Bros. v. Mobile & Ohio R. R. , 58 Ala. 165 ( 1877 )

BRICKELL, C. J.

It is not necessary to inquire whether the rules of the board of trade, at Columbus, had existed so long, were so generally known, and acted on, that they would be regarded as a custom or usage, entering into and forming a part of contracts for the sale of cotton there made, which were not in stipulation inconsistent with them. Of the character of these rules, Foster was informed by the plaintiffs, and that the proposed sale, or agreement to sell, made with him, was made in reference, and subject to them, and that while he would be allowed to examine, and, if he desired, to re-weigh the cotton, the title would not pass, the sale was not complete, and he could not ship or remove it, until the price was paid. Without dissent, Foster proceeded with the agreement, and these rules thus become parts of it, as completely as if the agreement had been reduced to writing, and they had been expressed as terms of it. To constitute a sale, the parties must mutually assent, that the property, absolute or general, in the thing sold, shall pass from the vendor to the vendee. There may be propositions which, when accepted and complied with, will ripen into a contract of sale; or, there may be agreements for a sale in the future; or, there may be executory contracts for sale, but these do not confer the rights, or impose the obligations, which arise from a contract of sale. — Pars. Mer. Law, 41; Chamberlain v. Smith, 44 Penn. St. 431. By the agreement made with Foster, neither the property, nor the right of possession, passed to him; and if, during the time allowed him for examination, and re-weighing, if he desired to re-weigh, or at any time before the payment of the price, the cotton had been lost, or from anj^ cause had perished, the loss would have fallen, not on him, but the plaintiffs. The agreement conferred on Foster a right to the inspection and examination, and re-weighing of the cotton, to ascertain if, in quality and quantity, it corresponded with the representations of the plaintiffs, if it was in fact the thing they proposed selling, and he proposed purchasing. It conferred on him, also, the right, on paying or tendering the price, within the time allowed by the rules of the board of trade, to demand of the plaintiffs a transfer of the ownership and possession. It conferred on the plaintiffs the right to demand the inspection and examination, and re-weighing, if that was desired, and the payment of the .price, within the time prescribed. A breach of the promise by either party, the other being willing and ready to perform on his part, would have been ground of an action for the recovery of damages. The contract was not, therefore, a sale, operating, and intended to operate a change of property, but an executory agreement for a sale.

The order given Foster by the plaintiffs, directing the warehousemen with whom the cotton was stored, to deliver it to the appellee, did not change the character of the agreement — did not convert it, from a mere executory bargain, into a sale, as between the plaintiffs and Foster. If the order had authorized the warehousemen to deliver the cotton to Foster, instead of to the appellee, and had been absolute, without qualification or condition in its terms, whether it would have operated a transfer of the property to him, would depend entirely on the intention with which it was given and received. This intention, as deduced from the agreement between the parties, and the circumstances attending the making of the order, would have controlled its operation.- — Magee v. Billingsley, 3 Ala. 698; Bates v. Simpson, 4 Ala. 306. The agreement between the plaintiffs and Foster, and the circumstances attending the execution of the order, show conclusively that the intention was, not a transfer of the property, nor entrusting to him possession of the cotton, but a mere delivery of it, at the place be selected as most convenient for inspection and examination. It gave him no right or interest in the cotton, distinct or different from that acquired by the agreement, and no authority or power over it, other than that he could have exercised if it had remained in the warehouse. The order is not, however, for the delivery of the cotton to Foster. It is in keeping with the agreement the plaintiffs made with him, by which they retained dominion, property and possession of the cotton, and yet afforded him the opportunity of inspection and examination. The delivery authorized, is to the appellee, and if accepted, the appellee thereby becomes the bailee of the plaintiffs, and not of Foster. The only connection the order indicates that Foster had with the cotton, was to pay the storage to the warehousemen. This, at best, is a very equivocal indication of connection with it; and cannot, with any propriety, be regarded as an indicium of ownership, or of authority over the cotton, when found in an order which does not indicate any intent on the part of the plaintiffs to part with the property or the possession, and expressly directs the transfer of custody and possession from a warehouseman, not to Foster, but to another bailee, a common carrier. There is not a word, other than the statement that Foster would pay the storage, to be found in the order, which indicates that he has the slightest connection with the cotton. It seems too plain for controversy, when the order is taken, as it must be, in connection with the agreement between the plaintiffs and Foster, and with the circumstances attendant upon its making, that it must be regarded, as the parties intended it, not as changing the ownership or possession of the cotton, but merely as an authority to the warehousemen to transfer it ie the warehouse, to the depot, or platform of the appellee. As between Foster and the plaintiffs, the property and possession of the cotton was not changed. Foster acquired no interest in it; his right was by payment of the price, within the time appointed, to acquire property in and possession of it. If the cotton was in his possession, there can be no doubt the plaintiffs would be entitled to recover it from him; or, if in the possession of the appellee, as his bailee, the rights of third persons, not having intervened, the duty of the appellee to surrender it to the plaintiffs, or on refusal, the right of recovery of the plaintiffs would be clear and undoubted. Whatever may have been the doubt, at one time, it is now well settled that the right of the true owner, to recover his property from a bailee, is co-extensive with that he would have if the possession had continued in the bailor. Each and both must yield to the paramount title. — The “Idaho,” 8 Otto. (93 U. S.) 575; Croswell v. Lehman, Durr & Co., 54 Ala. 363.

The general rule of law is, that in the absence of authority, or of property, a sale, or a pledge of chattels, confers no title, even when the person making it is in possession, and the person to whom it is made pays a valuable consideration or advances money in good faith, and without notice of the right or title of the true owner. — 1 Smith Lead. Cases (5th Am. ed.), 892-3; Benjamin on Sales (1st Am. ed.), 4; Banard v. Campbell, 55 N. Y. 456; Saltus v. Everett, 20 Wend. 267; Stanley v. Gaylord, 1 Cush. 536. The rule is embraced in the maxim : Nemo plus juris ad odium transferre potest quam ipse habet — Nemo dat quod non habet. There are cases recognized as exceptions to the rule.

The first of these, material to be noticed under the facts of this case, and the instructions to the jury, is that of an immediate sale, followed by possession in the vendee, with a condition annexed that, if he fails at a future day to pay the price, the vendor may reclaim the goods-r-or an immediate sale, followed by possession in the vendee, with an agreement that the title shall remain in the vendor until the price is paid. Not, perhaps, following the current of authority, this court has, in this class of cases, held, that a purchaser from tbe Tendee, while in possession, paying a valuable consideration, and without notice of the condition annexed, or of the agreement, would acquire a title that would prevail over the right of the vendor. The condition, or the agreement, is valid and operative, as between the vendor and ven-dee, and would be enforced if the rights of a subsequent bona fide purchaser had not intervened. — Sumner v. Woods, 52 Ala. 94; Dudley v. Abner, ib. 572. This class of cases is wholly unlike the present. Here there is no contract of sale, no transfer of property or of possession. There is, as we have said, at most, but an executory agreement for a sale. The reason lying at the foundation of the decisions to which we have referred is, that the transaction between the parties is, in effect, a mortgage — the reservation of the condition, or the stipulation, that the title should remain in the vendor, being intended as a security for the payment of the price. The recognition of such a reservation, or of such a stipulation, as superior to the right of the subsequent innocent purchaser, would offend the policy of our registration laws, and open a door for the perpetration of frauds. The exception in itself imports that there has been a sale, and a change of possession — a delivery by the vendor to the vendee, as a completion of the sale, putting the thing sold at the risk of the vendee. — Lehigh Co. v. Field, 8 Watts & Serg. 232; Lester v. McDowell, 18 Penn. St. 91; Chamberlain v. Smith, 44 Penn. St. 431.

Another class of cases, said to be exceptions to the general rule, that “no one can transfer to another a better title than he has himself,” is where the owner, with the intention of sale, parts with the property, though under such circumstances of fraud as would authorize him to reclaim it from the vendee. Pn this class of cases it is very accurately said: “We must distinguish whether the facts show a sale to the party guilty of the fraud, or a mere delivery of the goods into his possession, induced by fraudulent devices on his part. In other words, we must ask whether the owner intended to transfer both the property in and the possession of the goods to the person guilty of the fraud, or to deliver nothing more than the bare possession. In the former case there is a contract of sale, however fraudulent the device, and the property passes; but not in the latter cases.” — Benjamin on Sales (1st Am. ed.), 319. This case certainly does not fall within the exception. The plaintiffs did not part, or intend to part, with the property in the cotton, until the payment of the price ; and Foster did not contract for it until he made the payment — until that event, property and possession remained with the plaintiffs. If the order to the warehouseman could be regarded as an authority to Foster to take possession, it was a possession for the mere purpose of examination and re-weighing; and it was obtained by fraud. This mere possession clothed him with no right or interest in the cottori, which he could transfer to another. If there had been a sale, an intentional transfer of the property in the cotton to him, though it was induced by fraud, the right of a bona fide purchaser from him would prevail, because he was clothed with the title. True, the contract would have been voidable at the election of the plaintiffs-— it would not have been vokh The plaintiffs could have affirmed it, on discovery of the fraud, and have pursued him for the price ; or, they could have claimed its rescisión, and pursued the cotton. Until they disaffirmed, and claimed the rescission, the title of course would have remained in Foster ; and if, in the meantime, he had sold or pledged to one innocent and ignorant of the fraud, the title would pass to him. Hoffman v. Noble, 6 Metc. 73; Moody v. Blake, 17 Mass. 23.

Another class of cases forming an exception to the general rule, is, when the owner, by his own act or consent, has given another such evidence of the right to sell, or otherwise dispose of his goods, as according to the customs of trade, or the common understanding of the world, usually accompanied the authority of sale, or of disposition. Then, if the person entrusted with the possession of the goods, and with the indicia of ownership, or of authority to sell, or otherwise dispose of them, in violation of his duty to the owner, sells to an innocent purchaser, the sale will prevail against the right of the owner. He ought to bear the loss which may follow from his misplaced confidence, rather than the bona fide purchaser, who relied on the evidence of property, or of authority with which he clothed the possessor. It is within this exception this case is supposed to fall. The argument is,' the order given by the plaintiffs to the warehouse-men indicated that Foster had the ownership of the cotton, or, at least, authority to control and direct its shipment. By the order, the ■warehousemen were induced to deliver the cotton to the appellee, as the property, or on account of Foster ; and the appellee was induced to give him the bill of lading, which Williams, Johnson & Co. accepted as security for the bill of exchange discounted by them. This exception does not arise merely because the true owner entrusts another with the possession of his goods. Possession is prima facie evidence of the ownership of all species of personal property. It is but prima facie, and whoever deals alone on the faith of it must accept it as such, and in subordination to the paramount title, which would prevail over it, if the possession was not changed by the transaction into which he enters. If this was not true, a felon acquiring possession by theft, could, by a sale to an innocent purchaser, divest the true owner of his property. A naked bailee, entrusted with possession, could dispose of goods to the prejudice of his principal. A case does not fall within the exception unless the owner confers on the vendor other evidence of ownership, or of authority to dispose of the goods, than mere possession. — McMahon v. Sloan, 12 Penn. St. 229. The case of Andrew v. Dietrich, 14 Wend. 81, is an illustration. An auctioneer who had dealt with the tenant in possession of a house in which the carpets were down, under the belief that he was the owner of the carpets, and had advanced money on the faith of his ownership, acquired no right or title as against the true owner, who had delivered them to the tenant, under an executory contract for sale at. so much per yard. In Covill v. Hill, 4 Denio, 328, the principle is affirmed that the mere possession of goods, without some other evidence of property, or of authority from the owner to sell, will not enable the possessor to transfer a better title than he has himself. The plaintiff was the owner of a lot of lumber lying on the bank of the canal, which he agreed one Potter might ship in his, the plaintiff’s name, to the defendants at Albany to sell, and that when sold, the plaintiff should receive a certain sum per thousand feet, and Potter the remainder, if any, of the proceeds of sale — the title and possession to remain in the plaintiff till he was fully paid. The transaction between the plaintiff and Potter was treated as a bailment, and it was held the defendants acquired no title by the purchase from Potter. In Saltus v. Everett, 20 Wend. 267, there was a sale of lead by a person in possession, having a bill of lading indorsed in blank, and other written evidence of property he had fraudulently obtained, and the sale was held inoperative to divest the true owner of his title. In all cases, which have been deemed to fall within this exception, the owner has done some act, other than parting with possession, of a nature to mislead persons as to the title. The case of Pickering v. Busk, 15 East, 38, has been considered as carrying the exception to its limits. There the owner of hemp lying at the wharf had it transferred on the wharfinger’s books into the name of a broker whose business was that of buying and selling hemp; and though he gave the broker no authority to sell, it was held, a sale by him to an innocent purchaser passed the title. Lord Ellen-borough said: “ Strangers can only look to the acts of the parties, and the external indicia of property, and not the private communications which may pass between a principal and bis broker; and if a person authorize another to assume the apparent right of disposing of his property in the ordinary course of trade, it must be presumed the apparent authority is the real authority.”

The order to the warehousemen is the only evidence of ownership, or of a right to possession, which Foster had or the plaintiffs conferred. This order cannot be regarded as an evidence of the transfer to him of either possession or of property. It was not calculated to induce others to deal with him as the owner, or as having authority to dispose of the cotton. By it the plaintiffs, in effect, assert their ownership and authority, and designate the appellee, not Foster, as the person to whom possession or custody of the cotton was to be delivered. The order does state the ship mark of the cotton, and this, with its delivery to the appellee, may have indicated that transportation by the appellee was intended. If it indicates that intention, there is nothing to indicate that the plaintiffs did not intend the shipment should be on their own account, or that they would not give instructions, subsequently, as to the consignee, the place of destination, or on whose account, and as whose property it was to be transported. There is no indication that Foster had, in these respects, the slightest authority. It is not material what construction the warehousemen or the appellee may have placed on the order. If they construed it as an evidence of a transfer of property to Foster, or as conferring on him authority, they adopted that construction at their own peril; and their misconstructions can not prejudice the plaintiffs. The expression that Foster would pay the storage is, as we have said, to say the least of it, very equivocal as indicating that he had any connection with the cotton. If this expression created a conjecture that he was connected with it, its uncertainty ought to have put the warehousemen and the appellee on the inquiry, and inquiry would have rendered it impossible that they should have been misled. Not inquiring, when ordinary prudence would have suggested inquiry, they must take the consequences of their dealing with one who had no authority over the cotton. Nor have Williams, Johnson & Co. acquired any right in or to the cotton. The bill of lading erroneously given Foster by the ap-pellee, cannot deprive the plaintiffs of their property. Its transfer by indorsement would have passed no more than the right and title of Foster, if any he had, and if its transfer by delivery passed an equity courts of law would recognize and protect, it is an equity resting only on that right and title, not on the property of the plaintiffs. — Saltus v. Everett, 20 Wend. 267.

When the cotton was demanded of the appellee, the plaintiff tendered payment of the freight, but not of storage, which it seems the appellee had paid the warehousemen. The ap-pellee did not inform the plaintiffs of the payment of the storage, but placed its refusal to surrender possession on no other ground than that it would surrender only to the consignees or the person holding the receipt given for its transportation. We do not intend to express an opinion on the right of the appellee, in any event, to have demanded of the plaintiffs payment of freight or storage, as the condition on which they would surrender the cotton to them. If the appellee had that right, it ought to have been asserted when the demand was made. Not then asserting it, but placing their refusal on the sole ground that the plaintiffs were not the consignees, or had not possession of the receipt for transportation, they must be deemed to have waived it. They cannot now defeat the suit they have compelled, by asserting a lien the plaintiffs could have removed if knowledge of it had not been withheld from them. — Spence v. McMillan, 10 Ala. 583.

It is obvious from what we have said, that the instruction numbered three, is abstract, if it asserts the law correctly, and that the remaining instructions are erroneous statements of the law applicable to the facts shown by the bill of exceptions.

The judgment must be reversed, and the cause remanded.