Case ID: ad_143/html/0317-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hirsch Lumber Company, Respondent, v. Charles Bulkley Hubbell, as Assignee of Edward P. Coe and William H. Knox, Appellant.
    First Department,
    March 10, 1911.
    Sale — cash, on delivery — waiver — when title passes — insolvency of buyer — fraud.
    Although goods are to be paid for in cash on delivery the seller waives the condition if he deliver without demand for payment- the title passes to the buyer and the seller cannot afterwards maintain trover except the goods were obtained by the fraudulent contrivance of the buyer.
    The title of the buyer is good under the conditions aforesaid, although it thereafter made a general assignment for the benefit of creditors and was insolvent on the day of delivery, unless the insolvency was known to it and fraudulently concealed.
    Suit in equity brought by a seller to obtain a decree that the assignee for the benefit of creditors of the buyer held the goods subject to a trust for the plaintiff. Evidence examined, and held, insufficient to sho\y that the buyer was insolvent on the day the goods were delivered, or to show that the insolvency, if any, was known to it.
    The mere fact of insolvency though known to the buyer and not disclosed to the Seller does not impute fraud to the former: there must have been the intent when the property was purchased not to pay for it.
    
      Appeal by the defendant, Charles Bulkley Iiubboll, as assignee, etc.., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 24th of March, 1910, upon the decision of the court rendered after a trial at the New York Special Term
    
      Joseph M. Hartfield, for the appellant.
    
      Ralph James M. Bullowa, for the respondent.
   McLaughlin, J. :

On the 17th of October, 1906, the plaintiff’s assignor, Charles S. Ilirscli & Co., sold to the firm of Cadenas & Coe, the defendant’s assignor, a quantity of lumber at a stipulated price, delivery to be made as thereafter directed, and payment to be made in cash on delivery. The lumber was delivered to Cadenas & Coe on the 22d of January, 1907, on board the bark Maria L., a boat privately chartered by such firm and receiving freight from no other source. On the 15th of February, 1907, Cadenas & Coe made a general assignment for the benefit of creditors to the defendant Hubbell, who thereafter sold the lumber and received therefor the sum of $690.92. Some time after the delivery of the lumber to Cadenas & Coe, Charles S. Ilirscli & Co. assigned its claim therefor to the plaintiff, who brought this action in equity for the purpose of procuring a judgment to the effect that Hubbell, as assignee, was a trustee for the plaintiff of the lumber in question and that he be decreed to account for and pay over to the plaintiff the proceeds derived from the sale made by him. The judgment sought is based upon allegations in the complaint to the effect that under the terms of sale the plaintiff’s assignor was to be paid cash when the lumber was delivered, and that at that time the defendant’s assignor was insolvent, which fact was known to it, but fraudulently concealed from plaintiff’s assignor. The answer denied the material allegatio'ns of the complaint except as to the delivery of the lumber, the sale by the defendant and the proceeds derived therefrom. It also set up certain affirmative defenses. The trial court found in favor of the plaintiff and directed judgment in its favor against the defendant for the sum of $690.92, with interest from March 1, 1907. It also found that the firm of Cadenas & Coe was insolvent on the day the lumber was delivered, but did not find that that fact was known to such firm or that the same was fraudulently concealed from plaintiff’s assignor.

Considering the evidence in the most favorable view to the plaintiff, I do not think it was entitled to judgment. If it be true, as claimed, that the lumber was to be paid for in cash on delivery, or “ cash against documents,” the plaintiff’s assignor waived such condition. Ho demand was made for the payment of cash when the lumber was delivered or when bills were rendered for it; indeed, no such demand was made until March 1, 1907, at which time the assignee of Cadenas & Coe had sold the lumber. The rule was settled as far back as C hapmam, v. Lathrop (6 Cow. 110) that where goods are sold for cash, the vendor need not deliver them until the cash is paid, but if he deliver them without payment, the property passes, and if the vendee afterwards refuses to pay, the vendor cannot maintain trover for the goods, unless they are obtained by the fraudulent contrivance of the vendee. That case has been since followed and many times cited with approval. Thus, in Smith v. Lynes (5 N. Y. 41), it was said : “ Where goods are sold on condition of being paid for on delivery in cash or commercial paper, or on condition of receiving on delivery security for payment, an absolute and unconditional delivery of the goods by the vendor without exacting at the time of delivery a performance of the condition, or attaching any other condition to the delivery, is a waiver of the condition of the sale, and a complete title passes to the purchaser, if there is no fraudulent contrivance on the part of the latter to obtain possession. * * * An absolute and unconditional delivery is regarded as a waiver of the condition. By an absolute delivery without exacting the performance of the condition, the vendor is presumed to have abandoned the security he had provided for the payment of the purchase money, and to have elected to trust to the personal security of the vendee.”

• And to the same effect are Osborn v. Gantz (60 N. Y. 540) and Parker v. Baxter (86 id. 586).

Here, the lumber was delivered unconditionally. Ho evidence whatever was offered showing, or tending to show, either by acts or declarations of the parties that the delivery should be considered otherwise than as complete. Bills were thereafter delivered for the lumber. Some twenty odd days elapsed between the delivery of the goods and the assignment to the defendant and no demand had been made for cash. Hor was any demand made until fifteen days after the assignment. The truth is, the firm of Cadenas & Coe was considered solvent, and for that reason plaintiff’s assignor was perfectly willing to deliver the lumber and waived the condition that cash was to be paid on delivery. The fact that Cadenas & Coe thereafter made a general assignment for the benefit of creditors, or that it was insolvent on the day the delivery was made, unless such insolvency was known to it and fraudulently concealed, in no way changed the situation. The finding that it was insolvent on the day that the lumber was delivered is not sustained by the evidence, because the fact is uncontradicted that it was forced to assign some time thereafter, not because it did not have assets sufficient to pay its debts, but because of failure to collect from its creditors bills which they owed. But, if insolvent, there is no evidence that that fact was known to it.

It seems to be settled that the mere fact of insolvency, though known to the vendee, and not disclosed to the vendor, does not afford ground for imputing fraud to the former. There must have been the intent when the property was purchased, not to pay for it.” (Wheeler & Wilson Mfg. Co. v. Keeler, 65 Hun, 508 ; Hotchkin v. Third Nat. Bank of Malone, 127 N. Y. 329.)

Several other grounds are urged as calling for a reversal of the judgment, but we have not considered them, preferring to place our decision upon the ground that from the record as it comes to us the title to the lumber passed by delivery to the defendant’s assignor.

The judgment appealed from, therefore, is reversed and a new trial ordered, with costs to appellant to abide event.

Ingraham, P. J., Laughlin, Soott and Miller, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event.