Case Name: J. T. S. Brown & Sons v. J. J. Wieland et al.
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1902-02-08
Citations: 116 Iowa 711
Docket Number: 
Parties: J. T. S. Brown & Sons v. J. J. Wieland et al.
Judges: 
Reporter: Iowa Reports
Volume: 116
Pages: 711–716

Head Matter:
J. T. S. Brown & Sons v. J. J. Wieland et al.
1 Intoxicating Liquors: recovery of price paid for: Contracts not •made in Iowa. Code, section 2423, providing that all payments for intoxicating liquors sold in violation of the chapter should he held to have been received in violation of law, and on a agreement of the receiver to repay on demand the consideration therefor, does not affect a sale made outside of the state, though in response to an application secured hy an agent in the state, and there delivered to the purchaser. ,
1 2 What is iowa sale. Where the seller ships the liquors into the state under a hill of lading taken in his own name, and sends the hill of lading to a hank, with directions to deliver to the purchaser on making a certain cash payment and delivering certain notes, etc., the sale is an Iowa sale, and invalid within the statute.
3 Counterclaim for: Time of making demand for repayment Code, section 3570, provides that a counterclaim consists of a cause of action in favor of defendant which he “might have brought when suit was commenced, or which was then held, either matured or not, if matured when so pleaded.” Section 2423 provides that all payments for intoxicating liquors are received on a valid agreement by the receiver to repay the consideration on demand. Held, that the obligation to repay the consideration is positively imposed, and the time of repayment, only, is dependent on demand, and therefore a claim hy a purchaser of liquor for repayment of the purchase price already paid was held hy the latter at the institution of a suit for the balance due, and, where matured hy demand, before being pleaded, constituted a good counterclaim in his favor.
Appeal from Carroll District Court. — Hon. S. M. Elwood, Judge.
Saturday, February 8, 1902.
Action ou a promissory note signed by J. J. Wieland and E. B. Wieland, bis wife. Defendants allege tbat tbe consideration of tbe note was intoxicating liquors -sold in violation of law, and by way of counterclaim the de fendant J. J. Wieland seeks to recover from pUaintiffs money paid to plaintiffs by said J. J. Wieland for intoxicating liquors unlawfully sold and delivered by plaintiffs to said defendant in tbis state. Tbe court sustained a demurrer to defendant’s counterclaim, and, on the trial to a jury, directed a verdict for defendant on tbe issue as to ■the promissory note. From tbe judgment on tbis directed verdict, plaintiffs appeal, and defendants appeal from tbe ruling on demurrer to tbe counterclaim. Tbe litigation appears to be solely between plaintiffs and J. J. Wieland, and be will be treated as sole defendant. —
Affirmed in part, and reversed in part.
Geo. W. Bowen and John H. Hosier for plaintiffs.
M. W. Beach for defendants.

Opinion:
McClain, J. —
Plaintiffs, carrying on tbe business of selling intoxicating liquors as wholesale dealers at Louisville, Ky., received in March, 1899, through their agent in Iowa, an order from defendant for certain kinds and quantities of liquor, to be shipped to him at Audubon, Iowa; tbe total amount to be paid for tbe liquors purchased being $1,670. Tbis order was taken subject to the' approval of plaintiffs, and, if sale bad been effected in accordance with its terms,, such sale, so far as appears, would have been valid, and tbe purchase price could have bean collected by plaintiffs. But negotiations were subsequently carried on between tbe parties, by telegram and letter, with reference to change of terms, and there was a question as to whether tbe order bad not been revoked by Wieland. In tbe meantime tbe liquors bad already been, shipped to Audubon under a bill of lading taken by plaintiffs in their own name, with direction to tbe railroad company to notify defendant; and tbis bill of lading bad been sent to a bank, with direction to deliver it to defendant on bis making a certain cash payment, and delivering ceríáin notes, partly secured, for tbe balance of tbe purchase price. As a result of tbe negotiations, new terms of payment were agreed upon; and the bank was directed by plaintiffs to deliver the bill of lading to defendant when he should pay one-fifth of the purchase price in cash, and give notes for ¡the balancé, which should ^nature at various dimes — two of them to be secured by the signature of his wife, as surety. Defendant paid the money in accordance with this last arrangement, and delivered the notes, duly executed, and received the bill of lading, by means of which he secured from the railroad company the liquors specified therein. Three of the notes have been paid, and this action is brought on the fourth and last of them. The counterclaim is for the recovery of the amount of the cash payment, and of the notes which had already been paid when' suit was commenced. The defense to plaintiff's action on "the note and the counterelaun are both base upon, the provisions of Code, section 2423, the material part of which, as affecting this case, is as follows: "All payments or compensation for intoxicating liquors sold in violation of this -chapter, whether such payments or compensation be in money or anything else whatsoever, shall be held to have been re-ceived in violation of law, and to have been received upon a valid promise and agreement of the receiver to pay on •demand to the person furnishing such consideration the amount of said money, or the just value of such other thing. All sales, transfers, liens and securities of every kind which either in whole or in part shall have been made for or on account of intoxicating liquors sold in violation of this chapter shall be null and void against all persons, and no rights of any kind shall be acquired thereby. "
It is well settled in this state that where a sale of liquor is made outside of the state, though in response to an appli-cation secured by an agent in the state, the sale is not invalid' on account of the provisions of the section above referred to, and the seller may recover the price of the liquor, although the liquor is shipped by a common carrier into tbe state, and by tbe carrier delivered to the purchaser. This is on tbe theory that tbe sale is-completed outside of tbe state, by tbe delivery of tbe liquor to tbe carrier for transportation, and, unless there has been an intent on tbe part of tbe seller 'to assist tbe buyer in violating tbe laws of this state, tbe transaction is not illegal, so far as the laws of tbe state are concerned. Whitlock v. Workman, 15 Iowa, 351; Tegler v. Shipman, 33 Iowa, 194; Fred Miller Brewing Co. v. De France, TJ Iowa, 395; Wind v. Iler, 93 Iowa, 316; Gross v. Feehan, 110 Iowa, 163; Sachs v. Garner, 111 Iowa, 424; Schuenfeldt v. Junkermann (C. C.) 20 Fed Rep. 357. If these-liquors bad been shipped directly to- defendant, tbe subsequent modifications of tbe terms of tbe sale would probably not have converted tbe transaction into- an Iowa sale. Gross v. Feehan, supra. But plaintiffs, by delivering tbe liquors-to the carrier under tbe bill of lading taken in their own. name, did not make the delivery to tbe defendant in Kentucky. While tbe mere fact of taking tbe bill of lading in plaintiff's name might not in itself be controlling, yet it is-plain, from tbe entire transaction, that plaintiffs did not intend that tbe title to tbe liquor should pass to defendant,, until defendant complied with tbe terms of tbe contract, by making payments and delivering tbe notes at tbe bank in-Iowa, and thereby became entitled to tbe bill of lading,, which was then to be delivered to him. Until tbe defendant thus procured tbe -bill of lading, be was not to have any control over tbe liquors, and be was not, of course, the-owner thereof. Delivery of tbe liquors to the defendant under tbe contract was to be made, and was made, only when defendant became entitled to- tbe possession of tbe bill • of lading by performing bis part of tbe contract. At this-time tbe liquors were in Iowa, and we cannot escape the conclusion that tbe sale was therefore an Iowa sale. Plaintiffs suggest that the transaction was similar to a shipment of' goods C. O. D., and that it has been held that such a trans action passes tbe title when tbe goods are delivered to tbe carrier. Without-discussing that question, about which there is some conflict in the authorities, it is sufficient to say that this was not a similar case. The shipper here retained the full ownership and right to dispose of the goods,, and did, in fact, alter the terms upon which the goods should be delivered to the defendant; assuming to do so as the owner of the goods, having full control over them. Nor is the case lilce that of Wind v. Iler, supra, where it was held that the right of the buyer to inspect on receipt was not inconsistent with the title having passed at the time and place of shipment, inasmuch as a right of inspection and rejection is incident to a sale, which is completed by delivery to the carrier, of goods selected by the seller without the buyer's inspection and approval. We reach the conclusion therefore, that the sale was made in íowa, and was void under the section of the Code already referred to,' inasmuch as the plaintiffs had no authority to make sales of liquor in this state.
With reference to the ruling of the court sustaining plaintiff's demurrer to defendant's counterclaim, the contention is that the action to recover money paid as consideration for the illegal sale of intoxicating liquor can only be maintained after demand for repayment (Schober v. Rosenfeld, 75 Iowa, 455), and, as such demand in this case was not made by defendant until after the (commencement of plaintiffs' action, recovery cannot be had by way of counterclaim. Code, sec'tion 3570, so far as applicable to this case, requires that a counterclaim shall consist of a cause of action in favor of defendant, and against plaintiff, which the defendant "might have. brought when suit was commenced, or which was then held, either matured or not, if matured when so pleaded." Defendant insists, however, that the demand was material only for the purpose of maturing the claim which already existed, and had existed from the time the money was paid; and this view seems to be supported by the language of Code, section 2423, already quoted. When the plaintiffs received in Iowa, as consideration for the sale of liquors unlawfully made in Iowa, the payment by cash and notes', they did so under the condition imposed by the statutory provision that such compensation "was received upon a valid promise audj agreement of the receiver to pay on demand to the person furnishing such consideration the amount of said money, or the just value of such other thing." By the provision of the statute the duty to repay is directly and positively imposed, and the time of repayment, only, is dependent ón 'the. demand. Therefore, defendant's claim against plaintiffs was already held by him when plaintiffs' action was brought, and it was matured by demand before it was interposed as a counterclaim, and the demurrer to his counterclaim should have been overruled.
The case is therefore affirmed on plaintiffs' appeal, and on 'the appeal of defendant it is reversed.