Proctor, 4 Taunt. 209 ; Kenworthy v. 338 ; Gill *. Hewett, 7 Bush 10 ; Linn Schofield, 2 B. & C. 945; Walker v. Con- Boyd, &c, Co. v. Terrill, 13 Bush 463; stable, 1 B. & P. 306 ; Farebrother v. Mills v. Hunt, 20 Wend. 431 ; Price v. Simmons, 5 B. & Aid. 333 ; Durrell v. Durin, 56 Barb. 647 ; Townsend v. Van Evans, 31 L. J., Ex. 337 ; 1 H. & C. 174. Tassel, 8 Daly 261 ; Harvey v. Stevens, 5. The Auctioneer is the Agent of 43 Vt. 653. both Parties to Sign. — In Horton v. (e) See per Malins, V. C, in Beer v. McCarty, 53 Me. 394, Kent, J., said: London and Paris Hotel Company, 20 "The auctioneer is the agent for both Eq. 412, 426, and per Jessel, M. K., in parties to a certain extent. He is the Eossiter v. Miller, 46 L. J., Ch. 228, 231. agent of the seller in selling, and the 6. Mills v. Hunt, 20 Wend. 431 ; Schell agent of the purchaser to perfect the bar- u. Stephens, 50 Mo. 375. gain by signing a proper memorandum at (/) 26 L. J., Ex. 39 ; 1 H. & C. 484. the proper time." Morton v. Dean, 13 (g) 4 Ad. & E. 792. Mete. 385 ; Johnson v. Buck, 35 N. J. L. 296 FORMATION OF THE CONTRACT. [BOOK I. the sale, and the rest on delivery. The auctioneer put the defendant's name, like that of all other purchasers, on his catalogue as the highest bidder, and it was contended that he was her agent for that purpose, and that she was therefore bound by the written conditions of the sale. But the court held, that the real purchase was not a purchase at auction : that the sale was made before the auction, and that the public bidding was only used for the purpose of settling the price at which the purchaser was to take the goods under the antecedent bar- gain ; and that the auctioneer was not the agent of the purchaser. Denman, C. J., saying, " We do not overrule the former cases, but we consider them, inapplicable." § 270. But the agency of the auctioneer for the purchaser only be- gins where the contract is completed by knocking down the hammer. Up to that moment he is the agent of the vendor exclusively. It is only when the bidder has be- to n bu k er down come * ne purchaser, that the agency arises ; and until then the bidder may retract, and the auctioneer may do the same in behalf of the vendor, (h) 7 In Bird v. Boulter, (i) the person who signed the purchaser's name was not the auctioneer, but his clerk. Held to be suffi- cient. [But in that case there were special circumstances from which the clerk's authority to sign was inferred ; Auctioneer's agency for buyer only begins "when the goods are Auctioneer's clerk. Bird v. Boulter. (A) Warlow v. Harrison, 28 L. J., Q. B. 18 ; 1 E. & E. 295. 7. The Auctioneer's Authority to Sign for the Seller begins when the Hammer falls and ends with the Sale. — In Smith v. Arnold, 5 Mason 414, Story, J., said : " It has been decided that the memorandum of the auctioneer to bind the purchaser must be cotempo- raneous with the sale. It cannot be made afterwards.'' In Gill v. Bicknell, 2 Cush. 355, Shaw, C. J., said : " The tech- nical ground is that the purchaser, by the very act of bidding, connected with the usage and practice of auction sales, loudly and notoriously calls on the auc- tioneer or his clerk to put down his name as the bidder, and thus confers an author- ity on the auctioneer or his clerk to sign his name, and this is the whole extent of his authority." In Horton v. McCarty, 53 Me. 394, the auctioneer entered the sale and the buyer's name in a book, on his return from a sale, and this was held too late. In Hicks v. Whitmore, 12 Wend. 548, a statute requiring a memo- randum to be made in a sale-book at the time of the sale was interpreted, and it was held necessary that all the terms should be written at the time and place of sale. Hicks v. Whitmore is cited and followed in Craig v. Godfroy, 1 Cal. 415, where an entry of the buyer's name in the evening or on the next day was held insufficient. See Barnber v. Savage, 52 Wis. 110. Either Party may Retract before the Hammer falls. — See ante $ 42 note 8. (i) 4 B. & Ad. 443. PART H.J AGENTS DULY AUTHORIZED TO SIGN. 297 under ordinary circumstances the auctioneer s clerk is not . Peiroe d. Corf. the purchaser s agent.J (k) 8 The signature of a clerk of a telegraph company to a despatch was held to be sufficient where the original instructions had cierk of Teie- been signed by the party, in Godwin v. Francis, L. R, 5 C. P. 295.9 § 271. The signature required by the statute is that of the party to be charged, or his agent. If, therefore, the signature be P , , l-i • Signature by not that or the agent, qua agent, but only in the capacity an agent as a of witness to the writing, it will not suffice. 10 In Gosbell v. Archer, (T) the clerk of the auctioneer, who had graph Co. Godwin v. Francis. {k) Peirce v. |Corf, L. R., 9 Q. B. 210, per Blackburn, J., at p. 215. See, also, M'Mullen v. Helberg, 4 L. R, Ir. 94, per O'Brien, J., at p. 105. 8. Auctioneer's Clerk. — In Frost v. Hill, 3 Wend. 386, the owner acted as auctioneer of his goods, and his clerk made the memorandum of sale. This was held sufficient. But in Ijams u. Hoffman, 1 Md. 423, 435, the court held that a memorandum made by one stated to be clerk for the seller, was not suffi- cient, there being no evidence that he was clerk for the auctioneer. In John- son v. Buck, 35 N. J. L. 338, 342, where the auctioneer sued on his contract of sale, it was held that by thus suing he must be regarded as a party, and his signing for the buyer would not bind him. " But," continues Depue, J., " the reason of this disqualification to be the agent of the purchaser, for the purpose of signing, does not apply to the clerk of the auctioneer. * * * Where the auctioneer's clerk, or a volunteer, acts openly at a sale in entering the successful bids, as they are publicly announced, his authority to act for the purchaser in the premises is established." Cites Gill v. Bicknell, 2 Cush. 355. To the same effect see the similar case of Coate v. Terry, 24 U. C. C. P. 571. In Bamber v. Savage, 52 Wis. 110, the auctioneer made no memorandum, but one was made by an agent of the 6eller, without the know- ledge of the buyer. It was held void. See JSTorris v. Blair, 39 Ind. 90 ; Alna v. Plummer, 4 Me. 258 ; Smith v. Jones, 7 Leigh 165 ; Clarkson v. Noble, 2 U. C. Q. B. 361 ; Flintoft v. Elmore, 18 U. C. C. P. 274. 9. Sufficiency of Memorandum by Telegrams. — This subject was considered in Smith v. Easlon, 54 Md. 138, 144. The original message had been destroyed, but the court refused to accept the deliv- ered writing as a copy without proof of the original, and held that the original was not sufficiently proved by showing that it was a reply to a message sent the same day. See United States v. Babcock, 3 Dill. 576 ; Howley v. Whipple, 48 N. H. 487. Instances of sales made by tele- graph will be found in Murphy v. Thompson, 28 U. C. C. P. 233, and Bal- lantyne v. Watson, 30 U. C. G. P. 529. It was held in Kingborne v. Mutual Tel. Co., 18 Q. B. 60, that the original messages signed by the parties were necessary to prove a contract, but this seems to be now changed by statute of Ontario, 36 Vict., u. 11. 10. In Noakes v. Morey, 30 Ind. 103, a memorandum made by an agent of both parties for his own convenience, and not in their presence, was held insufficient. (0 2 Ad. & E. 500. 298 FORMATION OP THE CONTRACT. [BOOK I. Auctioneer's authority to act for his master, signed a memorandum of ne* asmt " tne sale, as witness to the signature of the buyer, and an Gosbeii v. attempt was made to set up the clerk's signature as that of a duly authorized agent of the vendor. The attempt was unsuccessful, and a dictum of Lord Eldon (m) to the contrary was said by Denman, C. J., to be open to much observation. The dictum of Lord Eldon was, that " where a party or principal or per- son to be bound signs as, what he cannot be, a witness, he cannot be understood to sign otherwise than as principal." [As to the personal liability of the auctioneer for the delivery of goods sold by him, see Woolfe v. Home, 2 Q. B. D. 355.] H § 272. There is a class of persons who make it their business to act as agents for others in the purchase and sale of goods, known to the common law as brokers. These persons, as a general rule, are agents for both parties, (n) and their signature to the memorandum or note of the agreement is binding on both principals, if the memorandum be otherwise sufficient under the statute. 12 Brokers. (m) In Coles v. Treoothiek, 9 Ves. 251 ; and see the observations of Lord St. Leonards, Sugd. V. & P., p.. 143, (ed. 1862.) 11. See Mills v. Hunt, 20 Wend. 431. (n) Thompson v. Gardiner, 1 C. P. D. 777. 12. A Broker may Sign for both Buyer and Seller. — In Newberry v. Wall, 65 N. Y. 484, a broker's "sold note " was produced, but it did not ap- pear that it had been received by the buyer, though there was 6ome proof that a copy of it had been sent to him. The argument of counsel appears to have been solely on the question whether a, letter written by the buyer was a sufficient memorandum, and the court held it in- sufficient, and seems to have assumed that the broker's note was not obligatory on the buyer. But the same case came up again and is reported in 84 N. Y. 576. In their decision the court say that there is evidence for the jury that the copy of the note sent to the buyer was received by him, and, if so, the broker's signing was sufficient. There seems to be no sound reason why the liability of a party on a broker's sale, should turn on the question of his receipt of the broker's note. If that is the requirement, then in every suit on a broker's sale, receipt of the note by the party sued, must be proved before recovery can be had. There is no authority for such require- ment, and the language of the court look- ing in that direction, in Newberry v. Wall as last decided, is probably to be regarded as no more than an effort to conform to the former decision of the same case — not to establish a general principle for guidance in future cases. It is the rule in that court that its decisions in any c:ise must stand as the law of that case, though overruled in other suits. Justice v. Lang, 52 N. Y. 325. That the broker should make a correct memorandum is essential ; that he should sign it in the presence of the party to be charged, or that the sig- nature should be shown to such party, is a requirement not to be found in the statute or decisions. Where an unauth- orized agent signs, a ratification is neces- sary ; but the signature of a broker who- PAKT II. J AGENTS DULY AUTHORIZED TO SIGN. 29£ The authority of a broker to bind his principals may by special agreement be carried to auy extent that the principal may Their general choose, but the customary authority of brokers is for the authori 'y- most part so well settled, as to be no longer a question of fact depend- ent upon evidence of usage, but a constituent part of that branch of the common law known as the law-merchant, or the custom of mer- chants. There are still, however, some points on which the limits of their authority are not fully determined, and on which evidence of usage would have a controlling influence in deciding on the rights of the parties, (o) § 273. Before entering into an examination of the authorities, it will be convenient to give a short summary of the statutes Brokersin in relation to brokers in the city of London, as many of oity of Londoa - the cases turn upon their dealings. Until the year 1870, the brokers of London had from very early times been under the control of the corporation of the city. The statutes of 6 Anne, c. 16, 10 Anne, c. 19, § 121, and 57 Geo. III., c. 60, ( p) contain provisions for the regulation of brokers, and for de- fining the power of the corporation. Under these acts the city formerly required a bond and an oath, the form of which, prior to the year 1818, may be found given in Kemble v. Atkins, 7 Taunt 260; S. C, Holt N. P. 431. The regulations imposed, and form of the bond as altered in 1818, are printed at length in the appendix to " Russell on Factors and Brokers." It is imposed as a duty on the broker that he shall " keep a book or register, intituled ' The Broker's Book,' and therein truly and fairly enter all such contracts, bargains, and agreements, on the day of the making thereof, together with the Christian and surname at full length of both the buyer and seller, and the quantity and quality of the articles sold or bought, and the price effects a sale is that of an authorized the cases stated in the text. Butler u. agent, and is made sufficient by the ex- Thomson, 92 U. S. 412 ; Eemick v. press terms of the statute. Therefore a Sandford, 118 Mass. 102 ; Ooddington v. mere memorandum signed by the broker Goddaid, 16 Gray 436 ; Bacon v. Eccles, in his sales-book is sufficient, though no 43 Wis. 227, 241. signed note of sale is sent to either party. (o) See, for example, Dickinson i>. Lil- See g 294, post. The following are cases wall, 4 Camp. 279 ; Baines v. Ewing, L. of authority on the validity of a broker's K., 1 Ex. 320 ; 35 L. J., Ex. 194. memorandum, and in none of them is it (p) These statutes will be found at p. regarded as essential that the party 6ued 450, of vol. I , Chitty's Collection of Stat- should have been served with a copy or a utes, (ed. 1880.) duplicate of the broker's note. See, also, 300 FORMATION OF THE CONTRACT. [BOOK I. of the same, and the terms of credit agreed upon, and deliver a con- tract note to both buyer and seller, or either of them, upon being re- quested so to do, within twenty-four hours after such request respec- tively containing therein a true copy of such entry; and shall upon demand made by any or either of the parties, buyer or seller, con- cerned therein, produce and show such entry to them or either of them, to manifest and prove the truth and certainty of such contracts and agreements." But by the London brokers' relief act, 1870,(5) most of these powers were taken away, the bonds are no longer re- reiief act, quired, the rules and regulations are no longer to be en- forced by the corporation, and now brokers are only re- quired to be admitted by the corporation, and a list of brokers is kept, from which any broker may be removed for fraud or other •offences in the manner specified in the act. § 274. Lord Blackburn (r) warns his readers not to confound the contract notes here mentioned, which are a copy of the Contract notes. . . , . . n . _ . . . , entry, with the bought and sold notes which are or ought to be made out at the time of making the contract, and generally as soon as, or before it is entered in the book, and he remarks that no mention is made of the bought and sold notes in the bonds or regula- tions. But Lord Ellenborough expressly says, in Hinde v. White- house, (s) and Heyman v. Neale, (t) that the bought and sold notes are " transcribed from the book," are " copies of the entry," and this may be found repeated iiassim in the reported cases, although no doubt these notes are very frequently made in the manner stated by Lord Blackburn, as is also apparent in the reported cases. The brokers in London are bound by the customs of trade just as Brokers in a ^ other brokers are, and such customs are valid in spite byoustomsof d °f anything to the contrary in the bonds and regulations trade - which are purely municipal, (u) § 275. When a broker has succeeded in making a contract, he re- Bo htand duces it to writing, and delivers to each party a copy of «oia notes. ^ e t erms as re duced to writing by him. He also ought to enter them in his book, and sign the entry. What he delivers to (q) 33 and 34 Vict., c. 60. The reasons (r) Blackburn on Sale, p. 98. for passing this act are given in the note (s) 7 East 559. .at p. 452 of Chitty's Statutes, vol. I. fed. («) 2 Camp. 337. 1880.) (u) Ex parte Dyster, 2 Eose 348. PART II.J AGENTS DULY AUTHORIZED TO SIGN. 301 the seller is called the sold note : to the buyer the bought note. No- particular form is required, and from the cases it seems that there are four varieties used in practice. The first is where on the face of the notes the broker professes to act for both the parties whose names are disclosed in the note. The sold note then, in substance, says, " sold for A B to C D," and sets out the terms of the bargain : the bought note begins, " Bought for CDof A B," or equivalent language, and sets out the same terms as the sold note, and both are signed by the broker. The second form is where the broker does not disclose in the bought note the name of the vendor, nor in the sold note the name of the purchaser, but still shows that he is acting as broker, not princi- pal. The form then is simply, " Bought for C D," and " Sold for A B." The third form is where the broker, on the face of the note, appears to be the principal, though he is really only an agent. Instead of giving to the buyer a note, " Bought for you by me," he gives it in this form, "Sold to you by me." By so doing he assumes the obliga- tion of a principal, and cannot escape responsibility by parol proof, that he was only acting as broker for another, although the party to whom he gives such a note is at liberty to show that there was an unnamed principal, and to make this principal responsible (ante §§ 237-240.) The fourth form is where the broker professes to sign as a broker, but is really a principal, as in the eases of Sharman v. Brandt, and Mollett v. Robinson, ante §§ 240, 241, in which ease his signature does not bind the other party, and he cannot sue on the contract. § 276. According to either of the first two forms, the party who receives and keeps a note, in which the broker tells him in effect, " I have bought for you," or "I have sold for you," plainly admits that the broker acted by his authority, and as his agent, and the signature of the broker is therefore the signature of the party accepting and retaining such a note ; (u) but according to the third form, the broker says, in effect, " I myself sell to you " and the acceptance of a paper describing the broker as the principal who sells, plainly repels any inference that he is acting as agent for the party who buys, and in the absence of other evidence, the broker's signature would not be that of an agent of the party retaining the note : and by the fourth form, (u) Thompson v. Gardiner, 1 C. P. D. 777. 302 FORMATION OP THE CONTRACT. [BOOK I. the language of the written contract is at variance with the real truth of the matter. These observations (many of which are extracted from " Blackburn on Sale ") have a direct bearing on points long in dispute, and some of which are yet vexed questions, as will abundantly appear on a review of the authorities. § 277. "Where the bought and sold notes and the entry in the broker's books all correspond, no dispute can arise as to the real terms of the bargain ; but it sometimes happens that the bought and sold notes differ from each other, and even that neither corresponds with the entry in the book. It then becomes necessary to determine the legal effect of the variance, and there has not only been great conflict in the decisions of the courts, but sometimes great change in the opinions of the same judge. As regards the signed entry broker's book in the broker's book, it has been held at different times opinion as to that it did, and that it did not, constitute the contract be- tween the parties ; and it has also been held that it was not even admissible in evidence, or, at all events, not without proof, that the entry was either seen by the parties when they contracted, or was assented to by them. The most convenient method of reviewing the decisions will be to follow the leading cases in order of time, and then deduce the propositions fairly embraced in them. § 278. In 1806 there was this dictum of Lord Ellenborough in Hinde v. Whitehouse (x) on the subject : " In all sales cases ew ° e made by brokers acting between the parties buying and Hinde v. selling, the memorandum in the broker's booh and the bought and sold notes transcribed therefrom, and delivered to the buyers and sellers respectively, have been holden a sufficient compliance with the statute." His lordship here speaks of bought and sold notes as mere copies of the book, and the inference would be that he considered the book, as the original, to be of more weight than copies from it. In 1807, he gave this opinion expressly in Heyman v. Neale (y) h an „ saying : " After the broker has entered the contract in his Neaie. book, I am of opinion that neither party can recede from it. The bought and sold note is not sent on approbation, nor does it constitute the contract. The entry made and signed by the broker who is the agent of both parties is alone the binding contract. What is (*) 7 East 509. (y) 2 Camp. 337. PART II.] AGENTS DULY AUTHORIZED TO SIGN. 303 called the bought and sold note is only a copy of the other, which would be valid and binding, although no bought or sold note was ever sent to the vendor and purchaser." In this case the bought and sold notes were sworn by the broker to be copies of the entry in his book, and the buyer had, soon after receiving the bought note, objected and said he would not be bound by it. § 279. In 1810, in Hodgson v. Davies, (z) the sale was through a broker, who rendered bought and sold notes, showing that Hodgson „. payment was to be by bills at two and four months. Five DaTles - days afterwards the defendant, being called on for delivery of the goods sold, objected to the sufficiency of the plaintiff, and refused to perform the contract. Lord Ellenborough thought at first that the contract concluded by the broker was absolute, unless his authority was liwited by writing of which the purchaser had notice. But the gentle- men of the special jury said that unless the name of the purchaser has oeen previously communicated to the seller, if the payment is to be by bill, the seller is always understood to reserve to himself the power of disapproving of the sufficiency of the purchaser, and annulling the contract. Lord Ellenborough allowed this to be a valid and reason- able usage, but left it to the jury whether the delay of five days in objecting was not unreasonable according to the usual commercial practice, and the jury found that it was. § 280. In 1814, the Court of Common Pleas decided the case of Thornton v. Kempster (a) {ante § 252), where the broker's Thorllton „ sold note described a sale of St. Petersburg hemp, and Kem P 8ter - the bought note described the goods as Riga Rhine hemp, a different and superior article. The court considered the case as though no broker had intervened, and the parties had personally exchanged the notes, holding that there never had been any agreement as to the sub- ject matter of the contract, and therefore no contract at all between the parties. In 1816, Cumming v. Roebuck (b) was tried before Gibbs, C. J., at Nisi Prius, and it appeared that the bought and sold CummillK „ notes differed. The learned Chief Justice said : "If the Eoebuck - broker deliver a different note of the contract to each party contract- ing, there is no valid contract. There is, I believe, a case which states the entry in the broker's book to be the original contract, but it has been since contradicted." (a) 2 Camp. 530. (5) Holt 172. (o) 5 Taunt. 786. 304 FORMATION OF THE CONTRACT. [BOOK I. It has been surmised that the case alluded to was that of Heyman v. Neale, (c) but no case has been found in the reports justifying the assertion of the Chief Justice that Heyman v. Neale had been contra- dicted. § 281. In 1826, the subject first came before the full court in the Queen's Bench in two cases. In the first, Grant v. Fletcher, (d) there was a material variance Grants. between the bought and sold notes, and the broker had Fletcher. made an unsigned entry in his " memorandum-book," which entry was incomplete, not naming the vendor. The plaintiff was nonsuited at the Assizes on the ground that there was no valid contract between the parties. Abbott, C. J., delivered the opinion of the court on the motion for a new trial. " The broker is the agent of both parties, and, as such, may bind them by signing the same contract on behalf of buyer and seller; but if he does not sign the same contract for both parties, neither will be bound. * * * The entry in the broker's' book is, properly speaking, the original, and ought to be signed by him. The bought and sold notes delivered to the parties ought to be copies of it. A valid contract may probably be made by perfect notes signed by the broker, and delivered to the parties, although the book be not signed ; but if the notes are imper- fect, an unsigned entry in the book will not supply the defect." In Groom v. Aflalo, (e) the other case, the decision was express that „ the bought and sold notes suffice to satisfy the statute, Aflal °- if otherwise unobjectionable, even though the entry in the broker's book be unsigned. The broker in this case made his entry complete in its terms on the 23d of February as soon as he had concluded the contract, but did not sign it. On the same evening he sent to the parties bought and sold notes signed by him, copied from the entry in his books. Next morning the defendant objected to, and returned the sold note, and refused to deliver the goods. The court held the contract binding, notwithstanding the absence of signature to the entry in the book, Abbott, C. J., saying, " The entry in the book has been called the original, and the notes copies : but there is not any actual decision that a valid contract may not be made, by notes duly signed, if the entry be unsigned. * * * We have no doubt that a broker ought to sign his book, and that every punctual broker will (c) 2 Camp. 337. (e) 6 B. & C. 117. (d) 5 B. & C. 436. PART II. J AGENTS DULY AUTHORIZED TO SIGN. 305 do so. But if we were to hold such a signature essential to the validity of a contract, we should go further than the courts have hitherto gone, and might possibly lay down a rule that would be followed by serious inconvenience, because we should make the validity of the contract to depend upon some private act, of which neither of the parties to the con- tract would be informed, and thereby place it in the power of a negli- gent or fraudulent man to render the engagements of parties valid or invalid at his pleasure." § 282. In Thornton v. Meux, (/) in 1827, tried before Chief Jus- tice Abbott, at Guildhall, there was a variance between ThorntonK the bought and sold notes, and plaintiff offered in evi- Meux - dence the entry in the broker's book to show which of the two was correct, but on objection, the evidence was excluded, the Chief Justice saying : " I used to think at one time that the broker's book was the proper evidence of the contract ; but I afterwards changed my opinion, and held, conformably to the rest of the court, that the copies de- livered to the parties were the evidence of the contract they enter into, still feeling it to be a duty in the broker to take care that the copies should correspond. I think I must still act upon that opinion, and refuse the evidence." § 283. It will be apparent from the foregoing cases how completely the opinion of the learned Chief Justice had been changed ; his view being, first, in Grant v. Fletcher, that the book was the original, though probably, if the bought and sold notes were perfect, the book might be dispensed with ; secondly, in Groom v. Aflalo, that the broker's signature in his book was not essential to the validity of the contract ; and thirdly, in Thornton v. Meux, that the signed entry was not even admissible in evidence, and that the bought and sold notes were the sole evidence of the contract between the parties. § 284. Hawes v. Forster^) was twice tried; first in 1832, and again in 1834. On the first trial, the plaintiff put in the Hawe9 „ bought note, and proved by the broker that he had made Forster - the contract, entered it in his book, signed the entry, and sent the bought and sold notes to the parties on the same evening ; but the broker could not tell which was first written, the entry or the notes. Plaintiff closed his evidence without calling for the sold note, and thereupon the defendant moved for non-suit, but Lord Denman held that the plaintiff was not bound to give any evidence of the sold (/) Moo. & M. 43. (g) 1 Moo. & Bob. 368. U 306 FORMATION OF THE CONTRACT. [BOOK I. note. The defendant then offered to prove by the broker's book a variance from the bought note put in, contending that the entry was the original contract; but this was objected to on the authority of Thornton v. Meux (supra, § 282,) and the evidence was rejected, Lord Denman saying: "I am of opinion that the plaintiffs have proved a contract by producing the bought note. * * * It is not shown that the sold note delivered to the defendants differed from the bought note delivered to the plaintiffs; had that been the case, it would have been very material. But in the absence of all proof of that nature, I am clearly of opinion that I must look to the bought note, and to that alone, as the evidence of the terms of the contract." The defendants afterwards moved for a nonsuit before the court in banc, on the ground of the non-production of the sold note, but failed. They also moved for a new trial, on the ground of the exclusion of the broker's book, and succeeded, the Lord Chief Justice saying, "that the court doubted whether the case involved any point of law at all, and whether it did not rather turn upon the custom, viz , how the broker's book was treated by those who dealt with him." On the second trial, the sold note was produced, and corresponded with the bought note, and proof was given by merchants that the broker's book was never referred to, and that they always looked to the bought and sold notes as the contract. The broker's book showed a material variance from the bought and sold notes, and Lord Denman put the question to the jury, " Whether the bought and sold notes constituted the contract, or whether the entry in the broker's book, which in this instance differed from the bought and sold notes, constituted it?" His lordship intimated his own opinion to be that in law the note delivered by the broker was the real contract; (h) but said that it had been thought better to take the opinion of the jury as to the usage of trade as a matter of fact, and told them : " If the evidence has satis- fied you that, according to the usage of trade, the bought and sold notes are the contract, then you will find a verdict for the plaintiffs." The jury found for the plaintiffs, and the defendants at first indicated the intention of carrying the case to a higher court, but afterwards submitted to the verdict. § 285. In 1842, the Exchequer Court had the subject, together with the decision in Hawes v. Forster, under consideration, in the case of (h) See dictum of Denman, C. J., al60, in Trueman v. Loder, 11 Ad. & E. 589. PART II. J AGENTS DULY AUTHORIZED TO SIGN. 307 Thornton v. Charles, (i) Parke, B., and Lord Abinger Thornton a lield opposite opinions. Parke, B., said : " I apprehend Charles it has never been decided that the note entered by the broker in his book, aud signed by him, would not be good evidence of the contract so as to satisfy the statute of frauds, there being no other. The case of Hawes v. Forster underwent much discussion in the Court of King's Bench when I was a member of that court, and there was some difference of opinion among the judges; but ultimately it went down to a new trial, in order to ascertain whether there was any usage or custom of trade which makes the broker's note evidence of the contract. * * * Certainly it was the impression of part of the court that the contract entered in the book was the original contract, and that the bought and sold notes did not constitute the contract. The jury found that the bought and sold notes were evidence of the contract ; but, on the ground that these documents having been delivered to each of the par- ties after signing the entry in the book, constituted evidence of a new con- tract, made between the parties on the footing of those notes.- (k) That case may be perfectly correct, but it does not decide that if the bought and sold notes disagree, or (and?) and there be a memorandum in the book made according to the intention of the parties, that memorandum signed by the broker would not be good evidence to satisfy the statute of frauds." Lord Abinger said : " I desire it to be understood that I adhere to- the opinion given by me, that when the bought and sold notes differ materially from each other, there is no contract, unless it be shown that the broker's book was known to the parties." § 286. In Pitts v. Beckett, (I) in 1845, the plaintiff, who had wool for sale in the hands of a wool-broker, took the defend- pittg v ant to the broker's office, and there sold the wool by Beckett - sample in the broker's presence, it being part of the bargain that the wool was to be in good dry condition. In the afternoon of the same day the broker wrote to the plaintiff: "Dear Sir, — We have this day sold on your account, Messrs. Beckett and Brothers " (here followed a description of the terms) " brokerage, 1 per cent. Hughes and Ronald." A machine copy of this communication was made in the broker's book. The broker did not write at all to the purchasers, nor send them any note of the contract. The note to the plaintiff said nothing about the stipulation that the bulk should be in good dry (i) 9 M. & W. 802. same effect, infra, \ 289. (£) See statement of Patteson, J., to (J) 13 M. & W. 743. 308 FORMATION OP THE CONTRACT. TbOOK I. condition. The defendants rejected the wool when sent to them, on the ground that it was not in good condition, and the jury found this to be true. The evidence offered was the note written to the plaintiff, and the machine copy of it as being the entry in the broker's book. Held, that the authority given to the broker by the defendant was not to make a bargain for him, but to reduce to writing and sign the> bargain actually made ; that the broker, therefore, was without authority from the defendant to sign a bargain which omitted one of the material stipulations, viz., that the wool should be in good dry condition ; and that the paper offered in evidence against defendants was therefore not signed by them or their agent. The judges also in- timated very strongly the opinion, that the broker's signature was not intended by him to represent the buyer's signature, and that the paper was a mere letter of advice, written in his character of agent of the plaintiff, copied by machine into his letter-book, and not intended as one of the bought and sold notes usually delivered by brokers. § 287. In 1851, the subject was elaborately considered in the sievewri ht » Queen's Bench, in the case of Sievewright v. Archi- Archibaid. baldj ( m ) before L orc j Campbell, C. J., and Erie, Patte- son, and "Wight man, JJ. The case was tried at Guildhall before the Chief Justice, and there was a verdict for the plaintiff, with leave re- served to move to set it aside, and enter a verdict for the defendant. The declaration set out an alleged " sold note," and contained a count for goods bargained and sold. A variance was afterwards discovered between the bought and sold notes, and an amendment alleging the bought note was allowed, on its being stated to the learned Chief Jus- tice that the plaintiff could give evidence of a subsequent ratification of the bought note by the defendant. The sold note was for a sale to the defendant of " 500 tons Messrs. Dunlop, Wilson & Co.'s pig iron." The bought note was for " 500 tons of /Scotch pig iron." The broker proved an order from the plaintiff to sell 500 tons of Dunlop, Wil- son & Co.'s iron : that their iron was Scotch iron, and that they were manufacturers of iron in Scotland ; and that the agreement with the defendant was, that he purchased from the broker 500 tons of Dunlop, Wilson & Co.'s iron. The name of the sellers was given to the pur- chaser. The bought and sold notes were complete in every respect, and corresponded, save in the variance between the words " Scotch (m) 20 L. J., Q. B. 529 ; 17 Q. B. 115. PART II. J AGENTS DULY AUTHORIZED TO SIGN. 309 iron" and "Dunlop, "Wilson & Co.'s iron." There was no entry in the broker's books signed by him. § 288. The views of the judges differed so widely, and their ob- servations on every branch of this vexed subject are so important, that it is necessary to transcribe them at considerable lengtfi. Lord Campbell's judgment was concurred in entirely by Wightman, J., who heard the argument in April, but was unable to be present at the decision in the following June. His lordship first held, that there was not sufficient evidence to justify the verdict of the jury that the defendant had LordCam ratified the contract expressed in the bought note. Next, bell ' s °P inlon - that there was no parol agreement shown by the evidence, antecedent to the bought note, and of which that bought note could properly be said to be a memorandum, but that the agreement itself was intended to be in writing, and was understood by the parties to have been reduced to writing when made: and his lordship then continued his reasoning on the supposition that this view was erroneous, and that there had been an antecedent parol agreement, in these words : " Can this (the bought note) be said to be a true memorandum of the agreement ? We are here again met by the question of the variance, which is as strong between the parol agreement and the bought note, as between tlie bought note and the sold note. If the bought note can be con- sidered a memorandum of the parol agreement, so may the sold note, and which of them is to prevail? It seems to me, therefore, that we get back to the same point at which we were when the variance was first objected to, and the declaration was amended. I by no means say that where there are bought and sold notes, they must necessarily be the only evidence of the contract : circumstances may be imagined in which they might be used as a memorandum of a parol agreement. Where there has been an entry of the contract by the broker in his book, signed by him, I should hold without hesitation, notwithstand- ing some dicta and a supposed ruling by Lord Tenterden, in Thorn- ton v. Meux, to the contrary, Mat this entry is the binding contract between the parties, and that a mistake made by him when sending a copy of it in the shape of a bought or sold note would not affect its validity. Being authorized by the one to sell and the other to buy i n the terms of the contract, when he has reduced it into writing, and signed it as their common agent, it binds them both according to the statute of frauds, as if both had signed it with their own hands. The duty 310 FORMATION OF THE CONTRACT. [BOOK I. of the broker requires him to do so, and until recent times, this duty was scrupulously performed by every broker. What are called the bought and sold notes are sent by him to his principals by way of information that he has acted upon their instructions, but not as the actual contract which was to be binding on them. This clearly appears from the practice still followed, of sending the bought note to the buyer and the sold note to the seller, whereas, if these notes had been meant to constitute the contract, the bought note would be put into the hands of the seller, and the sold note into the hands of the buyer, that each might have the engagement of the other party, and not his own. But the broker, to save himself trouble, now omits to enter and sign any contract in his book, and still sends the bought and sold notes as before. If these agree, they are held to constitute a binding contract; if there be any material variance between them, they are both nullities, and there is no binding contract. This last proposition, though combated by the plaintiff's counsel, has been laid down and acted upon in such a long series of cases, that I could not venture to con- travene it if I did not assent to it. * * * In the present case, there being a material variance between the bought and sold notes, they do not constitute a binding contract ; there is no entry in the broker's book signed by him; and if there were a parol agreement, there being no sufficient mention of it in writing, nor any part accept- ance or part payment, the statute of frauds has not been complied with, and I agree with my brother Patteson in thinking that the de- fendant is entitled to our verdict." § 289. Patteson, J., said that the sole question was whether there Patteson j was a D0 * e or memorandum in writing of the bargain opinion. signed by the defendant or his agent, it being quite im- material whether there was one signed by the plaintiff; that the mem- orandum need not be the contract itself, but that a contract might be by parol, and if a memorandum were afterwards made, embodying the contract, and signed by one party or his agent, he being the party to be charged, the statute was satisfied. Still, if the original contract was in writing, signed by both parties, that would be the binding in- strument, and no subsequent memorandum signed by one party could have any effect. The learned judge considered that in the case before the court the contract was not in writing ; that it was made by the broker, acting for both parties, but was not signed by him or them, and that the statute therefore could not be satisfied unless there was PART II.] AGENTS DULY AUTHORIZED TO SIGN. 311 some subsequent memorandum, signed by the defendant or his agent. His lordship then continued : " There are subsequent memoranda signed by the broker, namely, the bought and sold notes. Which of these, if either, is the memorandum in writing signed by the defend- ant or his agent? The bought note is delivered to the buyer, the defendant: the sold note to the seller, the plaintiff. Each of them in the language used purports to be a representation by the broker to the person to whom it is delivered of what he, the broker, has done as agent for that person. Surely the bought note delivered to the buyer cannot be said to be the memorandum of the contract, signed by the buyer's agent, in order that he might be bound thereby, for then it would have been delivered to the seller, not to the buyer, and viae versa as to the sold note. Can, then, the sold note delivered to the seller be treated as the memorandum signed by the agent of the buyer, and binding him, the buyer, thereby ? The very language shows that it cannot. In the city of London, where this contract was made, the broker is bound to enter in his books and sign all contracts made by him ; and if the broker had made such signed entry, / cannot doubt, notwithstanding the eases and dicta apparently to the contrary, that such memorandum would be the binding contract on both parties." The learned judge then went on to say that he had been one of the judges of the court that granted the new trial in Hawes v. Forster, and he confirmed the account given of that case by Parke, B., in Thornton v. Charles (supra, § 285.) He then continued : " However, in the present case there was no signed memorandum in the broker's book. Therefore, the bought and sold notes together, or one of them, must be the memorandum in writing signed by the defendant's agent, or there is none at all, and the statute will not be satisfied. If the bought and sold notes together be the memorandum, and they differ materially, it is plain that there is no memorandum. The court can- not possibly say, nor can a jury say, which of them is to prevail over the other. Read together, they are inconsistent; assuming the vari- ance between them to be material, and if one prevails over the other, that one will be the memorandum, and not the two together. If, on the other hand, one only of these notes is to be considered as the memorandum in writing signed by the defendant's agent, and binding the defendant, which of them is to be so considered, the bought note delivered to the defendant himself, or the sold note delivered to the plaintiff? I have already stated that I cannot think either of them 312 FORMATION OF THE CONTRACT. [BOOK I. by itself can be so treated. * * * If this were res integra,\ am strongly disposed to say that I should hold the bought and sold notes together not to be a memorandum to satisfy the statute of frauds, but I consider the point to be too well settled to admit of discussion. Yet there is no case in which they have varied, in which the court has up- held the contract, plainly showing that the two together have been considered to be the memorandum binding both parties, the reason of which is, I confess, to my mind, quite unsatisfactory, but I yield to authority. § 290. Erie, J., stated the question raised in the case as follows : Erie j "The defendant contends, first, that in cases where a con- opinion, j-j.^ ; s mac ] e \yy a broker, and bought and sold notes have been delivered, they alone constitute the contract, that all other evi- dence of the contract is excluded, and that if they vary a contract is disproved." The learned judge held, that the defendant had failed to establish this proposition, and then observed : " The question of the effect either of an entry in a broker's book signed by him, or of the acceptance of bought and sold notes, which agree, is not touched by the present case. I assume that sufficient parol evidence of a con- tract in the terms of the bought note delivered to the defendant has been tendered, and that the point is whether such evidence is inadmissi- ble, because a sold note was delivered to the plaintiff ; in other words, whether bought and sold notes, without other evidence of intention, are by presumption of law a contract in writing. I think they are not. If bought and sold notes, which agree, are delivered and accepted without objection, such acceptance, without objection, is evidence for the jury of mutual assent to the terms of the notes, but the assent is to be iuferred by the jury, from their acceptance of the notes without objection, not from the signature to the writing, which would be the proof, if they constituted a contract in writing. * * * The form of the instrument is strong to show that they are not intended to con- stitute a contract in writing, but to give information from the agent to the principal of that which has been done in his behalf. * * * No person acquainted with legal consequences would intend to make a written contract depend on separate instruments, sent at separate times, in various forms, neither party having seen both instruments. Such a process is contrary to the nature of contracting, of which the essence is interchange of consent at a certain time. * * * It seems to me, therefore, that upon principle, the mere delivery of bought PART II.] AGENTS DULY AUTHORIZED TO SIGN.. 313 and sold notes does not prove an intention to contract in writing, and does not exclude other evidence of the contract in case they disagree." The learned judge then pointed out the distinction between proof of a contract, and proof of a compliance with the statute, saying : " The question of a compliance with the statute does not arise till the con- tract is in proof. In case of a written contract, the statute has no application. In case of other contracts, the compliance may be proved by part payment or part delivery, or memorandum in writing of the bargain. Where a memorandum in writing is to be proved as a com- pliance with the statute, it differs from a contract in writing ; in that it may be made at any time after the contract, if before the action commenced, and any number of memoranda may be made, all being equally originals; and it is sufficient if signed by one of the parties only, or his agent, and if the terms of the bargain can be collected from it, although it be not expressed in the usual form of an agree- ment." His lordship then held, that upon a review of the evidence in the case, there was sufficient parol proof to show that the bought note was a correct statement of the terms of the bargain, and that defendant had acquiesced in and was satisfied with it. § 291, The next case was Parton v. Crofts, (n) in 1864, where the contract note delivered to the purchaser was alone pro- Parton „ duced in evidence, and it was held that it sufficed to prove Crofta - the contract between the two parties, and that the presumption was that the bought and sold notes did not vary ; if they did, it was for ' the defendant to prove the variance by giving in evidence the note sent to the seller. In Heyworth v. Knight, (o) the same court decided in the same year that where the contract appears in a correspondence Heyworthu to have been completed between the brokers, and the Knl 8 ht - bought and sold notes show a variance from that contract, the parties are bound by the agreement contained in the correspondence ; that the bought and sold notes are to be disregarded ; and that the purchaser was bound by the agreement made in the correspondence in accord- ance with the authority given, to his broker, although the broker had signed without authority a different contract in the bought and sold notes. In this case the decision of the Privy Council in Cowie v. (n) 16 C. B. (N. S.) 11 ; 33 L. J., C. P. (o) 17 C. B. (N. S.) 298 ; 33 L. J., C 189. P. 298. 314 FORMATION OP THE CONTRACT. [BOOK I. Cowieo. Remfry, 5 Moore P. C. C. 232, was very strongly disap- Remfry.' pr0 ved by Willis, J. § 292. The next case, in 1868, was Cropper v. Cook, (q) It decides No variance tnat '* ' s not a variance between the bought and sold notes arf™am"d pals tl)at the bought note shows the names of the two princi- !md noUn e the P a l s , and the sold note states, " Sold to our principals, &c.," without naming the buyers. It was proven in the case that a special usage exists in the wool trade, in Liverpool, that the buyer's broker may contract in the name of the principal, or at his discretion, without disclosing the principal's name, thus making himself personally responsible, if requested to do so by the vendor; and that the broker may do this, without communicating the fact to the buyer. The court held this usage reasonable and valid. §293. [The last case was Thompson v. Gardiner, (r) in 1876. A Thompson o broker who acted only for the plaintiff, the seller, entered Gardiner j nto a contract for the sale of butter to the defendant, sending a contract note to each party, but only signing the note sent to the plaintiff. He, however, duly entered and signed both notes in his broker's book. The defendant kept the bought note, but when called upon to accept the butter declined to do so on the ground that the bought note was unsigned. The court held — first (Grove, J., dubi- tante,) that the defendant by his conduct in retaining the note had acknowledged the broker's authority to sign the contract on his behalf; and, secondly, that even if the defendant were not bound by the broker's signature to the sold note, the signature in the broker's book was sufficient to satisfy the statute. "The broker being a broker authorized to make a memorandum of the contract on the defendant's behalf, the entry in his book was sufficient evidence of a memorandum of the bargain signed by a duly authorized agent within the meaning of the statute of frauds to bind the defendant." Per Cur. at p. 780.] The following propositions are submitted as fairly deducible from Genial pro- ^he authorities just reviewed, and others quoted in the deduoedfrom notes, though some of these points cannot be considered the authorities. a^ finally settled. § 294. First. — The broker's signed entry in his book constitutes Brokers tne contract between the parties, and is binding on both. eSstHutesThe Tllis proposition rests on the authority of Lord Ellen- borough, in Heyman v. Neale, (s) of Parke, B., in Thorn- contract. Uj) L. E., 3 C. P. 194. (s) 2 Camp. 337. (r) 1 C. P. D. 777. PART II.] AGENTS DULY AUTHORIZED TO SIGN. 315 ton v. Charles, (t) and of Lord Campbell, C. J., and Wightmau and Patteson, JJ., in Sievewright v. Archibald, (w) [and of the court in Thompson v. Gardiner, (x)] 13 Gibbs, C. J., in Cumming v. Roebuck; (y) Abbott, C. J., in Thorn- ton v. Meux ; (2) Denman, C. J., in Townend v. Drakeford ; (a) and Lord Abinger, in Thornton v. Charles, (t) are authorities to the con- trary, but they seem to have been overruled in Sievewright v. Archi- bald, (u) § 295. Secondly. — The bought and sold notes do not constitute the contract. This is the opinion of Parke, B., in Thornton v. Charles; (6) of Lord Ellenborough, in Heyman v. andsoid S notes Neale, (c) and was the unanimous opinion of the four judges in Sievewright v. Archibald, (u) The decision to the contrary, in the Nisi Prius case of Thornton v. Meux, (2) and the dicta in Groom v. Aflalo, (d) and Trueman v. Lodor, (e) are pointedly disap- proved in the case of Sievewright v. Archibald, (u) § 296. Thirdly. — But the bought and sold notes, when they corres- pond and state all the terms of the bargain, are complete But ., and sufficient evidence to satisfy the statute; even though ™Sf e the there be 110 entry in the broker's book, or, what is equiva- they ?orrea- n lent, only an unsigned entry. This was first settled by pond ' Groom v. Aflalo, (/) and reluctantly admitted to be no longer ques- tionable in Sievewright v. Archibald, (g) 14 § 297. Fourthly. — Either the bought or sold note alone will satisfy (t) 9 M. & W. 802. to vary from the bargain actually con- (u) 20 L. J., Q. B. 529; 17 Q. B. 115. eluded, (Davis v. Shields, 26 Wend. 341, (x) 1 C. P. D. 777. ante § 209,) and it may also be shown 13. In Coddington v. Goddard, 13 Gray that the broker had no authority from his 436, 442, Bigelow, C. J., referring to a employer to make the bargain which he memorandum in the broker's book, said : has entered in his book. Peltier v. Ool- " It is not denied that this memorandum lins, 3 Wend. 459, 467; Coddington v. may well be made in the book of a broker. Goddard, supra. Indeed, such entry may be resorted to as (y) Holt 172. the original evidence of the contract, (s) M. & M. 43. even when bought and sold notes of the (a) 1 Car. & K. 20. bargain, differing from each other, have (6; 9 M. & W. 802. been delivered to the parlies." Cites (c) 2 Camp. 337. Sievewriglit v. Archibald. See Clason v. (d) 6 B. & C. 117 Bailey, 14 Johns 484; Sale v. Darragh, (e) 11 Ad. & E. 509. 2 Hilt. 184, 197; Williams i>. Woods, 16 (/) 6 B. & C. 117. Md. 220, 250. But as we have seen, the (g) 20 L. J., Q. B. 529 ; 17 Q. B. 115 entry in the broker's book may be shown 14. Clen v. McPherson, 1 Bosw. 480. 316 FORMATION OP THE CONTRACT. [BOOK I. Either note *-he statute, provided no variance be shown between it and less variance" the other note, or between it and the signed entry in the shown. book. This was the decision in Hawes v. Forster, (h) of the Common Pleas in Parton v. Crofts, (i) [and of the Common Pleas Division in Thompson v. Gardiner.] (j) 15 § 298. Fifthly,- — -Where one note only is offered in evidence, the where laintiff defendant has the right to offer the other note or the defendant may s, g ne d entry in the book to prove a variance. Hawes v. t^showrari- r Forster (h) is direct authority in relation to the entry in ance ' the book, and in all the cases on variance, particularly in Parton v. Crofts, supra, it is taken for granted that the defendant may produce his own bought or sold note to show that it does not corres- pond with the plaintiff's. § 299. Sixthly. — As to variance. This may occur between the when there is bought and sold notes where there is a signed entry, or tSee" the 6 where there is none. It may also occur when the bought andthe e bcmght an< i s0 ^ notes correspond, but the signed entry differs and sold notes. fr()m them j f there be & g ; gued ^^ J fc f ollows f rom the authorities under the first of these propositions, that this entry will in general control the case, because it constitutes the contract, of which the bought and sold notes are merely secondary evidence, and any variance between them could not affect the validity of the original written bargain. If, however, the bought and sold notes correspond, but there be a variance between them taken collectively and the entry in the book, it becomes a question of fact for the jury whether the acceptance by the parties of the bought and sold notes constitutes evi- dence of a new contract modifying that which was entered in the book. This is the point established by Hawes v. Forster(/) accord- ing to the explanation of that case first given by Parke B., in Thorn- ton v. Charles, (g) afterwards by Patteson, J., in Sievewright v. Archi- bald, (h) and adopted by the other judges in this last-named case. 16 (A) 1 Mood. & Eob. 368. cision in note 12, supra ; Kemick v. Sand- (i) 16 C. B. (N. S.) 11 ; 33 L. J., C. P. ford, 118 Mass. 102 ; Dike v. Eeitlinger, 189. 23 Hun 241. (j) 1 C. P. D. 777. (/) 1 Mood. & E. 36S. 15. Butler v. Thomson, 92 TJ. S. 412 ; (g) 9 M. & W. 802. Newberry v. Wall. 84 N. Y. 576. In this {h) 17 Q. B. 115; 20 L. J., Q, B. 529 case there was a signed entry in the 16. Peltier v. Coliins, 3 Wend. 459; broker's book, but there is no discussion Coddington «. Goddard, J 3 Gray 436,412. of its effect. See comment on this de- PART n.] AGENTS DULY AUTHORIZED TO SIGN. 317 § 300. Seventhly. — If the bargain is made by correspondence, and there is a variance between the agreement thus concluded, variance be- and the bought and sold notes, the principles are the same tencorrespond- as those just stated which govern variance between a bougMand signed entry, and the bought and sold notes, as decided in SOIdnotes - Heyworth v. Knight, (i) I 7 § 301. Eighthly. — If the bought and sold notes vary, and there is no signed entry in the broker's book nor other writing variance be- showing the terms of the bargain, there is no valid con- a^sownotes tract. 18 This is settled by Thornton v. Kempster, (k) Cum- ^tl^ed™ is ming v. Roebuck, (Z) Thornton v. Meux, (m) Grant v. entry ' Fletcher, (n) Gregson v. Rucks, (0) and Sievewright v. Archibald, (h) The only opinion to the contrary is that of Erie, J., in the -y^efenote last-named case. In one case, however, at Nisi Prius, varied from rty Rowet). Osborne, (p) Lord Ellenborough held the de- note by broker - fendant bound by his own signature to a bought note delivered to the vendor which did not correspond with the note signed by the broker and sent to the defendant. § 302. Lastly. — If a sale be made by a broker on credit, and the name of the purchaser has not been previously communi- 1 ii -i /• ■ 1 • ■■ 1 In sale by cated to the vendor, evidence or usage is admissible to broker on credit, vendor show that the vendor is not finally bound to the bargain may retract, ^ ° 11 purchaser's until he has had a reasonable time, after receiving the sold na ™? » un - ' o satisfactory. note, to inquire into the sufficiency of the purchaser, and to withdraw if he disapproves. 19 This was decided in Hodgson v. (h) 17 Q. B. 115 ; 20 L. J., Q. B. 529. Eccles, 43 Wis. 227, 241 ; Butters v. (t) 17 C. B. (N. S.) 298; 33 L. J., C. Glass, 31 U. C. Q. B. 379. In this last P. 298. ■ case the court says that aside from any 17. Where two ageements were signed question of the statute of frauds, there for the same purchase at the same time, was no contract, because of the variance one printed, the other written, the latter between the bought and sold notes, containing a modification of the other, In Suydam v. Clark, 2 Sandf. Super. 133, parol evidence was admitted to show that the " sold note " provided that seven hun- the written agreement contained the true dred and fifty barrels of a lot of one contract. Hill v. Miller, 76 N. Y. 32. thousand should be delivered within (k) 5 Taunt. 786. three days; the "bought note" that the (I) Holt 172. whole one thousand should be delivered (m) 1 M. & M. 43. within three days. Held, a fatal vari- (n) 5 B. & C. 436. ance. See Canteberry v. Miller, 76 111. 355. (0) 4 Q. B. 747. 19. In Sumner v. Stewart, 69 Penna. 321, (p) 1 Stark. 140. a broker authorized to buy oil for future 18. See ante \ 222, note 6. Bacon v. delivery, closed a contract without sub- 318 FORMATION OF THE CONTRACT. [BOOK I. Davies, (q) aud as the special jury spontaneously intervened in that case, and the usage was held good without proof of it, it is not im- probable that the custom might now be considered as judicially recog- nized by that decision, and as requiring no proof, (s) but it would cer- tainly be more prudent to offer evidence of the usage. § 303. A singular point was decided in Moore v. Campbell, (t) A broker employed by the plaintiff to purchase hemp made Sold note of ■ i i • broker em- a contract with the defendant, and sent him a sold note. ployed by buyer only. The defendant replied in writing, " I have this day sold Campbell through you to Mr. Moore, &c, &c." The terms stated in this letter varied from those in the sold note sent to the defendant. The court held that these were not bought and sold notes by a broker of both parties, and that the broker was acting for the plaintiff alone. The plaintiff's counsel contended that the de- fendant's letter was sufficient proof of the contract to bind him, and must be taken to be his own correction of the sold note made by the broker, and binding on him. But the court held that although this was true if the intention of the parties was that this letter should con- stitute the contract, yet if the defendant never intended to be bound as seller unless the plaintiff was also bound as buyer, and meant that the plaintiff should also sign a note to bind himself, there would be no valid contract. The case was therefore remanded for the trial of this question of fact by the jury. 20 § 304. A mere difference in the language of the bought and sold Difference in n °tes will not constitute a variance, if the meaning be the language no sam e, and evidence of mercantile, usage is admissible to mitting the name of the seller. The buyer selling for an undiscloseJ principal ; see- on receiving the name refused to accept ondly, because the buyer was entitled to the seller. Held, on proof qf custom, know from whom he was obtaining title, that the buyer was not bound until a (q) 2 Camp. 531. seller approved by him was offered him. (s) See Erandao v. Barnett, 3 C. B. 519, In Thomas v. Kerr, 3 Bush 619, an auc- on appeal to H. of L. ; S. C, 12 CI. & tioneer selling horses and cattle on a Fin. 787, as to the necessity for proving farm, received from a servant and sold mercantile usages. Also, 1 Sm. L. C. property of another, supposing that it 602, (ed. 1879.) was that of his employer. The buyer (l) 23 L. J., Ex. 310 ; 10 Ex. 323. learning that it was not the property 20. Where the broker does not make of his supposed vendor, repudiated the the contract, but merely brings the par- purchase. It was held an invalid sale, ties together, and they agree upon the first, because the auctioneer was entitled sale, the broker's entry in his book will to know who his principal was, lest he bind neither. Aguirre v. Allen, 10 Barb, should make himself personally liable by 74. PART ii.] AGENTS DULY AUTHORIZED TO SIGN. 319 explain the language and to show that the meanings of var j anoe , if the two instruments correspond. The cases in illustration Sesame 18 are collected in the note, (w) And where the contract made by the broker was one for the ex- change or barter of goods, and he wrote out the contract MaoLeans , in the shape of bought and sold notes, giving to each Dunn - party on a single sheet a bought note for the goods he was to receive, and a sold note for the goods he was to deliver, it was held no vari- ance that the day of payment was specified at the end of both notes on one sheet, and at the end of the bought note only on the other. (*) § 305. The authority of the broker may, of course, like that of any other agent, be revoked by either party before he has ° ' J . Revocation of signed in behalf of the party so revoking ; (y) but after br °[ !:e '"'j' the signature of the duly-authorized broker is once affixed to the bargain, the only case in which the party can be allowed to re- cede appears to be that mentioned supra, § 302, where a credit sale has been made to an unnamed purchaser, in which event custom allows the vendor to retract if, on iuquiry withiu reasonable time after being informed of the name, he disapproves the sufficiency of the pur- chaser. 21 § 306. And where a broker had, reluctantly and after urgent per- suasion by the vendor, made an addition to the sold note, after both the bought and sold notes had been delivered alteration of ° sold note. to the parties and taken away, the vendor's contention that this addition was simply inoperative was overruled, and the court held that the fraudulent alteration of the note destroyed its effect, so that the vendor could not recover on it. (z) And the effect would (u) Bold v. Rayner, 1 M. & W. 342; the pleasure of the principal. Blackstone and per Erie, J., in Sievewright v. Archi- v. Buttermore, 53 Penna. 266 ; Hunt v. bald, 20 L. J., Q. B. 529; 17 Q. B.115; Rousmanier, 8 Wheat. 174, 201. Such Rogers v. Hadley, 2 H. & C. 227 ; 32 L. an agency is dissolved by the death of J., Ex. 227; Kerapson v. Boyle, 3 H. & the principal. Gait v. Galloway, 4 Peters C. 763 ; 34 L. J., Ex. 191. 332; Clark v. Courtney, 5 Id. 319. But (x) MacLean v. DuDn, 4 Bing. 722-4. a principal cannot put an end to an (y) Farmer v. Kobinson, 2 Camp, agency coupled with an interest, such as 339 n. ; Warwick v. Slade, 3 Camp. 127. a factor's lien for advances, nor will the 21. The authority of a broker maybe death of the principal terminate it. Hunt revoked, because a broker's agency is not v. Rousmanier, 8 Wheat. 174 ; Merry v. coupled with an interest in the thing to Lynch, 68 Me. 94. be sold, and such agency is revocable at (a) Powell v. Devit, 15 East 29. 320 FORMATION OF THE CONTRACT. [BOOK I. be the same in the case of a material alteration even not fraud- ulent. ( rules in shep. for money or other valuable consideration, and, First, the same thing is to be delivered to me at a day certain, and by our agreement a day is set for the payment of the money, or Sec- ondly, all ; or, Thirdly, part of the money is paid in hand ; or, Fourthly, I give earnest money, albeit it be but a penny, to the seller ; or, Lastly, I take the thing bought by agreement into my possession, where no money is paid, earnest given, or day set for the payment, in all these CHAP. II.] SALE OP SPECIFIC CHATTELS UNCONDITIONALLY. 327 cases there is a good bargain and sale of the thing to alter the property thereof. In the first ease I may have an action for the thing, and the seller for his money ; in the second case, I may sue for and recover the thing bought ; in the third, I may sue for the thing bought, and the seller for the residue of the money ; in the fourth case, where earnest is given, we may have reciprocal remedies, one against another ; and in the last case, the seller may sue for his money." § 314. In Noy's Maxims, (a) the rules are given thus : " In all agreements there must be quid pro quo presently, except ^ N . a day be expressly given for the payment, or else it is Maxims - nothing but communication. * * * If the bargain be that you shall give me £10 for my horse, and you gave one penny in earnest, which I accept, this is a perfect bargain, you shall have the horse by an action on the case, and I shall have the money by an action of debt. If I say the price of a cow is £4, and you say you will give me £4 and do not pay me presently, you cannot have her afterwards without I will, for it is no contract; but if you begin directly to tell your money, if I sell her to another, you shall have your action on the case against me. * * * If I sell my horse for money I may keep him until I am paid, but I cannot have an action of debt until he be delivered, yet the property of the horse is by the bargain in the bargainee or buyer; but if he presently tender me my money, and I refuse it, he may take the horse, or have an action of detinue, and if the horse die in my stables, between the bargain and delivery, I may have an action of debt for the money, because by the bar-gain the property was in the buyer." § 315. The rules given by these ancient authors remain substantially the law of England to the present time, with but one ex- ° , t. Modern rules ception. The maxim of Noy, that unless the money be the same with \ J ' J one exception. paid " presently there is no sale except a day be ex- pressly given for the payment, as exemplified in the supposed case of the sale of the cow, is not the law in modern times. The considera- tion for the sale may have been, and probably was, in Con .. .. those early days the actual payment of the price, but it t£e tr ronJseto has since been held to be the purchaser's obligation to pay S^piy^ent the price, where nothing shows a contrary intention. In of P rloe - Simmons v. Swift, (6) Bayley, J., said : " Generally, where a bargain (a) pp. 87-9. (6) 5 B. & C. 862. 328 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK H. is made for the purchase of goods, and nothing is said On sale of r & J & specific chat- about payment or delivery, the property passes immediately, in buyer im- so as to cast upon the purchaser all future risk, if noth- mechately. r r ing remains to be done to the goods, although he cannot take them away without paying the price." So in Dixon v. Yates, (c) Parke, J., said : " I take it to be clear that by the law of England the sale of a specific chattel passes the property in it to the vendee without delivery. * * * Where there is a sale of goods gen- erally, no property in them passes till delivery, because until then the very goods sold are not ascertained. But where by the contract itself, the vendor appropriates to the vendee a specific chattel, and the latter thereby agrees to take that specific chattel and to pay the stipulated price, the parties are then in the same situation as they would be after a delivery of goods in pursuance of a general contract. The very appropriation of the chattel is equivalent to delivery by the vendor, and the assent of the vendee to take the specific chattel and to pay the price is equivalent to his accepting possession. The effect of the contract, there- fore, is to vest the property in the bargainee." 1 § 316. The principles so clearly stated by these two eminent judges Tariingu. are tne undoubted law at the present time, (d) Thus, in Baxters Tarling v. Baxter, (d) the defendant agreed to sell to the plaintiff a certain stack of hay for £145, payable on the ensuing 4th (c) 5 Ad. & E. 313, 340. six months' credit, (a note being given), 1. See § 318, post. Leonard v. Davis, 1 and, by agreement, remained in the Black 476, 483 ; De Fouclear v. Shot- seller's warehouse, with his consent, tenkirk, 3 Johns. 170 ; Jenkins v. Jar- storage free. Before the expiration of rett, 70 N. C. 255. "As between ven- the term of credit the buyer failed, and dor and vendee it is specification and transferred the cotton to trustees for his not delivery that is necessary to the creditors, who brought trover for the cot- Testing of title." Lowrie, J., in Wins- ton against the seller. Story, J., said: low v. Leonard, 24 Penna. 14, 17. Bonn " When a contract for the sale of goods v. Haire, 40 Mich. 404 ; Uhl v. Bobi- is completed by the assent of both parties, son, 8 Neb. 272, 278 ; Wade v. Moffett, the property in the goods is transferred 21 111. 110; Seckel v. Scott, 66 111. to the vendee, and the price is due to the 106 ; Kohl v. Lindley, 39 111. 195 ; Brown vendor.'' And the suit was sustained. u. Wade, 42 Iowa 647 ; Taylor v. Twenty- (d) Hinde v. Whitehouse, 7 East 558 ; five Bales of Cotton, 26 La. Ann. 247; Tarling v. Baxter, 6 B. & C. 360; Martin- Cunningham v. Ashbrook, 20 Mo. 553, dale v. Smith, 1 Q. B. 389 ; Spartali v. 556; Goddard v. Binney, 115 Mass. 450, Benecke, 10 C. B. 212; Gilmour v. Sup- 455; Townsend v. Hargraves, 118 Mass. pie, 11 Moo. P. C. 551; The Calcutta 325, 332 ; Gough v. Edelen, 5 Gill 101. Company v. De Mattos, 32 L. J., Q. B. In Barrett v. Goddard, 3 Mason 107, 110, 322 ; Wood v. Bell, 6 E. & B. 355 ; 25 L. it appeared that cotton had been sold on J., Q. B. 148, and in Ex. Ch. 321 ; Cham- CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 329 of February, and to be allowed to stand on the premises until the first day of May. This was held to be an immediate, not a prospective sale, although there was also a stipulation that the hay was not to be cut till paid for. Bayley, J., said : " The rule of law is that where there is an immediate sale and nothing remains to be done by the ven- dor as between him and the vendee, the property in the thing sold vests in the vendee." This case was followed by one, presenting very simi- lar features, in the Queen's Bench in 1841. (e) § 317. In Gilmour v. Supple, (/) Sir Cresswell Cresswell, in giving an elaborate judgment of the Privy Council, says: " By Gilmour „ the law of England, by a contract for the sale of specific Su pp 1<5 - ascertained goods, the property immediately vests in the buyer, and a right to the price in the seller, unless it can be shown that such was not the intention of the parties." And in the Calcutta Company v. De Mattos, (g) in 1863, Blackburn, J., pronounced this to be " a very accurate statement of the law." AMERICAN DECISIONS.* § 318. The«>rule that the contract of sale passes the property imme- diately, before payment or change of possession, has been universally recognized in the United States. Nevertheless it must be taken with some modification, by reason of the extension by the American courts of the seller's right to rescind, to cases ol*non-payment. The rule is adopted in favor of the seller, but not in favor of the buyer, and hence is likely to mislead. If accepted to its full extent it involves three conclusions : First. That the goods are at the buyer's risk. This is law. Second. That the seller is entitled to payment. This is true, unless the seller has agreed to make delivery at some specified time and place, in which case he must first make or tender delivery. Third. That the buyer is entitled to possession of the property. This is not law. Payment or tender of payment is essential to entitle the buyer to the possession, unless the seller, by giving credit or surrend- ering possession, waives the right to hold the goods. The seller has bers v. Miller, 10 C. B. (N. S.) 125 ; 32 and 29 L. J., Ex. 180; Sweeting v. Tur- L. J., C. P. 30 ; Furley v. Bates, 2 H. & ner, L. R, 7 Q. B. 310. C. 200; 33 L. J., Ex. 43 ; Joyce v. Swan, (/) 11 Moo. P. C. 566. 17 C. B. (N. S.) 84. {g) 32 L. J., Q. B. 322, 328. (e) Martindale v. Smith, 1 Q. B. 389. *The rest of this chapter is by the See, also, Chinery v. Vial, 5 H. & N. 228 ; American editor. 330 EFFECT OP CONTRACT IN PASSING PROPERTY. [BOOK II. not only a lien on the goods for the price, but, in the United States, on default of payment, may rescind the sale and hold the goods as his own. In considering these subjects, citations will be classified under the following heads : I. When are the goods at the buyer's risk ? II. Effect, in passing property, of seller's agreement to deliver. III. Effect, in passing property, of payment. SECTION I. — BUYER'S RISK. § 319. An agreement for the present sale of specific chattels, with- out payment or delivery, casts on the buyer the risk of loss. The general rule is succinctly stated by Jewett, J., in Joyce v. Adams : 2 " The common law fixes the risk where the title resides." But, a* will be seen from the cases cited under our third division, while the title is considered to be in the buyer for the purpose of throwing upon him the risk of loss, it is considered to be in the seller for the purpose of his protection in case of non-payment. 3 The law was expressed m the U. S. Supreme Court, in the case of Leonard v. Davis, 4 by Clifford, J., as follows: "When the terms of sale are agreed on, and the bargain is struck and everything the seller has to do with the goods is complete, the contract of sale, says Chancellor Kent, becomes absolute as between the parties, without actual payment or delivery, and the property and the risk of accident to the goods vests in the buyer. He is entitled to the goods on payment or tender of the price, and not otherwise, when nothing is said at the sale as to the time of delivery, or the time of payment. But if the goods are sold on credit, and nothing is agreed upou as to the time of delivering the goods, the vendee is immediately entitled to the possession, and the right of property vests at once in him." § 320. In Bissell v. Balcom, 5 cattle were sold for $290, on account of which $5 was paid. The cattle were left in the seller's pasture, to- be taken by the buyer within three months, but were swept away by a flood. The seller sued for the price. Woodruff, J., said : " This constituted a present sale of the property at the common law, by which title passed to the purchaser, and by which the vendor's right 2. 8 N. Y. 291, 296. 5. 39 N. Y. 275, 279. See Hayden . 50. Farlow v. Ellis, 15 Gray 229 ; Ar- Baldwin, 17 Mass. 606. mour v. Pecker, 123 Mass. 143 ; Salomon 51. 60 Me. 48. v. Hathaway, 126 Mass. 482; Kenney v. 344 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. case." Cites Hammett v. Linneman. 52 I n Seed v. Lord, 53 wool was sold and sent to the buyer, to be paid for by his note at ninety days. The buyer not sending the note, the seller replevied. Dan- forth, J., said : " The legal effect of such a coptract is, that the giv- ing of the note is a condition precedent, and until that is done or waived, the title does not pass from the vendor." Cites the Massa- chusetts cases above stated. § 343. In Wabash Elevator Co. v. Bank of Toledo, 54 the owner of corn stored in a warehouse pledged the receipts to a bank ; Ohio decisions. . but having agreed to sell five thousand bushels, he pro- cured from the bank receipts enough to satisfy the sale, agreeing to pay the price to the bank. The buyer took the receipts and under- took to make payment by giving the seller credit upon a debt which he owed to the buyer. The seller demanded cash, which was refused. Notice of all the facts was given to the elevator company, which de- livered the grain to the buyer. The bank thereupon brought suit against the elevator company for the value of the corn. Day, J., said that the only question was whether the buyer obtained title. " The title did not pass. Under the circumstances disclosed in the evidence, there can be no doubt but that the transaction was understood by the parties as a cash sale. At all events, the proposition was made by one party and accepted by the other and no time of payment was men- tioned. When this is the case, the sale is presumed to be for cash. * * * A delivery, with the expectation of receiving immediate payment, is not absolute, but conditional, until payment is made ; and, where there is no waiver of payment, no title vests in the purchaser till the price is paid." In Hodgson v. Barrett, 55 the buyer agreed to pay one-half in cash and one-half by his note for sixty days. He gave the note and a check for the money, and the property was de- livered to him. The check was dishonored, and the court held, fol- lowing the case last above stated, that the vendor could maintain replevin for the property. § 344. In Goldsmith v. Bryant, 56 a merchant sold and fitted in the Wisconsin de- buyer's house carpets, curtains, &c, receiving f 50 on ac- cwions. count at the time the goods were ordered. The buyer not making payment when the work was finished, the seller replevied the 52. Ante I 338. 55. 33 Ohio St. 63. 53. 66 Me. 580. 56. 26 Wis. 34, 38. 54. 23 Ohio St. 311, 319. CHAP. II, J SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 345 goods sold. The judge charged the jury " that if the goods were de- livered without requiring the payment, the property passed to the buyer absolutely ; but if payment was required at the time of delivery, and not made, the plaintiff would be entitled to a reasonable time within which to resume possession," and this charge was held correct on appeal. In Fenelon v. Hogoboom, 57 the buyer of wheat, stored in bis own warehouse, received the receipts, and paid $40 on account, at the same time proposing to meet the seller at the elevator soon after, where he refused to pay the balance, because of an attachment against the husband of the seller levied on the wheat. The seller brought trover for the value of the wheat. Lyon, J., said : " The evidence shows that a cash sale was contemplated and intended by the parties. Whatever title passed to defendant by virtue of the delivery, was di- vested by his refusal to pay for the wheat," and a recovery was sus- tained. § 345. In Paul v. Reed, 58 the buyer, moving into the seller's house, examined and selected a hog, some flour, butter, NewHam sugar and other articles, and agreed to take them at cer- shire deoision8 - tain prices. He took out his pocket-book to pay for them, but at that moment the money due for the price was attached as a credit by a creditor of the seller, and the seller took back his goods. The court said that as the goods sold were, by law, exempt from attachment, the only question was whether the title to the goods vested in the buyer, so that he became indebted for them. Bellows, C. J., said : " The proof tends to show that the sale was for cash, and not on credit, and this is just what would have been intended had no time of payment been stipulated. The case, then, stands before us as a contract of sale for cash on delivery. In such case the delivery and payment are to be concurrent acts, and therefore if the goods are put into the posses- sion of the buyer in the expectation that he will immediately pay the price, and he does not do it, the seller is at liberty to regard the de- livery as conditional, and may at once reclaim the goods. In such a case the contract of sale is not consummated, and the title does not vest in the buyer." Cites the New York cases of Leven v. Smith and Russell v. Minor, supra, and continues: "The general doctrine is fully recognized in this state in Luey v. Bundy, 50 and more especially in Ferguson v. Clifford, 60 where it is laid down that if the delivery 57. 31 Wis. 172, 176. 59. 9 N. H. 298. 58. 52 N. H. 136. ' 60. 37 N. H. 86. 346 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. takes place when payment is expected simultaneously therewith, it is, in law, made upon the condition that the price shall forthwith be paid. If this condition be not performed, the delivery is inoperative to pass the title to the property, and it may be instantly reclaimed by the vendor." The court said that placing the hog in another pen, and mixing the sugar sold with some of the buyer's, did not show an in- tent, to pass title without payment; and the buyer being willing to permit the contract to fall, the creditor took nothing. § 346. In Pickett v. Cloud, 61 the contract was to deliver a specific south Carolina ^ °f cot ton at the buyer's gin-house, on a certain day, for deciaions. a certain price. No express provision was made as to time of payment. The seller took the cotton to the place named at the proper time, and the buyer not being there to pay for it, took it away again. The buyer made a subsequent demand, and sued for damages for refusal to deliver the cotton. Johnson, J., said that the time of payment was on delivery. "Upon the whole matter, it appears to me that the plaintiff having failed to tender the money, and make de- mand of the cotton at the time and place stipulated in the agreement, the defendant had the right to elect either to enforce the contract against him, or to consider it at an end, and dispose of it on his own account." This was followed in Neil v. Cheves, 62 where a part pay- ment was made ; but a new trial was ordered because the seller had not returned the part payment. These South Carolina cases were fol- lowed in a late case in California, Beauchamp v. Archer, 63 where cattle were separated from a herd under an agree- ment to sell, on which part payment had been made ; the price was ascertained and a check tendered for it. The buyer refused the cheek, demanding cash, and turned the cattle back witli the herd. A few days later the buyer tendered the price and demanded the cattle ; the seller refused them and tendered back the part payment. The buyer brought suit for the cattle or their value. Ross, J., said that the number of cattle was not ascertained at the time of the first payment, and that payment gave the buyer no property in the cattle, " and the right of the seller to have the whole purchase money paid before they parted with the possession, left them at liberty to rescind upon the failure of the plaintiff to comply with his part of the agreement." 61. 1 Bailey 362, 366. 63. 58 Cal. 431. 62. 1 Bailey 537. California deci eions. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 347 § 347. In Dannefelser v. Wright, 64 Richardson, J , said : " If the defendant obtained possession of the buggy on considera- Missouri deci . tion and on the promise that he would pay for it, and sions - there was no agreement for credit, the plaintiff's right to retake it did not depend on the motives of the defendant at the time of the de- livery, if the conditions were not afterwards complied with. For the purchaser, to whom property is delivered, coupled with the condition that he will pay for it, will be guilty of a fraud if he afterwards attempts to keep it without paying, although he intended to pay at the time he got it." So far as this decision is based on the idea of a right to rescind for fraud, it must be questioned, unless we are pre- pared to admit that every purchaser who keeps what he has not paid for is guilty of fraud. See Thompson v. Wedge, 65 stated post § 355. In S. W. Freight, &c, Co. v. Stanard, 66 Wagner, J., said : " There was nothing said between the parties as to payment; and where no time is stipulated for payment it is understood to be a cash sale, and the payment and delivery are immediate and concurrent acts, and the vendor may refuse to deliver without payment ; and if the payment be not immediately made, the contract becomes void." § 348. In Mathews v. Cowan 67 flour was sold and delivered, and the buyer after delivery gave a worthless check for it. I]]inois deoi . An action of trover was brought. Sheldon, J., said : " Iu slons - the case of a sale for cash, the payment of the price is a condition precedent implied in the contract of sale. As between buyer and seller the property never passed from the plaintiffs to the defendants, and the appropriation of the flour by the defendants to their own use was a conversion of the plaintiffs' property." Hoffman v. Culver 68 was a case of a sale for cash of a car-load of grain. The seller was to weigh it and pay for the number of bushels he might find, and it was put in his possession, and removed by him, when it was attached by his creditors. The seller not having been paid, replevied the goods. McAllister, P. J., said: " Thre payment of the price is a condition preliminary to the property passing to the buyer, and that could not be done before the property was ascertained by weighing." In Michi- gan C. R. R. v. Phillips 69 goods were sold for cash, and left with the buyer over night, to be paid for in the morning; but the buyer did 64. 27 Mo. 45, 47. 67. 59 111. 341, 347. 65. 50 Wis. 642, 644. 68. 7 Bradw. 450, 454. 66. 44 Mo. 71, 83. 69. 60 111. 190. 348 EFFECT OF CONTKACT IN PASSING PKOPERTY. [BOOK II. not pay for them, but pledged them to a bank. Sheldon, J., said : " No time being stipulated by the contract for payment of the price, its payment was a condition precedent implied by law, and the prop- erty would not vest in the vendee until he performed the condition or the seller waived it." But the court distinguished the case from Mathews v. Cowan, supra, because the property had come into the hands of a bona fide purchaser, whose rights were sustained. The rights of bona fide purchasers are discussed, post § 358, et seq. In Allen v. Hartfield 70 the sale was of horses, and $20 was paid on account, and a day fixed for the payment of the residue. After the term of credit expired, the seller placed the horses in the stable of the buyer, and went to his house for payment, which the buyer offered in the seller's own notes. These the seller refused to receive, and the buyer refusing to give up the horses, the seller brought trover. Walker, C. J., said that no time being fixed for delivery of the horses, they were not to be delivered until the price was paid. "It may be that the title vested in the buyer, subject to be defeated by a non- compliance with his part of the agreement. But even if that be true he had no right to possession until he paid the money. If he obtained possession of the horses, without intending to pay for them in money, it was in violation of the contract, and in fraud of appellee's rights; and he then had a right to rescind the contract and sue for and re- cover the horses or their value." 71 § 349. In Thompson v. Conover 72 the sale was of the seller's crop Newjerse °^ corD > a ' a fi xe( i price per bushel. After a portion was decisions. delivered, at the buyer's mill, it was levied upon by a creditor of the buyer, and the seller brought replevin. Green, C, delivering the opinion of the Court of Errors, said : " The vendor might have delivered all his crop on the same day, and demanded immediate payment, and upon its being refused, might have reclaimed the corn. But he chose to give credit for the purchase money till the entire crop was delivered, relying on the solvency and good faith of the vendee. He suffered the title to pass without the payment of the price, 8*nd has thus become a sufferer." This case is in harmony with the others above cited, except in this respect, that it seems to throw upon the seller the obligation of making his delivery, and demanding 70. 76 111. 358. Toledo W. & W. E. R. v. Gilvin, 81 111. 71. See, also, Van Duzor v. Allen, 90 511. 111. 499; Bagley v. Findlay, 82 111. 524; 72. 32 N. J. L. 466, 469. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 349 payment simultaneously. Most of the cases hold that the seller may make delivery in installments, if the article is of a bulky character and such delivery is usual ; and in default of payment when the last installment is delivered, he may reclaim the whole. See, supra, Rus- sell v. Minor, Henderson v. Lauck, Paul v. Reed, and see Harding v. Wirtz.73 §350. In Riley v. Wheeler, 74 Wheeler, J., said: "In Noy's Maxims it is said: 'If a man agree for the price of Vermont de- wares, he may not carry them away before he hath paid oislons - for tliem, if he have not day expressly given him to pay for them. But the merchant shall retain the wares until he be paid for them; and if the other take them, the merchant may have an action of tres- pass, or an action of debt for the money, at his choice.' We recognize this as sound law to the fullest extent." In Phelps v. Hubbard 75 the sale was of a specific lot of tobacco ready for delivery ; a payment was made on account and part was taken by the buyer. The seller refused to deliver the residue until it was paid for, and after keeping it for about a year, resold it and brought an action for his loss. Dunton, J., said : "After keeping the tobacco a reasonable time for the defendant, and his refusal to take the same, the plaintiff had a right to sell it for the most he could get, and to call upon the defend- ant to pay him the difference between what he got for the tobacco and the contract price." In Alabama and Georgia there are statutes providing that on sales of cotton title shall remain in the seller until payment. 76 § 351. The seller waives the condition of payment and the prop- erty passes, if he delivers it without requiring payment on delivery. In Leedom v. Phillips 77 the seller of a payment by lot of sugar left it in front of the buyer's store in his absence. Ou the same day the buyer sold it, and two hours later failed. The seller replevied the goods. The court said : " If one sells goods for cash, and the vendee takes them away without pay- ment of the money, the vendor should immediately reclaim them by pursuing the party." And it was held that by leaving the goods at 73. 1 Term. Ch. 610, 613. Flanders v. Maynard, 58 Ga. 56. See, 74. 42 Vt. 528, 532. also, on the Georgia statute, the case of 75. 51 Vt. 489, 494. See Jones v. Marsh, Comer v. Cunningham, 77 N. Y. 391, 22 Vt. 144. stated post ?J 358-360. 76. Lehman v. Warren, 53 Ala. 535; 77. 1 Yeatea 527. 350 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. the buyer's store without notifying any one there that the delivery was conditional, the seller had parted with title. Leedotn v. Phillips is followed in Bowen v. Burk, 78 a ud Rogers, J., said: "By an un- qualified delivery, notwithstanding a cash sale, the seller relinquishes the advantage of his possession and trusts to his action on the con- tract." See Backentoss v. Speicher. 79 In Mackaness v. Long 80 the court said : "Although the terms of sale be cash, subsequent delivery without payment passes the property to the vendee, not only as against the rest of mankind, but against the vendor himself. If the vendee takes the goods away without payment, the vendor should immediately reclaim them by pursuing the party and retaking them, and this may be done, when necessary, even by force. The right of reclamation, after delivery, exists only in case of fraud or deceit in the purchase, or in procuring the possession." This, of course, means after an unconditional delivery. § 352. In Smith v. Dennie 81 the sale was of ten boxes of sugar, to be paid for by notes with a certain endorser. The sugar was de- livered and attached for the buyer's debts, after which the seller de- manded the note, and, not receiving it, replevied the sugar. The jury found for the plaintiff, and the court, therefore, assumed that the sale was conditional, and considered the question whether the con- dition had been waived. Parker, C. J., said : " We are of opinion that the verdict is against the evidence, for there was nothing in the case from which an intention to hold on, upon the condition, can be inferred; no declaration at the time, which, though not necessary, is important, and no call for security until it was forgotten or abandoned, and perhaps never would have been recurred to if the goods had not been attached." This case is approved in Smith v. Lynes. 82 Paige, J., said : " Where there is a condition precedent attached to a contract of sale and delivery, the contract does not vest in the vendee on delivery until he performs the condition, or the seller waives it. An absolute and unconditional delivery is regarded as a waiver of the condition." In Husted v. Ingraham83 carpets for a hotel were de- livered and fitted under an agreement that the buyer should pay for them by notes secured by a chattel mortgage. The seller did not de- mand the mortgage for more than a month after delivery. Mean- 78. 13 Penna. 146. 81. 6 Pick. 262. 79. 81 Penna. 324. 82. 5 N. Y. 41, 44. 80. 85 Penna. 158, 162. 83. 75 N. Y. 251. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 351 time the property of the buyers was placed in the hands of a receiver, against whom the seller brought an action for conversion. Rapallo, J., said: "The omission to demand the mortgage simultaneously with the delivery of the property, or to make the delivery conditional upon the execution of the mortgage, and the subsequent delay in de- manding the mortgage, were sufficient to preclude the plaintiffs from alleging that the delivery was conditional." § 353. The recent case of Parker v. Baxter 84 J s instructive on this question. Corn was sold by 9, broker, and his note stated the terms — "payment cash." The seller delivered to the buyer, ship's receipts, for the corn endorsed in blank, on his positive assurance of payment early on the next morning, the seller at first refusing to give up the receipts on account of the buyer's delay to pay on a previous sale. At the same time with the receipts the seller gave the buyer a bill, at the head of which was printed a notice that title did not pass until paid for ; but to this the buyer's attention was not called. The buyer did not pay, but he pledged the goods to a banker, and the seller brought an action of replevin. The referee found that there was no fraud, and that title passed by the delivery of the receipts. On appeal the court considered simply the question whether title passed on the deliv- ery of the receipts. Rapallo, J., citing Smith v. Lynes and Osborn v. Gantz, supra, § 339, said : "That where goods sold, to be paid for in cash or notes on delivery, are delivered to the purchaser without the cash or notes being given or demanded at the time, the presumption is that the condition is waived, and that a complete title vests in the purchaser, but that this presumption may be rebutted. The delivery of the shipping receipts to the buyer on his promise to pay on the next day, was presumptive evidence of an absolute delivery of the goods, and a giving of credit for the price, and if standing alone would have required the referee to find a complete delivery. The delivery, however, at the same time, of the bills containing the printed heading, was a circumstance to rebut that presumption, * * * but they do not seem (o have been regarded by the parties as an element in the transaction, nor does it appear that they were even looked at. * * We do not feel at liberty to say that the intention of the parties was so conclusively proved that the referee could not pass upon it as a question of fact, and that there is no evidence in the case which can 84. 86 N. Y. 586, 593. Compare with stated post \ 357. Copland v. Bosquet, 4 Wash. C. C. 588, 352 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. sustain his conclusion that the delivery was absolute." Many cases have been stated above, where on similar facts a different verdict was given, but the principle is the same, the question being usually one of fact for the jury. § 354. In Warder v. Hoover, 85 Adams, J., said : " Where the agreement is that goods are to be paid for in cash on delivery, and the goods are delivered, it appears to us that there is a sale, whether the payment is made or not." In Haskins v. Warren, 86 the seller replevied cotton sold by him, because of non-payment of the price, and endeavored to prove a usage that title did not pass for ten days, during which the buyer held the goods for inspection. But the court held that the usage was not good, and Wells, J., said : " Payment of the price is the condition upon which alone the purchaser can require the seller to complete the sale by delivery of the property. But it is so, at the option of the seller. Delivery of possession, unqualified, is a release or waiver of his right, whether it be in the nature of a condition affecting the title, or only a lien for the price." 87 ''An unconditional delivery of goods sold for cash is a waiver of any condition in the sale, and the seller cannot afterwards assert a title to the goods." Gray, C. J., in Freeman v. Nichols. 88 " It is not the secret purpose, but the intention as dis- closed by the vendor's acts and declarations at the time, which gov- erns." Colt, J., in Wigton v. Bowley. 89 In Cole v. Berry, 90 Depue, J., said : " Payment of the contract price is one of the most usual' conditions on which the transfer of title depends. It is generally a condition to be performed simultaneously with delivery. If such be the contract, a waiver of the condition may be presumed from an unconditional delivery without exacting pay- ment, and in the absence of explanatory proof, the property will vest in the purchaser." Cites Smith v. Dennie and Smith v. Lynes, supra. § 355. Thompson v. Wedge, 91 was a case where the buyer bought a cow at auction, terms cash or approved paper. The seller permitted the buyer to take the cow away on his promise to pay a few days later, but payment not being made the seller brought replevin. It was not sustained. Lyon, J., said : " The plaintiff waived the security re- 85. 51 Iowa 491, 493. 88. 116 Mass. 309. 86. 115 Mass. 514, 533. 89. 130 Mass. 252. 87. See Morse v. Sherman, 106 Mass. 90. 42 N. J. L. 308, 310. 430 ; Upton v. Sturbridge Cotton Mills, 91. 50 Wis. 642. Ill Mass. 446, 452. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 353 quired by the terms of sale, by making the delivery without requiring it. Neither is there any ground for claiming that the defendant ob- tained delivery of the property by fraud. Thus we have here the simple case of a sale of property on credit, and an absolute delivery thereof to the purchaser." In McCraw v. Gilmer, 92 a cow was sent to a lawyer as an advance payment for legal services, but the lawyer died before he rendered the services, and the client replevied the cow. But the court held that the transfer was clearly unconditional. 93 § 356. If credit is given this is a waiver of the condition of pay- ment, and the contract of sale passes both property and Waiverby right of possession. " If the goods are sold upon credit, ei™g credlt - and nothing is agreed upon as to the time of delivering the goods, the vendee is immediately entitled to the possession, and the right of property vests at once in him." Clifford, J., in Leonard v. Davis. 94 This principle is subject only to this modification, that if the buyer becomes insolvent before he receives the goods, the seller may retain them under his lien, or by the exercise of the right of stoppage in transitu. See Milliken v. Warren ; 95 and see post Book V., Part I., Chap. V. § 357. Although the seller delivers goods without requiring pay- ment, he may reserve title by an express stipulation to , , , Express reser- that effect. Such a delivery is called a conditional deliv- vation of title, , on deiivery- en/, and is sometimes distinguished from a conditional sale. In Copland v . Bosquet, 96 (stated ante § 336,) Washington, J., said : " Though the sale was conditional, still it was competent to the vendor to dispense with that condition ; and if the sub- sequent delivery of the wine was unconditional, that circumstance is evidence of such dispensation, and that the vendor looked not to the wine, but to the personal security of the vendee. It becomes necessary, therefore, to inquire whether the delivery to vendee's agent was absolute or conditional. Upon the agent's first application for 92. 83 N. C. 162.' v. Wedge, 50 Wis. 642 ; McCraw v. Gil- 93. See further on this|subject Wilmarth mer, 83 N. C. 162; Johnson v. Farnum, ». Mountford, 4 Wash. C. C. 79,83 ; D' Wolf 56 Ga. 144; MeNail v. Ziegler, 68 111. u. Babbett, 4 Mason 289 ; Kose v. Story, 1 224. See, also, Blctxham v. Sanders, 4 B. Penna. St. 190 ; Landry v. Thomas, 3 & C. 941, stated by our author, post, in the Phil. 300 ; Flanders v. Maynard, 58 Ga. chapter on " Delivery." 56 ; MeNail v. Ziegler, 68 111. 224. 95. 57 Me. 46. 94. 1 Black 476, 483. See Thompson 96. 4 Wash. C. C. 588, 593. 354 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. delivery it was refused, and he was told that it would be first neces- sary to be satisfied of the goodness of the paper. Becoming impatient the agent again applied for the wine, when it was delivered, expressly on condition that he should cause to be produced a satisfactory accept- ance, or cash, agreeably to the terms of sale. Here, then, was a de- livery to the agent upon his promise, which in the view of the law was the promise of his principal, to fulfill the terms of the contract, as the express condition of the delivery." A replevin by the plaintiff, who had succeeded to the rights of the seller, was sustained. 97 Other cases illustrating this principle are above stated in § 338, et seq. Sales on condition of payment are discussed in the next chapter. § 358. The American decisions are not harmonious as to the rights Eights of a °f a bona fide purchaser from a buyer in possession under Ihasa?" pur " a conditional delivery. In New York a distinction is New York made between purchasers from one who holds property under a conditional sale, and purchasers from one Who holds under a conditional delivery. It is settled in that state that where the sale is on the condition of payment the buyer cannot transfer good title, except in certain exceptional cases. See next chapter. But a bona fide purchaser, for value, without notice, from one who has come into possession under an unconditional sale, but under a conditional delivery, obtains valid title. The question is fully discussed in Comer v. Cunningham, 98 a nd the previous decisions in the same court are explained, and an effort is made to reconcile them by the above dis- tinction. The suit was an action of replevin by the owners of cotton in Georgia, who sold it to one Williams, receiving two checks in pay- ment, one of which was dishonored. Williams shipped the cotton to the defendants, who accepted his draft against it and received the cotton. The original sellers brought replevin, and proved a Georgia statute that cotton sold by a cash sale shall not be considered the property of the buyer until fully paid for, though it be delivered to him. Rapallo, J., said that the sale was an absolute sale, and the statute " simply made the delivery conditional, and if written into the con- tract would affect nothing but the delivery. * * * When goods are sold to be paid for in cash or by notes on delivery, if delivery is made without demand of the notes or cash, the presumption is that the condition is waived, and a complete title vests in the purchaser ; but this presumption may be rebutted by proof of acts or declarations 97. Cites Harris v. Smith, 3 S. & R. 98. 77 N. Y. 391. 20 ; Hussey v. Thornton, 4 Mass. 405. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 355 and circumstances showing an intention that the delivery shall not be considered complete until performance of the condition, and the ques- tion of intention is one of fact. But after actual delivery, although as between the parties to the sale such delivery be conditional, a bona Jide purchaser from the vendee obtains a perfect title. * * * Bawls v. Deshler, 3 Keyes 572, is very much in point. Deshler sold a quantity of corn to Griffin, and gave him an order on the elevator to deliver the corn to him, ' subject to my order till paid for.' This delivery was clearly conditional. Yet this court held that Griffin having shipped the corn and drawn against it, the drawees, having paid the draft on the faith of the bill of lading, were protected as bona fide purchasers, and also under the factor's act." § 359. Judge Rapalloalso cited in support of this decision Smith v. Xiynes, Fleeman v. McKean, Beavers v. Lane and Wait v. Green, and distinguished Ballard v. Burgett and Austin v. Dye, as cases of condi- tional sale, and Herring v. Hoppock and Strong v. Taylor, as cases ■where the rights of bona fide purchasers were not in question. 99 The case of Ballard v. Burgett is stated to support Comer v. Cunningham, because it makes the answer to the inquiry in whom is the risk of loss of the property, the test to determine in whom is the title. In Wait v. Green, 99 a note was given for the price of a horse delivered. At the foot of the note was a memorandum that the note was given for a horse, and that the seller retained title till the note was paid. The court held that a bona fide purchaser from the buyer obtained good title. This case is explained in Ballard v. Burgett as a case where the risk of loss was in the buyer, the note being obligatory though the horse should die, showing that the condition was a mere security for the price. Comer v. Cunningham is approved in Dows v. Kidder. 100 § 360. The distinction between conditional sales and conditional deliveries is not clearly defined, and the New York rule, New York rule as promulgated in Comer v. Cunningham, seems likely to orltlclsed - add to the confusion already existing in this brauch of the law. Where parties have agreed upon an unconditional sale, it is quite competent for them at the time of delivery to change the transaction into a con- ditional sale. If they do so, it is forcing upon them a contract which 99. Smith v. Lynes, 5 N. Y. 41 ; Flee- Austin v. Dye, 46 N. Y. 500 ; Herring v. man v. McKean, 25 Barb. 474 ; Beavers v. Hoppock, 15 N. Y. 409 ; Strong v. Tay- Lane, 6 Duer 238 ; Wait v. Green, 36 N. lor, 2 Hill 326. Y. 556 ; Ballard ji. Burgett, 40 N. Y. 314 ; 100. 84 N. Y. 121, 128. 356 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. they have annulled, to insist upon the original contract in determining their rights. The rule nemo dat quod non habet applies with as much force to a conditional delivery as to a conditional sale. No reason is given in Comer v. Cunningham why the title of a purchaser should be better in the one case than in the other, except that the distinction reconciles the decisions in the New York Court of Appeals. It is very doubt- ful whether even this advantage has been gained. Wait v. Green r above stated, seems to be as clearly a conditional sale as Ballard v. Burgett, or Austin v. Dye, supra. § 361. Brundage v. Camp 101 is the leading case in Illinois. That was a case of a sale on condition of giving a note, and In Illinois and .. . ,,ii ijiji Pennsylvania permission was given to the buyer to take the property on chasers pro- condition that the note should be given by the following Monday. A sale by the buyer was sustained in favor of a bona fide purchaser, though the note was not given. This decision was followed in Michigan C. R. R. Co. v. Phillips, Young v. Bradley and Van Duzer v. Allen, 102 and in the last-named case it is held that a creditor and a purchaser stand on the same footing. These Illinois cases were decided on the ground that the first vendor should suffer, because he has put it in the power of his vendee to defraud others by entrusting him with the appearance of ownership ; and no distinction seems to be made between conditional sales and conditional deliveries, though the cases above cited might all be regarded as conditional de- liveries. In Pennsylvania the rule is well settled that an agreement to retain title, either on a conditional sale or conditional delivery, is void as regards creditors of, or bona fide purchasers from, the buyer in possession. 103 § 362. In Massachusetts a purchaser of property, delivered on con- dition that no title shall pass until payment is made, states' the° pur! obtains no title. No distinction is taken between condi- oniy his ven- tional sales and conditional deliveries. See Adams w.O'Con- ner, and Hirschorn v. Canney, stated ante § 341. In this last case the court rejects the New York rule as declared in Smith u. Lyues. 104 101. 21 111. 330. Linderman, 64 Penna. 499 ; Stadtfeld v. 102. Michigan C. E. E. v. Phillips, 60 Huntsman, 92 Penna. 53. 111. 190, 194; Young v. Bradley, 68 111. 104. See, also, Coggill v. Hartford & N. 553 ; Van Duzer v. Allen, 90 111. 499, 502. H. E. E., 3 Gray 545 ; Deshon v. Bigelow, 103. Martin v. Mathiot, 14 S. & E. 214 ; 8 Gray 159. Rose v. Story, 1 Penna. St. 190 ; Haak v. CHAP. II.] SALE OF SPECIFIC CHATTELS UNCONDITIONALLY. 357 These Massachusetts cases are cited and followed in Cole v. Berry and in Bradshaw v. Warner. 105 Both of these two last-named cases were in form conditional sales ; but notes were given, so that they do not differ from the New York case of Wait v. Green, the obligation to pay €xisting, though the chattels sold should be destroyed. The Massa- chusetts decisions have been generally followed, and in most of the states a bona fide purchaser gets no better title than his vendor. See next chapter. § 363. It is apparent that where the seller accepts an unconditional obligation or promise for the price of goods delivered to ii ii-i i • i i n i Effect of the the buyer, coupled with an agreement that title shall be chattel mort- . gage acts. vested in the seller until payment, such an agreement may be appropriately considered a mortgage to secure the price. See ante pp. 8 and 9. This view was suggested by Comstock, J., in Herring v. Hoppock. 1° 6 On this theory a bona fide purchaser from the buyer, may logically be held to obtain title against the seller, under the chattel mortgage acts, if the seller omits to file his agreement as a chattel mortgage. This is the reasoning of the United States Supreme Court. See Hervey v. R. I. Locomotive Works, 107 Heryford v. Davis. 108 The principle of these two last-named cases applies wherever the buyer is under a personal obligation to pay the price which the title is reserved to secure ; and it is not material whether the agreement to reserve title arises on the sale or on the delivery. This subject is further considered in the next chapter. 105. Cole v. Berry, 42 N. J. L.308, 314 ; 107. 93 U. S. 664. Bradshaw v. Warner, 54 Iud. 58, 62. 108. 102 U. S. 235. 106. 15 N. Y. 409, 414. 358 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK IL CHAPTER III. SALE OF SPECIFIC CHATTELS CONDITIONALLY. SEC. Two rules given by Lord Black- burn- First — Where vendor is to do any- thing to the goods before delivery, property does not pass 364 Second — Where goods are to be tested, weighed, or measured, prop- erty does not pass 365 A third rule given — Where buyer is bound to the performance of a con- dition, property does not pass, even by actual delivery, before performance of condition 366 Goods measured by buyer for his own satisfaction....: 371 Where buyer assumes risk of de- livery he must pay price, even where property has not passed, if destruction of goods prevents de- livery 374 , But intention must be clearly indi- cated 375 Goods sold to be paid for on delivery at a particular place 377 Goods put in buyer's packages 377 Where something is to be done by vendor to the goods after delivery, 378 Where something is to be done to the goods by the buyer 379 Where chattel is unfinished or in- complete, property does not pass unless contrary intention be proved 382 Where payment for a ship is to be made by fixed installments, as "work progresses 384 Eule does not apply to a contract for work and materials to be supplied, 387 When property passes in the ma- terials provided for completing the chattel 388 Authorities for third rule above given 391 Agreement for hire and conditional sale 393 American cases on the subject of this chapter 394 American criticisms on the rule in Clarke v. Spence 398 SEC- SECTION I. — FIRST RULE — AMERICAN DECISIONS. American decisions under the first rule 400- Sales to arrive 407 Unfinished chattels 408 SECTION II. — SECOND RULE — AMERICAS' DECISIONS. American decisions under the second rule 414 Effect of delivery in cases under the second rule 418 SECTION III.— THIRD RULE- DECISIONS. -AMERICAN American decisions under the third rule 425 Agreements reserving title till pay- ment, are valid between the par- ties 425 The buyer's interest may be sold 426 The seller's interest may be sold 426 The natural increase follows the title, 427 The risk of loss remains with the owner 427 License to retake property on de- fault 428 Forfeiture of partial payment by de- fault 429 Equitable principles 433 Waiver of forfeiture 436 SECTION IV. — THIRD RULE — RIGHTS OF PURCHASERS AND CREDITORS. Eights of bona fide purchasers and creditors 437 Decisions sustaining the seller's title.. 437 New York 437 Massachusetts 438 CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 359 SEC. Missouri 439 Iowa 440 Indiana 441 Connecticut 442 Vermont 442 New Jersey 443 Ohio 444 Tennessee 444 Most of -the other states accord 444 Ontario decisions 445 Pennsylvania courts sustain condi- tional sales if coupled with a hir- ing 446 Alabama courts follow Pennsylvania, 447 In what cases the seller may be estop- ped from claiming title 448 Purchasers protected, but not cred- itors 451 Decisions that conditional sales are void as to bona fide purchasers or creditors 452 Illinois 453 Federal courts 454 Kentucky 457 Pennsylvania 458 Alabama 459 New York decisions conflicting 460 Recording acts 461 Where vendor is to do any- thing to goods before deliv- ery, property does not pass § 364. Two rules on this subject are stated by Lord Blackburn, (a) as follows : Two rules on First. — Where by the agreement the vendor is to do this subject ' ° given by Lord anything to the goods for the purpose of putting them Blackburn, into that state in which the purchaser is to be bound to accept them, or, as it is sometimes worded, into a deliver- able state, the performance of those things shall, in the absence of circumstances indicating a contrary intention, be taken to be a condition precedent to the vesting of the property. 1 § 365. Secondly. — Where anything remains to be done to'the goods, for the purpose of ascertaining the price, as by weighing, ^^ goods measuring, or testing the goods, where the price is to de- ^ig h ed'or ed ' pend on the quantity or quality of the goods, the perform- ™ r0 perty d does ance of these things also shall be a condition precedent to not pass ' the transfer of the property, although the individual goods be ascer- tained, and they are in the state in which they ought to be accepted. 2 § 366. Third Rule.— To these may be added, Thirdly— Where the buyer is by the contract bound to do anything as a condi- tion, either precedent or concurrent, on which the passing bourfd toYcon- of the property depends, the property will not pass until ertydoes'not the condition be fulfilled, even though the goods may actual delivery, nil- -i • i ■ pi **" P el- form- have been actually delivered into the possession ot the anceofcondi- buyer. 3 The authorities in support of these propositions will now be con- sidered. (a) On Sale, pp. 151-2. 1. See post § 400, et seq., for American decisions. 2. See post \ 414, et seq., for American decisions. 3. See post § 425, et seq., for American decisions. 360 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. § 367. la Hanson v. Meyer, (b) the defendant sold a parcel of Hanson v starch, at £6 per cwt., and directed the warehouseman to Meyer ' weigh and deliver it. Part was weighed and delivered, and then the purchaser became bankrupt, whereupon the vendor countermanded the order for delivery of the remainder, and took it away. In an action for trover, brought by the assignees of the bank- rupt purchaser, Lord Ellenborough said, that the act of weighing was in the nature of a condition precedent to the passing of the property by the terms of the contract, because " the price is made to depend upon the weight." 4 § 368. In Rugg v. Miuett, (c) a quantity of turpentine, in casks, was put up at auction, in twenty-seven lots. By the terms of the sale, twenty-five lots were to be filled up by the vendors, out of the turpentine in the other two lots, so that the twenty- five lots would each contain a certain specified quantity, and the last two lots were then to be measured and paid for. The plaintiff bought the last two lots, and twenty-two of the others. The three lots sold to other parties had been filled up and taken away, and nearly all of those bought by plaintiff had been filled up, but a few remained unfilled, and the last two lots had not been measured, when a fire occurred and consumed the goods. The buyer sued to recover back a sum of money paid by him on account of his purchase. The court held, that the property had passed in those lots only which had been filled up, be- cause, as Lord Ellenborough said : " Everything had been done by the sellers which lay upoh them to perform in order to put the goods in a deliverable state." And Bayley, J., said, that it was incumbent on the buyer " to make out that something remained to be done to the goods by the sellers at the time when the loss happened." 5 § 369. Iu Zagury v. Furnell, (d) the property was held not to have _ u v passed, in a sale of " 289 bales of goat skins, from Moga- Fumeii. dore, per Commerce, containing five dozen in each bale, at the rate of 57s. 6d. per doz.," because, by the usage of trade, it was the seller's duty to count the bales over, to see whether each bale con- tained the number specified in the contract, and this had not been done when the goods were destroyed by fire. This was a decision of (b) 6 East 614. 5. Rugg v. Minett was followed in Fos- 4. See Hoffman v. Culver, 7 Bradw. 450, ter v. Ropes, 111 Mass. 10, 15. 454 ; Elgee Cotton Cases, 22 Wall. 189. (d) 2 Camp. 240. (c) 11 East 210. CHAP. in. J SALE OF SPECIFIC CHATTELS CONDITIONALLY. 361 Lord Ellenborough, at Nisi Prius, and the reporter states that after the plaintiff's nonsuit, he brought another action in the Common Pleas, and was again nonsuited by Sir James Mansfield, C. J., who concurred in opinion with Lord Ellenborough. In Simmons v. Swift, (e) the sale was of a specified stack of bark, at £9 5s. per ton, and a part was weighed and taken simmon9r . away, and paid for. Bayley, J., and the majority of the Swift ' court, held, that the property had not passed in the unweighed residue, although the specific thing was ascertained, because it was to be weighed, " and the concurrence of the seller in the act of weighing was necessary." § 370. In Logan v. Le Mesurier, (/) the sale was on the 3d of December, 1834, of a quantity of red-pine timber, then Lo „ Le lying above the rapids, Ottawa river, stated to consist of Meaurier - 1391 pieces, measuring 50,000 feet, more or less, to be delivered at a certain boom in Quebec, on or before the 15th of June then next, and to be paid for by the purchasers' notes at ninety days from the date of sale, at the rate of 9Jd. per foot, measured off. If the quantity turned out more than 50,000 feet, the purchasers were to pay for the surplus, on delivery, at 9Jd., and if it fell short, the difference was to be refunded by the sellers. The purchasers paid for 50,000 feet, before delivery, according to the contract. The timber did not arrive in Quebec till after the day prescribed in the contract, and when it did arrive, the raft was broken up by a storm, and a great part of the timber lost, before it was measured and delivered. Held, that the property was not transferred until measured, and that the purchasers could recover back the price paid for all timber not received, and damages for breach of contract. § 371. In Gilmour v. Supple, (g) where the facts were identical with the preceding, as regards the sale of a raft of timber, which Gilmour was broken up by a storm, the words of the contract were, Su pp 1 a fi er ^eir delivery to the vendee. 1° Thus, where, vendor'a/nSf until all the installments have been paid. 16 8ale - (z) See, also, 2 Wins. Saund. 47 u, 16. Installment Sales or Leases.— note. The decisions upon contracts of this char- (a) 2 Mood. & Rob. 223. acter are numerous in America. Many re- (6) 3 Camp. 92. cent cases hold that where it is apparent (c) 1 Mod. 243. that the contract, though nominally a 15. Eeitz's Appeal, 64 Penna. 162. hiring, is in reality a conditional sale, the 378 EFFECT OF CONTRACT IN PASSING PROPERTY". [BOOK II. Thus in Ex parte Crawcour, (d) where there was an agreement be- Ex part© tween Crawcour and one Robertson for the hire of some Crawcour. furniture, under which, if Robertson paid certain install- ments of money month by month the furniture was to become his property, he undertaking at the same time to deposit with Crawcour, as collateral security, promissory notes to the full amount of the in- stallments to be paid ; it was held, that until the payment of all the installments, the property in the furniture did not pass to Robertson. It should be noted that the agreement in question expressly pro- vided that the property should not pass until the payment of all the installments, but it is submitted that the result would have been the same even in the absence of any such provision.] AMERICAN DECISIONS. § 394. The cases in America upon the subject of this chapter are American cases not in all respects identical with those decided in our on the subject of this chapter. COUrtS. In Crofoot v. Bennett, (e) 17 a portion of the bricks in a specified crofooto kiln were sold at a certain price per thousand, and the Bennett. possession of the whole kiln was delivered to the vendee, that he might take the quantity bought. Held, that the property had passed in the number sold. Strong, J., in delivering the opinion, said: " It is a fundamental principle pervading everywhere the doc- trine of sales of chattels, that if goods be sold while mingled with others, by number, weight, or measure, the sale is incomplete, and the title continues with the seller until the bargained property be separated and identified. * * * The reason is that the sale cannot be ap- plied to aDy article until it is clearly designated, and its identity thus courts will so regard it, looking to the sub- §458; Singer Co. v. Holcomb, 40 Iowa stance rather than the form. Murch v. 33; Myer v. Car Co., 102 TJ. S. 1; Koh- Wright, 46 111. 487, stated post § 453 ; Her- ler v. Hayes, 41 Cal. 455 ; Hegler v. Eddy, vey v. R. I. Locomotive Works, 93 U. S. 53 Cal. 597. See, also, ante I 2, note on 664, stated post \ 454 ; Heryford v. Davis, page 10, " Sale or Lease.'' 102 U. S. 235, stated post \ 455 ; Greer v. (d) 9 Ch. D. 419, C. A. As to this cus- Church, 13 Bush 430, stated post § 457; torn of furniture dealers, see Ex parte Cole v. Berry, 42 > T . J. L. 308, stated post, Powell, 1 Ch. D. 504, C. A. and Crawcour I 433 ; Sumner v. Cottey, 71 Mo. 121, v. Salter, 18 Ch. D. 30, C. A. stated post, I 439 ; Rowe v. Sharp, Crist v. (e) 2 Comstock (N. Y.) 258. Kleber and Enlow v. Klein, stated post § 17. For American cases as to sales of 446 ; Brunswick v. Hoover, 10 Weekly chattels not specific, see next chapter. Notes of Cases (Penna.) 219, stated post CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 379 ascertained. In the case under consideration, it could not be said with certainty that any particular bricks belonged to the defendant until they had been separated from the mass. If some of those in an un- finished state had been spoiled in the burning, or had been stolen, they could not have been considered as the property of the defendant, and the loss would not have fallen upon him. But if the goods sold are clearly identified, then, although it may be necessary to number, weigh, or measure them, in order to ascertain what would be the price of the whole at a rate agreed upon between the parties, the title will pass. If a flock of sheep is sold at so much the head, and it is agreed that they shall be counted after the sale in order to determine the entire price of the whole, the sale is valid and complete. But if a given number out of the whole are sold, no title is acquired by the purchaser until they are separated, and their identity thus ascertained and determined. The distinction in all these cases does not depend so much upon what is to be done, as upon the object which is to be effected by it. If that is specification, the property is not changed ; if it is merely to ascertain the total value at designated rates, the change of title is effected." (g) § 395. [The same distinction was maintained in Groat v. Gile. (h) The defendant contracted to sell to the plaintiffs two flocks _ Groat v. G-ile* ot sheep except two bucks and a lame ewe, at four dol- lars a head. The plaintiffs had examined the sheep, and the excepted animals had been identified; they, also paid twenty-five dollars on account of the purchase. The sheep were to be taken, and the balance paid at a subsequent specified time ; meanwhile the vendor was to pas- ture them. Within the time named the plaintiffs paid the balance of the purchase money, and took away the sheep ; but meanwhile the defendant had shorn the sheep, and converted the wool to his own use. The action was to recover the value of the wool, and the plaintiffs were held entitled. The court said, "All the parties understood what par- ticular sheep and lambs were intended to be sold, and there is no doubt that they were sufficiently identified. Under such circumstances, when the terms of the sale were agreed on, and the payment of twenty- five dollars was made to the defendant on account of the purchase (g) See, also, Bradley v. Wheeler, 44 nett, Bradley v, Wheeler, and Kimberly N. Y. 495 ; Groat v. Gile, 51 N. Y. 431, o. Patchin, cited below, were referred to and 2 Kent 496. with approval. (A) 51 N. Y. 431, where Crofoot v. Ben- 380 EFFECT OF COKTRACT IN PASSING PROPERTY. [BOOK II. money by the plaintiffs, their liability became fixed for the balance, ■which was ascertainable by a simple arithmetical calculation based upon a count of the sheep and lambs, and the price to be paid per head for them. No delivery of them or other act whatever in relation to them by the defendant was required or intended. The plaintiffs were to take them without any agency in delivering them on the part of the defendant, and they from the time the agreement was made became the owners thereof."] § 396. In Kimberly v. Patchin, (i) the owner of a large mass of Kimberiy v wheat lying in bulk gave the vendee a receipt acknowledg- Patohin. j D g himself to hold 6000 bushels, sold for a specified price, subject to the vendee's order : and the title was held to have passed by the sale. Whitehouse v. Frost (post Ch. IV.) was followed and approved. Eusseii i) car- I' 1 R usse U v - Carrington, (k) the Court of Appeal of nngton. New York applied the same principle to similar facts. 18 In Oliphant v. Baker, (I) the vendor sold barley in bulk at a certain oh bantu price per bushel, the quantity to be afterwards ascer- Baker. tained. The barley being in the vendor's storehouse, which was to be surrendered to another person at a future day, it was agreed that the barley should be allowed to remain in the storehouse till the vendor transferred the possession of the building : and the purchaser agreed with the transferee of the building to pay storage after that time. The goods were destroyed by fire before being measured, but after the building had passed out of the possession of the vendor. Held, that the facts showed an intention to pass the property in the barley nothwithstanding it had not yet been measured, and that the loss must fall on the buyer. § 397. In Rourke v. Bullens, (m) the vendor sold a hog on credit, the Eourke v ^°S *° be kept an ^ fattened till the buyer called for it, Buiiens. an( j ^ n en ^ b e p a i. McKenzie, 31 Ark. 80. 30 Wis. 81, 88. 155, 162; Shepard v. Lynch, 26 Kan. 81. 1 Black 476, 483. 377. 82. See Cushman v. Holyoke, 34 Me. 396 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. In Morgan v. Perkins, 86 all the corn in a certain building was bar- gained for at $2.50 per barrel and a payment was made on account. The corn was to remain in the building till the buyer could take it away on his vessel ; but the seller resold it to one against whom the first buyer afterwards brought trover. The suit was sustained, the court finding from these facts that title had passed, though measure- ment was afterwards to take place to fix the price. Had part only been sold, title would not have passed until separation. § 424. In New York the same principles are established. See Groat v. Gile, stated § 395, ante. 87 In Burrows v. Whitaker, 88 lum- ber was delivered at a certain place, to be culled there by the buyer, and then counted to ascertain the price. After delivery of part, but before counting, part was swept away by a flood, and it was held that title had passed and the buyer must bear the loss. The contract was held to be separable, thus distinguishing the case from Kein v. Tup- per (§ 416, supra?) In Martin v. Hurlbut, 89 a sale of logs was held to be executory, because they were to be scaled and measured by a public officer, and because part of the logs were to be left at the place where they were •cut, to pay stumpage to the land-owner. In McNeil v. Keleher, 90 wood was sold, to be piled on the canal bank and paid for at a certain price per ton. It was held on the authority of Rugg v. Minett, ante § 368, and of Turley v. Bates, that title passed as soon as the wood was piled, though it had not yet been measured by the buyer. SECTION III. — THIRD RULE AMERICAN DECISIONS. § 425. The cases arising under the third rule (ante § 366) are those \ eements where possession of the property is given to the person properdin 16 agreeing to buy, but title is expressly reserved by the untupaymentt se ^' er unt ^ ^ e performance of some condition by the tween'the be " buyer. This condition is usually the payment of the price. parties. These sales express the intent of the parties as to the time when the property shall pass, and as we have seen (ante § 309) that the intent controls, there would seem to be no difficulty in the application 86. 1 Jones N. C. L. 171. See Allman *. 88. 71 N. Y. 291. Davis, 2 Ired. 12. 89. 9 Minn. 142. 87. See, also, Hurd v. Cook, 75 N. Y. 90. 15 U. C. C. P. 470. 454 ; Bradley v. Wheeler, 44 N. Y. 495. CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 397 of this rule, nor is there, as between the parties. When third persons claim to have acquired rights in the property sold, from the buyer in possession, questions arise in determining which the American courts have differed widely. But a stipulation reserving title until payment, though possession is given under an agreement to sell, is valid as be- tween the parties and as against third person, with notice. Thus, in Fosdick v. Schall, 91 cars were sold to a railroad company, to be paid for by installments, for which notes were given, the cars to remain the property of the seller until paid for. There was a mortgage on the railroad covering all present and future property of the company. Under this mortgage the mortgagees claimed priority to the claim of the seller of the cars. The court held that the mortgagees were not purchasers for value, but had only the mortgagor's rights, and Waite, C J., said : " As between the parties, the transaction is just what, on its face, it purports to be, a conditional sale, with a right of rescission on the part of the vendor, in case the purchaser shall fail in payment of his installments — a contract legal and valid as between the parties.'* This doctrine is universally sustained in America, as will appear from the cases cited in the note. 92 91. 99 U. S. 235, 250. 92. Maine. — Rogers v. Whitehouse, 71 Me. 222. (In this case a stock of goods in a store was sold, to be retailed by the buyer, but title was retained by the seller. This arrangement was held valid except as to the goods retailed. See post \ 448.) New Hampshire. — Sargent v. Gile, 8 N. H. 325 ; Kimball v. Jackman, 42 N. H. 242 ; McFarland v. Farmer, 42 N. H. 386. Vermont. — Burnell v. Marvin, 44 Vt. 277 ; Boot v. Lord, 23 Vt. 568 ; Arming- ton v. Houston, 38 Vt. 448. Massachusetts.— Hussey v. Thornton, 4 Mass. 405; Marston v. Baldwin, 17 Mass. 606 ; Barrett v. Pritchard, 2 Pick. 512 ; Ayer v. Bartlett, 6 Pick. 71 ; Hill v. Freeman, 3 Cush. 257 ; Coggill v. Hart- ford, &c, E. E., 3 Gray 545 ; Burbank v. Crooker, 7 Gray 158 ; Booraem v. Crane, 103 Mass. 522 ; Salomon v. Hathaway, 126 Mass. 482; Benner v. Puffer, 114 Mass. 376. (In this last case the condition was held valid, though the goods were not in existence at the time of the bargain, but were afterwards delivered under the agreement.) Rhode Island. — Goodell o. Fair- brother, 12 E. I. 233; Skelton v. Man- chester, 12 E. I. 326. Connecticut. — Forbes v. Marsh, 15 Conn. 384; Brown v. Fitch, 43 Conn. 512 ; Hine v. Eoberts, 48 Conn. 267. New York.— Smith u. Lynes, 5 N. Y. 41 ; Herring v. Hoppock, 15 N. Y. 409 ; Wait v. Green, 36 N. Y. 556 ; Ballard u. Burgett, 40 N. Y. 314 ; Austin v. Dye, 46 N. Y. 500; Cole v. Mann, 61 N. Y. 1 ; Boon v. Moss, 70 N. Y. 465 ; Nash v. Weaver, 23 Hun 513. New Jersey .—Cole v. Berry, 42 N. J. L. 308. Pennsylvania. — Haak v. Linderman, 64 Penna. 499, 501 ; Enlow v. Klein, 79 Penna. 488 ; Hartley v. Decker, 89 Penna. 470 ; Stadtfeld v. Huntsman, 92 Penna. 53. 398 EFFECT OF CONTRACT IX PASSING PROPERTY. [BOOJK II. § 426. The buyer may sell his interest iu the property, and if the condition is performed the vendee will obtain complete The buyer's in- r L teiest may be title. 93 If the goods are wrongfully taken from the buyer he, as well as the seller, may maintain trover against the wrongful taker, even after the condition has been broken. Delaware. — Williams v. Connoway, 3 Houst. 63. Maryland. — Hinkley v. Wheelwright, 29 Md. 341, 348; Walsh v. Taylor, 39 Md. 592. Virginia. — Leavell v. Eobinson, 2 Leigh 161. North Carolina. — Clayton v. Hester, 80 N. C. 275, where N orth Carolina cases are collected. Vassar v. Buxton, N. C. Sup. Ct., February Term, 1882. South Carolina. — Southern v. Cun- ningham, 11 Rich. L. 533; Talmadge v. Oliver, 14 So. Car. 522. Florida. — Johnston v. Eichelberger, 13 Fla. 230. Georgia. — Boyd v. Loften, 34 Ga. 494 ; Jowers v. Blandy, 58 Ga. 379. Alabama. — Leigh v. Mobile and Ohio E. R., 58 Ala. 165. Mississippi. — Mount v. Harris, 1 Sm. & M. 185 ; Ketchum v. Brennan, 53 Miss. 596. Texas. — Christian v. Bunker, 38 Tex. 234 ; Sacra i>. Semple, Tex. Slip. Ct., May, 1881, 12 Reporter 507. Ohio.— Sage v. Sleutz, 23 Ohio St. 1 ; Sanders v. Keber, 28 Id. 630 ; Carmock v. Gordon, 2 Cinn. 408. Michigan. — Couse v. Tregent, 11 Mich. 65 ; Fifield v. Elmer, 25 Mich. 48. Indiana. — Shireman v. Jackson, 14 Ind. 459 ; Plummer v. Shirley, 16 Ind. 380 ; Bradshaw v. Warner, 54 Ind. 58. ' Illinois. — Latham v. Sumner, 89 111. 233 ; Van Diizor v. Allen, 90 111. 499. Wisconsin. — Hunter v. Warner, 1 Wis. 141. Kentucky. — Chism v. Woods, Hard. 531 ; Vaughn v. Hopson, 10 Bush 337. Tennessee. — Bradshaw v. Thomas, 7 Yerg. 497 ; Gambling v. Read, Meigs 281. Minnesota. — McClelland v. Nichols, 24 Minn. 176. Iowa. — Bailey v. Harris, 8 Iowa 331 ; Robinson o. Chapline, 9 Iowa 91 ; Mose- ley v. Shattuck, 43 Iowa 540. Missouri. — Parmlee v. Catherwood, 36 Mo. 479 ; Sumner v. Cottey, 71 Mo. 121 ; Wangler v. Franklin, 70 Mo. 659. Arkansas. — Carroll i. Wiggins, 30 Ark. 402. Nebraska. — Aultman v. Mallory, 5 Neb. 178 ; McCormick v. Stevenson, Neb. Sup. Ct., 1882, 14 Reporter 691. Kansas. — Hallowell v. Milne, 16 Kan. 65 ; Fleck v. Warner, 25 Kan. 492. California. — Putnam v. Lamphier, 36 Cal. 151. Nevada. — Cardinal v. Edwards, 5 Nev. 36. Federal Courts. — Gregory v. Morris, 1 Wyom. T. 213, affirmed by United States Supreme Court, 96 U. S. 619 ; Gaylor v. Dyer, 5 Cranch C. C. 461; Wood v. Brooke, 2 Sawy. 576; The Oriole, 1 Sprague 31 ; Rogers, &c, Co. v. Lewis, 4 Dill. 158 ; Bauendahl *. Horr, 7 Blatchf. 548. Ontario. — Stevenson v. Rice, 24 U. C. C. P. 245 ; Gleason v. Knapp, 26 Id. 553 ; Mason v. Johnson, 27 Id, 208 ; Tuffts v. Mottashed, 29 Id. 539 ; Walker v. Hy- man, 1 Ont. App. 345 ; Mason v. Bickle, 2 Id. 291 ; Nordheimer v. Robinson, 2 Id. 305. 93. Blair v. Hamilton, 48 Ind. 32 ; Vin- cent i>. Cornell, 13 Pick. 294 ; Day v. Bas- sett, 102 Mass. 445; Crompton v. Pratt, 105 Mass. 255 ; Currier v. Knapp, 117 Mass. 324; Chase v. Ingalls, 122 Mass. 381. But see Chase v. Ingalls, 125 Mass. 117. CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 399 This is on the ground that such a buyer is in the position of a bailee, responsible for the goods to the owner, and therefore entitled to sue for them. 94 The interest of the buyer, before default, may be levied on and sold for his debts, and the seller cannot maintain trover until after breach of the condition, if, by the terms of his agreement, he is not entitled to take the property until such breach. 95 In Newhall v. Kingsbury 96 a mowing-machine was sold and deliv- ered, price payable in installments, machine to continue the seller's property until paid for. The sheriff seized and sold it for the buyer's debts, and the seller thereupon brought trover before the first install- ment became due. Morton, J., said that the first buyer had rightful possession until failure to perform the condition. " He had an inter- est in the property which he could convey, and which was attachable by his creditors, and which could be ripened into an absolute title by the performance of the conditions." 97 " At the time the plaintiffs commenced this suit, there had been no breach of the condition, and they had no right of possession. It follows that the action was pre- maturely brought." But after breach of the condition of payment, the seller may take the property by replevin from the buyer's credit- ors, no matter how large a portion of the price may have been paid on account. 98 The interest retained by the seller in goods bargained, and delivered on condition of payment, may also be sold, subject to the „ , . J.1XG seller s in* rights of the buyer in possession, either before or after t»rest may be default ; 99 it may also be levied upon and sold for the debts of the seller, or the seller may mortgage it. 100 § 427. The seller retaining title is the owner of the natural increase of the property, and may recover it if the condition is 1 . J The natural in- broken. Thus, in Buckmaster v. Smith ,101 the seller re- crease fouows ' ' the title. covered in trover not only for a mare which he had sold 94. Harrington v. King, 121 Mass. 269. Marvin, 44 Vt. 277 ; Hubbard v. Bliss, 95. Fairbanks «. Phelps, 22 Pick. 535. 12 Allen 590. 96. 131 Mass. 445. 100. McMillan v. Lamed, 41 Mich. 97. Cites Vincent *. Cornell, Day v. 521, 523 ; Everett v. Hall, 67 Me. 497. Bassett and Currier v. Knapp, note 93, 101 . 22 Vt. 203. See, also, Clark v. ante. Hayward, 51 Vt. 14 ; Allen v. Delano, 55 98. Hughes u. Kelly, 40 Conn. 148; Me. 113; Stewart u. Ball, 33 Mo. 154; Goodell v. Fairbrother, 12 E. I. 233. Kellogg v. Lovely, 46 Mich. 131! 99. See ante (j 6, note 1 ; Burnell v. 400 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. on a condition, but also her colt produced while in the possession of the The risk of person who had contracted to purchase. On the other withthe ams hand, the risk of loss of the property remains with the owner in the absence of any agreement to the contrary, though possession and use may be given to the buyer. Thus, in Swal- low v. Emery, 102 horses were sold at a stipulated price, to be kept and used by the buyer, but not to be his property until paid for. One of the horses died without fault of the buyer, and it was held that it was the seller's loss, and that he could only recover the price of the rest of the property sold, and that he could not reclaim the residue of the property after he had received its fair value. The giving of a note for the whole price was considered by Grover, J., in Ballard v. Burgett, 103 to be evidence that the property was at the risk of the buyer, notwithstanding an agreement reserving title. But later cases hold that no recovery can be sustained on such note if the consideration fails. 104 § 428. If the seller reserves title, and it is agreed that on default he may enter the buyer's premises and retake the prop- License to re- ' i take property erty, this license is irrevocable, and the seller will not be on default. J ' ' liable for trespass for such entry. Thus in Walsh v. Tay- lor 105 furniture was delivered, part of the price being paid, and the title to the furniture reserved until the rest of the price should be paid in installments of $1 per month. After default in payment of the entire balance, the seller entered the buyer's house and forcibly removed the furniture against the prohibition of the buyer. The court held that the license was irrevocable, and suit could not be maintained for trespass. But such entry must be made in a reasonable manner, and without needless violence. 106 § 429. Whether, on a sale reserving title till the price is paid, par- Forfeitnre of ^ a ^ P a y ments are forfeited on default of the residue, is a mentebyde- question on which the cases conflict. In courts possessing fcult " equity powers the modern tendency is to allow the seller who rescinds a contract for default after receiving a part of the price, to retain only so much as will compensate him. 102. Ill Mass. 355. See Grant v. 556 ; Kent v. Buck, 45 Vt. 18. United States, 7 Wall. 331. 105. 39 Md. 592. See, also, McClel- 103. 40 N. Y. 314. land v. Nichols, 24 Minn. 176. 104. See cases stated post U 433, 434, 106. Drury v. Hervey, 126 Mass. 519; 435. See, also, Loring v. Loring, 64 Me. Churchill v. Hulbert, 110 Mass. 42. CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 401 In Massachusetts the partial payments are forfeited. In Angier v. Taunton Paper Co. 107 a machine was delivered for $1000, payable in ten monthly installments ; title not to pass till paid for. The buyer defaulted after paying $500, and mortgaged the machine. The seller brought trover against the mortgagee, and it was held that he could re- cover the entire value. This case was recently followed in Colcord v. McDonald. 108 In Knox v. Perkins 109 property was sold and notes were given for the price ; and as to some of the property it was agreed the sale should be void if the notes were not paid when due. Default being made in payment, the seller retook the forfeited portion of the property, and also enforced the notes. Hoar, J., said : " It was in effect an agreement that R. & S. should have the whole property for a certain price, if the purchase money should be paid punctually ; but that if it should not be so paid, they should have less property for the price. Such a contract was a lawful one, if the parties chose to make it. The vendor was entitled to the whole price agreed on." § 430. This subject received thorough consideration in Brown v. Haynes. H° In that case oxen were sold for $120, of which one-half was paid in May ; if the residue was not paid in September the seller could retake them ; and they were to be the seller's until paid for. The final payment was not made, but the oxen were sold to one from whom the seller demanded them ; and on refusal to give them up the seller brought trover against the last purchaser. It was argued for the defence that the seller had only a lien for $60, and his recov- ery should be limited to that sum ; but the court held that the seller had the entire property, and the measure of damages was the entire value of the cattle. Appleton, C. J., said : " The purchaser failing to perform his agreement, derives no benefit from a partial peform- ance of his contract, nor can he confer any by reason thereof." But he intimated that an equitable suit might relieve the buyer. This case was followed in Everett v. Hall, m To the same effect see the recent Mississippi case of Duke v. Shackelford. 112 Fleck v. Warner 113 was an action of replevin by the seller against the buyer for a safe sold to be paid for in installments ; title reserved 107. 1 Gray 621. 111. 67 Me. 497. 108. 128 Mass. 470. 112. 56 Miss. 552.' 109. 15 Gray 529.- 113. 25 Kan. 492. 110. 52 Me. 578. 2c 402 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. till paid for. Defendant argued that the seller must tender back pay- ments received by him before he could recover; but the court said that such tender was not necessary to sustain replevin, and whether any part of the payments could be recovered must be determined in another action. In Haviland v. Johnson, 114 the buyer of a sewing machine on installments, having paid six out of twelve monthly in- stallments, defaulted, and the machine was taken away from her. She sued to recover back the installments paid, but the court found no cause of action. The same conclusion was reached in Illinois in the case of Singer Manufacturing Co. v. Treadway. 115 § 431. In Latham v. Sumner, 116 a piano sold was to vest only on payment of the price, of which $60 was paid, and for the residue notes were given. On default of payment of the first note, the seller re- took the piano, and returned the notes. The buyer sued to recover back the cash payment, on the ground that one who rescinds a contract must place the other party in statu quo. But the court said that there was no rescission, but an enforcement of the contract. In Howe Machine Co. v. Willie, H7 the buyer of a sewing machine on installments refused to complete payments because of defects in the machine. The seller retook the machine and the buyer sued for the installments paid. The suit was sustained on the ground that the buyer was warranted in rescinding because of the defects. § 432. Whelan v. Couch 118 was a case where the fixtures in a bowl- ing-alley were sold for $1078, in installments — $350 down, $109 per month for three months and $9 on the first day of each month thereafter till the whole was paid, time being made of the essence of the contract, and all payments to be forfeited in case of default. After more than half of the price had been paid, the buyer delayed one day in tendering payment, and the seller claimed a forfeiture. Spragge, C, said : " It shocks one, certainly, that a vendor should receive such considerable sums as W. has received and retain them as forfeited payments, be- cause a sum so small as $9 was not paid to the day; but that was the contract as explicit as the parties could make it, and I find no warrant for interfering with the contract under any circumstances that appear 114. 7 Daly 297. 117. 85 111. 333. 115. 4 Brad. 57. 118. 26 Grant's Ch. (Ont.) 74. 116. 89 111. 233. CHAP. III.] SALE OF SPECIFIC CHATTELS CONDITIONALLY. 403 In this case." The Chancellor did not discuss the question whether he might not refuse the aid of the court to enforce a forfeiture. § 433. On the other hand there are many decisions which .^^ ■ am adjust the claims of the parties on equitable principles. oipies. In Preston v. Whitney, 119 a piano was sold on installments of $25 per month, title reserved till paid for, and the seller was entitled to re- take possession on any default. After $100 had been paid, default was made and the piano was taken back. The buyer sued to recover beck his payments. Christiancy, J., said : " The defendant, having received one hundred dollars of plaintiff's money, paid only in con- sideration of the proposed purchase, and having taken back the prop- erty which constituted the consideration, and having terminated the contract upon which it was paid, has so much of the plaintiff's money in his hands, for which he should account upon just and equitable prin- ciples. He would doubtless have the right to deduct from the amount a fair compensation for the use of the piano, as well as for any reduc- tion in value beyond that arising from its legitimate use, and for any incidental expense in regaining possession. But he would have no right, uuder the terms of this agreement, to claim any forfeiture of all the money which might have been paid, beyond such reasonable com- pensation ; for, as to such excess, he has given and the plaintiff has received no equivalent or consideration. * * * Whether it would be competent to provide in such a contract for the forfeiture of all the sev- eral installments, or whether such a provision would be treated as a penalty, according to the principles which distinguish penalties from stipulated damages, is a question upon which we express no opinion." § 434. Subsequently, in the same state, in Johnson v. Whittemore, 120 the seller, on default of payment for a piano sold conditionally, brought trover against the buyer, and obtained judgment for its full value. But on writ of error this was reduced to the unpaid balance of the price, Christiancy, C. J., remarking that the provision in the contract for retaining the money paid only applied in case the vendor declared the sale void and retook the property, under the terms of the agreement. " What might have been the effect of such a provision in case the con- tract had been declared void, we ueed not decide, though it is clear such a provision is not one which the law would enforce, as for stipu- 119. 23 Mich. 260, 267. 120. 27 Mich. 463, 470. See Shepard v. Cross, 33 Mich. 96, stated post \ 436. 404 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. lated damages, as it is not based upon any idea of just and adequate compensation." In Hine v. Roberts, 121 an organ was delivered under an agreement acknowledging the payment of $50 " rent," and setting forth that a note for $140 had been given for the rest of the " rent ; " if all paid when due, a bill of sale should be given to the buyer ; if not paid, the seller might retake the organ. Default was made and the organ re- taken by the seller, who also brought suit on the note. Carpenter, J.^ said that the document was not a hiring but a conditional sale. " The purchase failed. There was therefore an entire failure of the con- sideration for the note." Therefore a verdict for the amount of the note was set aside. The same ruling was made in two recent Minne- sota cases. 122 § 435. In Guilford v. McKinley, 123 in an action of trover for a piano, delivered under a like contract, the court held that the seller could recover only a sum equal to the residue of the price, and that the buyer might reduce those damages by proof of breach of warranty. In Mott v. Havaua National Bank, 124 an engine was sold and a note given for the price, the engine to remain the property of the seller until the note was paid. The note not being paid, the engine was taken back. It was held that the amount recoverable on the note was the face of it, less the value of the engine when returned to the seller. In Ketchum v. Brennan, 125 machinery was delivered, to be paid for in installments, title retained by the seller until paid. The buyer sold the property and made default. It was held that the seller could maintain replevin against the second purchaser only on condition that he tendered back to the first purchaser the partial payments received. In the contract in this case there was no express provision for return of possession or forfeiture of payments on default, and the case was discussed as one of rescission. § 436. If the seller, retaining title to property delivered on a condi- waiver of for- t i° na l sa -^ e > permits the buyer to retain possession and re- feiture. ceives payments after the default, this operates as a 121. 48 Conn. 267. Gleason v. Knapp, 26 TJ. C. C. P. 553. 122. Third National Bank of Syracuse 123. 61 Ga. 230. v. Armstrong, 25 Minn. 530, and Minne- 124. 22 Hun 354. apolis, &c, Co. v. Hally, 27 Id. 495. See 125. 53 Miss. 596. "allowance for foot-dirt and water as customary." Breeds. >p ne ven( J ors gave an order on the wharfingers for delivery to the purchasers of " fifty tons of our Greenland oil, ex-ninety tons." The purchasers became insolvent on the day after this order was sent to the wharfinger, and the order was then countermanded by the ven- dors, nothing having been done' on it. Held, that the property had not passed. So in Busk v. Davis, (6) the vendor had about eighteen tons of Riga flax, in mats, lying at the defendant's wharf, and sold ten tons of it, giving an order to the purchaser on defendant for " ten tons Riga PDR. flax, ex Vrow Maria." In order to ascer- tain what portion of the flax was to be appropriated to this order, it 1. See the American cases post \ 469, (a) 13 East 522. et seq. (6) 2 M. & S. 397. Busk v. Davis. CHAP. IV.] SALE OF CHATTEL NOT SPECIFIC. 423 was necessary to weigh the mats, and this had not been done, when the buyer became insolvent, and the vendor thereupon countermanded the order. Held, that the property had not passed. § 463. In White v. Wilks, (c) the sale was of twenty tons of oil, out of the vendor's stock in his cisterns. In Austen ■ wbitev v. Craven, (d) the sale was by sugar refiners, of fifty hogs- " w ' llks - heads of sugar, double loaves, no particular hogsheads craven."' being specified. In Shepley v. Davis, (e) often tons of shepieyu. hemp out of thirty ; and the contracts were all held to be avls ' executory, no property passing. In Gillett v. Hill, (/) Bay ley, J., stated the law very perspicuously in the following words : " The cases may be divided into „ & J Gillett v. Hill. two classes ; one in which there has been a sale of goods, and something remains to be done by the vendor, and until that is done, the property does not pass to the vendee, so as to entitle him to maintain trover. The other class of cases is where there is a bargain for a certain quantity, ex a greater quantity, and there is a power of selection in the vendor to deliver which he thinks fit; then the right to them does not pass to the vendee, until the vendor has made his selection, and trover is not maintainable till that is done. If I agree to deliver a certain quantity of oil, as ten out of eighteen tons, no one can say which part of the whole quantity I have agreed to deliver until a selection is made. There is no individuality until it has been divided." (g) § 464. [In Gabarron v. Kreeft, (h) the sale was of all the iron ore, the produce of a certain mine in Spain. The contract Gabarron „ provided that the price should be paid by the defendants' Kreeft - acceptances, to be given on a certificate, that the quantity of ore drawn for was in stock, and that thereupon the property in the ore so drawn for should vest in the defendants. In carrying out the contract the defendants' acceptances, at a particular time exceeded the amount of all the ore already shipped, so that the defendants were entitled to a further quantity of the ore then in stock, as to which, however, no certificate had been given. Held, that in the absence of any specific appropriation of the ore by the seller in fulfillment of the contract no property in any of the ore in stock could vest in the defendants.] (c) 5 Taunt. 176. (g) See, also, Campbell v. Mersey (d) 4 Taunt. 644. Docks Company, 14 C. B. (N. S.) 412. (e) 5 Taunt. 617. (h) L. E., 10 Ex. 274 r fully considered (/) 2 C. & M. 530. post, Chap. VI. 424 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. § 465. The only case to be found in the reports in apparent contra- whitehouse diction to this principle of the law of sale, is Whitehouse «. Frost. v _ Frog^ (j) which, notwithstanding explanations by the judges in subsequent cases, is scarcely ever mentioned, without sug- gestion of doubt or disapproval. 2 In that case the contract was as follows : " Mr. J. Townsend bought of J. and L. Frost ten tons of Greenland oil, in Mr. Stainforth's cisterns, at your risk, at £39 — £390." There were then in the cistern forty tons of oil, which had belonged to Dutton and Bancroft, and they had sold ten tons of it to Frost & Co., and these were the ten tons which the latter sold to Townsend, giving Townsend an order on Dutton and Bancroft for " the ten tons of oil we purchased from you 8th Nov. last." The order was taken to Dutton and Bancroft by the purchaser, and ac- cepted by them in writing on the face of the order. Townsend left the oil in the custody of Dutton and Bancroft, and it was not severed from the bulk in the cisterns. It was held that the property had passed, as between Frost and Townsend. Lord Ellenborough put it on the ground that all right in the seller was gone by the acceptance of his delivery order in favor of Townsend, the seller never having had himself possession, but only a right to demand possession from the bailees, which right he had assigned to Townsend, just as it had been assigned to himself by his vendors. Grose, J., was of opinion that as the risk was in the buyer, and the delivery complete so far as the vendor was concerned, the property had passed. It was the purchaser's busi- ness to act with Dutton and Bancroft in drawing off the ten tons of oil. Le Blanc, J., put it on the ground that the sale was complete between Frost and Townsend, because nothing remained to be done between them. The vendor had given to the purchaser the only pos- session that the vendor ever had, and the purchaser had accepted this, and Dutton and Bancroft were bailees of the oil for the purchaser's use. All that remained to be done was between the purchaser and his bailees. Bayley, J., was very much of the same opinion, considering the purchaser's acceptance of an order on Dutton and Bancroft, his presentation of it to them, and obtaining their assent to be his bailees, as equivalent to a consent that the goods should be deemed to have (i) 12 East 614. widely extended. Jackson v. Anderson, 2. Whitehouse v. Frost has been recog- 4 Taunt. 24, may be consulted in support nized in most of the states as a correct of the same proposition. See post § 477 adjudication, and the principle that title et seq. may pass without separation has been CHAP. TV.] SALE OF CHATTEL NOT SPECIFIC. 425 been delivered to him. This case was much questioned in subsequent decisions, (j) In Wallace v. Breeds, (k) Lord Ellenborough again said of Whitehouse v. Frost, "there nothing remained to be done by the seller to complete the sale between him and the buyer." And in the subsequent case of Busk v. Davis, (I) where three of the judges (Lord Ellenborough and Le Blanc and Bayley, JJ.,) who decided Whitehouse v. Frost, were still on the bench, they adhered to the decision, both Le Blanc and Bayley saying, however, that the sale was of an " undivided quantity," and that delivery had been made of that undivided quantity so far as in the nature of things it was possible for the vendor to deliver it. The cases in which those contracts are considered, by which the vendor agrees to make and deliver a chattel, are reviewed Does giving or in the next chapter on "Subsequent Appropriation." property? § 466. This seems to be an appropriate occasion for considering the question whether earnest has any, and what, effect in altering the property in the goods which are the subject matter of the contract. In former times, when the dealings between men were few and simple and consisted, for the most part, where sale was intended, in the transfer of specific chattels, it was said that by the giving of earnest the property passed. Thus we have seen in the second chap- ter of this book that Shepherd's Touchstone contains this rule:(m) " If one sell me his horse, or any other thing for money, * * * and I give earnest money, albeit it be but a penny, to the seller, * * * there is a good bargain and sale of the thing to alter the prop- erty thereof." And Noy says (ante § 314) : " If the bargain be that you shall give me £10 for my horse, and you give me one penny in earnest, which I accept, this is a perfect bargain, you shall have the horse by an action on the case, and I shall have the money by an action of debt." But the context of both these passages shows very plainly that the authors were considering the subject of the different modes in which a bargain for the sale of a specific chattel could be completed, and were pointing out that the mere agreement of A to buy, and B to sell, did not constitute a bargain and sale, but that something further must be done " to bind the bargain." As soon as the bargain for the sale of the specific chattel was completed, in whai- (j) See White v. Wilks, 5 Taunt. 176; (A) 13 East 525. • Auaten v. Craven, 4 Taunt. 644 ; Camp- (I) 2 M. & S. 397. bell v. Mersey Company, 14 C. B. (N. S.) (m) Ante n Ppro " plied. The contract has been made in two successive stages, instead of being completed at one time; but it is none the less one contract, namely, a bargain and sale of goods. As was said by Holroyd, J., in Rhode v. Thwaites, (a) " the selection of the goods by one party, and the adoption of that act by the other, converts that which before was a mere agreement to sell into an actual sale, and the property thereby passes." The only difficulty that can arise on this question is in cases where ■(a) 6 B. & C. 388. 442 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. the vendor only has made the subsequent appropriation. is to appropri- If it has been agreed that the purchaser shall select out of the bulk belonging to the vendor, it is not easy to raise a controversy, but the cases in which the ablest judges have been much perplexed are those where the vendor is, by the express or im- plied terms of the contract, entitled to make the selection. A very common mode of doing business is for one merchant to give an order to another to send him a certain quantity of merchandise, as so many tons of oil, so many hogsheads of sugar. Here it becomes the ven- dor's duty to appropriate the goods to the contract. The difficulty is to determine what constitutes the appropriation : to find out at what precise point the vendor is no longer at liberty to change his intention. It is plain that the vendor's act in simply selecting such goods as he intends to send, cannot change the property in them. He may lay them aside in his warehouse, and change his mind afterwards ; or he may sell them to another purchaser without committing a wrong, be- cause they do not yet belong to the first purchaser, and the vendor may set aside other ,goods for him. It is a question of law whether the selection made by the vendor in any case is a mere manifestation of his intention, which may be changed at his pleasure, or a determi- nation of his right conclusive on him, and no longer revocable. § 489. The rule on the subject of election is, that when, from the nature of an agreement, an election is to be made, the Eule as to de- . termination of party who is by the agreement to do the first act, which, from its nature, cannot be done till the election is deter- mined, has authority to make the choice, in order that he may be able to do that first act, and when once he has done that act, the election has been irrevocably determined, but till tfien he may change his mind. (6) 1 For example, suppose A sell out of a stack of bricks one thousand to B, who is to send his cart and fetch them away. Here B is to do the first act, and cannot do it till the election is determined. He therefore has authority to make the choice, but he may choose first one part of the stack and then another, and repeatedly change his mind, until he has done the act which determines the election, that is, until he has put them in his cart to be fetched away ; when that is done, his election is determined, and he cannot put back the bricks and take (b) Heyward's Case, 2 Co. 36 ; Comyn's 1. See American decisions post § 512 Dig., Election ; Blackburn on Sale 12S. et seq. CHAP. V.] OF SUBSEQUENT APPROPRIATION. 443 others from the stack. So, if the contract were that A should load the bricks into B's carts, A's election would be determined as soon as that act was done, and not before. It follows from this, says Lord Blackburn, that where from the terms of an executory agreement to sell unspecified goods, the vendor is to despatch the goods, or do anything to at which prop- them that cannot be done till the goods are appropriated, he has the right to choose what the goods shall be ; and the property is transferred the moment the despatch or other act has commenced, for then an appropriation is made finally and conclusively by the authority con- ferred in the agreement, and in Lord Coke's language, " the certainty, and thereby the property begins by election." (c) But however clearly the vendor may have expressed an intention to choose particular goods, and however expensive may have been his preparations for perform- ing the agreement with those particular goods, yet until the act has actually commenced, the appropriation is not yet final, for it is not made by the authority of the other party nor binding on him. {d) § 490. A review of the authorities will show the subtle distinctions to which this subject gives rise, and the infinite diversity Kev ie W ofthe of circumstances under which its application becomes authorltles - necessary in commercial dealings. The considerations that govern it are rendered still more complex when the vendor, although appropri- ating the goods to the contract by despatching them, still retains con- trol by taking the bills of lading or other documents of title in his own name, in order to secure himself against loss in the event of the buy- er's insolvency or refusal to pay. The decisions in cases where the vendor, although appropriating the goods, has reserved expressly or by implication a special property in them, will be separately examined, after disposing of those which are free from this element of controversy. In 1803, in the case of Dutton v. Solomonson, (/) it was treated as already settled law that where a vendor delivers goods to Dntton „ Solo . a carrier by order of the purchaser, the appropriation is monson determined ; the delivery to the carrier is a delivery to the ^rri«r ry to vendee, and the property vests immediately. (c) Heyward's Case, 2 Coke 36 ; Mer- son, 7 E. & B. 885, 901 ; 26 L. J., Q. B. chants' National Bank v. Bangs, 102 296. Mass. 291, 295. (/) 3 B. & P. 582, per Lord Alvanley, (d) Blackburn on Sale, p. 128. The C. J. ; and see Cork Distilleries Co. v. accuracy of this statement of the law was Great Southern, &c, Railway Co., L. K., attested by Erie, J., in Aldridge v. John- 7 H. L. 269 ; and Johnson v. The Lan- 444 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. Law in the -^ n< ^ m tne United States the law is established to the United States. game e ff ect ^ 2 § 491. In 1825, Fragano v. Long (h) was decided in the King's Fraeanou Bench. The plaintiff sent an order from Naples to M. Long - & Sous at Birmingham, for merchandise " to be des- patched on insurance being effected. Terms to be three months' credit from the time of arrival." The goods were sent from Birmingham, ■marked with the plaintiff's name, to the agents of the vendors in Liverpool, with orders to ship them to the plaintiff. Insurance was made in the plaintiff's name. The goods were injured by the carrier by being allowed to fall into the water while loading them, and the action was assumpsit against the carrier. It was contended by the de- fendant that the property had not passed because the vessel's receipt expressed that the goods were received from the Liverpool shippers, the agents of the vendors, and they would therefore have been entitled to the bill of lading. But the court held that the property had passed to the plaintiff from the time the goods left the vendors' warehouse. Holroyd, J., said the principle was that " when goods are to be deliv- ered at a distance from the vendor, and no charge is made P ays r fo7the r by him for the carriage, they become the property of the buyer as soon as they are sent off." The words above printed in italics suggest that where the vendor pays the charges it is presumed that he retains the property in the goods. On this point the reader will find a very full exposition of the law in the elaborate opinion of Lord Cottenham, delivering the judgment of the House of Lords in Dunlop v. Lambert, (i) § 492. In Rohde v. Thwaites, (k) the appropriation by the vendor Eohdeu was assente( ^ to DV tne purchaser. The purchaser bought Thwaites. twenty hogsheads of sugar out of a lot of sugar in bulk belonging to the vendor. Four hogsheads were filled and delivered. Sixteen other hogsheads were then filled up and appropriated to the contract by the vendor, who gave notice to the purchaser to take them away, which the latter promised to do. Held, that this was an assent cashire and Yorkshire Bailway Co., 3 C. 2. See American decisions, post \ 512, P. D. 499, where, under somewhat curi- et seq. ons circumstances, the same rule was ap- (h) 4 B. & C. 219. plied. (i) 6 CI. & Finn. 600. (g) Krulder v. Ellison, 47 N. Y. 36. (£•) 6 B. & C. 388. CHAP. V.] OF SUBSEQUENT APPROPRIATION. 445 to the appropriation, that the contract was thereby converted into a bargain and sale, and that the property passed. 3 In Alexander v. Gardner, (I) decided in 183o, the property in a par- cel of butter was held to have passed from the plaintiff to Alexander „. the defendant by subsequent appropriation with mutual Gardner assent under the following circumstances. The original contract was for " 200 firkins Murphy & Co.'s Sligo butter at 71s. 6d. per cwt. free on board ; payment, bill at two months from the date of lading ; to be shipped this month. 11 Oct., 1833." On the 11th of November the plaintiff received from Murphy an invoice and bill of lading for these butters, which had not been shipped till the 6th of November. De- fendant waived the delay, and consented to take the invoice and bill of lading, which described the butter, the weights and marks of the casks, &c. The butter was afterwards lost by shipwreck. Held, that the subsequent appropriation was complete by mutual assent; that the property had passed, and the buyer must suffer the loss. The case was decided directly on the authority of Fragano v. Long, and Bolide v. Thwaites. § 493. The same principle governed Sparkes v. Marshall, (m) de- cided by the same court in the following year (1836.) Spark( , s ,. Mar . Bamford, a corn-merchant, sold to plaintiff "500 to 700 sha,: barrels of prepared black oats, at lis. 9d. per barrel, to be shipped by Thomas John & Son, of Youghall." The oats were to be delivered at Portsmouth. Some days afterwards Bamford informed plaintiffs that Messrs. John & Son had engaged " room in the schooner Gibralter Packet of Dartmouth to take about 600 barrels of black oats on your account." Plaintiff next day ordered insurance, " £400 on oats per the Gibralter Packet of Dartmouth, &c." In this action against the underwriter it was contended by them that the property had not passed, but the court held the contrary. Tindal, C. J., said that Bamford's letter to the plaintiff " was an unequivocal appropriation of the oats on board the Gibralter Packet," and " this appropriation is assented to and adopted by the plaintiffs, who, on the following day, gives instructions to his agent in London to effect the policy on oats per Gibralter Packet." § 494. In Bryans v. Nix, (n) decided in the Exchequer in 1839, 3. Eohde v. Thwaites was cited and kins v. Bromhead, 6 M. & G. 963 ; S. C, distinguished in Scotten v. Sutter, 37 7 Scott N. R. 921. Mich. 532, per Cooley, J. (m) 2 Bing. N. C. 761 (J) 1 Bing. N. C. 671. See, also, Wil- (m) 4 M. & W. 775. 446 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. the facts were, that one Teuipany, in Longford, drew a Bryans v. Nix. , . bill of exchange on the plaintiff at Liverpool, against two cargoes of oats, per boats Nos. 604 and 54, represented by two boat receipts or bills of lading, whereby the masters of the boat acknowl- edged to have received the oats on board, deliverable in Dublin to the plaintiff's agents, for shipment thence to the plaintiff at Liverpool. The plaintiff received, on the 7th of February, a letter from Tempany, dated the 2nd, containing these two boat receipts, dated the 31st of January, and thereupon accepted the bill of exchange which Tempany stated in a letter to be drawn against these oats. In point of fact, boat No. 604 had received its cargo, but although the master's receipt for boat 54 was dated on the 31st of January, the loading of it was only begun on the 1st of February, and on the 6th it had received only about 400 barrels out of the 530 barrels called for by the receipt. On that day, the 6th, Tempany, pressed by the importunity of the defendant, to whom he was largely indebted, gave to the defendant an order for both the boat-loads, addressed to Tempany's agent in Dub- lin, and the latter accepted the order and agreed to forward the cargoes to the defendant in London. The defendant obtained possession of the oats in Dublin, and the plaintiff demanded them from him, and brought action on his refusal to deliver them. The loading of the boat No. 54 was completed on the 9th of February. On these facts, after elaborate argument and time for advisement, Parke, B., deliv- ered the judgment of the Exchequer of Pleas, holding that the prop- erty in the cargo No. 604 had vested in the plaintiff, but not the cargo No. 54. In relation to the first cargo, the decision was on the grouud that " the intention of the consignors was to vest the property in the consignee from the moment of delivery to the carrier, and the case resembles that of Haille v. Smith, 1 B. & P. 563, where the bill of lading being transmitted for a valuable consideration, operated as a change of property instanter when the goods were shipped ; and it is also governed by the same principle upou which I know that of An- derson v. Clark (o) was decided, where a bill of lading making the goods deliverable to a factor was upon proof from correspondence of the intention of the principal to vest the property in the factor as security for antecedent advances, held to give him a special property the instant the goods were delivered on board, so as to enable him to sue the master of the ship for their non-delivery." In relation to the (o) 2 Bing. 20. CHAP. V.] OF SUBSEQUENT APPROPRIATION. 447 cargo of No. 54, however, the ground was that there were no specific chattels appropriated to it. The reasoning on this part of the case is submitted in full, because it does not seem altogether reconcilable with the subsequent case of Aldridge v. Johnson, -post, so far as regards the 400 barrels that had actually been put on board, destined for the plaintiff', before Tempany was persuaded to give an order for them in favor of the defendant. The learned Baron said (p. 792): "At the time of the agreement, proved by the bill of lading or boat receipt of the 31st of January, to hold the 530 barrels therein mentioned for the plaintiffs, there were no such oats on board, and consequently no specific chattels which were held for them. The undertaking of the boat-master had nothing to operate upon, and though Miles Tempany had prepared a quantity of oats to put on board, those oats still re- mained his property : he might have altered their destination and sold them to any one else : the master's receipt no more attached to them than to any other quantity of oats belonging to Tempany. If, indeed, after the 31st of January, these oats so prepared, or any other like quantity, had been put on board to the amount of 530 barrels, or less, far the purpose of fulfilling the contract, and received by the master as such, before any new title to these oats had been acquired by a third person, we should probably have held that the property in these oats passed to the plaintiffs, and that the letter and receipt, though it did not operate as it purported to do, as an appropriation of any existing specific chattels, at least operated as an executory agreement by Tem- pany and the master and the plaintiffs, that Tempany should put such a quantity of oats_ on board for the plaintiffs, and that when so put the master should hold them on their account ; and when that agree- ment was fulfilled, then, but not otherwise, they would become their property. But before the complete quantity of 530 barrels was shipped, and when a small quantity of oats only were loaded, (p) and before any appropriation of oats to the plaintiffs had taken place, Tem- pany was induced to enter into a fresh engagement with the defend- ant, to put on board for him a full cargo for No. 54, by way of satis- faction for the debt due to him, for such is the effect of the delivery •order of the 6th, and the agreement with Walker of the same date, (p) The reporter's statement, p. 778, is harbor at Longford, partly loaded, the that on the 6th of February, when de- loading having begun on the 1st of Feb- fendant's agent first pressed Tempany for ruary, and about 400 barrels being then security, " boat 54 was still in the canal on board." 448 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. to send the boat receipt for the cargo of that vessel. Until the oat*, were appropriated by some new act, both contracts were executory; on the 9th this appropriation took place by the boat receipt for the 530 barrels then on board, which was signed by the master, at the re- quest of Tempany, whereby the master was constituted the agent of the defendant to hold these goods ; and this was the first act by which these oats were specifically appropriated to any one. The master might have insisted on Tempany's putting on board oats to the amount of the first bill of lading, on account of the plaintiff's, but he did not do so." § 495. The difficulty felt in receiving this decision as satisfactory, Remarks on arises chiefly from the difference between the facts as stated Bryana v. Nix. j^ ^e reporter and found by the jury, and the facts as assumed in the opinion of the court. The trial at Nisi Prius was be- fore Williams, J., who told the jury to consider, as regards the cargo of No. 54, " whether, although the loading was not complete, the oats to be put on board were designated and appropriated to the plaintiff, as if they were, he was of opinion that they were entitled to recover that cargo also." The jury found for the plaintiff, finding also, as a fact, " that at the time the receipts were given, the cargo for boat 54 was specially designated, although the loading was not complete." But in the opinion of Parke, B., the quantity loaded at the time when Tem- pany assumed the power of diverting it to a new consignee, is treated as a trifle, " only a small quantity," instead of about three-fourths of the whole as stated by the reporter, and no notice is taken of the ruling of Williams, J., or the finding of the jury, although in some earlier passages of the opinion it is expressly stated to be the law that " if the intention of the parties to pass the property, whether absolute or special, in certain ascertained chattels is established, and they are placed in the hands of a depositary, no matter whether such depositary be a com- mon carrier, or ship-master, employed by the consignor or a third per- son, and the chattels are so placed on account of the person who is to have that property, and the depositary assents, it is enough ; and it matters not by what documents this is effected : nor is it material whether the person who is to have the property be a factor or not, for such an agreement may be made with a factor as well as any other in- dividual." The court, however, drew the legal inference, notwith- standing the verdict of the jury, that the oats which had been prepared for shipment on No. 54, for which the master had given a receipt in CHAP. V.] OF SUBSEQUENT APPKOPRIATION. 449 advance agreeing to deliver them to the plaintiff's agent, and of which about three-fourths had actually been put on board before the defend- ant made his appearance in Longford, were not received on account of the plaintiff, and had not been appropriated to the plaintiff in whole or in part. In the case of Aldridge v. Johnson, (q) as will presently be seen, it was held that where the vendor had filled 155 out of 200 sacks of grain for the vendee, in the vendor's own warehouse, and then emptied them again into the bulk, his election was determined as soon as he had filled each sack, and that the property had passed so far as regarded the 155 sacks. But it is remarkable that in Bryans v. Nix there is no suggestion, in the argument or in the decision, that there was any difference in the consignees' rights to the 400 barrels already loaded into the boat and the residue which had not been received by the master in fullfillment of 'the agreement that he was to deliver them to the plaintiff's agent in Dublin : nor was Bryans v. Nix quoted or referred to in Aldridge v. Johnson. § 496. In Godts v. Rose, (*•) in 1854, there was a conditional appro- priation, which was held not to pass the property, because Goats „ Eose the vendee had not complied with the condition. The sale ciKMumui was of five tons of- oil, " to be free delivered and paid for a PP ro P riation - in fourteen days." The plaiutiff, who was the vendor, sent to his wharfinger an order to transfer eleven specified pipes to the purchaser, and took the wharfinger's acknowledgment, addressed to the buyer, that these eleven pipes were transferred to the buyer's name. The plaintiff then sent this acknowledgment to the buyer, by a clerk, who also took an invoice of the oils, and asked for a check in payment. This was refused, on the ground that payment was only to be made in fourteen days. The clerk then demanded that the wharfinger's ac- knowledgment should be returned to him, and this was refused. The buyer then sent immediately to the wharfinger, and got possession of part of the oil, but before the delivery of the rest, the vendor counter- manded his order on the wharfinger. The latter, however, thinking that the property had passed, delivered the whole to the purchaser, against whom the action was then brought in trover. All the judges were of opinion that the property had not passed, because the order for its transfer was conditional on payment, the jury having found as (?) 7 E. & B. 885, and 26 L. J., Q. B. (r) 17 C. B. 229, and 25 L. J., C. P. 61. 296. 2F 450 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. a fact that the plaintiff's clerk did not intend to part with the oil or the transfer order without the check, and that he said so at the time. § 497. Aldridge v. Johnson (s) was decided by the Queen's Bench Aldrid in 1857. The plaintiff agreed to take from one Knight Johnson. one hundred quarters of barley, out of the bulk in Knight's granary, at £2 3s. a quarter, in exchange for thirty-two bullocks, at £6 apiece. The difference to be paid to Knight in cash. The bul- locks were delivered. The plaintiff was to send his own sacks, which Knight was to fill, to take to the railway for conveyance to the plaintiff, and to place upon trucks free of charge. Each quarter of barley would fill two sacks, and the plaintiff sent two hundred sacks to be filled, some of them with his name marked on them. Knight filled one hundred and fifty-five of the sacks, leaving in the bulk more than enough to fill the other forty-five sacks, but could not succeed, upon application at the railway, in obtaining trucks for conveying them. The plaintiff afterwards complained to Knight of the delay, and was assured that the barley would be put on the rail that day, but this was not done; and Knight finding himself on the eve of bankruptcy, emptied the barley out of the sacks into the bulk again, so as to make it undistinguishable. The action was detinue and trover, against the assignees of Knight for the barley and the sacks. Held, that the property in the barley, in the cne hundred and fifty-five sacks, had passed, but not in the barley which had not been filled into the other forty-five sacks. Campbell, C. J., said : " As soon as each sack was filled with barley, eo instanti the property in the barley in the sacks vested in plaintiff. I conceive there was here an a priori assent; not only was there a sale of barley, but it was a sale of part of a specific bulk, which the plaintiff had seen, and he sends the sacks to be filled out of that bulk, and out of that only could the vendee's sacks be filled. No subsequent assent was necessary, if the sacks were properly filled." His Lordship then showed that there was also a subsequent assent, and added : "Nothing whatever remained to be done by the vendor, for he had actually appropriated a portion of the bulk to the vendee." Erie, J., said : " Sometimes the right of ascertainment rests with the vendee, sometimes solely with the vendor. In the present case the election rested with Knkjht alone: he had to fill the sacks, which were to be sent to him for that purpose by the vendee, and as soon as he had done an outward act, indicating his election, viz., by fill- (s) 7 E. & B. 885, and 26 L. J., Q. B. 296. CHAP. V.J OF SUBSEQUENT APPROPRIATION. 451 ing the sacks, and directing them to be sent to the railway, the property passed." The decision in Aldridge v. Johnson was followed by the Ex- chequer of Pleas, in 1857, in Langton v. Higgins,(«) j^g^,,. (ante § 377.) Hisgins - § 498. In 1863, Campbell v. The Mersey Docks (w) was decided in the Common Pleas. A cargo of cotton, ex Bosphorus. & ) r i Campbell v. consisting of five hundred bales, arrived in the defend- The Mersey ants' docks in September, 1862. The plaintiff was the broker for them, and had himself bought two hundred and fifty bales, and sold the remainder to other parties. All had one mark, but the numbers were only affixed by the defendants when the bales were landed and weighed. On the 13th of September, a certificate or ware- house warrant was sent to the plaintiff for two hundred and fifty bales, "numbered from 1 to 250, entered by J. P. Campbell, on the 10th of September, 1862; rent payable from the 15th of September." The plaintiff thereupon paid for the two hundred and fifty bales, getting the warrant endorsed to him with a delivery order, " for the above- mentioned goods," dated the 15th of September. On the 7th of October, the plaintiff resold the cotton, and sent the warrant, endorsed by him, with a delivery order for the cotton therein mentioned. The buyer repudiated the contract, on the ground that the cotton was not equal to the samples. The plaintiff then demanded back the warrant, and was told by the defendants, for the first time, that two hundred of the bales, numbered from 1 to 250, had been inadvertently deliv- ered on the 11th and 13th of September to other persons. They offered him a fresh warrant for other numbers. He declined, and brought suit for the value of the two hundred and fifty bales. On the trial, the defendants insisted that the appropriation by the com- pany, of the two hundred and fifty bales, out of the larger number, was not sufficient to vest the property in those specific bales in the plaintiff, without his assent, and Keating, J., sustained this view. One of the jury then asked his Lordship if the plaintiff's endorse- ment of the warrant (on the resale) did not amount to such assent, and the learned judge said, it was not conclusive, but that it was open to the company to show that the appropriation was a mistake on the part of one of their clerks. The verdict was for the defendants, and (0 4 H. & N. 402, and 28 L. J., Ex. («) 14 C. B. (N. S.) 412. 2S2. 452 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. the court refused to order a new trial. Erie, C. J., said: "There certainly was some evidence of appropriation, and the question left to the jury upon that was, whether the evidence of that appropriation did not arise from a mistake on the part of the company's clerk. The learned judge is not dissatisfied with the finding of the jury upon that question." Willes, J., also said : " The real question was whether the appropriation of Nos. 1 to 250 was not a mistake. The jury found observations tnat '* was - No property in the goods, therefore, ever ondicta. vested in the pi a i nti ff» gut both the learned judges ex- pressed an extra-judicial opinion upon a point, confessedly "not ma- terial," to which attention must be directed. Erie, J., said : "It has been established by a long series of cases, of which it will be enough to refer to Hanson v. Meyer, 6 East 614; Rugg v. Minett, 11 East 210; and Rhode v. Thwaites, 6 B. & C. 688, that the purchaser of an unascertained portion of a larger bulk acquires no property in any part until there has been a separation and an appropriation assented to both by vendor and vendee. Nothing passes until there has been an assent, express or implied, on the part of the vendee." Willes, J., assented to this statement of the law, and said : " Perhaps the case of Godts v. Rose, 17 G. B. 229, is even more in point to show that there must not only be an appropriation, but an appropriation assented to by the ven- dee. The assent of the vendee may be given prior to the appropri- ation by the vendor; it may be either express or implied, and it may be given by an agent of the party, by the warehouseman or whar- finger, for instance." Care must be taken not to misconceive the true sense of these dicta. They do not mean that a subsequent assent by the buyer to the appro- priation made by the vendor is necessary. Willes, J, states this plainly, and Erie, J., says that there must be an assent of the vendee express or implied. This assent is implied, as shown by the language of Erie, J., himself in Aldridge v. Johnson, and in several of the cases already quoted, where by the terms of the contract the vendor is vested with an implied authority to select the goods, and has determined an election by doing some act which the contract obliged him to do, and which he could not do till an appropriation was made. That this is the real signification of these dicta is also fully shown in the strongly contested case of Brown v. Hare, (x) in which the unanimous decision of the Exchequer Chamber was likewise delivered by Erie, J. (x) 3 H. & N. 484, and 27 L. J., Ex. 822, and 29 L. J., Ex. 6. 372 ; afterwards in Ex. Ch., 4 H. & N. ' CHAP. V.] OF SUBSEQUENT APPROPRIATION. 453 § 499. In this case the defendant, at Bristol, bought from the plain- tiffs, merchants of Rotterdam, through their broker, re- „ . „ . „ Brown ». Hare. siding at Bristol, "20 tons of best oil, at 47s." The plaintiffs wrote to the broker on the 19th of April that they had secured ten tons for the defendant, deliverable in September, and the defendant wrote back "send them by next steamer." The oil was to be shipped "free on board." On the 7th of September the plaintiffs from Rotterdam wrote to the broker to inform the defendant, which he did, that they had shipped " five tons of rape oil for defendant," and on the 8th they forwarded the invoices and bill of lading. The bill of lading was for delivery to the plaintiffs' " order or assigns," and was endorsed by them on the 8th of September, " Deliver the goods to the order of Hare & Co." (the defendants.) The invoices specified the casks by marks and numbers ; and the bill of lading also identified them in the same way. The letter to the broker containing the invoices and bill of lading thus endorsed reached him on the 10th, after business hours, and on the 11th he sent them to the defendant. The ship was actually lost before the documents were received by the broker, and he knew it, but the defendant did not hear of the loss till about two hours after receiving the bill of lading, and he then imme- diately returned it to the broker. Bramwell, B., dissented from the majority of the court, thinking that there had been no appropriation to pass the property, but Pollock, C. B., delivered the judgment, hold- ing that the property had passed, and that the buyer must bear the loss; on the ground, first, that the contract to deliver "free on board" meant that it was to be for account of the defendant as soon as deliv- ered on board ; secondly, that taking the bill of lading to the shippers' own order, and then endorsing it to the defendant, was precisely the same in effect as taking the bill of lading to the order of the defend- ant; thirdly, that the bill of lading having been forwarded to the broker only that he might get the defendant's acceptance on handing it over, as provided in the contract, this did not prevent the property from passing, the goods represented by the bill of lading being in the same legal state as if in a warehouse, subject to the purchaser's order, but not to be taken by him without payment of the price. § 500. In error to Exchequer Chamber, this judgment was unani- mously affirmed, the court consisting of Erie, Williams, Crompton, Crowder, and Willes, JJ. Erie, J., in giving the opinion, said, that " The contract was for the purchase of unascertained goods, and the 454 EFFECT OF CONTRACT IN PASSING PBOPEBTY. [BOOK II. question has been, when the property passed. For the answer the contract must be resorted to, and under that we think the property passed when the goods were placed free on board in performance of the contract. In this class of contracts the property may depend, accord- ing to the contract, either on mutual consent of both parties, or on the act of the vendor communicated to the purchaser, or on the act of the vendor alone. If the bill of lading had made the goods to be deliv- ered ' to the order of the consignee/ the passing of the property would be clear. The bill of lading made them ' to be delivered to the order of the consignor,' and he endorsed it to the order of the consignee, and sent it to his agent for the consignee. Thus, the real question has been on the intention with which the bill of lading was taken in this form, whether the consignor shipped the goods in performance of his contract to place them free on board, or for the purpose of retaining control over them and continuing owner contrary to the contract. The question was one of fact, and must be taken to have been disposed of at the trial ; the only question before the court below or before us being, whether the mode of taking the bill of lading necessarily pre- vented the property from passing. In our opinion, it did not, under the circumstances." (y) § 501. In Tregelles v. Sewell, (z) in 1863, both buyer and seller „ „ were residents of London, and the contract was made Tregelles v. ' seweii. t ] iere _ The purchaser bought "300 tons Old Bridge rails, at £5 14s. 6d. per ton, delivered at Harburg, cost freight, and insurance: payment by net cash in London, less freight, upon hand- ing bill of lading aud policy of insurance. A dock company's weight note, or captain's signature for weight, to be taken by buyers as a voucher for the quantity shipped." Held, by all the judges iu the Exchequer, and afterwards in the Ex. Ch., that by the true construc- tion of this sale the seller was not bound to make delivery of the goods at Harburg, but only to ship them for Harburg at his own cost, free of any charge against the vjurchaser, and that the property passed as soon as the seller handed the bill of lading and policy of insurance to the purchaser. The difficulty that sometimes exists in construing contracts involv- The Calcutta ing the subject now under consideration, could hardly be DeMattos. illustrated by a more striking example than the recent (y) And see Ogg r. Shuter, as reported appeal, 1 0. P. D. 47, C. A., and is fully in the Court of Common Pleas, L. E., 10 considered, post % 562. C. P. 359. The decision was reversed on (z) 7 H. & N. 571. CHAP. V.] OF SUBSEQUENT APPROPRIATION. 455 case of The Calcutta Company v. De Mattos, (a) argued by very emi- nent counsel in the Queen's Bench in Michaelmas Term, D j vers j ty0 f 1862, and held under advisement till the 4th of July, opinion - 1863, when the judges were equally divided in opinion ; Coekburn, C. J., and Wightman, J., differing from Blackburn and Mellor, JJ. When the cause was heard in error in the Exchequer Chamber, (6) the diversity of opinion was still more marked, for while three judges (Erie, C. J., Willes, J., and Channell, B.) concurred in opinion with Blackburn and Mellor, JJ., and one judge (Williams, J.) agreed with Coekburn, C. J., and Wightman, J., two other judges (Martin and Pigott, BB.) differed from both. § 502. The facts were these. On the 1st of May, 1860, defendant wrote to the company, proposing to supply them with " 1000 tons of any of the first-class steam-coals on the Admiralty list, at my option, delivered over the ship's side at Rangoon at 45s. per ton of 20 cwt., the same to be shipped within three months of the date of acceptance of this offer. Payment of one-half of each invoice value in cash, on handing you bills of lading and policy of insurance to cover the amount, and balance by like payment on delivery," &c, &c. The reply of the 4th of May accepted the tender with the follow- ing modifications and additions: "The selection of the particular de- scription to be at the company's option * * * half the quantity, say not less thau 500 tons, to be shipped not later than 10th June prox., and the remainder in all that month * * * payment one- half of each invoice value by bill at three months on handing bills of lading and policy of insurance to cover the amount, or in cash under discount at the rate of £5 per centum per annum, at your option, and the balance in cash at the current rate of exchange at Rangoon." The contract was closed upon these conditions, and defendant in perform- ance of it chartered the ship Waban for Rangoon, the company being no party to the charter, and loaded her with 1166 tons of coal, taking a bill of lading which expressed that the coal was shipped by him, and was to be delivered at Rangoon to the. agent of the company or to his assigns, freight to be paid by the charterer as per charter-party. The charter-party stipulated that the freight was " to be paid in Lon- don on unloading and right delivery of the cargo at 40s. per ton on the quantity delivered * * * one-quarter by freighter's accept- ance at three months, and one-quarter by like acceptance at six months («) 32 L. J., Q. B. 322. (6) 33 L. J., Q. B. 214, in Ex. Ch. 456 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. from the final sailing of the vessel from her last port in the United Kingdom/the same to be returned if the cargo be not delivered at the port of destination ; and the remainder by a bill at three months from the date of the delivery at the freighter's office in London of the cer- tificate of the right delivery of the cargo." The defendant also effected insurance for £1400 and handed the bill of lading and policy to the company, in pursuance of the contract, to- gether with this letter : " 5th of July, 1860. Herewith I hand you Ocean Marine policy for £1400 for this ship, as collateral security against the amount payable by you on account of the invoice order, say £1311 15s., receipt of which please own." The answer acknowl- edged the receipt of the policy " to be held as collateral security for the payment to you of £1311 15s. on account of the invoice of that ship- ment." The invoice value of the coals was £2623 10s., of which the com- pany paid half to defendant on the 5th of July, and the vessel sailed on the 8th, but never arrived at her destination, nor were the coals delivered in conformity with the contract. § 503. On these facts it became necessary to decide what was the effect of the contract on the property in the goods, and the right to the price from the time of the handing over the shipping documents and paying half the invoice value. The opinion of Blackburn, J., was the basis of the final judgment, and was approved by the majority of the judges. It is so instructive on the whole subject, as to justify copious extracts. The learned judge said : " There is no rule of law to prevent the parties in cases like the present from making whatever bargain they please. If they use words in the contract showing that they intend that the goods shall be shipped by the person who is to supply them on the terms that when shipped they shall be the consignee's property and at his risk, so that the vendor shall be paid for them whether delivered at the port of destination or not, this intention is effectual. Such is the common case where goods are ordered to be sent by a carrier to a port of destina- tion. The vendor's duty is in such cases at an end when he has delivered the goods to the carrier, and if the goods perish in the car- rier's hands, the vendor is discharged and the purchaser is bound to pay him the price. See Dunlop v. Lambert, 6 CI. & Fin. 600. If the parties intend that the vendor shall not merely deliver the goods to the carrier, but also undertake that they shall actually be delivered CHAP. V.] OF SUBSEQUENT APPKOPBIATTON. 457 at their destination, and express such intention, this also is effectual. In such a case, if the goods perish in the hands of the carrier, the vendor is not only not entitled to the price, but he is liable for what- ever damage may have been sustained by the purchaser in consequence of the breach of the vendor's contract to deliver at the place of destina- tion See Dunlop v. Lambert. But the parties may intend an inter- mediate state of things; they may intend that the vendor shall deliver the goods to the carrier, and that when he has done so he shall have fulfilled his undertaking, so that he shall not be liable in damages for a breach of contract, if the goods do not reach their destination, and yet they may intend that the whole or part of the price shall not be payable unless the goods do arrive. They may bargain that the prop- erty shall vest in the purchaser as owner as soon as the goods are shipped, that then they shall be both sold and delivered, and yet that the price (in whole or in part) shall be payable only on the contingency of the goods arriving, just as they might, if they pleased, contract that the price should not be payable unless a particular tree fall, but with- out any contract on the vendor's part in the one case to procure the goods to arrive, or in the other to cause the tree to fall." Referriug to the terms of the contract under consideration, the learned judge pro- ceeded to remark : " It is clear that the coals are to be shipped in this country, on board a vessel to be engaged by De Mattos, to be in- sured, and the policy of insurance and the bill of lading and invoice to be handed over to the company. As soon as Mattos, in pursuance of these stipulations, gave the company the policy and bill of lading, he irrevocably appropriated to this contract the goods which were thus shipped, insured, and put under the control of the company. After this he could never have been required nor would he have had the right to ship another cargo for the company ; so that from that time, what had originally been an agreement to supply any coals answering the description, became an agreement relating to those coals only, just as much as if the coals had been specified from the first. * * * In construing this contract, the prima facie construction is that the parties intended that the property in the coals vested in the company, and the right to the price in De Mattos, as soon as it came to relate to specific ascertained goods, that is, on the handing over of the documents, and the inquiry must be whether there is any sufficient indication in the contract of a contrary intention. As to one-half of the price, the in- tention that it should only be paid ' on completion of the delivery at 458 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. Rangoon,' seems to me as clearly declared as words could possibly de- clare it, and consequently I think as to that half of the price no right vested in De Mattos unless and until there was a complete delivery at Rangoon. But consistently with this there might be an intention that there should be a complete vesting of the property in the goods in the company, and a complete vesting of the right to the half of the price in De Mattos, so as in effect to make the goods be at the risk of the company, though half the price was at the risk of De Mattos; so that the goods were sold and delivered, though the payment of half the price was contingent on the delivery at Rangoon, and this I think is the true legal construction of the contract." Wightman, J., was of opinion that on the true construction of the contract the vihole cargo remained the property of the vendor, and at his risk: that he was bound to deliver the whole at Rangoon, and that the transfer of the policy and bill of lading to the company was a security to protect the company in recovering back their advance of one-half the price in the event of De Mattos' failure to make delivery at Ran- goon. Cockburn, C. J., thought that the property in the coals passed to the company, subject to the vendor's lien, for the payment of the price; that the coals, when shipped, were specifically appropriated to the com- pany, and that by the transfer of the bill of lading they obtained dominion of the cargo, and could have disposed of it at their pleasure. But that De Mattos remained bound to make delivery in Rangoon, and by breach of that contract was bound to return the half of the price already paid, and to lose his claim for the remainder. In the Exchequer Chamber, Erie, C. J., expressed his concurrence with the opinion of Blackburn, J., as to the true meaning and effect of the contract, and Willes, J., and Channell, B., did the same. Wil- liams, J., merely expressed his assent to the views of Cockburn, C. J. Martin, B., gave his view of the true intention of the parties, with- out declaring whether and when, if at all, the property passed, but remarked : " I cannot say that I agree with my brother Blackburn's judgment:" and Pigott, B., expressed his concurrence with the inter- pretation of the contract by Martin, B. § 504. In Jenner v. Smith, (c) where the sale was made by sample, jenner v auc ^ was °^ * w0 pockets of hops out of three that were lying Smith. at a specified warehouse, the vendor instructed the ware- (c) L. B., 4 C. P. 270. CHAP. V.] OF 8TTB8EQUENT APPROPRIATION. 459 houseman to set apart two out of the three pockets for the purchaser, and the warehouseman thereupon placed on two of them a " wait- order card," that is a card on which was written, " to wait orders," and the name of the vendee : but no alteration was made in the warehouse- man's books, and the vendor remained liable for the storage. The vendor then sent an invoice with the numbers and weights to the buyer of these two pockets, with a note at the foot, "The two pockets are lying to your order." Held, that the property had not passed, because the buyer had not made the vendor his agent for appropriating the goods to the contract, nor abandoned his right of comparing the bulk with the sample, or of verifying the weight. There was neither pre- vious authority nor subsequent assent to the appropriation. In Ex parte Pearson, (d) the purchaser had ordered and paid for the goods, and the company loaded the goods on a railway to Es:parte ^^^ his address, and sent him the invoice after the presenta- eon ' tion of a petition for winding up the company, but before order made, and it was held that the property had passed to the purchaser and could not be taken by the official liquidator as assets of the company. § 505. Before leaving this branch of the subject, it is well to notice that the property does not pass even when the vendor has the power to elect, unless he exercise it in conformity with tion must be°m the contract. He cannot send a larger quantity of goods with the . Paine, 57 Ga. 50 ; opinion. See Bodgers v. Phillips, 40 N. Divessy v. Kellogg, 44 111. 114 ; Stafford Y. 519, and see ante § 161, note 12.) Bar- v. Walter, 67 111. 83; Merchants' Dis- ry v. Palmer, 19 Me. 303; Torrey v. Cor- patch Co. *. Smith, 76 III. 542 ; Wolf v. liss, 33 Me. 333 ; Woolsey v. Bailey, 27 N. Dietzsch, 75 111. 205 ; Ellis v. Boche, 73 H. 217 ; Smith o. Smith, 27 N. H. 244 ; 111. 280; Bliss v. Geer, 7 Bradw. 612; Garland v. Lane, 46 N.H. 245; Arnold v. ■Garretson v. Selby, 37 Iowa 529 ; Sedg- Prout, 51 N. H. 587 ; Armentrout v. St. wick u. Cottingham, 54 Iowa 512; Spencer Louis, &e., B. E., 1 Mo. App. 158; v. Hale, 30 Vt. 314 ; Strong v. Dodds, 47 Walker ». The State, 9 Tex. App. 39 ; Vt. 348. (These two Vermont cases hold Schlesinger v. Stratton, 9 B. 1. 578 ; Mack that delivery to a carrier named by the v. Lee, 13 B. I. ; Hobart v. Littlefield, •buyer is an acceptance by the buyer, such 13 B. I. . as will satisfy the statute of frauds. But 23. 55 Penna. 300. this is not in accord with the general 24. 22 Wis. 488. 470 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK IT. master, and that his responsibility only began when they reached the vessel. § 524. Where goods are consigned to one who has not ordered them, consignment or agreed to take them, it is manifest that ordinarily title ord!redfto°i will not pass until they have been accepted by him, for creator. want of that mutual assent which is essential to every sale. See ante § 38 and notes. But where a shipment is made to a creditor with a view to the application of the proceeds of the property to the debt, under a general arrangement for that purpose, the ques- tion whether title will pass or not is one of difficulty, and the cases differ. In Elliott v. Bradley, 25 the owner of goods consigned them to his factor, to whom he was indebted, but before either the goods or any order or receipt for them reached the factor, they were attached in transit by the creditor of the shipper. This attachment was sustained, the court holding that while in transit the goods remained at the risk and under the control of the shipper. This is a questionable case, and has been considered overruled by Davis v. Bradley. 26 In that case, however, the consignee accepted drafts on the faith of the particular consignment, and received receipts, and this was held to distinguish the case from Elliott v. Bradley. § 525. These Vermont cases were considered, and Elliott v. Brad- ley was approved and followed by the Supreme Court of Iowa, in Hodges v. Kimball. 27 In that case five car loads of grain were con- signed by rail to a consignee to whom the consignor was indebted, but before the cars were removed from the station where loaded, the grain was attached by a creditor of the shipper. This was held a good attachment, because the receipts had not been sent to the consignee at the time of the attachment. This case is supposed by Day, J., giving the opinion, to be supported by Bank of Rochester v. Jones, 28 but it is not, for the latter case was one of delivery subject to the payment of certain drafts, and title was reserved to secure such payment. He also cites Bonner v. Marsh. 29 In that case the court says that the 25. 23 Vt. 217. Heisk. 316 , Oliver „. Moore, 12 Heisk.. 26. 28 Vt. 118. 482. In these Tennessee cases the title 27. 49 Iowa 577. of an attaching creditor of the consignor 28. 4 N. Y. 497. was preferred to that of the consignee, 29. 10 Sm. & M. 376. To the same although the consignee had received the effect see Woodruff v. Nashville, &c, JR.. bill of lading and paid freight, and made- It., 2 Head 87; Saunders v. Bartlett, 12 advances on the property. CHAP. V.J OF SUBSEQUENT APPKOPKIATION. 471 question whether property shall pass is one of intent. If the goods are consigned under a contract of sale, the property passes by delivery to the carrier with a bill of lading to the buyer, but if there be no contract of purchase the shipper's title will not be divested, and though the consignee is a creditor of the shipper, he still acquires no interest in the goods, but only in the proceeds of sale. Until the goods reached the consignee they were liable to attachment by the shipper's creditors. § 526. In contrast with these decisions is the case of Strauss v. Wessel. 30 In that case the consignor sent a car-load of pork to his creditor, writing at the same time, " we deliver you this load on our indebtedness," and inclosing invoice, but keeping the bill of lading, which named the creditor as consignee. The property was attached in transit by a creditor of the consignor. The consignee replevied. Scott, J., said : " The relation of the parties to this shipment differed in no substantial respect from that of the case in which goods are shipped by a vendor to a purchaser who has previously ordered and paid for them. And in such case, it is well settled that the delivery of goods to a common carrier for conveyance to the purchaser, is equivalent to a delivery to the purchaser himself. The carrier is, in. that case, in contemplation of law, the bailee of the person to whom, not by whom, the goods are sent." This view best accords with the authorities. 31 § 527. An unauthorized delivery to a carrier will not pass the property. In Hague v. Porter, 32 a merchant in Newark . J 1 r J ° Unauthorized ordered 100 lamps from a merchant in New York. They delivery to a 1 ' carrier. were sent by a carman, but the Newark merchant refused to receive them, and they were left on the sidewalk. The seller sued for the price. Cowen, J., said that the suit should be for not accept- ing, the buyer not having directed the goods sent by carrier. " Such direction may certainly be implied from the course of trade, but I do not see here any direction so to send, either express or implied." § 528. The delivery to the carrier must be with ordinary care, to secure safe carriage and delivery to the buyer. Thus, a .... iii i i mi i Misdirection. misdirection, whereby the goods are lost, will prevent the property from passing. 33 It would seem that the consignor should 30. 30 Ohio St. 211. Loyd v. Wight, 20 Ga. 574; Hanauer v. 31. See Dows v. Cobb, 12 Barb. 310; Bartels, 2 Col. 514. Gibson v. Stevens, 8 How. 384, 397 ; 33. Woodruff v. Noyes, 15 Conn. 334 ; Bailey v. Hudson Eiver R. K. Co., 49 N. Garretson v. Selby, 37 Iowa 529, and Y. 70, 74. cases cited. 32. 3 Hill 141. To the same effect, see 472 EFFECT OF CONTRACT IN PASSING PROPERTY. [BO'JK II. Notice of con- give notice of the shipment in order that the consignee Bignment. may be on the i 00 k out f or tne g00 ds. But in Crook v. Cowan, 34 an order was sent by mail for carpets, to be sent by express. After some days' delay they were sent, but the buyer having written and telegraphed in the interim to learn whether his order would be filled, and having received no reply, bought other carpets, and refused to receive those he had ordered. The court held (Eodman, J., dissent- ing) that he was liable for the price. This was followed in Ober v. Smith, 35 where guano was ordered and shipped, but never reached the buyer, who was not notified of the shipment. If he had been notified he would probably have received it. A suit for the price was sustained. Faircloth, J., said : "The non-delivery was not owing to the negligence of the plaintiffs, and was probably occasioned by the fault of the carrier. It is contended, however, that the plaintiffs can- not recover, because they sent no bill of lading to the defendant. Such bills are not essential in contracts of sale and delivery like the present." Rodman, J., dissented, holding that the offer should have been accepted and the asseut siguified in a reasonable time, and that mere shipment of the goods was not such assent until the article was received and the assent thereby communicated, and until received the risk of loss was the shipper's. The dissent is based on the further ground that the vendor had neglected to take due precautions for safe delivery, and Clarke v. Hutchins, 14 East 475, is cited. The dissent- ing opinion is an able one, and in view of the decisions that it is essen- tial to a contract of sale that the assent to an offer should be communi- cated, will probably be preferred to the opinion of the court. 36 § 529. An appropriation of goods not according to contract will not pass the property unless the buyer accepts them. 37 cording to con- This is illustrated by the case of Gardner v. Lane. 38 In that case the contract was to deliver 1.35 barrels of No. 1 mackerel in payment of a debt. Being pressed to make delivery, the seller went with the buyer to a shed and counted out 85 barrels from a large lot, supposed to be all No. 1, but in fact 46 barrels were No. 3. They then went to a store and counted off from a large number two rows of barrels, 48 in number, supposed to be mackerel, but in fact 34. 64 N. C. 743. Wolf v. Dietzsch, 75 111. 205 ; Ellis v. 35. 78 N. C. 313. Eoche, 73 111. 280; Brown v. Berry, 14 36. See ante § 38, note 3, and post \ 532. N. H. 459 ; Brown t>. Foster, 113 Mass. Craig v. Harper, 3 Cush. 158, 160. 136 ; Zaleski v. Clark, 44 Conn. 218. 37. Divessy v. Kellogg, 44 111. 114; 38. 9 Allen 492. CHAP. V.] OF SUBSEQUENT APPROPRIATION. 473 containing only salt. Before they were removed, they were attached for a debt of the seller. The buyer replevied. The judge charged the jury that the buyer, finding that the goods were not as agreed, might return or keep them at his option, and the jury found for the buyer. But on exceptions this verdict was set aside. Bigelow, C. J., said : " Where parties to a contract of sale agree to sell a certain kind of property not yet ascertained, distinguished or set apart, and by mis- take a delivery is made of articles differing in their nature from those agreed to be sold, no title passes. They are not included withiu the contract of sale — the vendor has not agreed to sell nor the vendee to purchase them ; the subject matter has been mistaken, and neither party can be held to a contract to which he has not given his assent." Referring to cases cited by counsel, he said that in those cases there was no mistake concerning the goods, the mistake was only as to the quality of the article. "The error at the trial consisted in losing sight of the distinction between cases of this character and the one at bar ; between an agreement to sell a specified article, concerning the quality of which the parties were mistaken, and an agreement to sell one arti- cle, and a delivery by mistake of a wholly different article. In the former the title passes at the election of the vendee ; in the latter it does not." It was therefore held that the property in the No. 1 mackerel, only, passed. § 530. On the new trial the buyer offered to prove that the seller knew the contents of the barrels, and that therefore the case was one of fraud and not mistake, but the court held that this did not alter the case, unless the buyer, on discovery of the fraud, assented to receive the articles delivered, and that was not the case before the court ; and this was sustained on exceptions. 39 On this judgment the attaching creditor abandoned all claim to the No. 1 mackerel, and asked that the salt and No. 3 mackerel should be delivered to the attaching officer, and such order would have been made, but that it then appeared that ■the writ of attachment had never been entered in court, and thereby .the attachment was dissolved. In this state of affairs the judge at cir- cuit ordered an issue to try the question, whether the seller falsely and fraudulently sold and delivered the salt and the No. 3 mackerel as No. 1 mackerel, and the jury finding that he did, the court ordered judg- ment for the buyer (plaintiff in replevin) for all of the mackerel and salt. On exceptions this judgment was sustained. 40 Chapman, J., 39. 12 Allen 39. 40. 98 Mass. 517. 474 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II, said : " The plaintiff sued out the writ of replevin, describing the property as No. 1 mackerel. When the officer took it, the plaintiff discovered that a part was salt and a part No. 3 mackerel. He then altered his writ, and described the property correctly as salt and No. 3 mackerel. This was an election to take the property as it was. Against the fraudulent vendors, this election to take the property was valid. A fraudulent vendor cannot reclaim property sold by him, be- cause it is not what he represented it to be. And the vendee may keep it if he will, and sue for damages." § 531. Where the seller delivers a greater amount of the article ordered than the buyer has ordered or agreed to receive, Delivery of * ° ' more than con- the buyer may repudiate the whole, and if he accepts part tract requirea. . . he will be liable to pay for so much only as he takes. But in some cases where selection is not material, the bulk being uni- form in quality, the course of trade warrants a tender of a larger quantity than that purchased, from which the buyer is bound to take the portion bought by him. The most frequent cases of such appro- priation are those of a certificate entitling the buyer to a certain quan- tity of grain or oil out of a mass. See last chapter, § 477, et seq. 41 In England v. Mortland, 42 the agreement was to deliver 1000 cords of wood on the river bank for $3 per cord. There was piled on the bank a greater quantity than that required, and the owner made sales therefrom to various purchasers. The buyer took part of the quan- tity for which he had bargained from the pile, but refusing to take the rest was sued for the price, on a count for goods sold and delivered. The seller obtained a verdict, but it was set aside on appeal. Hayden, J., said : " According to the respondent's showing, the appellant had no greater right in the wood than any person who by chance wished to buy. To whatever refinement the doctrine of constructive delivery may be pushed, it cannot enable a vendor to assert and deny his own- ership over the same property at the same time." § 532. In Rommel v. Wingate, 43 the order was for 375 tons of coal to be shipped immediately. The coal was not shipped until after 10 days, (the delay being without fault of the seller) and the quantity shipped was 392 tons. The buyers refused to receive it, and were sued for damages for non-acceptance. Morton, J., said that the contract 41. See, also, Hutchinson v. Common- Mich. 86. wealth, 82 Penna. 472, 482 ; Wilkinson v. 42. 3 Mo. App. 490. Stewart, 85 Penna. 255; Smith v. Friend, 43. 103 Mass. 327, 330. 15Cal. 124: Iron Cliffs Co. v. Buhl, 42 CHAP. V.J OF SUBSEQUENT APPEOPEIATION. 475 bound defendants to receive 375 tons at once. " It did not bind them to take a larger cargo, or one which could not be shipped substantially as speedily as proposed by the plaintiff in his letter. If, by a change of circumstances, the plaintiff was unable to comply with this order of the defendants, he should have so informed them. He had no right to substitute a larger cargo, deliverable at a moreremote time, in place of the cargo ordered by the defendants." § 533. In Barton v. Kane, 44 the order was for 5000 cigars, and the seller sent 5625, writing, " I send you a few more than ordered so as to fill the case." The buyer refused to receive them, objecting to the quality, and stored them away for the seller, and they were destroyed by fire. The seller sued for the price and obtained a verdict. On appeal it was set aside, and the court held that a nonsuit ought to have been granted. Dixon, C. J., said : " The order was for 5000, but the plaintiff sent 5625. This was no compliance with the order, and im- posed no obligation on defendant, without showing an acceptance in fact by him after the cigars were received, the burden of which was upon the plaintiff. To constitute a delivery to the carrier, a delivery to the consignee, so as to pass the title, the goods must correspond in quantity as well as quality with those named in the order." Whether the buyer on receiving the goods is bound to give notice of his objec- tions, or otherwise be deemed to have waived them and accepted the goods, was considered and not decided, but on a later appeal in the same case it was intimated that failure to give notice of objection was equivalent to an acceptance. 45 § 534. In Downer v. Thompson, 46 n an order for 250 barrels of cement, 260 were sent by boat. The buyer refused to take Waiverof ob _ them from the boat, objecting solely on the ground of S™^! 1 " quality. On a suit for the price, a nonsuit was granted and hvery - sustained in the Supreme Court, 47 because the delivery was of too much. But this was reversed in the Court of Errors and Appeals, because the seller claimed only the price for 250 barrels, and there was evidence that he intended only to answer the order for that number by delivering more. " An over-performance could only be beneficial to defendant. If the rule be rigid that no more shall be delivered than was contracted for, then the least overplus must vitiate the delivery. But if some latitude is to be allowed for the sake of abundant caution, 44. 17 Wis. 38, 45. 46. 6 Hill 208. 45. 18 Wis. 262. 47. 2 Hill 137. 476 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. who is to decide how much excess there may be without vitiating the delivery? This is a question for the jury alone to decide." It was further held that by objecting solely on the ground of quality, the buyer waived any objection arising from excess of number. 48 In Larkin v. Mitchell, 49 the order was for 500,000 shingles. These were sent, and 160,000 more. The buyer took the amount of his order and refused to receive the rest, except to sell on commission. They were burned, and it was held the seller's loss. § 535. If only part of the goods ordered are sent, the title will not pass to the buyer unless he accepts them. He may, than the con- however, be deemed to have accepted them by failing to tract requires. . „ . . ~ , CA give notice of his refusal. & u In Rochester, &c, Oil Co. v. Hughey, 51 the contract was for four barge loads of oil. When the barges were partly filled they were burned, and this was held the seller's loss, and that the oil did not be- come the property of the buyer as fast as it entered' the barge. § 536. The general principle is that a chattel ordered to be manu- chatteis made fectured continues the property of the manufacturer until to order. completed and delivered or tendered. See ante § 408, et seq. 52 Whether, when a chattel is manufactured to order, the property in Acceptance of it passes upon its completion without acceptance by the chattel made r . r . r ....... _ . to order buyer, is a question upon which the decisions conflict. In Bement v. Smith, 53 a machine was built pursuant to a contract and tendered to the customer, who refused to receive it. He was held liable in an action for the price. Savage, C. J., said : " It was not the plaintiff's fault that the delivery was not complete ; that was the fault of the defendant. There are many cases in which an offer to perform an executory contract is tantamount to a performance. This I apprehend is one of them." 54 § 537. In Ballentine v. Robinson, 55 the agreement was to construct 48. See Southwell v. Beezley, 5 Oreg. Forsyth v. Dickson, 1 Grant (Pa.) 26 ; 143 ; Bailey v. Smith, 43 N. H. 141. Andrews v. Durant, 11 N. Y. 35 ; Veazie 49. 42 Mich. 296. „. Holmes, 40 Me. 69 ; Gregory v. Stry- 50. Downs v. Marsh, 29 Conn. 409 ; ker, 2 Denio 628. Defenbaugh v. Weaver, 87 111. 132. 53. 15 Wend. 493. 51. 56 Penna. 322. See Becords v. 54. Cites Towers v. Osborn, Strange Philadelphia, &c, B. B., stated ante \ 506, and Crookshank v. Burrell, 18 Johns. 515. 58. 52. See Pettengill v. Merrill, 47 Me. 55. 46 Penna. 177. 109 ; Schneider v. Westerman, 25 111. 514 ; CHAP. V.] OF SUBSEQUENT APPROPRIATION. 477 an engine for $535. The engine was constructed, and the buyer re- fusing to take it, the seller sued for breach of the contract, and was- held to be entitled to recover the contract price, although the engine remained in his shop. On the authority of these decisions Shawhan v. Van Nest 56 was decided. In that case a carriage was ordered and made, and the cus- tomer refusing to accept it, was held liable to pay the contract price. § 538. In Mount Hope Iron Co. v. Buffintou, 57 the buyers of an engine received it at a wharf and removed it to their works. The seller had agreed to set up the engine, the buyers furnishing certain materials. All the price had been paid except twenty per cent., re- served until the engine should be started in a satisfactory manner. The engine was attached by a creditor of the seller, and the buyer brought replevin. Wells, J., said that title passed on delivery at the wharf to the buyers. " They might perhaps have rescinded the con- tract and restored the title, upon a breach by the other party, or a failure to complete and start the engine in a satisfactory manner. But they might also elect to retain possession and title, relying upon their contract, and the margin of twenty per cent, of the price in their hands for their indemnity." In Goddard v. Binney, 58 a carriage was built on the buyer's order and marked with his name, and he was notified to come and take it. Before he had seen it, and before he had paid anything on it, the sell- er's shop was burned and the carriage destroyed. The above facts, together with the buyer's request that the carriage should not be sold, was held to throw the risk of loss upon the buyer. In Thorndike v. Bath, 59 four unfinished pianos were transferred by bill of sale, for their estimated value when finished, and the maker agreed to finish them. He did finish and sell two of them to a bona fide purchaser. The title of the first purchaser was sustained. 60 § 539. On the other hand, many cases accord with the English rule- 56. 25 Ohio St. 490. *. Holmes, 5 Cush. 147 ; Veazie v. Holmes, 57. 103 Mass. 62. 40 Me. 69 ; Paine v. Young, 56 Md. 314 ; 58. 115 Mass. 450, 456. Hadly v. Gano, Wright (Ohio) 554; Hyde 59. 114 Mass. 116. v, Lathrop, 2 Abb. App. Dec. 436 ; Spicers 60. See, further, that title may pass v. Harvey, 9 R. I. 582; Bank of Upper without acceptance on completion of a Canada v. Killaly, 21 TJ. C. Q. B. 9 ; Pratt chattel, the following cases : Groff v. v. Maynard, 116 Mass. 388 ; Higgins v.- Belche, ante \ 404 ; West Jersey B. B. v. Murray, 4 Hun 565. Trenton Car Works, ante (j 409 ; Wilkins 478 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. that acceptance is necessary to pass the property, that no suit can be maintained for the price before acceptance, and that the seller's remedy is only for damages for refusal to accept. See Book V., Part I. Chap. I. Thus in Moody v. Brown, 61 Shepley, J., said that to effect a change of property in a chattel ordered to be manufactured, there must be tender and acceptance. So in Hanauer v. Bartels, 62 wheat was to be ground into flour and furnished at a certain price per barrel. The seller delivered the flour to a carrier who, by mistake, left it with the wrong person. The buyer demanded it and brought replevin. The court held that no title passed until acceptance, but the demand was an acceptance, and on that ground the suit was sustained. In Rider v. Kelley, 63 the contract was to deliver all the hops which the seller should raise from 2000 hills, at a certain price per pound, according to quality. The hops were raised, tendered, and refused, whereupon suit was brought for damages, and a verdict recovered for the price. The court said that this verdict could only stand on the ground that title passed by the tender ; that the case came by analogy within the class of contracts for manufacture of goods. " In such cases the authorities have abundantly established the general rule that the article must not only be made and offered to the vendee, but that he must accept of it, or it must be set apart for him by his consent, before the title to it will vest in him." Referring to the provision as to the quality of the hops the court said : " The vendee was entitled to examine them. They would not become his property against his consent, although if he wrongfully refused to accept them, he would be liable in damages." § 540. Where the chattel is not manufactured according to order, the buyer may refuse to receive it, and the property will not pass. See ante § 529 and post Book IV., Part I., Conditions. This is illus- trated by the case of Woodle v. Whitney, 64 where the contract was to manufacture corn cultivators after a certain pattern. The buyer hav- ing received them and made a partial payment, found on trial that they were not properly made, and returned them. It was held that he could recover back the money paid, and damages for breach of contract. 61. 34 Me. 107. This was decided on 62. 2 Col. 514. the authority of Elliott v. Pybus, stated 63. 32 Vt. 268. in the text. See Gordon v. Norris, 49 N. 64. 23 Wis. 55. H. 376, 15 Am. Law Reg. (N. S.) 160. CHAP. V.] OF SUBSEQUENT APPKOPRIATION. 479 In England this right to rescind is limited to cases of breach of con- dition, but many American cases extend it to breach of warranty. See Boothby v. Scales, 65 and cases cited. See, also, post Book III., chap. I., § 2. In Gowans v. Consolidated Bank of Canada, 66 glassware was made to order and paid for, the manufacturer agreeing to store at the buy- er's risk and ship as directed. Instead of doing so, he placed the goods in a warehouse and pledged the warehouse receipt for a loan. It was held that title had not passed, and the pledge was therefore valid, no appropriation to and acceptance by the buyer having been proved, and Story on Sales § 233, is cited and approved. 65. 27 Wis. 626, 636. 66. 43 U. 0. Q. B. 318. 480 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. CHAPTER VI. RESERVATION OF THE JUS DISPONENDI. SEC. Preliminary observations on the sub- ject 541 Review of authorities 542 Remarks on Coxe v. Harden 543 Observations on Joyce v. Swan 556 Principles deduced from the au- thorities reviewed 565 AMEMOAH DECISIONS. Delivery to a carrier 573 Reservation of title inferred from circumstances 574 The bill of lading represents the property 577 SEC. Bill of lading to vendor reserves the property 578 But property may pass, though bill drawn to vendor 579 Delivery to the buyer as bailee 581 Bill of lading tendered on condition of accepting draft 583 An advance on security of a bill of lading is not a mortgage 586 Delivery to a carrier, C. O. D 587 Whether the reservation was to secure payment or acceptance of draft...'.. 588 Effect of delivering bill of lading to consignee 589 The property vests on acceptance of draft 590 § 541. It has already been shown that the rules for determining whether the property in goods has passed from vendor to observations purchaser, are general rules of construction adopted for the purpose of ascertaining the real intention of the parties, when they have failed to express it. Such rules from their very nature cannot be applied to cases where exceptional circumstances repel the presumptions or inferences on which the rules are founded. However definite and complete, therefore, may be the determination of election on the part of the vendor, when the contract has left him the choice of appropriation, the property will not pass if his acts show clearly his purpose to retain the ownership, notwithstanding such appropria- tion. § 542. The cases which illustrate this proposition arise chiefly where the parties live at a distance from each other, where they contract by correspondence, and where the vendor is desirous of securing himself against the insolvency or default of the buyer. If A, in New York, orders goods from B, in Liverpool, without sending the money for them, there are two modes usually resorted to, among merchants, by which B may execute the order without assuming the risk of A's in- CHAP. VI.J RESERVATION OF THE JUS DISPONENDI. 481 ability or refusal to pay for the goods on arrival. B may take the bill of lading, making the goods deliverable to his own order, or that of his agent in New York, and send it to his agent, with instruc- tions not to transfer it to A except on payment for the goods. Or B may not choose to advance the money in Liverpool, and may draw a bill of exchange for the price of the goods on A, and sell the bill to a Liverpool banker, transferring to the banker the bill of lading for the goods, to be delivered to A on due payment of the bill of exchange. Now in both these modes of doing the business, it is impossible to infer that B had the least idea of passing the property to A, at the time of appropriating the goods to the contract. So that although he may write to A, and specify the packages and marks by which the goods may be identified, and although he may accompany this with an in- voice, stating plainly that these specific goods are shipped for A's ac- count, and in accordance with A's order, making his election final and determinate, the property in the goods will nevertheless remain in B, or in the banker, as the case may be, till the bill of lading has been endorsed and delivered up to A. These are the most simple forms in which the question is generally presented, but we shall see that in this class of cases as well as in that just discussed, it is often a matter of great nicety to determine whether or not the vendor's purpose or in- tention was really to reserve a, jus disponendi. 1 § 543. In Walley v. Montgomery, (r) the plaintiff had ordered a cargo of timber from Schumann & Co., and they informed WaUe him by letter that they had chartered a vessel for him, and Montgomery. afterwards sent him in another letter the bill of lading and invoice, advising that they had drawn on him at three months, "for the value of the timber." The invoice was of a cargo of timber, "shipped by order, and for account and risk of Mr. T. Walley, at Liverpool," and the bill of lading was made " to order or assigns, he or they paying freight, &c." Schumann & Co. sent at the same time another bill of lading, with bills of exchange drawn on the plaintiff for the price, to the defendant, who was their agent, and he got the cargo from the captain. The plaintiff applied to the defendant for the cargo, offering to accept the bills of exchange, but the latter insisted on immediate payment; and on the plaintiff's refusal, sold the cargo, under direc- tion of Schumann & Co. Trover was brought, and Lord Ellenbor- 1. For a coucise statement of princi- decisions, see \ 573, et seq. pies, see post «n this ease. holding that although the shipper took the bill of lading to his own order, yet the property had passed when the goods were put on board. The distinction is a plain one. In the former cases the shipper had taken the bill of lading to his own order, for the pur- pose of retaining control of the goods for his own security ; but in Joyce v. Swan, the shippers and vendors had no purpose nor desire to keep any control of the goods, but, on the contrary, wished the buyer to take them. They were doubtful of the buyer's meaning, and there- fore took a precaution against leaving the property uninsured and un- cared for if his letter meant that he refused the purchase; but they were acting as his agents and intended to reserve nothing, no jus dis- ponendi, if his meaning was that he assented to the price. The buyer interpreted his own language just as the court did; he had meant to take the goods even at the price of £10, and that being so, the vendors CHAP. VI.J HESEKVATION OF- THE JUS DI8PONENDI. 495 were his agents in taking the bills of lading ; and the case is exactly in accord with Van Casteel v. Booker, (o) where it was left to the jury to decide as a question of fact, what was the intention of the vendor under all the circumstances of the case; and with Brown v. Hare, (p) where it was held that the question of intention must be considered as having been disposed of by the verdict of the jury, because it was one of, the facts for their decision on the trial. § 557. In Moakes v. Nicholson, (q) the facts were, that a sale was made by one Josse to Pope for cash, of a quantity of coal, Moakes „ parcel of a heap lying in Josse's yard, to be shipped on Nlcholaon - board of a vessel chartered by Pope in his own name and on his own> behalf, to carry it to London. The coal was shipped by Josse, who took three bills of lading, making the coal deliverable to " Pope or order." Only one of the three bills was stamped, and that was kept by Josse, but the second, with invoice and letter of advice, was sent to Pope on the 19th of December, and received by him on the 20th. Josse, being unable to get the price from Pope, sent the stamped bill to his agent, the defendant. In the meantime, on the 13th of Decem- ber, Pope had sold the coal on the London Exchange, but before it had been separated from the heap in Josse's yard, to the plaintiff, who paid for the coals before action brought. The defendant induced the captain of the vessel to refuse delivery to the plaintiff, and took pos- session of the coal himself. The plaintiff brought trover. Held, first, that the plaintiff had no better right than his vendor, Pope, because at the time of his purchase the goods were not ascertained and no bills of lading had been given, so that the sale had not been made by a transfer of documents of title ; secondly, that no title had passed to Pope from Josse, because the retention of the stamped bill of lading by the latter was a clear indication of his intention to reserve the ./us dis- ponendi ; thirdly, that the intention of Josse was a fact to be deter- mined by the jury. But semble, per Byles and Keating, JJ., that if Pope's sale had been made after his receipt of the bill of lading by endorsing it over, although unstamped, to a bona fide purchaser, the- result might have been different. The ratio decidendi of the case was clearly that Pope's sale was of a thing not yet his, of property not yet acquired, and therefore inoperative to pass the property. Ante § 78. L. J., C. P. 273; 19 C. B. (N. (o) 2 Ex. 691. (?) 34 (p) In Ex. Ch., 4 H. & N. 822; 29 L. 8.) 290. J., Ex. 6. 494 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. § 558. In Fulke v. Fletcher, (r) the plaintiff, a merchant of Liver- Fuike». poolj acting in behalf of De Mattos of London, had char- rietoher. terec i f rom tne defendant a vessel to load a complete cargo of salt for Calcutta. The plaintiff had put on board about 1000 tons of salt, for which he took receipts in his own name, when De Mattos failed, and the plaintiff declined to continue loading, whereupon the defendant filled up the vessel for his own account, and refused to de- liver to the plaintiff bills of lading for the 1000 tons, on the ground that they belonged to De Mattos. It was proven that the plaintiff was in the habit of buying such cargos for De Mattos, and charged him no commission, but an advance on the cost of the salt to remuner- ate himself for his trouble ; that the plaintiff always paid for the salt and loaded it at his own expense, and when the cargo was completed sent invoices to De Mattos and received the acceptances of the latter for the cost. Held, under these circumstances, a question of intention for the jury, whether the plaintiff intended to part with the property in the salt or to reserve it, and a verdict in favor of the plaintiff that he had not parted with the goods was maintained. § 559. In Shepherd v. Harrison, (s) the facts were that Paton, Nash shepherds. & ®°'> merchants of Pernambuco, bought for the plaintiff, Harnson. a merchant of Manchester, certain cotton, and shipped it on the defendant's steamship Olinda, taking a bill of lading. Then they wrote to the plaintiff, saying, " Enclosed please find invoice and bill of lading of 200 bales cotton shipped per Olinda, costing £851 2s. 7d." The letter also announced that a draft had been drawn for the price in favor of George Paton & Co., the agents in Liverpool of Paton, Nash & Co., " to which we beg your protection." The invoice was headed " Invoice, &c, on account and risk of Messrs. John Shep- herd & Co. (the purchaser.") The bill of lading, however, was not enclosed in the letter to the plaintiff, but was, together with the bill of exchange, enclosed to George Paton & Co., of Liverpool, who at once sent a letter to the plaintiff enclosing the bill of lading and the bill of exchange drawn on him, and stating " We beg to enclose bill of lading for 200 bales cotton shipped by Paton, Nash & Co., per Olinda, s. s. on your account. We hand also their draft on your good selves for cost of the cotton to which we beg your protection." (r) 18 C. B. (N. S.) 403 ; 34 L. J., C. 493 ; in the House of Lords, L. E, 5 H. P. 146. L. 116. (s) L. E., 4 Q. B. 196 ; in Ex. Ch., Ibid. CHAP. VI.] RESERVATION OF THE JUS DISPONENDI. 495 The plaintiff refused to accept the bill of exchange, but retained the bill of lading, and demanded the cotton from the master of the ship, who however delivered the goods to George Paton & Co., on a dupli- cate bill of lading held by them, and on receiving an indemnity against the plaintiff's claim. The plaintiff's action was trover against the master, but all the courts were unanimous in favor of the defendant, and it was held in the House of Lords : 1st. That the jus disponendi had been reserved by the vendors ; 2ndly. That where a bill of exchange for the price of goods is enclosed to the buyer for acceptance, together with the bill of lading which is the symbol of the property in the goods, the buyer cannot lawfully retain the bill of lading without accepting the bill of exchange ; that if he does so retain it, he thereby acquires no right to the bill of lading or the goods. § 560. [In Gabarron v. Kreeft, (t) the defendants had bought from one Munoz all the ore of a certain mine in Spain to be Gabarron „ shipped by Munoz F. O. B. at Cartagena, on ships to be Kxeett - chartered by the defendants, or by Munoz. The ore was to be paid for by acceptances against bills of lading, or on the execution of a charter-party, in which latter case a certificate that there was enough ore in stock to load the ship was to accompany the drafts. On being so paid for, the ore was to become the property of the defendants. Various vessels had been loaded, and others chartered, and various payments made up to March, 1872, when the Trowbridge, one of the ships chartered by the defendants, arrived at Cartagena. The pay- ments that had been made at that time exceeded in amount the price of all the ore shipped and to be shipped in all the vessels chartered and not loaded ; so that had Munoz shipped ore on the Trowbridge, he would have been entitled to no payment from the defendants in re- spect of it. He had ore which he could and ought to have so shipped, taking bills of lading to the order of the defendants. Instead of doing this, before any ore was put on board the Trowbridge, he picked a quarrel with the defendants, telegraphed to them that he would not load the Trowbridge on their account, and though they telegraphed back to him threatening him if he did not, he loaded the Trowbridge, and took bills of lading making the shipment to be by one Sabadie, and the cargo deliverable to Sabadie's order. He then endorsed Sabadie's and his own name on the bills of lading, and pledged them for value (0 L. B., 10 Ex. 274. 496 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK IT. with the plaintiffs. No certificate in relation to this ore was given by Munoz to the defendants. The captain was justified in giving the bills of lading, as the charter-party contained a clause authorizing him " to sign bills of lading as presented." It was agreed that at the time of shipment Munoz had no intention to ship the ore for the defend- ants. The question was whether the plaintiffs, or the defendants, were entitled to the cargo, and this depended for its decision on whether the property became vested in the defendants upon the ore being paid for, as the contract provided it should, or upon shipment on board the vessel chartered by the defendants. The Court of Exchequer held that the plaintiffs were entitled. Bramwell and Cleasby, BB., rested their decisions upon the following grounds : That notwithstanding the provision in the contract to that effect, the payment of the price could not per se operate to transfer the property in the ore to the de- fendants, so long as the ore had not been separated from the bulk of the stock ; that there was no evidence of a specific appropriation of the ore in fullfillment of the contract previous to shipment ;(t) and that shipment on board a vessel chartered by the defendants did not vest the property in them, when the shipper in dealing with the bills of lading has manifested his intention to reserve the jus disponendi. Kelly, C. B., came to the same conclusion upon a quite distinct ground, viz. : that as the defendants by the terms of the charter-party had authorized the master to sign bills of lading as presented, they were estopped from disputing plaintiffs' title as bona fide endorsees for value. § 561. It will be observed that although the agreement provided that the ore was to become the property of the defendants upon being paid for, yet, since the sale was not one of specific goods, it was neces- sary that there should be some subsequent appropriation by Munoz for the defendants before the property could actually vest in them. In the absence of any evidence of such appropriation previous to ship- ment, the question was reduced to this : Did the property pass on actual shipment, the shipper having no right to ship, except to pass the property, and having no right to retain possession for any lien for the price or otherwise, but taking, when he did take it, a bill of lading, deliverable otherwise than to the defendants, to whom it ought to have been made deliverable ? and after a careful review of the authorities cited in the text it was held, that the property did not pass. After commenting on Ellershaw v. Magniac, Turner v. Trustees of the Liver- (t) See ante \ 464. CHAP. VI.] RESERVATION OP THE JUS DISPONENDI. 497 pool Docks, Fulke v. Fletcher, Waite v. Baker, and Moakes v. Nichol- son, Brarnwell, B., says, at p. 281 : " The cases seem to me to show that the act of shipment is not completed till the bill of lading is given ; that if what is shipped is the shipper's property till shipped on account of the shipowner or charterer, it remains uncertain on whose account it is shipped, and is not shipped on the latter's account till the bill of lading is given deliverable to him." And Cleasby, B., at p. 285, referring to Turner v. Trustees of the Liverpool Docks, and Shep- herd v. Harrison, as being respectively an early and the latest au- thority on the subject, says : " The effect of these decisions is that the delivering of goods contracted for, on board a ship when a bill of lad- ing is taken, is not a delivery to the buyer, but to the captain as bailee to deliver to the person indicated by the bill of lading, and that this may equally apply when the ship is the ship of the vendee." § 562. In Ogg v. Shuter (w), the facts were that the plaintiff made a contract for the purchase of 20 tons of potatoes to be de- livered free on board at Dunkirk, price to be paid in cash against bill of lading, and the plaintiffs were to pay part of the price in earnest of the bargain. The potatoes were shipped under the contract in the plaintiffs' own sacks under a bill of lading which made them deliverable to the vendor's order, and the plaintiffs paid £30 in part payment of the price. The vendor endorsed the bill of lading to the defendant, who was his agent in London, and he upon the arrival of the ship presented to the plaintiffs a draft for the balance of the pur- chase money with the bill of lading annexed. The plaintiffs, believ- ing that the shipment was short, declined to accept the draft for the full amount, and thereupon the defendant sold the potatoes to another party. In an action against the defendsnt for conversion, a verdict was entered by consent for the plaintiffs, leave being reserved to the defendant to move that it should be entered for him, the court to draw inferences of fact. It was held by the Court of Common Pleas that the property in the potatoes had passed to the plaintiffs, on the ground that any evidence of the vendor's intention to reserve the jus dispo- nendi manifested by the expression in the contract " cash against bill of lading," and by the fact of the vendor taking the bill of lading to his own order, was over-ridden by the other terms of the contract, viz., that the potatoes should be delivered " free on board," and that there (u) 1 C. P. D. 47, C. A., reversing S. C, L. E., 10 C. P. 159. 2i 498 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. should be part payment of the price, coupled with the fact that the potatoes were delivered into the plaintiffs' own sacks. This decision was reversed on appeal, the Court of Appeal holding — First, that the retention by the vendor in his agent's hands of the bill of lading in the form in which it was taken was effectual to re- serve the jus disponendi. Secondly, that the right so reserved was not merely a vendor's lien on the goods, but involved the right to dispose of the goods by sale or otherwise, so long at least as the buyer remained in default. § 563. In Ex parte Banner (x), the firm of Christiansen & Co., who Ex parte Ban- carried on business at Para, in South America, acted as ner ' commission agents in the purchase and consignment of goods for Tappenbeck & Co., at Liverpool. The course of dealing be- tween the parties was as follows : Christiansen & Co., in order to provide funds for the purchase of goods, drew bills of exchange on Tappenbeck & Co., which they discounted at Para. They then pur- chased the goods with the proceeds, and shipped them for Liverpool, and sent the bills of lading making the goods deliverable to Tappenbeck & Co. and the invoices of the goods by post direct to Tappenbeck & Co. At the same time Tappenbeck & Co. were advised of the bills drawn upon them, which, in the ordinary course, they accepted on presentment, and paid at maturity. Both Christiansen & Co. and Tappenbeck & Co. stopped payment. At the time of Tapjienbeck & Co.'s stopping payment considerable quantities of goods were in transit between Para and Liverpool, and on their arrival were taken posses- sion of by the trustee in their liquidation. Some of the bills, out of the proceeds of which the goods had been purchased, were accepted, and others refused acceptance by Tappenbeck & Co., but none of them were paid at maturity. Held by the Court of Appeal, reversing the decision of Bacon, C. J., that the property in the goods had passed unconditionally to Tappenbeck & Co., and through them to their trus- tee, and that the creditors of Christiansen & Co. were not entitled to have the goods or their proceeds appropriated to meet the bills drawn in respect of them. Shepherd v. Harrison was expressly distinguished on the ground that there the consignor had taken the precaution to make the goods deliverable to his own order, and to forward the en- dorsed bill of lading, together with the bill of exchange, to an agent of his own. Mellish, L. J., in delivering the judgment of the court, (as) 2 Ch. D. 278, C. A CHAP. VI.] RESERVATION OF THE JUS DISPONENDI. 499 said (at page 288) : " We think that as soon as the goods were put on board ship at Para and the bills of lading making the goods deliver- able to Tappenbeck & Co. were put into the post directed to Tappenbeok & Co. and were thus placed beyond the control of Christiansen & Co., the property in the goods passed to Tappenbeck & Co. We conceive it is perfectly settled that if a consignor in such a case wishes to pre- vent the property in the goods, and the right to deal with the goods, whilst at sea, from passing to the consignee, he must by the bill of lading make the goods deliverable to his own order, and forward the bill of lading to an agent of his own. If he does not do that, he still retains the right of stopping the goods in transitu, but subject to that right the property in the goods and the right to the possession of the goods is in the consignee." § 564. In Mirabita v. Imperial Ottoman Bank, (y) the facts, so far as material, were these : The vendors shipped a cargo of umber on board a ship chartered for the plaintiff, and periai ottoman took bills of lading making the cargo deliverable " to order or assigns." They drew a bill of exchange for the price upon the plaintiff, which they discounted with the defendant bank, at the same time handing over to them the bills of lading to be given up to the plaintiff upon his meeting the bill of exchange at maturity. A fresh bill of exchange was afterwards substituted and transferred to the bank in exchange for the original bill. On the arrival of the cargo the plaintiff at first declined to accept the bill, but he subsequently ten- dered the amount for which it was drawn, and demanded the delivery of the bills of lading. The defendants refused to accept the amount of the bill and sold the cargo. The question was, whether under these circumstances the property in the goods had passed to the plaintiff so as to entitle him to maintain an action of trover against the defend- ants, (z) The Court of Appeal were unanimously of opinion that it had. It was clear that the intention of the vendors was that the prop- erty should vest in the plaintiff, subject only to his acceptance and pay- ment of the bill of exchange, and that the defendants were bound to give up the bills of lading to the plaintiff, upon his so doing. Cotton, L. J., (at page 172,) gives so clear an exposition of the Judgmentof principles that run through the decisions that we have Cotioa - L J - (y) 3 Ex. D. 164, C. A. with as a legal question, and not upon the (2) The action was commenced before equitable rights of the parties. See per the judicature acts, and therefore dealt Cotton, L. J., at p. 171. 500 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. ventured to transcribe it in full. "Under a contract for sale of chat- tels not specific the property does not pass to the purchaser unless there is afterwards an appropriation of the specific chattels to pass under the contract, that is, unless both parties agree as to the specific chattels in which the property is to pass, and nothing remains to be done in order to pass it. In the case of such a contract the delivery by the vendor to a common carrier, or (unless the effect of the ship- ment is restricted by the terms of the bill of lading) shipment on board a ship of, or chartered for, the purchaser is an appropriation sufficient to pass the property. If, however, the vendor, when shipping the articles which he intends to deliver under the contract, takes the bill* of lading (o his own order, and does so, not as agent or on behalf of the purchaser, but on his own behalf, it is held that he thereby re- serves to himself a power of disposing of the property, and that conse- quently there is no final appropriation, and the property does not on shipment pass to the purchaser. When the vendor on shipment takes the bill of lading to his own order, he has the power of absolutely dis- posing of the cargo, and may prevent the purchaser from ever assert- ing any right of property therein ; and accordingly in Waite v. Baker, Ellershaw v. Magniac and Gabarron v. Kreeft, (in each of which cases the vendors had dealt with the bills of lading for their own benefit,) the decisions were that the purchaser had no property in the goods, though he had offered to accept bills for or had paid the price. So, if the vendor deals with or claims to retain the bill of lading in order to secure the contract price, as when he sends forward the bill of lading with a bill of exchange attached, with directions that the bill of lading is not to be delivered to the purchaser till acceptance or payment of the bill of exchange, the appropriation is not absolute, but until accept- ance of the draft, or payment, or tender of the price, is conditional only, and until such acceptance, or payment, or tender, the property in the goods does not pass to the purchaser; and so it was decided in Turner v. Trustees of Liverpool Docks, Shepherd v. Harrison, and Ogg v. Shuter. But if the bill of lading has been dealt with only to secure the contract price, there is neither principle nor authority for holding that in such a case the goods shipped for the purpose of com- pleting the contract do not, on payment or tender by the purchaser of the contract price, vest in him. When this occurs there is a perform- ance of the condition subject to which the appropriation was made, and everything which, according to the intention of the parties, is neces- CHAP, VI.J RESERVATIOH OP THE JDS DISPONENDI. 501 sary to transfer the property is done ; and in my opinion, under such circumstances the property does, on payment or tender of the price, pass to the purchaser."] § 565. The following seem to be the principles established by the foregoing authorities : Eule3 deduoed First. — "Where goods are delivered by the vendor in re°^w h ofthe pursuance of an order, to a common carrier for delivery authontlea - to the buyer, the delivery to the carrier passes the property, he being the agent of the vendee to receive it, and the delivery to him being equivalent to a delivery to the vendee, (a) 3 § 566. Secondly. — Where goods are delivered on board of a vessel to be carried, and a bill of lading is taken, the delivery by the vendor is not a delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the bill of lading, as the one for whom they are to be carried. 4 This principle runs through all the cases, and is clearly enunciated by Parke, B., in Waite fc. Baker, (6) and by Byles, J., in Moakes v. Nicholson, (c) [and by Bramwell and Cleasby, BB., in Gabarron v. Kreeft, (d) and by Cotton, L. J., in Mirabita v. Im- perial Ottoman Bank. (e)J And the above two points were approved as an accurate statement of the law by Lord Chelmsford in Shepherd v. Harrison, supra. § 567. Thirdly. — The fact of making the bill of lading deliverable to the order of the vendor, is, when not rebutted by evidence to the contrary, almost decisive to show his intention to reserve the jus dis- ponendi, and to prevent the property from passing to the vendee. (/) 5 § 568. Fourthly. — The prima facie conclusion that the vendor re- (a) Waite v. Baker, 2 Ex. 1. See, also, (rf) L. R., 10 Ex., at pp. 281 and 285. Dawes v. Peck, 8 T. K. 330 ; Dutton v. (e) 3 Ex. D., C. A., at p. 172. Solomonson, 3 B. & P. 582 ; London and (/) Wilmshurst v. Bowker, 2 M. & G. North Western Railway Company v. 792; Ellershaw v. Magniac, 6 Ex. 570; Bartlett, 7 H. & N. 400, and 31 L. J., Ex. Waite v. Baker, 2 Ex. 1 ; Van Casteel v. 92; Dunlop v. Lambert, 6 CI. & Fin. 600; Booker, 2 Ex. 691 ; Jenkyns t. Brown, 14 Cork Distilleries Company v. Great South- Q. B. 496, and 19 L. J., Q. B. 286 ; Shep- ern Railway Company, L. R., 7 H. L. 269. herd v. Harrison, L. R., 4 Q. B. 196 ; in 3. See post $ 573-576, for American Ex. Ch. Id. 493; L. R., 5 H. L. 116; decisions. Gabarron v. Kreeft, L. R., 10 Ex. 274 ; 4. See post \ 577, for American deci- Ogg v. Shuter, 1 C. P. D. 47, C. A. ; Ex sions. parte Banner, 2 Ch. D. 78, C. A. (b) 2 Ex. 1. 5. See post \ 578, for American deci- (c) 19 C. B. (N. S.) 290; 34 L. J., C. P. B i ong . 273. 502 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. serves the jus disponendi, when the bill of lading is to his order, may be rebutted by proof that in so doing he acted as agent for the ven- dee, and did not intend to retain control of the property; and it is for the jury to determine as a question of fact what the real intention was. (/) 6 § 569. Fifthly. — That although as a general rule the delivery of goods by the vendor, on board the purchaser's own ship, is a delivery to the purchaser, and passes the property, yet the vendor may by special terms restrain the effect of such delivery, and reserve the jus disponendi, even in cases where the bills of lading show that the goods are free of freight, because owner's property, {g) [And on a sale of goods which are not specific, although the goods have been delivered on board a ship of, or chartered for, the purchaser, yet, in the absence of any appropriation of the goods in fulfilment of the contract pre- vious to shipment, the fact that the vendor has taken a bill of lading, making the goods deliverable to his own order, or that of a third per- son, will prevent the property in them from passing to the pur- chaser.] (h) 7 § 570. Sixthly. — That where a bill of exchange for the price of goods is enclosed to the buyer for acceptance, together with the bill of lading, the buyer cannot retain the bill of lading unless he accepts the bill of exchange: and if he refuse acceptance, he acquires no right to the bill of lading or the goods of which it is the symbol, (i) [And the vendor may exercise his jus disponendi by selling or otherwise dis- posing of the goods, so long at least as the buyer remains in de- fault.] (A) 8 § 571. {Seventhly. — But although the vendor may intend the (/) Van Casteel v. Booker, 2 Ex. 691 ; man v. Lancashire and Yorkshire Rail- Brown v. Hare, 4 H. & N. 822 and 29 L. way Co., 2 Ch. 332 ; Gumm v. Tyrie, 33 J., Ex. 6 ; Joyce v. Swan, 17 C. B. (N. 8.) L. X, Q. B. 97 ; in error, 34 L. J., Q. B. 84 ; Moakes v. Nicholson, 19 C. B. (N. S.) 124. 290; 34 L. J, C. P. 273. (h) Gabarron v. Kreeft, L. E., 10 Ex. 6. See post \\ 579 and 580, for Ameri- 274. can decisions. 7. See post \\ 581 and 582, for Ameri- (g) Turner v. Liverpool Dock Trustees, can decisions. 6 Ex. 543 ; Ellershaw v. Magniac, 6 Ex. (i) Shepherd v. Harrison, L. R., 4 Q. 570; Brandt v. Bowlby, 2 B. & Ad. 932; B. 196; in Ex. Ch., Id. 493; 5 H L. Van Casteel d. Booker, 2 Ex. 691 ; Moakes 116; Ogg v. Shuter, 1 C. P. D. 47, C. A. v. Nicholson, 19 C. B. (N. S.) 290 ; 34 L. (A) Ogg v. Shuter, 1 C. P. L\ 47, C. A. J., C. P. 273 ; Fulke v. Fletcher, 18 C. 8. See post \\ 583-588., for American B. (N. S.) 403 ; 34 L. J., C. P. 146 ; Schots- decisions. CHAP. VI.] RESERVATION OF THE JUS DISPONENDI. 503 transfer of the property to be conditional upon the buyer's acceptance of the bill of exchange, yet, if he puts into {he post addressed to the buyer a bill of lading making the goods deliverable to the buyer's order, he thereby abandons all control over the goods, and the prop- erty thereupon vests unconditionally in the buyer, and does not revest in the vendor on the buyer's failure or refusal to accept the bill of exchange.] (I) 9 § 572. \_FAghthly. — When the vendor deals with the bill of lading only to secure the contract price, as, e. g., by depositing it with bank- ers who have discounted the bill of exchange, then the property vests in the buyer upon the payment or tender by him of the contract price.] (m) 10 AMERICAN DECISIONS. * § 573. The decisions in the various States on this subject agree sub- stantially with the principles just stated. A distinction must be made between the case of a consignment in carrying out a contract of sale and a consignment of the goods for some other purpose, as. for instance, to be sold by the consignee. The foregoing principles relate to the former. See ante § 565, et seq. The effect of a consignment to a creditor has been considered ante § 524. American decisions that the property in goods ordered passes on de- livery to a carrier for transportation to the buyer are col- Deliverytoa lected in the last chapter. A striking illustration will be carner - found in the case of Bailey v. Hudson River R. R. Co., H which was a suit by the consignee against the carrier. The consignee had made a specific advance upon part of the goods, and the rest were shipped by agreement to pay a debt. Invoices were sent to consignee. After the goods had been delivered to the carrier, one of the consignors changed the direction, and the carrier accordingly delivered the goods to another person. The carrier was held liable for conversion. Church, C. J., said that the intent to pass the property to the consignee appears : " 1. By the agreement the day prior to the shipment ; 2. By forwarding invoices of the shipment; 3. By making the ship- (l) Ex parte Banner, 2 Ch. D. 78, C. A., point left undecided by Lord Cairns in distinguishing Shepherd v. Harrison, L. Ogg v. Shuter, 1 C. P. D. at p. 51. E., 4 Q. B. 196 and 493; L. E., 5 H. 10. See post I 590, for American deci- le 116. sions. 9. See post, \ 589, for American deci- *The rest of this chapter is by the sions. American editor. (m) Mirabita v. Imperial Ottoman 11. 49 N. Y. 70, 74. Bank, 3 Ex. D. 164, C. A., determining » 504 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. ment unconditionally ; 4. By retaining the receipt given by the carrier and neither making nor attempting to make any use of it." 12 On the other hand, it is held in Tennessee that an attaching creditor of the goods in transit can hold them against the consignee, though the latter may have received the bill of lading, and may have paid freight and made advances on the particular goods. 13 But these decisions find little support elsewhere. § 574. The seller may expressly reserve title, or the terms of the Reservation of contract ma y be such that title will not pass until the goods K2. are received by the buyer. Thus in Thompson v. Cinn., stances. &( , ; R R> u 900() tQns of j ron were barga ; ned for in Wales, to be shipped, part to New York and part to New Orleans. Of this, 590 tons were lost at sea. The court said that the contract pro- vided that defendant should make payment for the iron as delivered, implying that the delivery was a condition precedent to the obligation to pay. Furthermore, the buyer was to have an agent at each place of delivery to receive the iron. Therefore the property did not pass until delivery in America, and the risk of transportation was on the seller. In Congar v. Galena and Chicago R. E.., 15 nursery stock was ordered to be delivered, properly packed, at a station in Wisconsin, to be transported to a point in Illinois, the buyer to pay freight and charges, and to give notes for the price on delivery to him in Illinois. This contract was held not to pass title until the property was delivered in Illinois and the notes were given ; and the seller was held entitled, as owner, to sue the carrier for damages in transit. § 575. In Suit v. Woodhall, 16 a liquor dealer in Kentucky em- ployed an agent to solicit orders in Massachusetts, subject to the dealer's approval. An order was filled on terms that the seller should pay the freight from Kentucky to Massachusetts. On a suit for the price the buyer defended on the ground that the sale took place in Massachusetts and was void there under the prohibitory liquor laws. 12. See Lawrence v. Minturn, 17 How. Pennsylvania Co. v. Holderman, 69 Ind. 100, 107 ; Brown v. McGraw, 14 Pet. 479 ; 18 ; Chaffe v. Heyner, 31 La. Ann. 594. Schumacher v. Eby, 24 Penna. 521 ; Ar- 13. Woodruff v. Nashville, &c, R. R., buckle v. Thompson, 37 Penna. 170 ; 2 Head 87 ; Saunders v. Bartlett, 12 Philadelphia and Reading R. R. v. Wire- Heisk. 316 ; Oliver v. Moore, 12 Id. 482. man, 88 Penna. 264 ; Kelson v. Chicago, 14. 1 Bond 152. &c, R. R., 2 Bradw. 180 ; Magruder v. 15. 17 Wis. 477. Gage, 33 Md. 344 ; Ober v. Smith, 78 N. 16. 113 Mass. 391. C. 265; Gwyn v. R. R. Co., 85 N. C. 429; CHAP. VI.] RESERVATION OF THE JUS DISPONENDI. 505 The judge charged the jury that the sale took place on delivery to the carrier in Kentucky ; but on exceptions this verdict was set aside, the court holding that in view of the evidence that the seller was to pay the freight, it should be left to the jury to determine whether the prop- erty passed in Kentucky or Massachusetts. In Taylor v. Turner, 17 under the circumstances of the case, it was held that title did not vest in the consignee. Sheldon, J., said : " De- livery to a carrier is considered as a delivery to the consignee only when, and as, it is in agreement with the terms and intention of the shipment." §576. In Black v. "Webb, 18 the seller agreed to deliver 1000 bushels of barley within two months at a certain warehouse of a third party, and received $175 " as an advance to buy barley." After he had placed 652 bushels in the warehouse, and received receipts, the whole was lost by a freshet. He went on and bought 350 bushels more and placed them in the custody of the same warehouseman, and at the appointed time tendered the receipts for the whole thousand to the buyer, who refused them because of the loss, of most of the barley represented by them. The seller sued for the price, claiming that he was the agent for the buyer; but the court held- that the con- tract was one of sale and not of agency, and that title had not passed. Spalding, J., said : "It is in evidence that the warehousemen would have felt bound to deliver the barley to any person or persons pre- senting to them those receipts. These important evidences of owner- ship B. retained within his own control until after the loss. How can it be said with certainty that this barley would have been transferred to W. in case the warehouse had not been swept away ? B. had, in himself, the absolute power of disposal at any and all times as long as he retained the receipts, and W. could not object to a sale of the prop- erty in store, so that, at the last, he received in quantity and quality, the barley which B. had agreed to deliver to him." § 577. The bill of lading represents the property, and the endorse- ment and delivery of it constitute the appropriate means of transfer of property while in transit. 19 in g e represents " One who discounts for the shipper a draft on the con- e P r °P ec ?■ signee with bill of lading attached, acquires title to the property. The 17. 87 111. 296, 300. See Cobb v. 111. Wolf v. Gardner, 12 Cush. 19 ; Hath- Cent. E. B., 88 111. 394. away v. Hayaes, 124 Mass. 311 ; Tiedeman 18. 20 Ohio 304. v. Knox, 53 Md. 612. 19. Gibson v. Stevens, 8 How. 384 ; De 506 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. delivery of the bill of lading as security for the draft is an appropria- tion of the property to the holder of the draft, whether the bill is endorsed or not. 20 But, although the bill of lading and the property represented thereby may be transferred by delivery of the bill, yet it is not on the footing of commercial paper. The endorsement or transfer passes only such title as the seller has, and if possession of the bill of lading was procured by fraud, without any title, the holder can pass no title. 21 A distinction was made in Bissell v. Steel, 22 between the title of one who holds the bill of lading without endorsement as security for a draft discounted on the consignee, and of one to whose order the goods are made deliverable. The former has only a claim on the goods to be paid out of the proceeds; and therefore when such a holder set up a claim to be owner against the sheriff who had levied upon the goods for the consignor's debt, a nonsuit was granted because the claim was not supported by the facts, which the court held showed not ownership but only a lien. But this seems to have been practically overruled by recent cases. 23 § 578. In the case of The St. Joze Indiano, 24 goods were captured at sea as the property of an enemy, but were claimed by a vendor re- friend, one Lizaur. The consignor (the enemy) consigned the goods " to D. B. & F., (his agents), by order and for account of J. Lizaur." In a letter to D. B. & F., the consignor wrote, referring to Lizaur : " We find his order for goods will far exceed the amount of these shipments, therefore we consign the whole to you, that you may come to a proper understanding with him." Story, J., said: " In the present case the delivery to the master was not for the use of Mr. Lizaur, but for the consignees — a house composed of the same persons as the shippers, and acting as their agents. They therefore retained the constructive possession as well as right of property in the 20. Holmes v German Security Bank, v. Steele, 70 Penna. 188 ; Decan v. Ship- 87 Penna. 525 ; Holmes v. Bailey, 92 per, 35 Penna. 239 ; Baltimore, &c, R R. Penna. 57 ; Jordan *. Wilson, 25 Penn- v. Wilkens, 44 Md. 11 ; Tison v. Howard, 390; Commercial Bank v. Pfeiffer, 22 57 Ga. 410. See post Book III., Chap. Hun 327 ; Hathaway v. Haynes, 124 Mass. II.„sec. II., " Fraud on the Vendor." 311 ; Shaw v. Merchants' Bank, 101 U. S. 22. 67 Penna. 443. 557; Hieskell v. Farmers', &c, Bank, 89 23. Holmes v. German Security Bank, Penna. 155 ; Murray v. Warner, 55 N. 87 Penna. 525, and Holmes v. Bailey, 92 H. 546. Penna. 57. 21. Empire Transportation Company 24. 1 Wheat. 208. CHAP. VI.] RESERVATION OF THE JUS DISPONENDI. 507 shippers, and it is apparent from the letter that the shippers meant to reserve to themselves and to their agents, in relation to the shipment, all those powers which ownership gives over property." In Fifth National Bank of Chicago v. Bayley, 25 a number of bar- rels of flour were shipped at Chicago, consigned to the shipper's own order, for delivery to a merchant in Boston. The bills of lading were delivered to a bank which discounted drafts on the Boston merchant, and which received as security the bills of lading for delivery on acceptance of the drafts. The Boston merchant refused to accept the drafts, and the property was attached for a debt of the shipper. The bank re- plevied the flour from the attaching officer, and its title was sustained. § 579. But the inference that the seller reserves title from the fact that he procures a bill of lading to his own order is not Property may pass though Conclusive. bill of lading is drawn to ven- In Dows v. National Exchange Bank, 26 Strong, J., said : dor. " We agree that where a bill of lading has been taken, containing a stipulation that the goods shipped shall be delivered to the order of the shipper, or to some person designated by him, other than the one on whose account they have been shipped, the inference that it was not intended the property in the goods should pass, except by subsequent order of the person holding the bill, may be rebutted, though it is held to be almost conclusive." In Hobart v. Littlefield, 27 a merchant in Providence sent to Gal- veston an order for 50 bales of cotton. The cotton was bought and delivered on a wharf to the master of a vessel, and the master exe- cuted a bill of lading to the order of the consignor, which the con- signor endorsed in blank and sent to his agent in Providence, with a draft for collection from the buyer. Part of the cotton was put on board, when a fire took place, and part of the cotton on the dock was destroyed. In a suit for goods sold and delivered, it was held that the goods were at the buyer's risk, and judgment was given for the price. Potter, J., said :' " It would not follow, even if the goods were in the plaintiffs' control, that the title and the risk were not in and on the defendants. * * * The title might pass on the completion of the bargain and appropriation of the cotton in such manner that the goods would be at the buyer's risk, and yet the seller retain possession 25. 115 Mass. 228. See Seymour v. 26. 91 U. S. 618, 633. Newton, 105 Mass. 272 ; Redd *. Burrus, 27. 13 E. I. — . 58 Ga. 574. 508 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. of them by himself, or by the master as his bailee, until paid. If the retention of the bill of lading was merely to retain possession of the cotton for this purpose, then the title and the risk belonged to the de- fendants." § 580. The general principles relative to appropriation of goods to an executory contract are stated by Colt, J., in Merchants' Bank v. Bangs. 28 I n that case corn was ordered and delivered to a railroad company, consigned to the buyer. The seller received from the com- pany a bill of lading acknowledging receipt of the corn consigned to the buyer. On receiving this bill not endorsed, the seller obtained discount of a draft on the buyer for more than the price due. The buyer refused to accept the draft, and, having taken the corn, was sued in trover by the bank holding the draft and the bill of lading. The court said that if title to the corn passed to the buyer on the delivery to the carrier, it could not be divested by the subsequent delivery by the seller of the bill of lading to the bank. Whether it did so pass was a question for the jury. Colt, J., said : "If the bill of lading or other written evi- dence of delivery to the carrier be taken in the name of the consignee, or be transferred to him by endorsement, the strongest proof is afforded of the intention to transfer an absolute title to the vendee. But the vendor may retain his hold upon the goods to secure the payment of the price, although he puts them in course of transportation to the place of destination by delivery to a carrier. The appropriation which he then makes is said to be provisional or conditional. He may take the bill of lading or carrier's receipt in his own or some agent's name, to be transferred on payment of the price by his own or his agent's en- dorsement to the purchaser, and in all cases where he manifests an in- tention to retain this jus disponendi, the property will not pass to the vendee. Practically the difficulty is to ascertain, when the evidence is meagre or equivocal, what the real intention of the parties was at the time. It is properly a question of fact for the jury under proper in- structions, and must be submitted to them unless it is plain as matter of law that the evidence will justify a finding but one way." § 581. Analogous to the case of delivery on board the buyer's ship „ ,. t . is the case of delivery at the buyer's warehouse, or to the Delivery to th» •> J buyer as bailee. DU y e r as bailee. If the buyer agrees to accept the cus- tody as bailee, until he complies with certain conditions, the title will not pass, and he cannot make sale of the property until the conditions 28. 102 Mass. 291,' 295. CHAP. VI.] RESERVATION OP THE JUS DISPONENDI. 509 are performed. This results from the application of our author's' third rule, stated ante § 366, and perhaps should be qualified in some states as far as affects rights of bona fide purchasers, as has been shown ante § 437, et seq. The decisions, however, are not consistent on this sub- ject, even the federal courts regarding more the bill of lading than the actual possession, and sustaining conditions in a bill of lading, which they hold void in a bill of sale or contract for sale on installments, unless recorded as a chattel mortgage. In Farmers' and Mechanics' Bank v. Logan, 29 a cargo of wheat was sent to New York to order of consignor, whose agents delivered to the buyer the bill of lading on his acceptance of drafts for the price, under an agreement endorsed on the bill of lading that the delivery- was subject to the payment of the drafts, and that the wheat was held in trust to secure the payment. Before the maturity of the drafts, the buyer sold and delivered the wheat to a bona fide purchaser, against whom the holder of the drafts brought trover. A recovery of the value of the wheat was sustained. 30 § 582. In Dows v. National Exchange Bank, 31 the owners of wheat in Milwaukie shipped it to fill an order from a merchant in Oswego. They consigned it to the cashier of a bank in Milwaukee, care of a New York bank, and the Milwaukie bank discounted drafts for the price, and endorsed the bill of lading to the New York bank, directing the surrender of the wheat to the Oswego merchant on pay- ment by him of the drafts. At the same time the seller sent an in- voice to the buyer. The grain reaching its destination was placed for storage in an elevator of which the buyer was proprietor, to become his property only on payment of time drafts. He wrongfully placed the wheat on board canal boats, shipped it to New York and discounted drafts on pledge of the bills of lading of the canal boats. The Mil- waukie bank brought trover against the pledgees. Strong, J., de- livered the opinion of the court. " The position taken on behalf of the defendants, that the transmission of the invoices passed the prop- erty in the wheat, without the acceptance and payment of the drafts drawn against it, is utterly untenable. An invoice is not a bill of sale, nor is it evidence of a sale. It is as appropriate to a bailment as it is to a sale ; standing alone it is never regarded as evidence of title. 29. 74 N. Y. 568. 78 N. Y. 104, and both cite and follow the 30. This decision was followed in Far- case next stated, mers', &c. Bank v. Atkinson, 74 N. Y. 31. 91 U. S. 618. 587, and in Farmers' Bank o. Hazeltine, 510 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. * * These bills of lading unexplained are almost conclusive proof of an intention to reserve to the shipper the jus disponendi, and prevent the property in the wheat from passing to the drawees of the drafts. Such is the rule of interpretation stated in Benjamin on Sales." § 583. Our author's sixth principle, stated ante § 570, is firmly Biii of lading establishd by American decisions. As to the seventh, TOndit?onofao. ( ar >te § 571), some doubt may be entertained. No doubt ceptmg draft. a f )ona ji^g p urcaaser from one entrusted with a bill of lading to his own order might rely on it; but as between the parties it is a question of intent. In First National Bank of Cairo v. Crocker, 32 flour merchants in Illinois being indebted to defendants in Boston, promised to "make it right" at the next shipment. Afterwards the Illinois merchant consigned flour to their own order in Boston, marked, however, for the defendants, and sent the bill of lading with draft on defendants at- tached, for acceptance on delivery of the bill of lading. The defendants refused to accept the draft but obtained possession of the flour. There- upon the shipper drew another draft upon other merchants in Boston, and the plaintiffs discounted this draft on security of the bill of lading, but finding that defendants had obtained possession of the flour they brought trover. Their action was sustained. Ames, J., said : "This bill of lading was provisional, and was not intended to v^st the property in defendants or to authorize their taking possession of it, except upon the condition of their acceptance of the draft. * * Upon the refusal of defendants to accept the consignment on the terms offered, the owners of the flour had a right to seek a new consignee." In Stollenwerck v. Thacher, 33 the seller at Mobile shipped cotton consigned to the buyer in Boston, and sent the bill of lading endorsed in blank to the seller's agent in Boston, not to be delivered until drafts attached were paid. The agent delivered the bill of lading without requiring payment, and the buyer thereupon pledged the goods. The seller brought trover for the cotton against the pledgee, and his suit was sustained. § 584. The leading New York case on this subject is Bank of B.ochester v. Jones. 34 The owner of a lot of flour at Rochester shipped it to a consignee in Albany, to whom he was indebted, the forwarder 32. Ill Mass. 163. *. Fisher, 71 N. Y. 353. 33. 115 Mass. 224. See Marine Bank 34. 4 N. Y. 497. CHAP. VI.J RESERVATION OP THE JUS DISPONENDI. 511 giving a receipt for the flour, " to be forwarded to Jones, Albany." On the day of the shipment he discounted At a bank a draft on Jones and delivered the receipt to the bank as security. The bank forwarded the receipt and draft to an agent, but Jones refused, on presentation, to accept the draft, and afterwards stopped the flour at Utica and sold it there. The bank brought trover against him. Paige, J., said that as the receipt was not delivered to Jones, he acquired no right to re- ceive the property. On the other hand, the bank was a pledgee and could maintain trover. § 585. In Cayuga Bank v. Daniels, 35 the consignor agreed to ship all his purchases of apples to the consignees, and received advances in view of that agreement. He shipped a boat-load and took a bill of lading from the captain, showing that he was to deliver the apples to the consignees for account of the consignor. On the same day the con- signor insured the cargo, loss payable to the consignees, and delivered the bill of lading and policy to a bank, whose cashier mailed them to the consignees in a letter informing them that they would be drawn on against the property. Two days after, the bank discounted a draft on the consignees, which was presented to them ; but they refused to ac- cept it or to return the bill of lading, and afterwards received the cargo. The bank brought trover. The consignees claimed title by virtue of the consignment to them, the prior agreement to ship to them only, and the fact of their advances. But the court held that the con- signees had no title. Grover, J., said that the advances of the con- signees were not upon the particular apples sent them. " The prior agreement to ship the property confers no title upon the consignee. The owner may violate his agreement and not ship at all ; or, if he ships, may consign to another person. In either event no title is ever acquired by virtue of the unexecuted agreement to ship. * * * The owner of the property being free to ship the property or not, and, if he ships, to consign the same to one with whom he has made a prior agreement, or another, it follows that if he consigns to the former he may impose any conditions upon the consignment he chooses, and that such consignee can acquire title to the property only by performing such conditions." Bank of Rochester!;. Jones is cited and followed. 36 35 - . 47 N. Y. 631. of Kochester v. Jones was also followed in 36. Compare Bailey v. Hudson R. R. First Nat. Bank of Cincinnati v. Kelly, Co., 49 N. Y. 70, stated ante \ 573. Bank 57 N. Y. 34. 512 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. § 586. In Ohio the law is the same. In Emery v. Irving Bank, 37 goods were consigned by a dealer in New York to merchants in Cin- cinnati named in the bill of lading as consignees. The consignor drew against the goods on the consignees and discounted the drafts on pledge of the bill of lading with the bank. The consignees received the goods from the carrier, but refused to accept or pay the drafts because the consignor was indebted to them. The bank sued for the proceeds of the goods, and it was held that they could recover, the property being in them, notwithstanding the bill of lading was drawn to the consignees, who had not endorsed it. In First National Bank of Cincinnati v. Kelly, 38 a bank had dis- Advanoeson counted drafts on the consignee upon the security of a btiTof'adfng D 'H of lading, and it was argued that the transaction was a notamortgage. gh^^l mortgage and therefore void as to a bona fide pur- chaser, for want of filing in the office of a town clerk in Ohio. But the court held that it was not a mortgage but a pledge of the goods, pos- session of the bill of lading being equivalent to possession of the property. § 587. A delivery of goods to a carrier, with directions to collect on D Mver to delivery, or in the usual phrase marked " C. O. D.," is carrier c. o. d. undoubtedly a reservation of title to secure the payment of the price, and the carrier will be liable if he delivers without re- ceiving the payment. But as we have seen, (ante §§ 319 and 335), in the United States, title is sometimes considered to be in the seller for the purpose of protecting him in case of non-payment, and in the buyer for the purpose of holding him liable for payment of the price, and of throwing upon him the risk of loss. In Baker v. Bourcicault, 39 cards were ordered to be printed, framed and glazed, and sent by express to the person ordering them. All this was done, but the cards were lost in transit. This was held to be the seller's loss, because he marked the goods C. O. D., thus reserving the jus disponendi. But in Higgins v. Murray, 40 circus tents wore made to order, and when finished the buyer requested that they should be forwarded by 37. 25 Ohio St. 360. See Ontario Bank Wright, 48 N. Y. 1 ; Refining and Stor- v. N. J. Steamboat Co., 59 N. Y. 510 ; First age Co. v. Miller, 7 Phil. 97 ; Lester v. Nat. Bank of Toledo v. Shaw, 61 N. Y. McDowell, 18 Penna. 91. 283 ; Merchants' Bank v. Union, &c, Co., 38. 57 N. Y. 34. 69 N. Y. 373 ; Halsey v. Warden, 25 39. 1 Daly 23. Kan. 128 ; Marine Bank of Chicago v. 40. 73 N. Y. 252. CHAP. VI.] BESERVATION OF THE JUS DISPONENDI. 513 boat or cars. They were shipped and burned in transit. The bill of lading was subject to payment of cash on delivery, being marked C. O. D., the buyer to pay freight. The seller Sued for the price. Church, C J., said : " If the article had burned during the progress of con- struction, it is clear no action would lie, for the contract was an en- tirety, and until performed no liability would exist. And this rule would apply when the contract is to make and deliver at a particular place, and loss ensues before delivery at the place. But when the contract is fully performed, both as respects the character of the article and the delivery at the place agreed upon or implied, and de- fendant is notified, or if a specific time is fixed, and the contract is performed within that time, upon general principles, I am unable to perceive why the party making such contract is not liable." Accord- ingly the seller had judgment. Baker v. Bourcicault seems to have been overruled, though the New York Supreme Court attempted to distinguish it because there no notice had been given to the consignee of the completion of the property. 41 § 588. When a bill of lading is forwarded to an agent together with a ti'me draft on the consignee, the presumption, in the absence of special instructions, is, that the bill of lading reservation is is to be delivered upon acceptance of the draft, and need mentor accept- not be retained until the draft is paid. In National Bank of Boston v. Merchants' Bank of Memphis, 42 the Memphis bank dis- counted time drafts on the security of bills of lading of cotton shipped to Boston, and forwarded the bills of lading with the drafts to the Boston bank without information or instructions. The Boston bank, not knowing that the Memphis bank had discounted the drafts, de- livered the bills of lading upon their acceptance. The Memphis bank sued the Boston bank for negligence, alleging that they should have retained the bills of lading until the drafts were paid. But the Supreme Court held that the fair inference from the transaction was that the drafts were to be paid from the proceeds of sale of the cotton, that therefore the consignee was entitled to possession to enable him to make such sale, and that the holder of the bill of lading took only the shipper's rights, and as the shipper must give up the bill of lading on acceptance of the draft, so must his endorsee. The court cited and followed Lanfear v. Blossom, 43 and Wisconsin, &c, Co. v. Bank of 41. 4 Hun 565. See Wagner v. Hal- 42. 91 U. S. 92. lack, 3 Col. 176. 43. 1 La. Ann. 148. 2K 514 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. British North America, 44 and refers also to Goodenough v. City Bank, 45 and Clark v. Bank of Montreal. 46 See Farmers', &c, Bank v. Atkinson, 47 where National Bank of Boston v. Merchants' Bank of Memphis is distinguished, in the former case the consignor and consignee having agreed that payment and not merely acceptance should be secured by the bill of lading. § 589. As to our author's seventh principle, {ante § 571), it is proba- Effeotof de- ^ly not intended to convey the idea that if one mails a bill iadtog to b con- f °f lading to the consignee named therein, title will pass if signee. a con t rar y intent is manifested. If the bill of lading is delivered in expectation of immediate payment or acceptance of a draft, this is a conditional delivery, and the seller may reclaim the property if such condition is not complied with and he does not waive it, in the same manner as he might reclaim it if the goods themselves were de- livered in like manner. See cases stated ante § 336, et seq. But if the seller entrusts the buyer with a bill of lading to his order, and the buyer is thereby enabled to effect a sale and delivery of goods to a bona fide purchaser, it may well be considered that the seller is estopped from setting up his title against such purchaser. See ante § 448, et seq. But if the bill of lading and the goods are delivered to the buyer as bailee, title will not pass. See ante §§ 581, 582. In Cayuga Bank v. Daniels, 48 the bill of lading made the goods •deliverable to the consignee, and was mailed to him with notice of the rights of a pledgee holding drafts on the consignee. The consignee refusing to accept the drafts or surrender the bill, was held liable in trover. See this case stated ante § 585. § 590. If the bill of lading is to. be delivered ou acceptance of a draft, the sale is on that condition, and title vests on its acceptance's performance, and in general not before. In Alderman v. Eastern R. B,., 49 a car-load of oats was shipped to the consignor's own order, and the bill of lading was sent to a bank with authority to endorse it to the buyer on payment of drafts for the price. The buyer sold the oats to arrive, to B. & D. 44. 21 TJ. C. Q. B 284 ; affirmed, 2 TJ. Mullen, 15 Penna. 200 ; Winter v. Coit, 7 C. Err. & App. 282. N. Y. 288. 45. 10 TJ. C. C. P. 51. 49. 115 Mass. 233. To the same effect, 46. 13 Grant's Ch. 211. see Newcomb v. Boston and Lowell R. R., 47. 74 N. Y. 587, 591. 115 Mass. 200 ; Libby *. Ingalls, 124 48. 47 N. Y. 631. See Greaner v. Mass. 503. But see ante ?? 568, 579. (HAP. VI.] KESEKVATION OF THE JUS DISPONENDI. 515 On the presentation of the drafts the buyer induced plaintiffs to pay them, and the bank thereupon endorsed the bill of lading to the buyer, who at once endorsed it to plaintiffs. Soon after, the carrier delivered the oats to B. & D., on their representations that they were the pur- chasers, and plaintiffs, holding the bill of lading, brought trover against the carrier. The suit was sustained. Gray, C. J., said : "The sale and delivery to B. & D. passed no title as against the plaintiffs, because at the time of the sale the seller had acquired none, and at the time of the delivery plaintiffs' title had already vested." 516 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. CHAPTER VII. EFFECT OF A SALE BY THE CIVIL FRENCH AND SCOTCH LAW. SEC. Discovery of the Institutes of Gaius, 591 Sale the offipring of exchange 592 Dare,facere, prcestare 593 Civil, prastorian and natural obliga- tions 593 Four stages in mode of making sales in Home 594 Nexum, stipvlatio, titerarum obligatio seu expensilatio, and mutual con- sent 594 Four contracts Juris gentium 595 Bilateral or synallagmatic contracts, 595 Distinctions between sales in Rome and at common law 596 In Rome, price certain required 596 SEC In Rome sale was not a transfer of ownership 597 Vendor bound only to deliver posses- sion 597 When vendor knew he was not owner, 597 What was meant by eviction 598 Remedies of evicted purchaser 599 Actio ex emplo, and actio de stipvla- tione duplw 599 Vendor bound as auctor to make good his warranty 600 Things sold at risk of buyer before delivery 601 Vendor bound prcestare custodiam 601 French law 602 Scotch law 604 § 591. An attempt must now be made to give a summary, necessarily- very imperfect, of the principles of the civil law, in regard to the nature of the contract of sale and its effect in passing the property in the thing sold. The subject is the more difficult, because there is a marked dis- tinction between the modern civil law and the Roman law, and because the doctrines are subtle and technical, requiring for elucidation at least some general idea of the mode in which the Romans entered into con- tracts at different periods in their history. The civilians of the present generation have enjoyed an immense ad- vantage over their eminent predecessors, Pothier and the C in»titutes d'Aguesseau, Cujas and Vinnius, Domat and Dumoulins. The Digest, Code and Institutes of Justinian, compiled in the sixth century, during the reign of that emperor (a. d. 527-565), formed prior to the year 1816, the almost exclusive source from which was derived a knowledge of Roman jurisprudence ; and in that famous corpus juris civilis, the name of Gaius was confounded with those of the other eminent jurists, whose responses (or as we should call them opinions on cases submitted), were adopted by the imperial law-giver as a part of the statutory law of the empire. It was, however, known that the Institutes of Justinian were modeled on those of Gaius, who CHAP. VII.] SALE BY CIVIL FKENCH AND SCOTCH LAW. 517 lived nearly four centuries earlier, during the reigns of Antoninus Pius and Marcus Aurelius. But the works of Gaius were believed to be irretrievably lost till the year 1816, when Niebuhr discovered in a convent at Verona a parchment manuscript of Roman law, of which the original text had been partially obliterated to give place to a theo- logical work of one of the fathers of the fifth century, (a) Savigny recognized the old writing to be the text of Gaius, and after several months of patient labor, the original manuscript was restored almost in its integrity, thus giving to the civilians a succinct and methodical treatise on the whole body of the Roman law as it existed in the second century of our era. By means of this invaluable addition to former sources of information, the modern German and French commentators have been able to pour a flood of light on many questions formerly obscure, and it is from their works that the following summary is chiefly extracted. § 592. Sale was considered as the offspring of exchange, and for many centuries it was disputed whether there was any difference in the nature of these contracts. " Origo emendi, spring of ex- 7 7- 7 ■ • change. vendendique a permutationious empit, ohm enim non, ita erat nummus ; neque aliud merx, aliud pretium voeabatur." (b) And in the earliest period of the republic, when the laws of the Twelve Tables sufficed for the simple dealings of a rude peasantry, or of the poor city clients of the Roman patricians, the contracts were formed solely by means of actual exchange made on the spot, as the very names evince; for the things were either exchanged by the permutatio, or given for a price by the venumdatio. § 593. Afterwards, when the idea of binding one party to another by consent, and thus forming an obligation (juris vincu- r)are faeer lum), was entertained, the whole body of possible engage- P Tcestare - ments between man and man was included in the three expressions, dare, facere , prcestare : dare, to give, that is, to transfer ownership : facere, to do, or even abstain from doing an act : prcestare, to fur- nish or warrant an enjoyment or advantage or benefit to another. And these three classes of engagements might arise out of three classes of obligations, only two of which gave a right of action, the third being available only for defence in some special cases. The three classes of (a) See a very interesting account of (6) Dig. 18, 1. De Contrah. Emptione. this discovery in the preface to the first And see ante p. 1, note (a). edition of Gains. 518 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. _. ., . obligation were civil obligations, which gave a right of Civil, pr&torian t ° to ? & to S"aM atural ° b " ac *-' on a ' law: praetorian or honorary obligations, which gave the right to sue in equity, that is, to invoke the equitable jurisdiction of the prsetor (c) and natural obligations, for which there was no action at law or in equity, but which might be used in defence, as in compensatio or set-oif. "Etiam quod natura debetur, venit in compensationem." (d) The vendee then, like all other contracting parties, had certain actions (e) which alone he was permitted to institute against the vendor. The Institutes of Gaius give us the form of declaration in an action in personam. "In personam actio est, quotiens cum aliquo agimus, qui nobis ex contractu, vel ex delicto obligatus est : id est, cum intendimus, dare, facere, prosstare oportere." § 594. Now, the mode of forming contracts of sale in Rome passed Four stages in through four successive stages after the primitive one of ™g d s e aiesin 3ak " actual exchange from hand to hand. 1st, the nexum, Eome - which was effected per ms et libram, and consisted in weighing out a certain weight of brass, and using certain solemn words, nuncupatio, which operated together as a symbol to form a perfect sale (at a period when men had not learned to write), termed nexum, maneipium, mancipatio, alienatio per ces et libram, all of which had fallen into disuse and derision long before the time of Gaius, (/) who says, " in odium venerunt." 2d, the sale by certain sacramental words alone, and dispensing with the ces et libram: this was the stipulation (g) which bound only one side, from its very nature, because it consisted in a promise made in response to the stipulator. A stipulation, therefore, might bind the vendor or the vendee; it required two stipulations to bind both. The rigorous solemnities and sacramental formula? of the old law of the Quirites, were upheld with strictness by the patricians and priests, so that by an exaggerated technicality, the words " Spondes ? Spondeo," forming a stipulation, were not allowed to be used by any but Roman (c) For these two classes giving rights 7, \ 1. See, also, Inst. 3, 15. Festus, in of action, see Inst. 3, 13, 1. his Abridgment of Valerius Ftaccus, says : (d) Dig. 16, 2, 6, Ulp. "Stipem esse nummum signaium, testimonio (e) Com. 4, \ 2. est et id, quod datur stipendium militi, et (/ ) Gai. 4, 30. quum spondetur pecunia, quod stipulari did- (g) The etymology of this word is tur;" and Isidor of Seville (lib. 4, Orig.u. doubtful: Paulus derives it from stipu- 24,) says: "Dicta stipulatio u, stipula. hum, an old word, meaning firm. Sent. 5, Veteres enim quando sibi aliquid promitte- CHAP. VII.] SALE BY CIVIL FRENCH AND SCOTCH LAW. 519 citizens, (h) foreigners and barbarians being compelled to adopt other words, as "Promittis," "Dabis," " Fades," for the same purpose, these latter expressions being deemed juris gentium. But Justinian tells us that this form of eontract was obsolete in his day. (i) § 595. 3d. The third step in the progress of the law naturally oc- curred when men had learned generally to write, and T-i ... i . l i ill * ± Literarum obli- every Koman citizen kept a book called a register or ac- ga uo, or ex- count book [tabulae, codex acoepti et depensi.) The law de- clared that an entry made in this book in certain terms, admitting the price to be considered as weighed out and given, should be equivalent to the actual ceremony per ces et libram, and should constitute not simply a proof of the sale, but the written contract itself, literarum obligatio. This book was carefully written out once a month from a diary or blotter (adversaria), and was treated as a proof of the high- est character, Cicero saying of the tabula, that they are " ceternce, sanetice quo? perpetuoe existimationis fidem et religionem amplectunter." (k) This contract was said also to be an expensilatio, from the entries in these books, the party who paid money entering it under this head, as pecunia expensa lata, and the one who received it, as peeunia aceepta relala. 4th. The fourth and last stage was the contract Mutualcon . by mutual consent alone ; and it is again a remarkable sent - instance of the strict techicality of the Roman law, (/) that it allowed but four contracts to be made in this manner, on the ground that they were contracts juris gentium, while all others were still required to be made with the formalities of the Roman municipal stat- Pour oontracta utes. These four contracts are sale (emptio-venditio), let- iwrU sentium. ting for hire (locatio-conductio), partnership (societas), and agency or mandate (mandatum.) They are also the only contracts of the Roman law that were termed bilateral, or synallagmatic, or re- Bilateral ciprocal : that is, binding the parties mutually (ultro- synallagmatic. citroque), every other form of contract being unilateral, i. e. binding bant, stipulam tenentes frangebant, quam an extension of sta to stand. ilerum jungentes, sponsiones sum agnosce- (h) Gai. Com. 3, 93. bant " This last etymology seems to be (i) Inst. 3, 15, 1. merely an invention, as the French say, (k) Pro Eoscio 3, $ 2. aprte coup. Such a mode of contracting, (/) Gains thus complains : "Namque ex and such a derivation, if true, could nimia subtilitate veterum qui tunc jura con- scarcely have been unknown to Paulus diderunt, eo res perducta est ut vel qui mini- and Feslus. The word is probably akin mum errasset, litem perderet." — L. 4, $ 30. to stipes, a post, from stop to make firm, 520 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. one party only, and requiring to be repaated in the reverse form in order to bind the other, as in the stipulatio. [The historical development of the forms of contract is treated in Maine's tne nmt h chapter of Maine's Ancient Law. The class of Ancient Law. rea i contracts, comprising loan (mutuum), pledge (pignus), and deposit (depositum), is there placed in order of time between the literal and the consensual contracts, the links in the chain being: (1) nexum, (2) stipulatio, and (3) literal, (4) real, (5) consensual contracts.] § 596. The sale being at last permitted by mutual consent, its ele- Distmction be- men ts were the same as at the common law, with the ex- Eomeandat ceptions now to be considered, common law. lgt The price wag tQ be certainj e j t h er absolutely or in Price must be a manner that could be determined, as for centum aureos ; certain. or for what it cost you, quantum tu idemish; or for what money I have in my coffer, quantum pretii in area habeo. (m) The common law rule, that in the absence of express agreement a reason- able price is implied, did not exist in the Roman law. § 597. 2dly. It was a received maxim in the Roman law that the vendor did not bind himself to transfer to the buyer the transfer of property in the thing sold ; his contract was not rem dare, but prmstare emptori rem habere licere. The texts abound in support of this statement. " Qui vendidit, necesse non habet fundum emptoris facere," unless he made a special and unusual stipulation to that effect, for the text goes on to say, " ut cogilur qui fundum stipu- lanti spopondit." (n) If the vendor was owner, the property passed by virtue of his promise to guarantee possession and enjoyment, but if not, the sale was still a good one, and its effect was simply to bind the vendor to indemnify the buyer, if the latter was " evicted," that is, dispossessed judicially at the suit of the true owner. Ulpian's expla- nation is entirely lucid. " El in primis ipsam rem prazstare venditorem oportet, id est, tradere. Quce res, si quidem dominus fait venditor, facit et emptorem dominum ; si non fuit, tantum evictionis nomine venditorem obligat, si modo pretium est numeratum, aut eo nomine satisfaetum." (o) Vendor was ^ resulted, therefore, that on the completion of a contract deliver posses'- or " se ^ e > t" e vendor was bound simply to deliver possession, and the buyer had no right to object that the vendor was not owner. But the possession thus to be transferred, was something (m) Dig. 18, 1, De Contrail. Empt. 7, (n) Dig. 18, 1, 25, § 1, Ulp. tt 1 and 2. (o) Dig. 19, 1, 11, \ 1, Ulp. CHAP. VD.] SALE BY CIVIL FKENCH AND SCOTCH LAW. 521 more than the mere manual delivery, and the Romans had a special term for it : it must be vacua possessio, a free and undisturbed posses- sion, not in contest when delivered ; " vacua possessio emptori tradita non intelligitur, si alius in ea, legatorumfideive commissorum servandorum causa in possessione sit : aut creditor -es possideant. Idem dicendurn est si venter in possessione sit. Nam et ad hacpertinet vacui appellatio." (p) And if the vendor knew that he was not the owner and made a sale to a buyer ignorant of that fact, so as willfully knewh™™' to expose the latter to the danger of eviction, the vendor's conduct was deemed fraudulent, and the buyer was authorized to bring an equitable suit, ex empto, without waiting for the eviction. " Si sciens alienam rem ignoranti mihi vendideris, etiam priusquam evincatur, utiliter (q) me ex empto acturum putavit [Africanus] in id, quanti mea intersit, meam essefactam. Quamvis enim alioquin verum sit, venditorem hactenus teneri ut rem emptori habere liceat, non etiam ut ejus faciat; quia tamen dolum malum abesse prcestare debeat, teneri eum, qui sciens alienam, non suam, ignoranti vendidit." (r) § 598. The eviction against which the vendor was bound to warrant the buyer, was the actual dispossession effected by means of a judgment in an action by a third person, and it was meantMtJyevic- not enough that judgment was rendered if not executed. In Pothier's edition of the Pandects, he thus states the rule and cites a response of Gaius : " Cum ea res evicta dicatur, quae per judicem ablata est, Mac non videbitur evicta, si condemnatio exitum non habuit, et adhuc rem habere liceat. Exemplum affert Gaius. Habere licere rem videtur emptor, et si is qui emptorem in evictione rei vicerit, ante ablatam vel abductam rem sine successore decesserit, ita ut neque ad fiscum bona pervenire possint, neque privatim a areditoribus distrahi, tunc enim nulla (p) Dig. 19, 1, 2, I 1, Paulus. tained by me for damages (literally, for (q) Utiliter, that is, in equity, before as much interest as I had, that the thing the Prmtor. should become mine.) For, although it (r) Dig. 19, 1, 30, \ 1. The text may would otherwise be true that the vendor be thus translated for the benefit of those is only bound to guarantee possession to not familiar with the technical terms of the buyer, not also that the thing should the Roman law : " If you, knowing a become the buyer's, yet because he ought thing to be another's, sell it to me, who also to warrant the absence of fraud, a am ignorant of the fact, Africanus was of man is held responsible who, knowing the opinion that even before eviction, an thing to be another's, not his own, has equitable suit ex empto might be main- sold it to one ignorant of that fact" 522 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. competit emptori ex stlpulatu actio, quia rem habere ei licet. L. 57, Gaius, lib. 2 ad Ed. jEdil.-Curul." (s) § 599. The evicted purchaser had two actions, one ex empto, which was the actio directa, resulting from the very nature of the Remedies of j. j • i. • 1 . i r J evicted pur- contract, and in which the recovery was tor damages con- lii-Actio ex sisting of the value of the thing at the date of eviction, and empto. . , . , . -, ... any expenses incurred in relation to it, the true principle in this action being to restore the buyer to the condition in which he would have been, not if he had never bought, but if he had not been dispossessed, (t) The second action was de stipulatione duplo3, and arose out of a cus- tom of stipulating that the buyer, in case of eviction, stipuilt^ne should receive, as an indemnity, double the price given. This stipulation became so general, that under an Edictum JEdilium-Curulium, it was considered to be implied in all sales, unless expressly excluded : " Quia assidua est duplm stipulatio, idcirco placuit ex empto agi posse si duplam venditor mancipii non caveat. EA ENIM QUJE SUNT MORIS ET CONSUETUDINIS, IN BONiE FIDEI judiciis debent tenire." («) The whole of the second title of the 21st Book of the Digest is devoted to this subject, De Evictionibus et Duplce Stipulatione. § 600. In consequence of the peculiar obligations of the vendor as „ . warrantor against eviction, he was called the auctor, who Vendor was ° ? 2 tomake Sa ood° r was bound autoritotem prozstare, to make good his war- hia warranty. ran ty ; and the form of procedure was, that whenever the buyer was sued by a person claiming superior title to the thing sold, it was his duty to cite his vendor, and make him party to the action, so as to give him an opportunity of urging any available defence. This proceeding was termed litem denuntiare ; or auctorem laudare; auctorem interpellare : and the buyer who failed to cite in warranty his vendor, without a legal excuse for his default, lost his remedy. " Emptor fundi, nisi auctori aut heredi ejus denuntiaverit, evicto prmdio, (s) Pothier, Pandecte Justinianse, lib. Pand. Just., lib. 19, tit. 1, ch. 1, Nos. 43 to 21, tit. 2, De Evict. Pars 2, No. XII. So 47, under the head — " Quanti teneatur strict was the rule, that the buyer had no venditor emptori, eviclionis nomine, haa remedy if evicted under the sentence of actione ex empto." an arbitrator, or by compromise. ,Id., No. (u) Dig., lib. 21, tit. 2, 1. 31, § 20, Ulp. XVI. De jEdil. Edict. («) The texts are collected in Pothier, CHAP. Vn.] SALE BY CIVIL FREXCH AND SCOTCH LAW. 523 neque ex stipulatu, neque ex dupla, neque ex empto actionem contra ven- ditor em vel fidejussorem ejus habet." (x) § 601. It would seem the natural consequence of these principles, that a vendor who did not even profess to transfer title, must Thing sold was necessarily suffer the loss, if the thing sold perished before beforedefivery, delivery, on the maxim that res perit domino. But, on pro°e!?y had the contrary, the rule was explicitly laid down in con- notpa8se formity with ours at common law, as exemplified in Ruggu. Minett, (y) where the buyer of the turpentine was held bound to suffer the loss of the goods destroyed before delivery, on the ground that the ownership had vested in him. The reasoning by which this result was reached in the Roman law is thus explained by an eminent French jurist. After citing the text of the Institutes, (2) which is in the=e words : " Own autem emptio et venditio contractu sit, quoc effici diximus simul atque de pretio convenerit, cum sine scriptura res agitur, periculum rei venditce statim ad emptorem pertinet, tametsi adhuc ea res emptori tradita non sit ; " the commentator says : " Quels sont les effets de la vente ? C'est de prodtdre des obligations : le vendeur est oblige de livrer et de faire avoir la chose d I'acheteur. Eh bien ! si depuis la vente il y a en des fruits, des accroissemerds, il sera oblige de rneme de livrer et de faire avoir ces fruits, ces accroissements. (Dig. 19, 1, de Action. Empt. 13; §§ 10, 13 et 18, Ulp.) Si la chose a diminuee s'est deterioree sans safaute, il ne sera oblige de la livrer, de 'a faire avoir, qu'ainsi diminuee, ainsi deterioree ; et si la chose a peri sans sa faute, son obligation aura cesse d'exister. Voild tout ce que signifie cette maxime, que la chose, du moment de la vente, est aux risques de I'acheteur. C'est-d-dire que I'obligation du vendeur de livrer et de faire avoir, s'appliquera d la chose telle qu'elle se trouvera par suite des changements qu'elle aura pu eprouver. 11 ne s'agit en tout ceci que de I'obligation du vendeur. Et s'il y a perte Male nous ne ferons qu'appliquer cette regie commune de I'extinction des obli- qations, que le debiteur d'un corps certain (species) est libere, lorsque ce oorps a peri sans son fait ou sans sa faute. (Dig. 45, 1, de Verb. Oblig. 23, Pomp.) Mais que deviendra I'obligation de I'acheteur rela- tivement au prix f Le prix convenu devra-t-il etre augmente ou diminue, selon que la chose aura regu des accroissements, ou subi des deteriora- tions f En aucune maiiiere ; le prix restera toujours le meme. Et si la chose vendue a peri totalement, de sorte que le vendeur se trouve libere (x) Code, tit. de Evic. et Dup. Stip., (j/) 11 East 210. 1, 8. (z) Inst. 3, 23, 3. 524 EFFECT OF CONTRACT IN PASSING PROPERTY. [BOOK II. de V obligation de la livrer, I'acheteur le sera-t-il aussi de cette de payer le prixf Pas davantage. Les deux obligations, unefois contractus, ont une existence independanle : la premiere peut se modifier ou s'eteindre dans son objet, par les variations de la chose vendue — la seeonde n'en continue pas moins de subsisler, toujours la meme. (Dig. 18, 5, de Rescind. Vend. 5, § 2.) Tel etait le systhne Romain — et c'est pour cela qu'il est vrai de dire que du moment de la vente, I'acheteur court les risques de la chose vendue, bien que le vendeur en soii encore proprie- taire." (a) But although the risk of loss before delivery was thus imposed on the buyer, it was on condition that the vendor should be bound prmstare guilty of no default in taking care of the thing till he eustodiam. , , transferred it into the buyer s possession, for an accessory obligation of the vendor was prmstare eustodiam. "Et sane pericu- lum rei ad emptorem pertinet dummodo eustodiam venditor ante tradi- tionem prozstet." (6) § 602. Such were the leading principles of the Roman law as to the effect of sale in passing title, and such was the law of the continent of Europe wherever based on the civil law, till the adoption and spread of the Code Napoleon, first among the Latin races, and more recently among the nations of Central and Northern Europe. The French Code says in a few emphatic words, "La vente de la chose d'autri est nulle," art. 1599, and would thus seem to have swept away at once the entire doctrine dependent upon the Roman system, which was based on a principle exactly the reverse. But unfortunately the definitions of the nature and form of the con- tract in the arts. 1582 and 1583, gave some countenance to the idea that such was not the intention of the authors. Instead of defining a sale to be a transfer of the property or ownership, the language is, in art. 1582 : "La vente est une convention par laquelle I'un s'oblige d livrer une chose, et I'autre a la payer;" and in 1583 : "LJlle est par- faite entre les parties, et la propriete est acquise de droit d I'acheteur, d I'egard du vendeur, des qu'on est convenu de la chose et du prix, quoique la chose n'ait pas encore ete livree ni le prix paye." The consequence of this almost literal adoption of the texts of the Roman law was, that not only an eminent jurist, but the Court of Cassation itself, will be found to furnish authority for the position that a sale transfers only aright of (a) Ortolan, Explic. Hist, des Inst., (6) Dig. 47, 2 de Furtis, 14, Ulp. tome 3, p. 282. CHAP. VH.] SALE BY CIVIL. FRENCH AND SCOTCH LAW. 525 possession, not a title of ownership. Toullier, one of the most accred- ited commentators, is of this opinion ; (e) and there is a decision of the highest court in France in conformity with it. (d) But this view seems to be now exploded, and all the recent writers, including such great authorities as Duranton, Zacharise, and Troplong, insist that the modern idea of the transfer of ownership is what was really intended by the authors of the civil code, (e) M. Fremery gives the following clear exposition of the origin of the difficulty, and adds his authority to that of the great body of French jurists in support of the position that the modern civil law is on this point opposite to that of the Corpus Juris Oivilis : § 603. " The fragments preserved in the Digest conclusively prove that custom had consecrated at Rome a habitual formula for contracts of sale, subject to special clauses, which were to be added to suit the circumstances. According to this formula, it was the vendor who spoke, legem dicebat. It was customary according to this formula for the vendor, in expressing the engagements which he agreed to assume, to use these words : prcestare emptor i rem habere lioere; terms which, strictly construed, are not as wide in their import as the words rem dare. The jurists decided on this state of facts that every ambiguous clause was to be interpreted against the vendor, whose fault it was, not to have expressed himself more clearly. They further decided that he was not bound to transfer ownership. "Justinian inserted these decisions in his Digest, and made them the law ;• so that, deriving their authority from legislation, and not from the special circumstances of fact, on which the jurisconsults had reasoned, they became applicable to every contract of sale by its nature, as recognized by the law. If,' then, the old formula is abandoned, and the vendor uses the words rem, dare, and no longer rem habere licere, how can one explain a law which declares that the vendor does not bind himself to transfer the ownership ? And if, using neither locu- tion, he simply says, ' I sell,' and leaves it to usage to determine the meaning which it has attached to these words, what is to be done if it be manifest that all who use these words attach to them the idea that the vendor binds himself to transfer the ownership? • (e) Tome 14, No. 240, el seq. et seq. ; tit. 2, add aum&me No. ; Duvergier (d) Sirey 32, 1, 623. tit. 1, Nos. 10, et seq. ; Charupionniere et (e) Favart, V° Vente ; Duranton, t. 16, Eigaud, Dr. d'Enreg., t. 3, No. 1745 ; No. 18 ; Troplong, Vente, tit. 1, Nos. 4 Zachariae, t. 2, Common mis- cumstances justify the inference that no contract would take - have been made if the whole truth had been known to the parties, the sale is voidable. 1 If either party has performed his Contraot part during the continuance of the mistake, he may set jJS&iiedwhere aside the sale on discovering the truth, unless he has done r ^^^°^^. something to render impossible a restitutio in integrum of Slble ' (6) MostyD v. West Mostyn Coal Co., 1 replevied the horse, and the suit was C. P. D. 145. sustained. (c) Storey v. Waddle, 4 Q. B. D. 289, Mistake as to Quality.— In Byers v. C. A. But see Holloway v. York, 2 Ex. Chapin, 28 Ohio St. 300, a cooper sold D. 333, C. A. and delivered a lot of barrels for oil and 1. Mistake as to Price, or Quantity, received the price. The cooper prepared — See ante $ 50, note 16. Armstrong Fur- them for use according to custom by glue- niture Co. v. Kosure, 66 Ind. 545. In ing, but pronounced them improperly Rupley v. Daggett, 74 111. 351, the seller made, and returned them, the buyer as- offered a horse for $165. The buyer said : senting and giving back a note for the " Did I understand you sixty-five ?" The greater part of the price. Subsequently seller answered yes, supposing that the the cooper discovering, as he alleged, that buyer referred to the amount in addition the barrels would have answered the pur- to $100. The buyer took away the horse, pose if they had been properly glued, but the seller learning that the buyer tendered a return of them, and de- understood that the price was $65 only, manded back the note, and on a refusal, 2l 530 AVOIDANCE OP THE CONTRACT. [book. in. the other side, a restoration to the condition in which he was before Even where the contract was made. If that be not possible, the de- Susedby 89 ceived P art y must be content with a compensation in fraud. damages. And this rule is applicable to cases even where the mistake of the complaining party was caused by the fraud of the other, (d) 2 and suit upon the note he set up these facls as a defence. The jury found for defendant, and the court sustained the verdict, there being evidence that the note had been given under the belief that the barrels were not properly made for oil barrels, and that this belief was mistaken, the barrels being in fact suitable if prop- erly glued by the buyer. Mistake as to Identity or Subject Matter.— In Kyle v. Kavanagh, 103 Mass. 356, the contract was to sell a lot on Prospect street in Waltham. There were two streets of that name, and each party mistaking the intent of the other as to which was meant, it was held that there was no contract. See Barfield v. Price, 40 Cal. 535, 542. In Harvey v. Harris, 112 Mass. 32, the sale was of two rows of barrels of flour as damaged flour. In fact the flour was sound, having been placed by mistake in a lot of damaged flour. It was held that this was not merely a mis- take in quality of the thing sold, but a mistake in identity. See Cutts v. Guild, 57 N. Y. 229 ; Sheldon v. Capron, 3E.L 171. In Hills v. Snell, 104 Mass. 173, a warehouseman having flour on storage for two persons, delivered to a purchaser from one, out of the more valuable lot of the other. The purchaser having paid for it and innocently used it, was held not liable either in tort or contract, to the warehouseman. AVhere the sale is of an animal, supposed by both parties to be alive, but in fact dead, or of a ship, which has been destroyed without the knowl- edge of either, or where both are under a mistake of fact as to any essential ele- ment of the agreement, it is void. See ante \ 76, note 1 ; McGoren v. Avery, 37 Mich. 120. In Chapman v. Cole, 12 Gray 141, the owner of a gold coin worth $10, not lawful money, passed it off by mistake for a. half-dollar piece. It was held that he could recover in trover against one who held it in good faith for value. Had it been lawful money the case would have been otherwise, as that cannot be followed even though stolen. In Montgomery County v. American Emi- grant Co., 47 Iowa 91, the county sold all its swamp land. A new allotment of swamp land had been made, of which the county officers were ignorant. Held, that the contract being made under a material mistake of fact, must be set aside. (d) Hunt v. Silk, 5 East 449 ; Black- burn v. Smith, 2 Ex. 783 ; Sully v. Fearn, 10 Ex. 535; Clarke v. Dickson, E., B. & E. 148; 27 L. J., Q. B. 223; Savage v. Canning, 16 W. R. 133 ; 1 Ir. C. L. 434. And see next chapter. 2. Restoration Must be Complete. — If the party desiring to rescind lias changed the condition of the property while ignorant of the fraud, he can no longer have the remedy of rescission. Smith v. Brittenham, 98 111. 188. "No principle is better settled than that a party cannot rescind a contract, and at the same time retain possession of the con- sideration in whole or in part, which he has received under it." Leonard, J., in Bishop v. Stewart, 13 Nev. 25, 41, citing many cases ; Masson v. Bovett, 1 Denio 69 ; Hendrickson v. Hendrickson, 51 Iowa 68 ; Gay v. Alter, 102 U. S. 79 Grymes v. Sanders, 93 U. S. 55, 62 Lyon v. Bertram, 20 How. 149, 154 Haase r. Nonnemacher, 21 Minn. 486 Hammond v. Buckmaster, 22 Vt. 375 CHAP. I.] MISTAKE, AND FAILURE OF CONSIDERATION. 531 Cox v . Prentice. § 607. In Strickland v. Turner, (d) the sale was of an annuity, de- pendent on a life that had ceased without the knowledge strickIand „ of either party, and the purchaser paid his money. Turner - Held, that he could recover it back as money had and received. In Cox v. Prentice, (e) the plaintiff bought a bar of silver, and by agreement it was sent to an expert to be assayed, and on his report of the quantity of silver contained in the bar, the plaintiff paid for it. There was a mistake in the assay, and the quantity of silver was much less than was stated in the report. Held to be a common mistake, and that the plaintiff, on offer to return the bar, could recover the price paid in assumpsif, Lord Ellenborough say- ing, it was just as if an article is sold by weight, and there is an acci- dental misreckoning of the weight. § 608. The case of Boulton v. Jones, (/) was a very singular case of Vance v. Schroyer, 79 Ind. 380 ; Coolidge v. Bingham, 1 Mete. 547 ; Thayer d. Tur- ner, 8 Mete. 550 ; Cook v. Gilman, 34 N. H. 556, 560 ; Tisdale v. Buckmore, 33 Me. 461 ; Auger v. Thompson, 3 Ont. App. 19. In Morse v. Brackett, 98 Mass. 209, the buyer returned wool bought by him be- cause not of the character warranted. But as he did not return the bag contain- ing the woo], it was held that he had not put the seller in the same position as be- fore the contract. See Bassett v. Bram, 105 Mass. 551, 558, where the value of the property not returned was trifling. But the tender need not be made where the thing received is utterly valueless, such as forged securities. Brewster v. Burnett, 125 Mass. 68; Smith v. Smith, 30 Vt. 13y; Boyce v. Watrous, 7 Daly 87, affirmed 73 N. Y. 597 ; Dill v. O'Fer- rell, 45 Ind. 268 ; Hess v. Young, 59 Ind. 379. Nor where the suit is against a third person who has possession with no- tice, of the property sought to be re- claimed. Stevens u. Austin, 1 Met. 557. The rescission must be within a reasonable time. Wolf v. Dietzsch. 75 111. 205; Johnson v. MeLane, 7 Blackf. 501. What is a reasonable time depends on the cir- cumstances of each case. Marston v. Simpson, 54 Cal. 189 ; Grymes v. San- ders, 93 U. S. 55, 62. When the seller applied to a court of equity to enjoin a suit at law on an agreement of sale which by mistake transferred more property than was intended, and it appeared that he had not in good faith carried out the agreement as in fact made, the court re- fused to enjoin the suit at law except on condition of a rescission of the original contract, and putting the other parties in statu quo. Cassidy v. Metcalf, 66 Mo. 519. In Herman v. Haffenegger, 54 Cal. 161, in a suit to rescind, the plaintiff's offer to return the property received by him was not made until the trial, and this was held too late. The tender should be before suit. Gould v. Cayuga Co. Bank, 21 Hun 293, 304; Gifford v. Carvill, 29 Cal. 589. (d) 7 Ex. 208. See a similar case in equity, Cochrane v. Willis, 1 Ch. 58. (e) 3 M. & S. 344. (/) 2 H. & N. 564; 27 L. J., Ex. 117, followed in the American case of The Boston Ice Co. v. Potter, 123 Mass. 28, an-te \ 59. See a criticism on the remarks in the text in Pollock on Contracts, Appendix E, p. 457 (2d ed.) The note is omitted in the 3d edition. See, however, note at p. 436 of that edition. 532 AVOIDANCE OF THE CONTRACT. [BOOK III. Bouiton v. mutual mistake, and is well worth consideration. The facts have already been stated at length (ante § 58), and were substantially these : One Brocklehurst kept a shop. He owed money to the defendant Jones. One day he sold out his shop and business to the plaintiff Bouiton. On the same day, Jones, ignorant of this sale, sent a written order for goods to the shop, addressed to Brocklehurst, and Bouiton supplied them. Jones consumed the goods, still ignorant that they were supplied by Bouiton, and when payment was asked for, declined, on the ground that he had a set-off against Brocklehurst, with whom alone he had assented to deal. The action was for goods sold, and the court held that there whs no con- tract by Jones with the plaintiff, and that inasmuch as he had a set-off against Brocklehurst, the mistake as to the person was sufficient to entitle him to refuse payment. So far the case was in accordance with the rule laid down by Gibbs, C. J., in Mitchell v. Lepage (g) (not cited in Bouiton v. Jones), and the plaintiff could not be permitted to recover. But on the principles governing contracts in on Bouiton v. general, it is submitted that the plaintiff was not wholly without remedy. For aught that appears in the report, there was a clear case of mutual mistake. The plaintiff, who had just bought out the shop and business of Brocklehurst, did nothing wrong, nothing out of the usual course of trade in supplying goods on a writ- ten order sent by a customer to a shop, addressed to the man whose business he had just bought, and in ignorance of the fact that it could be at all material to the buyer whether the goods were supplied by himself or by his predecessor in business. Plaintiff's mistake was his ignorance that the defendant wished to buy qua creditor of Brockle- hurst, so as to pay for the goods by a set-off. Defendant's mistake was in consuming the goods of the plaintiff, in the belief that they were the goods of Brocklehurst. It can hardly be doubted that if the goods had not been consumed before the discovery of the mistake, the defendant would have been bound on demand to return the goods if he did not choose to pay for them. The very basis of the decision was that there had been no contract between the parties, and if so, on no conceivable ground could the defendant have kept without payment another man's goods sent to his house by mistake. The consumption of the goods prevented the possibility of a simple avoidance of the contract on the ground of mutual mistake. That mistake was in (g) Holt N. P. 253. CHAP. I.] MISTAKE, AND FAILURE OF CONSIDERATION. 533 relation to the mode of payment. The vendor thought he was to be paid in money : the buyer intended to pay in his claim against Brocklehurst. The real question under the circumstances then was this : Is the buyer to pay as he intended, or as the vendor intended? for both had intended that the property in the goods should pass, at the price fixed in the invoice. Now, in determining this, which was the real dispute, a controlling circumstance is that the buyer was wholly blameless, whereas the seller had been guilty of some slight negligence. If the seller had sent an invoice or bill of parcels with the goods, showing that he was the vendor, the buyer would have been at once informed of the mistake, and might have rejected the goods ; but the vendor delayed sending his invoice till the goods were con- sumed. The true result therefore of the whole transaction, it is sub- mitted, is in principle this, that the buyer was bound to pay for the goods in the manner in which he had assented to pay, and the vendor was bound to accept payment in that mode. The buyer was there- fore responsible, not at law (for courts of law have no means nor machinery for reforming contracts nor rendering conditional judg- ments), but in equity, either to make an equitable assignment to the vendor of his claim against Brocklehurst for an amount equivalent to the price, or to become trustee for the seller in recovering the claim against Brocklehurst. He would have no right to retain the whole of his claim against Brocklehurst while refusing to pay for the goods. (A) The case is manifestly quite distinct from that of a mutual mistake, where a party has consumed what he did not intend to buy. If A sends a case of wine to B, intending to sell it, but fails to communi- cate his intention, and B, honestly believing it to be a gift, consumes it, there is no ground for holding B to be responsible for the price, either in law or equity, if he be blameless for the mistake. 3 (h) See for illustration of equitable striking illustration of the effect of a mis- principles in such eases, Harris v. Pep- take by the buyer in the person with perell, 5 Eq. 1. whom he was dealing. The article sold 3. Mistake as to the Person of the having been consumed, it was held that other party. — In Gregory v. Wendell, 40 the seller, who had undertaken to supply Mich. 432, 443, Cooley, J., said: "No the contract of another, could not recover man can be compelled against his will to in any form of action. On the other accept another contracting party in place hand, where the buyer discovered the of the one he has dealt with, even though mistake before he had consumed the arti- a contract with such other party may be cle, and instead of at once returning it, equally valuable." Boston Ice Co. v. Pot- kept and used it, he was held liable, ter, 123 Mass. 28, stated ante I 59, is a Mudge v. Oliver, 1 Allen 74. See Kan- 534 AVOIDANCE OF THE CONTRACT. [book in. § 609. Where the mistake is that of one party only to the contract, Mistake of one anc ' ' s no ^ ma de known to the other, the party laboring Stiw?' under the mistake must bear the consequences, in the ab- the other. se nce of any fraud or warranty. If A and B contract for the sale of the cargo per ship " Peerless," and there be two ships of that name, and A mean one ship and B intend the other ship, there is no contract, (i) But if there be but one ship " Peerless," and A sell the cargo of that ship to B, the latter would not be permitted to excuse himself on the ground that he had in his mind the ship "Peeress," and intended to contract for a cargo by this last-named ship. Men can only bargain by mutual communication, and' if A's proposal were unmistakable, as if it were made in writing, and B's answer was an unequivocal and unconditional acceptance, B would be bound, however clearly he might afterwards make it appear that he was thinking of a different vessel. v For the rule of law is general, that whatever a man's real intention may be, if he manifests an intention to another party, so General rule of . , , • i -i, i lawivnerea as to induce that other party to act upon it, he will be party does not manifest his estopped from denying that the intention as manifested was his real intention, (k) 4 real intention. dolpn iron Co. v. Elliott, 34 N. J. L. 184 ; Orcutt v. Nelson, 1 Gray 536, 542 ; Winchester v. Howard, 97 Mass. 303, stated post note 5. If one falsely repre- sents himself as agent for another, and as such procures goods, there is no contract at all. Decan v. Shipper, 35 Penna. 239 ; Barker v. Dinsmore, 72 Penna. 427 ; Dean v. Yates, 22 Ohio St. 388; Moody v. Blake, 117 Mass. 23. In Hamet v. Letcher, 37 Ohio St. 356, Hamet sold and delivered a lot of hogs to one Rohner .is agent for Letcher. In fact, Rohner. was not agent for Letcher, his representa- tions to that effect being false. Bohner sold the hogs to Letcher and received pay- ment. Hamet, not receiving payment, brought suit against Letcher for conver- sion. It was held that he was entitled to recover. Okey, C. J., said : " The circum- stance that Hamet intended that Letcher & Co. should have the hogs is of no im- portance. He never intended that they should acquire title from any other than himself, nor do they make any claim to such property under any purchase they made from him." (»') Baffles v. Wichelhaus, 2 H. & C. 906.; 33 L. J., Ex. 160. (k) Per Lord Wensleyd ale, in Freeman v. Cooke, 2 Ex. 654; Doe v. Oliver, and cases collected in notes to it, 2 Sm. L. C. 775, (8th ed.) ; Cornish v. Abington, 4 H. & N. 549 ; 28 L. J., Ex. 262 ; Alexanders*. Worman, 6 H. & N. 100 ; 30 L. J., Ex. 198 ; Van Toll v. South Eastern Railway Co., 12 C. B. (N. S.) 75 ; 31 L. J., C. P. 241 ; In re Bahia and San Francisco Bail- way Co., L. R., 3 Q. B. 584 ; Carr v. Lon- don and North Western Railway Co., L. B., 10 C. P. 307, per Brett, J., at p. 316. 4. Mistake of One not Known to the Other. — In Stoddard v. Ham, 128 Mass. 383, mentioned ante \ 53, note 20, a quan- tity of brick were sold and delivered, the seller supposing that the buyer was acting in the purchase as agent for a particular person. Finding that the buyer was not CHAP. I.J MISTAKE, AND FAII-TTRE OF CONSIDERATION. 535 § 610. When the mistake of one party is known to the other, then the question resolves itself generally into one of fraud, ..... .. - . • 1 c-ri Mistake of one which is the subject ot the next chapter. 5 In the case party known J ' to the other. just supposed of a ship " Peerless " and a ship " Peeress," there can be little doubt that if the vendor knew that the purchaser had a different ship in his mind from that, intended by the vendor, there would be no contract, for by the rule of law just stated, the vendor would not be in a position to show that he had been induced to act by a manifestation of the buyer's intention different from his real inten- tion. And if he not only knew the buyer's mistake, but caused it, his conduct would be fraudulent. But, as a general rule in sales, the vendor and purchaser deal at arms' length, each relying on his own skill and knowledge, and each at liberty to impose conditions or exact warranties before giving assent, and each taking upon himself all risks other than those arising from fraud, or from the causes against which he has fortified himself by exacting conditions or warranties. So that even if the vendor should know that the buyer was purchasing, for instance, cotton goods submitted to his inspection in the mistaken belief that they were made of linen, or if the purchaser should know that the vendor was selling a valuable estate under the mistaken belief that a search for mines under it had proved unsuccessful neither party could avoid the contract made under the supposed error or mistake. acting as such agent, the seller brought tro- one with whom the buyer would not will- ver, but it was held that he could not re- ingly have any dealings. It was held that cover, the buyer not being aware of the the buyer might rescind. In Holtz v. mistake. Colt, J., said : "The difficulty is, Schmidt, 59 N. Y. 253, an agreement was that the plaintiffs, if they had any other made that if the plaintiff, a liquor dealer, intention, (than that of sale to the buyer), should buy goods required in his business neglected to disclose it. It was a mistake from defendant, an importer, that defend- on one side, of which the other had no ant would sell to him at as low a price knowledge or suspicion, and which con- as to any one else. Defendant sold to sisted solely in the unauthorized assump- others at a lower price than to plaintiff, tion that he was acting as agent for a third who sued for the difference. Andrews, person." See cases cited ante $ 53, note J., said that the contract imposed no 20. Stoddard v. Ham is distinquished in obligation except so far as acted on, then Hamet v. Letcher, stated note 3, ante. it became operative ; and he sustained the 5. Mistake of One. Known to the action, saying: "The law will imply a Other. — Winchester v. Howard, 97 Mass. promise on the part of he defendant to 304, was a case where the buyer erro- restore the money thus inequitably ob- neously supposed the seller to be the tained, and which was paid by the plain- owner of the property sold, and the seller tiff under a mistake of fact, and received knew of this mistake, and concealed the by the defendants, knowing that they fact that he was agent. The principal was were not entitled to it." 536 AVOIDANCE OF THE CONTRACT. [BOOK III. The exception to this rule exists only in cases where, from the relations between the parties, some special duty is incumbent on the one to make full and candid disclosure of all he knows on the subject to the other. This topic is more fully considered in the next chapter on Fraud. § 611. The mistake which will justify a party in seeking to avoid his contract must be one of fact, not of law. The uni- Mistake must ... be of fact, not versal rule is Iqnorantia juris neminem excusat.® The law. J •> cases illustrating this maxim are very numerous, and only a small number of them will be found in the note. (I) But in Wake v. wake v. Har- Harrop, (I) it was held, both in the Exchequer of Pleas rop ' and in the Exchequer Chamber, that where a party had specially stipulated that he was acting only as agent for another, and had signed as such agent for his absent principal named in the signa- ture, he was at liberty to show, by way of equitable defence, that the agreement which had been drawn up in such terms as to make him personally liable at law, was so written by mistake, that it did not express the real contract, and that he was not liable as principal. Some of the judges thought the plea a good defence, even at law, but this point not being raised, was not decided. § 612. In Cooper v. Phibbs, (m) Lord Westbury gave the following cooper v verv ^ u0 ^ statement of the true meaning of the maxim Phibbs. j ug (. quoted " It i s sa i(j ignorantia juris haud excusat, but in the maxim this word jus is used in the sense of denoting general 6. Mistake as to Legal Effect of may, and probably does sometimes hap- Agreements. — Where the mistake is as pen that one or both of the contracting to the legal effect of an agreement, the parties misapprehend the legal effect, yet party misunderstanding it cannot be re- if it be not unintelligible, the court will lieved from its performance on that read the contract for the parties, and they ground. Clark v. Lillie, 39 Vt. 405 ; Mil- will be bound by its legal effect." See ler e. Lord, 11 Pick. 11 ; Srnither v. Cal- post note 8. vert, 44 Ind. 242 ; Clodfelter v. Hulett, 72 (I) Bilbie v. Lumley, 2 East 471 ; Ste- Ind. 137, 143. Where, however, both vens v. Lynch, 12 East 38 ; East India parties have acted on an admissible Co. v. Tritton, 3 B. & C. 280 ; Milnes v. construction of an ambiguous contract, Duncan, 6 B. & C. 671 ; Stewart v. Stew- the court will adopt that construction, art, 6 CI. & F. 966 ; Teed v. Johnson, 11 Coleman o. Grubb, 23 Penna. 393. But Ex. 840 ; Piatt v. Bromage, 24 L. J., Ex. where the meaning is plain, the error of 63 ; Wake v. Harrop, 6 H. & N. 768 ; 1 the parties cannot control its effect. Bail- H. & C. 202 ; 30 L. J., Ex. 273 ; 31 L. J., road, Co. v. Trimble, 10 Wall 367, 377. Ex. 451. In Bice v. Dwight Manufacturing Com- (m) L. B., 2 H. L. 148-170 ; and s ee pany, 2 Cush. 80, 86, Forbes, J., said : Jones v. Clifford, 3 Ch. D. 779. " When a contract is reduced to writing it ( HAP. I.] MISTAKE, AND FAILURE OP CONSIDERATION. 537 law, the ordinary law of the country. But when the word jus is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact ; it may also be the result of matter of law : but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that the agreement is liable to be set aside as having proceeded upon a common mistake. Now that was the case with these parties — the respondents believed themselves to be entitled to the property ; the petitioner believed that he was a stranger to it : the mistake is discovered and the agreement cannot stand." The case was that of a party the real owner of a property, agreeing in ignorance of his right, to take a lease of it from the supposed owners, who were equally ignorant that they had no title to it. § 613. [And in Earl Beauchamp v. Winn, (n) Lord Chelmsford said : " With regard to the objection, that the mistake (if Eajl Beau any) was one of law, and that the rule, Ignorantia juris <*amp«.Winn. neminem excusat applies, I would observe upon the peculiarity of this case, that the ignorance imputable to the party was of a matter of law arising upon the doubtful construction of a grant. This is very dif- ferent from the ignorance of a well-known rule of law. And there are many cases to be found in which equity, upon a mere mistake of the law, without the admixture of other circumstances, has given relief to a party who has dealt with his property under the influence of such mistake." In equity the line between mistakes in law and mistakes in fact has not been so clearly and sharply drawn as by the courts ot common law, and there are cases m which equity grants relief against mistakes of law, the ground for the relief being that, under the particular facts of the case, it is inequitable that the one party should profit by the mistake of the other, (o) And now it would seem that under the judicature act, 1873, sec. 25, subs. 11, the rule adopted by courts of equity will prevail.] § 614. An innocent misrepresentation of fact or law may give rise to a contract, and thus involve the question, whether the Innooentmia . party deceived by such innocent misrepresentation is ^J^jJjjL 1 ^?" entitled on that ground to avoid the contract. take ' [n) L. K., 6 H. L., at p. 234. per Mellish, L. J., in Bogers v. Ingham, (o) Per Turner, L. J., in Stone v. God- 3 Ch. D., C. A., at p. 357 ; per cur. in frey, 5 D., E. M. & G. at p. 90 ; per James, Daniell v Sinclair, 6 App. Cas. at p. 190. L. J., in ex parte James, 9 Ch. at p. 614 ; 538 AVOIDANCE OF THE CONTRACT. [BOOK III. The law as to misrepresentation of fact was thus stated by Black- ist^offact burn, J., in delivering the judgment of the court in Ken- nedy v. The Panama Mail Company, (o) " There is a Panama Mail very important difference between cases where a contract may be rescinded on account of fraud, and those in which it may be rescinded on the ground that there is a difference in substance between the thing bargained for and that obtained. It is enough to show that there was a fraudulent representation as to any part of that which induced the party to enter into the contract which he seeks to rescind ; but where there has been an innocent misrepresentation or misapprehension, it does not authorize a rescission unless it is such as to show that there is a complete difference in substance between what was supposed to be and what was taken, so as to constitute a failure of con- sideration. For example, where a horse is bought under a belief that it is sound, if the purchaser was induced to buy by a fraudulent representation as to the horse's soundness, the contract may be re- scinded. If it was induced by an honest misrepresentation as to its soundness, though it may be clear that both vendor and purchaser thought that they were dealing about a sound horse and were in error, yet the purchaser must pay the whole price, unless there was a warranty : and even if there was a warranty, he cannot return the horse and claim back the whole price unless there was a condition to that effect in the contract, Street v. Blay." (p) 7 The learned judge then quotes the authorities from the civil law to the same effect, and concludes the passage by saying, " And as we apprehend, the principle of our law is the same as that of the civil law; and the difficulty in every case is, to determine whether the mistake or misapprehension is as to the substance of the ivhole consideration, going as it were, to the root of the matter, or only to some point, even though a material point, an error as to which does not affect the substance of the whole consideration." (o) L. R., 2 Q. B. 580-587. cepted as correct. The buyer, it is held, (p) 2B. & Ad. 456. may rescind for any material misrepre- 7. Doggett v. Emerson, 3 Story 700, sentation, whether fraudulent or not. In 732 ; Daniel v. Mitchell, 1 Story 172. the case supposed in the text, of a horse Street v. Blay was anticipated by the warranted sound, the buyer in those States United States Supreme Court in Thornton would undoubtedly be held entitled to v. Wynn, 12 Wheat. 183, where the same rescind the contract if the horse proved result was reached. But American de- to be unsound. American decisions on cisions have greatly extended the remedy this important subject are stated at the of avoidance or rescission, and in several close of this chapter, \ 623, et seq. States the statement of the text is not ac- CHAP. I.] MISTAKE, AND FAILURE OF CONSIDERATION. 539 § 615. In Torrance v. Bolton, (g) it was held that where a bidder at an auction was misled by the particulars advertised, as Torranoe „ to the property exposed for sale, and being deaf did not Bolkm - hear the conditions read out at the sale in which the property was stated to be subject to mortgages, he was not bound by the contract made by mistake under such misleading particulars, which had in- duced him to believe that he was buying the absolute reversion of the freehold and not an equity of redemption. No fraud was shown, but the court said, that the description in the particulars was " improper, insufficient, and not very fair." (Per James, L. J., 8 Ch., at p. 123.) This subject is further treated in the chapter on Warranty, Book IV., Part II., Ch. I. § 616. As to mistake or failure of consideration in a contract which was induced by an innocent misrepresentation of law, it 2d _ of law was carefully considered by the Common Pleas in the two southaiis. cases of Southall v. Rigs; and Forman v. Wright, (r) and ' 8g ' &fcl & ' x ' Forman v. held to form a valid ground for avoiding a contract. 8 Wright. It is to be observed, however, that in both those cases, the mistake went in the above-quoted language of Mr. Justice Blackburn, " to the substance of the whole consideration," and it is apprehended that the right of rescinding a contract, on the ground of mistake of law in- duced by innocent misrepresentations, is subject to the same qualifica- tion and limitation as where there is a mistake of fact induced by the same cause, as explained in Kennedy v. The Panama Mail Co., supra. § 617. In Stevens v. Lynch, (s) the drawer of a bill of exchange, knowing that time had been given to the acceptor without stevens „ his, the drawer's, assent, but ignorant that in law he was L y nch - thereby discharged, promised to pay the bill, and he was held bound. This case was cited in Forman v. Wright, but Williams, J., simply said, (t) (q) 14 Eq. 124 ; 8 Ch. 118. held at the mere pleasure of the legisla- ()■) Both reported in 11 C. B. 481 ; 20 ture, by a reservation in the charter not L. J., C. P. 145. See, also, Kushdall v. contained in the copy shown to the Ford, 2 Eq. 750. parties, the sale was annulled by the 8. Mistake of Law. — See ante note 6. Court of Chancery. In Burt v. Bowles, In King v. Doolittle, 1 Head 77, it was 69 Ind. 1, it was held that fraud or mis- held that in a suit to rescind a contract, a take could not be inferred from false party might plead ignorance of a private representations of the law, for every one act of the legislature, and of the laws of must be presumed to know it. See Ameri- another state. So where a bank charter can Ins. Co. v. Capps, 4 Mo. App. 571. was sold, which both parties believed to (s) 12 East 38. be indefeasible, but which in fact was (t) 20 L. J., C. P., at p. 149. 540 AVOIDANCE OF THE CONTRACT. [BOOK III. " That is a very different case ; " the difference being apparently this, that in the case of Forman v. Wright, thedefendant had never owed the money at all, so that his error went " to the substance of the whole considera- tion," whereas, in Stevens v. Lynch, the defendant had been indebted to the plaintiff for a good consideration, and although the law dis- charges a surety where time is given to the principal debtor without the surety's assent, yet this is done on the ground that the condition of the surety is generally thereby altered; and non constat that in Stevens v. Lynch, the defendant's condition was really altered. Cer- tainly the whole consideration of his promise to pay was not the mis- take of law, inasmuch as the promise was manifestly based in part on the original consideration received when the bill was drawn. In the case of Beattie v. Lord Ebury, (u) there is an elaborate dis- Beattie v Lord cuss i orl of the law on this subject in its application to the Ebury. cage Q f an a g en t; honestly representing himself to have an authority which he does not possess, and Mellish, L. J., in delivering the judgment of the court, expressed a very strong opinion, that if in such a case the written power was shown by the agent, he would not be responsible for the innocent misrepresentation of its legal effect. § 618. As early as 1797, it was held by the King's Bench to be Failure of con- sett l e d ' aw tnat a man wn0 na( l advanced money On a Con- sideration, tract of sale had a right to put an end to his contract for Sis e tocom dor failure of consideration, and recover in an action for plete contract. ^^ ^ ^ receiveJj if the vendor f aile d to Comply with his entire contract, (x) A buyer may recover, on the same ground, where title tne P" ce P a ^ to tne se ^ er w ^° nas warranted title, when ranty'by'vTn-" tne goods for which the money was paid turn out to have dor; been stolen goods, and the buyer has been compelled to deliver them up to the true owner, (y) And even without such war- or even with- rarlt y> i* nas keen sa id to be tne undoubted right of a in saTe'ofT 13 ' buyer to recover back his money paid on the ordinary chattel. purchase of a chattel, where he does not get that for which be paid; (2) 9 but this subject of failure of title is more elaborately (u) 7 Ch. 777 at p. 800 ; S. C, L. R., 9. Burt v. Bowles, 69 Ind. 1, 7 ; Howe 7 H. L. 102. Machine Co. v. Willis, 85 111. 333 ; (x) Giles v. Edwards, 7 T. R. 181. Minneapolis Harvester Works v. Holly, (y) Eichholtz v. Banister, 17 C. B. (N. 27 Minn. 495. In Thomas v. Knowles, S.) 708 ; 34 L. J., C. P. 105. 128 Mass. 22, the seller of a ship agreed (z) Per cur. in Chapman v. Speller, 14 to buy it back at the end of the voyage. Q. B. 621, and 19 L. J., Q. B. 241. After the ship started on another voyage, CHAP. I.] MISTAKE, AND FAILURE OF CONSIDERATION. 541 treated, post, Book IV., Part II., Ch. I., § 2, on Implied Warranty of Title. And the same right exists in favor of the buyer where he has paid money for forged scrip in a railway : (a) or for forged bills or notes : (b) or for an article different from seouritiesfave that which was described in the sale, as is shown. post, in Book IV., Part I., on Conditions, (c) § 619. Where money was paid for shares in a projected joint-stock company, and the undertaking was abandoned, and the pm-chageof projected company not formed, the buyer was held enti- J ? iiteTcom l - pro ~ tied to recover back his money as paid on a consideration pany ' which hail failed, (d) So, also, where a buyer has paid for a bill of exchange which proves to be invalid, having been avoided InTaIldblu by a material alteration ; (e) or for an unstamped bill of ex- Unstampea change which purports to be a foreign bill, and turns out securlt y- to be worthless because really a domestic bill, invalid without a stamp, (/) he may rescind the contract for failure of consideration. 10 the buyer tendered a bill of sale, and brought suit for breach of the agreement, but the vessel had become a wreck at the time of the tender, and it was held that the suit would not lie. (a) Westropp *. Solomon, 8 C. B. 345. (b) Jones v. Byder, 5 Taunt. 488; Gurneyu. Womersley, 4 E. & B. 133; 24 L. J., Q. B. 46 ; Woodland v. Fear, 7 E. & B. 519 ; 26 L. J., Q. B. 202. (c) See notes to Chandelor v. Lopus, 1 Sm. L. C. (ed. 1879) 183. (d) Kempson v. Saunders, 4 Bing. 5. (e) Burchfield v. Moore, 3 E. & B. 683 ; 23 L. J., Q. B. 261. (/) Gompertz v. Bartlett, 2 E. & B. 849 ; 23 L. J., Q. B. 65. 10. Invalid Securities. — In Wood v, Sheldon, 42 N. J. L. 421, the subject of sale was a certificate for a scrip dividend. This was adjudged void by the Court of Chancery, whereupon the buyer brought suit to recover back the price paid by him, and a judgment in his favor was sustained in the Court of Errors and Appeals. Beasley, C. J., cited Gompertz v. Bartlett, 2 E. & B. 849, and said : " Both parties to the present contract thought that the vendee was obtaining a valid obligation of this gas company, binding them to pay this large sum of money ; instead of this, a nullity was passed to him." Thrall v. Newell, 19 Vt. 208, was also approved. In that case a note was sold, the maker of which, as it afterwards appeared, was in- sane when he signed it. The buyer was held entitled to recover back the price. In Littauer v. Goldman, 72 N. Y. 506, the sale was by delivery of a note void for usury. It was held that the seller, who had no knowledge of the defect, could not be held liable. Miller, J., reviews the cases and concludes that there can be recovery, in case of sale of a note, only where the seller's title fails or where the instrument is forged. In Wood v. Sheldon, Beasley, C. J., distinguishes Littauer v. Goldman, as applying only to sales of negotiable paper, but he says: "This judgment is admittedly supported by no precedent, and if we reason by analogy, there seems to be strong ground to call it in question.'' In support of the general principle that a contract for purchase of a chose in action may be avoided if the chose proves worthless, we cite further. 542 AVOIDANCE OF THE CONTRACT. [BOOK III. § 620. But there is not a failure of consideration when the buyer has received that which he really intended to buy, although the thing bought should turn out worthless. H Thus, where a buyer bought railway scrip, and the directors of the company subsequently repudiated it as issued without their authority ; upon proof offered that the scrip was the No failure of consideration where buyer ge!s what he really intended to buy, even if It turn out "worthless. Marvin v. Jarvis, 20 N. Y. 226 ; Webb v. Odell, 49 N. Y. 583; Ross v. Terry, 63 N. Y. 613 ; "Whitney v. National Bank of Potsdam, 45 N. Y. 305 ; Bell v. Dagg, 60 N. Y. 530 ; Orand v. Mason, 1 Swan 196 ; Dumont v. Williamson, 18 Ohio St. 515 ; Aldrich v. Jackson, 5 R. I. 218 ; Terry v. Bissell, 26 Conn. 23 ; Hurd v. Hall, 12 Wis. 112, 135; Paul v. City of Kenosha, 22 Wis. 266 ; Giffert v. West, 33 Wis. 617 ; Snyder v. Eeno, 38 Iowa 329 ; Lobdell v. Baker, 1 Mete. 193 ; Merriam v. Woleott, 3 Allen 258. See ante J 53. 11. Where Buyer gets all he Bar- gained for. — "If a parly gets all he know- ingly contracts for, he will not be allowed to plead that he got no consideration." Neidefer v. Chastain, 71 Ind. 363, 368. Where goods are sold as an estimated quantity, more or less, the parties having equal opportunity to estimate the amount, there can be no avoidance if the quantity turns out to be greater or less than the estimate. Thus in McCrea v. Longstreth, 17 Penna. 316, the purchaser of a farm, bargained for the produce on it, and on an estimate of quantity of the various chat- tels, paid $1800 therefor, the seller ex- pressly providing that the estimated quan- tities were not guaranteed to be accurate. The buyer brought suit to recover back part of the price, alleging that there was an over-estimate of forty per cent., but he was non-suited on writ of error. Lewis, J., said : " We infer from the transaction that the quantities were unknown to either party, each having equal advantages in making the estimate, and neither having the power to arrive at certainty with re- gard to the quantity of wheat, rye and oats, as measurement of grain in the straw is impossible. * * The parties ought certainly to be permitted to make their bargains upon an estimate of quan- tity, and having done so, each exercising his judgment with equal means for form- ing an opinion, and both agreeing that an error in the estimate shall not be made the foundation of an action, the courts have no right to disturb their arrange- ments in violation of their contract. After the whole contract has been fully executed by the parties, the expression adopted by Yeates, J., in Steinbauer v. Witman, 1 S. & K. 448, is peculiarly ap- plicable, ' the funeral has passed by.' " In Sankey v. First National Bank of Mifflinburg, 78 Penna. 48, the cashier of a bank bought bonds at par, both the cashier and seller supposing that to be their market value. In fact the time to redeem them had been extended, and they were at a premium of six per cent., and on learning this fact the seller sued for the premium. It was held that no action would lie. Williams, J., said : " The mistake or ignorance of the parties in regard to the premium was not of the essence of the contract, or its procuring cause.'' In Wheat v. Cross, 31 Md. 99, 104, the sale was of a. horse in the pos- session of the buyer at the time of the sale. The offer was sent and accepted by mail, but before the acceptance was received t'he buyer wrote withdrawing the offer because the horse was found to be diseased. The court said that the mistake was of a matter wholly collateral, and the sale could not be avoided. See Hun- ter v. McLaughlin, 43 Ind. 38 ; Gaylord Manufacturing Co. v. Allen, 53 N. Y. 515 ; Brown v. Fagan, 71 Mo. 563 ; Bryant v. Pember, 45 Vt. 487. CHAP. I.J MISTAKE, AND FAIXUKE OF CONSIDERATION. 543 only known scrip of the railway, and had been for several Lamert „ months the subject of sale and purchase in the market, Heath - held, that the buyer had got what he really intended to buy ; and could not rescind the contract on the ground of a failure of consideration, (g) [And so where a person bought the exclusive right of using a patent in a foreign country, being aware at the time of the pur- chase that no exclusive right to use the process there could phfteSewage 3 " be obtained, but desiring an ostensible grant of the exclu- sive right, with the object of floating a company : it was held, that having obtained what he desired and intended to buy, he could not recover the purchase money on the ground that the consideration had failed. (A)] § 621. Where the failure of consideration is only partial, the buyer's right to rescind will depend on the question whether the Partial fei i ure contract is entire or not. Where the contract is entire, as uoi° nsldera in Giles v. Edwards, (i) and the buyer is not willing to TTT , ' \ / <> o Where contract accept a partial performance, he may reject the contract in *" entire, buyer ± r r J J J may reject the toto, and recover back the price. But if he has accepted whole a partial performance, he cannot afterwards rescind the But not if he L x t has accepted contract, but must seek his remedy in some other form of re- action. Thus, in Harnor v. Groves, (k) a purchaser of Hamorv. fifteen sacks of flour having, after its delivery to him, used half a sack, and *hen two sacks more, was held not entitled to rescind the contract, on the ground of a failure of consideration, and to Sale of a Worthless Patent. — be deemed a useful invention, though its Whether on a sale of a patent which use was not profitable, was held correct, proves to be worthless, there is a failure This was approved in Green v. Stewart, 7 of consideration, depends not on the Baxter 418. See Cowan v. Dodd, 3 Coldw. utility or pecuniary value of the patent 278 ; Shepherd v. Jenkins, 73 Mo. 510 ; but solely on its validity. This validity Harlow v. Putnam, 124 Mass. 553 ; Mc- may be questioned on such an issue, in Kee v. Eaton, 26 Kan. 226 ; Lester v. the same manner as in a suit for infringe- Palmer, 4 Allen 145. But see, contra, ment ; and it may be shown that the Gray v. Billington, 21 U. C. C. P. 288. patent ought not to have been granted. (g) Lamert v. Heath, 15 M. & W. 487. "Letters patent of the United States can See, also, Lawes v. Purser, 6 E. & B. 930 ; be lawfully granted only for new and 26 L. J., Q. B. 25. useful inventions, and are but prima facie {h) Begbie v. Phosphate Sewage Co., evidence of the novelty and utility of the L. R., 10 Q. B. 491 ; affirmed, 1 Q. B. D. invention described." Gray, J., in Nash 674, C. A. v. Lull, 102 Mass. 60. And in that case (i) 7 T. K. 181, ante \ 618. See Whin- the charge that if the invention could be cup v. Hughes, L. R., 6 C. P. 78. applied to a beneficial purpose, it might (k) 15 C. B. 669 ; 24 L. J., C. P. 53. >u AVOIDANCE OF THE CONTKACT. [BOOK IK. return the remainder, although he had made complaint of the quality as not equal to that bargained for, as soon as he had tried the first half sack. So if the buyer has paid for a certain quantity of goods, and the vendor has delivered only part, and makes default in delivering the remainder, the buyer may rescind the contract for the deficiency, and recover the price paid for the quantity deficient ; for the parties in this case have, by their conduct, given an implied assent to a severance of the contract by the delivery on the one part, and the acceptance on the other, of a portion only of the goods sold. This is in its nature a total failure of consideration for part of the price paid ; not, as in the case of the flour, a partial failure of the whole. This was held, in Devaux Devaux« con- v - Connolly, (I) where the plaintiff had paid for two parcels noiiy. f terra japonica, one of 25 tons, and the other of 150 tons, and the parcels turned out to be only 24 tons and 132f tons respectively. § 622. On the other hand, if the thing sold is such in its nature as •where thing not *° ^ e severable, and the buyer has enjoyed any part of arable and Sev ~ tQe consideration for which the price was paid, he is no ioyedpaxt of" longer at liberty to rescind the contract. 12 Thus, in Tay- (l) 8 C. B. 640. 12. Partial Failure of Consideration. Severable Contract. — In Norris v, Har- ris, 15 Cal. 226, 256, the sale was made in California of property in Texas, including nine negroes, for |6000 ; 250 horses for $9000, and 7000 cattle for $56,000. The buyer finding less property in Texas than he had bargained for, brought suit in California to rescind the contract and to recover the consideration which he had paid. Field, C. J., said : " In the pres- ent case the contract includes three items — the slaves, the horses and the cat- tle. As to the slaves, the contract is clearly entire. A gross sum is fixed for the whole number, and no means for de- termining the price for each one is afforded, and hence the agreement is im- plied that the whole are to be taken or none. As to the horses and cattle, a possible deficiency in their number was in the contemplation of the parties at the time, and hence provision for compensa- tion per head was provided to meet such deficiency. The failure, then, to deliver the whole number of horses and cattle did not invalidate the contract as to them, but the sale of the three slaves, and the consequent inability to deliver the whole number, would have that operation as to the item of slaves were it not for the subsequent and independent stipulation by the parties, by which provision was made for the sales which might take place before the news of the transfer could be received by the agent of the defendants. That stipulation obviates the objection on that ground." Accordingly, the court re- fused to rescind, but left the buyer to his remedy at law for damages. In Richards v. Shaw, 67 111. 222, the seller delivered only 391 bushels of corn in fulfillment of a contract to deliver 500 ; but it was held that he might recover, on an implied contract, the fair value of the corn de- livered, less damages for failure to fulfill. This is the modern doctrine, though re- jected in New York, unless the buyer has waived entire performance. Avery v. CHAP. I.J MISTAKE, AND FAILURE OF CONSIDERATION. 545 lor v. Hare, (m) where the plaintiff purchased from the de- yJ, e n f onsidera " fendant the use of a patent right, and had made use of it , „ r & ' Taylor ». Hare. for some years, and then discovered the defendant not to be the inventor, it was held that he could not maintain an action for rescission of the contract and return of the price, on the ground of failure of consideration ; and this case was followed by the King's Bench half a century later in Lawes v. Purser, (n) where Lawes „. Pur . the facts as pleaded were almost identical with those in 8er ' Taylor v. Hare. In Chanter v. Leese, (o) the Exchequer Chamber, in the case of a sale of six patents for one consideration, five of which were ohanter „ valid, and one void, held, that there had been an entire Leese ' failure of consideration, on the ground that the money payable had not been apportioned by the contract to the different parts of the considera- tion, and the patents had not been enjoyed in part by the buyer. " We see, therefore, that the consideration is entire, and the payment agreed to be made by the defendants is entire, and we see also a failure of the consideration, which being entire, by failing partially, fails entirely ; and it follows that no action can be maintained for the money." The court further stated that even if the five patents had been enjoyed, they Wilson, 81 N. Y. 341. In Morgan v. of goods was paid in a worthless note MoKee, 77 Penna. 228, the contract was represented to be good, it was held that for eight monthly deliveries of oil, pay- the seller, on return of the note, could sue ment to be made on each delivery. The for that part of the price represented by fourth delivery not being made, the buyer the note, without returning the rest of the declared the contract rescinded ; but the price received. Martin v. Roberts, 5 court held that the contract was mani- Cush. 126. In Young, &c, Co. v. Wake- festly severable, each delivery and pay- field, 121 Mass. 91, a number of distinct ment being a separate contract, and that articles were bought at one time for the contract was not rescinded. See Costi- separate prices, but after some had been gan v. Hawkins, 22 Wis. 74. Cole, J., sold by the buyer, he returned the rest as said that the contract of sale before the not answering the warranty. On a suit court, being severable, might be enforced for the price, it was held that the contract as to part and rescinded as to the residue, was not entire, and the buyer might and the price paid for such part of the therefore rescind as to any of the separate consideration as had failed, be recovered purchasers, for cause, without rescinding back. On a rescission where one party as to all. has received benefit from the contract, (m) 1 B. & P. N. B. 260. slight evidence will raise an implied (n) 6 E. & B. 930 ; 26 L. J., Q. B. 25. promise to pay for it. Knauss v. Shiffert, (o) 5 M. & W. 698. 58 Penna. 152. Where part of the price 2 M 546 AVOIDANCE OF THE CONTRACT. [BOOK III. were of opinion that no action could be maintained on the agreement, though possibly a remedy might exist in some other form of action. * SECTION II. — AVOIDANCE FOR BREACH OP WARRANTY. AMERICAN DECISIONS. § 623. It was formerly held in England that the buyer of property warranted as to quality, could avoid the contract for breach of the warranty. See post § 628. But modern decisions have restricted this remedy to eases where the warranty was fraudulent, that is, where the seller was aware of the defects against which he warranted, and con- cealed them. See post § 638, and ante § 614. On this subject the American courts have divided, a part holding that there can be no avoidance or rescission of the contract for mere breach of warranty without fraud, and the others holding that the buyer is entitled to property of the quality contracted for, and may return it and rescind the contract for breach of warranty, whether there was fraud or not on the part of the seller. The former class will be first considered. The modern English rule has been approved in New York and Pennsylvania, and in an early case in the United States Supreme Court, and may perhaps be said to be sustained by the greater weight of authority. §624. In Thornton' v. Wynn, 13 (1827), the question arose in the United States Supreme Court. A horse was sold and t <~ • p i • i i i Federal courts warranted. On a suit tor the price the buyer proved breach of warranty and offer to return the horse. Washington, J., said : " Tf the sale be absolute, and there be no subsequent agreement or consent of the vendor to take~back the article, the contract remains open, and the vendee is put to his action upon the warranty, unless it be proved that the vendor knew of the unsoundness of the article, and the vendee tendered a return of it within a reasonable time." This restricts the right to rescind to cases of fraudulent representations. In Lyon v. Bertram, 14 (1857), the same court refer to a statement in Smith's Leading Cases, notes to Cutter v. Powell, that on discovery of a breach of warranty the buyer " may refuse to receive the article at all," and say that this is an open question. Thornton v. Wynu is *The rest of this chapter is by the 13. 12 Wheat. 183, 193. American editor. 14. 20 How. 149, 154. CHAP. I.J MISTAKE, AND FAILURE OF CONSIDERATION. 547 cited, but the question is not decided. Since that time neither of these cases appears to have been cited in the United States Supreme Court. § 625. Thornton v. Wynn was followed in Pennsyl- J t J Pennsylvania. vania in the case of Kase v. John. 15 A machine was sold and warranted, but not answering the purpose was returned and suit brought to recover back the price. In the absence of any proof of knowledge by the vendor of the defects of the machine, it was held that the buyer could not rescind, but was limited to an action for breach of warranty. This is still the law in Pennsylvania, as appears from the case of Freyman v. Knecht, 16 where it is held that in the absence of fraud the buyer cannot rescind for breach of warranty, and Kase v. John is followed. § 626. In New York the English law as declared in the case of Street v. Blay, 17 was followed in the case of Voor- hees v. Earl, 18 in which Cowen, J., said : " Where there is a warranty on a sale of goods, without fraud, and no stipu- lation in the contract that the goods may be returned, the vendee has no right to annul the contract without the consent of the vendor." This statement of the law was reiterated by the same judge in Cary v. Gruman,19 and these cases were mentioned as " well considered " by Comstock, J., in Muller «. Eno, 20 and have been often cited. In Day v. Pool, 21 Peckham, J., said : " It seems to be regarded as settled in this state, though perhaps not necessarily determined in any case, that the vendee has no right to return the goods in such case (of breach of warranty) unless there was fraud in the sale." § 627. In Illinois the English case of Street v. Blay, and the New York case of Voorhees v. Earl, above stated, were ap- Illinois d proved in Doane v. Dunham, 22 but the Massachusetts overstates, rule seems to have been since followed. See post § 632. In Texas, the rule that a contract of sale cannot be rescinded for breach of warranty without fraud has been adopted, 23 and this is the doctrine in Vermont and Missouri, where the United States Supreme Court case of Thornton v. Wynn was followed, 24 and there is a recent 15. 10 Watts 107. 21. 52 K Y. 416. To the same effect, 16. 78 Penna. 141, 144. see Rust v. Eckler, 41 N. Y. 488, 491. 17. 2 B. & Ad. 456. 22. 65 111. 512. 18. 2 Hill, 288, 291. 23. Wright v. Davenport, 44 Tex. 164, 19. 4 Hill 625. 168. 20. 14 N. Y. 597, 601. 24. West v. Cutting, 19 Vt. 536 ; Walls 548 AVOIDANCE OF THE CONTRACT. [BOOK III. dictum to the same effect in Minnesota. 25 The same rule is estab- lished in Georgia, 26 Connecticut, 27 Kentucky 28 a nd North Caro- lina. 29 § 628. The opposite opinion, namely, that the buyer may rescind the sale if the article sold does not answer the warranty, whether fraudu- lent or not, was held by Lord Eldon in Curtis v. Hannay, 30 and though overruled in England (see ante § 614), has been adopted in Massachusetts and other states. In Massachusetts the law was stated in Bradford v. Manly 31 (1816). Massacwtu That was a sale b y sample, and Parker, C. J., said: rule differs. « ^hat the thing is the same as that which he (the seller) shows for it, he certainly undertakes, and if a different thing is de- livered, he does not perform his contract, and must pay the difference or receive the thing back and rescind the bargain if it is offered him." There was a similar dictum by Morton, J., in Perley v. Balch,32 (1839); and in Dorr v. Fisher, 33 (1848), Shaw, C. J., said: "A warranty may be treated as a condition subsequent, at the election of the vendee, who may, upon breach thereof, rescind the contract and recover back the amount of his purchase money, as in the case of fraud ; but if he does this he must first return the property sold." § 629. In Bryant v. Isburgh, 34 (1859), the precise question as stated by Metcalf, J., was whether a purchaser "can rescind the contract and return the property, for breach of warranty, when there is no fraud and no express agreement that he may do so." After referring to the cases cited by counsel, showing the law in England, New York and Penn- sylvania, and in the United States Supreme Court, 35 Metcalf, J., said that by the law of Massachusetts as understood for more than forty years, " he to whom property is sold with an express warranty, as well as he to whom it is sold with an implied warranty, may rescind the contract for breach of warranty by a seasonable return of the property, v. Gates, 6 Mo. App. 242, 246. But see 29. Lewis v. Kountree, 78 N. C. 323, Richardson v. Grandy, 49 Vt. 22. 327. 25. Knoblauch v. Krouschnabel, 18 30. 3 Esp. 82. Minn. 300. 31. 13 Mass. 139. 26. Clark <-. Neufville, 46 Ga. 261 ; 32. 23 Pick. 283. Damson v. Penniman, 65 Ga. 698. 33. 1 Cush. 271, 274. 27. Buckingham v. Osborne, 44 Conn. 34. 13 Gray 607. 133. 35. Thornton v. Wynn, 12 Wheat. 183 ; 28. Lightburn v. Cooper, 1 Dana 273. Voorhees v. Earl, 2 Hill 288 ; Kase v. See Phelps v. Quinn, 1 Bush 375. John, 10 Watts 107 ; Street v. Blay, 2 B. & Ad. 45G, all stated supra. CFTAP. I.] MISTAKE, AND FAILURE OF CONSIDERATION. 549 aud thus entitle himself to a full defence to a suit brought against him for the price of the property, or to an action against the seller to re- cover back the price if it have been paid to him." The law thus de- clared has been since recognized and followed in Massachusetts. 36 § 630. In Maine the same conclusion was reached independently in Marston v. Knight, 37 the court refusing to follow Street v. Blay, 38 and preferring the older decision of Curtis v. Han nay. 39 Wells, J., said : " There does not appear to be any good reason why a purchaser should be compelled to retain a chattel pur- chased upon a warranty which is broken and be put to his action for damages when it may be unsuitable to his wants. He relies upon the warranty, and the breach is equally injurious to him whether the seller acted in good or bad faith." The case was one of exchange of horses and the plaintiff finding that the horse received by him did not answer the warranty, tendered him back and then brought replevin for the horse he had delivered, and he recovered. 40 § 631. In Fisk v. Tank, 41 Dixon, C. J., said that many respectable authorities hold that if a warranty is not complied with the vendee may refuse to receive the article, or may keep it long enough for examination and then return it and recover back the price. That question, however, the court reserved. In Woodle v. Whitney, 42 machines were made and delivered, and, being found defective, were returned. The court held that the price paid could be recovered back. In Boothby v. Scales, 43 the sale was of a fanning-mill, warranted, and Dixon, C J., said : " It is well settled in this state, as in several others, that for a breach of warranty without actual fraud on the part of the vendor, the purchaser is entitled to rescind the contract, and for that purpose may return the goods, or what is the same thing, offer to return them within a reasonable time." The same principle has since been repeatedly declared in Wisconsin. 44 § 632. In Howe Machine Co. v. Rosine, 45 the sale was of a machine 36. Boardman v. Spooner, 13 Allen 42. 23 Wis. 55. 353, 361 ; Young, &c, Co. v. Wakefield, 43. 27 Wis. 626, 636. 121 Mass. 91 ; Morse v. Braekett, 98 44. This right to rescind was recog- Mass. 205. nized in Merrill v. Nightingale, 39 Wis. 37. 29 Me. 341. 247, 250 ; in Fairfield v. Madison Manu- 38. 2 B. & Ad. 456. factoring Co., 38 Wis. 346 ; Churchill r. 39. 3 Esp. 82. Price, 44 Wis. 540, and in Warder v. 40. See Cutter v. Gilbreth, 53 Me. 176. Fisher, 48 Wis. 338, 341. 41. 12 Wis. 276, 303. 45. 87 111. 105. 550 AVOIDANCE OF THE CONTRACT. [BOOK III. sold as new, but in fact old. The seller agreed to substi- tute new parts but did not do so. The buyer tendered a return of the machine and demanded back his note for the price. It was held that a verdict for the buyer in a suit on the note was right. In Sparling v. Marks, 46 a stone was sold as a diamond, but proved to be only a crystal. The buyer ou tendering back the stone was held entitled to rescind the contract and recover back the price, which he had paid. This last case is discussed purely as a case of warranty, but both of these cases may perhaps be classed as cases where there was a breach of the conditions of the sale. The right to rescind for breach of warranty by returning the property warranted is recognized in two recent decisions in the Illinois intermediate Court of Appeals. 47 § 633. There are several early cases in Maryland sustaining the right to rescind for breach of warranty, though in none of Maryland. . - ... n , them perhaps was it strictly necessary tor the court to pass on that question. In Franklin v. Long, 48 (1836), Buchanan, C. J., said: "It is the received doctrine in this state, though otherwise decided elsewhere, that if a person sells an article, as a horse, with a warranty of soundness, which turns out to have been unsound, the buyer may either keep the horse and bring an action on the warranty, or rescind the contract by a return- of the horse, or offer to return him, in a reasonable time, so that the seller may be placed in statu quo, and sue for and recover back the purchase money, in an action for money had and received." This principle was applied in Tay- mon v. Mitchell, 49 and has since been recognized in that state. 50 § 634. The foregoing decisions were followed in Iowa in the case of iowa and other R°g ers v - Hanson. 51 In that case the buyer gave his states. notes and a mare for a threshing machine, which was warranted. The machine not answering the warranty the buyer re- turned it and demanded back his notes and the mare. Not receiving them he brought suit, and the court ordered the contract to be re- scinded and the notes and the mare to be returned. On appeal Day, J., referred to the conflict of authority, cited Massachusetts, Maine and Maryland decisions, and said : " The doctrine of the Massachu- 46. 86 111. 125. Blake, 2 Harr. & J. 353 ; Hyatt v. Boyle, 47. Prickett v. McFadden, 8 111. App. 5 Gill & J. 110. 197 ; Matthews v. Fuller, 8 111. App. 529. 49. 1 Md. Ch. 496, 501. See, also, Buff v. Jarrett, 94 III. 475, 479. 50. Mei eney v. Duvall, 21 Md. 166 ; 48. 7 Gil) & J. 407, 419. See Butter v. Lane v. Lantz, 27 Md. 211. 51. 35 Iowa 283. CHAP. I.j MISTAKE, AND FAILURE OP CONSIDERATION*. 551 setts cases, though perhaps not sustained by the greater number of authorities, is, to our minds, the more reasonable and just. We know of no satisfactory reason why one who desired a good article, and is willing to pay a price which will command it, should be required to keep an inferior article at a lesser price. Such a construction of the law substitutes for the party's contract an agreement which he did not make, and requires him to accept an article which he would not have purchased if he had known of its defeats." In Jack v. Des Moines, &c, Co., 52 it was held that where wheat was ordered and shipped to the buyer, he might reject it because it was not, as agreed, " good milling wheat," and recover back the price paid by him, notwithstand- ing he had paid freight. Referring to Rogers v. Hanson, above stated, the court said : " Our prior decision upon this question, counsel vig- orously assail. Our confidence in its correctness is not shaken." Some support to the same doctrine may be found in cases in the reports of Ohio, Alabama, Arkansas, Indiana and other states, re- ferred to in the note, 53 though perhaps most of these decisions may be explained on other grounds. See, also, post § 638, note 4. § 635. It is undoubted law, that if property not specific is contracted for, and warranted to possess certain qualities, and inferior p . property is tendered, the buyer may refuse to receive it, s P eeific - and may return it after examination or trial. 54 On the same prin- ciple, where property is sold by sample, it is one of the conditions of the contract that the buyer may examine the bulk when tendered, and reject the property when not equal to the sample. This right closely resembles the right to rescind, for if goods so sold are accepted, title is considered to have vested at the time of the appropriation of them to the buyer, as, for example, by delivery to a carrier. 55 This sub- ject is discussed post, chapters on "Conditions" and "Warranty." 52. 53 Iowa, 399, 402. See Clarke v. Eice, 1 Bailey 648. McGetchie, 49 Iowa 437. 54. Kimball, &c, Co. v. Vroman, 35 53. Beresford v. McCune, 1 Cinn. Su- Mich. 310, 330; Bigger v. Bovard, 20 per. Ct. 50; Byers v. Chapin, 28 Ohio St. Kan. 204; Knoblauch v. Krouschnabel, 300 ; Rodgers v. Niles, 11 Ohio St. 48 ; 18 Minn. 300 ; Polhemus v. Heiman, 45 Barnett v. Stanton, 2 Ala. 181 ; Blackman Cal. 573. v. Johnson, 35 Ala. 252 ; Perry v. John- 55. Boothby v. Plaisted, 51 N. H. 436 ; ston, 59 Ala. 648, 653; Plant *. Condit, McMarty v. Gordon. 16 Kan. 35; Gill?). 22 Ark. 454, 458 ; Kighter v. Boiler, 31 Kaufman, 16 Kan. 571 ; Dike v. Beit- Ark. 170, 173 ; Wynn v. Hiday, 2 Blackf. linger. 23 Hun 241 ; Webster v. Granger, 123; Dill v. O'Fenell, 45 Ind. 268; By- 78 111. 230; Merriman v. Chapman, 32 ers v. Boslick, 2 Mills 76 ; Ti'immier r. Conn. 146 ; Gatling v. Newell, 9 Ind. Thomson, 10 S. C. 164, 187; Smith v. 572. 552 AVOIDANCE OF THE CONTRACT. [BOOK III. CHAPTER II. FRAUD. SEC. SECTION I. — IN GENERAL. Fraud renders contract voidable 636 Definitions of fraud 636 No fraud unless party deceived 637 Nor unless contract is induced there- by... 637 Nor without dishonest intention 638 Fraud without damage gives no right of action 639 Mistaken belief as to facts caused actively or passively 640 Silence may be equivalent to active misrepresentation 640 Caveat emptor is the general rule 641 Buyer can exact warranty, if unwill- ing to deal on these terms 641 Action of deceit, being founded on tort, may exist in favor of third persons, not parties to the sale 642 Limits of liability 642 But third persons cannot sue ex con- tractu 645 To entitle any one of the public to bring action in tort for deceit where fraudulent representations are published, he must establish a direct connection between himself and the person publishing them... 646 An American case on this point 647 SECTION II. — ON THE VENDOR. Effect of fraud on vendor in passing title 648 Depends on vendor's intention to transfer possession and ownership, or possession only 648 Sale obtained by fraud on vendor not void, but voidable 649 Bona fide third persons protected in rights acquired before avoidance of sale 649 Not protected where vendor trans- ferred possession only 649 Exception to protection of innocent third person, where fraudulent vendee is 2'rosecuted to conviction, 650 Law now altered 650 SEC. Earlier cases as to passing property reviewed 651 Doubt suggested as to Duff v. Budd and Stephenson v. Hart 653 Intention not to pay for the goods... 656 Remarks on Parker . McCullough, 4 S. & 21 Penna. 367, 372 ; Rodman v. Thal- R. 483. heimer, 75 Penna. 232, 237. See, also, 2. In Pennsylvania, the fraud, to avoid Dambmann v. Schulting, 75 N. Y. 55. a sale, must be " actual artifice, intended CHAP. II.] FRAUD. 555 The Roman jurisconsults attempted definitions, two of which are here given : " Dolum malum Servius quidem ita definit Eoman j uri8 . machinalionem quandam alterius decipiendi causa, cum consults - aiiud simulatur, et aliud agitur. Labeo autcm, posse et sine simula- tione id agi ut quis circumveniatur : posse et sine dolo malo aliud agi, aliud simulari ; sicuti faciunt qui per ejus modi dissimulationem deser- viant, et tuentur vel sua vel aliena : Itaque, ipse sic definit, dolum malum esse omnem calliditatem, fallaciam, machinationem ad circumveniendum, fallendum deciyiendwm alterum adhibitam. Labeonis definitio vera est. Dig. 1. iv., t. 3, 1. 1, § 2. The Civil Code of France, without giving a definition, provides, in art. 1116: " Fraud is a grouod for avoiding a contract oivilCodeof when the devices (les manoeuvres) practiced by one of the France - parties are such as to make it evident that without these devices the other party would not have contracted." § 637. However difficult it may be to define what fraud is in all cases, it is easy to point out some of the elements which . No fraud unless must necessarily exist before a party can be said at com- party is de- ceived, mon law to have been defrauded. In the first place it is essential that the means used should be successful in deceiving. How- ever false and dishonest the artifices or contrivances may be by which one man may attempt to induce another to contract, they do not consti- tute a fraud if that other knows the truth, and see through the artifices or devices. Haud enim decipitur qui scit se decipi. If a contract is made under such circumstances, the inducement or motive for making it is ex concessis, not the false or fraudulent representations, which are not believed, but some other independent motive. [And even if the one party is unaware of the truth, yet if the artifice adopted „ . u J J •> r Or unless con- by the other has not induced him to enter into the con- *£ereb induoed tract, that is to say, if the fraud is not fraus dans locum contractui, he will not be entitled to relief.] 3 3. The Fraud Must Have Induced made must have been such as were caleu- the Sale. — In Gregory v. Sehoenell, 55 lated to deceive a person of common pru- Ind. 101, 106, the seller of mules replevied dence; they must have been false, and them on charge of fraudulent repiesenta- known to be false, at the time, by the per- tions by the buyer as to his solvency, son who made them; and the person to when the sale was made on credit. Bid- whom they were made must have believed die, J., said: "In such a case to establish them to be true and relied upon them; fraud and authorize a rescission of the and they must have been the inducement contract for that cause, the representations which caused him to part with his prop 656 AVOIDANCE OF THE CONTRACT. [BOOK III. erty. A fraud by which no one is deceived, is harmless in law." Artifices which do not deceive do not warrant an avoidance of the contract. Phipps v. Buckman, 30 Penna.401 ; Clark v. Everhart, 63 Penna. 347 ; Weistt). Grant, 71 Penna. 95 ; Hanna v. Rayburn, 84 111. 533; McDonald v. Trafton, 15 Me. 225 ; Bowman v. Carithers, 40 Ind. 90 ; Frenzel v. Miller, 37 Ind. 1, 17; Merwin v. Arbuckle, 81 111. 501; Gunby v. Sluter, 44 Md. 237, 247 ; Hagee v. Newton, 59 Ga. 113; Todd v. Fambro, 62 Ga. 664; Cochrane v. Halsey, 25 Minn. 52, 63 ; Parker v. Marquis, 64 Mo. 38, 42 ; Sledge v. Scott, 56 Ala. 202, 206. Misrepresentation of the Law. — On the same principles it was held in Burt v. Bowles, 69 Ind. 1, that fraud could not be predicated on false statements of the law, for the party to whom such repre- sentations were made could not be de- ceived thereby, because he must be con- clusively presumed to know the law. In Upton v. Tribilcock, 91 TJ. S. 45, 50, Hunt, J., said: "That a misrepresenta- tion or misunderstanding of the law will not vitiate a contract, where there is no misunderstanding of the fads, is well settled." In Rawson v. Harger, 48 Iowa 269, the seller represented that he had a valid patent. It was held that the only fact thus stated was that he had a patent. Its validity was a question of law, and a misstatement as to the validity was held not fraudulent. But this may be doubted, for the validity of a patent depends on its novelty, and that is a question of fact. See ante \ 620, note 11. In the case of Ins. Co. v. Reed, 33 Ohio St. 283, 293, the same principle was declared, where the fraud was that of an insurance agent who procured a settlement of a loss by false representations that the loser could not recover, because of forfeiture by breach of conditions. See Fish v. Clelland, 33 111. 243 ; Clem v. Newcastle, &c, R. R , 9 Ind. 488 ; Rose v. Hurley, 39 Ind. 77, 82 ; Dailey v. Jessup, 72 Mo. 144 ; Clodftlter v. Hulett, 72 Ind. 137, 143. Compare however, the above-stated Ohio case of Ins. Co. v. Reed, with the very similar case of Tabor v. Mich. Mut. Life Ins. Co., 44 Mich, 324, 331. Campbell, J., said that the doctrine which makes parties bear the consequence of mistake of law is hard in many cases, that forfeiture of an insurance policy is a mixed question of law and fact, and there being circum- stances of imposition, a surrender of a policy was set aside. A misrepresentation of private acts or foreign laws may be fraudulent. See ante \ 616, note 8. The Fraud Need not be the Sole Inducement.— "It is not necessary that the false representations should have been the sole or even the predominant motive ; it is enough if they had material influ- ence upon the plaintiff, though combined with other motives." Colt, J., in Safford v. Grout, 120 Mass. 20, 25 ; Matthews v. Bliss, 22 Pick. 48 ; Ruff v. Jarrett, 94 111. 475, 480 ; McAleer v. Horsey, 35 Md. 439, 452; Hersey v. Benedict, 15 Hun 282, 287 ; People v. Haynes, 11 Wend. 557; Winter v. Bandell, 30 Ark. 363, 373. Material Misrepresentations Will be Presumed to Have Induced tbe Sale. — On proof that representations were material and false, the burden will be thrown upon the party making them to show that they were not relied on by the other party. Fishback v. Miller, 15 Nev. 428, 443 ; Kerr on Fraud and Mis- take 75 ; Holbrook v. Burt, 23 Pick. 546, 552. Pretended Assent Given, to Detect Fraud. — In Royce v. Watrous, 7 Daly 87, on appeal, 73 N. Y. 597, the buyer at- tempted to procure goods by giving in payment worthless notes which he repre- sented to be good. The seller having dis- covered the fraud, accepted the notes and used them as evidence of the fraud on a criminal complaint, and refused to deliver the goods. He was sued for damages for breach of contract, anil the judge on the trial directed a verdict against him, because the seller had not been deceived and had CHAP. II.] FRAUD. 557 § 638. Next, it is now well settled that there can be no fraud with- out dishonest intention, no such fraud as was formerly termed a legal fraud. Therefore, however false may be out dishonest p ... intention : no the representation ot one party to another to induce him legal fraud in to make a contract, there is no ground for avoiding it as obtained by fraud, if the party making the representation honestly and on reasonable grounds believed it to be true ; although other remedies are sometimes available to the deceived party, ante § 605, et seq., post, Warranty. 4 § 639. Lastly, there must be damage to the party deceived, even when there is a knowingly false representation, before a Praud without right of action can arise. "Fraud without damage, or ^"Sght o'f V ac- damage without fraud, gives no cause of action," was the tlon ' maxim laid down by Croke, J., in 3 Bulst. 95, and quoted with ap- proval by Buller, J., in the great leading case of Pasley v. Free- man, (a) to which more particular attention will presently be drawn. 5 made the contract with his eyes open. But on appeal this was reversed, the court hold- ing that there was no contract, the buyer having received the notes merely to obtain evidence, and not being estopped to deny the contract, because estoppel is never applied in aid of a fraudulent purpose. 4. There Must be Fraudulent In- tent. — See post $ 678, note 32. In Comins v. Coe, 117 Mass. 45, the buyer gave the seller a check for the property sold. The check was dishonored, not because the money was not on deposit to meet it, but because the bank had discovered frauds upon it by the buyer's forgeries and held the deposit to secure itself. Under these circumstances the seller brought a suit to recover the property sold, against the buyer's assignees. But the court held that these forgeries had no connection with the sale, and the fact that an inci- dental effect of their discovery was to pre- vent payment of the check, did not show fraud in the contract of sale. A statement made with false pretence of knowledge is fraudulent. See post \ 691, and note. False Representations Producing Mistake. — But although false statements innocently made will not justify the avoidance of the sale for fraud, they may warrant its avoidance because of the mis- take produced thereby. See last chapter, and see Pendarvis v. Gray, 41 Tex. 326, and Lopes v. Bobinson, 54 Tex. 510. In Smith v. Bichards, 13 Peters 26, the court said : " It was immaterial to the pur- chaser whether the misrepresentation pro- ceeded from fraud or mistake. The injury to him is the same, whatever may have been the motives of the seller." This language was approved in Grim r. Byrd, 32 Gratt. 293, 300, and Staples, J., said : " The real inquiry is not whether the ven- dor knew the representation to be false, but whether the purchaser believed it to be true, and was misled by it in entering into the contract." See Crump v. U. S. Mining Co., 7 Gratt. 352. To the same effect, see Thorne v. Prentiss, 83 111. 99 ; Allen t-. Hart, 72 111. 106 ; Buff v. Jar- ret t, 94 111. 475, 479. (a) 3 T. B. 51 ; 2 Sm. L. C 66, (8th ed.) 5. The Fraud Must be a Cause of Damage to the Party Deceived. — Mor- rison v. Lods, 39 Cal.381, 385; Weaver v. Wallace, 9 N. J. L. 314, [251] ; First 558 AVOIDANCE OF THE CONTRACT. [BOOK III. Atwood Small. The whole doctrine on the subject was very much discussed iu the House of Lords, iu the celebrated case of Atwood v. Small ; (b) and in Lord Brougham's opinion, the princi- ples unanimously conceded to be true by their lordships are carefully laid down, (e) § 640. The mistaken belief as to facts may be created by active Mistaken belief means > as by fraudulent concealment or knowingly false representation ; or passively, by mere silence when it is a duty to speak. But it is only where a party is under some pledge or obligation to reveal facts to another that mere silence will be considered as a means of deception, (d) 6 may be caused actively or passively. National Bank of Bamsville v. Yocum, 11 Neb. 328; Neidefer v. Chastain, 71 Ind. 363, 365 ; Wiley v. Howard, 15 Ind. 169; Sledge v. Scott, 56 Ala. 202, 206; Fuller v. Hodgden, 25 Me. 248 ; Weist v. Grant, 71 Penna. 95. In Brown v. Blunt, 72 Me. 415,421, Barrows, J., said: "The payment of plaintiff's own debt was no damage. It was not defrauding him to induce him to pay it by means of a false representation, had that been proved. Hence it is held in Commonwealth v. Mc- Duffy, 126 Mass. 467, that the oflfence of obtaining property by false pretences can- not be committed when the party charged obtains no more than is rightfully due him ; that the question in such cases is whether defendant had an intent to de- fraud, and effected that purpose." To the same effect see Marsh v. Cook, 32 N. J. Kq. 262. See Bartlett v. Blaine, 83 111. 25; Missouri Valley Land Co. v. Bush- nell, 11 Neb. 192, 196; Clark v. Tennant, 5 Neb. 549; First National Bank v. Yocum, 11 Neb. 328. . The Fraud Must be Material to the Transaction. — " If the representations re- late to another matter, or to the one in dispute in but a trivial and unimportant maimer, they would afford no sufficient ground to set aside the contract." Hall i>. J. Anson, 41 Mich. 286, 290; Frenzel v. Miller, 37 Ind. 1, 17 ; First National Bank v. Yocum, 11 Neb. 328; Noel v. Horton, 50 Iowa 687. In McAleer v. Horsey, 35 Md. 439, 452, Miller, J., said : " If the fraud be such that had it not been practiced the contract could not have been made or the transaction completed, then it is material to it; but if it be made probable that the same thing would have been done if the fraud had not been prac- ticed, it cannot be deemed material. Whether material or otherwise, seems a question for the jury." See Buschman v. Codd, 52 Md. 202, 207. (6) 6 CI. & Fin. 232. The opinions de- livered by some of the law lords in this case are considered and explained by Jessel, M. B., in Bedgrave v. Hurd, 20 Ch. D. 1, C. A., pp. 14-17. (c) 6 CI. & Fin, pp. 443-447. See, also, per Lord Wensleydale, in Smith v. Kay, 7 H. L. C, at p. 774. {d) Smith v. Hughes, L. B., 6 Q. B. 597 ; and see an interesting case before the Supreme Court of the United States, Laidlaw v. Organ, 2 Wheat. 175. 6. In Laidlaw v. Organ, 2 Wheat. 178, 195, the buyer learned of the peace be- tween Great Britain and the United States, and immediately bought tobacco, which he obtained more cheaply because the seller was ignorant of the news. The seller attempted to rescind. Chief Justice Marshall said : " The question is whether the intelligence of extrinsic circumstances, which might influence the price of the commodity, and which was exclusively within the knowledge of the vendee, CHAP. II. J FRAUD. 559 [There are, however, eases in which a non-disclosure of a material fact may be equivalent to active misrepresentation, for the silence may be withholding of that which is not stated may make that aSive a m"srep- which is stated absolutely false, (e) Or, again, it may be resentation - that from the nature of the transaction, the fact not disclosed is such that it is impliedly represented not to exist. (/) 7 § 641. In general, where an article is offered for sale, and is open to the inspection of the purchaser, the common law does not Cmeate ^^ permit the latter to complain that the defects, if any, of general rule, the article are not pointed out to him. The rules are Caveat emptor and Simplex commendatio non obligat. The buyer is always anxious to buy as cheaply as he can, and is sufficiently prone to find imaginary fault in order to get a good bargain, and the vendor is equally at liberty to praise his merchandise in order to enhance its value if he abstain from a fraudulent representation of facts, provided the buyer have a full and fair opportunity of inspection, and no means are used for hiding the defects. If the buyer is unwilling to bargain on these ought to have been communicated by him to the vendor. The court is of opinion that he was not bound to communicate it. It would be difficult to circumscribe the contrary doctrine within proper limits, where the means of intelligence are equally accessible to both parties. But at the same time each party must take care not to say or do anything tending to impose upon the other." See Blyden- burgh v. Welsh, Baldw. 331, 337 ; But- ler's Appeal, 26 Penna. 63, 66 ; Kintzing v. McElrath, 5 Penna. 467 ; Perry v. Johnston, 59 Ala. 648 ; People's Bank v. Bogert, 81 N. Y. 101, 108. (e) Per Lord Cairns in Peek v. Gur- ney, L. E., 6 H. L., at p. 403. And this statement of the law has been approved and explained by James, L. J., in Ark- wright v. Newbold, 17 Ch D., C. A., at p. 317, and by Jessel, M. P., in Smith v. Chadwick, 20 Ch. D., C. A., at p. 58. (./) Per Blackburn, J., in Lee v. Jones, 17 C. B. (N. S.) at p. 506, and per eundem in Phillips v. Foxall, L. E., 7 Q. B., at p. 679. 7. See post § 732, note 50. In Levoe v. Brandt, 53 N. Y. 462, goods were bought on credit, no representation being made. A suit was pending against the buyer, and the plaintiff therein was entitled to judgment for more than the buyer was worth, but had delayed to enter judgment for more than a year prior to the sale to the buyer. Immediately after that sale the creditor entered judgment and levied on the goods. Eeplevin by the seller was sustained on the ground that the buyer had fraudulently concealed the existence of an undefended suit against him for more than he was worth. Peckham, J., said : " There is good ground for infer- ring, from the facts proved, that the pur- chaser intended to commit a fraud in this purchase. Such a fraud may be as easily consummated by the suppression of a truth as by the suggestion of a falsehood." See Armstrong v. Huffstutler, 19 Ala. 51 ; Marsh v. Webber, 13 Minn. 109; Turner v. Huggins, 14 Ark. 21 ; Stevens v. Or- man, 10 Fla. 9 ; Hanson v. Edgerly, 29 N. H. 343 ; Brown v. Montgomery, 20 N. Y. 287 ; Pease v. McClelland, 2 Bond 42. 560 AVOIDANCE OF THE CONTRACT. [BOOK III. terms, he can protect himself against his own want of care e.xart r wa?ranty or skill by requiring from the vendor a warranty of any .loai on the matters, the risk of which he is unwilling to take on him- self. 8 But the use of any device by the vendor to induce 8. Caveat Emptor. — See Veasey v. Daton, 3 Allen 380, where Metcalf, J., said : " The plaintiff had no right to rely on the representation of value as a fact, nor lo place any confidence in it. Such representation, however exagger- ated, false and deceptive it may be, is not actionable if the subject of sale be open to the buyer's observation. He is bound to examine or inquire for himself and trust his own judgment, or take a war- ranty from the seller." See Teague i. Irwin, 127 Mass. 217 ; Morrison v. Koch, 32 Wis. 254 ; McClanahan «. MeKinley, 52 Iowa 222. In Beninger v. Corwin, 24 N. J. L. 257, the suit was for the price of a horse, and the defence fraud in conceal- ing that the horse was diseased. Ogden, J., said : " It cannot be concealed that K. got a great advantage in the trade and put off upon C. a defective, wind-broken horse, yet the question presses upon the court whether a legal defence was estab- lished. No warranty appears to have been made, and none can be inferred. * * * The doctrine seems to be firmly established that in cases of sales, if there be no warranty as to quality, or wilful misrepresentation, or artful device to dis- guise the character or conceal the defects of the thing sold, the vendee should be bound by the contract." See Protection, &c, Co. v. Osgood, 93 111. 69, 76 ; Dillard v. Moore, 7 Ark. 166 ; Morris v. Thomp- son, 85 111. 16 ; Cogel v. Kniseley, 89 111. 598. An extreme application of the maxim caveat emptor will be found in G-raffenstein v. Epstein, 23 Kan. 443. The question was stated to be " whether a false and fraudulent representation as to the market price of a commodity made by a purchaser who knows, to a seller who does not know, the market price, to induce a sale more advantageous to the pur- chaser than he could otherwise get, and which representation is believed and re- lied on by the seller to his damage, is such a fraudulent representation as avoids the contract of sale." Brewer, J., said : "The question thus presented must be answered in the negative. * * * The article was one of general commerce ; there was no special relation of trust or confidence ; no peculiar training was pre- requisite to a knowledge of values ; the market price was a matter of public knowledge and could be ascertained by any one by reasonable effort and inquiry. Under such circumstances, if one party chooses to take the statements of the other and act upon them, rather than make any inquiry as to the market price, he cannot thereafter repudiate his contract on account of the falsity of the state- ments." This case may be questioned. While the buyer was not bound to dis- close the market price, he was bound, if he undertook to state it, to state it as he believed it to be. Thus it has been held in many cases that representations by the seller, that a patent, which was the subject of sale, had been largely sold and was profitable, if false, were fraudulent and would warrant avoidance of the contract. Somers v. Eichards, 46 Vt. 170, 175 ; Cros- land v. Hall, 33 N. J. Eq. 111. See cases cited in reporter's note to the latter case. Kenner v. Harding, 85 111. 264, 274; Ives v. Carter, 24 Conn. 392, 405, where false statements of offers for the property were held fraudulent. And see Miller v. Barber, 66 N. Y. 558, 567, where the property sold was stock, and the false statement was that certain persons named had made purchases of other stock of the company. This was held to be a material CHAP. II.] FRAUD. 561 the buyer to omit inquiry or examination into the defects of the thing sold is as much a fraud as an active concealment by the vendor him- self. 9 [In America, the doctrine that mere " dealer's talk " will not give rise to an action of deceit has been carried very far. Thus, Law in , in Ellis v. Andrews, (g) a false statement by the vendor Amerlea - as to the value of stock was held to be a mere expression of opinion as to the value of the thing sold, and as such giving no right of action to the purchaser who bought on the faith of it.] 1° misstatement. A statement of the law which commends itself as reasonable and just will be found in Jackson v. Collins, 39 Mich. 557, 561. In that case a stock of goods in a store was sold. They were represented as fresh and new, but in fact were old. Campbell, C. J., said : " It is certainly possible for the owner of a stock of goods to deceive a buyer who could, by examining each parcel by itself, avoid being deceived. All such transactions must be looked at reasonably. One who is as prudent on the particular occasion as most prudent men would be, and is nevertheless cheated, can hardly be held negligent." See Savage v. Stevens, 126 Mass. 207 ; Smith v. Countryman, 30 N. Y. 655, 670, 681. See post note 20. 9. Artifices to Conceal. Aliud est Tacere, Aliud Celare. — In Matthews v. Bliss, 22 Pick. 48, 52, Shaw, C. J., said : " Each may act upon the knowledge which he has, without communicating it. But aliud est tacere, aliud celare. If there be studied efforts to prevent the other from coming to the knowledge of the truth, or if there be any, though slight, false and fraudulent suggestion or rep- resentation, then the transaction is t inted with turpitude." See Boseman v. Ca ovan, 43 Cal. 110, 118, where the lan- guage of the text is quoted and approved. Smith v. Countryman, 30 N. Y. 655, 681. (g) 56 N. Y. 83; and see Bishop v. Small, 63 Me. 12. 10. Expressions of Opinion are not Fraudulent. — Where the representation 2 is upon its face a matter of opinion, and not of fact, it cannot be made the occasion of avoidance. In Belcher v. Costello, 122 Mass. 189, Eudicott, J., said : "The repre- sentation proved was, that the parties (who made the note given for the price) were good. This, taken by itself, is not the statement of a fact, but the expression of an opinion merely. The learned judge erred in ruling as matter of law that the representation that a party is in good pecuniary circumstances, and able to pay the notes, which is equivalent to a repre- sentation that he is good, is necessarily the representation of a fact." Whether a representation by a buyer asking credit as to his responsibility is a statement of fact or of opinion is often a question for the jury. In Morse v. Shaw, 124 Mass. 59, the buyer asking credit, and owning valu- able real estate, made representations as to the amount of his debts. Morton, J., said : " Such a representation may be in- tended as a willfully false statement of a fact, and may be understood as a state- ment of fact. Or it may be intended as the expression of the opinion or estimate which the owner has of the value of his property, and may be so understood. Sup- pose that a man who owns property worth $1000, for the purpose of procuring credit represents that he has property worth $100,000. It would be self-evident that he meant to misrepresent facts, and such misrepresentation would be fraud. But if the same man should represent that he' had property worth $1500, it might well N 562 AVOIDANCE OF THE CONTRACT. [BOOK III. be regarded as an expression of his judg- ment or estimate of value, and therefore not an actionable fraud. In such cases it is for the jury to determine." See Sledge v. Scott, 56 Ala. 202, 206 ; Bigler v. Flick- inger, 55 Penna. 279 ; Homer v. Perkins, 124 Mass. 431. In Watts v. Cummins, 59 Penna. 84, land sold in western Pennsyl- vania was said to be good oil land, but the court said that this was plainly an expression of opinion as to a matter unknown to both parties. Statements of Value are not Fraud- ulent. — In Homer v. Perkins, 124 Mass. 431, Endicott, J., said: "The mere affirmations or expressions of opinion by a seller in regard to the value of the property he is attempting to sell, or of a purchaser in regard to the value of the property he desires the seller to take in payment, can never be safely relied on by the other party. They are the com- mon and well-understood affirmations in respect to property, as between-buyer and seller, made for the purpose of increasing the price, and effecting a sale or barter, and in such » case the maxim caveat emptor applies. The party to whom they are made has no right to rely on them, and although false, and intended to de- ceive, the party who confides in them is not entitled to relief." This has been ex- tended even to false representations as to the cost of the property. See Medbury v. Watson, 6 Mete. 246, 259, 260 ; Veasey v. Daton, 3 Allen 380 ; Poland v. Brownell, 131 Mass. 138; State v. Phifer, 65 N. C. 321, 326 ; Long v. Woodman, 58 Me. 49 ; Holbrook v. Conner, 60 Me. 578 ; Cooper v. Lovering, 106 Mass. 79 ; Mooney v. Miller, 102 Mass. 220; Schramm v. OConner, 98 111. 539 ; Dawson v. Graham, 48 Iowa 378 ; First National Bank v. Yocum, 11 Neb. 328 ; Gordon o. Butler, 105 U. S. 553 ; Uhler v. Semple, 20 N. J. Eq. 288 ; Sledge v. Scott, 56 Ala. 202 ; Wil- cox v. Henderson, 64 Ala. 535, 541 ; Samson v. Lord, 13 How. 198 ; Somers v. Bichards, 46 Vt. 170, 175 ; Merwin v. Arbuckle, 81 111. 501 ; People v. Jacobs, 35 Mich. 36; Buschman v. Cold, 52 Md. 202, 207 ; Van Epps v. Harrison, 5 Hill 63 ; Kennedy v. Bichardson, 70 Ind. 524, 534 ; Cagney v. Cuson, 77 Ind. 494, 497 ; Yeagin v. Irwin, 127 Mass. 217 ; Stevens *. Kainwater, 4 Mo. App. 292; Bantat). Savage, 12 Nev. 151. And see ante note 8. Misrepresentations as to Facts which throw Light on Value are Fraudulent. — Thus in Manning v. Al- bee, 11 Allen 520, the seller of goods took in payment bonds at a certain value on the credit of a false quotation in a newspaper shown to him by the buyer ; and it was held that this was something more than an expression of opinion as to value ; and replevin to recover the goods sold was sustained. Smith v. Andrews, 8 Ired. L. 6; Pearce v. Blackwell, 12 Ired. L. 49, 60. It is sometimes difficult to de- termine whether a statement is one of opinion or of fact. In State v. Tomlin, 29 N. J. L. 13, 23, defendant was in- dicted for obtaining property by false pre- tences, having bought a note at » low price by representing that the maker was insolvent. This was held a representa- tion of a fact. Ogden, J., said : " The status of the debtor is a fact, and he who unqualifiedly undertakes to declare what such status is, represents a fact, and does not express an opinion merely." State v. Tomlin was followed in the recent case of State v. Hefner, 84 N. C. 751, where there was a like indictment for falsely repre- senting that a mare was sound, and there had never been anything the matter with her eyes. Ashe, J., said: "If he had simply stated that the eyes of the mare were sound, this would have been no more than the expression of an opinion, which we think would not come within the statute; but when he says that there has never been anything the matter with them, this is a fact." In Bradley v. Luce, 99 111. 234, worthless stock was repre- sented worth a large sum, and mortgages for $12,000 on land worth $2000, were CHAP. II.] FRAUD. 563 § 642. The authorities on which the foregoing preliminary remarks are based will be referred to in the detailed investigation which it is proposed to make of the subject, divided, for convenience, into three parts ; 1st, fraud on the vendor ; 2d, on the purchaser ; 3d, on cred- itors, including the law on bills of sale. But it will be Actionof de . useful first to point out that a man may make himself el^sUn'fatoraf liable in an action, founded on tort for fraud or deceit or not partils'to [perhaps] negligence (h) in respect of a contract, brought theoontraot - by parties with whom he has not contracted, by a stranger, by any one of the public at large who may be injured by such deceit or neg- ligence. [But the liability is limited in this way, that to enable a third per- son, a stranger to the contract, to maintain an action of Limitsof the deceit, it must appear that he has been injured by acting liabilit y- upon the defendant's false representation, made with the direct intent that he should act upon it in the manner which has occasioned the injury or loss, (i) § 643. The principles by which the limits of responsibility for a false representation are to be ascertained, were laid down le/m BanyL. by Lord Hatherley (then Wood, V. C.) in Barry v. Cross- key, (j) as follows : " First. Every man must be held responsible for the consequences of a false representation made by him to another, upon which that other acts, and so acting, is injured or damnified. " Secondly. Every man must be held responsible for the conse- quences of a false representation made by him to another, upon which a third person acts, and so acting, is injured or damnified, provided it appear that such false representation ivas made with the intent that it represented as good. These statements lowed in preference, were held clearly fraudulent. In Jackson (i) Langridge v. Levy, 2 M. & W. v. Collins, slated ante note 8, Campbell, 159; in error, 4 M. & W. 337, as ex- C. J., said : " No rule can adequately de- plained and commented upon by Wood, fine all the ciroumstances in which repre- V. C, in Barry v. Crosskey, 2 J. & H. sentations either of fact or of opinion 117, 118, 123; and by Lord Cairns in may become fraudulent and actionable." Peek v. Gurney, L. K., 6 H. L. 377, 412; (h) George v. Skivington, L. B., 5 Ex. see, also, Hosegood v. Bull, 36 L. T. (N. 1 ; but see Heaven v Pender, 9 Q. B. D. S.) 617. 102, where George v. Skivington is disap- (j) 2 J. & H. at p. 122, adopted by proved, and the earlier case of Winter- Lord Cairns in Peek v. Gurney, L. R., 6 bottom v. Wright, 10 M. & W. 109, fol- H. L., pp. 412, 413. '564 AVOIDANCE OF THE CONTRACT. [BOOK III. should be acted upon by such third person in the manner that occa- sions the injury or loss. " Thirdly. The injury must be the immediate and not the remote consequence of the representation thus made. To render a man re- sponsible for the consequence of a false representation made by him to another, upon which a third person acts, and so acts, is injured and damnified, it must appear that such false representation was made with the direct intent that it should be acted upon by such third person in the manner that occasions the injury or loss."] H § 644. The case usually cited as tin leading one on this point is Langridge «. Langridge v. Levy, (k) where the defendant offered for sale a gun, on which he put a ticket in these terms : " War- ranted, this elegant twist gun, by Nock, with case complete, made for his late Majesty, George IV.: cost 60 guineas; only 25 guineas." The gun was sold to the plaintiff's father, who told the defendant that it was wanted " for the use of himself and his sons. It was warranted to be a good, safe, and secure gun, and to have been made by Nock." The gun burst in the hands of the plaintiff, injuring him severely, and it was proven not to be of Nock's make. Parke, B., delivered the judgment of the court, after time taken for consideration. He said : " If the instrument in question * * * had been delivered by the defendant to the plaintiff for the purpose of being used by him, with an accompanying representation to him that he might safely so use it, and that representation had been false to the defendant's knowledge, and the plaintiff had acted upon the faith of its being true, and had received damage thereby, then there is no question but that an action would have lain upon the principle of a numerous class of cases, of which the 11. False Statements to a Third statement to one could not give a right of Person. — These principles are illustrated action to another to whom it was com- in Eaton v. Avery, 83 N. Y. 31, 34, where municated. But if the statement is made one of several partners made representa- for the purpose of being communicated to tions as to the pecuniary responsibility of another and to influence his mind, such his firm, to an agency whose business it other, if he acts on such statement, may was to ascertain and report the responsi- have a remedy. Natigatuck Cutlery Co. bility of merchants. On the faith of the v. Babcock, 22 Hun 481, 485 ; Common- report of this agency, goods were sold on wealth v. Call, 21 Pick. 515 ; Common- credit to the firm, and the representations wealth v. Harley, 7 Mete. 462. See post proving false, the seller brought suit notes 12 and 13. against the' partner Who made them, for (k) 2 M-. & W. 519 ; in error, 4 M. & deceit. Eapallo, J., said that it was a W. 337. correct general proposition that a, false CHAP. II.] FRAUD. 565 leading one is that of Pasley v. Freeman ; (I) which princi- Pasley ,_ Free . pie is that a mere naked falsehood is not enough to give a man right of action : but if it be a falsehood told with the intention that it should be acted upon by the party injured, and that act must produce damage to him ; if instead of being delivered to the plaintiff immediately, the in- strument had been placed in the hands of a third person, for the pur- pose of being delivered to and then used by the plaintiff, the like false representation being knowingly made to the intermediate person to be communicated to the plaintiff, and the plaintiff had acted upon it, there can be no doubt but that the principle would equally apply, and the plaintiff would have had his remedy for the deceit." In the Exchequer Chamber the judgment was affirmed on the ground " that as there is fraud ; and damage the result of that fraud ; not from an act remote and consequential, but one contemplated by the defend- ant at the time, as one of its results, the party guilty of the fraud is responsible to the party injured." § 645. In George v. Skivington, (m) the plaintiffs, Joseph George and Emma, his wife, claimed damages of the defendant, a Geor „ ei) chemist, for selling to the husband a bottle of a chemical sklvm s ton - compound to be used by the wife, as the defendant then knew, for washing her hair. The declaration charged negligence and unskillful- ness of the defendant in making the said compound, and alleged per- sonal injury to the wife resulting from the use of it. Demurrer and rejoinder. Held, a good cause ofaction on the authority of Langridge v. Levy. [This case, however, has met with disapproval, and is very doubtful law. (n) ] But no action growing out of the contract can be maintained in such cases, except by parties or proxies, (o) , m ,. . . , .„ , Butnosuehae- The distinction was clearly illustrated in a case in the '»» can be ' maintained on. Queen's Bench, where there were two counts in the decla- contract. ration; the first, on contract, which was held bad, the Gerhard ». second, in tort, which was sustained. The fraud charged {I) 3 T. B. 51, and 2 Sm. L. G. (ed. (o) Winterbottom v. Wright, 10 M. & 1879) 66, where all the authorities are W. 109; Longmeid v. Holiday, 6 Ex. collected. 761 ; Howard v. Shepherd, 9 C. B. 297 (m) L. E., 5 Ex. 1 ; 39 L. J., Ex. 8. 19 L. J., C. P. 249 ; Playford v. United (n) See Heaven v. Pender, 9 Q. B. D. Kingdom Telegraph Co., L. E., 4 Q. B. 102. 706. • 566 AVOIDANCE OP THE CONTRACT. [BOOK III. was issuing to the public a false and fraudulent prospectus for a com- pany, whereby the plaintiff was deceived into taking shares, (p) This principle, that the liability in an action of tort may be en- To entitle any f° rce d against a party guilty of fraudulent representations lirto'bring'an publicly given out and intended to deceive the public at foJdece'it' by an y person who has suffered damages in conse- i^nt ; repre" du " quence of them, has since been frequently enforced by sentations are , 1 , / a published, he the COUrtS. (q) a direct con- §646. [But it is now conclusively settled, overruling tween himself some of the earlier decisions, that this liability can only and the person . „ - . . . . i • 1 publishing be entorced in cases where the person, who complains that he has been injured by acting in reliance upon the false representations, can establish in the communication of the false repre- sentations some direct connection between himself and the person pub- lishing them. This was decided by the House of Lords in Peek v. Gurney, (r) Peekti Gur where it was held that the responsibility of directors who ney - issue a prospectus for an intended company misrepresent- ing actual and material facts, and concealing facts material to be known, does not, as of course, follow the shares on their transfer from an allottee to one who afterwards purchases them from him upon the market, the ground of the decision being, that as the object of the prospectus was to induce persons to become original shareholders in the company, its office was fulfilled when the shares were once allotted, (s) 12 (p) Gerhard u. Bates, 2 E. & B. 476 ; vhi supra ; Gerhard v. Bates, ante \ 645 ; 22 L. J., Q. B. 364> Langridge v. Levy, and Barry v. Cross- (q) Scott v. Dixon, reported in note, 29 key, ante \ 643, were explained and L. J., Ex. 62 ; decided by the Q. B. in adopted by Lord Chelmsford, at p. 396, 1859 ; Bagshaw v. Seymour, in note, 29 and by Lord Cairns, at p. 412. L. J., Ex. 62, and 18 C. B. 903 ; Bedford 12. False Representations by Di- v. Bagshaw, 4 H. & N. 538 ; 29 L. J., Ex. rectors. — Peek v. Gurney was cited in 59. But these last two cases are over- Bank of Montreal v. Thayer, 7 Fed. Re- ruled by Peek v. Gurney, infra. See, also, porter 622, 628, and McCrary, J., said : North Brunswick Railway Co. v. Cony- " We have seen no case which holds that beare, 9 H. L. C. 712 ; Western Bank of it must be made to appear that the fraud- Scotland v. Addie, L. R., 1 Sc. App. 145 ; ulent representations were made directly Henderson v. Lacon, 5Eq. 219 (V. C. W.) and individually to the plaintiff. It is (r) L. K, 6 H. L. 377. enough if he was authorized to act upon (s) In this case, Seymour v. Bagshaw, them, and did so." In America the lia- and Bedford v. Bagshaw, ubi supra, were bility of directors for fraudulent repre- expressly overruled ; and Scott v. Dixon, sentations in issuing shares, and for CHAP. II.] FRAUD. 567 § 647. The following action was held to be maintainable in the State of New York. A had agreed to bring certain Case decided in animals for sale and delivery to B, at a specified place. ^ionfor k de- A third person, desirous of making a sale to B, falsely celt ' represented to him that A had abandoned all intention of fulfilling his contract, thereby inducing B to supply himself by buying from that third person. A was put to expense and loss of time in bringing the animals to the appointed place and otherwise disposing of them. In an action for damages for the deceit against the third person by A, it was not only held that he was entitled to recover, but that it was no defence to the action that the contract between A and B was one that could not have been enforced, (t) 13 We will now revert to the subject of I'mud as specially applied in cases of sale. issuing void shares, is carried further than in Peek v. Gurney ; and the officers issuing such shares are held liable not only to the first purchasers but to any bona fide holder for value. In Bruff v. Mali, 36 N. Y. 200, 206, officers of a com- pany made fraudulent and void issues of stock, and they were held liable to any bona fide purchaser of the stock. The court likened the case to that of Thomas v. Winchester, 7 N. Y. 397, where a poison wa a carelessly labeled as a harm- less medicine, and after it had passed through several hands, caused mischief, for which the original vendor was held liable directly to the injured party. See ante \ 645 ; Fenn v. Curtis, 23 Hun 384 ; Barnes v. Brown, 80 N. Y. 527. So, too, in Bartholomew v. Bentley, 15 Ohio 659, the managers of a bank issued bills with- out authority of law. One who took some of the bills for value brought suit against the bank for fraud. The court said : "If there was a general design to defraud all such as could be defrauded by taking their paper issues, it is sufficient, and the plain- tiff may maintain his suit, provided he has taken the paper and suffers from the fraud." But in Wakeman v. Dalley, 51 N. Y. 27, it was held that a director of a cor- poration could not be held liable for fraud because of false statements in a published report of the condition of the company, unless it is shown that the falsity of the statements was known to him. Arthur v. Griswold, 55 N. Y. 400 ; Morgan v. Skiddy, 62 N. Y. 319 ; Thompson on Lia- bility of Officers of Corporations, p. 401, et seq. (t) Benton v. Pratt, 2 Wend. 385. See notice of this case by Colt, J., in Randall v. Hazleton, 94 Mass. 412, at p. 417. 13. The case of Benton v. Pratt, 2 Wend. 385, mentioned in the' text, was fol- lowed in Bice v. Manley, 66 N. Y. 82. In that case a contract was made to sell cheese. It was void because within the statute of frauds, but both parties would have performed it but for the fraud. The defendant, to prevent the sale and to pro- cure a sale to himself, sent to the seller a telegram signed with a name resembling that of the buyers, to the effect that they did not care for the cheese. Deceived by this, the owner sold and delivered his cheese to the person who had sent the telegram. The first buyers sued the second for fraud. Earl, J., said: "What difference can it make that plaintiffs could not enforce their agreement ? The referee found that S. (the seller) would have performed the agreement and plaintiffs would have had 568 AVOIDANCE OF THE CONTRACT. [BOOK. III. SECTION II. — FRAUD ON THE VENDOR. § 648. It is not until quite recently that it was finally settled Effect of fraud whether the property in goods passes by a sale which the fn pa?si y nK d ° r vendor has been fraudulently induced to make. The re- property, ceot cases of Stevenson v. Newnham, (u) in the Exchequer Chamber, and of Pease v. Gloahec, (v) in the Privy Council, confirm- ing the principles asserted by the Exchequer in Kingsford v. Merry, (x) taken in connection with the decision of the House of Lords in Oakes v. Turquand, (y) leave no room for further question. By the rules established in these cases, whenever goods are obtained from their owner by fraud, we must distinguish whether the facts show a sale to the party guilty of the fraud, or a mere delivery of the goods into his possession, induced by fraudulent devices on his part. In Depends on r ' i , i i • i i vendor's infen- other words, we must ask whether the owner intended to tion to transfer possession and transfer both the property in, and the possession of, the ownership, or r r J ' L possession goods to the person guilty of the fraud, or to deliver nothing more than the bare possession. In the former case, there is a contract of sale, however fraudulent the device, and the property passes : but not in the latter case. § 649. In the former case the contract is voidable at the election of the vendor, not void ah initio. It follows, therefore, that Sd'altniMo, the vendor may affirm and enforce it, or may rescind it. butwt «. g e may sue in assumpsit for the price, and this affirms the contract, or he may sue in trover for the goods or their value, and this disaffirms it. 14 But in the meantime, and until he Stwrd per? elects, if his vendee transfer the goods in whole or in part, If a^uiredb!-' whether the transfer be of the general or of a special prop- fore avoidance. ^ ^ them, to an innocent third person for a valuable con- sideration, the rights of the original vendor will be subordinate to those the benefit of it, but for the fraud of the and L. R., 4 H. L. 64 ; and Clough v. defendant. How, then, can it be said that London and North Western Railway Co., plaintiffs were 'not damaged, that there L. R., 7 Ex. 26, post § 659. was not both fraud and damage?" See 14. The Defrauded Party Only can Snow D. Judson, 38 Barb. 210; White v. Rescind.— As the contract is valid at the Merritt, 7 N. Y. 352. election of the defrauded vendor, it fol- (u) 13 C. B. 285, and 22 L. J., C. P. 10. lows that no one else can treat it as void (») L. R., 1 P. C. 220 ; 3 Moo. P. C. if he does not. Thus in Brown v. Pierce, (N. S.) 556. 97 Mass. 46, a defrauded vendor resold (x) 11 Ex. 577, and 25 L. J., Ex. 166. the property without taking steps to (y) L. R., 2 H. L. 325. See, also, Reese rescind the first sale, and it was held that River Mining Co. v. Smith, 2 Ch. 604, the second buyer could not claim an CHAP. II. j FRAUD. 569 of such innocent third person, (z) I 5 If, on the contrary, the intention of the vendor was not to pass the property, but merely to Not protected ... . P . -. * . 1 where vendor part with the possession 01 the goods, there is no sale, and only trans- avoidance of the former sale, nor hold the property nguiist the dishonest buyer. See, also, Henry v. Daley, 17 Hun 210; Row- ley v. Bigelow, 12 Pick. 307, 312. The Rescission Must be Complete. — If the seller rescinds, he must rescind entirely. He cannot treat part of the contract as valid and rescind the rest. If he has given credit for the price, he can- not rescind the credit and sue at once for the price; he should rescind the whole and sue in trover or replevin. Kyan v. Brandt, 42 111. 78 ; Moriarty v. Stofferan, ' 89 111. 528 ; Stewart v. Emerson, 52 N. H. 301, 321 ; Weed v. Page, 7 Wis. 503. Thus in Kellogg v. Turpie, 93 111. 265, the vendor, who had sold on credit, finding that he had been deceived by the buyer, brought suit, before the credit expired, for the price. But the court said that the buyer could not rescind the credit and sue on the contract. If be desired to re- scind, he must bring trover or replevin for the goods. To the same effect see Adler v. Fenton, 24 How. 407. In New York, however, it was held that in such a case the seller might rescind the sale and then waive the tort and sue ex contractu on an implied sale. Both v. Palmer, 27 Barb. 652; Wigand v. Sichel, 3 Keyes 120. See, also, McGoldrick v. Willetts, 52 N. Y. 612, 620. But this right to waive the tort and sue in assumpsit is, by the weight of authority, limited to cases where the wrongful possessor of property has sold it, in which an action may be brought for money had and received. See Kellogg v. Turpie, supra, and cases cited. Restoration Necessary to Avoid- ance. — See ante \ 606, note 2. A de- frauded seller does not lose the right to rescind because the buyer has incurred expenses with respect to the property in carrying out the fraud, nor is it necessary that the seller should make good such ex- penses, even though he receives an ad- vantage from them by rescission. Thus in Guckenheimer v. Angevine, 81 N. Y. 394, the buyer, who obtained the property by fraud, paid a revenue tax in order to obtain possession, and it was held that the seller might rescind the sale without ten- dering back the tax, although he received the advantage of the payment. See Downer v. Smith, 32 Vt. 1 ; Grant 11. Law, 29 Wis. 99. And where the defrauded seller is able to recover only a portion of the property, he may maintain a suit for the value of the residue. Powers v. Bene- dict, 88 N. Y. 605 ; Kinney v. Kiernan, 49 N. Y. 164. In the recent case of Day- ton v, Morton, 47 Mich. 193, 195, on a suit in conversion to recover the value of a horse, for the price of which a note had been given, which note the seller did not surrender, Campbell, J., said : " We do not understand that there is any rule re- quiring a defrauded party to give up the personal unsecured obligation of those who defraud him as a condition of a suit for the fraud. It is one of the documents which may be necessary, as it was here, to prove the false representations which were endorsed on the note itself. By sur- rendering this, plaintiff would have lost the most important item of proof he pos- sessed." But see Auger v. Thompson, 3 Ont. App. 19. (z) Attenborough v. London and St. Katherine's Dock Co., 3 C. P. D. 450, C. A. ; Babcock v. Lawson, 4 Q. B. D. 394 ; 5 Q. B. D. 184, C. A. 15. Bona Fide Purchasers Protected. — A bona fide purchaser for valuable con- sideration, without notice of fraud, from one who has fraudulently obtained both possession and property, will be pro- tected. Maine.— Ditson v. Randal, 33 Me. 202 ; Titcomb v. Wood, 38 Me. 561 ; Lee ti. 570 AVOIDANCE OP THE CONTBACT. [book in. Kimball, 45 Me. 172, (criticised, 58 N. Y. 77.) New Hampshire . — Kingsbury v. Smith, 13 N. H. 109. Massachusetts. — Rowley v. Bigelow, 12 Pick. 307, 312 ; Hoffman v. Noble, 6 Mete. 68; Easter v. Allen, 8 Allen 7. Connecticut. — Williamson v. Russell, 39 Conn. 406, 412; Lynch v. Eeecher, 38 Conn. 490. New York.— Fassettu. Smith, 23 N. Y. 252 ; Stevens v. Brennan, 79 N. Y. 254 ; Paddon v. Taylor, 44 N. Y. 371. Pennsylvania. — Sinclair v. Healy, 40 Penna. 417. Delaware. — Mears v. Waples, 3 Houst. 581, 620; affirmed, 4 Houst. 62, (follow- ing Hall v. Hinks, 21 Md. 406, 418.) Maryland. — Powell v. Bradlee, 9 Gill & J. 220, 278 ; Hall v. Hinks, 21 Md. 406, 418. This case has been often cited, and dissents from the leading Massachu- setts case of Cogill v. Hartford & N. H. R. R., 3 Gray 545. Virginia. — Williams v. Givin, 6 Gratt. 268 ; Wiekham v. Martin, 13 Gratt. 427 ; Old Dominion Steamship Co. v. Burck- hardt, 31 Gratt. 664, 678, (approves Hall v. Hinks, 21 Md. 406.) Georgia. — Kern v. Thurber, 57 Ga. 172; Nicol n. Crittenden, 55 Ga. 497. Mississippi. — Lee v. Portwood, 41 Miss. 109. Ohio.— Dean *. Yates, 23 Ohio St. 386, 395; Combes v. Chandler, 33 Ohio St. 178. Indiana- -Bell v. Cafferty, 21 Ind. 411 ; Sharp v. Jones, 18 Ind. 314; Claflin ». Cottman, 77 Ind. 58. Illinois. — Chicago Dock Co. v. Foster, 48 111. 507 ; Brundagee v. Camp, 21 111, 330 ; Ohio & M. R. R. v. Kerr, 49 111. 458 ; Holland v. Swain, 94 111. 154 ; Van Duzc.r v. Allen, 90 111. 499. Kentucky. — Arnett i>. Cloudas, 4 Dana 299 ; Wood v. Yeatman, 15 B. Mon. 270. Tennessee. — Arendale v. Morgan, 5 Sneed 703 ; Hawkins v. Davis, 5 Baxt. 698 ; Gage v. Epperson, 2 Head 669 ; Hawkins v. Davis, S Baxt. 506. Wisconsin. — Singer Co. v. Sammis, 49 Wis. 316. Minnesota. — Cochran v. Stewart, 21 Minn. 435. Missouri. — Wineland v. Coonce, 5 Mo. 296. Kansas. — Wilson u. Fuller, 9 Kan. 176. California.— Paige v. O'Neal, 12 Cal. 483, 497 ; Sargent v. Sturm, 23 Cal. 359. In order to fully protect a bona fide pur- chaser, the rule is established that he may sell and give good title to one who has notice of the fraud ; otherwise he might be deprived of power to sell. What can rightfully be sold may as rightfully be bought. 2 White & T. Lead. Cas. in Eq. 95. Who are Bona Fide Purchasers. — One who takes property in payment of an existing debt is not protected as a bona fide purchaser for value. In Barnard v. Campbell, 58 N. Y. 73, 76, Allen, J., said that an innocent purchaser from the vendee could not defend against the claim of the defrauded vendor, unless such pur- chaser had " parted with value upon the faith of the apparent title of the wrong- doer and his right to dispose of the prop- erty." In that case the purchasers had ordered 1800 bags of linseed from one J., and sent notes for the price, at the same time that they sent the order. J. bought the linseed to fill the order by means of fraudulent representations, and sent it to his purchasers whose notes he had dis- counted. The defrauded vendor brought replevin against the innocent purchasers, and recovered, because they "parted with their notes upon the faith of the promise of J. alone." They did nothing based upon his title and possession. See same case, 55 N. Y. 456, and see the similar case of Fletcher v. Drath, 66 Mo. 126; Weaver v. Barden, 49 N. Y. 286; Ste- vens v. Brennan, 79 N. Y. 254, 258; Poor v. Woodburn, 25 Vt. 235; Sargent i, Sturm, 23 Cal. 359 ; Hyde v. Ellery, 18 Md. 496, 501 ; Pope v. Pope, 40 Miss. CHAP. II.] FRAUD. 571 he who obtains such possession by fraud can convey no ferred posses- .. 1*1 i • sion. property in them to any third person, howev.er innocent, for no property has passed to himself from the true owner. 16 § 650. To these common law rules, there is one statutory exception. Where the fraud by which the goods are obtained from vendor, is such as to enable him to succeed in prosecuting where true to conviction the fraudulent buyer as having been guilty eutes to comic- 516 ; But see, contra, Shufeldta. Pease, 16 Wis. 659. An attaching creditor of the purchaser is not in the position of a bona fide purchaser. Thompson v. Rose, 16 Conn. 71 ; Naugatuek Cutlery Co. a. Bab- cock, 22 Hun 481, 485; Buffington v. Gerrish, 15 Mass. 156; Wiggin v. Day, 9 Gray 97 ; Atwood v. Dearborn, 1 Allen 483 ; Whitman v. Merrill, 125 Mass. 127 ; American, &c, Express Co. v. Willsie, 79 111. 92 ; Jordan v. Parker, 56 Me. 557 ; Field v. Stearns, 42 Vt. 106; Fitzsim- mons v. Joslin, 21 Vt. 129; Poor v. Wood- burn, 25 Vt. 234 ; Hackett v. Callender, 32 Vt. 97. See, however, Gilbert v. Hud- son, 4 Me. 345. And a creditor who buys in the property at a sale under his execu- tion against a fraudulent purchaser, can- not hold the property so bought against the defrauded vendor. The court will strike out the amount realized on the execution if the defrauded seller retakes the property. Devoe v. Brandt, 53 N. Y. 462, 466. One who has given notes for the price is not a bona fide purchaser for value until he makes payment on the notes. Matson v. Melchor, 42 Mich. 477. One who buys with notice of the fraud of his vendor in obtaining the property is not a bona fide purchaser, and is liable not only to lose the goods, but if he sells them is liable for their value. Meacham v. Colliquan, 7 Daly 402 ; Bateau v. Ber- nard, 3 Blatchf. 214 ; Stearns v. Gage, 79 N. Y. 102. And where a bona fide pur- chaser from a fraudulent purchaser, learned of the fraud before the whole price was paid, he was protected against the defrauded vendor only to the extent of the amount paid before notice of the fraud, and not as to subsequent payments. Dows v. Kidder, 84 N. Y. 121. An as- signee in bankruptcy is not in the posi- tion of a purchaser for value, and there- fore the sale may be avoided as against him by a seller defrauded by the bank- rupt. Donaldson v. Farwell, 93 U. S. 631 ; Montgomery v. Bucyrus Machine Works, 92 U. S. 257. The same principle applies to the case of an assignee for the benefit of creditors. Such assignee is not a pur- chaser. Belding v. Frankland, 8 Lea 67, 72 ; Katcliffe v. Sangston, 18 Md. 383 ; Bussing v. Kice, 2 Cush. 48. 16. Possession Without Title Gives no Authority to Sell.— See ante Book I., Chap. II., Section I., and see ante 'i 437, et seq. Western Trans. Co. v. Marshall, 4 Abb. App. Dec. 575; Kinsey v. Leggett, 71 X. Y. 387 ; Decan v. Shipper, 35 Penna. 239 ; Brower v. Peabody, 13 N. Y. 14; Dows v. Perrin, 16 N..Y. 325; Dows v. Greene, 24 N. Y. 638 ; Dean v. Yates, 23 Ohio St. 388, 396. Where the buyer personates another, or falsely pretends to be agent for another, and thereby obtains possession of property, no title passes to him ; neither can he give title by a sale to the person whom he represented without authority. True, the intent of the seller was to confer title, but not on the person dealt with, as agent, and no title which comes through him can be sustained. See ante $ 608, note 3, post \ 663. In such case the per- son falsely represented, if the goods come to his hands, may adopt the transaction as his own, thus ratifying the agency; but if he does so he must adopt it wholly. Dalton v. Hamilton, 1 Hannay (N. B.) 422, stated post \ 660, note 19. 572 AVOIDANCE OF THE CONTRACT. [BOOK III. ^Sity Sffeise °f obtaining the goods by false and fraudulent pretences, pretences. j ie w j]j De en titled, after such conviction, to recover his goods, even from a third person, who is a bona fide purchaser from the party committing the fraud. The statute and cases under it have already been reviewed, ante Book I., Part I., Chap. II. [It has, however, been recently decided that the statute has no ap- Aiceration in plication to a case of false pretences where the property in law ' the goods has passed. (Vide Lindsay v. Cundy, 1 Q. B, D. 348 ; and Moyce v. Newington, 4 Q. B. D. 32, ante § 12.)] 17 § 651. The early cases are not universally in accord with the prin- Eariier cases °iples above stated, and in more than one of them the reviewed. property was held not to have passed, although it was very plainly the intention of the vendor to transfer the title, as well as the possession, of the goods. In Martin v. Pewtress, (a) decided in 1769 ; Read v. Hutchinson, (b) in 1813 ; Gladstone v. Hadwen, (c) in the same year ; Noble v. Adams, {d) in 1816; and the Earl of Bristol v. Wilsmore, (e) in 1835, dicta are to be found as to the effect of fraud in preventing the property from passing to the purchaser, which are quite in opposition to the later authorities, though in most, if not all, of these cases the deci- sions were quite correct. The last-mentioned case was one in which a check had been given by the buyer on a bank in which he had no funds, and was decided on the authority of Read v. Hutchinson, Noble v. Adams, supra ; and of Rex v. Jackson, (/) in which a conviction for obtaining goods under false pretences (under the 30th Geo. II., c. 24) was upheld on proof that the accused had obtained the goods by giving in pay- ment a check on a banker with whom he had no cash, and which he knew would not be paid. Dun v. Budd (g) was an action by a vendor against a common carrier to whom he had delivered goods, to be forwarded to Duffj. Budd. b ' Mr. James Parker, High street, Oxford. The goods had 17. See discussion of the subject in (a) 4 Burr. 2478. Cochran v. Stewart, 21 Minn. 435, 440, (b) 3 Camp. 352. Gilfillan, C. J., concluding that the (c) 1 M. & S. 517. rights of a bona fide purchaser are the (d) 7 Taunt. 59. same whether the fraud is a felony or not. (e) 1 B. & C. 514 ; and see Loughnan But in Fassett v. Smith, 23 N. Y. 252, it v. Barry, 6 Ir. R. C. L. 457. is assumed that no title can pass where the (/) 3 Brod. & B. 116. seller acquired title by a fraud amounting (g) 3 B. & B. 177. to felony. CHAP. II. J FKAXJD. 573 been ordered by an unknown person, and there was no James Par- ker in that street, but there was a William Parker, a solvent tradesman, who refused the parcel. Soon after, a person came to the defendant's office and claimed the parcel as his own, and on paying the carriage it was delivered to him. He had on previous occasions received goods from the same office, directed to Mr. Parker, Oxford, to be left till called for. One of the grounds of defence taken by Pell, Serjeant, was that the property in the goods had passed out of ' the plaintiff to the consignee. Dallas, C. J., and Burrough, J., did not notice the point, but Park, J., said that the ground taken did " not apply to a case bottomed in fraud in which there had been no sale," and Richardson, J., said, " there was clearly a property in the plaintiffs entitling them to sue, as they had been imposed on by a gross fraud." § 652. A few years later, a case almost indentical in its features came before the same court. Stephenson v. Hart (h) was, gte hen30n v again, an action by a vendor against a common carrier. A Hart - purchaser bought goods from the plaintiff, and ordered them to be sent to J. West, 27 Great Winchester street, London, and gave a spurious bill of exchange in payment. The vendor delivered the goods to the carrier to be forwarded to the above address. No person was found at the address, but a few days after the carrier received a letter signed "J. West," stating that a box had been addressed to him by mistake to Great Winchester street, and asking that it should be forwarded to him at the Pea Hen, a public house at St. Alban's. The box was so forwarded, and the person who had sent for it, said it was for him, and stated its contents before opening it, thus showing that the box had reached the person to whom it was addressed. One ground of de- fence, again, was that upon the delivery to the carriers the property ceased to be in the vendor, and was vested in the consignee. Park, J., held that the property had not passed, because West had never meant to pay for the goods, and the true question was " not what the seller meant to do, but what are the intentions of the customer. Did he mean to buy?" Burrough, J., said that the property had never passed out of the consignor, giving no reason except that the transac- tion of West was a gross fraud ; but Gaselee, J., doubted strongly whether trover could lie when the carrier had delivered the goods to Jie person to whom they had been really consigned by the vendor. (A) 4 Bing. 476. 674 AVOIDANCE OF THE CONTRACT. [BOOK III. § 653. It is submitted that both these cases against the carriers are Doubt submit- vel 7 doubtful authorities under the modem doctrine, twolfa^s 111686 which clearly holds that the property does pass, when the vendor intends it to pass, however fraudulent the device of the buyer to induce that intention, (i) In Heugh v. The London and North Western Railway Company, (k) Heugh i. Lon- where the same question was involved under very similar western eS? circumstances, it was held that it was a question of fact for the jury whether the carrier had acted with reason- able care and caution with respect to the goods after their refusal at the consignee's address, and the court refused to set aside a verdict for the defendant on that issue. In McKean v. Mclvor, (I) the decision was also in favor of the car- McKeanc riers, and Brarnwell, B., expressed concurrence in the Mcivor. opinion of Gaselee, J., who dissented in Stephenson v. Hart, (m) supra. § 654. In Irving v. Motley, (n) the facts were, that one Dunn and a Irving v Mot- ^ rm °f "Wellington & Co., had been engaged in a series of ley - transactions, in which Dunn, as agent, purchased for them goods, on credit, and immediately resold them at a loss, the purpose being to raise money for the business of Wallington & Co. Dunn was also an agent for the defendant Motley, who was entirely inno- cent of any knowledge of, or participation in, the transactions of Wall- ington & Co. Under these circumstances, Dunn, in behalf of Wall- ington & Co., applied to the defendant for an advance, which the latter agreed to make if secured by a consignment of goods. Thereupon Dunn, as agent of Wallington & Co., bought a parcel of wool from the plaintiff, on credit, and at once transferred it to Motley, as security for the advance. Wallington & Co. became bankrupt a few days after this transaction, and the plaintiff brought trover against Motley for the wool. A verdict was given for the plaintiff, the jury finding that the transaction was fraudulent, and that Motley knew nothing of the fraud, but that Dunn was his agent as well as that of Wallington & (£) This expression of doubt is not gested was taken into consideration was withdrawn in the third edition of this dough v. London and North Western treatise. It seems to be further justified Railway Co., L. B., 7 Ex. 26, post $ 659. by the three cases since decided in the (k) L R., 5 Ex. 51. Exchequer, in all of which the defence of (I) L. E., 6 Ex. 36. the carriers was successful, though the (m) 4 Bing. 676. only one in which the point here sug- (n) 7 Bing. 543. CHAP. II.] FRAUD. 575 Co. The court refused to set aside the verdict, but the judges were not in accord as to the grounds. Tindal, C. J., said : " The ground set up here is that there was an acting and an appearance of purchase given to the transfer of these goods, which in truth and justice it did not really possess. Whether Dunn, as the agent of Wallington & Co., went into the market and got these goods into his possession, under such representation as may amount to obtaining goods under false pre- tences, it is not necessary to say, but it comes very near the case : it is under circumstances that place him and Messrs. Wallington in the light of conspirators to obtain possession of the goods. * * * At all events, it was left to a jury of merchants, and though they have ac- quitted the defendants of fraud, yet they involved them in the legal consequences, as it was a fraud committed by their agent with a view to benefit them." Park, J., agreed with the Chief Justice, but he ex- pressed anxiety to explain Noble v. Adams, (o) saying, that the court did not hold, nor mean to hold in that case, that obtaining goods under false pretences was the only ground upon which the transaction could be held void. Gaselee, J., was careful to confine the doctrine of the case before the court, to the special circumstances, saying : that it was " maintainable against the defendants, because they had constituted Dunn their agent, for the purpose of securing themselves, by getting a consignment of wool made to them from Wallington & Co. ; and their agent having thought fit to procure that consignment by means of what the jury have found to be a fraud, however innocently the de- fendants may have acted, they cannot take any benefit from the mis- conduct of that agent." Alderson, J., however, thought that the case was confused by treating it as one of principal and agent ; that Dunn and Wallington were principals in a conspiracy to get the goods from the plaintiff, and therefore no property passed out of Messrs. Irving. § 655. In Ferguson v. Carrington, (p) goods were sold to defendant on credit, whereupon he immediately resold them at lower _ J r J Ferguson v. prices, and the vendor brought assumpsit for the price be- CarTin et°n- fore the maturity of the credit, on the ground that the defendant had manifestly purchased with the preconceived design of not paying for them. Lord Tenterden, C. J., nonsuited the plaintiff, on the ground that by bringing an action on the contract, he affirmed it, and was therefore bound to wait till the end of the credit, but that " if the de- fendant had obtained the goods with the preconceived design ofnotpay- (o) 7 Taunt. 59. (p) 9 B. & C. 59. o76 AVOIDANCE OF THE CONTRACT. [BOOK III. ing for them, no property passed to him by the contract of sale, and it was competent to the plaintiff to bring trover, and treat the contract as a nullity, and the defendant not as a purchaser of the goods, but as a person who had obtained tortious possession of them." Park, J., concurred in this view. It should not be overlooked that in this, as in several of the pre- Observations ceding cases, the action was between the true owner and on this case. the fraudulent buyer ; that the language of the judges was intended to apply only to the case before them, and was not therefore so guarded in relation to the effect of the contract in transferring the property, as it would doubtless have been if the rights of innocent third parties had been in question. § 656i_ In Load v. Green, (q) the buyer purchased the goods on the 1st of July, they were delivered on the 4th, and a fiat in Load v. Green. , . - . . T • i 1 bankruptcy issued on the 8th. It was uncertain whether the act of bankruptcy had been committed prior to the purchase. The jury found that the buyer purchased with the fraudulent intention of not paying for the goods ; and it was held, that even Intention not , - , . . , , to pay for the assuming the act oi bankruptcy to have been committed goods. . . after the purchase, " the plaintiff had a right to disaffirm it, to revest the property in the goods, and recover their value in trover against the bankrupt. [In Ex parte Whittaker, (r) the buyer had committed an act of Ex parte whit- bankruptcy on the 1st of December, and on the 3d a bank- taker, ruptcy petition had been filed. On the 5th of December the buyer purchased wool at an auction, and the vendor being unaware of his pecuniary circumstances, allowed him to remove it without pay- ing the price. The buyer made no representation at the time as to payment. Held, on these facts that it was not clear that the buyer purchased with the intention of not paying for the goods, and that the vendor therefore was not entitled to have the contract rescinded.] 18 (q) 15 M. & W. 216. Lowrie, J., said : " The instruction is, thai (?•) 10 Ch. 446. an intention not to pay, and conscious and 18. Purchase with Intent not to unrevealed insolvency, make a purchase Pay. — In Pennsylvania it is held that a fraudulent, legally as well as morally. Is purchase on credit by one who knows he it so? An intention not to pay is dis- is insolvent, is not fraudulent. In that honest, but it is not fraudulent. The law state it is held that to avoid a sale for provides an action on the contract as the fraud there must be "artifice, intended remedy for just such dishonesty. Audit and fitted to deceive." The case usually is no more fraudulent to have such an in- cited is Smith -a. Smith, 21 Penna. 367. tendon at the time of the pnrehnse than CHAP. II. J FHAUD. 577 § 657. In the early case of Parker v. Patrick, (s) the King's Bench held, in 1793, that where goods had been obtained on false Parker) , Pat . pretences, and the guilty party had been convicted, the, title nok ' at the time when payment ought to be made. * * Where must we look for fraud ? Not in the buyer's intention merely. It must be fraud on the vendor, that is, fraud acted out. * * The dis- honest intention and the concealed insol- vency did not induce the vendor to sell his goods." This was followed in Back- entoss v. Speicher, 31 Penna. 324 ; in Harner v. Fisher, 58 Penna. 453 ; and in Eodman v. Thalheimer, 75 Penna. 232. In the last case the court says : " Insol- vency and a knowledge of it at the time of the sale are evidence to go to the jury with other facts to show the intended fraud, but standing alone will not operate to rescind." See Kline v. Baker, 99 Mass. 253, where a Pennsylvania sale was in question. The Pennsylvania rule was ap- proved in Bell v. Ellis, 33 Cal. 620 ; and there is a dictum to the same effect in Wilson v. White, 80 N. C. 280 ; but it seems to have found very little support elsewhere. A Purchase by one who does not Intend to Pay, may be Avoided as Fraudulent. — This is the principle estab- lished by the recent decisions in most of the states ; and in the United States Supreme Court, in Donaldson v. Farwell, 93 U. S. 631, it wa« adopted and declared to be the doctrine established by a pre- ponderance of authority. Wiggin v. Day, 9 Gray 97 ; Dow v. Sanborn, 3 Allen 181 ; Thompson v. Rose, 16 Conn. 71, 81 ; Ayres v. French, 41 Conn. 142, 153, 155 ; Burrill v. Stevens, 73 Me. 395 ; Stewart v. Emerson, 52 N. H. 301, 318 ; Mulliken v. Millar, 12 K. I. 296 ; Powell v. Brad- lee, 9 Gill & J. 220, 248, 278 ; Peters v. Hilles, 48 Md. 506, 512 ; Bidaulf v. Wales, 19 Mo. 36 ; 20 Mo. 546 ; Fox v. Webster, 46 Mo. 181 ; Byrd v. Hall, 2 Keyes 646 ; Johnson v. Monell, -2 Keyes 655 ; Henne- 2o quin *. Naylor, 24 N. Y. 139; Devoe v. Brandt, 53 N. Y. 462; Schufeldt v. Schnitzler, 21 Hun 462; Wright v. Brown, 67 N. Y. 1 ; Stoutenburgh v. Konkle, 15 N. J. Eq. 33; Mears r. Waples, 3 Houst. 581 ; Doyle v. Mizner, 40 Mich. 160; Shipman v. Seymour, 40 Mich. 274, 283 ; Talcott v. Henderson, 31 Ohio St. 162; Allen v. Hartfield, 76 111. 358; Lane v. Bobinson, 18 B. Mon. 623; Belding v. Frankland, 8 Lea 67 ; Klopen- stein o. Mulcahy, 4 Nev. 296 ; Seligman v. Kalkman, 8 Cal. 207, (criticised in last case and in Bell v. Ellis, 33 Cal. 620) ; Parker v. Byrnes, 1 Low. 539, 542 ; Davis v. Stewart, 8 Fed. Reporter 803 ; Davis v. McWhirter, 40 U. C. Q. B. 598. But failure to disclose insolvency is not alone enough to establish intent not to pay ; it is evidence of such intent, but not con- conclusive. Schufeldt v. Schnitzler, 21 Hun 462 ; Nichols v. Pinner, 18 N. Y. 295 ; Wright v. Brown, 67 N. Y. 4 ; Red- ington v. Roberts, 25 Vt. 686 ; Garbutt v. Bank of Prairie du Chien, 22 Wis. 3S4 ; Burrill v. Stevens, 73 Me. 395; Klopen- stein v. Mulcahy, 4 Nev. 296 ; Talcott v. Henderson, 31 Ohio St. 162 ; Belding v. Frankland, 8 Lea 67. The intent not to pay for property bought on credit may be proved by evi- dence of other fraudulent purchases, part of the same scheme of fraud, by the secreting of the property bought as soon as obtained, or by turning it over to another creditor, or by evidence of ad- missions, or of subsequent conduct indi- cating a design to defraud, or by other circumstances. Wiggin v. Day, 9 Gray 97 ; Parker v. Byrnes, 1 Low. 539, 542 ; Jor- dan v. Osgood, 109 Mass. 462 ; Davis v. McWhirter, 40 U. C. Q. B. 598 ; 2 Kent Com. 484. (s) 5 T. R. 175. 578 AVOIDANCE OF THE CONTRACT. [BOOK III. of the original owner could not prevail against the rights of a pawn- broker, who had made bona fide advances on them to the fraudulent possessor. This case has been much questioned, but the Rerharks on it. ,,.„... a * . , only difficulty in it may be overcome by adopting the suggestion made by Parke, B., in Load v. Green, namely, that the false pretences were successful in causing the owner to make a sale of the goods, in which event an innocent third person would be entitled to hold them against him. Several of the judges made remarks on the case, in White v. Garden, (t) and it was cited by the court as one of the acknowledged authorities on this subject in Stevenson v. Newnham. (u) In Powell v. Hoyland, (v) decided in 1851, Parke, B., expressed a Powell v. Hoy- stron g impression that trespass would not lie for goods land. obtained by fraud, " because fraud does transfer the prop- erty, though liable to be divested by the person deceived, if he chooses to consider the property as not having vested." In White v. Garden, (x) the innocent purchaser from a fraudulent White v Gar- ven dee was protected against the vendor, and all the judges den ' expressed approval of the opinion given by Parke, B., in Load v. Green. In Stevenson v. Newnham, [y) in 1853, Parke, B., again gave the Stevenson v unanimous opinion of the Exchequer Chamber, that the Newnnam. effect of fraud " is not absolutely to avoid the contract or transaction which has been caused by that fraud, but to render it void- able at the option of the party defrauded. The fraud only gives a right to rescind. In the first instance, the property passes in the sub- ject matter. An innocent purchaser from the fraudulent possessor may acquire an indisputable title to it though it is voidable between the original parties." § 658. This decision was not impugned, when the Exchequer Kingsford t> Chamber, in Kingsford v. Merry, (z) in 1856, held that Merry. j. ne defendant, an innocent third person, who had made advances on goods, could not maintain a defence against the plain- tiffs, the true owners. In that case, the party obtaining the advances had procured the delivery of the goods to himself by falsely repre- senting that a sale had been made to him by the owner's agents, the (t) 20 L. J., C. P. 167, and 10 C. B. 919. (x) 20 L. J., C. P. 167, and 10 C. B. (u) 13 C. B. 285, and 22 L. X, C. P. 919. 110 ; and see Moyce v. Newington, 4 Q. (y) 13 C. B. 285, and 22 L. J., C. P. B. D. 35, ante . Smith, (e) the Co. ». smith. House of Lords held the defendant entitled to have his name removed from the list of contributory shareholders in the plain- tiff's company, although his name was on the register when the com- pany was ordered to be wound up ; on the ground that he had, prior to the winding-up order, notified his rejection of the shares, and com- menced proceedings to have his name removed. On. this ground the case was distinguished from Oakes v. Turquand. (/) § 662. In Higgons v. Burton, (g) a discharged clerk of one of plain- Higgons v miffs' customers fraudulently obtained from plaintiffs goods Eurton. j n £j )e name an( [ as \) e [ a g f r the account of the customer, and sent them at once to defendant, an auctioneer, for sale. Held, that there had been no sale, but a mere obtaining of goods from plain- tiff on false pretences, that no property passed, and that defendant was liable in trover. Plainly in this case the plaintiffs, although deliver- ing the possession, had no intention of transferring the property to the clerk, and the latter, therefore, could transfer none to the auctioneer. In Hardman v. Booth, (h) the plaintiff went to the premises of well illustrated in Moller v. Tuska, 87 N. if a man once determines his election, it Y. 166, where the election to avoid was shall be determined forever. Hence they held final. The facts were these : The could never successfully assert a claim sellers brought an action to rescind the against the purchaser under the contract ; sale on the ground of fraud, and to re- for the election to disaffirm it had been cover possession of the goods from one to manifested, and to revoke it was not in whom the defrauding buyer had conveyed their power.'' Therefore it was held that them, with notice of the fraud. Pending the proof of claim in bankruptcy could the suit, the seller had proved his claim not affect the previous election or the for the price against the estate of the pending suit. See Morris v. Rexford, 18 fraudulent buyer, who had become bank- N. Y. 552, 556 ; Powers v. Benedict, 88 rupt, and on the trial it was claimed that N. Y. 605, 609. the suit to rescind could not be sustained (e) L. R., 4 H. L. 64; 2 Ch. 604. because of this claim made under the con- (/ ) L. E., 2 H, L. 325. tract. But Danforth, J., said : " The (?) 26 L. J., Ex. 342. plaintiffs manifested their election by (A) 1 H. & C. 803 ; 32 L. J., Ex. 105 ; bringing this action. After that the other Hollins v. Fowler, L. R., 7 H. L. 757 ; way of redress was not open to them, for Ex parte Barnett, 3 Ch. D. 123. according to Comyn, (Dig. Election C. 2,) CHAP. II.] FRAUD. 583 Gandell & Co., a firm not previously known to him, but Hardman t ..> of high credit, to make sale of goods, and was there re- Booth - ceived by Edward Gandell, a clerk, who passed himself off as a member of the firm, and ordered goods, which were supplied, but which Edward Gandell sent to the premises of Gandell & Todd, in which he was a partner. The plaintiff knew nothing of this last- named firm, and thought he was selling to " Gandell & Co." The goods were pledged by Gandell & Todd with the defendant, an auc- tioneer, who made bona fide advances on them. The plaintiff's action was trover, and was maintained, all the judges holding that there had been no contract, that the property had not passed out of the plaintiff, and that the defendant was therefore liable for the conversion. § 663. [And in Lindsay v. Cundy, (i) the same principle was applied. It appeared that a person named Alfred Blenkarn had LindaaViJ hired a room in a house looking into Wood street, Cheap- Cund y- side, and from there had written to the plaintiffs, who were manufac- turers, proposing to purchase goods of them. The letters were headed " 37 Wood street, Cheapside," and the signature, " Blenkarn & Co.," was written so as to resemble the name " Blenkiron & Co." There was a firm of good repute who carried on business at 123 Wood street, under the'style of " W. Blenkiron & Son." The plaintiffs, who were aware of the reputation of the firm of W. Blenkiron & Son, but did not know the number of their house- of ' business, sent the goods addressed to " Messrs. Blenkiron & Co., 37 Wood street, Cheapside." Blenkarn sold some of the goods thus, fraudulently obtained to the defendants, who were bona fide purchasers for value, and who resold them in the ordinary course of business. Blenkarn was afterwards convicted of the fraud. In an action for the conversion of the goods, it was held by the House of Lords, affirming the decision of the Court of Appeal, that as the plaintiffs had no knowledge of, and never in- tended to deal with Blenkarn, no contract of sale had ever existed between them ; that the only persons with whom they had intended to deal were the well-known firm of Blenkiron & Co ; that the prop- erty in the goods, therefore, remained in the plaintiffs, and the defend- ants were liable for their value.] 20 § 664. In 1866, Pease v. Gloahec, (k) on appeal from the Admiralty (i) 3 App. Cas. 459, sub nom. Cundy (k) L. R., 1 P. C. 220 ; 3 Moo. P. C. v. Lindsay : S. C„ 2 Q. B. D. 96, C. A. ; 1 (N. S.) 566. And see Oakes v. Turquand, Q. B. D. 348. ' . - L. E., 2 H. L. 325. 20. See ante g 649, note 16. 584 AVOIDANCE OF THE CONTRACT. [BOOK III. Pease v. Court, was twice argued by very able counsel. After Gioahec. advisement, the Privy Council, composed of Lord Chelmsford, Knight Bruce, and Turner, L. JJ., Sir J. T. Coleridge, and Sir E. V. Williams, delivered an unanimous decision. The principle laid down in Kingsford v. Merry, as stated by the Court of Exchequer (and not affected by the reversal of their judg- ment in the Exchequer Chamber), was affirmed to be the true rule of law, viz. : " Where a vendee obtains possession of a chattel with the intention by the vendor to transfer both the property and possession, although the vendee has committed a false and fraudulent misrepre- sentation in order to effect the contract or obtain the possession, the property vests in the vendee until the vendor has done some act to disaffirm the transaction ; and the legal consequence is, that if before the disaffirmance the fraudulent vendee has transferred either the whole or a partial interest in the chattel to an innocent transferee, the title of such transferee is good against the vendor." § 665. [Babcock v. Lawson, (I) where the plaintiffs were pledgees „ . . and not the owners of the goods, illustrates the same Babcock v. o J Lawson. principle. The plaintiffs had made advances to Denis Daly & Sons on the security of certain flour, warehoused in the plain- tiff's' name. The defendants subsequently made advances to Denis Daly & Sons on the security of a pledge of the same flour, in ignorance of the prior transaction with the plaintiffs, and Denis Daly & Sons, by a fraudulent representation that they had sold the flour to the defend- ants, obtained a delivery order for it, which they gave to the defend- ants. The defendants accordingly obtained possession of the flour, and, the advances made by them not being repaid, sold it. The plain- tiffs sued the defendants for conversion : — Held, that assuming the plaintiffs, as pledgees, to have ever had a special property in the flour, they must be taken to have intended to revest the whole property in Denis Daly & Sons, in order that they might transfer it to the defend- ants as purchasers; and that although the plaintiffs might have revoked the delivery order as being procured by fraud, so long as the flour remained in the hands of Denis Daly & Sons, yet when the property in the flour had been transferred to the defendants for good consideration, the title of the latter was indefeasible. Cockburn, C. J., holding the analogy between the case under consideration and one where a vendor is induced to part with the property by fraud to be (I) 4 Q. B. D. 394, affirmed 5 Q. B. D. 284, C. A. CHAP. II.] FKAUD. 585 complete ; and the decision of the Queen's Bench Division was af- firmed on appeal. And in this case, and in Moyce v. Newington, (m) Cockburn, C. J., lays down in the broadest possible manner that the courts were pre- pared to hold, that when one of two innocent parties must suffer from the fraud of a third, the loss should fall on the- one who enabled the third party to commit the fraud, citing with approval the decision of the Supreme Court of Judicature of the State of New York in the case of Root v. French, (o) where the preference thus ' v ' r . Rootu. French. given to the right of the innocent purchaser is treated as an exception to the general law, and is rested on the above general principle of equity.J § 666. It is a fraud on the vendor to prevent other persons from bidding at an auction of the goods sold, and where the buyer had, by an address to the company assembled at the vendor to pre- auction, persuaded them that he had been wronged by the from bidding at t iii i i . i 11 auction sale. vendor, and that they ought not to bid against the buyer, the purchase by him was held to be fraudulent and void, (p) 21 (m) 4 Q. B. D. 32, ante g 12. (o) 13 "Wendell 570. And see the American decisions, cited post \ 673. (p) Fuller v. A brahams, 3 B. & B. 116. 21. Interference With Auction Sales. — If one obtains property at auction by preventing others from bidding, the sale may be avoided. This applies to judicial as well as private sales. In Slater v. Ma-xwell, 6 Wall. 268, and in Cocks v. Izard, 7 Wall. 559, the buyer dissuaded bidders by falsely representing himself as looking after the interests of the owners, and the sales were set aside. In Jackson v. Morter, 82 Penna. 291, the buyer falsely represented the encumbrances on the property to be greater than they were in fact. But where, at an execution sale, the buyer procured the goods at an under- value by truthfully representing that he was buying for the benefit of the debtor, it was held that the sale could not be avoided therefor. Dick v. Cooper, 24 Penna. 217, 221. Combinations of indi- viduals to buy jointly have been held fraudulent. But the modern doctrine is thus stated in Kearny v. Taylor, 15 How. 494, 521, by Nelson, J., in United States Supreme Court : " If it is found that the object and purpose are, not to prevent competition, but to enable, or as an in- ducement to the persons composing the association to participate in the bidding, the sale should be upheld ; otherwise, if for the purpose of shutting out competion and depressing the sale, so as to obtain the property at a sacrifice." See Jenkins v. Frink, 30 Cal. 586 ; Phippen v. Stickney, 3 Mete. 384 ; National Bank of Metropolis v. Sprague, 20 N. J. Eq. 159 ; Marie v. Garrison, 83 N. Y. 14, 28. An agree- ment by one for a consideration, not to bid against the buyer, whereby the latter obtains the property at a reduced price, is fraudulent. Morris v. Woodward, 25 N. J. Eq. 32 ; Slingluff v. Eckel, 24 Penna. 472 ; Gardiner a. Morse, 25 Me. 140. In Fennor v. Tucker, 6 R. I. 551, a sale was avoided because the buyer had persuaded a rival bidder to withdraw his bid, out of favor. 586 AVOIDANCE OF THE CONTRACT. [BOOK III. Where the fraud on the vendor consists in the defendant's inducing him by false representations to sell goods to an insolvent Where vendor ° is induced by third person, and then obtaining; the goods from that third fraud to sell to . an insolvent person, the price may be recovered from the defendant as third person. r > l J though he had bought directly in his own name, for his possession of the vendor's goods unaccounted for implies a contract to pay for them, and he cannot account for his possession, save through his own fraud, which he is not permitted to set up in defence, (q) In Biddle v. Levy, (r) the defendant told plaintiff that he was about to retire from business in favor of his son, who was a youth of seventeen years of age, but would watch over him. He then introduced his son to the plaintiff, who sold to the son goods to the value of £800. The representations were false and fraudulent, and Gibbs, C. J., held an action for goods sold and de- livered to be maintainable against the father. These two cases probably rest on the principle that the nominal pur- chasers were secret agents buying for the parties committing the fraud, who were really the undisclosed principals, (s) 22 § 667. Where, however, the fraud on the vendor is effected by , means of assurances given by a third person of the buyer's re e resent'fuons solvency and ability, the proof that such assurances were ven"y e by tMrd ma de must be in writing, as required by the 6th section of prove" b^writ Lord Tenterden's act (9 Geo. IV., c. 14,) which provides ten evidence. " that no action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade, or dealings of any other person, to the intent or purpose that such other person may obtain credit, money, or goods upon, (t) unless such representation or assurance be made in writing, signed by the party to be charged therewith." 23 The construction of this section was much debated in the case of l de<; Bar- Lyde v. Barnard, (t) in which the judges of the Exchequer nard. were e q Ua ]ly divided, but the case had no reference to a ( q) Hill v. Perrott, 3 Taunt. 274. take for " thereupon : " perhaps the words (r) 1 Stark. 20. ought to be " money or goods upon (s) Thompson v. Davenport, 2 Sm. L. credit." See remarks of the judges in C, at p. 387. Lyde v. Barnard, 1 M. & W. 101. 22. Meyer v. Amidon, 23 Hun 553. 23. Similar statutes have been passed (() This word " upon " is perhaps a mis- in Maine, Vermont, Massachusetts, Vir- CHAP. II.] FRAUD. 587 sale of goods. In Haslock v. Ferguson, (w) the action was Has]ook „ against the defendant for an alleged fraudulent declaration Fer «" 80n - to the plaintiff that one Barnes was of fair character, by which repre- sentation the plaintiff was induced to sell goods to Barnes, the proceeds of which were partly applied to the benefit of the defendant. The court held that parol evidence of the alleged representation was inad- missible, overruling a distinction which Sir John Campbell, for the plaintiff, attempted to support, " that the gist of the action was not the misrepresentation of character, but the wrongful acquisition of prop- erty by the defendant." In Devaux v. Steinkeller, (x) it was held that a representation made by a partner of the credit of his firm was a representation Devaux „ of the credit of "another person" within the meaning of steinkel,er this statute; and in Wade-w. Tatton, (y) in the Exchequer ^Sby^artner Chamber, that where there were both verbal and written ° f r £ editofhi3 representations, an action will lie if the written representa- w^ae v. Tat- tions were a material part of the inducement to give credit. § 668. The effect of concealment or false representations made by the buyer with a view to induce the owner to take less for 11 ill • i i i False repre- his goods than he would otherwise have done, does not sentations by ° ' buyer m order appear to have been often considered by the courts. Chan- to get goods r r J cheaper. cellor Kent carries the doctrine on the subject of fraud much further" than could be shown to be maintainable by decided cases, and states it in broader terms than are deemed tenable by the later edjtors of his Commentaries, (z) Under the head of " Mutual Disclosures," he lays down, in relation to sales, the proposition that, "as a general rule, each party is bound to communicate to the other his knowledge of the material facts, provided he knows the other to be ignorant of them, and they be not open and naked, or equally within the reach of his observation." 24 ginia, Alabama, Kentucky, Indiana, 640, notes 6 and 7, and \ 641, note 9, and Missouri and Michigan. See Browne on see post \ 732, note 50. The buyer need Stat. Frauds, § 181, note 2. not disclose to the seller facts of which («) 7 Ad. & E. 86. information is open equally to both. (x) 6 Bing. (N. C.) 84. Kintzing v. McElrath, 5 Penna. 467 ; But- ty) 25 L. J., C. P. 240. See, also, ler's Appeal, 26 Penna. 63 ; Gartner v. Swan v. Phillips, 8 Ad. & E. 745 ; Turn- Barnetz, 1 Yeates 307. Laidlaw v. Organ, ley v. McGregor, 6 M. & S. 46 ; Pasley v. 2 Wheat. 178, is the leading American Freeman, 3 T. R. 51. case. See ante \ 640, note 6. Where a (z) 2 Kent 483, (12th ed.) trustee buys the trust property from his 24. Duty of Disclosure. — See ante $ cestui que trust, the fullest disclosure is 588 AVOIDANCE OF THE CONTRACT. [BOOK III. § 669. The courts of equity even fall far short of this principle, and both Lord Thurlowand Lord Eldon held that a. pur- chaser was not bound to acquaint the vendor with any latent advantage in the estate. In Fox v. Mackreth, (a) Lord Thurlow was of opinion that the purchaser was not bound to disclose to the seller the existence of a mine on the land, of which he knew the seller was ignorant, and that a court of equity c»uld not set aside the sale, though the estate was purchased for a price of which the mine formed no ingredient. Lord Eldon approved this ruling in Turner v. Harvey, (b) But in the latter case Lord Eldon also held that if the least word be dropped by the purchaser to mislead the vendor in such a case, the latter will be relieved ; and his Lordship accordingly decided that the agreement for the sale in that case should be given up to be canceled. The facts were that the purchaser of a reversionary interest had concealed from the seller that a death had occurred by which the value of the reversion- ary interest was materially increased. § 670. At common law, the only case decided in banco, that has been found on this point is Vernon v. Keys, (c) in which Atoommon the declaration was in case, and a verdict was given for law - Vernon »• In equity, pur chaser not bound to ac- quaint vendor with latent &d- vantages of thing sold. Fox >•. Mack- reth. Turner v. Har- vey. But purchaser must not mis- lead vendor in such a case. necessary, and this principle applies to dealings between solicitor and client, and between others holding relations of trust. Dambmann v. Schulting, 75 N. Y. 55, 62. But it has been held that a director may- buy shares of stock from a stockholder in the company without disclosing facts affecting the value. This is perhaps be- cause the director is trustee for the com- pany and not for the stockholders, yet it seems doubtful law. Carpenter v. Dan- forth, 52 Barb. 581 ; Board of Tippe- canoe Co. v. Reynolds, 44 Ind. 509 ; Fisher v. Budlong, 10 R. I. 525. In Bench v. Sheldon, 14 Barb. 66, the seller had lost his flock of sheep. They had been found and advertised by the finder ; and this fact was known to the buyer, and not to the seller. The seller thinking that the chance of finding them was desperate sold them for a trifle, the buyer in the course of the bargaining saying that he did not suppose the seller would ever find them. Johnson, J., said that he was clearly of opinion that the buyer was under no duty to diiclose, but that the statement that he did not believe the sheep would ever be found was a false statement, and therefore the seller could avoid for fraud. See Hadley v. Clinton Co., 13 Ohio St. 502 ; Paul v. Hadley, 23 Barb. 521 ; Dambmann v. Schulting, 75 N. Y. 55, 62 ; Prescott v. Wright, 4 Gray 461, 464 ; Smith v. Countryman, 30 N. Y. 655, 670, 681 ; Howard v. Gould, 28 Vt. 523. A stricter rule prevails in Ver- mont. See post I 732, note 50. (a) 2 Bro. C. C. 400. For the judg- ment of Lord Thurlow, see 2 Cox Eq. Cas. 320. (6) Jacob 178. (c) 12 East 632, and in Ex. Ch., 4 Taunt. CHAP. II.] FRAUD. 589 the plaintiff on the third count, which alleged that the ^ s i * h 6 e °" ,y plaintiff, being desirous of selling his interest in the busi- ness, stock in trade, &c, in which he was engaged with defendant, was deceived by the fraudulent representation of the defendant, pending the treaty for the sale, that the defendant was about to enter into partner- ship to carry on the business with other persons, whose names defendant refused to disclose, and that these "persons would not consent to give plaintiff a larger price than £4500 for his share, while the truth was that these persons were willing that the defendant should give as much as £5291 8s. Qd. The judgment in favor of plaiitiff was ar- rested, Lord Ellenborough giving the opinion of the court after ad- visement. His Lordship said that the cause of action as alleged amounted to nothing more than a false reason given by the defendant for his limited offer, and that this could not maintain the verdict, un- less it was shown " that in respect of some consideration or other, ex- isting between the parties to the treaty, or upon some general rule or principle of law, the party treating for a prchase is bound to allege truly, if he states at all, the motives which operate with him for treat- ing, or for making the offer he in fact makes. A seller is unquestion- ably liable, to an action of deceit if he fraudulently misrepresent the quality of the thing sold to be other than it is, in some particulars which the buyer has not equal means with himself of knowing, or if he do so in such manner as to induce the buyer to forbear making the in- quiries which, for his own security and advantage, he would otherwise have made. But is a buyer liable to an action of deceit for misrepre- senting the seller's chance of sale, or the probability of his getting a better price for his commodity than the price which such proposed buyer offers ? I am not aware of any case or recognized principle of law upon which such a duty can be considered as incumbent upon a party bargaining for a purchase. It appears to be a false representation in a matter merely gratis dictum, by the bidder, in respect to which the bidder was under no legal pledge or obligation to the seller for the pre- cise accuracy and correctness of his statement, and upon which, there- fore, it was the seller's own indiscretion to rely, and for the conse- quences of which reliance therefore he can maintain no action." When the case came before the Exchequer Chamber, (d) Puller, in argument, insisted that the false representation made by defendant was on a matter of fact, not of opinion, and that there was no case in which (d) 4 Taunt. 488. 590 AVOIDANCE OF THE CONTRACT. [BOOK III. it had been held that an action would not lie under such circumstances ; but the court would hear no reply, and at once confirmed the judg- ment, Sir James Mansfield, C. J., simply saying : " The question is whether the defendant is bound to disclose the highest price he chooses to give, or whether he be not at liberty to do that as a purchaser which every seller in this town does every day, who tells every falsehood he can to induce a buyer to purchase." § 671. In Jones v. Franklin, (e) coram Rolfe, B., at Nisi Prius, the Jones ». Prank- * ac ^ on was t rover , and the circumstances were that the lm - plaintiffs, assignees of a bankrupt, were owners of a policy for £999, on the life of one George Laing, and early in 1840 had en- deavored through their attorney, to sell it for £40, but could find no purchaser. Defendant knew this fact. On the 15th of August Laing became suddenly very ill, and he died on the 20th. On the 18th defendant employed one Cook to buy the policy for the defend- ant, and to give as much as sixty guineas for it. The vendor asked Cook when he applied to buy it what he thought it would be worth, and Cook said about sixty guineas. Cook and the defendant both knew that Laing was in imminent danger, but did not inform the vendor, who was ignorant of it, and sold the policy at that price, sup- posing Laing to be in good health. Rolfe, B., said, " there could be no doubt such conduct was grossly dishonorable. But he had no dif- ficulty in going further than this, and telling the jury that if they be- lieved the facts as stated on the part of the plaintiffs, the defendant's conduct amounted to legal fraud, and he could not set up any title to the policy so acquired." § 672. It does not seem possible to reconcile this case with "Vernon v. Keys. In both cases the purchasers made a false repre- C;ise not recon- J l r ciiabiewith sentation. But in Vernon v. Keys, the falsehood was A ernon v. J > Keys - volunteered, and misrepresented a fact; whereas in Jones v . Franklin, the buyer's statement, through his agent, that the policy was worth about sixty guineas, was only made in answer to a question of the vendor as to his opinion, and according to Lord Ellenborough, the buyer was " under no legal duty or obligation to the seller for the precise accuracy of his statement," and the seller could maintain no action for " the consequences of his own indiscretion in relying on it." There was, perhaps, enough in the case to bring it within the prin- ciple of equity laid down by Lord Eldon in Turner v. Harvey, (/) but (e) 2 Moo. & K. 348. (/) Jac. 169. OHAP. II.] FKAUD. 591 dishonorable and unfair as was the conduct of the buyer, it would be difficult to show, on authority, that it was in law such a fraud as vitiated the sale. § 673. In America it has been held, that if a purchaser make false and fraudulent representations as to his own solvency, Deoi9ion3in and means of payment, and thereby induces the vendor Amenoa - to sell to him on credit, no right either of property or possession is acquired by the purchaser, and the vendor would be justified in re- taking the property, provided he could do so without violence, (g) [And the Supreme Court of the United States has decided that a purchaser of goods, who, without making any fraudulent representa- tions as to his solvency, conceals from the vendor his insolvent condi- dition, and thereby induces him to sell the goods on credit, is guilty of such a fraud as entitles the vendor to disaffirm the contract and re- cover the goods ; if in the meantime no innocent person has acquired an interest in them. (A) It would seem, therefore, that in America, as in England, the contract is treatedi-as voidable and not void. Some of the decisions, however, given in the states, proceed upon the prin- ciple that where the buyer does not intend to pay for the goods, the contract is absolutely void (except by estoppel as against the buyer, if the vendor chooses to affirm it), because it is not the intention of both parties to be bound by it. (z) In both countries, however, the rights of innocent purchasers from a fraudulent vendee are protected, and it seems to be of no practical importance whether the protection is granted on the ground that the original contract of sale is valid until disaffirmed, or whether this result follows from the equitable doctrine, that when one of two innocent parties must suffer from the fraud of a third, the loss should fall on the one who enabled the third party to commit the fraud.] SECTION III. FRAUD ON THE BtJYEE. § 674. In every case where a buyer has been imposed on by the fraud of the vendor, he has a right to repudiate the con- Buyer de _ tract, a right correlative with that of the vendor to dis- yendormay affirm the sale when he has been defrauded. The buyer a ™ dthesal °- (g) Hodgedon u. Hubard, 18 Vt. 504 ; (i) Per Doe, J., in Stewart v. Emerson, Johnson v. Peck, 1 Wood. &Min. (Mass.) 52 N. H. 301, at p. 318, where all the 334; Mason v. Crosby, 1 Wood. & Min. authorities, English and American, are 342. discussed ; and see the remarks of Cock- (h) Donaldson v. Farwell, 3 Otto 631 ; burn, C. J., in Moyce v. Newington, 4 Q. see, also, Root v. French, 13 Wend. 570. B. D. 35, ante \ 665. j92 AVOIDANCE OF THE CONTRACT. [BOOK III. under such circumstances may refuse to accept the goods, if he dis- cover the fraud before delivery, or return them, if the discovery be Before or after not ma de till after delivery; and if he has paid the delivery. price, he may recover it back on offering to return the goods, in the same state iu which he received them, (j) 25 And this ability to restore the thing purchased unchanged in condition is indispensable to the exercise of the right to rescind, so that if the pur- chaser has innocently changed that condition while ignorant of the fraud he cannot rescind, (h) 26 (j) Clark v. Dickson. E., B. & E. 148, and 27 L. J., Q. B. 223 ; Murray v. Mann, 2 Ex. 538 ; Street v. Blay, 2 B. & Ad. 456. 25. The Buyer may Rescind for the Seller's Fraud. — Pence r. Langdon, 99 U. S. 57S ; Cheongwo v. Jones, 3 Wash. G. C. 359; Daggett t: Emerson, 3 Story 700; Cushwa v. Forrest, 4 Cranch C. C. 37 ; Croyle v. Moses, 90 Penna. 250 ; Lowrv !■. McLane, 3 Grant 333 ; Kimball ?>. Cun- ningham, 4 Mass. 502 ; Coolidge v. Brig- ham, 1 Mete. 547 ; Bank of Woodland v. Hiatt, 58 Gal. 234 ; Cruess v. Fessler, 39 Cal. 336. (In this case an avoidance was sustained for misrepresentation as to the value of the good will of a business sold.) Morrison v. Lods, 39 Cal. 381 ; Gifford v. Carvill, 29 Cal. 589 ; Merritt v. Kobinson, 35 Ark. 483 ; First National Bank r. Yocum, 11 Neb. 32S ; Poor i'. Woodburn, 25 Vt. 234 ; Gates <. Bliss, 43 Vt. 299 ; Prentiss <■. Buss, 16 Me. 30 ; Perkins v. Bailey, 99 Mass. 61 ; Waters Patent Heater Co. r. Smith, 120 Mass. 444; Warren v. Tyler, 81 111. 15 ; Foulk v. Eckert, 61 111. 318 ; Hall i: Fullerton, 69 111. 448 ; Baker v. Lever, 67 N. Y. 304. (k) Western Bank of Scotland v. Addie, L. Pv., 1 Se. App. 145; cases, ante g 606. 26. Return of Property. — See ante \ 606, note 2. If the property purchased is of any value whatsoever, it must be re- turned by the buyer before lie can rescind. But if it is entirely worthless it need not be returned. A complaint, therefore, by a buyer, in a suit depending on rescission, must either allege offer to return, or that the property is worthless. Perley v. Balch, 23 Pick. 283 ; Fitz v. Bynum, 55 Cal. 459 ; Morrison v. Lods, 39 Cal. 381 ; Merritt v. Eobinson, 35 Ark. 483. (In this case the offer to return the property was made on Sunday, and was held in- sufficient for that reason. But see Pence v. Langdon, 99 U. S. 578.) Bacon v. Brown, 4 Bibb 91 ; First National Bank of Barnsville v. Yocum, 11 Neb. 328 ; Downer v. Smith, 32 Vt. 1, 7 ; Gates v. Bliss, 43 Vt. 299. (In this case it is held that the buyer must clearly signify his purpose to rescind for the fraud. A mere negotiation for a settlement, or offer to trade back, would not suffice. See Mc- Cnlloch v. Scott, 13 B. Mon. 172.) Get- chell v. Chase, 37 N. H. 106, 110 ; Weeks v. Robie, 42 N. H. 316, 322 ; Willoughby v. Moulton, 47 N. H. 205; Butler *. Northumberland, 50 N. H. 33 ; Sanborn v. Batchelder, 51 N. H. 426, 434 ; Manahan v. Noyes, 52 N. H. 232 ; Spencer v. St. Clair, 57 N. Y. 1. (In this case it was held that a note must be returned, though worthless, before the party who received it could rescind. But this does not accord with the weight of authority.) Jemison *. Woodruff, 34 Ala. 143 ; Shaw v. Barn- hart, 17 Ind. 183 ; Eose v. Hurley, 39 Ind. 77 ; Haase v. Mitchell, 58 Ind. 213 ; Jen- nings v. Gage, 13 111. 610; Smith v. Bit- tenham, 98 111. 188 ; Baker v. Lever, 67 N. Y. 304. (In this case it is held that the fraudulent vendor cannot set up neg- ligence of the buyer in discovering the fraud as a defence to a suit for rescission.) CHAP. II.] FRAUD. 593 § 675. But the contract is only voidable, not void, and if after dis- covery of the fraud he acquiesces in the sale by express Eleotion by words or by any unequivocal act, such as treating the bu y er - property as his own, his election will be determined, and he cannot afterwards reject the property. 27 Mere delay also may have the same effect, if, while deliberating, the position of the vendor has been altered ; (I) and the result will not be affected by the buyer's subse- quent discovery of a new incident in the fraud, for this would not confer a new right to rescind, but would merely confirm the previous knowledge of the fraud. 28 Farrell v. Corbett, 4 Hun 128 ; Van Liew v. Johnson, 4 Hun 415 ; Dows v. Gris- wold, 4 Hun 550, 556. The Defrauded Buyer May Recover for Repairs on Property Returned, — If the buyer has expended money in re- pairing the property before he discovers 28. Mere Delay may Waive the Right to Avoid. — In Learning v. Wise, 73 Penna. 173, the buyer sued to recover the price paid for oil-stocks. There was a delay to rescind for four months, during which the buyer was searching for oil on the lands of the company. The court the fraud, he may rescind by returning held that the delay was too great : " The the property and recover for these re- pairs in assumpsit. Wright v. Haskell, 45 Me. 489 ; Farris v. Ware, 60 Me. 482 ; Canada v. Canada, 3 Cush. 15. These are cases of sales of real estate, but the prin- plaintiffs could not take the chance of the speculation, and at the same time repudi- ate the contract if it turned out to be a losing bargain." In this case the stocks had fallen in price in the interim ; but ciple would seem to apply to personalty, mere delay was held sufficient in Collins Imperfect Restoration, by Guilty v. Townsend, 58 Cal. 608, 614, and in Party. — If the guilty party has disposed Gifford v. Carvill, 29 Cal. 592. See, also, of part of property received by him, he Herrin v. Libbey, 36 Me. 357 ; Burton v. cannot thereby prevent a rescission. The Stewart, 3 Wend. 239 ; Blen v. Bear River, party defrauded may elect to take a par- &c, Co., 20 Cal. 602 ; Willoughby v. Moul- tial restoration. Hammond v Pennock, ton, 47 N. H. 205 ; Hall v. Fullerton, 69 61 N. Y. 145. Depreciation of the Property will not Destroy the Right to Rescind. — Veazie v. Williams, 8 How. 134, 158 ; Neblett v. Macfarland, 92 U. S. 101, 104. 27. Acquiescence will Waive the Right to Avoid. — Kimball v. Cunning- Ill. 448 ; Evans v. Montgomery, 50 Iowa 325, 337 ; Rawson v. Harger, 48 Iowa 269, 274; Parinlee ». Adolph, 28 Ohio St. 10, 17. A better doctrine, however, would seem to be that of the text, that mere delay after discovery of the fraud would not deprive the defrauded buyer ham, 4 Mass. 502 ; Learning v. Wise, 73 of the right to rescind, unless the seller's Penna. 173 ; Downer v. Smith, 32 Vt. 1, position should be altered in the interim. 8; Weeks v. Kobie, 42 N. H. 316, 320; Thompson v. Lee, 31 Ala. 292, 303; Evans v. Montgomery, 50 Iowa 325, 337 ; Grymes v. Sanders, 93 U. S. 55, 62. See ante \ 660, note 19. (0 Clough v. London and North West- ern Railway Co., ante \\ 659, 660 2P See ante I 660 ; Whitcomb v. Benio, 52 Vt. 382, 390. In Dayton v. Monroe, 47 Mich. 193, the suit was for conversion of a horse obtained by a fraudulent pur- chase. The defence claimed waiver by delay to rescind. Campbell, J., said : Delay alone, while it may have some 594 AVOIDANCE OF THE CONTRACT. [BOOK III § 676. These principles are well illustrated in the case of Campbell Campbell v. v - Fleming, (m) The plaintiff, deceived by false repre- Fiemmg. sentations of the defendant, purchased shares in a mining company. After the purchase he discovered the fraud, and that the whole scheme of the company was a deception. The action was brought to recover the purchase money that he had paid. But it ap- peared that subsequently to the discovery of the fraud, the plaintiff had treated the shares as his own, by consolidating them with other prop- erty in the formation of a new company, in which he sold shares, and realized a considerable sum. The plaintiff then endeavored to get rid of the effect of the confirmation of the contract, resulting from his dealing with the shares as his own, by showing that at a still later period he had discovered another fact, namely, that only £5000 had been paid for the purchase of property by the mining company, al- though it was falsely represented to the plaintiff when he took the shares that the outlay had been £35,000. The plaintiff was nonsuited by Lord Denman, and on the motion for new trial all the judges held the nonsuit right. Littledale, J., said : " After the plaintiff learned that an imposition had been practiced on him, he ought to have made his stand. Instead of doing so, he goes on dealing with the shares, and in fact disposes of some of them. Supposing him not to have had at that time so full a knowledge of the fraud as he afterwards obtained, he had given up his right of objection by dealing with the property after he had once discovered that he had been imposed upon." Parke, J., said : " After the plaintiff, knowing of the fraud-, had elected to treat the transaction as a contract, he had lost his right of rescinding it ; and the fraud could do no more than entitle him to rescind." Patteson, J., concurred, and said : " Long afterwards he discovers a new inci- dent in the fraud. This can only be considered as strengthening the evidence of the original fraud ; and it cannot revive the right of repudi- ation which has been once waived." Lord Denman, C. J., said : " There is no authority for saying that a party must know all the inci- dents of a fraud before he deprives himself of the right of rescind- ing." (n) 29 bearing on the fraud, as affecting plain- (n) See ante \ 659, as to election, and tiffs' conduct, cannot be, in a court of law, the case of Clough v. London and North a bar to suit, unless coming within the Western Railway Co., L. E., 7 Ex. 26, statute of limitations. In all controversies there cited. not within the statute, waiver, if relied 29. Affirmance After Partial Discov- on, is a question of fact and not of law." ery of Fraud.— On the other hand, in (ro) 1 Ad. & E. 40. Pierce v. Wilson, 34 Ala. 596, 609, the court CHAP. II.] FKAUD. 595 [The very recent case of Redgrave v. Hurd (o) before the Court of Appeal decides two important points with reference to the Eedgrave „. buyer's right to have a contract rescinded on the ground Hurd - of fraud — 1. When the seller has made a false representation which from its nature might induce the buyer to enter into the contract (1) Buyer is on the faith of it, it will be inferred that the buyer was ^""ctecHn induced thereby to enter into the contract, and it does not [he false re™ rest with him to show that he in fact relied upon the rep- u^fessVTcon- ,. on " trary be proved resentation. w In order to displace this inference the seller must prove either that the buyer had knowledge of facts which showed the representation to be untrue, or that he expressly stated in terms or showed by his con- duct that he did not rely upon the representation but acted upon his own judgment. 2. Where the- buyer relies on the seller's representation, he is not deprived of his right to relief because he had the means (2) Buyer fa not of discovering that the representation was false.] 31 rigSt tor^iief 18 § 678. The rules of law defining the elements which non-irfqu"^ rescinded a sale after three years' delay to file a bill therefor, on the ground that the buyer was not at first fully apprised of the- fraud. The subject of sale was a patent right in looms for the State of Tennessee. The false representations related first, to the fitness of the machine to be worked by hand, and second, to its fitness for use in factories. About three months after the sale the buyer found that the first class of representations was false and offered to rescind. The seller refusing, the buyer made efforts to sell, (unsuccess- fully), and tested the machine in factories, for which he found it useless. Being then sued for the price, he filed a bill (three years having elapsed since the offer to rescind) to set aside the contract. The suit was sustained, on the ground that full discovery of the fraud was not made until the trial in a factory, and on the further ground that by the first offer to rescind the buyer had perfected his right of action, (o) 20 Ch. D. 1, C. A. (reversing the decision of Fry, J.,) where the opinions of Lords Cottenham and Brougham and Earl Devon, in Attwood v. Small, 6 CI. & P. 232, relied upon in the court below, are considered- and explained by Jessel, M. E., at pp. 14-17. 30. Fishback v. Miller, 13 Nev. 428, 443 ; Holbrook v. Burt, 22 Pick. 546, 552. 31. The defrauding vendor cannot set up the buyer's negligence in permitting or discovering the fraud, as a defence to an avoidance. Jackson v. Collins, 39 Mich. 557, 561 ; Baker v. Lever, 67 K. Y. 304; Bank of Woodland v. Hiatt, 58 Cal. 234. In Kendall v. Wilson, 41 Vt. 567, 571, the article sold was a perpetual motion machine. The motion was pro- duced by concealed clock-work. The buyer discovering the cheat, sued to re- cover back the price. The defence was that the buyer was bound to know that it was a humbug. But the court sustained a recovery saying, " the law will afford relief even to the simple and credulous who have been duped by art and false- hood." 596 AVOIDANCE OF THE CONTRACT. [BOOK III. what dements are essential to constitute such fraud as will enable a pur- toentitiTbuyer chaser to avoid a sale were long in doubt, and there was on r groumi S of e specially a marked conflict of opinion between the Court mah'tah' an of Queen's Bench and the Exchequer, until the decisions ceit. ' " " of the Exchequer Chamber in Evans v. Collins, (p) in False repi-e- 1844, and Ormrod v. Huth, (a) in ] 845, established the true sentation not • • 1 i i sufflciint if principle to be that a representation, false in fuel, gives made. no right of action if innocently made by a party who be- lieves the truth of what he asserts; and that in order to constitute fraud, there must be a false representation knowingly made, i. e., a con- currence of fraudulent intent and false representation. And a false representation is knowingly made, when a party for a fraudulent pur- pose states what he does not believe to be true, even though he may have no knowledge on the subject. These decisions bring back the law almost exactly to the point at which it was left by the King's Bench in the great leading cases of Pasley v. Freeman, (»■) and Haycraft v. Creasy, (s) decided in 1789 and 1801. 32 [The above rules must be taken subject to the qualification herein- after noticed (post § 691) with regard to reckless statements.] (p) 5 Q. B. 820. Ohio St. 10, 20 ; Wheeler v. Randall, 48 (q) 14 M. & W. 650. 111. 182 ; Bird v. Foreeman, 62 111. 212 ; (r) 3 T. R. 51 ; 2 Sm. L. C. 66, (8th Merwin v. Arbuckle, 81 111. 501 ; Tone r. ed.) Wilson, 81 111. 529, 533; Clements v. (s) 2 East 92, Boone, 5 Brad. 109 ; Mason v. Chappell, 32. Innocent Misrepresentations are 15 Gratt. 572 ; Sims v. Eiland, 57 Miss. not Fraudulent.— See ante \ 638. It is 83, 607 ; Klein v. Rector, 57 Miss. 538 ; generally true that there must be fraudu- Nelson v. Lulling, 46 How. Pr. (N. Y.) lent intent to constitute such fraud as will 355; Marnlock v. Fairbanks, 46 Wis. avoid a contract of sale; but as we have 415; King v. Eagle Mills, 10 Allen 548; seen {ante \ 628, et seq.,) where the false Kimbell v. Moreland, 55 Ga. 164 ; San- statements amount to a warranty, it is ford v. Cloud, 17 Fla. 557, 572; Merriam held in many states that the buyer may v. Pine City Lumber Co., 23 Minn. 314, rescind, though they were innocently 324; Rawson v. Harger, 48 Iowa 271; made. The general principle, however, Page v. Parker, 40 N. H. 47 ; Pettigrew v. is that if the party making the false state- Chellis, 41 N. H. 95, 99 ; Hanson v. Ed- ments honestly believes them to be true, gerly 29 N. H. 343 ; Merchants Bank v. the contract cannot be avoided, for fraud. Sells, 3 Mo. App. 85 ; Righter v. Roller, The statement must be both false and 31 Ark. 170, 174 ; Bigler v. Flickinger, fraudulent. Lord v. Goddard, 13 How. 55 Penna. 279, 283 ; Allen v. Wanamaker, 198, 211 ; Gregory v. Schcenell, 55 Ind. 31 N. J. L. 370 ; Searing v. Lum, 2 South. 101, quoted note 3, ante ; Taylor v. Luthe, 683 ; Lamm v. Port Deposit, &c, Co., 49 26 Ohio St. 428 ; Parmlee v. Adolph, 28 Md. 233, 240. CHAP. II.] FRAUD. 597 The effect of innocent misrepresentation as causing Mistake or Failure of Consideration has been treated ante § 614, et seq. 33 § 679. In the former of these cases it was held, that a false affir- mation made by the defendant, with intent to defraud the „ , _ J j Pasley v. Free- plaintiff, whereby the plaintiff receives damage, is the man- ground of an action upon the case in the nature of deceit ; and that such action will lie, though the defendant may not benefit by the deceit, nor collude with the person who is to benefit by it. Pasley v. Freeman was an action brought against a party for damages, for falsely representing a third person to be one whom the plaintiff could safely trust, the defendant well knowing that this was not true. In the latter case, Haycraft v. Creasy, it was held, that an action of deceit would not lie upon similar false representations, Haycrafl „ though the party affirmed that he spoke of his own know- Creas y- ledge, if the representations were made bona fide with a belief in their truth. § 680. After a series of intervening cases, that of Foster v. Charles (i) came twice before the Common Pleas in 1830 and 1831, Foaters and was deliberately approved and followed by the charles - Queen's Bench in Pofhill v. Walter, (u) in 1832. It was f e ° lhiu "• Wal " held in these cases unnecessary to prove " a corrupt mo- Motive , tive of gain to the defendant, or a wicked motive of in- jury to the plaintiff. It is enough if a representation is made which the party making it knows to be untrue, and which is intended by him, or which, from the mode in which it is made, is calculated to ini duce another to act on the faith of it in such a way as that he may incur damage, and that damage is actually incurred. A willful false hood of such a nature is in the legal sense of the word, a fraud." [And upon the question of motive the judgment in Polhill v. Wal- ter is fully confirmed by the observations of Lord Cairns in Peek' v. Gurney, (w) who says: "In a civil proceeding of this kind all that your Lordships have to examine is the question, Was there or was there not misrepresentation in point of fact? and if there was, how- ever innocent the motive may have been, your Lordships will be obliged to arrive at the consequences which properly would result from what ■was done."] 33. See ante \ 738, note 4. (w) L R, 6 H. L., at p. 409, and see (t) 6 Bing. 396, and 7 Bing. 105. Xeddell v. McDougall, 29 W. B. 403, C. A. (ii) 3 B. & Ad. 122. s unim- portant. 598 AVOIDANCE OF THE CONTRACT. [BOOK in. § 681. While the authorities stood in this condition, the cases of Cornfoot v. Fowke (x) and Fuller v. Wilson (y) were decided, the former in the Exchequer, in 1840, and the latter in the Queen's Bench, in 1842, the judges in the latter case expressly declining to follow the ruling in the former, and adopting in preference the dis- senting opinion of Lord Abinger. Cornfoot v. Fowke (z) was a case in whieh the defendant refused to Comfoot v comply with an agreement to take a furnished house, on Fowke. tne g roun( i t na f; he had been defrauded by the plaintiff and others in collusion with him. The house had been represented to the defendant by plaintiff's agent as being entirely unobjectionable, whereas the adjoining house was a brothel and a nuisance, which was compelling people in the neighborhood to leave their houses. This fact was known to the plaintiff, but was not known to his agent, who made the representation, and the plaintiff" did not know that the representa- tion had been made. All the cases, from the leading one of Pasley v. Freeman, (a) were cited in argument, and the majority of the court, Rolfe, Anderson, and Parke, BB., held the defence unavailing, while Lord Abinger, C. B., said that the opposite conclusion was so plain as not to admit a doubt in his mind, but for the dissent of his brethren. § 682. Rolfe, B., held the question to be one as to the power of an agent " to affect his principal by a representation collateral to the con- tract. To do this, it is essential * * * to bring home fraud to the principal, and * * * all the facts are consistent with the hy- pothesis that the plaintiff innocently gave no directions whatever on the subject, supposing that the intended tenant would make the neces- sary inquiries for himself." Alderson, B., said : " Here the representation, thougli false, was believed by the agent to be true. He therefore, if the case stopped here, has been guilty of no fraud. * * * It is said that the knowledge on the part of the principal is sufficient to establish the fraud. If, indeed, the principal had instructed his agent to make the false statement, this would be so, although the agent would be innocent of any deceit; but this fact also fails. * * * I think it impos- sible to sustain a charge of fraud when neither principal nor agent has committed any — the principal, because, though he knew the fact, he was not cognizant of the misrepresentation being made, nor even (x) 6M.&W. 358. (z) 6 M. & W. 358. (y) 3 Q. B. 58. (a) 3 T. E. 51. CHAP. II.] FRAUD. 599 directed the agent to make it ; and the agent, because, though he made a misrepresentation, yet he did not know it to be one at the time he made it, but gave his answer bona fide." § 683. Parke, B., pointed out that the representation was no part of the contract, which was in writing, and therefore it could not affect the rights of the parties, except on the ground that it was fraudulent. On the simple facts, each person was innocent, because the plaintiff made no false representation himself, and although his agent did, the agent did it innocently, not knowing it to be false ; and the proposition seemed untenable that if each was innocent, the act of either or both could be a fraud. It was conceded that an iimocent principal would be bound if his agent committed a fraud, but in the case presented, the agent acted without fradulent intent. It was also conceded that "if the plaintiff not merely knew of the nuisance, but purposelyemployed an ignorant agent, suspecting that a question would be asked of him, and at the same time suspecting or believing that it would by reason of such ignorance be answered in the negative, the plaintiff would unquestionably be guilty of a fraud." (a) His Lordship deemed it immaterial whether the making of such representations as were made by the agent was within the scope of his authority or not, as they could not affect the contract unless fraudulent. Lord Abinger, C B., gave an elaborate dissenting opinion, in which he held " that it is not cor- rect to suppose that the legal definition of fraud and covin necessarily includes any degree of moral turpitude ; * * * the warranty of a fact which does not exist, or the representation 'of a material fact contrary to the truth are both said in the language of the law to be fraudulent, although the party making them suppose them to be cor- rect •" that there was not a total absence of moral turpitude in the agent, even upon the presumption that he was wholly ignorant of the matter : that " nothing can be more plain than that the principal, though not bound by the representation of his agent, cannot take advantage of a contract made under the false representation of an agent, whether that agent was authorized by him or not to make such representation ;" that it did not follow because the plaintiff was not bound by the representation of the agent, even if made without authority, that " he is therefore entitled to bind another man to a con- tract obtained by the false representation of that agent. It is one thing to say that he may avoid a contract if his agent without his authority (a) See Ludgater v. Love, 44 L. T. (N. S.) 694, C. A., post \ 698. 600 AVOIDANCE OF THE CONTRACT. [BOOK III. has inserted a warranty in the contract, and another to say that he may enforce a contract obtained by means of a false representation made by his agent, because the agent had no authority." (See observations on this case, post § 697.) § 684. In Fuller v. Wilson, (b) which was an action on the case for Fuller ». a ^ se representation, the Queen's Bench, through Lord Wilson. Denman, C. J., declined to take any ground other than the broad proposition of Lord Abinger, which they adopted, " that whether there was a moral fraud or not, if the purchaser was actually deceived in his bargain, the law will relieve him from it. We think the principal and his agent are for this purpose completely identified*, and that the question is not what was passing in the mind of either, but whether the purchaser was in fact deceived by them or either of them." The conflict of opinion cannot be more plainly stated. The Queen's Conflict of Bench thought the sole test was whether the purchaser ?ween the 5 * was deceived by an untrue statement into making the bargain. Bench and The Court of Exchequer thought it further necessary that xc equer. ^ e p ar (y raa king the untrue statement should know it to be untrue. Fuller v. Wilson was reversed in error, (c) solely on the ground that the facts of the ease did not show any misrepresentation on the part of the vendor, but only the purchaser's own misapprehension ; and Tindal, C. J., in delivering the opinion, stated that the court did " not enter into the question discussed in Cornfoot v. Fowke." § 685. In Moens v. Hey worth, (d) in 1842, the question again came Moens« Hey- before the Exchequer of Pleas, (the case of Fuller v. worth. Wilson not being yet reported,) and Lord Abinger re- newed the expression of his dissent from Parke, B., and Alderson, B., repeating that " the fraud which vitiates a contract, * * * does not in all cases necessarily imply moral turpitude." His Lordship instanced the sale of a public house, and an untrue statement by the seller that the receipts of the house were larger than was the fact, but the untrue statement might be made without dishonest intent, as if proper books had not been kept. In such case his Lordship insisted that the purchaser might maintain aD action on the false representation, even though the vendor did not know that it was false when made. The other judges held the contrary, Parke, B., saying distinctly, that in such cases " it is essential that there should be moral fraud." (6) 3 Q. B. 58. (d) 10 M. & W. 147. (c) Wilson v. Fuller, 3 Q. B. 1009. CHAP. n.J FEATJD. 601 § 686. In the next year, 1843, Taylor v. Ashton (e) came before the same court, and the judgment of the Queen's Bench in Taylor „ M . Fuller v. Wilson was relied on by the plaintiff, but Parke, ton B., said when it was cited : " I adhere to the doctrine that an ac- tion for deceit will not lie without proof of moral fraud, and Lord Denman seems to admit that to be so. If the party bona fide believes ^he representation he made to be true, though he does not know it, it is not actionable." The learned Baron afterwards delivered the judg- ment of the court, holding that " it was not necessary, in order to con- stitute fraud, to show that the defendants knew the fact to be untrue : it was enough that the fact was untrue if they communicated that fact for a deceitful purpose; * * * if they stated a fact which was un- true for a fraudulent purpose, they at the same time not believing that fact to be true, in that case it would be both a legal and moral fraud." § 687. In 1843, the Queen's Bench had before them the case of Evans v. Collins, (/) which was an action by a sheriff to Evan8 „ Co] . recover damages against an attorney for falsely represent- llua - ing a certain person to be the person against whom a ca. sa. had been sued out by the attorney, so that the sheriff had been induced to take the wrong person into custody, and had thereby incurred damage. The jury found that the defendant had probable reason for believing that the person pointed out to the sheriff was really the person against whom the ca. sa. was issued, so that there was clearly a total absence of moral turpitude. It had, however, been previously held, in Humphrys v. Pratt, (g) in the House of Lords, that an execution creditor was bound to indemnify a sheriff who had seized goods pointed out by the creditor, and upon his requisition and false representation that they belonged to his debtor, although the counts in the declaration did not aver any knowledge or belief on the part of the execution creditor that his representation was false. On the authority chiefly of this decision in the House of Lords, Lord Denman, C. J., held the action in Evans v. Collins maintainable, but he added : " One of two persons has suffered by the conduct of the other. The sufferer is wholly free from blame : but the party who caused his loss, though charged neither with fraud nor with negligence, must have been guilty of some fault when he made a false representation. He was not bound to make any statement, nor justified in making any which he did not (e) 11 M. & W. 401. (g) 5 Bligh (N. S.) 154. (/) 5 Q. B. 804. 602 AVOIDANCE OF THE CONTRACT. [BOOK III. know to be true ; and it is just that he, not the party whom he has misled, should abide the consequence of his misconduct. The allega- tion that the defendant knew his representation to be false is therefore im- material: without it, the declaration discloses enough to maintain the action." § 688. This case was reversed in the Exchequer Chamber, (A) after time taken for consideration, by the unanimous judgment Exchequer of Tindal, C J., Coltman, Erskine, and Maule, JJ., and Parke, Alderson, Gurney, and Rolfe, BB. The court stated the question to be distinctly " whether a statement or representa- tion which is false in fact, but not known to be so by the party making it, but, on the contrary, made honestly aud in the full belief that it is true, affords a ground of action." The court held, that on the whole current of authority, "fraud must concur with the false statement in order to give a ground of action." The court explained the decision in Humphrys p. Pratt, (g) in which no reasons were assigned for the judgment, as having proceeded on the grouud that the execution credi- tor in that case had made the sheriff his agent, and was bound to in- demnify him for the consequences of acts done under the principal's instructions. § 689. The next case was Ormrod v. Huth, [k) in the Exchequer Ormrod» Chamber, in 1845, on error from the Exchequer of Pleas, Huth - so that the judges of the Queen's Bench must have taken part in the judgment. Tindal, C. J., laid down the rule, which he said was supported both by the early and later cases, so clearly as to render it unnecessary to review them, in the following words : "Where upon the sale of goods the purchaser is satisfied without requiring a warranty, (which is a matter for his own consideration), he cannot re- cover upon a mere representation of the quality by the seller, unless he can show that the representation was bottomed in fraud. If, in- deed, the representation was false to the knowledge of the party making it, this would in general be conclusive evidence of fraud; but if the representation was honestly made and believed at the time to be true by the party making it, though not true in point of fact, we think this does not amount to fraud in law." § 690. Finally the Queen's Bench abandoned their former doctrine (A) 5 Q. B. 820. (£) 14 M. & W. 650. (g) 5 Bligh (N. S.) 154. CHAP. II.] FKATJD. 603 in express terms in 1846, Lord Denman, C. J., deliver- Baileyv . Wal . ing the opinion in Bailey v. Walford, (I) in these words : for. Wickham, 3 De G. &.J. Penna. 139; Milton v. Oldham, 63 Mo. 304, 316; Hart v. Swaine, 7 Ch. D. 42; 181 ; Dulaney v. Rogers, 64 Mo. 201. Leddell v. McDougall, 29 W. R. 403, C. 38. See ante \ 639, note 5. A. ; Redgrave v. Hurd, 20 Ch. D. 1, C. 39. See ante \ 637, note 3, and \ 639, A., per Jessel, M. R., at p. 12; Smith v. note 5. Chadwick, Id. 27 per eundem, at p. 44, (x) 17 Ch. D. 301, C. A. and per Cotton, L. J., at p. 68 ; Mathias (y) 20 Ch. D. 27, C. A. v. Yeits, 46 L. T. (N. S.) 497, C. A. The 40. Action for Deceit.— A third per- rule had been laid down to the same effect son may be held liable for misrepresenta- by Maule, J., in Evans v. Edmonds, 13 tions which would not be actionable if C. B. 777, at p. 786. uttered by a party to the contract. Thus 36, See ante jj 643, note 11, and rece i ve d dividends, and acted as a partner until the Glasgow Bank. ii qu ;d a tion. In October, 1878, the bank went into liqui- dation, and the plaintiff was entered on the list of contributories and paid calls. In December, 1878, he brought this action, in the nature of an action of deceit, against the bank and its liquidators to recover damages in respect of the sum he had paid for the stock, the money he had already paid for calls, and the estimated amount of future calls. He founded his claim to relief on the ground that he was induced to buy the stock by reason of the fraudulent misrepresentiorJs and con- cealments of the manager and directors. He admitted that after the winding up had commenced it was too late for him to claim rescission of his contract and restitutio in integrum. It was held by the House of Lords that the action was irrelevant and not maintainable. The distinction between shares in a company and any other chattels, viz., that a shareholder in a company is a partner in it, was pointed out, and it was shown that any attempt, while he remains a partner in the company, to throw upon the assets of the company and the other con- tributories the loss he had sustained, was at variance with the contract he had entered into with his partners, viz., that the assets and contri- butions shall be applied in payment of the debts and liabilities of the company, which contract he had, by remaining in the company until its liquidation, chosen to affirm. The decision in The Western Bank of Scotland v. Addie was approved and followed. But, on the ques- tion whether a corporation can be called on to answer in an action of deceit by a person other than a shareholder, the reader is referred to the judgments of Lord Selborne (x) and Lord Blackburn, (y) where the previous cases are discussed, particularly Barwick v. The English Joint Stock Bank, The Western Bank of Scotland v. Addie, and Mackay v. The Commercial Bank of New Brunswick. § 708. Lord Selborne, (a;) adopts the principle laid down by Mr. Justice Willes in the first of those cases, and adds, " That principle re- ceived full recognition from this House in The National Exchange Co. v. Drew (2) and New Brunswick Railway Co. v. Conybeare, (a) and was certainly not meant to be called in question by either of the learned Lords who decided The Western Bank of Scotland v. Addie. It is a principle not of the law of torts or of fraud or deceit, but of the law of agency, equally applicable whether the agency is for a corporation {in a matter within the scope of the corporate powers) or for an indi- (x) 5 App. Cas. 826. (s) 2 Macq. 103. (jr) At p. 338. (a) 9 H. L. C. 711. CHAP. II.] FEATJD. 617 vidual, and the decision in all these cases proceeded, not on the ground of any imputation of vicarious fraud to the principal, but because (as it was well put by Mr. Justice Willes in Barwick's case) " with respect to the question, whether a principal is answerable for the act of his agent in the course of his master's business, no sensible distinction can be drawn between the case of fraud and the case of any other wrong." And Lord Blackburn, (b) points out that Lord Chelmsford in The Western Bank of Scotland v. Addie, laid down no general position as to all contracts, and that his dieta and those of Lord Cranworth (who does use language applicable to all contracts) are reconcilable with Bar- wick's and Mackay's cases, if confined to the particular and peculiar contract then under consideration, viz., a contract to take shares, add- ing, in conclusion, (c) " I do not say that the difference of the contract from that to buy shares would distinguish the case. All that I say is that if such a case arises, the consideration of the question whether it is decided by Addie v. The Western Bank is not meant to be pre- judiced by anything I now say." § 709. The combined effect of the decisions in The Western Bank of Scotland v. Addie and Houldsworth v. The City of meeoto{the Glasgow Bank, is that the only remedy of a shareholder deolslolls - in a joint stock company, who has been induced to purchase shares by the fraud of the agent of the company, is rescission of his contract and restitutio in integrum. If he is once debarred from seeking that relief by the declared insolvency of the company or from any other cause, there is no other remedy open to him except to bring a personal action against the agent who has been actually guilty of the fraud. It is submitted, therefore, that the 3d proposition above laid down (ante § 705) must be modified thus : 3dly. The purchaser can maintain an action of deceit against the innocent principal, where the fraud of the agent has been committed within the scope of his authority, and where the principal has bene- fited by it. (d) 4thly. In this respect it makes no difference whether the principal be a corporation or an individual, (e) 44 (6) 5 App. Cas. 339. (e) Mackay v. The Commercial Bank (c) At p. 341. of New Brunswick, ubi supra ; HoulcU- (d) Barwick v. English Joint Stock worth v. The City of Glasgow Bank, 5 Bank, L. R., 2 Ex. 259 ; Mackay v. The App. Cas. 317, per Lord Selborne, at p. Commercial Bank of New Brunswick, L. 326, and the more guarded remarks of R, o P. C. 394 ; per Fry, J., in Cargill v. Lord Blackburn, at pp. 339, 34U. Bower, 10 Ch. D., at p. 514. 44. Liability of Principal for Deceit 618 AVOIDANCE OF THE CONTRACT. [BOOK III. 5thly. A shareholder in a joint stock company, who has been in- duced to purchase his shares by the fraud of the agent of the company, cannot bring an action of deceit against the company, so long as he is a member of it.] (/) § 710. [In several cases, where shareholders in a company have Liability of endeavored to render the directors of the company liable arampTny 1 ° f f° r ^ se au d fraudulent representations contained in pros- fraidui e ent d pectuses or other documents, it has become necessary to of Agent. — The general rule determining the liability of the principal for the torts of his agent is stated by the United States Supreme Court as follows : " Whatever an agent does or says in reference to the business in which he is at the time em- ployed, and within the scope of his authority, is done or said by the princi- pal." Washington, J., in American Fur Co. v. United States, 2 Peters 358, 363. This rule was taken from the earlier case of United States v. Gooding, 12 Wheat. 460, 469, where Story, J., said : " What- ever the agent does within the scope of his authority binds his principal and is deemed his apt," and it has since been ap- proved in the same court in several cases. See Barreda v. Silsbee, 21 How. 146, 164 ; Cliquot's Champagne, 3 Wall. 114, 140; Stockwell v. United States, 13 Wall. 531, 550. A principal adopting a contract is bound by his agent's representations in effecting it, though false and in excess of his authority. Mundorff v. Wickersham, 63 Penna. 87 ; Keough v. Leslie, 92 Penna. 424 ; Veazie v. Williams, 8 How. 134, 157 ; Crump v. United States Mining Co., 7 Gratt. 352, 369. In Coddington v. Goddard, 16 Gray 436, 441, the agent, in buying copper, being asked by the seller whether there had been any ad- vance in copper, answered, truthfully, " none that I know of." There had been an advance to the knowledge of the principal, and the seller claimed to rescind. But the court said that such a representation was not made by him in behalf of the principal, but only as to his personal knowledge, and therefore no fraud could be imputed to the principal. The knowledge of the agent is imputed to the principal. The Distilled Spirits, 11 Wall. 356; Fairfield Savings Bank v. Chase, 72 Me. 226, 230. But see, contra, Houseman v. The Building Association, 81 Penna. 256. The liability of the principal for the deceit of his agent, act- ing in the course of his employment, has been asserted in the following cases : Sandford v. Handy, 23 Wend. 260, 268 ; Bennett v. Judson, 21 N. Y. 238, (modi- fied in Wakeman v. Dalley, 51 N. Y. 27) ; Griswold v. Haven, 25 N. Y. 595 ; Craig v. Ward, 3 Keys 387 ; El well v. Cham- berlain, 31 N. Y. 611, 619; Davis «. Bemis, 40 N. Y. 453 ; Indianapolis, &c, Railway Co. v. Tyng, 63 N. Y. 653, 655; McBean v. Fox, 1 Bradw. 177, 185; Durant v. Rogers, 87 111. 508, 511 ; Reed ii, Peterson, 91 111. 288, 298; Haskit v. Elliott, 58 Ind. 493 ; Locke v. Stearns, 1 Mete. 560 ; Commonwealth v. Nichols, 10 Mete. 259; Coddington v. Goddard, 16 Gray 436, 441 ; Fitzsimmons v. Joslin, 21 Vt. 12!); Tagg v. Tennessee National Bank, 9 Heisk. 479; Crump v. United States Mining Co., 7 Gratt. 352, 369; Lawrence v. Hand, 21 Miss. 103 ; Law v. Grant, 37 Wis. 548, 557 ; Linton v. Housk, 4 Kan. 535 ; Tome v. Parkersburg Branch R. R., 39 Md. 36, 71, 85; Lamm v. Port Deposit Association, 49 Md. 233, 241 ; Erb v. Great Western Railway Co., 3 Ont. App. 446. (/) Western Bank of Scotland v. Ad- die, L. R., 1 Sc. App. 146 ; Houldsworth CHAP. II.] FRAUD. 619 consider the relationship existing between the directors c^^Mifin and the persons who have actually committed the fraud. JJXr docu- In Peek v. Gurney, (g) where the action was brought by ments - a shareholder against the directors of Overend, Gurney Gumey. & Co., for false and fraudulent representations contained in the pros- pectus of the company intended to carry on the business of the firm of Overend & Gurney, it was attempted on behalf of Barclay, one of the defendant directors, to relieve him from liability on the ground that he had taken no part in, and given no express authority for the prep- aration and publication of the fraudulent prospectus which, in fact, he had never read until after the company had stopped payment. But this defence was held unavailing, and Lord Chelmsford, in moving the judgment of the House of Lords, said (at p. 392), " The short answer to this defence is, that he was acquainted with all that the other directors knew; he consented to become a director, knowing that a prospectus would, as a matter of course, be issued : he signed the memorandum and articles of association referred to in the prospectus ; and, upon receipt of the prospectus, he filled up and signed the form of application for shares, printed with and forming part of the pro- spectus. Can he, upon these facts, be heard to say that he did not authorize the prospectus, or sanction its publication?" § 711. In Weir v. Bell, (h) the defendant directors had been author- ized by the company to issue debentures. Afterwards, ,. ii • i ■ i i Weii-o. Bell. the directors at a board meeting authorized the secretary of the company to employ a firm of brokers to place the debentures. The secretary accordingly employed brokers on behalf of the company, who, without any express authority from the directors, issued a pro- spectus containing false and fraudulent statements, on the faith of which the plaintiff" purchased debentures which proved to be worthless. The action was brought against several of the directors in the first instance, and the judgment of the Exchequer Division was in favor of them all, proceeding upon the ground that the brokers were the agents of the company, and not of the directors, and disregarding the finding of the jury upon this head as contrary to the evidence. The plaintiff appealed only against the judgment in favor of the defendant Bell. It was held by the majority of the Court of Appeal, consisting v. The City of Glasgow Bank, 5 App. Cas. (h) 3 Ex. D. 238, C. A. ; S. C, sub nom. 317. Weir v. Barnett, Id. 32. (g) L. K., 6 H. L. 377. 620 AVOIDANCE OF THE CONTKACT. [BOOK III. of Cockburn, C J., Bramwell and Brett, L.JJ., that on the facts dis- closed, the defendant was not liable. Cockburn, C. J., based his judgment, which received the concur- rence of Brett, L. J., on the ground that the defendant Bell, although a party as director to the receipt of the money paid for the debentures, was not aware of the falsity of the statements contained in the pro- spectus, and derived no personal benefit from the money so received, (i) Bramwell, L. J., based his judgment on the ground that the defend- ant Bell had been guilty of no moral fraud, and not being the princi- pal of the brokers, could not be held to have impliedly undertaken for the absence of fraud in them in issuing the prospectus. Cotton, L. J., on the other hand, delivered a powerful dissentient judgment, holding that the finding of the jury, that the brokers were the agents of the directors, was warranted by the evidence, that the brokers in preparing and issuing the prospectus discharged a part of the duty entrusted to the defendant as one of the directors by the resolution authorizing the issue of debentures, and that it was the de- fendant's duty as director to ascertain whether the statements in the prospectus were true or false ; and he referred to the passage above cited from Lord Chelmsford's judgment in Peek v. Gurney, as con- firming this view. § 712. And in Cargill v. Bower, (k) Fry, J., following the decision car m °f * ne Exchequer Division in Weir v. Bell, in which the Bower. Court of Appeal had not then delivered their judgment, held that a director of a company is not liable for a fraud committed by his codirectors, or by any other agent of the company, " unless he has either expressly authorized, or tacitly permitted its commission ; " and he reconciled this decision with the principle applied by the House of Lords to Barclay's case in Peek v. Gurney, on the ground that Bar- clay must be considered to have there impliedly authorized the com- mission of the fraud, inasmuch as he had given authority to his co- directors to issue a prospectus, although from his knowledge of the affairs of the firm of Overend & Gurney, he must have been aware that any prospectus would necessarily be fraudulent.] 45 (i) At p. 249 of the report, Cockburn, Privy Council in Mackay v. The Com- C. J., intimates that he would have held mercial Bank of New Brunswick, ante the defendant liable if, after knowledge \ 706. r.l' the fraud, he had derived benefit from (k) 10 Ch. D. 502. it. This was one of the questions left 45. See Wakeman v. Dalley, 51 N. Y. open by the Judicial Committee of the 27 ; Morgan u. Skiddy, 62 N. Y. 319 CHAP. II.] FRAUD. 621 § 713. It must not be concluded from this review of the authorities that the purchaser, who has been induced by false repre- sentations to make the contract, is always without remedy havea'remedy because the vendor believed the statements to be true, and sentation by „ /. t i • mi i innocent ven- was innocent oi any fraudulent intent. Ihese cases only dor, when rep- ii*ii ill • i- regentation establish that the vendor has committed no wrong, and is amounts to * . . , warranty. therefore not liable in an action of deceit, or any other action founded on tort. But, in very many instances, a representation mad? by the vendor amounts in law to a warranty, and when this is the case, the purchaser has remedies on the contract, for breach of the warranty. 46 The rules of law by which to determine when a repre- sentation is a warranty, and what are the rights of the buyer for a breach of this warranty, when the representation is false, are treated post Book IV., Part II., Ch. I., on Warranty. The law as to the effect of innocent misrepresentation of law or of fact, has been dis- cussed ante § 614, et seq. § 714. The case of Feret v. Hill (Z) has been omitted in the foregoing review, in order not to interrupt the exposition of the i-i it • , i ,i t Feret «. Hill. point directly under discussion, but the case well deserves consideration. It was in its facts the converse of Corn- comfoot ». Fowkc. foot v. Fowke. The defendant Hill was the owner of a tenement, and the plaintiff sent an agent to him to give assurances of the plaintiff's good character and reputation, in order to induce the de- fendant to let the premises to the plaintiff. The agent was innocent, and was honest in his assurances of the plaintiff's good character, but in point of fact the plaintiff, who pretended that he wanted the premises for carrying on business as a perfumer, intended to convert them into a brothel. The plaintiff was let into possession and used the premises as a brothel, and the defendant discovering the fraud practiced on him, ejected the plaintiff forcibly from the apartments, after having given him a notice to quit, which he disregarded. The plaintiff then brought ejectment to recover possession of the apartments, and the jury found, first, that the plaintiff, at the time he entered into the agreement, intended to use the premises for a brothel ; and secondly, that he had induced the defendant to enter into the agree- ment by fraudulent misrepresentation as to his character, and as to the 46. Da Lee v. Blackburn, 11 Kan. 190; d. Henderson, 64 Ala. 535; Bower v. Weimer v. Clement, 37 Penna. 147 ; Mc- Fenn, 90 Penna. 359. Farland v. Wemmer, 9 Watts 55; Jack- (I) 15 C. B. 207 ; 23 L. X, C. P. 183. son v. Wetheral, 7 S. & E. 422; Wilcox 622 AVOIDANCE OF THE CONTRACT. [BOOK III. purpose for which he wanted the premises. The verdict was for the defendant, and Crowder, J., reserved leave to the plaintiff to move to enter the verdict in his favor, if the court should be of opinion that the agreement, notwithstanding this finding, was valid. The motion pre- vailed, and the plaintiff was held entitled to enforce the agreement, on the ground that the misrepresentation was of a fact collateral to the agreement, Jervis, C J., saying that there was no misrepresentation "as to the legal effect of the instrument which he (the defendant) exe- cuted, nor as to what he was doing, or that he was doing one thing, when in fact he was doing another." The other judges also put the case upon the ground that the court was not called on to enforce any agreement at all, but to replace premises in the possession of a man who had an executed legal title to the possession : that it was impossi- ble to say that nothing passed under the demise, simply because it was obtained by fraudulent misrepresentation. The effect of this decision seems to be, that a defrauded lessor, who Defrauded nas actua Uy executed a demise, cannot treat it as a nul- lesaor - lity, but must proceed to have it rescinded on the ground of the fraud by an appropriate tribunal, before treating it as non- existent : such appropriate tribunal not being a court of law, but one of equity. [And now, under the judicature acts, when such relief is sought by Effect of the *he plaintiff, the Chancery Division of the High Court is judicature acts, ^g appropriate tribunal. Judicature Act, 1873, § 34, subs. 3, ante § 605.] § 715. In further illustration of the effect of fraudulent representa- tions to the prejudice of the purchaser, the reader is re- shareholders . „ , . . i 1 . , defrauded by ferred to the series of decisions rendered in cases where prospectus. shareholders in companies have attempted to relieve them- selves from responsibility by showing that they had been induced to take the shares through fraudulent representations of the directors. These cases are all reviewed in Oakes v. Turquand, (m) decided in the House of Lords in August, 1867, in which it was settled that such con- tracts are voidable only, not void, and that the defrauded shareholders cannot relieve themselves from responsibility to creditors, by disaffirm- ing the contract after the company has failed, and has been ordered to (m) L. E., 2 H. L. 325. See, also, Ten- Glasgow Bank, 5 App. Cas. 317, ante I nent v. The City of Glasgow Bank, 4 App. 707 ; and Burgess' case, 49 L. J., Ch. 541. Cas. 615, and Houldsworth v. The City of CHAP. II.] FRAUD. 623 be liquidated in chancery, [and the same principle applies to a volun- tary winding-up. (n)] 47 § 716. [By 30 and 31 Vict., c. 131, § 38, (Companies Act, 1867,) it is enacted, that " every prospectus of a company and Companie9 Mli every notice inviting persons to subscribe for shares in 1867 . 2 :i8 - any joint stock company, shall specify the dates and the names of the parties to any contract entered into by the company, or the pro- moters, directors, or trustees thereof, before the issue of such prospec- tus or notice, whether subject to adoption by the directors, or the com- pany, or otherwise ; and any prospectus or notice not specifying the same shall be deemed fraudulent on the part of the promoters, direct- ors, and officers of the company knowingly issuing the same as regards any person taking shares in the company on the faith of such pro- spectus, unless he shall have had notice of such contract." (o) It would be beyond the scope of this work to examine all the cases which have been decided on the question what contracts must be set out under this section, as to which there has been a great divergence of opinion. The reader is referred to the note on this section in Mr. Buckley's work on the Companies Acts, (3d ed.,) p. 455.] § 717. It would be an onerous and scarcely useful task to enumerate the various devices which, in adjudicated cases, have been Devioeswhich held by the courts to be frauds on purchasers. The prin- fraudulent held ciples stated in this chapter have been illustrated in B s amst ba y<*- (n) Stone v. City and County Bank, 3 C. 707. But a shareholder whose stock was P. D. 282, C. A. issued without authority of law, and is 47. Stock Subscriptions, Procured therefore void, cannot be held liable by Fraud. — In Vreeland v. N. J. Stone either to the company or its creditors on Co., 29 N. J. Eq_. 190, Bunyon, C, said : such subscription. Scovill v. Thayer, 105 " The rule is universal that whatever U. S. 143, 149. fraud creates, justice will destroy.'' Con- (o) Cornell v. Hay, L. B., 8 C. P. 328 ; tracts' to take stock stand on the same Askew's case, 22 W. B. 762 ; Charlton u. footing as other obligations, and may be Hay, 31 L. T., (N. S.) 437 ; 23 W. B. rescinded for fraud. Thompson on Lia- 129 ; Gove^s case, 1 Ch. D. 182, C. A. ; bility of Stockholders, § 142. But where Craig v. Phillips, 3 Ch. D. 722 ; Phos- the company has become insolvent, and phate Sewage Co. v. Hartmont, 5 Ch. D. creditors' rights have intervened, the 394, C. A.; New Sombrero Co. v. Erlan- shareholder cannot be relieved from his ger, id. 73, C. A. ; 3 App. Cas. 1218; subscripton. Ogilvie v. Knox Ins. Co., 22 Bagnall v. Carlton, 6 Ch. D. 130 ; S. C. How. 380 ; Upton v. Trebilcock, 91 U. S. in C. A., id. 371 ; Twycross v. Grant, 2 C. 45 ; Chubb v. Upton, 95 U. S. 667 ; Pull- P. D. 469, C. A. ; Sullivan v. Mitcalfe, 5 man v. Upton, 96 U. S. 323 ; Hawley v. C. P. D. 455, C. A. ; Arkwright v. New- Upton, 102 U. S. 314 ; County of Morgan bold, 17 Ch. D. 301, C. A. v. Allen, 103 U. S. 498, 509. See ante \ 624 AVOIDANCE OF THE CONTRACT. [BOOK III. numerous decisions, (p) Some of those which have most frequently occurred in practice will be presented as examples. In Bexwell v. Christie, (q) it was held to be fraudulent in the ven- Puffers at auc- dor t0 ^id by himself or agents at an auction sale of his tion. own g 00( J S) where the published conditions were "that Christie.*' tne highest bidder shall be the purchaser, and if a dis- pute arise, to be decided by a majority of the persons present." Lord Mansfield also in that case held it to be a fraud on the public, and therefore on the buyer, for the vendor falsely to describe his goods offered at auction as " the goods of a gentleman de- ceased, and sold by order of his executor." The foregoing case was highly eulogized, and followed by Lord Howard v Cas- Kenyou and the King's Bench in Howard v. Castle ; (r) tle and the employment of " puffers " as they are termed, that is, persons engaged to bid in behalf of the vendor in order to force up the price against the public, has ever since been held fraudulent, (r) 48 (p) Early ,■. Garret, 9 B. & C. 92S ; Duke of Norfolk v. Worthy, 1 Camp. 340 ; Hill v. Gray, 1 Stark. 434 ; Jones v. Bowden, 4 Taunt. 847 ; Barber v. Morris, 1 Mood. & B. 62 ; Tapp v. .Lee, 3 B. & P. 367 ; Corbett *. Brown, 8 Bing. 33 ; Hill v. Perrott, 3 Taunt. 274 ; Abbotts v. Barry, 2 B. & B. 369. (q) 1 Cowp. 395. (r) 6 T. B. 642. See, also, Wheeler v. Collier, 1 M. & W. 123; Crowder r. Austin, 3 Bing. 36S ; Bex v. Marsh, 3 Y. & J. 331 ; Thornett i. Haines, 15 M. & W. 367 ; Green v. Baverstock, 14 C. B. (N. S.) 204, and 32 L. J., C. P. 180. 48. Puffing at an Auction Sale is Ground for its Avoidance. — This was held in Veazie r. Williams, 8 How. 134, 153, although the by-bidding was by the auctioneer without authority from his principal. See Moncrieff v. Goldsbor- ough, 4 Har. & McH. 281 ; Pennock's Appeal, 14 Penna. 446, 450 ; Staines v. Shore, 16 Penna. 200 ; Yerkes v. Wilson, 81 Penna. 9, 17; Fisher v. Hersey, 17 Hun 370 ; National Bank of the Metropo- lis v. Sprague, 20 N. J. Eq. 159 ; Curtis v. Aspinwall, 114 Mass. 187, 191 ; Miller v. Baynard, 2 Houst. 559 ; McDowell v. Simms, 6 Ired. Eq. 278. But an open bidding for the owner, or an announce- ment of a limit below which the property will not be sold, is legitimate. Steele v. Ellmaker, 11 S. & B. 86, 88. This is said to be overruled in Pennock's Appeal, 14 Penna. 446, 450, but it is not apparent why. The cases are not inconsistent. The fact that a puffer bid at a sale will not impair its validity if the bid next preceding the successful bid was genuine. This was stated in National Bank of the Metropolis v. Sprague, 20 N. J. Eq. 159, 165, on the authority of Story ; but in Curtis v. Aspinwall, 114 Mass. 187, 197, Morton, J., said : " There is a presump- tion that the last bidders are influenced and injured by the previous fictitious bids. But this presumption may be re- butted. If the by-bidding had no effect or influence upon the purchaser's bid, the latter cannot avoid his contract." And the court reasoned that by-bidding on one of several adjoining parcels of land might mislead the judgment of buyers of other parcels. CHAP. II.] FRAUD. 625 § 718. In the case of Warlow v. Harrison, decided in Queen's Bench, (s) and afterwards in the Exchequer Chamber, (t) WarIOW „. Har . the law on the subject of the auctioneer's responsibility in rl8 ° n - such cases was examined on the following state of facts : ^ons?bie e for e " The defendant was an auctioneer, having a horse repository, fraud onbu y er - and they advertised for sale a mare, " the property of a gentleman, without reserve." The plaintiff attended the sale, and bid 60 guineas, and another person bid 61 guineas. The plaintiff, being informed that this last person was the owner, declined to bid further, and the horse was knocked down to the owner as purchaser at 61 guineas. The plaintiff at once informed the defendant and the owner that he claimed the mare as the highest bona fide bidder, the sale having been adver- tised " without reserve." The owner refused to let him have- the mare, and he thereupon tendered to the defendant, the auctioneer, 60 guineas in gold, and demanded the mare. The plaintiff had notice of the con- ditions of the sale, among which were the following : " First. The highest bidder to be the buyer, and if any dispute arise between two or more bidders before the lot is returned into the stables, the lot so disputed shall be put up again, or the auctioneer may declare the pur- chaser. Third. The purchaser being declared, must immediately give in his name and address, with, if required, a deposit of 5s. in the pound on account of his purchase, and pay the remainder before such lot is delivered. Eighth. Any lot ordered for this sale and sold by private contract by the owner, or advertised ' without reserve,' and bought by the owner, to be liable to the usual commission of £2 per cent." As the judgment of the Exchequer Chamber turned much upon the plead- ings, it is necessary to state that the plaintiff's declaration, after alleg- ing the advertisement for sale without reserve, went on to aver that he attended the sale and became the highest bidder, " and thereupon and thereby the defendant became and was the agent of the plaintiff to com- plete the contract ; and then charged a breach of the defendant's duty to the plaintiff as the plaintiff's agent in failing to complete the contract in behalf of the plaintiff. The defendant pleaded : First, not guilty. Secondly, that the plaintiff was not the highest bidder. Thirdly, that the defendant did not become the plaintiff's agent as alleged. In the plaintiff's argument the following civil law authorities were cited : Cicero de Officiis, lib. 3, § 15, " Tollendum est igitur ex rebus contrahendis ornne mendacium ; non licitatorem venditor, nee qui contra (s) 28 L. J., Q. B. 18. (0 1 E. & E. 295 ; 29 L. J., Q. B. 14. 2r 626 AVOIDANCE OF THE CONTRACT. [BOOK III. heliceatur,(u) emptor apponet :" and Huberus lib. 18, tit. 2, §. 7, Prce- lectiones : " Sed hoc facile constabit, si venditor falsum emptorem inde ab initio subornet, qui plus aliis offered, ut veris emptoribus prozmium maxima licitationis, vulgo, stryckgelt, quo nihil usitatius, intercipiat, dolo detecto, venditorem teneri ad prozmium vera licitatori maximo prcestan- dum, quia hoc est contra fidem eonventionis perfected qua statutum est ut maximo licitatori prozmium daretur." § 719. Lord Campbell, C. J., delivering the unanimous judgment of the Queen's Bench, holding : First. — That it was not true in point of law that the auctioneer is the agent of the purchaser until the acceptance of his bid as being the highest, which acceptance is shown by knocking down the hammer ; and that till then the auctioneer is exclusively the agent of the vendor. Secondly. — That both parties may retract till the hammer is knocked down : that no contract takes place between them till that is done ; and that the auctioneer cannot be bound when both the vendor and bidder remain free. The learned Chief Justice then said in the name of the court : Thirdly. — " We are clear that the bidder has no remedy against the auctioneer, whose authority to accept the offer of the bidder has been determined by the vendor before the hammer has been knocked down." § 720. Although this judgment of the Queen's Bench was not re- versed in the Exchequer Chamber, because approved on the pleadings as they stood, the third proposition above quoted was not affirmed, and the Court of Error gave leave to the plaintiff to amend, so as to enforce a liability against the auctioneer. The Exchequer Chamber, composed of Martin, Bramwell, and Watson, BB., and Willes and Byles, JJ., were unanimous in holding the auctioneer liable, and in giving leave to amend ; but Willes, J., and Bramwell, B., without dissenting from the opinion of the majority, as delivered by Martin, B., preferred putting their judgment on a different ground, on which they felt themselves more clearly justified in their conclusions. Mar- tin, B., first declared that the judgment of the Queen's Bench was right upon the pleadings, but that the Court of Appeal being now vested with power to amend, and the object of the law being to de- (u) The better reading is, qui contra property is not worth what has been reliceatur, " a person to bid back " or offered for it. The reading se licealur is lower than some one has already bid, in condemned by Ziimpt. order to produce the impression that the CHAP. It.] FKAUD. 627 termine the real question in controversy, the power ought to be "largely exercised" for that purpose; and that upon the facts the plaintiff was entitled to recover. § 721. The learned Baron then proceeded as follows: "In a sale by auction there are three parties, namely, the owner of the property to be sold, the auctioneer, and the portion of the public who attend to bid, which of course includes the highest bidder. In this, as in most cases of sales by auction, the owner's name was not disclosed : he was a concealed principal. The names of the auctioneers, of whom the defendant was one, alone were published, and the sale was announced by them to be 'without reserve.' This, according to all the cases both at law and in equity, means that neither the vendor nor any person on his behalf may bid at the auction, and that the property shall be sold to the highest bidder, whether the sum bid be equivalent to the real value or not. For this position, see the case of Thornett v. Haines, 15 M. & W. 367. We cannot distinguish the case of an auctioneer putting up property for sale upon such a condition from the case of the loser of property offering a reward ; or that of a railway company publishing a time-table, stating the times when and the places at which the trains run. It has been decided that the person giving the infor- mation advertised for, or a passenger taking a ticket, may sue as upon a contract with him. Denton v. The Great Northern Railway Com- pany, 5 E. & B. 860, 25 L. J., Q,. B. 129. Upon the same principle it seems to us, that the highest bona fide bidder at an auction may sue the auctioneer as upon a contract that the sale shall be without reserve. We think that the auctioneer who puts property up for sale upon such a condition, pledges himself that the sale shall be without reserve ; or, in other words, contracts that it shall be so, and that this contract is made with the highest bona fide bidder, and in saie'^wlthout case of a breach of it, he has a right of action against the tracts witbuie auctioneer. * * * We entertain no doubt that the fide bidder, owner may at any time before the contract is legally com- become pur- plete, interfere and revoke the auctioneer's authority, but he does so at his peril ; and if the auctioneer has contracted any liabil- ity in consequence of his employment and the subsequent revocation or conduct of the owner, he is entitled to be indemnified." § 722. In reference to the conditions of the sale, the learned Baron further said, as to the first condition, that the owner could not be the Duyer, and the auctioneer ought to have refused his bid, giving for a 628 AVOIDANCE OF THE CONTRACT. [BOOK III. reason, that the sale was without reserve ; and that the court were in- clined to differ with the Queen's Bench, and to consider that the own- er's bid was not a revocation of the auctioneer's authority. The eighth condition was construed as providing simply that if the owner acted contrary to the conditions of the sale, he must pay therusual commis- sions. The court was therefore ready to give judgment for the plain- tiff if he chose to amend his declaration. Willes, J., and Bramwell, B., preferred putting their assent to the judgment on the grounds that the facts furnished strong evidence to show that the auctioneer had received no authority from the owner to advertise a sale " without reserve ;" and that the plaintiff ought to be allowed to amend by adding a count, alleging an undertaking by the auctioneer that he had such authority, and a breach of that under- taking. § 723. It was said at one time that the rule in equity differs from that at common law on the subject of puffers to this ex- Distinction l}e- J L tween law arid tent : that in equity it is allowable to employ one puffer, but equity as to T. ./ i J J. > puffing at auc- n0 more, for the purpose only of preventing the property from being sold below a limit fixed by the vendor. Willes, J., in Green v. Baverstock, (t) however, expressed the opinion that the rule in equity was confined to sales under the order of the court, in conformity with " an inveterate practice." But the existence of any such rule in equity appears to have been still a moot point, even in 1865, as is shown in the opinion of Lord Cranworth in Mortimer v. Bell, (w) By the new act, however, 30 and 31 Vict., c. 48, passed Act 30 and 31 at tne i nstance °f Lord St. Leonards (but applicable ouly vict., c. 48. i sa ] e f i anc i^ it j s provided in the fourth section, that " whereas there is at present a conflict between her Majesty's courts of law and equity in respect of the validity of sales by auction of land where a puffer has bid, although no right of bidding on behalf of the owner was reserved, the courts of law holding that all such sales are absolutely illegal, and the courts of equity under some circumstances giving effect to them, but even in courts of equity the rule is un- settled ; and whereas it is expedient that an end should be put to such conflicting and unsettled opinions : Be it therefore enacted, that from and after the passing of this act, whenever a sale by auction of land would be invalid at law by reason of the employment of a puffer, the same shall be deemed invalid in equity as well as at law." (t) 14 C. B. (N. S.) 204 ; 32 L. J., C. {u) 1 Ch. 10. P. 180. CHAP. II.] FRAUD. 629 § 724. The statute further directs that where land is stated to be sold without reserve, it shall not be lawful for the seller fto bid, or the auctioneer to accept, a bid from him, or any one employed by him ; and where the sale is subject to the right of a seller to bid, it shall be lawful for the seller or any one person in his behalf to bid. (x) The act also forbids the courts of equity from continuing the prac- tice of opening biddings in sales made under their orders ; so that in future the highest bona fide bidder at such sales shall be the purchaser, in the absence of fraud or improper conduct in the management of the sale. In a case (y) just before the passing of this act, it was announced that the sale was " without reserve," and that the parties Dimmo k interested had liberty to bid. It was held by Lords Jus- luxiett - tices Turner and Cairns that on these terms, a purchaser was bound by his bid for £19,000, the only bids higher than £14,000 having been made by the purchaser and a mortgagee in possession of the estate. § 725. In The Queen v. Kenrick, (z) the fraud on the purchaser, for which the defendant was convicted as being guilty of false pretences, was telling the buyer that the horses offered for hoods S J a buyer sale had been the property of a lady deceased, were then MplihSSi^ the property of her sister, and never had been the prop- qualities! and erty of a horse-dealer, and that they were quiet and tract- selling them, able; all these statements being false, and the vendor The Queen ». knowing that nothing but a belief in their truth would induce the buyer to make the purchase. In Dobell v. Stevens, (a) the fraud consisted in falsely telling the buyer that the receipts of a public house were £160 per Falsestate . month, and the quantity of porter sold seven butts per ^ratingrf- month, and that the tap was let for £82 per annum, and puwfe'house. two rooms for £27 per annum, whereby the plaintiff was Dobeii ». induced to buy; and similar deceits were employed in Lysney v. Selby, (6) and Fuller v. Wilson, (c) 49 (x) See Gilliat v. Gilliat, 9 Eq. 60, as to (c) 3 Q. B. 58. the construction of this clause. 49. Cruess v. Fessler, 39 Cal. 336 ; Hale (y) Dimmock v. Hallett, 2 Ch. 21. v. Philbrick,47 Iowa 217 ; Mather ». Eob- (z) 5 Q. B. 49. inson, 47 Iowa 403 ; Nelson v. Wood, 62 (a) 3 B. & C. 623. Ala. 175 ; Crossland v. Hall, 33 N. J. Eq. (6) 2 Lord Raymond 1118. Ill ; Bower v. Fean, 90 Penna. 359. 630 AVOIDANCE OF THE CONTRACT. [BOOK III. § 726. In Schneider v. Heath, (d) a vessel was sold, " hull, masts, yards, standing and running rigging, with all faults, as fauns'" a " tne y now '" e- " There was, however, a false statement, Snceai U de- '° ^at " ^ e ^ u ^ was near 'y as g°°d as when launched," feots. an( j means were taken to conceal the defects that the ven- He h a I tb der "" dor knew to exist - This was ! leld b y Sil * James Mans- Bagiehoie v. &eid to be a fraud on the purchaser ; but in Baglehole v. Walters, (e) Lord Ellenborough was decided in his rejec- tion of the purchaser's attempt to repudiate the sale of a vessel under exactly the same description, " with all faults," where the seller, although knowing the latent defects, used no means for concealing them from the purchaser. In this decision, Lord Ellenborough ex- piokerin v pressly overruled Mellish v. Motteux, (/) and in Picker- Dowson. j n g y _ Dowson, (g) the Common Pleas followed Lord Ellenborough's decision, as one " never questioned at the bar ;" and concurred in overruling Mellish v. Motteux. Baglehole v. Walters was also followed by the King's Bench in de- ciding By water v. Richardson, (A) in 1834. 50 § 727. In Horsfall v. Thomas, (i) the defence to an action on a bill of exchange was that the buyer had been defrauded in Concealing © • / buyer nee™ ^ ie P urcnase °f a steel gun, for which the bill was given. Inspect ^he g un was ma de by defendant's order, and he was in- Horsfaii ». formed when it was ready, but made no examination of Thomas. j^ aQ( j gen j. ^ ^i Q £ exc h arj g e [ Q j )ar t payment. There was a defect in the gun, and a metal plug was inserted, which would have concealed the defect from any person inspecting the gun. It was received by the defendant, fired several times, answered the purpose as (d) 3 Camp. 506. still its character and identity as the arti- («) 3 Camp. 154. cle described." See Henshaw v. Robins, (/) Peake 115. 9 Mete. 83, 90; Gossler v. Eagle Sugar (g) 4 Taunt. 779. Refinery, 103 Mass. 331, 334; Hanson v. (h) 1 Ad. & E. 508. See, also, Freeman Edgerly, 29 X. H. 343, 353. " When a *. Baker, 5 B. & Ad. 797 ; Ward v. Hobbs, vendee takes an article with all faults he 4 App. Cas. 13; S. C, 3 Q. B. D. 150, C. becomes his own insurer, and the seller A., overruling 2 Q. B. D. 331. is relieved from all obligation to disclose 50. Sale with all Faults. — Notwith- any fault ; but he must resort to no trick standing the sale is " with all faults," the or contrivance to conceal the defect or thing sold must answer the description by mislead the purchaser." Pearce i>. Black- which it is sold. In Whitney v. Board- well, 12 lred. L. 49, 61 ; Smith v, An- man, 118 Mass. 242, 247, the phrase is drews, 8 lred. 6. defined to mean " such faults or defects (t) 1 H. & C. 90, and 31 L. J., Ex. 322. as the article sold might have, retaining CHAP. II.] FEATJD. 631 long as it was entire, but afterwards burst in consequence of the defect. Held, that the defendant had not been influenced in his acceptance of the gun by the artifice used, for he had never examined it : that the mere statement by the plaintiffs to the defendant that the gun was ready for him, even if they knew the existence of a defect which would make the gun worthless, and failed to inform him of it, was not a fraud. The learned judge, Bramwell, B., who delivered the judgment of the court, said that "fraud must be committed by the affirmance of some- thing not true within the knowledge of the affirmant, or by the sup- pression of something which is true and which it is the duty of the party to make known." In the case before the court there was no affirmance ; and there was no duty on the part of the maker to point out a defect where the buyer has an opportunity for inspection and does not choose to avail himself of it. (k) This decision is questioned and disapproved by Cockburn, C. 3., in Smith v. Hughes, L. R., 6 Q,. B. 597, and it certainly seems that the artifice used to conceal the defect comes -within the definition usually given of fraud. § 728. The case of Hill v. Gray, (I) decided by Lord Ellenborough at Nisi Prius in 1816, would seem to conflict with the „.,, „ " Hill v. Gray. general rule in relation to concealment. The facts were Saleof that the agent employed by plaintiff to sell a picture was ture - pressed by the defendant to tell him whose property it was: the agent refused. The same agent was at the time selling also pictures for Sir Felix Agar, and the defendant, " misled by circumstances, erroneously supposed" that the picture in question also belonged to Sir Felix Agar, and under this misapprehension bought it. The agent " knew that the defendant labored under this delusion, but did not remove it." The price was £1000, the picture being said to be a Claude, and proof was offered that it was genuine, and that after the defendant knew that it was not one of Sir Felix Agar's pictures he had objected to paying on the ground that it was not genuine, but not on the ground of any deception. Lord Ellenborough said : "Although it was the finest picture that Claude ever painted, it must not be sold under a decep- tion. The agent ought to have cautiously adhered to his original stipu- lation, that he should not communicate the name of the proprietor, and not to have let in a suspicion on the part of the purchaser which he (h) See Keates v. Earl Cadogan, 10 C. v. Gray, 1 Stark 434. B. 591, and 20 L. J., C. P. 76; also, Hill {I) 1 Stark. 434. 632 AVOIDANCE OF THE CONTRACT. [BOOK III. knew enhanced the price. He saw that the defendant had fallen into a delusion in supposing the picture to be Sir Felix Agar's, and yet he did not remove it. * * * This case has arrived at its termination, since it appears that the purchaser labored under a deception, in which the agent permitted him to remain, on a point which he thought mate- rial to influence his judgment." This judgment; on a first perusal, seems certainly not reconcilable with the received principles on the subject, but in Keates v. Earl Cadogan, (n) the case was explained by the Common Pleas by construing the language of Lord Ellenborough in the italicized passages as intimating that there " had been a positive aggressive deceit." It is, indeed, quite possible that it was the act of the agent in putting the picture with those of Sir Felix Agar that created the belief, which the agent perceived, and did not remove. § 729. In the earlier case of Jones v. Bowden, (o) an action upon the case for deceit in a sale was maintained under the Jones t>. Bow- den - following circumstances : The defendant bought pimento where usage at an auction sale, as sea-damaged. It is usual in such age to be de- sales of this article to declare it to be sea-damaqed, and olared. .... . n ' when nothing is said, it is supposed to be sound. De- fendant then repacked it, and it was included in a catalogue of the auction sale, as " 187 bags pimento, bonded," and at the foot was stated, " the goods to be seen as specified in the catalogue, and re- mainder at No. 36, Camomile street." Defendant drew fair samples, which were exhibited to the bidders, by which the article appeared to be dusty, and of inferior quality ; but no one could tell from the samples that the goods had been sea-damaged or repacked, either of which facts depreciates the value in the market. The catalogues were not distributed till the day before the sale, and no one had inspected the goods. The auctioneer made no addition nor comment on what was stated in the catalogue, and the plaintiff became the purchaser at 13d. per pound, which was not more than a reasonable price, after taking into consideration the fact that it had been sea-damaged and repacked. The jury said : " That the state of the goods ought to have been com- municated by the defendant to the plaintiff," and found a verdict for him, subject to the point whether the action was maintainable. A rule (m) 10 C. E. 591, at p. 600 ; 20 L. J., attributes the explanation to the anxiety C. P. 76. And see per Lord Chelmsford of the court to reconcile the case with in Peek v. Gurney, L. E , 6 H. L., at p. established principles. 390, who doubts whether the mere silence (o) 4 Taunt. 847. of the agent could be so interpreted, but CHAP. II. J FRAUD. 633 to set aside the verdict was discharged. The grounds are not very intelligibly given, but it may be fairly inferred from the language of Mansfield, C. J., that he considered the verdict of the jury as estab- lishing a usage which imposed on the vendor the duty of disclosing the defect, thus bringing the case within the general principle stated by Bramwell, J., in Horsfall v. Thomas, (q) § 730. In Smith v. Hughes, (r) the action was by the plaintiff, a farmer, to recover the price of certain oats sold to the de- Smith „ fendant, an owner and trainer of race-horses. The plain- Hu « hes - tiff's account of the transaction was that he took a sample of the oats to the defendant and asked if he wished to buy oats, to which the latter answered, " I am always a buyer of good oats." The plaintiff asked thirty-five shillings a quarter, and left the sample with the defendant, who was to give an answer next day. The defendant wrote to say he would take the oats at thirty-four shillings a quarter, and they were sent to him by the plaintiff. But the defendant's account was that, to the plaintiff's question he answered, " I am always a buyer of good ola oats : " and that the plaintiff then said, " I have some good old oats for sale." There was no difference of testimony as to the other facts ; and it was further sworn by the defendant that as soon as he discovered that the oats were new, he sent them back : that trainers use old oats for their horses, and never buy new when they can get old. There was also evidence to the effect that thirty-four shillings a quarter was a very high price for new oats, more than a prudent business man would have given, and that old oats were then very scarce. § 731. The judge told the jury that the question was whether the word " old " had been used in the bargain as stated by the defendant, and if so the verdict must be for him ; but if they thought the word " old " had not been used, then the second question would be " whether the plaintiff believed the defendant to believe or to be under the im- pression that he was contracting for the purchase of old oats." If so, the verdict would also be for the defendant. The jury found for the defendant. The question for the Queen's Bench was whether the second direction to the jury was right, for they had not answered the questions separately, and it was not possible to say on which of the two grounds they had based their verdict. In testing the second question (?) 1 H. & C. 90 ; 31 L. J., Ex. 322. of Laidlaw v. Organ, 2 Wheat. 178, hefore See, also, Parkinson v. Lee, 2 East 314. the Supreme Court of the United States. ()•) L. B., 6 Q. B. 597 ; and see the case 634 AVOIDANCE OF THE CONTRACT. [BOOK III it was plainly necessary to assume that the word "old" had not been used, and on that assumption the court ordered a new trial. Cockburn, C. J., said, that assuming the vendor to know that the buyer believed the oats to be old oats, but that he had done nothing directly or indirectly to bring about that belief, but simply offered his oats and exhibited his sample, the passive acquiescence of the vendor in the self-deception of the buyer did not entitle the latter to rescind the sale. Blackburn, J., concurred, saying that " whatever may be the case in a court of morals, there is no legal obligation on the vendor to inform the purchaser that he is under a mistake, not induced by the act of the vendor." The learned judge further doubted whether the jury had been made to understand the difference between agreeing to take the oats under the belief that they were old (for in that case there would be no defence), and agreeing to take the oats under the belief that the plaintiff contracted that they were old, for in this case the parties would not be ad idem as to their bargain, and there would therefore be no contract. Hannen, J., also thought that the second question was probably misunderstood by the jury, and concurred with Blackburn, J., in the distinction above pointed out. He said, .that to justify a verdict for the defendant it was not enough for the jury to find that " the plaintiff believed the defendant to believe that he was buying old oats," but that what was necessary was, to find that " the plaintiff believed that the defendant believed that the plaintiff was contracting to sell old oats." § 732. In the following very exceptional case, where the fraud of coi- * ne ven dor was committed not on the buyer, but by collu- ^ndor'and 66 " s i° n w ' t ^ 1 ^' ie buyer against another person, the vendor twrd'person 9 - 1 was u °t permitted to recover against the buyer, vlntedfvomre- In Jackson v. Duchaise, (s) the facts were that the agafS'buyer. plaintiff sold the goods in a house to the defendant for Jackson e. £100, but she could not raise the money ; she applied to one Walsh, to aid her in the purchase, and he at her re- quest agreed to buy them from the plaintiff for £70, which he did, taking a bill of sale to himself. By agreement between the plaintiff and the defendant, she was to pay the deficiency of £30 to him, in two notes, of £15 each, and this was concealed from Walsh. On action brought by plaintiff on one of the two notes, Lord Kenyon, at Nisi (s) 3 T. E. 551. CHAP. II. j FRAUD. 635 Prius, and the court in banc afterwards, held the transaction to be a fraud on Walsh, and that plaintiff could not recover. The principle was the. same as that on which secret agreements to give one creditor an advantage over others as an inducement to sign a composition in insolvency, are held fraudulent and void, (f) In the Supreme Court of the State of Vermont it was held to be fraudulent in a vendor to sell a horse having an internal malady of a secret and fatal character, not apparent by inthe superior any external indications, but known to the seller, and mont— of fraud known by him to be unknown to the buyer, if the malady was such as to render the horse of no value, (u) 51 (t) Dalgleish v. Tennent, L. E., 2 Q. B. 49. (u) Paddock v. Strobridge, 29 Vt. 470. 51. Concealment may be Fraudu- lent.— See ante \ 640, notes 6, 7 ; § 641, noles 8, 9, and \ 668, note 24; Bank of United States v. Lee, 13 Pet. 107, 119 ; Cornelius v. Molloy, 7 Penna. 293, 299 ; Hanks v. McKee, 2 Litt. 227. In Krumb- haar v. Birch, 83 Penna. 426, 428, Mer- eur, J., said : " It needs no citation of authorities to prove that the willful mis- representation or concealment of a ma- terial fact by the vendor constitutes a fraud." This was followed in Croyle v. Moses, 90 Penna. 250, where the same judge added that misrepresentations might be by art or artifice as well as by statements. In Maynard v. Maynard, 49 Vt. 297, the principle of Paddock v. Stro- bridge, stated in the text, was followed. The seller of a bull did not disclose his knowledge that the bull was impotent, though he knew that the buyer designed him for breeding purposes. This con- cealment was held actionable fraud. In the same state, in the case of Paddock v. Strobridge, 20 Vt. 470, 483, a horse sold was worthless because he had a secret disease, and the failure to disclose it was held fraudulent. Redfield, C. J., said: " There is no positive duty on the vendor to disclose secret defects, but if he conceal them even by silence, when he knows that the other party has fallen into a delusion in regard to them, this is equivalent to a false representation or the use of art to disguise the defects." Carpenter v. Phil- lips, 2 Houst. 524. See Hanson v. Edgerly, 29 N. H. 343, 359. In Gough v. Dennis, Hill & D. 55, the vendor offered a note of a broken bank for sale, and said that a certain broker had offered a certain price for it, but concealed the fact that three other brokers had refused it. This concealment was held fraudu- lent. See Prentiss v. Euss, 16 Me. 30. And in Patterson v. Kirkland, 34 Miss. 423, 431, the court said : " If defendant [the seller] made representations as to soundness, he was bound to state all he knew on the subject." See At wood v. Chapman, 68 Me. 34, 40 ; Blydenburgh v. Welsh, Baldw. 331. In contrast with the Vermont decisions above stated is the case of Beninger v. Corwin, 24 N. J. L. 257, 264, where a horse apparently sound was wind-broken. Ogden, J., said : " The seller may know of defects in his goods, and yet if he makes no false representa- tions, employs no artifice to conceal them, is guilty of no positive deceit, and leaves the buyer to exercise his own judgment, skill and experience upon the qualities of the subject of sale, whatever ought to be the effect upon the transaction, on moral grounds, of such silence, he is not, accord- ing to the cases, guilty of legal active fraud." This accords with the weight of authority. But any artifice to conceal is 636 AVOIDANCE OP THE CONTRACT. [BOOK III. SECTION IV.— FRAUD ON CREDITORS STATUTE OF ELIZABETH. § 733. Sales made by debtors in fraud of creditors are usually con- statute of sidered as being governed by the statute 13 Eliz., c. 5, Elizabeth. an( j ^ e (3 ec [ s ; 0I j S mac ] e under it; but other statutes had been previously passed on the same subject, and in Cadogan v. Kennett, (x) Lord Mansfield said that " the principles and rules of the common law, as now universally known and understood, are so strong against fraud in every shape, that the common law would have at- tained every end proposed by the statutes, 13 Eliz., c. 5, and 27 Eliz., c. 4. The former of these statutes relates to creditors only : the latter to purchasers. These statutes cannot receive too liberal a construction, or be too much extended in suppression of fraud." 52 The 13 Eliz., c. 5, was intended "for the avoiding and abolishing of feigned, covinous, and fraudulent feoffments, gifts, grants, aliena- tions, &c, &c, as well of lands and tenements, as of goods and chat- tels * * * devised and contrived of malice, fraud, covin, collu- sion, or guile, to the end, purpose, and intent to delay, hinder, or de- fraud creditors * * * to the overthrow of all true and plain dealing, bargaining, and chevisance between man and man, without the which no commonwealth or civil society can be maintained or con- tinued." The statute, therefore, provides that all alienations, bargains, and conveyances of lands and tenements, or goods and chattels, made for any such intent and purpose as is above expressed, shall be " deemed and taken, (only against that person or persons, his or their heirs, suc- cessors, executors, administrators, and assigns, and every of them whose actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries and reliefs, by such guileful, covinous, or fraudu- lent devices and practices as is aforesaid, are, shall, or might be in anywise disturbed, hindered, delayed, or defrauded,) to be clearly and utterly void, frustrate, and of none effect." This statute was con- firmed by 14 Eliz., c. 11, § 1, and made perpetual by 29 Eliz., c. 5, § fraudulent, and so where a horse had been of the states determining the effect of the drugged at the time of the sale to conceal retention of possession by the seller after the disease, the sale was held voidable, the sale. In some states such continued Cassell k Herron, 5 Clark 250. See ante possession renders the sale void as to $ 641, nnte 9. third persons. In others it is made prima (x) Cowp. 432. facie void, and good faith may be shown. 52. Statutes have been passed in many See post notes 58, 60. CHAP. II.] FRAUD. 637 2. And it seems that it protects against fraudulent sales, tiS&ture subsequent creditors, as well as those having claims at the oreditors - date of the fraudulent conveyance, (y) 53 (y) Graham v. Furber, 14 C. B. 410, and 23 L. J., C. P. 51. It is now settled that subsequent creditors may, under cer- tain circumstances, maintain an action to set aside a fraudulent conveyance, and are in any case entitled to share in the benefit of proceedings taken by creditors having claims at the date of the convey- ance. The cases are collected in Robson on Bankruptcy, p. 153 (ed. 1881.) 53. Persons having Actions for Tort against the Seller, are his Creditors within this Statute. — Scott v. Hartman, 26 N. J. Eq. 89 ; Corder *. Williams, 40 Iowa 582 ; Cooke v. Cooke, 43 Md. 522, 531 ; Gebhart v. Merfeld, 51 Md. 322, 325. Subsequent Creditors. — Some authori- ties hold that a transfer fraudulent as to existing creditors, may be avoided by sub- sequent creditors. All agree that if not fraudulent as to existing creditors, subse- quent creditors can avoid it only by show- ing, that it was made with a view to incurring liabilities, or embarking in a hazardous business, which gives rise to their debts. Thacher v. Phinney, 7 Allen 146 ; Winchester v. Charter, 12 Allen 606, 609 ; Wadsworth v. Williams, 100 Mass. 126, 130 ; Day v. Cooley, 118 Mass. 524, 527 ; Dodd r. Adams, 125 Mass. 398 ; Car- penter v. Carpenter, 25 N. J. Eq. 194; Kirksey r. Snedecor, 60 Ala. 192 ; Sexton e. Wheat on, 8 Wheat. 229 ; Mattingly v. Xye, S Wall. 370; Smith r. Hodges, 92 U. S. 183 ; Graham r. Railroad Co., 102 V. S. 148, 153 ; 1 Am. Lead. Cas. 1. Most of the cases hold that, even where the transfer is fraudulent as to existing cred- itors, to enable a subsequent creditor to set it aside, there must be special circum- stances, such as continued possession by the debtor, whereby he obtained the credit, or the fact that the transfer was made on the eve of starting in a hazard- ous business. The rule is said to be that a transfer is void only as against those it was intended to defraud, and that subse- quent creditors cannot, ordinarily, come within that description. Harlan o. Ma- glaughlin, 90 Penna. 293, 297 ; Monroe v. Smith, 79 Penna. 459 ; Snyder v. Christ, 39 Penna. 499, 506 ; Shand v. Hanley, 71 N. Y. 319 ; Arrowsmith v. O'Sullivan, 44 K Y. Super. Ct. 573 ; Mullen v. Wilson, 44 Penna. 413 ; Dorley v. McKiernan, 62 Ala. 34; Lloyd v. Bunce, 41 Iowa 660; Sanders v. Chandler, 26 Minn. 273 ; Lehm- berg v. Biberstein, 51 Tex. 457. Is a Voluntary Transfer Conclu- sively Fraudulent as to Existing Cred- itors ? — In some of the states this is an- swered in the affirmative, and if debts, existing at the time of a gift or voluntary transfer of the debtor's property, remain unpaid, the creditors may avoid such gift or transfer, although the donor may have reserved ample property to pay all his debts. "A volunteer takes subject to the risk, not of the grantor having other property sufficient to pay his then exist- ing debts, but of his paying those debts." Per Van Koughnet, C, in Irwin v. Free- man, 13 Grant Ch. (Ont.) 465, 470; Has- ton v. Castner, 31 N. J. Eq. 697 ; Kirksey v. Snedecor, 60 Ala. 192, 197 ; Choteau v. Jones, 11 111. 300, 318 ; Hatfield v. Merod, 82 111. -113 ; 1 Am. Lead. Cas. 39, [37.] But the general rule is that whether a. gift of property is fraudulent or not is a question of fact ; and if the donor re- serves sufficient property to pay his debts, and no actual intent to defraud creditors appears, the gift will be sustained, though ' the donor becomes insolvent before he had paid the debts existing at the time of the gift. See Salmon v. Bennett, 1 Conn. 525; S. C, 1 Am. Lead. Cas. 32, and notes; Merrell v. Johnson, 96 111. 638 AVOIDANCE OF THE CONTRACT. [BOOK III. § 734. In Twyne's case, (2) the celebrated leading case on this subject, the debtor had made a secret conveyance to Twyne by gen- Twyne's case. eral deed of all his goods and chattels, worth £300, in satisfaction of a debt of £400, pending an action brought by another creditor for a debt of £200. The debtor continued in possession of the goods, and sold some of them, and shore the sheep and marked them with his own mark. The second creditor took the goods in execution, but Twyne resisted the sheriff, and Coke, the queen's attorney-general, thereupon filed an information against him in the Star Chamber. The learned author says, in his report, that " In this case, divers points were resolved : " 1. That this gift had the signs and marks of fraud, because the gift is general without exception of his apparel, or of anything of necessity, for it is commonly said, quod dolosvs versatur in generalibus. " 2. The donor continued in possession, and used them as his own ; and by reason thereof he traded and trafficked with others, and de- frauded and deceived them. " 3. It was made in secret, et dona clandestina sunt semper sus- piciosa. 54 " 4. It was made pending the writ. " 5. Here was a trust between the parties, for the donor possessed all, and used them as his proper goods, and fraud is always appareled and clad with a trust, and trust is the cover of fraud. 55 " 6. The deed contains that the gift was made honestly, truly, and bona fide; et elausulce inconsuetce semper induount suspicionem. 56 § 735. " Secondly, it was resolved that notwithstanding here was a true debt due to Twyne, and a good consideration of the gift, * * * yet it is not bona fide, for no gift shall be deemed to be bona fide * * * which is accompanied with any trust." Lord Coke there- fore advises : " Reader, when any gift shall be made to you in satis- faction of a debt, by one who is indebted to others also: 1. Let it be made in a public manner, and before the neighbors, and not in private, 224, 230 ; Patterson v. McKinstry, 97 111. Haydock v. Coope, 53 N. Y. 68, 73 ; Sims 41 ; Pratt v. Curtis, 2 Low. Dec. 87 ; v. Gaines, 64 Ala. 392 ; Henry v. Hinman, Holden v. Burnham, 63 N. Y. 74; Smith 25 Minn. 199; Tupper v. Thompson, 26 1. Vodges, 92 U. S. 183. Minn. 385. See New Hampshire cases, (2) 3 Coke 80; 1 Sm. L. C. 1. cited post note 60. 54. Blennerhasset v. Sherman, 105 U.S. 56. Baldwin v. Whitcomb, 71 Mo. 651, 100, 115-117. 659. 55. Bentz r. Kockey, 69 Penna. 71, 77 ; CHAP. II ] FRAUD. 639 for secrecy is a mark of fraud. 2. Let the goods and chattels be ap- praised by good people to the very value, and take a gift in particular in satisfaction of your debt. 3. Immediately after the gifts, take the possession of them, for continuance of possession in the donor is the sign of trust. * * * " And because fraud and deceit abound in these days more than in former times, it was resolved in this case by the whole court, that all statutes made against frauds should be liberally and beneficially ex- founded to suppress the fraud : ' Quseritur, ut crescunt tot ■magna volumdna legis In promptu causa est, crescit in orbe dolus. 1 " § 736. In the application of the statute, a question of fact for the iury is constantly presented ; namely, whether the transfer J J J L J t Conveyance of the goods was bona fide, or fraudulent, that is, " with fraudulent or ° J ' ' ' not, queation the end, purpose, and intent to delay, hinder, or defraud offaet for jury, creditors," as the act expresses it. It was, indeed, held in Edwards v. some early cases, of which the leading one is Edwards v. Harben, (a) that under certain circumstances this was a question of law for the court. The decision was given in that case by Buller, J., who said : " This has been argued by the defendant's counsel as being a case in which the want of possession is only evidence of fraud, and that it was not such a circumstance per se as makes the transaction fraudulent in point of law : that is the point which we have considered, and we are all of opinion that if there be nothing but the absolute convey- ance without the possession, that, in point of law, is fraudulent." (6) As this case does not appear ever to have been overruled, (cj though fre- quently mentioned unfavorably, it may be assumed that the law would be held to be the same at the present time ; but it is to be observed that, in the guarded form in which the principle is announced, a case could scarcely arise in which it would be applicable, for it is difficult to suppose that an action would be tried where nothing would be shown beyond a bare conveyance without possession : where something of the relations of the parties, and the circumstances of their dealings, would not appear. Apart from this very exceptional case, the authorities are (a) 2 T. E. 587, and see post \ 740. rence, J., in Steel v. Brown, 1 Taunt. 382 : (6) See, also, Paget v. Perchard, 1 Esp. see, however, the remarks of Lefroy, C. J., 205; Martin v. Perchard, 2 W. Bl. 702. in the Irish case of Macdona v. Swiney, (c) It was said to be good law by Law- 8 Ir. C. L. E. 73, at pp. 84-86. <340 AVOIDANCE OF THE CONTRACT. [BOOK III. all in accordance in treating the question of Fraus vel non, as one of fact for the jury, even where the vendor remains in possession. § 737. In Latimer v. Batson, (d) an execution had been levied on Latimer v. Bat- tne household furniture, wine, &c, of the Duke of Marl- eon ' borough at Blenheim, and an officer remained in posses- sion some time, and then executed a bill of sale to the execution credi- tor, but the duke prevailed on the latter to leave him in possession. The execution creditor afterwards sold the goods to the plaintiff Lati- mer for £700, and the plaintiff put a man-servant into the house. The duke also remained there, and used the goods, as if no execution had been put in ; but the execution was known in the neighborhood. The goods were then seized by a second creditor, and carried away. On these facts, Jervis contended that the judge ought to have directed the jury that if they thought the duke remained in possession, the sale was void, citing Wardall v. Smith, (e) where Lord Ellenborough said that " to defeat an execution by a bill of sale there must appear to have been a bona fide substantial change of possession. It is a mere mockery to put in another person to take possession jointly with the former owner of the goods. A concurrent possession with the assignor is colorable. There must be an exclusive possession under the assign- ment, or it is fraudulent and void as against creditors." But the court refused a new trial, affirming the propriety of the judge's charge, he having told the jury that if they thought the sale to the plaintiff was bona fide, and the purchase money really paid by him, he was entitled to a verdict; but if the purchase money was really paid by the duke, and the sale to the plaintiff colorable, they should find for defendant. Bayley, J., also held, in conformity with Leonard v. Baker, (/) Wat- kins v. Birch, (g) and Jezeph v. Ingram, (h) that " if goods seized under an execution are bona fide sold, and the buyer suffers the debtor to con- tinue in possession of the goods, still they are protected against subsequent executions, if the circumstances under which he has the possession are known in the neighborhood." 57 § 738. In Martindale v. Booth, (i) all the judges were of opinion (d) 4 B. & C. 652. as to third persons, an exception is made (e) 1 Camp. 332. in the case of official sales under execu- (/) 1 M. & !S. 251. tion. Leaving the property in possession (g) 4 Taunt. 823. of the judgment debtor raises no presump- (h) 8 Taunt. 838. tion of fraud. Walter v. Gernant, 13 57. In Pennsylvania, though in general Penna. 515; Craig's Appeal, 77 Penna. leaving the property sold in possession of 44-8 ; Maynes r. Atwater, 88 Penna. 496. the seller is conclusive evidence of fraud (i) 3 B. & Ad. 498. CHAP. II.] FRAUD. 641 that the continuance of possession in the vendor is not, of Martindale „ itself, sufficient to render void a sale of goods as fraudu- Booth - lent, especially where the possession is consistent with the deed which provides only for the future entry into possession by the purchaser, conditioned on the vendor's default; and in addition to the numerous cases there cited, those in the note (k) sufficiently establish the propo- sition that the continued possession by the vendor of goods sold, is a fact to be considered by the jury as evidence of fraud, and is not in law a fraud per se. 58 (k) Lady Arundel v. Phipps, 10 Ves., Jr., 145 ; per Buller, J., in Hazelington v. Gill, 3 T. R. 620, note a ; Linden v. Sharp, 6 M. & G. 895-898 ; Pennell v. Dawson, 18 C. B. 355. 58. Possession Retained by the Sel- ler is Evidence of Fraud, but is not Fraud. — This is the doctrine sustained by most of the recent American author- ities, in the absence of controlling stat- utes. In the United States Supreme Court the case of Hamilton v. Russell, 1 Cranch 310, where possession in the seller was adjudged to be fraud, was substan- tially (though not expressly) overruled in Warner v. Norton, 20 How. 448, 460. McLean, J., said : " For many years past the tendency has been, in England and in the United btates, to consider the ques- tion of fraud as a fact for the jury, under the instruction of the court. Where pos- session of goods does not accompany the deed, it is prima facie fraudulent, but open to the circumstances of the transaction which may prove an innocent purpose." And a charge of the court below to that effect was held correct. See Robinson o. Elliott, 22 Wall. 513, 523. The follow- ing cases sustain this view. Those in support of the opposite doctrine are stated post note 60. Rhode Island. — Anthony?). Wheatons, 7 R. I. 490, 498 ; Sarle v. Arnold, 7 R. I. 582, 587. New York. — The earlier cases in New York followed Edwards v. Harben and Hamilton v, Russell, 1 Cranch 309. See 2 Sturtevant v. Ballard, 9 Johns. 337, per Kent, C. J., (1812.) But the modern English doctrine was followed in Bissell v. Hopkins, 3 Cowen 166, 188, where a full discussion of the subject by the re- porter will be found. Subsequently a statute was passed which the Supreme Court held to restore the rule of Edwards v. Harben ; Beekman v. Bond, 19 Wend. 444 ; Randall v. Cook, 17 Wend. 56. But the Court of Errors and Appeals over- ruled these decisions in Smith v. Acker, 23 Wend. 653, (1840.) The question dis- cussed was under the New York statute of frauds, but as interpreted by the last case (p. 676) the statute only declared the law previously existing, without settling the question in dispute. This decision led to a spirited conflict between the Court of Errors and Appeals and the Su- preme Court, the latter then composed of eminent jurists. The opinions in Smith v. Acker were keenly criticised in Butler v. Van Wyck, 1 Hill 438, 450, (1841), which was in turn criticised with unusual warmth by some of the senators in the higher court, in Hanford v. Artcher, 4 Hill 271, (1842.) It was determined in the last-mentioned case that where the seller retains possession, evidence of good faith will rebut the presumption of fraud that arises from non-delivery. This was approved in Michell v. West, 55 N. Y. 107, (1873), where the court said that if the sale was shown to be bona fide, it was not necessary to offer any excuse for per- mitting possession to remain in the ven 642 AVOIDANCE OF THE CONTRACT. [BOOK III. dor. The rule now is that possession re- tained by the seller raises a presumption of fraud, that it may be rebutted by pioof of good faith, and that when any evidence in rebuttal is offered, the validity of the transaction is a question for the jury. Blaut v. Gabler, 77 N. Y. 461 ; May v. "Walter, 56 N. Y. 8 ; Tison v. Terwilliger, 56 N. Y. 273 ; Van Buskirk v. Warren, 4 Abb. (N. Y.) App. Dec. 457 ; Tate v. McCormick, 23 Hun 218 ; Betz v. Connor, 7 Daly 550 ; Schoonmaker v. Vervalen, 9 Hun 138; Hollacker v. O'Brien, 5 Hun 277. New Jersey. — Here Edwards v. Har- ben was approved by a dictum in Chumar v, "Wood, 6 N. J. L. 155, but this was overruled, and the rule declared " that possession in the vendor is prima facie evidence of fraud, but may be explained." Miller v. Pancoast, 29 N. J. L. 250 ; Hall ■u. Snowhill, 14 N. J. L. 8 ; Eunyon v. Groshon, 12 N. J. Eq. 86. Virginia. — In this state, also, possession in the seller was formerly held to be con- clusive evidence of fraud as to his credit- ors. These decisions were overruled in Davisu. Turner 4 Gratt. 422, (1848), which is now the law of that state. Forkner v. Stewart, 6 Gratt. 197 ; Dance v. Seaman, 11 Gratt. 778 ; Sipe v. Earman, 26 Gratt. 563, (1875) ; Bait. & O. E. E. v. Glenn, 28 Md. 287, 324, applying Virginia law. North Carolina. — Eea v. Alexander, 5 Ired. L. 644 ; Boone v. Hardie, 83 N. C. 470. South Carolina. — Terry v. Belcher, 1 Bailey 568 ; Smith v. Henry, 2 Bailey 118. But a transfer to pay a debt will be void unless possession is given. Fulmore v. Burrows, 2 Eich. Eq. 96. Georgia. — Peck v. Land, 2 Kelly 1 ; Carter v. Stanfield, 8 Ga. 49 ; Collins v. Taggart, 57 Ga. 355. Alabama — Mayer v. Clark, 40 Ala. 259, 269 ; Crawford v. Kirksey, 50 Ala. 590, 598 ; Same case, 55 Ala. 282, 285. Mississippi. — Comstock v. Eayford, 12 Sm. & M. 369 ; Carter o. Graves, 6 How. (Miss.) 9 ; Eankin v. Holloway, 3 Sm. & M. 614 ; Summers v. Eoas, 42 Miss. 749 ; Hilliard v. Cagle, 46 Miss. 309. Louisiana. — Spivey v. Wilson, 31 La. Ann. 653 ; Devonshire v. Gathreaux, 32 La. Ann. 1132; Eichardson v. Cramer, 28 La. Ann. 357. Texas.— Gibson v. Hill, 21 Tex. 225 ; Green v. Banks, 24 Tex. 508; Kerr v. Hutchins, 46 Tex. 384 ; Scott v. Alford, 53 Tex. 82, 92. Arkansas. — Hempstead v. Johnston, 18 Ark. 123, 134; George v. Norris, 23 Ark. 121, 128. Tennessee. — Young ;;. Pate, 4 Yerg. 164; Maney v. Killough, 7 Yerg. 443; Darwin v. Handley, 3 Yerg. 502 ; Gait v. Dibrell, 10 Yerg. 146 ; Tennessee National Bank v. Ebbert, 9 Heisk. 153. Ohio. — Eogers v. Dare, Wright 136 ; Burbridge v. Seeley, Wright 359 ; Horn- beck v. Vanmetre, 9 Ohio 153 ; Collins v. Meyers, 16 Ohio 547, 552. Indiana. — Nutter v. Harris, 9 Ind. 88 ; Kane v. Drake, 27 Ind. 29 ; Eose v. Col- ter, 76 Ind. 590. In this case Elliott, C. J., said : " It is firmly established tha* under a statute, fraud is a question ot fact." Cites Leasure v. Coburn, 57 Ind. 274 ; Bentley v. Dunkle, 57 Ind. 374. Michigan. — Molitor v. Eobinson, 40 Mich. 200 ; Webster *. Bailey, 40 Mich. 641 ; Carpenter v. Graham, 42 Mich. 191 ; Webster v. Anderson, 42 Mich. 554 ; Mc- Laughlin v. Lange, 42 Mich. 81. Wisconsin. — Sterling v. Eipley, 3 Chand. 166 ; Whitney v. Brunette, 3 Wis. 621 ; Smith v. Welch, 10 Wis. 91; Bullis v. Borden, 21 Wis. 135; Williams v. Por- ter, 41 Wis. 422. Minnesota. — Vose v. Stickney, 19 Minn. 367, 369. Kansas. — Phillips v. Eietz, 16 Kan. 396, 400. Nebraska. — Eobison v. Uhl, 6 Neb. 328; Morgan v. Bogue, 7 Neb. 429; Densmore v. Tower, 11 Neb. 118 ; Miller v. Morgan, 11 Neb. 121. Oregon. — Moore v. Floyd, 4 Oreg. 101 ; McCully v. Swackhamer, 6 Oreg. 438. But Possession Coupled with the CHAP. II. J FRAUD. 643 That the notoriety of the sale is a strong circumstance to rebut the presumption of fraud even where the vendor retains posses- Notoriety f sion, is shown by the cases quoted in the above opinion, p"^m P t!on ts delivered by Bayley, J., in Latimer v. Batson, to which offraud - may be added Kidd v. Rawlinson, (Q Cole v. Davies (m) [and Macdona v. Swiney. (n) ] In Hale v. Metropolitan Omnibus Company, (o) Vice-Chancel lor Kindersley expressed the modern doctrine in these terms : " It was at one time attempted to lay down rules that par- T °ie. ei Every ticular things were indelible badges of fraud, but in truth itsowndrcum- t . stances. every case must stand upon its own tooting, and the court or the jury must consider whether, having regard to all the circum- stances, the transaction was a fair one, and intended to pass the prop- erty for a valuable consideration." § 739. It is well settled that the mere intention to defeat the exe- cution of a creditor will not avoid a sale as fraudulent, if it be made bona fide for a valuable consideration, (p) defeat execu- JSbr is it a fraud to mortgage personal property for money actually lent to the mortgagor, even though the mortgagor's intention may be thus to defeat the expected execution of a judg- ment creditor ; (q) nor to confess a judgment in favor of j U dgmeX° , . , « . . p.. . . P -with intent to one creditor tor the purpose ot giving him a preterence give prefer- over another who is on the eve of issuing execution on a judgment previously obtained. (r)59 Power to Sell Goods Retained by 4 N. Y. 501 ; Edgell v. Hart, 9 N. Y. 2, 6 ; the Seller, Constitute Fraud.— Eob- Russell v. Winne, 37 N. Y. 591, 595; inson v. Elliott, 22 Wall. 513, 524 ; Tennessee Bank v. Ebbert, 9 Heisk. 153, Southard v. Benner, 72 N. Y. 424 ; Free- 159 ; Collins v. Meyers, 16 Ohio 547. man v. Eawson, 5 Ohio St. 1 ; Barnet v. (I) 2 Bos. & P. 59. Fergus, 51 111. 58 ; Harmon v. Hoskins, (m) 1 Ld. Raym. 724. 56 Miss. 142 ; Joseph v. Levi, 58 Miss. (») 8 Ir. C. L. E. 73. 843. If, however, the seller in possession (o) 30 L. J., Ch. 777. sells the goods as agent and for the bene- ( p) Wood v. Dixie, 7 Q. B. 892 ; Riches fit of the buyer, the transaction will be v. Evans, 9 C. & P. 640 ; Hale v. Metro- valid. Goodheart v. Johnson, 88 111. 58. politan Omnibus Co., 30 L. J., Ch. 777. And the question of fraud in every such (5) Darvill v. Terry, 6 H. & N. 807 case is one of fact. Scott v. Alford, 53 and 30 L. J., Ex. 355. Tex. 82, 95 ; Weber v. Armstrong, 70 Mo. (r) Holbird v. Anderson, 5 T. R. 235 217; Hewsonu. Tootle, 72 Mo. 632; Brett 59. An Insolvent Debtor May Sell v. Carter, 2 Low. Dec. 458 ; Hughes v. His Property. — Otherwise he would not Cory, 20 Iowa 399 ; Gay v. Bidwell, 7 be able to apply his property to pay his Mich. 519 ; contra, Griswold 1. Sheldon, debts. " If the transaction be an honest 644 AVOIDANCE OF THE CONTRACT. [BOOK III. § 740. In America, it is somewhat remarkable that the ruling of the King's Bench, in Edwards v. Harben, (s) has not only been followed to its full extent, but the doctrine has been pushed even beyond the principle there established. 60 Chancellor Kent erroneously supposes the English law to Decisions in America. Edwards v. Harben fol- lowed. one, in good faith and for an adequate consideration, it matters not how many creditors may be thereby prevented from reaching the property.'' Miller v. Kirby, 74 111. 242, 246; Wood ,. Shaw, 29 111. 444 ; Bowden v. Bowden, 75 111. 143, 147 ; Erb v. Cole, 31 Ark. 554. An Innocent Purchaser is Protected. — An innocent purchaser from one who sells with intent to defraud his creditors stands on the same footing with one who has purchased property to which the seller has obtained title by fraud. See ante § 649, note 15; FarrelH'. Colwell, 30 N. J. L. 123 ; Atwood v. Impson, 20 N. J. Eq. 150, 155; Scott v. Heilager, 14 Penna. 238 ; Kellogg o. Aherin, 48 Iowa 299 ; Massie v. Enyart, 32 Ark. 251. Preferences. — The general rule is thus stated in York County Bank v. Carter, 38 Penna. 446, 453 : " An insolvent creditor may prefer one creditor to another either by judgment or deed, in any mode except by an assignment in tru^t. The effect of such preference may be to delay a credi- tor not preferred, in fact to prevent his obtaining payment at all ; but if the motive, the honest intent, was to pay the pre- ferred debt, the transaction is not in- validated by the statute of 13 Eliz." See Gans v. Renshaw, 2 Penna. St. 36; Covan- hovan v. Hart, 21 Penna. 495 ; Marbury v. Brooks, 7 Wheat. 556 ; S. C, 11 Wheat. 78; Tompkins v. Wheeler, 16 Pet. 118. "The debtor may prefer one creditor, pay him fully, and exhaust his whole prop- erty, leaving nothing for others equally meritorious. Yet their case is not reme- dial." Catron, J., in Clarke v. White, 12 Pet. 178, 200. Blennerhassett v. Sher- man, 105 U. S. 100, 117; Ferguson v. Spear, 65 Me. 277. (Held here that a man may prefer his wife if she is his creditor. And to the same effect is the next case.) Brighani u. Fawcett, 42 Mich. 542; Hill *. Bowman, 35 Mich. 191 ; Benrmann v. Van Buren, 44 Mich. 496, 499; Dudley v. Danforth, 61 N. Y. 626 ; Smith v. Skeary, 47 Conn. 47, 54. (In this case the creditors obtained a preference from a corporation in which they were directors, but it was sustained, being bona fide.) Fleischer v. Dignon, 53 Iowa 288; Whitehead v. Woodruff, 11 Bush 209 ; Gage v. Chesebro, 49 Wis. 486, 494 ; Eldridgei). Phillipson, 58 Miss. 270 ; Butler v. White, 25 Minn. 432. (s) 2 T. K. 587 ; ante \ 736. 60. Decisions that Sales are Void as to Creditors op and Purchasers from the Seller until Delivery is Made. Federal Courts. — In these courts by the earlier decisions the doctrine of Ed- wards v. Harben was carried very far. In the case of Hamilton v. Russell, 1 Cranch 309, 316, Marshall, C. J., said that fraud- ulent conveyances would be " most effec- tually prevented by declaring that an absolute bill of sale is itself a fraud, unless possession accompanies and fol- lows the deed. This construction, too, comports with the words of the act." This was followed in the Admiralty case of The Schooner Eomp, Olcott Adm. 196, 203, where Betts, J., said: "This conclusion of law cannot be displaced by evidence proving the bona fides of the transaction." The same doctrine was held in Allen v. Massey, 17 Wall. 351, but solely on the ground of a Missouri stat- ute, the law of that state ruling the case. On the other hand, the modern English doctrine is approved by the United States chap. n.J FRAUD. 645 Supreme Court in Warner v. Norton, 20 How. 448, 460, and that appears to be the latest decision of that court where the question was fairly raised. See ante note 58, where this case was quoted. The fol- lowing decisions sustain the general pro- position that possession retained by the seller after sale, is in general fraudulent in law and void as to bona fide creditors or purchasers. In many of these states the decisions rest upon statutes. Massachusetts. — In 1821 it was held in this state that a sale of goods was void as against an attaching creditor of the seller until delivery. Lanfear v. Sumner, 17 Mass. 110, 113. Jackson, J., said : " The general rule is perfectly well established that the delivery of possession is neces- sary in a conveyance of personal chattels, as against every one but the vendor." This was followed in Shumway v. Rutter, 7 Pick. 56, (1828) ; Carter v. Willard, 19 Pick. 1, 11, (1837); Packard v. Wood, 4 Gray 307, 311, (1855) ; Rourke v. Bul- lens, 8 Gray 549, (1857.) The rule was carried very far in Veazie v. Somerby, 5 Allen 280, 289, (1862), where it was held that as against a subsequent bona fide pur- chaser, no title passes by an oral sale of a boat moored in the water, without some further action of the purchaser to take possession. In Burge v. Cone, 6 Allen 412, (1863), it was held that the sale of chattels in the custody of a third person, would not pass the property as against a creditor of the seller, in the absence of delivery of manual possession or notice to the custodian. And the law appears to be still the same in that state. In Dempsey v. Gardner, 127 Mass. 381, (1879), the vendor sold a horse to her son for a fair price paid, and gave him a bill of sale. He permitted the horse to re- main in her custody, and it was held liable for her debts. Gray, C. J., said : " The buyer did no act by way of taking possession or exercising ownership, and the seller did not agree to hold or keep the horse for him. There was no evi- dence of delivery for the jury except such as might be implied from the execu- tion and delivery of the bill of sale. This was not enough." See, also, Harlow v. Hall, 132 Mass. 232, (1882.) To relieve the harshness of this rule very slight evi- dence of actual delivery has been allowed to protect the rights of the purchaser. Thus if the seller retains possession in a changed character, as warehouseman or bailee under an express agreement, as for example under an agreement to do work upon the property sold or to take care of it, or to remove it to premises of a third person, in all such cases the property will be protected against creditors of and purchasers from the seller in possession. Ingalls v. Herrick, 108 Mass. 351 ; Thorn- dike v. Bush, 114 Mass. 116 ; Hobbs v. Carr, 127 Mass. 532 ; Russell v. O'Brien, 127 Mass. 349 ; Stinson v. Clark, 6 Allen 340; Green v. Rowland, 16 Gray 58; Phelps v. Cutler, 4 Gray 137 ; Cushing r. Breed, 14 Allen 376. If the property is at the time of the sale in possession of a third person, notice to such person is essential to perfect the sale. Tuxworth v. Moore, 9 Pick. 347 ; Carter v. Willard, 19 Pick. 1 ; Hardy v. Potter, 10 Gray 89 ; Whitney v. Lynch, 16 Vt. 579 ; Burge ti. Cone, 6 Allen 412. Maine. — In this state Massachusetts decisions are followed. McKee v. Gar- cellon, 60 Me. 165, 168 ; Fairfield Bridge Co. v. Nye, 60 Me. 372, 377 ; Sawyer v. Nichols, 40 Me. 212 ; Vining v. Gilbreth, 39 Me. 496 ; Farrar v. Smith, 64 Me. 74 ; Reed v. Reed, 70 Me. 504. New Hampshire. — In this state also the rule of Edwards v. Harben is adopted. The leading case is Coburn v. Pickering, 3 N. H. 415, 428, since repeatedly fol- lowed and approved. The theory is that where possession is reserved there is a secret trust. Paul v. Crooker, 8 N. H. 288 ; French v. Hall, 9 N. H. 145 ; Clarke v. Morse, 10 N. H 236 ; Kendall v. Fitts, 22 N. H. 1, 7 ; Clapp v. Rogers, 38 N. H. 435, 438 ; Cutting *. Jackson, 50 N. H, 646 AVOIDANCE OP THE CONTRACT. [BOOK III. 253; Putnam v. Osgood, 52 N. H. 148, 154 ; Coolidge v. Melvin, 42 N. H. 510 ; Lang d. Stockwell, 55 N. H. 561. In this last case the seller reserved the right to use the horse and wagon which he sold, about his business. The property being seized for the seller's debt, the buyer brought trespass. Smith, J., said : "Un- less we are to disregard the numerous decisions in this state, commencing with Coburn v. Pickering, of which I believe there are seventeen, where such sales are held to constitute a fraud in law, the court has no other alternative than to pronounce the sale fraudulent as against the credit- ors of M.," (the seller.) Vermont. — The same rule prevails in this state. Rockwood v. Collamer, 14 Vt. 141; Stephenson v. Clark, 20 Vt. 624; Weeks v. Prescott, 53 Vt. 57, 72 ; Hildreth v. Fitts, 53 Vt. 684, 687 ; Pettingill v. El- kins, 50 Vt. 431. Connecticut. — In this state Edwards v. Harben and the United States Supreme Court case of Hamilton v. Eussell, 1 Cranch 309, were approved and followed in Swift v. Thompson, 9 Conn. 63, 69, and no state has carried the doctrine of those cases further. In Norton ». Doolittle, 32 Conn. 411, the court said : " Purchasers must learn that if they purchase property, and without a legal excuse permit the possession to remain in fact or apparently and visibly the same, they hazard its loss by attachment fpr the debts of the ven- dor." This language is approved in Hatstat v. Blakeslee, 41 Conn. 301, and Pardee, J., said it was a rule of policy to prevent fraud, and was to be inflexibly maintained. Mead v. Noyes, 44 Conn. 487. Pennsylvania. — The law of Pennsyl- vania resembles closely that of Massa- chusetts. It is stated with great fullness in McKibbin v. Martin, 64 Penna. 352, 356. In that case the seller of the furni- ture in a hotel remained in the employ of the buyer, and the question was whether the property was liable for the debts of the seller. Sharswood, J., said : " Clow v. Woods, 5 S. & R. 275, decided by this court in 1819, is the magna charta of our law upon this subject. It estab- lished that retention of possession was fraud in law, wherever tne subject of transfer was capable of delivery, and no honest and fair reason could be assigned for the vendor not giving up and the ven- dee taking possession. * * * The court is to judge whether there is suffi- cient evidence to justify the inference of such delivery." The court also approved Babb v. Clemson, 10 S. & R. 428, and quoted it as follows: "There cannot be a concurrent possession in the assignor and assignee; it must be exclusive, or it is deemed fraudulent and colorable. To de- feat the execution, there must have been a bona fide, substantial change of posses- sion. It is a mere mockery to put in another person to keep possession' jointly with the former owner." In McKibbin r. Martin, as there was evidence of actual change of possession, it was left to the jury to determine whether the change was bona fide, and whether there was con- current possession. See cases cited in McKibbin v. Martin. See Young v. Mc- Clure, 2 W. & S. 150 ; McBride v. Mc- Clelland, 6 W. & S. 94 ; Boyle v. Rankin, 22 Penna. 168 ; Winslow v. Leonard, 24 Penna. 14, 18 ; Garman v. Cooper, 72 Penna. 32, 36 ; McMarlan v. English, 74 Penna. 296; Evans v. Scott, 89 Penna. 136. But continued possession of the seller under a lawful contract to hold the property as the buyer's bailee will pro- tect the property against the seller's creditors. Smith v. Crisman, 91 Penna. 428. And where the property is in the possession of a third person no delivery or notice seems to be necessary in Penn- sylvania. Linton v. Butz, 7 Penna. 89 ; Worman v. Kramer, 73 Penna. 378, 385 ; Woods v. Hull, 81 Penna. 451. But see Trunick v. Smith, 63 Penna. 18. Delaware. — Burman v. Herring, 4 Harr. 458 ; Perry v. Foster, 3 Harr. 293. CHAP. II. J FRAUD. 647 be unsettled on the question, (£) but he states it to be the established law in the federal courts of the United States, that an absolute bill of sale is itself a fraud in law unless possession accompanies and follows the deed ; and in a recent case (b) it was even decided that the bona fides of the transaction between the parties, and the fact that possession remained with the vendor for justifiable purposes, would not suffice to render the sale valid. This seems also to be the doctrine of the state courts in Virginia, (e) South Carolina, Pennsylvania, Illinois, New Jersey, Vermont, and Connecticut, while the English rule pervades the other states. 61 Maryland. — Gough v. Edelen, 5 Gill 101 ; Green *. Treiber, 3 Md. 28. Florida.— Smith v. Hines, 10 Fla. 258, 295 ; Wilson v. Lott, 5 Fla. 305, 325 ; Gibson v. Love, 4 Fla. 217, 238. Missouri. — In this state the sale of goods is void as to creditors and pur- chasers " unless accompanied by delivery in a reasonable time," by act of 1865. See history of the law in Claflin v. Eosenberg, 42 Mo. 439, 448; S. C, 43 Mo. 593; Allen v. Massey, 17 Wall. 351 ; Bishop v. O'Connell, 56 Mo. 158 ; Wright v. Mc- Cormick, 67 Mo. 426 ; Stern v. Henley, 68 Mo. 262 ; Cator v. Collins, 2 Mo. App. 225 ; Basse v. Thomas, 3 Mo. App. 472. Kentucky. — Brummel v. Stockton, 3 Dana 135 ; Bobbins v. Oldham, 1 Duvall 28 ; Allen v. Johnson, 4 J. J. Marsh. 235 ; Anthony v. Wade, 1 Bush 110; Morton v. Bagan, 5 Bush 334 ; Woodrow v. Davis, 2 B. Mon. 298 ; Kendall v. Hughes, 7 B. Mon. 368, 370. Illinois. — In this state great import- ance is attached to actual possession. In Thompson v. Yeck, 21 111. 73, Breese, J., said that possession permitted to remain with the vendor was fraudulent in itself, and void as to creditors and purchasers. And this has been followed since. Ketchum t>. Watson, 24 111. 591 ; Walker v. Collier, 37 111. 362; Thompson v. Wil- hite, 81 111. 356 ; Lefever v. Mires, 81 111. 456 ; McCann ,: Meyer, 4 Brad. 376 ; Straus ». Minzesheimer, 78 111. 492; Ticknoru. McClelland, 84 111. 471, 474; Allen v. Carr, 85 111. 388. An exception to the rule is recognized in the case of grain in a warehouse. Such property is transferred sufficiently by delivery of the warehouse receipt. Broadwell v. How- ard, 77 111. 305. Iowa. — Section 1923 of the code pro- vides that " no sale of personal property where the vendor retains actual possession is valid against existing creditors or sub- sequent purchasers without notice," un- less a written instrument of conveyance is recorded. Under the statute, see Boothby v. Brown, 40 Iowa 104 ; Sutton v. Ballou, 46 Iowa 517 ; McKay v. Clapp, 47 Iowa 418; Smith v. Champney, 50 Iowa 174 ; Hickok v. Buell, 51 Iowa 655. California. — O'Brien v. Chamberlain, 50 Cal. 285 ; Grum v. Barney, 55 Cal. 254 ; Watson v. Eodgers, 53 Cal. 401. Nevada. — Gray v. Sullivan, 10 Nev. 416 ; Lawrence v. Burnham, 4 Nev. 361, 366. Colorado. — McCraw u. Welch, 2 Col. T. 284. Ontario. — Eanney v. Moody, 6 U. C. C. P. 471 ; William v. Rapelje, 8 Id. 186. (0 2 Kent 521. (6) The Bomp, Olcott's Adm. 196, cited in note, at p. 520, 2 Kent (12th ed.) (c) The English doctrine, it would seem, is now established in Virginia. See The Baltimore and Ohio Railroad Co. ii. Glenn, 28 Md. 287, at pp. 324, 325, where the Virginia authorities are re- viewed. 61. This is quite inaccurate, our author having been misled by overruled decis- 648 AVOIDANCE OF THE CONTRACT. [BOOK III. § 741. [The legislation with reference to bills of sale has rendered Law as to bills obsolete a part of the law under the statute of 13 Eliz., c. of sale. ^ so f ar ag re ] a te S to the transfer of chattels. The statutes ac" s i878 s , ale now in force are the 41 and 42 Vict., c. 31 (bills of sale Amendment act, 1878,) and the 45 and 46 Vict., c. 43 (bills of sale act ' 1882 - act (1878) amendment act, 1882.) By the bills of sale act, 1878, the 17 and 18 Vict., c. 36 (bills of sale act, 1854,) and the 29 and 30 Vict, c. 96 (bills of sale act, 1866,) were repealed, except as to bills of sale executed before the 1st of January, 1879 (the day when the act came into operation), and even as to such bills of sale the rules with respect to construction, and to the renewal of registration, were to be those of the act of 1878. The object of the legislation on this subject is thus stated in the Object of legis- P ream ble to the act of 1854 : " Whereas frauds are fil- iation, quently committed upon creditors by secret bills of sale of personal chattels, whereby persons are enabled to keep up the ap- pearance of being in good circumstances and possessed of property, and the grantees or holders of such bills of sale have the power of taking possession of the property of such persons to the exclusion of the rest of their creditors."] SECTION V. FRAUD ON CREDITORS — BILLS OF SALE. § 742. [By reason of the passing of the bills of sale acts, 1878 and 1882, since the second edition of this treatise, a large portion of the law under the act of 1854 has been rendered obsolete. The editors have therefore found it necessary to rewrite this portion of the work ; and, in doing so, have deemed it advisable to treat the subject under a separate section. It has been thought well to set out in full the main Provisions of provisions of the act of 1878, with the principal decisions the act of 1878. thereunder, briefly noticing the alterations occasioned by the act of 1882. (d) Those portions of the act of 1878 which were not contained in the previous act of 1854 are printed in italics. 62 ions. The case of " The Romp " is by no note 6. means recent, and the latest decision in (d) This act only received the royal the United States Supreme Court over- assent at the time when the sheets of this rules it. (20 How. 460.) The modern edition were passing through the press. English doctrine has also been long 62. These acts cover the same class of adopted in Virginia, South Carolina and transactions provided for in America by New Jersey. See ante note 58. On the the " chattel mortgage acts." Those acts other hand, many states have adopted are simple and easily applied, and con- the rule in Edwards v. Harben. See ante trast favorably with the cumbrous piece CHAP. II.] FRAUD. 649 § 743. By the 4th section, " The expression ' bill of sale ' is to in- clude bills of sale, assignments, transfers, declarations of 4th9eotion . trust without transfer, inventories of goods with receipt Definition oi thereto attached, or receipts for purchase moneys of goods, blllof9aIe and other assurances of personal chattels, and also powers of attorney, authorities, or licenses to take possession of personal chattels as security for any debt, and also any agreement, whether intended or not to be fol- lowed by the execution of any other instrument, by which a right in equity to any personal chattels, or to any charge or security thereon, shall be conferred, but is not to include the following documents; ^^ are not that is to say, assignments for the benefit of the creditors lnoludeu - of the person making or giving the same, marriage settlements, trans- fers or assignments of any ship or vessel or any -share thereof, transfers of goods in the ordinary course of business of any trade or calling, bills of sale of goods in foreign parts or at sea, bills of lading, India warrants, warehouse-keepers' certificates, warrants or orders for the de- livery of goods, or any. other documents used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of such document to transfer or receive goods thereby repre- sented." In the case of Allsopp v. Day, (s) a receipt for money given by a husband to the trustees of his wife's settlement " for the purchase of my household goods and effects contained in eopda with re- r j a nemt attache inventories of goods "with re- ceipt attached. the enclosed inventory " was held under the act of 1854 not to be a bill of sale ; and this decision was followed in Byerly v. Prevost. (f) But the authority of these cases had been questioned before the act of 1878 in Ex parte Odell(w) and Ex parte Cooper, (x) and Exparte0 deii. now they are expressly within the words of the above sec- Ex parte tion. Cooper - § 744. The effect, however, of the section is much restricted by the late decision of the Court of Appeal in Marsden v. Maraden „ Meadows, (y) where it was decided that an inventory of Meadowa - of English legislation discussed in this illustrate by citations. section. They form a subject by itself, (s) 7 H. & N. 457 ; 31 L. J., Ex. 105. which, as it is somewhat aside from the (t) L. R., 6 C. P. 144. subject of this treatise, and cannot be (u) 10 Ch. D. 76, C. A. adequately considered in the limits of (x) Id. 313, C. A. these notes, the editor will not attempt to (y) 7 Q. B. D. 80, C. A., following 650 AVOIDANCE OF THE CONTRACT. [BOOK III. goods with a receipt for the purchase money given to a purchaser by a sheriff who had seized under a writ of fi. fa. does not amount to a bill of sale under this section, and need not be registered. The re- striction intended to be put upon the words of the enactment appears to be that inventories and receipts to be within the act must operate as assurances, or to use Lord Justice Cotton's words, must be "docu- ments on which the title of the transferee of the goods depends, either as the actual transfer of the property, or an agreement to transfer, or as a muniment or document of title taken, to use an expression found in some of the cases, at the time as a record of the transaction." Here the claimant had a complete title to the goods, before the receipt by the sheriff was given. The receipt was mere surplusage. The words " any agreement * * * by which a right in equity EauitaWe *° anv cna ttels shall be conferred " are declaratory of the assignments ] aw as ] a j(j (J 0wn i n cases before the act. (z) As to transfers of shares in ships, reference should be made to the Transfers of merchant shipping act, 1854 (17 and 18 Vict., c. 104, §§ ships. 55,57,81.) And a ship built for a foreigner, and which, therefore, could not be registered as a British ship, is within the ex- ception, (a) As to transfers of goods in the ordinary course of business, the reader is referred to the cases below cited, (b) Foreign parts. Foreign parts include Scotland, (c) § 745. In Ex parte Crawcour, (d) it was held under the act of 1854 Hire and con- that an agreement for the hire and conditional purchase, notTbiii of e by installments, of furniture, whereby the property in the 8ale ' furniture was to remain in the lessor until the payment of all the installments, and he was to have power to seize the furniture upon failure to pay any of the installments, did not amount to a bill of sale by the hirer to the lessor, inasmuoh as no property in the furniture passed to the hirer until the payment of the full amount of the install- ments. § 746. By the 4th section it is also provided, that " The expression Woodgate v. Godfrey, 5 Ex. D. 24, C. A. ; (6) Ex parte North Western Bank, 15 S. C, 4 Ex. D. 59, decided under the act Eq. 69 ; Ex parte Conning, 16 Eq. 414 ; of 1854. Merchant Banking Co. v. Spoffen, 11 Ir. («) Ex parte Mackay, 8 Ch. 643 ; Ex R. Eq. 586 ; Ex parte Watson, 5 Ch. D. parte Conning, 16 Eq. 414. 35, C. A. (a) Union Bank v. Lenanton, 3 C. P. (c) Coot v. Jecks, 13 Eq. 597. D. 243, C. A. (d) 9 Ch. D. 419. CHAP. II. J FRAUD. 651 ' personal chattels ' shall mean goods, furniture, and other r & ' > 4th section. articles capable of complete transfer by delivery, and (when separately assigned or charged) fixtures and growing gUJjJeS 1 crops, but shall not include chattel interests in real estate, nor fixtures (except trade machinery as hereinafter defined) when as- signed together with a freehold or leasehold interest in any land or build- ing to which they are affixed, nor growing crops when assigned together with any interest in the land on which they grow, nor shares or interests in the stock, funds or securities of any government, or in the capital or property of incorporated or joint stock companies, nor choses in action, nor any stock or produce upon any farm or lands which by virtue of any covenant or agreement or of the custom of the country ought not to be removed from any farm where the same are at the time of making or giving of such bill of sale :" and by the 7th section, which should be read together with it, "No fixtures or growing crops shall be deemed, under this growing crops act, to be separately assigned or charged by reason only deemed sepa- . .77 77 ■ rately assigned that they are assigned by separate words, or that power is when the land J J * r ' , f m passes by the given to sever them from the land or building to which they sam e instm- are affixed, or from the land on which they grow, without otherwise taking possession of or dealing with such land or building, or land, if by the same instrument any freehold or leasehold interest in the land or building to which such fixtures are affixed, or in the land on which such crops grow, is also conveyed or assigned to the same persons or person." (e) Growing crops were held under the act of 1854 not to be personal chattels within the meaning of that act, (/) but upon , , , , . . Growing orops. severance the crops become personal chattels, and there- fore subject to the provisions of the act. (g) A consideration of the case of Meux v. Jacobs, (h) together with the two sections above cited, will show what the words "when "wiensepa- 7 rately as- separately assigned or charged " were intended to cover, charged ' Trade machinery is dealt with separately by the 5th section, post § 751, and any mortgage of trade machinery must (it Trade would seem) be registered as a bill of sale, whether it is machlner y- separately assigned or not. (i) (e) This section is made retrospective. (h) L. R., 7 H. L. 481. (J) Brantom v. Griffits, 2 C. P. D. 212, (i) As to the law previous to the act, C. A. ; affirmed, S. C, 1 C. P. D. 349. see Mather v. Fraser, 25 L. J., Ch. 361 ; (g) Ex parte National Mercantile Bank, Waterfall v. Penistoue, 6 E. & B. 876, and 16 Ch. D. 104, C. A. 26 L. J., Q. B. 100. 652 AVOIDANCE OF THE CONTRACT. [BOOK III. § 747. By the 4th section it is further provided, that " Personal chattels shall be deemed to be in the ' apparent possession ' Definition of apparent pos- of the person making: or giving a bill of sale, so long as session. r & & & > b they remain or are in or upon any house, mill, warehouse, building, works, yard, land, or other premises occupied by him, or are used and enjoyed by him in any place whatsoever, notwithstanding that formal possession thereof may have been taken by or given to any other person." This, with the exception of a slight verbal alteration, is identical with the definition of " apparent possession " given in the 7th sec- tion of the act of 1854. The 8th section, post § 755, deals with the effect of goods comprised in an unregistered bill of sale remaining in the possession or apparent possession of the grantor. The latter words of the clause qualify what precedes them, and More than therefore if more than formal possession has been taken oima. posi ky t j je g rau j- ee> ^g c i ause dogs no t apply, (k) What is required, in order to constitute a more than formal posses- sion, has not been judicially defined, but in the note infra, (I) will be found some of the cases which have been decided on this head. It is, in general, a question of fact for the jury to decide. § 748. A difficulty was felt as to taking more than formal posses- Taking posses- sion of growing crops, and it was laid down in Sheridan crops. srowing v. Macartney, (m) that so long as they are upon land oc- cupied by the grantor, they must be in his apparent possession. This case, however, has not met with approval in the English courts, (n) and in Ex parte Arnison (o) (which was, however, a case of distress for tithe rent-charge) it was intimated that, after possession of growing crops has once been taken, a notice to inform the public would be sufficient. Upon the word " occupied " it has been held that actual de facto occupation by occupation is meant, (p) If the grantor does not per- grantor. sonally occupy the premises, the goods are not in his ap- (k) Gough v. Everard, 2 H. & C. 12; 516, C. A. Ex parte Lewis, 6 Ch. 626. (m) 11 Ir. C. L. Kep. 506. (I) Ex parte Jay, 9 Ch. 697 ; Ex parte (m) See remarks by Bramwell, B., in Homan, 10 Eq. 63; Smith v. Wall, 18 L. Gough v. Everard, 2 H. & G, at p. 12, T. (N. S.) 182 ; Davies v. Jones, 10 W. and Brett, J., in Brantom v. Griffits, 1 C. R. 779 ; Emmanuel v. Bridger, L. R., 9 P. D., at p. 355. Q. B. 286 ; Ancona v. Rogers, 1 Ex. D. (o) L. R., 3 Ex. 56. 285, C. A. ; Ex parte Fletcher, 5 Ch. D. (p) Robinson v. Briggs, L. R., 6 Ex. 1. 809, C. A. ; Seal *. Claridge, 7 Q. B. D. < HAP. II.] FKAUD. 653 parent possession, (q) Occupation by him as a servant to the grantee is sufficient, (r) In Seal v. Claridge, (s) the goods were in the grantor's house, of which the grantor possessed a key. He did not sleep there, but went in and out as he pleased. Held, that this amounted to a personal occupation by the grantor, and that the goods were in his apparent possession. § 749. Possession by a bailee on behalf of the grantor was held in Ancona v. Rogers, (t) to be his possession, although the Possession by grantee had attempted ineffectually, owing to the refusal ballee - of the owner ot the house where the goods were, to get access to them. But it is otherwise if the bailee holds on behalf of some third party, (u) In Ex parte Saffery, (x) it was held that goods iu the actual visible possession of the sheriff under an execution are not in possession by the apparent possession of the grantor, and the earlier 8herlff - case of Ex parte Mutton (y) was not followed. In this connection reference should be made to the doctrine of " re- puted ownership " under the bankruptcy laws. By § 15, subs. 5 of the bankruptcy act, 1869 (32 and erahip in bank- ruptcy as 33 Vict., c. 71,) it is provided that the property of a aftecting wiis bankrupt divisible among his creditors shall include, inter alia : — "All goods and chattels being at the commencement of the bank- ruptcy in the possession, order, or disposition of the bankrupt, being a trader, by the consent and permission of the true owner, of which goods and chattels the bankrupt is reputed owner, or of which he has taken upon himself the sale or disposition as owner; provided that things in action other than debts due to him in the course of his trade or business shall not be deemed goods and chattels within the mean- ing of this clause." The 20th section of the act of 1878 made an important alteration in the existing law by providing that "Chattels corn- Law under act prised in a bill of sale which has been and continues to be of 1S78, duly registered under this act shall not be deemed to be in the possession, order, or disposition of the grantor of the bill of sale within the mean- ing of the bankruptcy act, 1869." (q) Gough v. Everard, 2 H. & C. 1. (») Market Banking Co. v. Spoffen, 11 (r) Pickard v. Marriage, 1 Ex. D. 364. Ir. R. Eq. 587. (s) 7 Q. B. D. 516, C. A. (x) 16 Ch. D. 668, C. A. (*) 1 Ex. D. 205, C. A. (y) 14 Ex. 178. 654 AVOIDANCE OF THE CONTRACT. [BOOK III Under the bills of sale act, 1854, there was no similar provision and it was decided that, where the grantor was a trader, goods com- prised in a bill of sale, although registered, remained until demand in his order and disposition, and in the event of his bankruptcy vested in his trustee. § 750. And now the 15th section of the act of 1882 expressly re- Under act of P ea l s the above section, and revives, at any rate so far as 1882, relates to bills of sale given by way of mortgage, the doc- trine of reputed ownership. This restores the authority of the cases decided previous to the year 1879, the most important of which are given in the note, infra. (2) The following are the chief points of distinction between "appar- Distinction be- ent possession " under the bills of sale act, 1878, and " re- parent posses- P ute d ownership" under the bankruptcy act: puted owner- re !• The reputed ownership clause applies only to traders. shlp ' ' 2. Under the reputed ownership clause it is necessary that the true owner should consent, and a demand by the true owner excludes its application, whereas, as we have seen, it is diiferent in the case of apparent possession (Ancona v. Rogers, ubi supra.) 3. The only person who is favored by " reputed ownership " is the trustee in bankruptcy or liquidation, whereas an unregistered bill of sale is also void as against execution creditors. 4. Reputed ownership applies to personal chattels incapable of com- plete transfer by delivery, e. g., shares, stock and trade debts, whereas the bills of sale act does not. 5. Reputed ownership does not apply to fixtures including therein trade machinery, whereas the bills of sale act applies to trade machinery in all cases, and also to other fixtures " when they are separately as- signed or charged." 6. Reputed ownership applies, although the goods are neither in the possession nor the apparent possession of the bankrupt, whereas by the bills of sale act they must be in the grantor's possession or apparent possession. 7. Reputed ownership does not apply when the goods come into the bankrupt's possession after the commencement of the bankrupty, (z) Freshuey v. Carrick, 1H.&N. 653 ; Cubitt, 2 De G. & J. 222 ; Spackman v Keynolds ». Hall, 4 H. & N. 519 ; Badger Miller, 12 C. B. (N. S.) 659 ; Ex part- v. Shaw, 2 B. & E. 472 ; Stansfield v. Harding, 15 Eq. 223. chap. n.J FEAUD. 655 whereas the words of the bills of sale act are " at or after the time of filing the petition for bankruptcy." (a) If the true effect of the 15th section of the act of 1882 is to repeal absolutely the 8th section of the act of 1878 (as to which, see post § 774,) the doctrine of apparent possession will, for the future, be of importance only in reference to bills of sale, registered before the 1st of November, 1882, and the doctrine of reputed ownership alone ap- plies to all bills of sale registered after that date. § 751. By the 5th section, " Trade machinery shall, for the purposes of this act, be deemed to be personal chattels, and any mode , . , , 5th section. of disposition of trade machinery by the owner thereof which would be a bill of sale as to any other personal chat- actto 1 trade 1 ° tels shall be deemed to be a bill of sale within the meaning of this act." The section proceeds to define what is comprised within the term " trade machinery ; " see ante § 746. The limiting words, " for the purposes of this act," are important. Independently of the act fixed trade machinery is not goods and chat- tels, and, therefore, not within the doctrine of reputed ownership under the bankrupty act. § 752. By the 6th section, " Every attornment, instrument, or agree- ment, not being a mining lease, whereby a power of distress is given or agreed to be given by any person to any other 7 /. ', /• i p , Certain instra- person by way oj security for any 'present, juture, or con- ments giving tingent debt or advance, and whereby any rent is reserved tress to be sub- or made payable as a mode of providing for the payment of interest on such debt or advance, or otherwise for the purpose of such security only, shall be deemed to be a bill of sale, within the meaning of this act, of any personal chattels which may be seized or taken under such power of distress. " Provided that nothing in this section shall extend to any mortgage of any estate or interest in any land, tenement, or hereditament which the mortgagee, being in possession, shall have demised to the mortgagor as his tenant at a fair and reasonable rent." An attornment clause was not uncommonly inserted in mortgage (a) See Williams on Bankruptcy, p. upon the act of 1878 have been inserted. 123, (ed. 1876.) The alterations following 656 AVOIDANCE OP THE CONTRACT. [BOOK III. deeds, and it was until lately" generally supposed that a mortgagee might avail himself of such a clause without incurring the responsibilities of a mortgagee in possession. But from recent decisions (b) it appears that under an attornment clause the mortgagee is under the same lia- bility to account as a mortgagee in possession would have been. § 753. In Ex parte Williams, (o) decided before 1879, a mortgage Ex parte was ma de of certain smelting works to secure a debt of Williams. £55,000 and interest. The deed contained a clause whereby the mortgagors attorned tenants to the mortgagees at the yearly rent of £20,000. The mortgagors became bankrupt, and the mortgagees claimed under the attornment clause to distrain for a year's rent upon the goods and chattels on the mortgaged premises. It was admitted that the annual value of the property was only £3000. The Court of Appeal held, that the clause was a mere device for obtaining a security over chattels which would otherwise have been divisible among the general body of creditors, and void as an attempt to evade the bankruptcy laws. But where the rent fixed is a real and not a fictitious one, the chief test of which lies in a comparison of its amount with the fair letting value of the property, a bona fide tenancy is created, and the mort- gagee is then entitled to exercise all the rights of a landlord, including the right to distrain, (d) § 754. These cases arose under deeds executed before the act of -,„.,, 1878, and were decided under the 34th section of the iron Co. bankruptcy act, 1869, which empowers a landlord to dis- train for one year's rent accrued due prior to the date of the order of adjudication. In the case of Re Stockton Iron Company, it was held that the clause was not a " license or authority to take possession of chattels" within the bills of sale act, 1854. But now, under this section, every mortgage deed containing an attornmeut clause must be registered, in order to render that clause valid as against the trustee in bankruptcy or the execution creditor, (e) (6) In re Stockton Iron Furnace Co., 335, C. A. ; Ex parte Jackson, 14 Ch. D. 10 Ch. D. 335, C. A.; per James, L. J., 725, C. A.; and see Ex parte Punnett, 16 p. 356 ; per Bramwell, L. J., p. 357 ; Ex Ch. D. 226, C. A. ; Ex parte Isherwood, parte Punnett, 16 Ch. D. 226, C. A. ; per 46 L. T. (N. S.) 539. Jessel, M. P., p. 235. (e) Per Baggallay, L. J., in Ex parte (c) 7 Ch. D. 138, C. A. Jackson, 14 Ch. D., at p. 733 ; Kobson on (d) In re Stockton Iron Co., 10 Ch. D. Bankruptcy 543, (ed. 1881.) CHAP. II.] FRAUD 657 In Ex parte Harrison, (/) it was held, by the Court of Appeal, that the proceeds of distress for rent levied under an at- Exparte tornment clause are, in the absence of any provision in Harrison - the deed to the contrary, applicable to payment of principal as well as of interest. § 755. By the 8th section, " Every bill of sale to which this act applies shall be duly attested, and shall be registered under gth this act within seven days after the making or giving Avoidanoe of thereof, and shall set forth the consideration for which such un^tt^eta bill of sale was given, otherwise such bill of sale, as against certain cases - all trustees or assignees of the estate of the person whose chattels, or any of them, are comprised in such bill of sale under the law relating to bankruptcy or liquidation, or under any assignment for the benefit of the creditors of such person, and also as against all sheriffs' officers and other persons seizing any chattels comprised in such bill of sale, in the execution of any process of any court authorizing the seizure of the chattels of the person by whom or of whose chattels such bill has been made, and also as against every person on whose behalf such process shall have been issued, shall be deemed fraudulent and void so far as regards the property in or right to the possession of any chattels comprised in such bill of sale which, at or after the time of filing the petition for bankruptcy or liquidation, or of the execution of such as- signment, or of executing such process (as the case may be), and after the expiration of such seven days, are in the possession or apparent possession of the person making such bill of sale (or of any person against whom the process has issued under or in the execution of which such bill has been made or given, as the case may be.") The 15th section of the act of 1882 repeals this section. The 8th section of the same act is a substantial re-enactment of it, , ...„,. . . , , ... Act of 1882. but contains this further important provision, that bills of sale to which the act applies will, on failure to comply with the requisites as to attestation, registration, and statement of consideration, be rendered absolutely void. The extent and effect of this repeal is noticed post § 774. Under the act of 1854 attestation was unnecessary. Attestation. As to the mode of attestation required by the act of 1878, see post §765 (/) 18 Ch. D. 127, C. A., where Hampson v. Fellows, 6 Eq. 575, was not followed 2.T 658 AVOIDANCE OF THE CONTRACT. [BOOK III. § 756. There are four classes of persons as against whom an Persons as unregistered bill of sale is by this section declared to against whom _ . - unregistered be VOld bill of sale void 1st. The grantor's trustee in bankruptcy or insolvency : 2d. His assignees in any assignment for the benefit of creditors ; 3d. Sheriff's officers and others seizing under execution ; and 4th. All persons in whose behalf process of execution has issued. The liquidator of a company is not comprehended in these provi- Liquidator of s i° ns as being an assignee in bankruptcy or insolvency, an°asSgnL n fa iff) because he acts not only for creditors but for contribu- bankruptoy. ^j^ an( j fQJ . ^ company The rule in bankruptcy contained in this section is not applicable judicature act unc ler the 10th section of the judicature act, 1875, to the 1875 J 10. cage Q f j^g administration by the court of an insolvent's estate, (h) The principle of the decisions is that the 10th section of the judicature act, whilst introducing new rules for the administration of assets, does not enlarge or diminish the assets to be administered. The new provision as to setting forth the consideration for the bill Consideration, of sale has already given occasion for numerous decisions which are not all reconcilable, and some of the earlier of which do not seem now to retain much authority. The case, decided on this point are now referred to in order of date. § 757. In Ex parte Carter, (i) where the bill of sale recited in effect _ . „ , that £400, the amount of the consideration, had been ad- Ex parte Cart- ' ' ter vanced to the grantor, whereas in fact £240 was advanced to the grantor and his partner jointly, and the dates of the several advances were also misrecited, it was held by the chief judge that, although the transaction was au honest one, the consideration was not truly stated, and the bill of sale void. In Hamlyn v. Betteley, (k) where the statement of the considera- h mi v ^ oa was " t ^ le sum °f ^182 3s. now paid by the grantee Betteiey. t ^ ne grantor," and that sum was paid at the grantor's request, partly to pay out executions on the grantor's goods, partly to (g) Ee Marine Mansions Co., 4 Eq. 601. be put upon the 10th section of the judi- (h) Be Knott, 7 Ch. D. 549, note ; Ee cature act. D'Epineuil, 20 Ch. P. 217. See, also, per (i) 12 Ch. D. 908. The decision is James, L. J., in Ee Withernsea Brick questioned by Baggallay, L. J., in Ex "Works Co., 16 Ch. D. 337, C. A., at p. parte National Mercantile Bank, 15 Ch. 341, where he points out the limitation to D., at p. 55. {k) 5 C. P. D. 327. CHAP. II.] FRAUD. 659 the attesting solicitor for money lent and costs due to him from the grantor, and the balance in cash to the grantor, it was held that the statement of the consideration was sufficient in the absence of any suggestion of fraud. In Ex parte National Mercantile Bank, (I) it was held, by the Court of Appeal, that a collateral agreement between the ExparteNa . grantor and the grantee as to the application of the con- ti° e n Bank ercan * sideration does not require to be stated. § 758. In Ex parte Charing Cross Advance and Deposit Bank, (m) the consideration was stated in the operative part of the Ex parte bill of sale as £120. In fact, £90 was paid to the grantor, Bank. £30 being retained by the grantee for interest and expenses. At the foot and after the attestation clause there was a receipt setting forth the actual facts. It was held, that the receipt was not part of the deed, and that the consideration was not truly set forth therein. Ex parte National Mercantile Bank was distinguished upon the ground that in that case there was a bona fide debt existing, independently of and previous to the transaction of loan. In Carrard v. Meek, (n) the bill of sale was expressed to be " in con- sideration of the payment of £81 18s. by the grantee Carrard „ to the grantor, and in further consideration of £16 3s. Meek - by the grantee to the sheriff of Surrey for and at the request of the grantor." The former sum was a past payment and the latter a present payment to discharge an execution. Held, that the considera- tion was sufficiently set forth. § 759. In Ex parte Berwick, (o) the consideration for a bill of sale dated the 4th of June, 1879, was stated to be the "sum E rte of £65 now paid" by the grantee to the grantor. The Berwlck - £65 was in fact advanced by installments, the first of which was on the 16th of April, 1877, and the last on the 16th of October, 1878. It was held by the chief judge in bankruptcy that the consideration was not truly stated. In Ex parte Challinor, (^>) it was held that the bill of sale was not vitiated because a part of the sum stated as the considera- tion was retained by the grantee to pay the costs of the Ex parte Challinor. (Z) 15 Ch. D. 42, C. A. (o) 43 L. T. (N. S.) 576 ; 29 W. E. 292, (m) 16 Ch. D. 35, C. A. sed qutxre. (») 50 L. X, Q. B. 187 ; 29 W. E. 244. (p) 16 Ch. D. 260, C. A. But see Ex parte Firth, infra. 660 AVOIDANCE OF THE CONTRACT. [BOOK III. solicitor in the preparation of the deed and of the auctioneer for the valuation of the property. Ex parte Charing Cross Bank was dis- tinguished upon the ground that there a sum was colorably retained for interest when no interest could have been due at the time. But in Hamilton v. Chaine, (9) where there was a deduction for Hamilton r commission upon the loan, and the statement of the con- chame. sideration was the whole amount of the loan without deducting the commission, the Court of Appeal held that the consid- eration was not truly stated, and Ex parte National Mercantile Bank and Ex parte Challinor were distinguished ; at the same time Brett and Cotton, L. JJ., expressed doubt as to the correctness of those decisions. § 760. In the Credit Company v. Pott (r) it was held that the con- Credit Co » sideration for a bill of sale had been truly set forth, where Pott. upon a statement of accounts it was found that the grantor was indebted to the grantee to the amount of £7350, and the bill of sale recited that the grantee had agreed to lend £7350 to the grantor, and the consideration was stated to be £7350 then paid by the grantee to the grantor. In Ex parte Winter, (s) the bill of sale recited that the mortgagor Ex parte was indebted to the mortgagee in the sum of £1444 14s. Wmter. gd., and that the mortgagor had agreed to execute the mortgage deed in order to induce the mortgagee not to institute pro- ceedings. The facts were that a few days previous to the execution of the bill of sale the mortgagee had given the mortgagor a cheque for the full amount, but on hearing rumors as to the mortgagor's in- solvency, stopped payment of it at the bank. Two days later the stop was withdrawn on the distinct understanding that good security should be given, and the cheque was accordingly paid a few hours prior to the execution of the bill of sale, but no proceedings had been threat- ened by the mortgagee. Held, that the consideration was properly set forth. Jessel, M. R., said : " I wish to add that a small inaccuracy in the statement of the consideration will not be sufficient to avoid a bill of sale, otherwise valid. That act was never intended to defraud credit- ors. Substantial accuracy is sufficient to satisfy its requirements." '( es was a competent attesting witness, (k) and so tor ' was the solicitor acting for the grantee ; (I) but that the grantee himself, although a solicitor, could not be the attesting wit- ness, (m) As to the explanation, it had been decided that though the attesta- Expianation *i on c ' ause must state that the bill of sale had been ex- by ium. plained to the grantor by the attesting solicitor, yet no such explanation need in fact have been given, and its omission would not invalidate the bill of sale, (n) Effect of these The en?ec t °f these decisions was to render the provisions decisions. Q £ ^e 1st subsection practically valueless, and it is now Act of 1882. f orma n y rep ealed by the 10th section of the act of 1882. The affidavit of " due execution and attestation," filed with the bill Affidavit of °^ ss ^ e > mus t state ^ na * the bill of sale was duly attested, tion andat- u " *• e, i tnat tne attesting witness was present and witnessed testation." j tg execu ti n. A mere verification of the signature of the witness to the attestation clause is defective and will invalidate the registration, (o) These decisions are still of importance with regard to all bills of sale registered before the 1st of November, 1882, and possi- bly with regard to absolute bills of sale (to which the new act does not apply) registered after that date. § 766. With respect to the description of the residence and occupa- tion of the grantor, the decisions under the statutes have occupation*"/ established that the object of the forms and requisites prescribed was to afford to creditors and parties interested a true idea of the position in life of the grantor, and to give such a description of the residence and occupation of the grantor and witnesses (j) Davis v. Goodman, 5 C. P. D. 128, v. Eeed, 9 M. & W. 404. C. A., overruling S. C, Id. 20. . (n) Ex parte National Mercantile Bank, (k) Vernon v. Cooke, 49 L. J., C. P. 15 Ch. D. 42, C. A. ; and see Hill v. 767. Kirkwood, 28 W. E. 358, C. A. (1) Penwarden v. Roberts, 9 Q. B. D. (o) Sharpe v. Birch, 8 Q. B. D. Ill ; 137. Ex parte Knightley, 46 L. T. (N. S.) (m) Seal v. Claridge, 7 Q. B. D. 516, C. 776 ; Fordo. Kettle, 9 Q. B. D. 139, C. A A., following upon this point Freshfield CHAP. II. J FRAUD. 665 as would enable persons interested in the matter to trace out who is the person giving the bill of sale, and who the witnesses are, so as to ascer- tain the bona fides of the transaction, (p) Any misdescription or non-description in these particulars will therefore vitiate the bill of sale. Description of Among the very numerous cases which have been deci- witnesses. ded on this point the following are selected as fair examples : — It has been held insufficient to describe as " gentleman " Description of only a clerk in the audit office, (q) or an attorney's clerk, oceu P atlon - (»•) or a silk buyer, (s) But such a description was held sufficient where the party had no occupation, (t) . § 767. How far the bill of sale may be read together with the affi- davit in order to supply omissions or deficiencies in the How far bin of latter is a question not free from difficulty. vit m a ay bf da ' As a general rule the description of the grantor's resi- read Aether. dence and occupation should be repeated in the affidavit. In Hatton v. English, («) the bill of sale gave a complete descrip- tion of the residence and occupation of the grantor, but lllitton r the affidavit contained no description of his occupation En s lish - and no reference (apparently) to the description given in the bill of sale ; held that it was necessary that the description should be filed along with the bill of sale, and that the fact that the bill of sale con- tained it was not a compliance with the statute. In Pickard v. Bretts, (a;) the affidavit described the grantor as " the said J. B., of No. 9, George street, in the said bill of sale Pickard „ mentioned," but omitted his occupation of hotel-keeper. Bretts - (p) Per Wightman, J., in Hewer v. (t) Morewood v. South Yorkshire Sail- Cox, 3 E. & E., at p. 433 ; per Blackburn, way Co., 3 H. & N. 798 ; 28 L. J., Ex. J., Id., p. 436; per eundem in Briggs v. 114; Sutton v. Bath, 3H.&N. 382; 27 Boss, L. S., 3 Q. B. 268-270 ; per eundem L. J., Ex. 388 ; Nicholson v. Cooper, 3 H. in Larchin v. North Western Deposit & N. 384; London Loan Co. v. Chace, 12 Bank, L. S., 10 Ex. 64 ; per Coleridge, C. B. (N. S.) 730 ; 31 L. J., C. P. 314; C. J., in Murray v. Mackenzie, L. S., 10 Grant v. Shaw, L. R., 7 Q. B. 700 ; Brod- C. P., at p. 628 ; per Cockburn, C. J., in rick v. ScaU, L. E., 6 C. P. 98 ; Smith v. Jones v. Harris, L. K., 7 Q. B., at p. 160. Cheese,- 1 C. P. D. 60 ; Castle v. Downton, (q) Allen v. Thompson, 1 H. & N. 15 ; 5 C. P. D. 56 ; Ex parte Wolfe, 44 L. T., 25 L. J., Ex. 249. (N. S.) 321 ; affirmed, sub nom. Ex parte (r) Tuton o. Sanoner, 3 H. & N. 280 ; Chapman, 45 L. T. (N. S.) 265, C. A. 27 L. J., Ex. 293 ; Beales v. Tennent, 29 («) 7 E. & B. 94 ; 26 L. J., Q. B. 161. L. J., Q. B. 188. W 5 H. & N. 9 ; 29 L. J., Ex. 18. (s) Adams v, Graham, 33 L. J., Q. B. 71. 666 AVOIDANCE OF THE CONTRACT. [BOOK III. The bill of sale accurately described his residence and occupation, but there was nothing in the affidavit which verified the description given in the bill of sale ; held that the bill of sale could not be referred to in order to supply the want of any description of his occupation in the affidavit. But in Jones v. Harris, (y) where the residence was incompletely Joneso. Han-is. but accurately stated in the affidavit as " Dynevor Lodge," and was completely stated in the bill of sale as "Dynevor Lodge in the parish of Llanarthney, in the county of Caermarthen," it was held that the ambiguity arising from the incompleteness of the affidavit might be cured by reference to the bill of sale. The question of sufficiency is aliyays one of degree, and as was said by Blackburn, J., in Jones v. Harris, (z) " Chatsworth " would be a sufficient description of the residence of the Duke of Devonshire, and possibly "Scotland" of the Duke of Buccleuch. The general rule, therefore, seems to be modified to this extent that it is allowable by a reference to the bill of sale to supplement the description given, but not to supply a description omitted, in the affidavit. A variance, however, between the description given in the bill of sale aud that given in the affidavit is fatal, (a) § 768. The residence of the witness has been held sufficiently indi- Desoription of cate d D y giving his place of business, without describing residence. ^ e pi ace w here he sleeps, (6) or conversely by giving his private abode without his place of business, (c) A residence described as " New street, Blackfriars, in the county of Middlesex," without adding the "city of London," was held sufficient, (d) and so was a residence described as " in the county of Chester," Briggs v. Boss, which was in fact situate within the county of the city of Chester, (e) And in Briggs v. Boss, (/) the attesting witness stated : " I reside at Hanley, in the county of Stafford, and am an accountant," (y) L. R , 7 Q. B. 157, (d) Hewer v. Cox, 3 E. & E. 428 ; 30 (z) L. R., 7 Q. B., at p. 164. L. J., Q. B. 73. (a) Murray i. Mackenzie, L. R., 10 C. (e) Ex parte M'Hattie, 10 Ch. D. 398, P. 6'25. G. A. (b) Attenborough v. Thompson, 2 H. (/) L. R., 3 Q. B. 268; 37 L. J., Q. & N. 559; 27 L. J., Ex. 23; Blaekwell B. 101. See, also, Blackwell v. England, v. England, 8 E & B. 56 ; 27 L. J., Q. 8 E. & B. 541 ; 27 L. J., Q. B. 124 ; Re B. 124. Hams, 10 Ir. Ch. R. 100; 1 L. T. (N. S.) (c) Yardley v. Jones, 4 Dowling P. C. 467. 45, sed qtuere. CHAP. II.l FRAUD. 667 and this was Held sufficient both as to residence and occupation, although it was proven that Hanley was a borough containing 40,000 inhabitants, and although the deponent was a clerk of an accountant residing in Manchester, whose name was over the door of the place of business in Hanley ; these facts being overcome by proof, first, that hundreds of letters reached the deponent addressed Hanley only : and, secondly, that although he was only a clerk at Hanley for the Man- chester accountant, he was allowed by his employer to do business oc- casionally on his own account : but in a later case before the Queen's Bench the same description " accountant " was held to be r t Larcbin v. an insufficient description of the occupation of a clerk in De r ositBarST 1 the accountant's department at Euston Station, although be worked for other people after office hours, in bookkeeping and matters of account, and the court characterized Briggs v. Boss as an extreme decision, (g) An affidavit describing the grantor's residence and occupation to the " best of the belief " of the witness, was held suffi- Affidavit to " best of be- cient by the Exchequer of Pleas, in Roe v. Bradshaw. (h) net" § 769. In Shears v. Jacobs, (i) it was held that a trading company is competent to give a bill of sale, and that an affidavit Trading com- describine; the company as "The Glucose Sugar and pany may give & . . Mil of sale. Coloring Company," and giving the address of its prin- cipal office, was a sufficient compliance with the act. It was further held in this case and in Deffell v. White, (k) that directors attesting the seal of the company were not wit- Direotor nesses within the meaning of the act whose residences it notwHifeS?s is necessary to state. under the act. The description of the residence and occupation of the grantor re- quired is the description of such residence and occupation at the date of the affidavit, and not at the time of making or giving the bill of sale. (I) There is nothing in the act which necessitates the name of the grantor being correctly given, so far as regards the validity of the registration. It is sufficient if he can be identified from the name, (g) Larchin v. North Western Deposit (/) Button ■„. O'Neill, 4 C. P. D. 354, Bank, L. JR., 10 Ex. 64. (J. A., dissenting from London and West- (h) L. P., 1 Ex. 106 ; 35 L. J., Ex. 71. minster Loan Co. v. Chase, 12 C. B. (N. (i) L. P., 1 C. P. 513 ; 35 L. J., C. P. S.) 730 ; but see Ex parte Kahen, 46 L. 241. T. (N. S.) 856. (A) L. P., 2 C. P. 144. 668 AVOIDANCE OF THE CONTRACT. [BOOK II I. residence and occupation given, and an error in the Christian name is of no importance, (m) § 770. In Marples v. Hartley, (n) decided under the act of 1854, Registration tne ^ acts were tnat a bill of sale was given on the 27th when°g S o S ods 0I " June, and a creditor's execution levied on the 5th of takenbyoredi- July> within the twenty-one days then allowed for regis- tfon'wfthSTthe tration. The grantee did not register at all. Held that for registration, his title under the bill of sale was good : the court de- Marpiesu. daring that "two things are required before the require- ments of the statute need be complied with: the appar; ent possession of the goods and the lapse of the twenty-one days. The assignee has the period of twenty-one days within which he may complete his title by registering the bill of sale : but if he takes pos- ' session under it in the meantime, he need not register at all. Here, it was not invalidated at the time the goods were received by the sheriff. It therefore gave the claimant a good title to the goods till he had so seized them or had registered it within the twenty-one days." The principle of this decision would now apply under the acts of 1878 and 1882, substituting seven for twenty-one days. § 771. By the 10th section (subs. 3) : " If the bill of sale is made loth section or gi ven subject to any defeasance or condition, or declara- subs - 3 - tion of trust not contained in the body thereof, such de- feasance, condition, or declaration shall be deemed to be part of the bill, and shall be written on the same paper or parchment therewith before the registration, and shall be truly set forth in the copy filed under this act therewith and as part thereof, otherwise the registration shall be void." This provision is substantially the same as that contained in the 2d section of the act of 1854. In Robinson v. Collingwood, (o) it was held under the act of 1854 onius? applies ^ lat * ne sect i° n applied only to declarations of trust be- gr£itee,°noTto tween the grantor and the grantee, not to one between the ftraiiglr™* 1 grantee and a stranger to the grantor. In Ex parte Southam, (p) it was held that a prior parol agree- (m) Ex parte M'Hattie, 10 Oh. D. 398, (o) 17 C. B. (N. S.) 777; 34 L. J., C. C. A. P. 18. («) IE. AS. 1; 30 L. J., Q. B. 92; (p) 17 Eq. 578. See, also, Ex parte see, also, Banbury v. White, 2 H. & C. Collins, 10 Ch. 367 ; Ex parte Odell, 10 300; 31 L. J., Ex. 258; and Ex parte Ch. D. 76, C. A.; Ex parte Popplewell, Kahen, supra. 21 Ch. D. 73, C. A. OHAP. II.] FRAUD. 669 ment not appearing in the bill of sale, by which the Defeasance or debt was to be paid off by small weekly installments, condition - amounted to a defeasance or condition within the meaning of the sec- tion, and must be registered. § 772. Further, by the 10th section, " In case two or more bills oj sale are given, comprising in whole or in part any of the 7 77 i i t i- i 101b. section. same chattels, they shall have priority m the order of the ' *> r J J Priority given date of their registration respectively as reqards such chat- b y ?ate wag held va]id ag against all subsequent encumbrancers who took with notice of the an- nuities. Edwards v. Edwards was not cited, but the principle of the decision in Graves v. Tofield was that the wording of the section was similar to that employed in the old registry acts, under which notice had been held fatal to the subsequent registered encumbrancers, and that therefore the legislature must be taken to have used the words in the later act in the sense given to them by the decisions under the earlier acts, otherwise they would have used the words " any notice notwithstanding," which appear in some of the other sections. It is therefore submitted that notice of the existence of a prior un- registered bill of sale would not, under this section, prejudice the title of a second bill of sale holder who had duly registered. As to a transfer of a registered bill of sale, see Home v. Hughes, (y) § 773. By the 11th section, " The registration of a bill of sale must nth section be renewed once at least every five years, and if a period Renewal of 0I " & ve years elapses from the registration or renewed leg^tration. registration of a bill of sale without a renewal or further renewal (as the case may be), the registration shall become void." This section is retrospective. It has been decided that the registration must be renewed within the required period, although in the meantime the bill of sale has been transferred to a third person, and the assignee, if the registration is not renewed, has no title as against an execution creditor, (z) § 774. The amendment act of 1882, which is to be construed, so Amendment * ar as ' s consistent with its tenor, as one with the act of act, 1882. 1878, came - nt0 p erat i on n the 1st of November, 1882. The act, except as to the provision contained in the 13th section, is not retrospective. It applies only to bills of sale given by way of security for the payment of money, i. e. to bills of sale by way of mortgage (sect. 3), and is not to apply to any debentures issued by any mort- gage, loan, or other incorporated company, and secured upon the com- pany's capital, stock or goods, chattels and effects (sect. 17.) The 10th and 15th sections of the act expressly repeal the 8th and (x) 14 Ch. D. 563, C. A. (a) Karet v. Kosher Meat Supply As- (y) 6 Q. B. D. 676, C. A. sociation, 2 Q. B. D. 361. HAP. II. J FRAUD. 671 20th sections and a portion of the 1 0th section of the act j^p^u^ of 1878, as well as any provisions of the earlier act which aeotlons - are inconsistent with the later act. It is impossible at the present time to state positively the effect of repealing these sections, and the point will no doubt be soon judicially determined. The 3d section of the act of 1882 enacts that the act shall not apply to bills of sale " given otherwise than by way of security for the payment of money," and if the scope of the act is thus to be limited to conditional bills of sale, the effect may be that the law as to absolute bills of sale remains un- changed, and they continue to be subject to all the provisions of the act of 1878. On the other hand, as the repeal of the sections in ques- tion is absolute in terms, the effect would seem to be simply to strike the repealed sections out of the act of 1878, leaving absolute bills of sale — i. e. bills of sale given otherwise than as security for the pay- ment of money — subject to the provisions of the act of 1878 which are left unrepealed by the amendment act. It would then seem to follow that this class of bills of sale no longer requires to have the consideration for which they are given set out, nor, indeed, to be attested or registered, for although the unrepealed portions of the 10th section of the act of 1878 provide for attestation and registration, the penalty attaching to non-compliance with these provisions is removed by the repeal of the 8th section. At the same time, by the repeal of the 20th section, goods comprised in an absolute bill of sale, even though registered, would become subject to the order and disposition clause of the bankruptcy act. The point, however, is by no means clear, and must await judicial decision. § 775. The following are the more important provisions contained^ in the new act : — t Provisions of I. Every bill of sale to which the act applies is to be *j"L aot of absolutely void, unless — 1. Made in accordance with the form in the schedule to the act (sect. 9) ; 2. Duly attested, that is to say, attested by one or more credible witnesses, not being a party or parties thereto (z) (sects. 8 and 10.) 3. Registered under the act of 1878 within seven clear days, if executed in England, or where the execution has taken place (2) These last words are merely decla- Claridge, 7 Q. B. D. 516, C. A. ; and see ratory of the law before the act. Seal e. Freshfield r. Reed, 9 M. & W. 404. 672 AVOIDANCE OF THE CONTRACT. [BOOK III. out of England, within seven clear days after the bill of sale would have reached England in course of post, if posted immediately after its execution (sect. 8.) 4. The consideration, which, as under the act of 1878, must be truly set forth, is at least £30 (sects. 8 and 12.) § 776. II. Every bill of sale to which the act applies is to be void except as against the grantor in respect of any personal chattels — 1. Comprised in the bill of sale, and not specifically described in a schedule annexed thereto (sect. 4) ;• 2. Specifically described in the schedule, but of which the grantor was not the " true owner " at the time of its execution (sect. 5.) Growing crops actually growing at the time when the bill of sale was executed, and fixtures, plant or trade machinery substituted for any of the like fixtures, plant or machinery specifically described in the schedule, are excepted from the operation of the two foregoing paragraphs (sect. 6.) The object of these sections is to prevent a person for the future from contracting to assign after-acquired property to the detriment of his creditors. Under the earlier acts, assignments were often made of after-acquired property, and especially of stock in trade, which might at any time during the continuance of the security be upon the debtor's premises, and applying the rule laid down in equity in Holroyd v. Marshall, (a) it was held in several cases (b) that such assignments operated so as to give a title to stock in trade acquired after the date of the bill of sale. , § 777. III. Personal chattels assigned under a bill of sale to which the act applies are only to be liable to seizure by the grantee for one of the five following causes : 1. Default in payment of the sum secured at the due date, or in the performance of any covenant or agreement contained in the bill of sale and necessary for maintaining the security ; 2. The bankruptcy of the grantor or his suffering the goods to be distrained for rent, rates or taxes ; (a) 10 H. L. C. 191. As to the way in 47 L. J., Q. B. 581 ; Lazarus v. Andrade, which equity viewed these contracts to 5 C. P. D. 318 ; but the charge must relate assign, see per Jessel, M. K., in Collyer to specified property, Belding v. Beed, 3 v. Isaacs, 19 Ch. D., at p. 351, C. A. H. & C. 955 ; Ee D'Epineuil, 20 Ch. D. (6) Leatham v. Amor, 26 W. K. 739 ; 758. CHAP, n.] FRAUD. 673 3. The grantor's fraudulently removing or suffering the goods to be removed from the premises ; 4. The grantor's failure, without reasonable excuse, to produce, upon the written demand of the grantee, his last receipts for rent, rates, and (o) taxes ; 5. Execution levied on the goods under a judgment. And even where seizure has taken place for any one of the foregoing causes, the court or a judge may on the application of the grantor, within five days from the seizure, restrain the grantee from removing or selling (d) the goods, if satisfied that, by payment or otherwise, the cause of seizure no longer exists (sect. 7) ; and in order to give time for such an application, the goods seized are not to be removed or sold (d) until the expiration of five clear days from the seizure. There is nothing in the 7th section to warrant the statement in the marginal note that a bill of sale containing a power to seize, except for one of the five given causes, shall be void, (e) • The insertion in the bill of sale of a cause of seizure not authorized by the act would probably be simply nugatory. It would seem, also, that no practical effect could be given to the second authorized cause of seizure, where the grantor of the bill of sale is a trader. The 15th section of the act of 1882 repeals the 20th section of the act of 1878, and the result, at any rate so far as relates to con- ditional bills of sale, is to bring chattels comprised in a bill of sale, even if registered, within the order and disposition clause of the bank- ruptcy act, 1869 (ante § 749.) § 778. IV. A bill of sale to which the act applies, is not to be any protection against taxes and poor and other parochial rates (sect. 14.) Lastly. Provision is made for the local registration in the county courts of abstracts of bills of sale to which the act applies, in addition to the registration in London under the act of 1878 (sect. 11,) and the right to inspect and take extracts from registered bills of sale is defined and limited (sect. 16.) (c) This should probably be " or." containing a power of sale would be (d) It is to be observed that although a treated as " in accordance with " the form power of sale is here implied, no express in the schedule to the act, which is all power of sale is given to the grantee that is required by the 9th section, either in the form in the schedule to the (e) The marginal note correctly sum- act or in the body of the act itself. It is marized the clause as it stood in the draft submitted, however, that a bill of sale bill. 2d 674 AVOIDAXCE OF THE CONTRACT. [BOOK III. § 779. It is to be observed that neither the statute of Elizabeth nor oid law the earlier bills of sale acts rendered the contract void be- ContraoTnot tween the parties, (f) and the 8th section of the act of t r wMn b thi w " 1878 carefully enumerates those third persons who shall parties. remain unaffected by the contract, where the forms and requisites rendered necessary by the act have not been complied with. Without these provisions, however, it would not be competent to either party to impeach the provisions of such a contract on the ground that it was intended as a fraud on creditors, (g) for the general princi- ple of law that no man shall set up his own fraud as the basis of a right or claim for his own benefit would clearly apply, (h) But even as to creditors, such conveyances are not void, but voidable, voTdMto 110 and the creditors must, as in all analogous cases, elect whether they will treat their debtor's conveyance as valid or defeasible. If the transferee makes a conveyance to a bona fide Title of bona third person for a valuable consideration, before the bill fons'a^ufred °f sa ' e ' s impeached by creditors as being in fraud of their goodagah5t ee rights, the title of such bona fide third person will not be creditors. disturbed, (i) But the assignee for value of a bill of sale is not protected as a bona fide third person unless he renew the regis- tration within five years, as required by 29 and 30 Vict., c. 96. (k) 63 (/) Davis v. Goodman, 5 C. P. D. 128, Varney, 98 Mass. 118 ; Brooks v. Martin, C. A., overruling Div. Ct., Id. 20. 2 Wall. 70 ; Ybarra v. Lorenzana, 53 Cal. (g) Eessey v. Windham, 6 Q. B. 166 ; 197 ; Mudge v. Oliver, 1 Allen 74. These Doe d. Roberts v. Roberts, 2 B. & Aid. cases rest on the ground that the court 367. will not allow either party to call (A) Id. Philpotts v. Philpotts, 10 C. B. his own act fraudulent. But there are 85 ; 20 L. J., C. P. 11. cases which hold that the fact of the fraud (i) Moorewood v. South Yorkshire Rail- may be shown, and the result will be that way Co., 3 H. & N. 799 ; 28 L. J. Ex. the party seeking relief upon a contract 114. founded in fraud, will fail. These de- (k) Karet v. Kosher Meat Supply As- cisions are founded on the principle ex- sociation, 2 Q. B. D. 361. pressed by the maxim, In pari deliclu 63. Transfers in Fraud of Creditors melior est conditio possidentis. Church v. are Valid Between the Parties, and Muir, 33 N. J. L. 318. In this case Beas- Against all Save Creditors. — Telford v. ley, C. J., erroneously supposes this view Adams, 6 Watts 429, 434 ; Boyle v. Ran- to be sustained by the greater weight of kin, 22 Penna. 168, 170 j Phipps v. Boyd, authority. Nellis o. Clarke, 20 Wend. 54 Penna. 342; Evans v. Herring, 27 N. 24; S. C, 4 Hill 424. And see Gary v. J. L. 243 ; Ruckman v. Ruckman, 32 N. Jacobson, 55 Miss. 204, where the subject J. Eq. 259 ; Gary v. Jacobson, 55 Miss, is discussed and cases cited. Burleigh v. 204 ; Maher v. Swift, 14 Nev. 324 ; Alii- White, 64 Me. 23. son v. Hogan, 12 Nev. 38; Harvey v. CHAP. II.] FRAUD. 675 § 780. The act of 1882 has made an important change in this re- spect. It repeals the 8th section of the act of 1878, „ , r l ' New law. above referred to, and renders any bill of sale given by — way of mortgage absolutely void, unless it complies with luteiy void in" the provisions contained in the 8th, 9th and 12th sections of the act. Under the statute of Elizabeth it was held in various cases that as the transfer was good not only between the parties, but as aerainst strangers, not creditors, the sheriff would be held trespasser un- 6 . „ , . , , t . less he show liable as a trespasser if he seized the goods on execution both judgment . . , , . and writ. against the vendor, unless he put in evidence the writ to show that he was acting for a creditor ; (I) and in White white *. Mor- v. Morris, (I) it 'was held, overruling Bessey v. Windham, [m) that it was necessary for the sheriff to produce, in wwt, evidence, the judgment as well as the writ, in order to defend him- self in such cases. A bill of sale being a security for a debt becomes void when- the debtor has been released by a discharge in bank- tintouXy" ruptcy.(n)] «£d.Mii«f SECT. "VI. FRAUD ON CREDITORS FRAUDULENT PREFERENCE. § 781. Contracts of sale will also be avoided as fraudulent against creditors when made in furtherance of an attempt to dis- turb the principles on which the bankrupt and insolvent pose o/dis-'" laws of the country are based, the object of these laws ity among iiT-i ■ /> 1 ii creditors. being to secure an equal ratable distribution of the debt- or's property among his creditors. All contracts, including that of sale, are voidable as fraudulent when made for this purpose. In all contracts between an insolvent and his creditors, the law imports a tacit stipulation that all shall share alike, pari passu ; and that it shall not be competent for any one of them, without the knowledge of the rest, to secure any benefit or advantage in which they have no share, (o) 64 (I) Doe d. Roberts v. Roberts, 2 B. & (») Thompson v. Cohen, L. R., 7 Q. B. Aid. 367; Bessey v. Windham, 6 Q. B. 527; Cole v. Kernott, Id. 534; and see 166 ; Glave v. Wentworth, 6 Q. B. 173, n. Collyer ». Isaacs, 19 Ch. D. 342, C. A. (/) 11 C. B. 1015, and 21 L. J., C. P. 185. (o) Dauglish v. Tennent, L. R., 2 Q. B. (m) See note [1), ante \ 780. 49 ; 36 L. J., Q. B. 10 ; Howden v. Haigh, 64. Sales in Violation of the In- various assignment laws of the states ren- solvent Laws, or Bankruptcy Act. — der preferences void, yet as interpreted, See ante note 59. Although some of the this meaus, in effect, only that a prefer- 676 AVOIDANCE OF THE CONTRACT. [BOOK III. § 782. In this connection it may be useful to refer to a class of cases Return of which will again come under consideration in the chapter pafd^Sidor by treating of stoppage in transitu. The equity in favor of an insolvent, returning goods to an unpaid vendor by a buyer who finds that he is insolvent, and will be unable to pay for them, is so strong in its appeal to the conscience of honest men, that cases have frequently arisen where the buyer, on becoming insolvent, has at- tempted to prevent the goods from being fused into the common mass of assets by rejecting them, or rescinding the sale, and returning the goods. § 783. In some early cases, before the principles were well settled, Early cases couuteuance was given to the idea that a buyer might re- resSssion'of scind a sale after its performance by the actual delivery deifveryto of the goods into his possession, if the rescission was ac- fore^n'actof complished, and the goods returned to the vendor, before '"' the buyer committed an act of bankruptcy. The earliest case on the subject was Atkin v. Barwick, (p) variously reported, and of which a full account was given by Lord Abinger in his dissenting opiuion in James v. Griffin, (q) But although this case subsequently 11 Ad. & E. 1033 ; Higgins ?>. Pitts, 4 Ex. ardson, L. E., 5 C. P. 744. .See, also, 312 ; Wilsoo v. Ray, 10 Ad. & E. 82 ; Lei- Jackson v. Duchaise. 3 T. R. 551, and cester v. Rose, 4 East 371 ; Mallalieu v. Nunes v. Carter, L. R , 1 .P. C. 342, for an Hodgson, 16 Q. B. 689 ; 20 L. J., Q. B. instructive opinion of Lord Westbury, on 339 ■ Britten v. Hughes, 5 Bing. 460 ; the construction of statutes setting aside Coleman v. Waller, 3 Y. & J. 212 ; Wells sales made in contemplation of bank- v. Girling, 1 B. & B. 447 ; Elliott v. Rich- ruptcy. ence in the assignment itself, or a prefer- Patten v. Burr, 52 Iowa, 518 ; Hauselt v. ence given where both seller and buyer Vilmar, 76 N. Y. 630 ; Grant v. National contemplate that an assignment will be Bank, 97 U. S. 80 ; Lincoln v. Wilbur, speedily made, will be void. And the in- 125 Mass. 249 ; Zahni v. Fry, 10 Phil. terpretation of the late United States 247 ; Fraser v. Thatcher, 49 Tex. 26 ; bankruptcy law was similar. The following Dance v. Seaman, 11 Gratt. 778 ; Sipe v. are recent cases upon the general subject : Earman, 26 Gratt, 563, 566; Bentz v. Jones i. Syer, 52 Md. 211; Gardners). Rockey, 69 Penna. 71, 76 ; 1 Am. L. Cas. Commercial Bank, 95 111. 298 ; Eldridge 61, [56] ; Gottwalls v. Mulholland, 15 v. Phillipson, 58 Mies. 276 ; Scott v. Al- U. C. C. P. 62; affirmed, 3 E. & A. 194; ford, 53 Tex. 82 ; Blennerhassett v. Sher- Gordon v. Young, 12 Grant's Ch. (Ont.) man, 105 U. S. 100 ; Rogers ^. Palmer, 318 ; Risk v. Sherman, 21 Id. 250 ; Fra- 102 U. S. 263 ; Barbour v. Priest, 103 U. zier v. Fredericks, 24 N. J. L. 162. S. 293 ; Guernsey v. Miller, 80 N. Y. 181 ; (p) 1 Stra. 165 ; 10 Mod. 432 ; Fortes. Auffmordt v. Rasin, 102 U. S. 620 ; Get- 353. man v. Oswego Bank, 23 Hun 498 ; James (q) 2 M. & W. 623-639. v. Mechanics' Bank, 12 R. I. 460 ; Van < ir.u\ n ] fraud. 677 received countenance in Alderson v. Temple, (?•) in Harman v. Fisher,(s) and various other cases, and was made the basis of the decision in Salte v. Field, (t) yet the ratio decidendi was constantly overruled i questioned, and it is now perfectly well settled that if the latercase3 insolvent vendee has come into actual possession of the goods, he can- not rescind the contract and return the goods to the vendor, for that would be a clearly fraudulent preference in favor of the vendor. This was first distinctly held by Lord Kenyon and the King's Bench, in Barnes v. Freeland, (m) almost immediately after the decision given by them in Salte v. Field, (t) and the question now always turns upon the point whether — First, the buyer has left anything undone for the perfect transfer of the property to himself, in mSS°e ff, per " which case, the sale being incomplete, he may honestly ertyhas P no P 1 ,. , , , pi- i completely decline to complete it to the prejudice 01 his vendor; or passed: secondly, whether, although the transfer of the property or, 2ndi y , P os- •" . . i i j session has not be complete, the transit into his possession remains incom- been taken by plete, in which event he may honestly refuse the posses- sion, so as to leave to his vendor the right of stoppage in transitu, which will be equally available to the latter if he can accomplish it before the assignees get possession of the goods. § 784. An instance of the first kind is given in Nicholson v. Bower, (v) where wheat was purchased by sample, and Nioholson „ forwarded to the purchaser by railway, and on arrival at Bower - the railway warehouse, a bulk-sample was taken to the purchaser by his orders, and found to correspond, but the purchaser, knowing him- self to be insolvent, told his carman, " Don't cart it home at present." The sale was by parol, and the impression of the judges evidently was, that the transit was at an end, so that the vendor's right of stoppage was gone : but the value being over £10, the sale was incomplete under the statute of frauds, unless the vendor had accepted as well as received the goods, and although it might be his duty to accept when he found that the bulk accorded with the sample according to his verbal agree- ment, yet if he chose not to accept, the sale was incomplete, and his object of returning the goods to his vendor would thus be accom- plished. In the language of Erie, J., in commenting on the buyer's (r) 4 Burr. 2235. B. & P. 119;"Heinecke v. Erie, in Ex. (s) Cowp. 117. Ch., 8 E. & B. 410 ; 28 L. J., Q. B. 79. (t) 5 T. R. 211. (v) E. & E. 172; 28 L. J., Q. B. 97; {%) 6 T. B. 80. See, also, Neate v. and see Richardson v. Goss, 3 B. & P. Ball, 2 East 123; Richardson v. Goss, 3 119; and Ex parte Cote, 9 Ch. 27. 678 AVOIDANCE OF THE CONTKACT. [BOOK III. action, "The meaning of all this seems to be this: — 'I will hold my hand : in honesty the wheat ought to go back as I cannot pay for it ;' and he sends the next day a notice to the vendor, and is willing that it should get back to him, if by law it might. The bankrupt broke his contract, mayhap, by not accepting, but that does not show that there was an acceptance." (w) § 785. But even if the property has passed, it may be that the pos- session is not yet obtained, and the buyer may then honestly reject it without exposing himself to the charge of giving an undue preference to one creditor over the others. The different cases in which buyers have adopted this course and thus kept unimpaired the vendor's right of stoppage in transitu, are referred to in the note, (a;) 65 The reader is also referred to a very singular case, that of Dixon v. Dixon v Bald- Baldwin, (y) where the King's Bench decided that al- win ' though the transit was at an end, and although both the property and possession were confessedly in the vendee, yet, under the special circumstances of the case, the buyer had not laid himself open to a charge of fraudulent preference by re- scinding the contract, because it was done by advice of counsel, after a statement of his intention to do so, made to his creditors at a meeting called by him, and not done with the voluntary intention of giving an undue advantage. The judges were not unanimous, and the question was considered by the majority rather as one of fact than of law. («>) As to what amounts to a rescission 65. Voluntary Avoidance by Insolv- of a contract by an insolvent purchaser, ent Buyer. — Seed v. Lord, 66 Me. 580, 582; Bee Morgan v. Bain, L. R., 10 C. P. 15. Clark v. Bartlett, 50 Wis. 543, 547. In (x) Atkin .v. Barwick, 1 Str. 165 ; 10 this last case the goods came to the hands Mod. 432 ; Fortes, 353 ; Salte v. Field, 5 of the insolvent buyer, who had rescinded, T. R. 211 ; Bartram v. Farebrother, 4 and he took them into his possession, but Bing. 579; Smith v. Field, 5 T. R. 402; only for their safe-keeping and not to hold James v. Griffin, 2 M. & W. 623; Siflken as owner. It was held that the asbignee v. Wray, 6 East 371 ; Heincke v. Erie et for the benefit of the buyer's creditors al., 28 L. J., Q. B. 79, and 8 E. & B. could not take the goods. To the same 410; Bolton v. Lancashire and York effect see next case. Sturtevant v. Orser, Railway Co., L. R., 1 C. P. 431 ; 35 L. 24 N. Y. 538, 544; Grout v. Hill, 4 Gray J., C. P. 137 ; Whitehead v. Anderson, 9 361 ; Clemson u. Davidson, 5 Binn. 392 ; M. & W., at p. 529. Se# remarks of Greaner «. Mullen, 15 Penna. 200, 206 ; Parke, B., in Van Casteel v. Booker, 18 Clark v. Lynch, 4 Daly 83. L. J., Ex. 9, at p. 14 ; 2 Ex. 691, at p. (y) 5 East 175. 706. KF 915 Th6 1883 c.l Author Vol. Benjamin, Judah Philip Title Copy Benjamin's Treatise on the JL,. iw uT tale o£ persnual — Date Borrower's Name L_