Case ID: mass_29/html/0312-01.html
Source: Caselaw Access Project
Author: {"author": "Shaw C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

David Rowley et al. versus Benjamin Bigelow et al.
    
    In trover for goods sold by the plaintiff to a vendee under whom the defendant derived his title, it was held, that the testimony of persons who had sold goods to the same vendee about the same time, showing that he was then insolvent, and that he knew it, and that he had no reasonable expectation of paying for the goods purchased by him, is competent evidence to prove that his purchase from the plaintiff was fraudulent.
    A fraudulent purchase of goods, accompanied with delivery, is not void but voidable only, at the election of the vendor, and until it is avoided the vendee has power to make a valid sale of the goods to a bond Jide purchaser having no notice of the fraud.
    Where goods sold, to be paid for on delivery, were put on board a vessel appointed by the vendee to receive them, not for the purpose of transportation to him or to be delivered for his use at a place designated by him, but to be shipped by such vessel, in his name, from his place of residence and business, to a third person, it was held, that the right to stop in transitu was at an end when the goods were put on board the vessel.
    If a bill of lading is signed before the goods are shipped or even purchased, and afterwards, at any time before the vessel sails on the voyage described, goods are put on board as and for the goods embraced in the bill of lading, as against the shipper and master, the bill of lading will operate on such goods by way of relation and estoppel; and the consignee, who receives it and accepts drafts on the faith of the consignment, has as valid and effectual a title to the goods as could be obtained by an actual delivery of the goods themselves.
    Trover for 627 bushels of yellow corn, valued at 55 cents a bushel.
    At the trial, before Wilde J., it was proved by the plaintiffs, that on the 24th of May, 1830, the corn belonged to them and was in their possession, in the city of New York, on' uoaid the sloop Milan, of which S. Dunning, one of the plaintiffs, was master, and that it was measured and delivered on board the schooner Lion. They alleged that one William N. Martin, a merchant there, fraudulently obtained possession of it by pretending to purchase it for cash ; and it was proved that on the 25th of May he shipped it on board the Lion, consigned to the defendants at Boston, and that the vessel sailed in the afternoon of that day for Bostón. On the 26th, Dunning, having ineffectually demanded payment for the corn, at Martin’s counting-house, proceeded to Boston to reclaim it. He reached Boston before the arrival of the Lion, and on the 29th gave notice to the defendants, to whom by Martin’s orders the corn was to be delivered, that Martin had fraudulently obtained it from the plaintiffs, and that they intended to repossess themselves of it. On the 30th, when the Lion had arrived in Boston harbour, Dunning boarded her and demanded of the master possesssion of the corn, giving him notice that Martin had obtained it fraudulently from the plaintiffs. The master notwithstanding delivered it to the defendants ; after which Dunning demanded it of them and tendered them any freight or charges which they had paid. They refused to deliver the corn, and thereupon the suit was commenced.
    In order to establish the fraud on the part of Martin, the plaintiffs relied on the depositions of C. A. Jackson and others, merchants in New York, who testified that Martin had made similar purchases of them about the same time, and imder circumstances tending to show that he was insolvent, and that he knew it and had no reasonable expectation of paying for the merchandise according to his contract. The defendants objected to the admission of these depositions, but the judge permitted them to be read to the jury.
    The defendants, to establish their right to hold the corn against the plaintiffs, offered in evidence a bill of lading, dated May 17th, 1830, signed by the master of the Lion, purporting to be for 2000 bushels of yellow corn shipped by Martin and consigned to the defendants ; also an invoice corresponding to the bill of lading and purporting to be for 2000 bushels of corn consigned to the defendants for sale on the shipper’s account, and signed by Martin ; also a letter from Martin to the defendants, dated May 17th (to which the bill of lading and invoice were annexed) advising that he valued on them in favor of Henry Bennett for $ 1000, at ten days’ sight, and directing them, if he had valued too much on this shipment, to charge it to some previous one, there being an existing account between Martin and the defendants. And i't was proved that a bill drawn accordingly by Martin, was accepted by the defendants on the 20th of May and paid by them at maturity
    There was no evidence that the defendants had any knowledge of the fraudulent conduct of Martin, but it appeared that they received the bill of lading and invoice and accepted the draft in the usual course of business.
    Upon this evidence the judge ruled, that the defendants had a good title to the property notwithstanding the fraudulent conduct of Martin, and notwithstanding the bill of lading had been signed before the corn was shipped ; to which the plain tiffs excepted.
    A verdict was taken for the defendants by consent; and if the whole Court should be of opinion that they had a valid title to the corn, under the invoice and bill of lading, judgment was to be rendered upon the verdict; but if the Court should be of opinion that the ruling was wrong, the verdict was to be set aside and the defendants defaulted, unless the Court hould also be of opinion that the depositions above mentioned were improperly admitted ; in which case a new trial was to be granted.
    
      March 10th.
    
    
      Fletcher and W. J. Hubbard for the plaintiffs.
    The possession of the corn having been obtained by fraud on the part of Martin, the property remained in the plaintiffs and did not vest m Martin, and the defendants, claiming under him, have no title. 2 Kent’s Com. 390, cites Noble v. Adams, 7 Taunt. 59; De Wolf v. Babbett, 4 Mason, 289.
    Even if Martin might have made a valid transfer by a sale and delivery of the goods themselves, the delivery of the bill of lading merely would not have that effectit wrould pass such title only as the consignor himself had. Now the corn was not purchased by Martin, until some days after the bill of lading had been received and the draft had been accepted by the defendants. There is no precedent of a bill of lading carrying property not existing as the subject of it at the time when it was executed. Mason v. Lickbarrow, 1 H. Bl. 362 ; Austen v. Craven, 4 Taunt. 643.
    The bill of lading was fraudulent, being signed before the goods were on board, and consequently no title could pass by it; and the defendants have a remedy against Martin and the master of the vessel. 2 Holt on Ship. 75 ; Lickbarrow v Mason, 2 T. R. 75 ; Meyer v. Sharpe, 5 Taunt. 74.
    Suppose there was no fraud, yet the sale being made for cash, the delivery was conditional and the plaintiffs had a right to reclaim the corn before it arrived at Boston, its place of destination ; and by giving notice of their claim to the defendants and going on board the vessel and demanding the corn before it was delivered to the defendants, they did what was equivalent to an actual stoppage in transitu. 2 Kent’s Com. 430, 434 ; 2 Holt on Ship. 204; Mason v. Lickbarrow, 1 H. Bl. 362.
    
      Curtis for the defendants.
    The depositions were inadmissible, the facts therein stated being res inter alios, and the deponents being parties to similar suits in which it is for their interest to prove fraud in the purchases made by Martin.
    But assuming the purchase to be fraudulent, the vendee, being in possession of the goods, could convey a valid title to an innocent bona fide purchaser. Parker v. Patrick, 5 T. R. 175; Hollingsworth v. Napier, 3 Caines’s R. 186; Buffington v. Gerrish, 15 Mass. R. 158; Walsh v. Mowrey, 8 Cowen, 238; Hussey v. Thornton, 4 Mass. R. 407; Smith v. Dennie, 6 Pick. 266.
    The right to stop in transitu ceased upon the corn’s being put on board the vessel. That was a delivery to Martin, and after that he was capable of making a valid sale or consignment. Hawes v. Watson, 2 Barn. & Cressw. 540; Cuming v. Brown, 9 East, 506; Hollingsworth v. Napier, 3 Gaines’s R. 186; Abbott on Ship. (4th Am. edit.) 368, 369, 378; Stubbs v. Lund, 7 Mass. R. 453. And a bill of lading was not essential, to enable the defendants to demand the merchandise. Be Wolf v. Harris, 4 Mason, 515; Walter v. Ross, 2 Wash. C. C. Rep. 289.
    We however view the bill of lading as an important document in the case. Martin and all persons claiming under him are estopped by it to say the merchandise was not on board before it was signed.
    
      March 19 th.
    
   Shaw C. J.

delivered the opinion of the Court. The first question arising in this cause is, whether the depositions of Jackson and others, under the circumstances, ought to have been admitted as competent. These were generally persons, of whom Martin had ‘made similar purchases, of like articles, about the same time, and under circumstances tending to show that he was insolvent and had no reasonable expectation of paying for the merchandise according to his contract.

The objection to this evidence is placed on two grounds, first, that these persons having similar claims of their own, some of which are pending here, they have an interest in establishing the fraud which they are called to prove ; and secondly, that the transactions being res inter alios, have no tendency to prove the fact in issue in this particular case.

But in our opinion, the objection cannot be sustained upon either ground. As to the first, it is quite clear, that the verdict and judgment in this case would not be evidence in either of theirs ; that their interest is in the question and subject matter and not in the event of the suit, and therefore that the objection, such as it is, goes to the credit and not to the competency of the witnesses. As to the other objection, we think this evidence has a direct and material bearing upon the fact in issue. It tends to show, that at the time this ostensible purchase was made, Martin was insolvent, that he knew he was insolvent, that he had no reasonable ground to believe that he could pay the cash and did not expect or intend to pay the cash for the merchandise which he purchased, and so that he obtained the goods by false pretences. The fact of insolvency, of his knowledge of his insolvency, and that he had no expectation or intention of paying for the corn in question, is a material fact and the principal fact in controversy on which this case rests, and is material to the issue. The evidence bears upon the question quo animo, the intent, the fraudulent purpose.

2. It is next contended on the part of the plaintiffs, that no property passed by the fraudulent purchase of Martin, from the plaintiffs to him, so as to enable him to make a title to the 'defendants.

The evidence clearly shows that there was a contract of sale and an actual delivery of the goods, by their being placed on board a vessel, pursuant to his order ; and this delivery was unconditional, unless there was an implied condition arising from the usage of the trade that the delivery was to be considered revocable, unless the corn should be paid for, pursu ant to the contract and to such usage. This contract and delivery were sufficient in law to vest the property in Martin, and make a good title, if not tainted by fraud. But being tainted by fraud, as between the immediate parties, the sale was voidable, and the vendors might avoid it and reclaim their property. But it depended upon them to avoid it or not, at their election. They might treat the sale as a nullity and reclaim their goods ; or affirm it and claim the price. And cases may be imagined, where the vendor, notwithstanding such fraud, practised on him, might, in consequence of obtaining security, by attachment or otherwise, prefer to affirm the sale. The consequence therefore is, that such sale is voidable, but not absolutely void. The consent of the vendor is given to the transfer, but that consent being induced by false and fraudulent representations, it is contrary to justice and right, that the vendor should suffer by it, or that the fraudulent purchaser should avail himself of it ; and upon this ground, and for the benefit of the vendor alone, the law allows him to avoid it.

The difference between the case of property thus obtained, and' property obtained by felony, is obvious. In the latter case, no right either of property or possession is acquired and the felon can convey none.

We take the rule to be well settled, that where there is a contract of sale, and an actual delivery pursuant to it, a title to the property passes, but voidable and defeasible as between the vendor and vendee, if obtained by false and fraudulent representations. The vendor therefore can reclaim his property as against the vendee, or any other person claiming under him and standing upon his title, but not against a bond fide purchaser without notice of the fraud. The ground of exception in favor of the latter is, that he purchased of one having a possession under a contract of sale, and with a title to the property, though defeasible and voidable on the ground of fraud ; but as the second purchaser takes without fraud and without notice of the fraud of the first purchaser, he takes a title freed from the taint of fraud. Parker v. Patrick, 5 T. R. 175. The same rule holds in regard to real estate. Somes v. Brewer, 2 Pick. 184.

3. Another ground is, that the plaintiffs had a right to stop in transitu, and exercised that right, in sufficient season, by demanding the goods of the master on his arrival at Boston, and before the goods reached the hands of the defendants.

The right of stoppage in transitu is nothing more than an extension of the right of lien, which by the common law the vendor has upon the goods for the price, originally allowed in equity and subsequently adopted as a rule of law. By a bargain and sale without delivery, the property vests in the vendee; but where, by the terms of sale, the price is to be paid on delivery, the vendor has a right to retain the goods till payment is made, and this right is strictly a lien, a right to detain and hold the goods of another as security for the payment of some debt, or performance of some duty. But when the vendor and vendee are at some distance from each other, and the goods are on their way from the vendor to the vendee, or to the place by him appointed for their delivery, if the vendee become insolvent and the vendor can repossess himself of the goods before they have reached the hands of the vendee or the place of destination, he has a right so to do, and thereby regain his lien. This however does not rescind the contract, but only restores the vendor’s lien; and it can only take place when the property has vested in the vendee.

Without considering what would have been the effect of the oill of lading in defeating the vendor’s right to stop in transitu, had the place of destination been Boston, we are of opinion that upon another ground, the right did not exist in the present case.

What does or does not constitute a journey’s end, and the termination of the transit, may, in many cases, be a question of difficulty and has often been a subject of discussion. But here we think it very clear, that a delivery of the corn on board of a vessel appointed by the vendee to receive it, not for the purpose of transportation to him, or to a place appointed by him to be delivered there for his use, but to be shipped by such vessel, in his name, from his own place of residence and business to a third person, was a termination of the transit, and the right of the vendor to stop in transitu was at an end. Noble v. Adams, 7 Taunt. 59.

4. It is contended that the defendants were not purchasers for a valuable consideration and bona fide, so as to be entitled to the benefit of the exception in their favor. But we are of opinion that they do stand in that relation, and are entitled to the benefit of it. It appears that they advanced, either in cash or by the acceptance of Martin’s drafts in favor of third persons, to an amount equal to the value of the goods, and that after having been furnished with bill of lading and invoice and in the ordinary course of business. The ground upon which the plaintiffs rely is, that at the time the bill of lading was signed, the corn was not on board, and in fact, as appears by a comparison of dates, had not been purchased of the plaintiffs. This was undoubtedly irregular; and if done by collusion between Martin and the master to enable the former to get money or credit on the bill of lading, was a gross fraud upon any person deceived by it. But it is not perceived how the plaintiffs can avail themselves of this, supposing it to lie a fraud. A bill of lading is a contract of carriage for hire, by which the master engages to deliver the goods to the shipper or his order, and so is quasi negotiable. It operates by way of estoppel against the master and also against the shipper and indorser.

The bill of lading acknowledges the goods to be on board, and regularly the goods ought to be on board before the bill of lading is signed. But if, through inadvertence or otherwise, the bill of lading is signed before the goods are on board, upon the faith and assurance that they are at hand, as if they are received on the wharf ready to be shipped, or in the shipowner’s warehouse, or in the shipper’s own warehouse, at hand and ready, and afterwards they are placed on board, as and for the goods embraced in the bill of lading, we think, as against the shipper and master, the bill of lading will operate on these goods by way of relation and by estoppel.

It is asked, how long after the signature of the bill of lading property may be delivered on board, so as to be bound by it and become the subject on which it shall operate. We think, at any time whilst the vessel is taking in her cargo for that voyage, as described in the bill of lading, and before she sails upon it. Here there was a time, when the bill of lading might have been properly signed by the master, namely, after the corn was delivered and before the vessel sailed; and it is admitted that this was received as and for the corn mentioned in the bill of lading. And it can make no difference to the plaintiffs, whether the bill of lading was signed after this shipment, or a few days before, in anticipation of such shipment. Supposing, then, that when the goods were shipped, as against the shipper and master the bill of lading operated upon this property and would have bound the master to deliver it to the consignee, as we think it would, then by the uniform course and practice of merchants, the bill of lading represents the property, and any bond fide title for valuable consideration. obtained by a transmission or negotiation of the bill of lading, gives as valid and effectual a title to the goods, as could be obtained by an actual delivery of the goods themselves.' The defendants have shown such a title, and there' fore the order of the Court must be

Judgment on the verdict. 
      
       See Bottomly v. United States, 1 Story R. 135; Bradford v. Boylston F. 
        
        M. Ins. Co. 11 Pick. 162; Rex v. Hough, 1 Russ. & Ry. 120; Rex v. Bull, ibid. 132; Rex v. Dunn, 1 Mood. Cr. Cas. 146; Rex v. Hunt, 3 Barn. & Aid. 566; Phillips & Amos on Evi. (8th Lond. ed.) 494.
     
      
       See Clay v. Harrison, 10 Bam. & Cressw. 99; James v. Griffin, 2 Mees. 
        & Welsby, 632; Edwards v. Brewer, ibid. 379; People v. Haynes, 14 Wend. 566.
     
      
       See Bolin v. Huffnagle, 1 Rawle, 9; Allen v. Gripper, 2 Crompt. & Jervis, 218; Foster v. Frampton, 6 Barn. & Cressw. 107; Townley v. Crump, 5 Nev. & Mann. 606; Buckley v. Furniss, 15 Wend. 137; Newhall v. Vargas, 1 Shepl. 93
     
      
       See Mien v. Williams, ante, 297.-