Court Opinion

ID: 8771651
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:46:57.90165+00
Date Added: 2024-06-11T17:02:15.694318
License: Public Domain

SANBORN, Circuit Judge
(dissenting). Among the terms of the agreement of sale of the cattle were these, that they should be shipped in two lots, 25 car loads in the first lot and the remainder in the second lot, that each lot should be paid for in full upon its delivery, and that the draft for $2,000 should be applied in part payment of the second lot. It was upon this contract that the draft for $2,000 on the defendant was given to the plaintiff on the purchase of Putnam on September 17, 1906. Under this agreement on September 19, 1906, the plaintiff took the draft for $10,615, drawn by the purchaser, Putnam, in payment for the 25 car loads which upon that day were shipped by direction of Putnam to the defendant. This draft in payment for the cattle was not paid, and the title and the right to the possession of these cattle remained in the vendor. Where the agreement of sale is that the property shall be paid for on delivery, and the, purchaser gives a check or draft at the time of delivery, pursuant to the agreement which is not paid, the sale is on condition that the vendor retains the right of possession, and that he may replevy the property as soon as the check or draft is dishonored. Matthews v. Cowan, 59 Ill. 341, 347; Sprague Canning Co. v. Fuller, 86 C. C. A. 46, 49, 158 Fed. 588, 591; Morris v. Rexford, 18 N. Y. 552, 555; Russell v. Minor, 22 Wend. (N. Y.) 659, 664; Paul v. Reed, 52 N. H. 136, 138; 24 Amer. & Eng. Encyclopedia of Law, 1052, 1053, note 1; Wells v. Merle & Heaney Mfg. Co., 66 Ill. App. 292, 295; Ames v. Moir, 130 Ill. 582, 591, 22 N. E. 535; The Elgee Cotton Cases, 89 U. S. 180, 188, 196, 22 L. Ed. 863. And where a part payment has been made and delivery follows, but the check or note for the remainder of the payment is dishonored, the right of possession still remains in the vendor, and replevin will lie until the property is paid for in full. Baker v. McDonald, 74 Neb. 595, 104 N. W. 923, 1 L. R. A. (N. S.) 474.
When the cattle arrived and were tendered to the defendant, it' knew that they were purchased and delivered upon condition that the draft for $10,615 should be paid. It, however, declined to pay this draft because the cattle were not in its opinion worth so much money, but nevertheless took and held possession of all these cattle worth over $10,000 to secure to itself the repayment of the $2,000 which it had paid upon the first draft. The defendant was not a bona fide purchaser of the cattle from Putnam, the vendee, because it knew the condition of their sale before it received them, and it could not have obtained from him any better title or right of possession than he had, and his title and right of possession were subject to the condition that the plaintiff held both until the $10,615 were paid. Harkness v. Russell, 118 U. S. 667, 681, 7 Sup. Ct. 51, 30 L. Ed. 285; Canadian Bank of Commerce v. McCrea, 106 Ill. 281, 285, 286; Coggill v. Hartford & New Haven R. R. Co., 3 Gray (Mass.) 545, 550.
*26But it is,said that the plaintiff is estopped from asserting its title and from recovering possession of its0 cattle from the defendant until it repays to the defendant the $2,000 which the latter paid upon the first draft, by reason of the facts that after the agreement of sale had been made and before the delivery of the cattle the plaintiff informed its bank that it had sold its herd of cattle, asked the bank to inquire, of the defendant whether or not the vendee’s draft upon it for $2,000 would be paid, the bank inquired, the defendant answered that it would pay the draft if it was drawn for cattle for immediate shipment, and the bank, although the plaintiff had never authorized it, or any individual, to state that the draft was drawn against any shipment of cattle or to make any other statement about the sale, told the defendant that the draft was for cattle bought for immediate shipment and that the cattle had been shipped, although they had not been, and the plaintiff had not stated that they had been. Thereupon the defendant paid the draft in reliance upon the statement of the bank that it was drawn for cattle bought for immediate shipment. My mind refuses to assent to the conclusion that these facts raise such an .equitable estoppel as deprived the plaintiff of its legal title and right to the possession of its cattle, or that it bound it to repay the $2,000, or that it fastened a lien upon its cattle for that amount.
1. The statement of the plaintiff to the bank that it had sold its herd of cattle and its request that the bank would ask the defendant if Putnam’s draft for the $2,000 would be paid gave no actual or apparent authority to the bank to make on behalf of the plaintiff any statement or representation, much less ar.y false statement or representation, which the plaintiff had not communicated to it in relation to the sale of the cattle, and for that reason the plaintiff, it seems to me, was not bound by any statements of the bank. If A. makes a sale of property for $15,000 to B. on condition that B. shall pay for it in full before it is delivered, and B. gives him a draft upon C. for $2,000, and A. tells his bank that he has sold his property, asks it to inquire. of-C. if the draft for $2,000 will be paid, does that authorize the bank to deprive C. of the entire value of his draft by making statements about A.’s sale of his property which A. never made and never directed the bank to make? It is common practice for payees of drafts on distant drawees to ask their banks to inquire of the drawees whether or not the drafts will be paid, but no authority in the banks to make statements regarding the property of the payees which will deprive them of that property or compel them to repay the money due them, on such drafts can in my opinion be lawfully inferred from such requests. A direction to or a request of the bank by the payee to make the controlling statement, it seems to me, would be indispensable to an estoppel of the payee by such a statement.
2. More than a statement or conduct which leads another to do what he would not otherwise have done is indispensable to an equitable estoppel which will destroy the lawful title of the owner to property, although the maintenance of such title may subject another to loss, or injury, or disappointment of expectations upon which he acted. Either a willful intent to deceive, or such gross negligence of the rights of others as is tantamount thereto, is essential to such an estop*27pel. Truthful statements and conduct made with ordinary care will not raise such an estoppel. There must be some moral turpitude or some breach of duty, Henshaw v. Bissell, 18 Wall. 255, 271, 21 L. Ed. 835; Brant v. Virginia Coal & Iron Co., 93 U. S. 326, 335, 336, 23 L. Ed. 927: Steel v. Smelting Co., 106 U. S. 447, 455, 1 Sup. Ct. 389, 27 L. Ed. 226; Bank v. Farwell. 7 C. C. A. 391, 394, 396, 58 Fed. 633, 636, 639; Given v. Times-Republic Printing Co., 52 C. C. A. 40, 43, 114 Fed. 92, 95.
The cases of Dickerson v. Colgrove, 100 U. S. 578, 580, 25 L. Ed. 618, and Kirk v. Hamilton, 102 U. S. 68, 26 L. Ed. 79, do not conflict with this rule. In the Dickerson Case Edmund Chauncey and Sarah Kline owned equal undivided parts in a tract of laud which Sarah sold and conveyed by warranty deed to Lowell Morton, who went into possession of the property in 1854. Lowell caused his brother Eleazer to write Chauncey and to ask him if he made any claim to the premises. Chauncey in response sent a letter in 1856 to Sarah Kline, his sister, the contents of which were communicated to Lowell Morton, in which he wrote:
“You can tell Mr. Morton for me he need not fear anything from me. Thank God I am well oil here, and you can claim all there. This letter will be enough for him.”
In reliance upon this letter, Morton conveyed the lands by warranty deeds to others, who improved them. In 1865 Chauncey conveyed his undivided interest to Dickerson and another, and in 1873 Dickerson and another brought ejectment and were held to be estopped by Chauncey’s letter. Lf the plaintiff in this action had written a letter to the bank to the effect that it would claim nothing under the draft for $2,000, or that it would repay to the defendant whatever it paid upon this draft, or that if the defendant would pay the draft it should have a lieu upon the plaintiff’s cattle for that amount superior to its claim for the purchase price of them, and if the plaintiff had directed the bank to tell the defendant the contents of this letter, this case would be analogous to Dickerson v. Colgrove.
In Kirk v. Hamilton, 102 U. S. 68, 26 L. Ed. 79, a trustee appointed by the court under a creditors’ bill against the debtor, Kirk, sold certain of his lands, and the sale was confirmed by the court. Before the trustee made his deed Kirk appeared in the court and objected to the allowance of simple contract debts in the distribution of the proceeds of the sale. But those debts were allowed, and thereafter on December 34, 1865, the trustee conveyed the lands to the purchaser, Hamilton, who paid $4,000 for them and went into possession of them. Kirk resided on an adjoining lot, but he never objected to the sale or claimed that there was any defect therein, or claimed any title to the property until 1872, when he brought ejectment, although he knew that Hamilton was erecting a building upon the lots which cost him $4,000 in the intervening years. The court held these acts constituted a clear fraud, and that lie was estopped to recover the property. In each of these cases the plaintiffs were guilty of actual and willful deceit. They owed to the defendants the duty to tell the truth about their claims to the property which the defendants were purchasing and *28improving, and they made misrepresentations which deceived the defendants to their injury. They were both guilty of moral turpitude and of breaches of duty. But in the case at bar the plaintiff owed the defendant no duty to disclose the nature of his transaction or the terms of his sale. It was dealing with the defendant at arm’s length.
It was not asking the defendant to pay the draft for $2,000. It was not the guarantor of the payment of that draft or surety in any sense for the drawee. It was the vendor of its cattle; Putnam was the vendee. Putnam was the drawer of the draft; he was its guarantor, and he it was that was requesting the defendant to pay the $2,000, not on the plaintiff’s, but on Putnam’s, account. The plaintiff, the vendor, stood on one side and Putnam and the defendant on the other side of this transaction, and to each of the latter the rule caveat emptor was applicable in all its force. The plaintiff’s inquiry whether or not the draft would be paid was not a request for its payment, but a mere request for information. It was the owner of its cattle. One of the conditions of its contract of sale was that they should be paid for in full at or before their delivery, and that it should be entitled to their possession until they were paid for in full, and the record discloses no evidence that the defendant ever made any statement or representation inconsistent with the existence of that condition, and hence none that ever could estop it from enforcing the condition. The only statement the evidence shows that it made, that it had sold its herd of cattle, and even the bank’s unauthorized statement that the cattle had been bought for immediate shipment and that they had been shipped, were all consistent with the condition of the sale, and the rule of caveat emptor placed on the defendant the burden to ascertain the terms of the sale if it deemed them material.
In Henshaw v. Bissell, 18 Wall. 255, 271, 21 L. Ed. 835, the Supreme Court said:
“There is, therefore, no case for the application of the doctrine of equitable estoppel. For its application there must be some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence on his part as to amount to constructive fraud. An estoppel in pais is sometimes said to be a moral question. Certain it is that to the enforcement of an estoppel of this character, suc'h as will prevent a party from asserting his legal rights to property, there must generally be some degree of turpitude in his conduct which has misled others to their injury.”
In Brant v. Virginia Coal & Iron Company, 93 U. S. 326, 335, 336, 23 L. Ed. 927, the Supreme Court again said:
“It is difficult to see where the doctrine of equitable estoppel comes in here. For the application of that doctrine there must generally be some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence on his part as to amount to constructive fraud, by which another has been misled to his injury. ‘In all this class of cases,’ says Story, ‘the doctrine proceeds upon the ground of constructive fraud or of gross negligence, which in effect implies fraud. And, therefore, when the circumstances of the case repel any such inference, although there may be some degree of negligence, yet courts of equity will not grant relief. It has been accordingly laid down by a very learned judge that the cases on this subject go to this result only, that there must be positive fraud or concealment, or negligence so gross as to amount to constructive fraud.’ 1 Story's Eq. 391. To the same purport is the language of the adjudged cases. Thus, it is said by the Supreme Court of Pennsylvania that ‘the primary ground of *29the doctrine is that it would be a fraud in a party to assert wliat his previous conduct had denied, when on the faith of that denial others have acted The element of fraud is essential either in the intention of the party estopped. or in the effect of the evidence which he attempts to set up.’ Hill v. Eppley, 31 Pa. 334; Henshaw v. Bissell, 18 Wall. 271, 21 L. Ed. 835; Biddle Boggs v. Merced Mining Co., 14 Cal. 368; Davis v. Davis, 26 Cal. 23, 85 Am. Dec. 157; Commonwealth v. Moltz, 10 Pa. 531, 51 Am. Dec. 499; Copeland v. Copeland, 28 Me. 539; Delaplaine v. Hitchcock, 6 Hill (N. Y.) 16; Havwes v. Marchant, 1 Curt. 136, Fed. Cas. No. 6,240; Zuchtmann v. Roberts, 109 Mass. 53, 12 Am. Rep. 663. And it would seem that to the enforcement of an estoppel of this character with respect to the title of property, such as will prevent a party from asserting his legal rights, and the effect of which will be to transfer the enjoyment of the property to another, the intention to deceive and mislead, or negligence so gross as to be culpable, should be clearly established.”
If, after tlie payment of the $2,000 and before the cattle were shipped, the defendant had brought an action for the cattle, it could have recovered neither the cattle nor any lien upon them until it paid the balance of the purchase price, the $10,615, and it acquired no rights by the delivery which was conditioned by the payment of that amount. The plaintiff did nothing inconsistent with this condition, nothing but to tell its bank that it had sold its cattle and to ask it to inquire whether or not the draft for $2,000 would be paid. I am unable to perceive any moral turpitude or any negligence whatever in these acts, or in the fact that the plaintiff subsequently continued to assert its legal rights under its legal contract. In my opinion it was guilty of no moral turpitude and of no breach of duty which should deprive it of the $2,000 which it had the legal right to receive, or of its cattle, which it had the right to hold until the purchase price for them was paid, or of the right to enforce its contract of sale, under which it was entitled to hold both the cattle and the $2,000 until the full purchase price of the former was paid to it, and I think the iudgment below should be reversed.