Case Name: The Baltimore & Ohio Southwestern Railway Company v. Good et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1910-06-07
Citations: 82 Ohio St. 278
Docket Number: No. 11370
Parties: The Baltimore & Ohio Southwestern Railway Company v. Good et al.
Judges: Spear, Davis, Spiauck and Price, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 82
Pages: 278–289

Head Matter:
The Baltimore & Ohio Southwestern Railway Company v. Good et al.
Sale of chattels for cash on delivery — Chattels in custody of bailee— Vendor without requiring payment — Gives vendee order on bailee — Vendee transfers to innocent purchaser — Original vendor cannot replevin from. ■ sub-vendee — Lazo of sales — Title of chattels.
1. In sales of specific chattels for cash on delivery, delivery and payment are concurrent acts, and delivery in the expectation of receiving immediate payment is not absolute but conditional, and, when there is no waiver of payment, the property does not pass until the price is paid.
2. In a sale for cash on delivery, when the goods are in the custody of a bailee and the vendor, without requiring payment, gives to the vendee a delivery order directing the bailee to deliver the goods to the vendee, or to his order, intending to transfer both the. property and possession, and the bailee pursuant to the order delivers the goods to a bona Me purchaser from the vendee, the delivery is as to the innocent purchaser absolute and not conditional, and the title of such sub-vendee is good against the seller, although the sale between the vendor and vendee was fraudulent.
3. G. sold a car of oats to 13., terms cash on delivery, the weight to be ascertained and certified by the official weigher of the Cincinnati Chamber of Commerce, of which both were members. G. at the time of sale gave B. a delivery order on the carrier, in whose custody the car was, to deliver the car to B. or to B. or order. B. sold the oats to M. and transferred to him the delivery order. M. sold the oats to G. B., who surrendered the order to the carrier and ordered the car turned over to another carrier, which was done. M. on account of the sale to him paid B. $400, and G. B. paid M. $250. B. was insolvent and G. replevied the car in the possession of the carrier who had received it for G. B. Held: That G. was not entitled to recover the car.
(No. 11370
Decided June 7, 1910.)
.Error to the Circuit Court of Hamilton county.
In September, 1905, a car of oats was shipped to Good & Company at Cincinnati with a sight cffiaft attached to the bill of lading. Upon arrival of the car in Cincinnati on the C. H. & D. railroad, the consignee paid the draft and surrendered the bill of lading to the railroad company. The official grain inspector for the Cincinnati Chamber of Commerce graded the car and delivered a sample of the oats to the consignee, who, on the same day, sold the oats on “change” to A., Bender at 30 cents per bushel, and gave him the following written delivery order:
“To the Cincinnati, Hamilton & Dayton Railroad Company:
“Please deliver to the order of A. Bender or A. Bender Car 1427 oats consigned to us.
“Goon & Company.”
On the same day Bender sold the car of oats to Maguire & Company at 29j4 cents and turned the delivery order over to them and received their check for four hundred dollars, and something over — the exact amount is not given. The following day Maguire & Company sold the oats to Gale Brothers at 30 cents and gave them the delivery order arid received their check on account for $250.00. Gale Brothers surrendered the delivery order to the C. H. & D. Railroad Company and ordered the car turned over to the plaintiff in error, the B. & O. Southwestern Railway Company, to be placed at their elevator, and the C. H. & D. Railroad Company accepted the de livery order and placed the car in the yards of the B. & O. Southwestern Railway Company.
At the time of the sale Bender was insolvent, and, for the purposes of this case, it is assumed that the purchase by him was fraudulent.
After the car had been turned over to the B. & O. Southwestern Railway Company, and before it had been placed by that company at the elevator of Gale Brothers, Good & Company, replevied the car from the railroad company.
The jury found against Good & Company, and on error in the circuit court, that court reversed the judgment, and upon the undisputed facts entered judgment for Good & Company.
Mr. L. W. Goss and Mr. H. D. Peck, for plaintiff in error.
In this case, Good sold this car of oats to Bender, trusting him for-payment. If Bender did not pay him he could retake the car so long as it remained in Bender’s possession. But when it had passed into the hands of bona fide purchasers, innocent of any collusion, the case is entirely different.
If Good failed to so protect himself under the rules, can he now call on a bona fide, innocent purchaser to recoup his loss?
Does it not come within the principle laid down by this court in Combes v. Chandler, 33 Ohio St., 178, and Eaton & Co. v. Davidson, 46 Ohio St., 362?
Messrs. Kelley & Hauck, for defendants in error.
This order' was neither a muniment of title, an assignment or transfer of title or possession of the carload of oats, in the actual possession of the railway company, and did not clothe Bender with an insignia of ownership or apparent ownership of the carload of oats.
The transaction between Good and Bender, if anything, was an executory contract of sale, and we contend not even a conditional sale, because there was no delivery of either title or possession either actual or constructive.
The delivery order was a mere request to the C. H. & D. railway to deliver the car of oats, nothing more. Hoskins v. State, 11 Ga., 92.
A delivery order, merely, transfers no title to the goods mentioned in it. Anderson v. Read, 106 N. Y., 348; M’Ewan v. Smith, 2 H. L., 309; Benjamin on Sales (6 ed.), Section 776; Railroad Co. v. Bank, 54 Ohio St., 72.
Until the car was placed at Gale Brothers’ elevator and acceptance by them there, was no change of possession as amounted to actual receipt, and possession was still in Good & Co., the vendor. Benjamin on Sales (6 ed.), Section 173.
The same principle applies as in the exercise of a vendor’s right of stoppage in transitu, which is not extinguished by the actual and complete delivery of the goods consigned to the vendee or to some agent of and for him. Calahan v. Babcock, 21 Ohio St., 281; Car & Wheel Works v. Shorter, 8 Dec. Re., 290.
The vendor and the vendee and his sub-vendees were all fellow members of the Cincinnati Chamber of Commerce, and as between members those rules have the same effect as rules of law, and in so far as they are applicable they enter into and form a .part of all contracts made by members with transactions on “change.” 17 Cyc., 866, 867.
Bender and his sub-vendees were charged with notice of the rules that all purchasers of grain were to be for cash and to be paid for on delivery, and that delivery was not complete until the car was unloaded -and officially weighed out by the official weigher of “change.”
This was not an absolute delivery, and no title passed to Bender until it was officially weighed and the price paid. Car Co. v. Rolling Mill Co., 4 C. C., 301; Elevator Co. v. Bank, 23 Ohio St., 311; Hodgson v. Barrett, 33 Ohio St., 67; 2 Mechem on Sales, Sections 541-557.
A sale of goods for cash is strictly speaking a sale on condition until payment has been made or waived, the contract remains executory and delivery in such case is not a completion of the contract. Frech v. Lewis, 218 Pa. St., 141.
The ascertainment of the official weight and the payment of the price was a condition precedent to the passing of title. 1 Mechem on Sales, Section 540; Elevator Co. v. Bank, 23 Ohio St., 311; Bonham v. Hamilton, 66 Ohio St., 89; Benjamin on Sales (6 ed.), Section 318.
And if the condition be not performed the goods may be retaken b)^ the vendor. 1 Mechem on Sales, Section 554.
Even from a bona tide sub-vendee for value if the vendor had done nothin s: to estop himself. 1 Mechem on Sales, Section 555; Bank v. Railroad Co., 44 Minn., 224; Freeman v. Kreamer, 63 Minn., 242; Benjamin on Sales (6 ed.), 282, 283; Coggill v. Railroad Co,, 3 Gray, 545.
Even though the goods were purchased for resale. Sargent v. Metcalf, 5 Gray, 306; Armour v. Pecker, 123 Mass., 145.
And this right of the seller to retake his goods is one which cannot be defeated by any local usage.

Opinion:
Summers, C. J.
All the parties to the sale were members of the Cincinnati Chamber of Commerce, the sale was there made and was subject to the following rule of the organization governing purchases of grain:
"Rule 7, Section 1. All purchases of grain, unless otherwise agreed upon, are understood to be for cash and to be paid for on delivery."
A witness for the plaintiffs testified that the manner of selling grain in carload lots on "change" is as follows: The official grain inspector of the Chamber of Commerce grades the grain in the car in the railroad yards, and delivers a samplé of the uniform grade of the grain in the car to the consignee or owner, who then exhibits the sample on "change" and when he makes a sale he delivers to the purchaser the sample and a delivery order, like that set out in the statement of facts, to the carrier to deliver the car to the purchaser or order, and the purchaser then orders the car to his elevator or switch, or wherever he wishes to unload it, and as it is being unloaded it is weighed by the official weigher, who gives the seller a certificate of the weight and the seller then makes a bill to the buyer at the agreed price, which the buyer pays in cash upon its1 receipt. A witness for the defendants testified on cross-examination that on "change," in the trade, a delivery of the order is considered a delivery of the property, and that when the order is delivered it is customary for the buyer to pay 80 per cent, of the price, according to the estimated weight of the car, and that the balance is paid upon receipt of a bill with the certificate of the official weigher attached.
It is undisputed that settlement was to be based upon the certificate of the weigher, and the circuit court based its decision upon the assumption that, as under the rule, sales were cash on delivery and as under the usage the weight was to be ascertained as the car was unloaded, delivery could not be complete until the weight was certified. It is elementary in a sale of specific chattels that neither payment nor delivery is essential to the passing of title. The passing of the title may be conditional on payment, but generally, in such sales the title passes, but delivery and payment are immediate and concurrent acts, and if delivery be made in expectation of immediate payment and such payment is not made, the seller may reclaim the goods. When the goods must be counted, weighed or measured in order to identify them, the property does not pass, but when they are specific and these acts are to be done merely to ascertain the sum to be paid, the title may pass although the goods have not been delivered. The passing of the title depends upon the intention. If delivery has not been made, or if made in order that the price may be ascertained, the presumption is that the property has not passed. If the sale is for cash, or cash on delivery, and delivery is made, the presumption is, that it was made in expectation of immediate payment, and that the delivery was conditional; and the same is true and the presumption stronger when weighing is to be done by the buyer. In Wabash Elevator Co. v. First National Bank of Toledo, 23 Ohio St., 311, there was a sale on "change" between two commission men of five thousand bushels of corn. The seller sent by a clerk warehouse receipts to the buyers in expectation of immediate payment. The buyers accepted the receipts and informed the clerk that they would credit the seller with the price. The seller would not consent to this and the buyers refused to return the receipts. The court held that a delivery with the expectation of receiving immediate payment is not absolute, but conditional until payment is made, and, when there is no waiver of payment, no title vests in the purchaser until the price is paid. In Hodgson v. Barrett, 33 Ohio St., 63, the sale was of a barge load of coal, one-half cash. The coal was delivered and a check given for the cash. The check went to protest and the seller replevied the coal, and it was held: "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. 31 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."
But payment as a condition may be waived by the seller, and if it is the .property vests' in the buyer. All attending circumstances may show that the delivery was not conditional, even when weighing is necessary to ascertain the price, and that the intention was to transfer both the title and possession and to trust the buyer to pay when the price is ascertained. In the present case no presumption of waiver would arise merely from the delivery of the car to the buyer, for by the rule of the Chamber of Commerce the sale was for cash on delivery and the sum to be paid could not be ascertained until the oats were weighed, which by the usage on "change" was- to be done by the official weigher as the car was unloaded, so that delivery would not be complete until the oats were weighed. But if by the usage on "change" the delivery of a delivery order was the delivery of the oats and 80 per cent, of the estimated price was then payable and the balance when the, weight was officially certified, then Good & Company waived payment in cash on delivery when they gave the deliver}^ order without the cash payment, and the 80 per cent, either was payable on demand or credit for the whole price was extended to Bender until the weight was officially certified, and the title of an innocent sub-vendee from Bender would be good against Good & Company. And, independently of the usage, last referred to, when it is considered that the sale was made on "change" b}r one dealer to another dealer and not to a consumer, and that a delivery order was given directing the delivery not merely to the buyer, but to him or to his order, the conclusion must be that Good & Company assented to a sale and delivery of the oats by Bender, and that it was the intention of Good & Company by the sale and the giving of the delivery order to transfer both the title and the unconditional possession of the property to Bender.
The transaction, though fraudulent on the part of Bender, was not void, but only voidable. If the delivery without payment was merely a waiver of immediate payment, or an extension of credit, it may be that as between thé vendor and the vendee the vendor could have protected himself, for it is an implied condition in a sale on credit that the buyer shall keep his credit good. Diem v. Koblitz, 49 Ohio St., 41. Good & Company as against Bender might have repudiated the transaction, but they could not do so at the expense of an innocent sub-vendee. "When a vendee obtains possession of a chattel with the intention by the vendor to transfer both the property and possession, although the vendee has committed a false and fraudulent misrepresentation in order to effect the contract or obtain the possession, the property vests in the vendee until the vendor has done some act to disaffirm the transaction; and the legal consequence is that if before the disaffirmance the fraudulent vendee has transferred either the whole or a.partial interest in the chattel to an innocent transferee, the title of such transferee is good against the vendor." Kingsford v. Merry, 1 H. & N., 503; Pease v. Gloahec, L. R., 1 P. C., 219.
It is true that a delivery order, unlike a bill of lading, is not considered a symbol of the goods so that a transfer of it is constructively a delivery of the goods, but is considered merely a request in writing by the owner of goods to his agent or bailee, having custody of the goods, to deliver them as therein directed, and that the seller may revoke the order against an innocent sub-vendee of the goods and transferee of the order. But when the order has been executed and the goods have been delivered to an innocent sub-vendee, or the bailee has attorned to him, it is too late to revoke the order. As to him there is nothing to revoke, the delivery has been actually or constructively made and the goods are no longer in the possession of the seller, but in the possession of the sub-vendee or in the possession of his agent. In Ker & Butterworth's Fifth Edition-of Benjamin on Sales, 471, it is said in substance that in this country, as well as in England, purchases by an insolvent buyer who does not intend to pay are treated as voidable and not void, and that while in some of the 1 states the transaction is treated as absolutely void, the rights' of innocent purchasers from a fraudulent buyer are protected, and that it is of little practical importance whether the protection is afforded on the ground that the original contract of sale is valid until disaffirmed, or whether the preference of the right of an innocent third person is based upon the principle, that when one of two innocent parties must suffer from the fraud of a third, the loss shall fall on the one who enabled the third party to commit the fraud.
It follows that the correct result was reached in the court of common pleas and that the circuit court was in error in reversing the judgment, and the judgment of the circuit court is reversed and the judgment of the court of common pleas is affirmed.
Reversed.
Spear, Davis, Spiauck and Price, JJ., concur.