Case ID: abb-pr-ns_10/html/0370-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Leonard, Com.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PADDON against TAYLOR.
    
      Commission of Appeals,
    
    
      January, 1871.
    
    
      Fraudulent Sales.—Bona Fide Purchase.—CONSIDERATION.
    
      A purchaser of chattels, to whom the seller has delivered them with intent to pass the title, although the purchaser procured the delivery by fraud, can convey a good title to a jfde purchaser for value.
    
    The surrender by -the latter, of the fraudulent purchaser’s promissory note, given for money loaned, equal in amount to the value of the chattels sold, is a good consideration, and makes the sale valid against the original seller, within this nile.
    
    Appeal from a judgment.
    This action was brought by John W. Paddon against James C. Taylor.
    The complaint alleged that one Hicks, with whom Paddon had had previous dealings, applied to purchase of the plaintiff one hundred and sixty-eight barrels of flour, payable in cash, which were delivered to him. That the purchase was fraudulent. That, immediately afterward, and before payment, Hicks deposited the flour in the warehouse of one Spader, and took from him an acknowledgment of the receipt, from S. P. Taylor, of one hundred barrels, which acknowledgment was marked “not negotiable.” S. P. Taylor was the father and agent of the defendant. That, immediately after obtaining the receipt, Hicks absconded, and that the plaintiff thereupon demanded the flour from Spader, but was refused, and then began an action against Spader to recover the flour. That Hicks had delivered the receipt taken from Spader, to the defendant, for the sole consideration of the,, surrender of a note made by Hicks in favor of Taylor, for money previously loaned. That Taylor then demanded the flour from Spader, and was refused, and that Taylor then began an action in which Spader was sole defendant, to recover the flour. That the claim of Taylor was the reason that Spader had refused to deliver the flour to plaintiff, and that the clnim constituted a cloud on plaintiff’s title. That Spader paid to plaintiff the value of the said one hundred barrels on condition that plaintiff would indemnify him in the suit of Taylor v. Spader. That, at the time of this transaction, the action of Taylor v. Spader was at issue, and that the plaintiff apprehended that, by reason of the form of the receipt given by Spader to Hicks, and by him transferred to Taylor, and from the fact that Spader was the sole defendant in that action, the plaintiff might be embarrassed in defending in Spader's name, and precluded from showing Hicks’s fraud And plaintiff’s title to the flour, whereby he would be put to the expense of another action against Taylor, besides being obliged to repay Spader. The complaint closed with a demand for judgment that the certificate of receipt, and all other evidences of title to said flour, should be brought into court, that they might be canceled, and that the defendant might be perpetually enjoined from further prosecution of the action against Spader, and with a demand for further or other relief, &c.
    The defendant admitted the allegations of the complaint, so far as they related to the transactions in which he was concerned, and upon trial the court found that the allegations of the complaint, admitted by the answer, were true; and found as matter of law that the defendant was entitled to judgment, and ordered the complaint dismissed.
    ■ The plaintiff appealed to the general term, where the judgment was affirmed, and an appeal was taken to this court.
    
      Buekham, Holmes & Bangs, for plaintiff, appellant.
    
      L. A. Fuller, for defendant, respondent;
    Relied on Western Transportation Co. v. Marshall, 37 Barb., 509, affirmed in 6 Abb. Pr. N. S., 280; and on 6 Bosw., 299 ; 3 Duer, 341; 5 N. Y. [1 Seld.], 41; and as to the consideration, on 33 Barb., 215 ; 18 Id., 191.
    
      
       It is otherwise of a purchaser under an executory or conditional contract. In such a case the transfer of possession is not considered a sufficient indication of ownership to protect a bona fide purchaser (Ballard v. Burgett, 40 N. Y., 314; reversing 47 Barb., 646, and overruling in part Winne v. McDonald, 39 N. Y., 233, and Wait v. Green, 36 Id., 556).
    
    
      
       So also of the surrender of past due and protested collateral notes of other persons who were insolvent (Park Bank v. Watson, 42 N. Y., 490).
    
   By the Court.—Leonard, Com.

The plaintiff delivered his flour to a fraudulent purchaser. He rily surrendered his possession under the color of a sale. As between vendor and purchaser, the contract of sale was voidable at the option of the vendor, but it was not void. •

The purchaser could sell the flour, and make a valid title as against the plaintiff, to a bona fide purchaser ; that is, to a purchaser without notice of the fraud by which the flour was purchased from the plaintiff, or reason to suspect it, and who paid a present and sufficient consideration. There was evidence tending to prove that the defendant was such a purchaser, and the fact has been so found, as it must be assumed.

This is conclusive, unless there is some indisputable fact which in law requires a different conclusion.

The plaintiff urges that the defendant did not part with or pay such a consideration as brings him within the class of bona fide purchasers entitled ■ to hold against a vendor where the property has been obtained through a fraudulent sale.

The facts in regard to the consideration paid by the defendant, are, that he held the promissory note of the alleged fraudulent purchaser, given to him for money loaned, equal in amount to the value of the flour. He purchased the flour, and gave up the note in payment of the price. This payment made the purchase by the defendant valid against the plaintiff, so far as the consideration bears upon the bona fide character of the transaction (Youngs v. Lee, 12 N. Y. [2 Kern.] 551; Pratt v. Coman, 37 N. Y., 440).

The plaintiff relies on the case of Spraights v. Hawley, 39 N. Y., 441, and other cases of a like tenor, to establish his right to recover the flour, or defeat the title of the defendant.

The cases cited do not cover the principle involved. The mortgagee in the case cited had not voluntarily. surrendered his lien, nor put another in possession of the property. Mere possession of personal property is not such indicia of ownership as will protect a bona fide purchaser for value.

The possession of an agent or bailee who'has no power of sale from the owner, or the possession of a thief, will not enable a purchaser to obtain any title, howevér fair-the price paid, or free from reason to doubt the right of such possessor to make the sale.

The consent of the owner to part with the possession of his merchandise, although fraudulently obtained, enables his vendee to give a good title to a purchaser, who will be entitled to protection, if his transaction is bona fide.

The judgment should be affirmed with costs.

All the commissioners concurred, except Lott, Oh. Com., who did not vote.

Judgment affirmed, with costs.