Case Name: Dando versus Foulds
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1884-01-15
Citations: 105 Pa. 74
Docket Number: 
Parties: Dando versus Foulds.
Judges: Before Mercitb, C. J., Gordon, Paxson, Trunkey, Sterrett, Green and Clark, JJ.
Reporter: Pennsylvania State Reports
Volume: 105
Pages: 74–77

Head Matter:
Dando versus Foulds.
1. Where a person receives a chattel for a specified time, and agrees to pay for its use, and, further, to purchase it during or at the expiration of said period, the contract is one of bailment and not of sale.
2. As such a contract does not vest any title in the bailée at the time possession of the chattel is delivered to him thereunder, it is not void as against his creditors under the Statute of Fraudulent Conveyances.
3. A. leased to B. certain machinery for one year at a specified rental. He agreed to sell to B. the said machinery at the expiration of the lease for a stipulated price, and B. agreed to purchase it at that time. B. further agreed that at any time, on thirty days’ notice from A., he would purchase the machinery for the said price; that if he failed to do so A. might sell the machinery at any time thereafter, and should the proceeds of such sale be less than the price aforesaid, B. would pay A. the amount of the deficiency. B. entered into possession, and C., one of his creditors, levied on the machinery as his property. In a feigned issue between A. and C. to determine their respective rights in said property:
Held, that die agreement constituted a bailment and not a conditional sale; that in the absence of collusion between A. and B. it was not void as against C. under the Statute of Fraudulent Conveyances ; that A. was therefore entitled to recover.
January 15, 1884.
Before Mercitb, C. J., Gordon, Paxson, Trunkey, Sterrett, Green and Clark, JJ.
•- Error to the Court of Common Pleas, No. 3, of Philaphia county: Of July Term, 1883, No. 34.
Feigned issue, wherein Henry Foulds was plaintiff, and Thomas S. Dando was defendant, to try the title to certain printing machinery which had been levied upon as the property of Donvin Freeman by the defendant, a judgment creditor of said Freeman, and which was claimed by the plaintiff.
On the trial, before, Ludlow, P. J., the- following facts appeared: Some ten months prior to the levy in question, Foulds purchased the said machinery from the Chandler estate, and, having leased the room in which it was located, entered on November 19, 1881, into a written agreement with Freeman, by which it was provided that Foulda should “ lease ” unto Freeman the premises and machinery in question for one year at a specified rental, which was payable in monthly instalments ; that at the expiration of said term Foulds should sell and Freeman should buy the machinery in question for $8700; that Freeman should, “upon thirty days’ notice from Foulds, purchase said machinery” for $3700; that if Freeman should, “either at the expiration of said lease, or prior thereto upon the giving by said Foulds of such thirty days’ notice, fail to comply with said agreement, Foulds might either at public or private sale dispose of said stock and fixtures for the best price to be obtained therefor, and that should there be any deficiency between the sum realized and the said amount of $3700, Freeman should reimburse and indemnify Foulds for such difference, together with costs entailed by such proceedings ”; that the lease of said machinery might be renewed at its expiration for the period of another year by mutual agreement.
A formal lease of said machinery was executed by Foulds to Freeman in substantial conformity with said articles of agreement, but it contained no clause relating to the purchase of the goods by the lessee.
Freeman entered into possession of the machinery under the above lease and articles of agreement, and while it was in his hands Dando, one of his judgment creditors, levied upon it as his property.
The Court instructed the jury that the above agreement constituted a bailment and not a conditional sale, and that unless they found that there had been collusion between Foulds and Freeman their verdict should be for the plaintiff.
Verdict for the plaintiff and judgment thereon. The defendant took this writ of error, assigning for error the said instruction of the Court.
F. F. Hoffman for the plaintiff in ertor.
— Where, as in this case, there is no obligation to. return the specific article, and the receiver is at liberty to return something of equal value, he becomes debtor to make the return, and the title to the property is changed. Such a contract is not a bailment, but a sale. Benj. on Sales (3d Amer. Ed.), 5; Brunswick v. Hoover, 95 Pa. St., 508; Heryford v. Davis, 12 Otto, 235; Krause v. Commonwealth, 93 Pa. St., 418.
Frank S. Christian for the defendant in error.
— -This Court has invariably sustained the title of bailor when goods, etc., were delivered under a bailment for hire and agreement to sell: Chamberlain v. Smith, 8 Wr., 431; Lehigh Coal Co., v. Field, 8 W. & S., 232; Enlow v. Klein, 29 P. F. S., 490; Clark v. Jack, 7 W. 375. In fact this Court has gone farther and sustained title of bailor when the delivery of goods was under color of. bailment with intent to pass title upon compliance with terms of bailment: Rowe v. Sharp, 1 P. F. S., 26; Lehigh Co. v. Field, 8 W. & S., 232; Henry v. Patterson, 7 P. F. S., 347; Becker v. Smith, 9 P. F. S., 469.

Opinion:
Mr. Justice Gordon
delivered the opinion of the Court February 4, 1884.
The single assignment of error in this case is to that part of the charge of the court below, in which the jury were instructed that the agreement between Foulds and Freeman, in reference to the machinery, stock and fixtures, constituted a bailment and not a conditional sale. We have then, to consider the character and effect of the contract of the parties above mentioned, executed on the 18th of November, 1881.
Was this contract in effect such a conditional sale of- the property therein mentioned as vested a present title thereto in Dorwin Freeman ? If it did so operate it was,fraudulent as to creditors, however good it might be between the parties themselves. It is to be observed, that to bring the case within the statute of Elizabeth, the contract must vest presently a title of some kind in the buyer, and the mere right to acquire the title at some future time, or upon the happening of some future contingency will not have that effect. Rose v. Story, 1 Barr, 190. In other words, the title to the goods must pass to the vendee at the time he receives the possession, otherwise there is no sale, but only a bailment. We must, then, look to see how, under the contracts before us, Freeman received the goods in controversy, and this depends largely upon the character of his original possession, for if his title was not that of a vendee when he went into possession, it is very certain that he has acquired no such title since that time, for it is not pretended that he complied with the conditions necessary to vest him with such title. But we have here, in the forefront of the agreement, a lease, first, of the building at an annual rental of one thousand dollars, and, second, of the personalty in controversy at a rent of twenty dollars a week and we also have separately a contemporaneous lease of what appears to be the same machinery, stock.and fixtures, for the same term and for the same rent per week, and in this instrument there is no condition for purchase, but it is, in all respects, a regular lease. Again, Foulds covenanted-, in the agreement first above mentioned, to sell to Freeman this machinery, stock and fixtures, at the expiration of the lease, for the sum of $8700, and, on the other hand} Freeman agreed that at that time he would,_ at the price mentioned, buy the said property, and further, that he would purchase and pay for the same, at any time on thirty days' notice from Foulds. But in all this we discover no intention to vest title in Freeman at the time of the execution of the agreement. His possession is to be only that of a tenant or bailee, and except at the will of the lessor he has no right to purchase until the expiration of the lease. But it is urged, that by the terms of the contract, Foulds could not only compel Freeman to buy after thirty days' notice, but that in default of his so doing, he might sell the goods as it were on Freeman's account, and charge him with any deficiency in the price. This however only amounts to an option in Foulds to determine the lease as to the personalty on a thirty days' notice, and to treat the property as though owned by Freeman. But this option on part of the lessor, except merely in the. matter of time, does not alter the nature of the contract, and the balance is but a method of compelling performance, and the determination of the measure of damages in case of non-performance. Strike this all out, and nothing has been materially altered except to deprive the lessor of liis option to call upon the lessee to perforin his covenant before the expiration of the lease. But it still remains that he is bound to purchase at the end of the term, and if he does not do so he must answer for liis breach of contract in damages. But what difference in principle can it make that the lease might be determined in thirty days rather than in one year? It was still a lease, and if Freeman got the possession of the goods under it, he held not as owner but as a lessee or hirer. Thus, in the absence of oral evidence to prove an intent to hinder, delay or defraud creditors, held, as we are to the letter of the papers before us, we cannot presume that the parties intended any thing other than that which is expressed in their contract, that is, that Freeman held the goods in controversy only as a bailee, with an option to purchase which he never exercised.
The Judgment is affirmed.