Court Opinion

ID: 6581247
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:28.065895+00
Date Added: 2024-06-11T15:57:17.476582
License: Public Domain

Loomis, J.
There is much contrariety of reasoning and decision relative to the validity of what are called conditional sales in different states, and often to some extent in the same state.
The courts of Pennsylvania have most firmly established the rule that a sale and delivery of personal property with an agreement that the ownership shall remain in the vendor until the purchase money is paid, is fraudulent and void as to creditors of the vendee and innocent purchasers; but they are obliged to except cases of bailment where no present contract of sale is regarded as made, and they have often found difficulty in distinguishing between eases that lie near the border line separating sales from bailments, where there is a condition upon which the bailee may become the owner. See Statfield v. Huntsman, decided in January, 1880, and Brunswick v. Hoover, decided in November, 1880, reported in the Albany Law Journal, Vol. 24, No. 10, pages 185 to 187, and cases there cited.
The courts of New York seem to concur with those of Pennsylvania in holding conditional sales void as to purchasers, (Steelyards v. Sanger, 2 Hilton, 96, Smith v. Lynes, 1 Selden, 41, Haggarty v. Palmer, 6 Johns. Ch., 437,) but differ in giving effect to them against levies made by creditors and assignments in trust or as security for the payment of antecedent debts. Haggerty v. Palmer and Smith v. Lynes, supra; Keeler v. Field, 1 Paige, 312; Herring v. Hoppod, 15 N. York, 409; Beaven v. Lane, 6 Duer, 232; Wait v. Green, 35 Barb., 585. But when the agreement confers on the conditional vendee the right to sell or a right inconsistent with continued ownership of the original *149vender, the courts of New York pronounce the transaction fraudulent as against both creditors and purchasers. Ludden v. Hazen, 31 Barb., 650; Bonesteel v. Flack, 41 Barb., 435; Powell v. Preston, 1 Hun, 513.
In Maine, Yermont and Massachusetts the condition that the right of property shall remain in the vender until payment is held good not only as between the original parties, but also against purchasers from the vendee and creditors of the latter, even when possession goes with the sale, and there is nothing to indicate that it is not absolute. In all the cases of this class that have hitherto been considered by this court, the court has uniformly and consistently applied the principle embodied in the ancient maxim, “ that when a man hath a thing he may condition with it as he will.” 1 Sheppard’s Touchstone, 118.
In the leading case of Forbes v. Marsh, 15 Conn., 384, Williams, Ch. J., in delivering the opinion, cited several cases decided by the courts of Massachusetts, and added:— “ It is claimed however that these and many other cases of a similar character are peculiar to that state. The court think otherwise, and that they are based upon the principle of the common law, which construes contracts according to the intention of the parties, and allows men to contract according to their own pleasure, unless contrary to the policy of the law or certain technical rules. The owner may dispose of his property to whomsoever he pleases, at any time and in any manner. 2 Bl. Com., 447. When he relies upon his remedy it is but just that he should be left to it according to his agreement, but on the contrary there is no reason why a man should be forced to trust where he never meant it. Per Holt, Ch. J., in Thorpe v. Thorpe, 1 Salk., 171. For the agreement of the minds of the parties is the only thing the law respects in contracts. Plowd., C. 140. * * The rule of law making the property of one man liable for the debts of others in whose hands it is found, is applicable particularly to that property which was once owned by the possessor, and is by him sold or mortgaged to another, and then suffered to remain in ltis posses*150sion. In such cases possession is evidence of fraud, because there is not given to the world the usual evidence of a change of title. The vender or mortgagor is therefore presumed to remain owner, of the property as before. It is otherwise in cases like that before us. The vendee comes into possession of property which was known to belong to another man. Whether therefore the vendee had borrowed it, or hired it, or purchased it, becomes a matter of inquiry, and ought to be ascertained by him who proposes to trust his property upon the faith of this appearance; for the law offers its protecting shield to those who attempt to protect themselves. Accordingly we find that all these cases of conditional sales made bona fide have been held good as against attaching creditors as well as against the parties.”
The doctrine of this case has been reaffirmed in Hart v. Carpenter, 24 Conn., 427, Tomlinson v. Roberts, 25 id., 477, Cragin v. Coe, 29 id., 51, Hughes v. Kelly, 40 id., 148, and Brown v. Fitch, 43 id., 512.
But it must be observed that these cases, while firmly sustaining the condition and protecting the title of the original vender against all other parties, do not directly involve the precise question now presented. Those cases are all distinguishable from this in two particulars—the property was of a nature not necessarily to be consumed in the use, and there was no sort of concession on the part of the original vender that the conditional vendee might dispose of the property without first paying the price agreed upon. Both these elements, to some extent at least, exist in the present case, and occasion hesitation on the part of the court as to the validity of the condition as against the creditors of McAvoy.
The finding bearing upon the question is as follows:— “ It was an express condition of both sales that the title to the merchandise should not vest in the vendee until it was fully paid for, and until such payments were made the title was to remain in the venders. * * Said McAvoy is a retailer of liquors, and it was supposed by the parties that the merchandise would be used in his business, and in case *151any of it should have been sold and consumed before the conditions of sale were complied with, the venders could only enforce their condition against such portion as might remain unsold.”
Under such an agreement, after the property has been attached by creditors, will the law consider it as belonging to the plaintiffs or to their conditional vendee, McAvoy ?
If we invoke the aid of the courts of other states to give an answer to this question, we find decisions of the highest courts of Maine, Vermont and Massachusetts, protecting the title of the original vender under agreements substantially the same as the one we are considering.
In Rogers v. Whitehouse, 71 Maine, 222, goods were bought by a retail trader upon condition that the property should not vest in him until they were fully paid for, but with an understanding between the parties that' they were to go into the store of the conditional purchaser and be sold by him in the regular course of trade; and it was held that they did not pass to the assignee in insolvency of the latter for the benefit of his creditors, although the original vender would have been estopped to deny the title of those who might purchase portions of them of the retailer in the regular course of his business, and it was distinctly held that it was not essential to the existence and validity of such a condition that the conditional vendee should have no right to sell to others. Barrows, J., in giving the opinion said:—“We see no legal objection to a wholesale dealer making a conditional sale to a retailer with the understanding that he may dispose of the goods as they may be called for at retail, but that as between themselves the property shall not pass until the goods are paid for, and in such case, while the purchaser at retail would get a title which the original vender could not impeach because of his agreement with the retailer, it would be the title of the original vender, and not that of the retailer, who has none and can convey none except in the manner which his arrangement with the vender permits.”
In Armstrong v. Houston, 38 Vermont, 448, the plaintiff *152sold one Thompson provisions on conditions, made in good faith, that they were to remain the property of the plaintiff until paid for, but with the understanding that Thompson might consume them in his family. The defendant, a constable, attached the provisions in behalf of a creditor of Thompson. Held—that the condition was valid, and the title to the goods remained in the plaintiff until they were paid for or consumed. Kellogg, J., in delivering the opinion of the court said:—“It was the unquestionable right of the plaintiff to sell this property to Thompson upon the condition that, until payment of the price, the property should remain the plaintiffs’. The retention of the title to the property is not a fraud upon any person, and such a contract is one which every person has a right to make. In a conditional sale the possession of the property is ordinarily transferred to the vendee, and very frequently with expectation of both of the parties to the sale that the property will be used by the vendee; but in such cases the vendee is, until the performance of the condition, only a bailee of the property for a specific purpose, and he acquires no property in the goods from the possession merely. His right rests upon the agreement of the parties, and their intention in making the contract of sale is to be carried into effect if the transaction was entered into in good faith, unless the contract is one which contravenes some established rule of law.”
Of the Massachusetts cases the one most in point is Burbank v. Crooker, 7 Gray, 158, where there was a sale and delivery of a stock of goods to a shopkeeper to be put into his shop for sale, but upon condition that the title should not vest in him until payment of the price, and it was held that the title did not pass, and that the condition was operative as against even a purchaser from him of the whole stock of goods; although it was also held that had a sale been made of individual articles in the ordinary course of business in a country store, the plaintiff might have been estopped to assert any right adverse to such purchaser, having placed them in the hands of such dealer with the understanding that they were to be thus used.
*153The New York cases already referred to render it probable that the courts of that state would declare such a condition inoperative, although there is a distinction of some significance between the case of Ludden v. Hazen, on which the defendant relies, and the case at bar, in this—that in the former the vendee, to use the language of the court, was to “ run his unlicensed grocery upon borrowed whiskey,” all of which by the terms of the agreement was to be paid for only when sold—showing that a sale by the groceryman was the most prominent part of the contract. In so flagrant a case it might well be held that the condition was colorable, fraudulent and void. We concede however that the reasoning contained in the opinion renders it probable that the contract we are considering would in that state be declared void against purchasers and creditors.
The finding in the case now under consideration leaves it a little in doubt how far the parties contemplated any use of the liquors in McAvoy’s business until paid for by him; and it appears that although he had had possession for several months, yet all the packages remained intact except one, which was opened and a small quantity drawn therefrom a day or two before the attachment, and on the day after the attachment full payment was intended to be made to the agent, who was then expected, in New Britain.
But conceding that the parties actually contemplated that there might be some sales made before actual payment of the price, yet the terms of the agreement, coupled with the conduct of the conditional vendee in pursuance of it, evince the perfect good faith and bond fide character of the transaction, so that it cannot be pronounced void on account of any wrong intent of the parties. If therefore the condition is to be held inoperative at all, the law must so declare it upon grounds of public policy, because it was calculated to give the one clothed with the possession a false credit, or else upon the ground that the plaintiffs through their contract are to be regarded as holding the possessor, or conditional vendee, out to the world as absolute owner.
*154The objection as to giving a false credit has undoubtedly much force, so that in several states the courts consider it as sufficient, but it applies with more or less strength according to the circumstances to all cases of conditional sales where the vendee is clothed with full possession and apparent ownership; but as the court says in Forbes v. Marsh, supra, in this state “ all these cases of conditional sales made bona fide have been held good against attaching creditors,” and in reply to the objection we are considering it warns persons against putting faith in appearances except where the case comes within the rule of the vender’s retaining possession after the sale, and persons about to give credit on the faith of such appearances must mate inquiry; and in this respect the language of our courts is similar to that of Campbell, J., in giving the opinion in Ketchum v. Brennan, 53 Miss., 596—“ A buyer must beware of purchasing from one who has not title; possession is not title.”
The other objection, as to holding out the possessor to the world as absolute owner, is involved partly in the one just considered, except so far as the contract in question must be construed as contemplating or authorizing a sale by the possessor.
Possession, with the jus disponendi added, has been regarded by many courts as a sufficient reason for declaring a contract colorable and fraudulent without regard to the real intent of the parties. Bump on Fraudulent Conveyances, 123, and cases there referred to.
We concede that there is much force in the reasoning supporting such a rule, but at the same time we must bear in mind the spirit and drift of our own decisions as they may have induced the making of such contracts. While it is true, as already stated, that no case identical with the present in the particular feature we are now considering has hitherto been before this court, yet the cases referred to clearly show that the controlling consideration has been the bona, fide character of the transaction and the honest meaning and intent of the parties, without applying any technical rule of public policy, as in the cases of a retention of possession by the vender after a sale.
*155The courts of Massachusetts and Connecticut have always been in harmony on this vexed subject, and the principles hitherto adopted by us, if they do not logically compel, yet very naturally lead to the same result as already reached in that state, where the title of the original vender has been protected notwithstanding the objection we are considering.
If however the contract in question must be construed to mean that the plaintiff authorized MeAvoy to sell the property as his own, we should be constrained to hold it so absolutely inconsistent with the retention of the title in the plaintiff as to waive or make void the condition. But in this case the condition that no title was to pass until payment is so clear, express and positive in its terms that we are inclined to give it full effect, and to construe what is afterwards said of the understanding of the parties relative to a sale as the court in Rogers v. Whitehouse, supra, did, that is, not as authority to sell as his own (having nothing himself) but as authority simply to transfer the title of the plaintiff in the manner authorized.
The discussion, so far, implies that we consider that the validity of the contract in question should be determined by the laws of this state; but we ought perhaps to refer particularly to the claim made in behalf of the defendants, that “the negotiations for the sale, although carried on by the plaintiffs’ agent in New Britain, required the assent of the plaintiffs in New York to complete the contract,” and that therefore it must be considered as there made.
We think the claim thus stated is based on a partial statement of the facts. But if we supply the omission by reference to the finding, that says “ the sales were made at New Britain,” that payment was to be there made to the plaintiffs’ agent, and that “ all the merchandise was immediately .after the respective sales placed in the possession of MeAvoy at New Britain,” it will become clear that the transaction is to be governed by the laws of this state.
There was error in the judgment complained of and it is reversed.
*156In this opinion the other judges concurred; except Carpenter, J., who dissented.