Case ID: ohio-st_33/html/0063-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hodgson v. Barrett.
    1. In the case of an assignment hy an insolvent debtor for the benefit of creditors, the rights of the assignee in the property assigned are no greater than those of the debtor prior tó the assignment.
    2. Where goods are sold for cash, delivery and payment are concurrent conditions of the sale; and a delivery made in expectation of immediate payment is conditional only; so that if payment be refused, the vendor may reclaim the goods.
    ■3. Where payment is made by a check, drawn by the purchaser on his banker, this is a mere mode of making a cash payment, and not the acceptance of a security. Such payment is conditional only, and if the check upon due presentation is dishonored, the vendor’s right to retake . the goods from the purchaser remains in full force.
    
      4. Nov will such right be affected by a delay in presentment for four days, where the drawer has not sufficient funds in the hands of the drawee for the payment of the check, and no injury arises to the drawer from such delay.
    f>. Under such circumstances, the right of the vendor to rescind the contract will not be lost, as between the parties, by a delay in its exercise, which is not indicative of an election not to rescind, and is not to the injury of the other party.
    Error to tbe Superior Court of Cincinnati.
    Plaintiffs in error brought their action in replevin in the ■Superior Court of Cincinnati, against George W. Zeigler, ■sheriff of Hamilton county, to recover the possession of a barge load of coal, which had been levied upon by said sheriff, as the property of Haubold & Son, by virtue of an ■execution against them in favor of one William H. Brown.
    After the execution of the writ of replevin, Haubold & Son made an assignment under the state law. Subsequently, they were adjudicated bankrupts, under the act provi ding for a uniform system of bankruptcy throughout the United States, and John Barrett was elected their assignee.
    Ziegler never answered in the case. Barrett, assignee, by an order of the court, caused himself to be substituted as party defendant, and filed his answer, and Brown, the execution creditor, who had also been made a defendant was, by consent of parties, dismissed from the case before trial.
    The cause came on for trial at the March term, 1874, of the Superior Court of Cincinnati, on the following agreed statement of facts:
    “ It is agreed that the case shall be submitted upon the following statement of facts :
    “The plaintiffs were dealers in'coal, residing at Pitts-burg, Penn. On the 19th day of March, 1873, they sold and delivered, through their agents, Joseph Walton & Co., then in Cincinnati, to Haubold & Son, coal dealers in the latter-city, tbe barge load of coal, amounting in value to $1,-615.04, described in the petition, terms of sale being one-half cash, balance by promissory note at sixty days. On the day of the sale, Haubold & Son executed and delivered,, for the time payment, their note as follows :
    “ $807.52. Cincinnati, March 19,1873.
    “ Sixty days after date, we promise to pay to the order 'of Hodgson & Mort, eight hundred and seven and fifty-two-one hundredths dollars, at German Savings Institution of Cincinnati, 0., value received-.
    “ No. —. Due-. [Signed.]
    “ Haubold & Son.”
    And on the following day, for the balance of the purchase money, gave their check as follows :
    “ No. —. Cincinnati, March 20, 1873.
    “ German Savings Institution : Pay to Joseph Walton & Co., or order, eight hundred and seven and fifty-two one hundredths dollars.
    $807 52-100. [Signed.]
    “ 16,709. “ Haubold & Son.”
    “ Indorsed as follows : ‘ Joseph Walton & Co/ ‘ Pay H. Peachey, cashier, or order, for account of Farmers’ Deposit National Bank of Pittsburg, Pa. S. George, Jr., cashier/' Which check was accepted by the agents, the payees of the check, and forwarded same day to Pittsburg, which, on the day of its arrival, they placed in their (the agents’) bank for collection, and said bank, on the day of its deposit, forwarded same to its correspondent in Cincinnati, the Lafayette Bank, and on the 24th day of March, 1873, the day of its receipt by the Lafayette Bank, was presented for payment to the payer, the ‘ German Savings Institution,’ and! payment refused, and thereupon the check was protested for non-payment, and no part thereof has since, or ever,, been paid.'
    “ At the time the check was given, and at the date of its; presentation, Haubold & Son had in the German Savings; Institution the sum of $659.38-100, and no more, and nc further deposits were ever made by them, for the reason, that on the morning of the 21st day of March, 1873, che sheriff, by virtue of an execution against them, in favor of ~W. II. Brown, the defendant herein, levied upon all Of their personal property in trade, completely breaking up their business, and compelling them to make an assignment for the benefit of creditors, which was done on the 25th of March, 1873, by proceedings under the state laws, but the assignment was superseded by creditors filing, on the 1st of April, a petition in involuntary bankruptcy against Iiaubold & Son, and they were, on the eighth day of that month, adjudicated bankrupts, and the defendant, John Barrett, herein, was elected and qualified, and still is the assignee in bankruptcy. The assignee has never collected the said $659.38-100, the sum in bank to the credit of Haubold & Son at the date of the check, and at the date of the presentation of the check, nor any part thereof; hut the bank, after the proceedings in bankruptcy were commenced,, appropriated the amount towards satisfaction of a debt of its own from Haubold & Son.
    “ On the day preceding the filing of the petition in this cause, plaintiffs tendered to Haubold & Son the check and note, and requested delivery of the barge and coal, which was refused, as the latter was already in possession of the sheriff, under the execution and levy aforesaid.
    “ If the court shall be of opinion that the plaintiffs are entitled to judgment, the amount shall be for one cent and costs; if the defendant shall be entitled to judgment, the amount shall be sixteen hundred and fifteen and four hundredths dollars, and interest from the 29th day of March, 1873, and the cause shall be retained to determine which of defendants are entitled to the money.
    “ Hoadly & Johnson,
    
      Attorneys for Plaintiff.
    
    “ Moulton & Johnson, and J. Schroder,
    
      Attorneys for •Barrett.
    
    “ Since the foregoing was signed, it is agreed that W. H. Brown has been dismissed in this action, and has no further interest herein, so that if judgment is for defendants, it may be entered in favor of Barrett, assignee.
    “Hoadly & Johnson, Attorneys for Plaintiffs.
    
    “Moulton & Johnson, Attorneys for Barrett.”
    
    Judgment having been rendered, in special term, in favor of plaintiffs in error, defendants in error prosecuted their writ of error to the general term of the superior court, where the judgment below was reversed, and judgment entered for defendants in error, for the sum of $1,615.04, to reverse which judgment this writ of error is prosecuted.
    
      Hoadly, Johnson § Golston, for plaintiff in error:
    The delivery of the coal by plaintiffs in error to Haubold & Son was not absolute, but conditioned upon receiving immediate payment, and the title to the coal did not pass to Haubold & Son until payment; and the giving of a note on the day of sale for one-half the purchase-money, and a check representing the cash on the succeeding one, makes no difference. 23 Ohio St. 311; 2 Disney, 127; 24 N. Y. 139; 2 Keys (N. Y.), 646; 53 N. Y. 462; 16 Conn. 71; 2 Sup. Ct. Rep. 116.
    
      J. Shroeder, and Moulton, Johnson $■ Levy, for defendants in error:
    The title to the coal passed to Haubold & Son. 2 Kent’s Com. 496, 497; Haskins v. Warren, 115 Mass. 537; 3 Duer, 341; 8 Wend. 257; 6 Cowen, 110; 5 T. R. 231; 111 Mass. 453.
   Scott, J.

The question in this case is, whether, under the state of facts shown by the agreed statement, the title to the coal passed unconditionally with the possession to the vendees, in-virtue of the contract of sale and delivery; or whether, as between the parties, the vendors had a right to rescind the contract, and reclaim possession of the coal.

This controversy is virtually between the vendors and the vendees; for the rights of the defendant, Barrett, who is the voluntary assignee in bankruptcy of the vendees, are only those of his assignors. No question arises as to the rights of a bona fide purchaser for value.

The terms of sale were, one-half cash, and the other half by promissory note at sixty days. The delivery of the coal, .and payment therefor, were concurrent conditions of the sale. Plaintiffs could not demand payment till delivery, .and upon delivery they had a right to expect present payment. A delivery, under such circumstances, without more, is, in law, conditional; and if payment be not made, ■the vendor may resume possession of the thing sold. Wabash Elevator Co. v. First Nat. Bk. of Toledo, 23 Ohio St. 311, and authorities there cited; Benj. on Sales, §§ 592, 677.

We must, therefore, regard the delivery mentioned in the agreed statement as conditional only, nothing being stated which would give it a different character. The purchasers proceeded to the execution of the contract, on .their part, by making and delivering their promissory note for the deferred payment. Eor some unexplained reason, the cash payment was not made till the next •day. But we can not infer, from the mere fact that a night intervened before the cash payment was made, that the plaintiffs consented to waive their right to require present payment, or to resume possession of the barge and ■its cargo, if payment should be refused. Such temporary delay is quite consistent with the idea that the parties intended their respective rights to remain in statu quo, until payment should bo made. The burden is on the defendant to show that the plaintiffs waived any of their rights under the contract. On the next day the purchasers gave a check on their banker for the cash payment, and on the-following day became bankrupts. This was only a conditional payment, which would become absolute if the check was paid on presentation, or if presentation was unreasonably delayed to the injury of the drawers. The drawing" of this check was a false representation that the drawers-had funds sufficient to meet it, in the hands of the drawees; and its acceptance by plaintiffs’ agents was not an election to take security instead of cash. The law on this subject is thus stated by Mr. Benjamin, in his Treatise on Sales, § 781: “ But a man who prefers a check on a banker to-payment in money is considered as electing to take a-security instead of cash; for a check is accepted as a particular form of cash payment, and if dishonored the vendor-may resort to his original claim, on the ground that there-has been a defeasance of the condition on which it was-taken. But if a check received in payment is not presented within reasonable time, and the drawer is injured; by the delay, the check will operate as an absolute payment.” This doctrine is abundantly sustained by the authorities. Everett v. Collins, 2 Camp. 515; Smith v. Ferrand, 7 B. & C. 19; Pierce v. Davis, 1 Moody & Rob. 365; Hough v. May, 4 Ad. & Ell. 954; Small v. Franklin Minings Co., 99 Mass. 277; Weddigen v. Boston Flastic Fabric Co.,. 100 Mass. 422. And, on the latter point, Hopkins v. Ware, L. R. 4 Ex. 268; Smith v. Miller, 43 N. Y. 171.

The plaintiffs reside in Pittsburg, and their agents, in-Cincinnati, transmitted the check to that point, whence it was returned to a Cincinnati bank for collection, and thus a delay of four days occurred from the date of the check till its pr-esentation for payment. The drawees, for good cause, refused payment. The drawers had no funds in their hands, and were wholly insolvent. The drawees•were still solvent, and the drawers sustained no loss by the delay. "We can not infer, from the agreed statement, that the check would have been paid if it had been pre•sented on the day of its date. No state of facts is shown which would have justified the drawers in expecting that it would be honored. They had not then provided, and •did not afterward provide, means for its payment, and were otherwise indebted to the drawees. They had as•sumed to appropriate absolutely a sum of money in their banker’s hands, and have no right to complain that the ■plaintiffs’ agents believed in the existence of the fund, and •expected it to lie in the hands of the bankers till called for. Byles on Bills, 20 (6th ed.)

As between the parties then, upon the dishonor of the check, we think the plaintiffs were clearly entitled to re•sume possession of the coal. But, in the mean time, the •coal had passed out of the control of the purchasers, and was in the possession of the sheriff: the purchasers had ■made a voluntary assignment of all their property, and were wholly insolvent. Under these circumstances a delay of three or four days occurred before the dishonored •check and worthless note of the purchasers were tendered ■back, and a return of the coal demanded. Whether the plaintiffs’ agents, Walton & Co., were still in Cincinnati, or had left that place before the protest of the cheek, does not appear. Be this as it may, it would be the duty of the Cin•cinnati bank, which, had received the check for collection, to inform its correspondent, at Pittsburg, of its protest. Information of the fact would naturally reach the plaintiffs ■through a cireuitpus channel, and they would seem to have lost no time in going to Ci n cinnati, and asserting their rights. No such delay is shown as would ^manifest an election not to rescind; nor does it appear that Ilaubold & Son were,in :any way, injured thereby. 'It ought not, therefore, to affect the right of plaintiffs to treat the supposed payment by •chock as a nullity, and wholly to avoid the contract of sale.

The judgment of the court in general term will be re-versed, and that of the court in special term will be affirmed.