Case ID: mass_47/html/0068-01.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

Martin Hoffman & another vs. Joseph Noble & another.
    Though goods, which a purchaser obtains by fraudulent representations, may be reclaimed from him by the seller, if he seasonably rescind the sale, yet if the purchaser sells them, for a valuable consideration, to a third person who has no notice of the fraud, or consigns them to such person for sale, and he advances money thereon, before the first seller interposes, such second purchaser or consignee will hold the goods against the first seller.
    In an action of replevin, the general issue pleaded, with notice, pursuant to St. 1836, c. 273, of the matter intended to be given in evidence by the defendant, is equivalent to an avowry, or plea of property in another, at common law, with a suggestion foi a return $ and judgment for a return may be awarded, if the defendant prevails,
    r., a broker, in behalf of A., agreed with B., a commission merchant, to consign to him certain goods of A. for sale, of part of which goods a bill of lading had been received and was delivered to B. j and B. advanced a certain sum against said consignment, and agreed to sell the goods on commission: As the goods had not arrived, T., for himself, pledged to B. an accepted draft, as collateral security for the money advanced by him, to be held by B. until the goods should be received by him; and it was agreed that if the goods, on arrival, should not be satisfactory to B., T. should be at liberty to pay the sum advanced by B., and to take back the draft and goods, and that he would do so, on B.?s request. That part of the goods, which were described in said bill of lading, afterwards arrived and came into B.'s hands, and they were taken from B. on a writ of replevin sued out by H., who claimed them on the ground that they had been fraudulently obtained from him by A.: Afterwards, and before the action of replevin was tried, B. received the sum advanced by him out of the proceeds of the draft pledged by T., and from other sources; and on the trial of said action, B. prevailed. Held, that B. was entitled to judgment for a return of the goods.
    Replevin of seventy five baskets of champagne wine. Plea, the general issue, with a specification of the grounds of defence.
    The plaintiffs were auctioneers in the city of New Y ork, and the defendants commission merchants in Boston. At the trial, in the court of common pleas, before Williams, C. J. the p.ain-tiffs offered evidence to prove that the wine in question was sold by them at auction, in New York, on the 23d of June 1841, to Samuel N. Greene, and that one of the terms and conditions of the sale was, that the purchaser should give satisfactory paper for the price. The evidence also tended to prove that the wine, after the sale, was delivered, by the plaintiffs’ order, to said Greene, upon his promise that he would afterwards procure and deliver to the plaintiffs such approved paper; and that the plaintiffs afterwards demanded such paper of said Greene, who neglected and failed to procure the same.
    Upon this evidence, the plaintiffs insisted that no property in the wine passed to said Greene, by such sale and delivery, until performance, on his part, of the said condition of sale. The court instructed the jury, on this point, that though the plaintiffs, on such conditional sale, might have retained the wine until the condition should be performed, yet that if, in consideration of said Greene’s promise to perform it, they made an absolute delivery of the wine to him, they thereby waived the condition, and could not afterwards rescind said sale and reclaim the wine, upon his failure to perform said promise.
    The plaintiffs also offered evidence tending to prove that said Greene procured the delivery of the wine by them to him, as aforesaid, by a fraudulent pretence that he would afterwards perform said condition, without any intention to perform the same, or to pay for the wine. And the court requested the jury to decide the question of fraud, upon the evidence submitted to them; but upon this point, the jury could not agree.
    The evidence also tended to prove that the plaintiffs were not the general owners of the wine in question, and that they had never, until the commencement of this action, been in the actual possession thereof; that it remained in the possession of the general owner, until it was delivered to said Greene by the plaintiffs’ order, as aforesaid; and that the plaintiffs had no other title to or interest in the wine, except such as arose from their employment by the owner to sell the same at auction.
    
      Upon this evidence, the defendants objected that the plaintiffs could not maintain this action. But the court overruled the objection.
    The defendants, to prove their interest in and right to the possession of said wine, read in evidence the following written agreement, made June 24th 1841, between them and John S. Tylei, a broker, in behalf of D. Greene, a partner of said Samuel N. Greene, and jointly interested with him in said wine:
    “J. S. Tyler, in behalf of D. Greene, has agreed with Noble & Sturtevant, to consign to them 140 baskets of champagne wine, to be received from N. York, of which bill lading for 75 baskets has been received and delivered over to said Noble & Sturtevant, and also 200 barrels tar now in Boston; and Noble & Sturtevant agree to advance $ 1005-53 against said consignment, and to sell the said goods for the customary commission of 2J per cent., and if sold on credit, then to charge the customary guaranty commissions ; charging also interest on said advance. And as the said wine has not yet arrived, so that the quality may be ascertained, the said Tyler, for himself, has pledged to said Noble & Sturtevant an acceptance, dated June 15th 1841, of D. Greene’s draft on S. T. Armstrong, N. York, payable in 90 days, for $1025, to be and remain as collateral security for the advance aforesaid, until the said wine shall be received. And it is agreed that if said Noble & Stur-tevant shall not be satisfied with the said merchandize, when they shall have seen the same, the said Tyler shall be at liberty to pay them the sum advanced, with a commission of 2J per cent, thereon, and to take back the said acceptance and the said merchandize. And the said Tyler agrees, that if the said Noble & Sturtevant shall require him so to do, he will so take back said merchandize and acceptance, within 3 days after notice of their wishes, paying said advance, interest and commissions. John S. Tyler, for himself and D. Greene.
    Noble & Sturtevant.”
    The defendants also offered evidence to prove that they did advance said sum, and that the wine in question afterwards came into their hands and possession, pursuant to and in part execution of said agreement; but they admitted that, since the commencement of this action, and before the trial, the sum so advanced by them had been fully paid from the proceeds of the draft and tar mentioned in said agreement.
    Upon this evidence, the court instructed the jury, that if they were satisfied that the written agreement aforesaid was a true and bona fide transaction between the parties thereto, and that the defendants actually made the said advance upon such agreement, it was in effect an advance on the credit of said consignment ; and if the jury were satisfied that the said wine came to the defendants’ possession pursuant to such agreement, and they made the said advance thereon in good faith, in the usual course of business, and without notice of any fraud, on the part of said Greene, in procuring the delivery thereof, the defendants would be entitled to a verdict.
    The following verdict was returned : “ The jury find that the defendants came into possession of the property alleged to be detained by them, without a knowledge of its having been obtained fraudulently, and that the defendants advanced thereon the sum of $ 1005-53, in good faith, and in the usual course of business; and so they find that said defendants are not guilty in manner and form as the plaintiffs in their writ have alleged; and they assess damages in the sum of one cent.”
    After the verdict was received and recorded, the defendants filed a motion that judgment should be rendered for a return of said wine, which was ordered by the court accordingly.
    The plaintiffs alleged exceptions to the rulings, directions and decisions of the court.
    
      E. D. Sohier, for the plaintiffs.
    The plaintiffs sold the wine to D. & S. N. Greene, on a condition that was not performed, and therefore had a right to reclaim it. 1)’Wolf v. Babbett, 4 Mason, 289. Palmer v. Hand, 13 Johns. 434. The money advanced on the wine, by the defendants, was repaid before the trial; so that they had no legal claim or lien, even if there had been no fraud in the Greenes. And as the jury did not agree on the point of fraud, judgment for a return should not have heen entered. The defendants had, at most, only a lien, at any time; and that lien was discharged before verdict. If the Greenes could not hold against the plaintiffs, by reason of fraud, the defendants could not. Wheeler v. Train, 4 Pick. 168. Simpson v. M’Farland, 18 Pick. 427.
    The plaintiffs may well maintain this action. By the “owner” of goods, who is entitled by the Rev. Sts. c. 113, § 27, to cause them to be replevied, is meant a special as well as a general owner. Williams v. Millington, 1 H. B. 81. Willing v. Rowland, 4 Dali. 106, note.
    
    
      Crowninshield, for the defendants.
    If the sale of the wine was conditional, the plaintiffs have waived the condition. Long on Sales, (Rand’s ed.) 189. 2 Kent Com. (3d ed.) 497. Hussey v. Thornton, 4 Mass. 407. Smith v. Rennie, 6 Pick. 262. Thurston v. Blanchard, 22 Pick. 20. Dresser Manufi. Co. v. Waterston, 3 Met. 18. Carleton v. Sumner, 4 Pick. 516. Or if they have not waived the condition, yet a bond fide purchaser will hold against them. And the defendants, having in good faith advanced money on the wine, stand on the same ground as an actual purchaser. Somes' v. Brewer, 2 Pick. 184. jRoot v. French, 13 Wend. 572. Furniss v. Hone, 8 Wend. 256. Mowrey v. Walsh, 8 Cow. 238. Rowley v. Bigelow, 12 Pick. 312. Hilliard on Sales, 283.
    The defendants’ lien has not been discharged; and they claim a return for the protection of Tyler as well as themselves. All the payment that has been made is that of Tyler’s draft; and that was paid after this action was commenced. Tyler has a claim on the defendants, under the agreement between them. A return is ordered, without an avowry, where property in a third person is pleaded in bar or in abatement. Harrison v M’Intosh, 1 Johns. 380. Butcher v. Porter, 1 Salk. 94. See also Simpson v. M’Farland, 18 Pick. 430, 431. Collins v. Ftoans, 15 Pick. 63. . Quincy v. Hall, 1 Pick. 360. The grounds stated in the specification of defence, filed by the 'defendants, are tantamount to a plea of property in another. )
    The plaintiffs cannot maintain replevin. The Rev. ¡jilts, c. 113, §27, authorize only “the owner, or the person entitled to the possession ” of goods, to “ cause them to be replevie.d ” The plaintiffs are neither the owners of the wine, nor entitled to the possession of it.
   Shaw, C. J.

Upon exceptions from the court of common pleas, the case appears to be this: The plaintiffs have replevied 75 baskets of champagne wine, sold by them as auctioneers, in New York; and the ground of their case was, that a delivery was obtained of the wine to the purchasers, by a fraudulent representation on their part, and so the property did not pass to them; and that the defendants, not being purchasers and holders for value, at least at the time of the trial, had no better title to hold the property against the plaintiffs, than the first purchasers.

On the first question, the jury did not agree. On the second question, the jury found that the defendants came into possession of the property without a knowledge of its having been obtained fraudulently, and that they advanced money on it, in good faith; and they returned a general verdict for the defendants.

The court of common pleas, believing that it was not necessary to the decision of the cause, that the first point of fact should be determined, viz. whether the goods were, in the first instance, obtained by fraud, rendered judgment for the defendants for nominal damages and costs, and for a return of the goods. Two questions now arise :

I. Whether the instructions of the court to the jury were right, and the verdict well warranted by the evidence.

II. Whether, upon the facts, the defendants were entitled to judgment for a return.

I. In discussing the first question, it is to be treated in the same manner as if the goods had in fact been obtained, by tne first purchasers, by fraud; though in justice to them, it should be borne in mind that this fact is not proved; and the truth of it is assumed only for the purpose of the argument.

It is a well established rule, that goods obtained by fraud m the sale, as by false representations, may be reclaimed by the vendor. This does not proceed on the ground that the property in the goods does not pass by the sale, but that the dishonest purchaser shall not hold it against the deceived vendor But it is at the option of the vendor to rescind the contract and reclaim the goods, or not. If he elects to rescind and avoid the sale, he must do it within a reasonable time after coming to the knowledge of the fraud. If he does anything to affirm the sale, after a full knowledge of the facts — especially if he suffer considerable time to elapse, or if others are induced by his affirmance to act — he will not be entitled to disaffirm the sale and reclaim the goods. By the contract, the vendee takes the property in the goods ; but he takes by title defeasible, because, as against the vendor, he cannot honestly, and of course not legally, hold them. But this right of reclaiming can be enforced only whilst the goods are in the hands, first, of the fraudulent purchaser ; or, secondly, of some agent, trustee, or other person holding for the use and benefit of the purchaser; or, thirdly, of some one who has taken them of the purchaser, with knowledge of the fraud by which they were obtained, or with notice sufficient to put him on reasonable inquiry, including, under this head, a mere volunteer, who has obtained the goods without paying any valuable consideration. It follows, that a purchaser for a valuable consideration, without notice, takes a title from the vendee, which is not defeasible, and will therefore hold the goods.

The principle of this rule of law is well illustrated by the distinction between this case and that of stolen goods, or goods pledged by a factor who was authorized to sell them; in both which cases, by the common law, the original owner might reclaim them from an innocent purchaser without notice. In the former case, no title passed by the felonious taking, and therefore none could be communicated (except by sale in market overt, which stands on different grounds,) to a purchaser. In the case of goods pledged by a factor, the title, the right of property of the owner, was never devested by his own act, or by his authority. The factor had a naked authority to sell, and a sale under that authority would have passed a good title from the owner. But the factor had no authority to pledge the goods ; 'his act in that respect was void, and vested no title in the pawnee. Thurston v. Blanchard, 22 Pick. 20. Dresser Manuf. Co. v. Waterston, 3 Met. 18. But in the present case, the defendants, without notice, advanced the full value of the wine. Such an advance, in this respect, is equivalent to a purchase for value, and the same principle applies. The defendants took a good title, and had a right to hold the wine, when the action was brought.

II. Are the defendants entitled to a return ? The genera' issue and notice, in the mode of pleading now established by Si. 1836, c. 273, are equivalent to an avowry at common law or a plea of property in another, with a suggestion for a return If the defendants had not, at the time of the trial, received the full amount for which the wine was pledged, it is clear that they would have been entitled to judgment for a return. But it appears that, at that time, they had received a sum of money sufficient to pay their claim; and it is conceded that the money was received on a draft which was Tyler’s property, and was pledged to them by him.

1. The pledge by Tyler, though he acted as broker foi Greene, was of his own property, and in his own name, and for himself. It was not a pledge generally for repayment of the advance, but was collateral to his undertaking, in behalf of Greene, that the wine should come into the defendants’ hands, and be of good quality. So far as the wine did come into the defendants’ hands, and was of good quality, that is, to the extent of the 75 baskets in question, his pledge was redeemed, and he was entitled to have it returned, though for the balance not received he was liable. But before the question could be settled, the defendants collected the whole draft, and to the extent to which the pledge of Tyler to them was made good, to the same extent he was entitled to have the draft restored.

2. By the terms of the agreement with Tyler, the defendants were bound first to apply the goods in their hands, viz. the wine, and could not resort to Tyler’s pledge, until the other failed. It now appears that they had a good title to the wine, as against the plaintiffs, (being holders for value,) and had a right to apply the proceeds thereof to the reimbursement of their advance. The fact that the defendants had, in the mean time, collected the draft, can make no difference; the proceeds stood in place of the draft itself, and did not enure by way of actual payment of the advance, because it was only upon a contingency that it was to be so applied; which contingency had not happened.

E By the express terms of the agreement between Tyler and the. defendants, they stipulated with him, in certain events, to deliver back the wine to him; intending thus to secure him, if they should require him, as they might, to pay the amount of the advance, by taking it out of his own funds collaterally pledged to them. Upon that stipulation, he would have an action against them, either to return the wine, or to account for so much of their money as would be equivalent to its value. In either case, they have a right to a return; either, in the former case, to make good their obligation to him, or, in the latter, to replace the amount of money for which they are liable to account with him. We are therefore of opinion, that the judgment for a return of the goods was right.

A question was made, whether under the circumstances disclosed, the plaintiffs have shown such a right of property as would enable them to maintain this action. Having decided against them, on other grounds, we forbear expressing any opinion on this point.

Exceptions overruled