Court Opinion

ID: 5253111
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:19:31.988354+00
Date Added: 2024-06-11T08:27:58.602536
License: Public Domain

Smith, J. (dissenting in part):
In January, 1914, the plaintiff made a contract with the Atlantic Phosphate and Oil Corporation, a manufacturer of fish oil, for its entire product for the year 1914, with the exception of 6,000 barrels, or as much thereof as might be demanded, which the said oil corporation had agreed to give to Harden, Orth & Hastings Company. The contract provided that the purchaser should receive the oil in the purchaser’s tank cars, to be supplied by the purchaser at the seller’s said factory at Promised Land, or, at the purchaser’s option, from time to time, in purchaser’s barrels to be furnished by the purchaser at the said factory at Promised Land. It was further provided that the purchaser should provide enough tank cars or barrels at the factory as aforesaid to take and receive all said oil as and when produced by the seller, except as thereinafter provided. It was thereinafter provided that when the said oil is produced by the seller at its factory it shall be invoiced to the purchaser by Harden, Orth & Hastings Company, the agent of the seller, and provision is made for the drawing of drafts as against the purchase price. Later the contract provides:
*385“If at any time there shall not be at the factory sufficient tank cars or barrels furnished by the Purchaser to receive all the oil as fast as produced, the Seller shall store the said oil in its own tanks at its factory, and Harden, Orth & Hastings Company shall invoice the oil so soon as stored in said tanks to the Purchaser, and shall be entitled to draw on the Purchaser at sight, at the same rate of twenty-five cents a gallon for the said oil so stored in storage tanks, as well as for the oil placed in said tank cars or barrels; provided, however, that if at any time the oil so stored in the Seller’s storage tanks shall reach the amount of fifteen thousand barrels, and there shall not be enough tank cars or barrels provided by the Purchaser to take care of all excess as fast as produced, the Seller may ship such excess oil to the Purchaser or store the same in any way that may be possible, and the Purchaser in that event shall pay to the Seller any extra expenses thus incurred by the Seller.”
The defendant was the factor under an agreement for the sale of this oil of the Atlantic Phosphate and Oil Corporation. The defendant had advanced substantial sums of money to that corporation, and in order to protect the defendant for its commissions and for the advances, the drafts drawn on the plaintiff for the oil shipped were delivered to and collected by the defendant. Thereafter, by the direction of the defendant, the Atlantic Phosphate and Oil Corporation shipped six carloads of the oil to Swift & Co., and it is for the conversion of these six carloads of oil by the defendant that this action is brought.
Of these six carloads, four were taken direct from the tanks of the Atlantic Phosphate and Oil Corporation and put upon the cars of Swift & Co., and thus forwarded to Swift & Co. The other two carloads had been taken from the tanks by the Atlantic Phosphate and Oil Corporation and put upon the cars belonging to the plaintiff, and the oil in these cars belonging to the plaintiff was shipped to Swift & Co. As to the oil taken directly from the tanks of the Atlantic Phosphate and Oil Corporation and put upon the cars of Swift & Co., I do not think the defendant can be held for conversion, although it participated in a diversion of this oil. The defendant can only *386be held for conversion provided title had passed from the Atlantic Phosphate and Oil Corporation to the plaintiff.
In the manufacture of this oil, the evidence shows that the method of manufacture was to cook the fish which were not otherwise fit for eating, and then through presses the oil •was pressed out and turned into tanks, where the oil was further cooked; that thereafter the oil is turned into settling tanks and given a chance to clear, and that after it is cleared the oil is finally pumped into the storage tanks, where it stays until it is loaded upon the car, so that the placing óf this oil in the storage tanks was only the last step in the process of manufacture. It would of necessity have been run into these storage tanks, whether or not it was sold to the plaintiff, or whether or not it was sold to any one. All of the oil was run into these storage tanks from the settling • tanks, in order that the settling tanks might be used for further oil that was in process of manufacture.
By section 86 of the Personal Property Law (Consol. Laws, chap. 41 [Laws of 1909, chap. 45], as added by Laws of 1911, chap. 571) it is provided that " 1. The goods which form the subject of a contract to sell may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by the seller after the making of the contract to sell, in this article' called ' future goods.’ * * * 3. Where the parties purport to effect a present sale of future goods the agreement operates as a contract to sell the goods.”
Section 99 of that law (as added by Laws of 1911, chap. 571) provides: "Property in specific goods passe? when parties so intend. 1. Where there is a contract to sell specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. 2. For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties, usages of trade and the circumstances of the case.”
Section 100 (as added by Laws of 1911, chap. 571) purports to give the rules for ascertaining intention, and by rule 4 it is provided: “1. Where there is a contract to sell unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally *387appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.”
These provisions of the Personal Property Law were taken from the Uniform Sales Act which had been enacted in many States, including Connecticut, New Jersey, Massachusetts, Rhode Island and Ohio, as early as 1909. In Williston on Sales at Common Law and under the Uniform Sales Act, Professor Williston, in speaking of rule 4, says (at p. 380): “ As an original question it might be well urged that when a contract is made for the sale of unspecified goods, the property should pass unless a contrary intention is manifested, as soon as the goods become specified and put in a deliverable condition by the seller. It is well settled, however, that the property does not pass at so early a moment. Some subsequent act in regard to the goods is necessary as a manifestation of the intent to transfer it. The intention alone is not enough, and certainly unless clearly so agreed, the completion of the goods is not a sufficient manifestation of intention by outward act. There is not much authority upon the question whether the parties, if they expressly so agree, may vary the rule that the property does not pass on the mere completion of the goods. In other words, it is not clear whether the rule that the property does not pass until some subsequent act of appropriation is one of presumption based perhaps on supposed intention, or whether it is an absolute rule of law. In theory there seems no reason why the intention of the parties should not prevail if it is clearly manifested and some authority supports this view. The completion of the goods is itself an outward act, which it would seem might be agreed upon as the appropriation. As a general rule, however, some act of appropriation of the goods to the buyer, other than mere completion dr preparation, is essential and for the transfer of the property, and it is necessary that the act of appropriation should be assented to by both parties. But as in the formation of contractual agreements generally, it is immaterial that the parties express their assent at different times, nor is it material which party makes the proposition.”
*388In McKinney’s Consolidated Laws of New York, Annotated (Personal Property Law, p. 169), in speaking of this rule, it is stated: “ Rule 4, paragraph 1, is in accord with the common law of this State, with the possible exception noted below relating to the forcing of title on a buyer by means of tender.”
At page 161 of his work, Professor Williston, in speaking of the sale of future goods, says: “ But the mere acquisition of the goods by the seller does not, it seems, in our law operate as a transfer of title to the buyer even though the parties intend that it should be so.” In this authority is cited the case of Low v. Pew (108 Mass. 347), and the footnote reads: “ In the latter case fishermen purported to 1 sell, assign and set over * * * all the halibut that may be caught by the master and crew of the schooner Florence Beed on the voyage upon which she is about to proceed.’ While the schooner was upon her voyage the fishermen became bankrupt, and it was held that their assignees in bankruptcy had title to the fish that had been caught, as against the buyer.”
In Andrews v. Durant (11 N. Y. 35) Judge DeHio says: “ In general a contract for the building of a vessel or other thing not yet in esse, does not vest any property in the party for whom it is agreed to be constructed during the progress of the work, nor until it is finished and delivered, or at least ready for delivery and approved by such party. All the authorities agree in this. [Citing authorities.] And the law is the same though it be agreed that payment shall be made to the builder during the progress of the work, and such payments are made accordingly. In Mucklow v. Mangles [1 Taunt. 318], which arose out of a contract for building a barge, the whole price was paid in advance, the vessel was built and the name of the person who contracted for it was painted on the stem, yet it was held that the title remained in the builder.”
In Comfort v. Kiersted (26 Barb. 472) it was held: “ Where an article agreed to be sold is yet to be manufactured, the title does not pass until there has been some act on the part of the vendor which amounts to a delivery, and some act on the part of the vendee which amounts to an acceptance.” Tn writing for a unanimous court, Justice Harris there says: “ In this case, the parties to the contract had agreed that *389the shingles should be the property of the defendants as fast as they were made. Still the contract was executory. To make a sale complete, so as to vest the title in the vendee, the thing sold must not only be in existence, but it must be identified. The contract itself conveyed no present right of property to the defendants. Though Davis agreed that the shingles he was about to make should, as fast as made, become the property of the defendants, still, as it was an agreement to be executed in futuro, his right was, not to the shingles, but in action for not executing the agreement. Before the title would vest, even after the shingles had been made, something must have been done which would amount at least to a constructive delivery. The shingles must have been in some way designated and set apart, so as to be capable of being identified as the property of the purchasers. [Citing cases.] ”
In Andrew v. Newcomb (32 N. Y. 417) it was held that the title to growing crops could pass as soon as the crops came into existence, but the court states this rule as an exception to the general rule, that title to property not in existence cannot be affected so as to vest the title when it comes into being. Even this rule has been limited in the case of Rochester Distilling Company v. Rasey (142 N. Y. 570) which recognizes as between a tenant and a third party that the title to the crops would not pass without a subsequent act of appropriation. (See, also, Hart v. Taylor, 82 N. Y, 376; Deeley v. Dwight, 132 id. 59; Atlantic Building Supply Co. v. V. P. Cement Co., 203 id. 133.)
Under these authorities, I am ^unable to find any act of the vendor which constitutes an unconditional appropriation of this oil to the plaintiff’s contract. Nothing was done with the oil except what was necessary to do in the completion of the process of manufacture. The oil that was in these tanks belonged in part to Harden, Orth & Hastings Company, if they chose to exercise their option to purchase the same. It is stipulated in the case that they did exercise their option, but by the stipulation it is stated that that option was exercised during “ that period.” That period is the period provided in their contract with the American Phosphate and Oil Corporation, which was one year from the 15th day of December, 1913, so that in August, 1914, it does not appear *390that Harden, Orth & Hastings Company had exercised their option to take any part of that oil. For aught that appears, their 6,000 barrels provided for in their contract may all have been in those tanks at the time of the alleged conversion, and thereafter taken. It is argued, because by plaintiff’s contract a draft might be drawn upon the plaintiff for twenty-five cents a gallon, while the oil was still in the storage tanks, that this provision indicates an intention that title shall pass at once when the property gets into the storage tanks. It will be noticed, however, that these drafts are to be drawn by Harden, Orth & Hastings Company, which firm had its option to withdraw 6,000 barrels of oil at any time from those tanks, so that this clause of the contract is not sufficient to indicate the intention of the parties that title shall pass at once upon production and storage in these storage tanks. In Comfort v. Kiersted (supra) the opinion discusses this very situation and Justice Harris writes: “ Suppose Davis had made, with another person, another contract, in all respects like that under consideration, whereby he had agreed to deliver the same quantity of shingles as fast as made, could it be pretended that the defendants would, by the mere operation of their contract, become the owners of all the shingles made by Davis, as soon as manufactured? It would then need, as now, that in some way the shingles should be designated as delivered in execution of the contract, in order to change the right of property. And they would then have become the property of the one or the other of the parties to whom he had agreed to sell them, according to their designation.” So, under the contract here to sell to Harden, Orth & Hastings Company 6,000 barrels of the oil at their option, the placing of the oil in these storage tanks could not in any way be deemed an appropriation to the plaintiff’s contract, and much less, with the right of Harden, Orth & Hastings Company to take therefrom 6,000 barrels of oil, could it be deemed to be an unconditional appropriation to the plaintiff’s contract, which unconditional appropriation is made by the Personal Property Law a requisite to the passing of title of future goods. If placing this oil in these storage tanks could in any event be deemed a delivery, it was a conditional delivery, conditioned upon the election of Harden, Orth & *391Hastings Company to take 6,000 barrels thereof for their own proposes.
As to the oil which had been placed in the cars of the plaintiff, it seems to me clear that the Atlantic Phosphate and Oil Corporation had so far made an unconditional appropriation of that oil to the plaintiff’s contract as to vest title in the plaintiff. That the defendant had full knowledge of that contract, I have no doubt whatever. It had loaned to the Atlantic Phosphate and Oil Corporation a large amount of money. Confessedly, the contract was shown to one of the officers of the defendant, with every presumption that it was read, as it was to their interest to read the contract and become acquainted with its conditions. Moreover, the defendant discounted drafts drawn by the Atlantic Phosphate and Oil Corporation upon the plaintiff for oil delivered under this contract, and discounted the drafts for the $25,000 advanced by the plaintiff to the Atlantic Phosphate and Oil Corporation, and it is against all probability that this was done without a substantial knowledge of the plaintiff’s rights in this oil. In fact, the course of business of the Atlantic Phosphate and Oil Corporation seems, during all this time, to have been dictated by the defendant, which had so large an interest in the company by reason of moneys advanced. Inasmuch as the title to this oil in these cars had passed to the plaintiff, the defendant was guilty of conversion in directing a diversion of this oil from the plaintiff to Swift & Co.; and as to this oil, the exceptions must be sustained, and a new trial ordered, with costs to plaintiff to abide the event.
Exceptions sustained and motion for new trial granted, with costs to plaintiff to abide event. Order to be settled on notice.