Allen, Bethune & Co. v. Maury & Co. , 66 Ala. 10 ( 1880 )

SOMEBYILLE, J.

A sale may properly be defined to be, “ a transfer of the absolute, or general property in a thing, for a price in money.” — Benj. on Sales, § 1. If- any thing remains to be done' by either party to the transaction, before delivery, — as, for example, to determine the price, quantity, or identity of the thing sold, — the title does not vest in the purchaser, but the contract is merely executory.—Hudson v. Weir, 29 Ala. 294.

Where, however, goods are sold and delivered, the terms of sale being specified, and the'vendee reserves the right to reject or return, the title passes, liable to be divested by the exercise of this option to rescind, expressed within a reasonable time. When there is 'a warranty by the seller, express or implied, this right would exist, without any special stipulation to that effect in the contract of sale. If the seller fails to deliver that which he has agreed to sell,-the purchaser may rescind the contract^ and return the goods, or retain them, and claim a deduction for their relative inferiority in value.—Magee v. Billingsley, 3 Ala. p. 679 ; 1 Smith’s Lead. Cas. (17th Am. Ed.) 326.

Here, the appellees expressly reserved the right to inspect and re-weigh the cotton purchased from Munter & Brother, and to reject such bales as might be found to be -£ sand-packed, seed-packed, or water-packed.” The cotton' was delivered, and the warehouse receipts surrendered. The stipulated price was paid, excepting about five dollars per bale, .which was retained merely as a security for the faithful performance of the contract on the part of the vendors. Under this state of facts, the title to the five hundred or more bales of cotton purchased from Munter & Brother by the appellees, clearly vested in th¿m.

The evidence shows that the -seven bales of cotton, for which this action was brought, was a portion of this five hundred or more bales. To maintain trover for them, the appellees, who were plaintiffs in the suit below, must have had a property in the cotton, and the right of possession at the time of the conversion. If they have legally parted with either of these pre-requisites, they are debarred from bringing this suit.

It is a noticeable fact, that the warehouse receipts for the rejected cotton were taken by appellees in the name of Munter & Brother, when they returned it to the warehouse of the appellants. When the settlement took place between them, and the bank check was drawn and delivered, the cotton receipts were also delivered up to Munter & Brother, by whom they were subsequently indorsed to Earley, Spear & Co., for value, and without notice.

A receipt of this character is not, in any technical sense, negotiable. It merely stands in the place of the property represented by it, and the delivery of the receipt, apart from any statute regulating the transfer, would have the same effect in transferring the title to the property, as the delivery of the property itself. In other words, the delivery of such indicia of title is usually regarded as a symbolic delivery of' the property itself.—National Bank v. Walbridge, 19 Ohio State Rep. 419; Burton v. Duryea, 40 Ill. 325; Horr v. Barker, 8 Cal. 614.

If the receipts had been taken in the name of the appellees (Maury & Co.), then an indorsement would have been necessary to convey the legal title, under the provisions of section 2099 of the Code.—Lehman, Durr & Co. v. Marshall, 47 Ala. 362. In this transaction, appellees assumed, it seems, to act as the agents of Munter & Brother; and in the subsequent settlement between the parties, and acceptance of the surrendered receipts, this agency in depositing the cotton in the warehouse of appellants was fully ratified. These receipts, being in the name of Munter & Brother, needed no indorse-ment to them in writing. Their delivery unindorsed, under the circumstances, was a symbolical delivery of the cotton.

It is maintained that Munter & Brother obtained possession of these receipts by fraud, and that, to this end, they made the settlement with Maury & Co., and gave the bank check to them with preconceived intent to intercept its payment.

It was not until recently that the question was settled, whether property in goods passes to the purchaser by a sale which the vendor was fraudulently induced to make. The rule, as deduced by a learned text-writer, seems to be as follows ¡ — “Whenever goods are obtained from their owner by fraud, 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.” Benj. on Sales, § '433. “ 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. This contract is voidable at the election of the vendor, not void ab initio." — lb. § 433. Where such is the case, it follows that the vendor may affirm and enforce the contract, so far as the vendee is concerned, or he may, at his option, rescind it.

But there is a limitation of this principle, in favor of bona fide purchasers, without notice, from the fraudulent vendee. A third person, in such cases, may acquire a good title from such vendee by giving him value for the property, or incurring some responsibility upon the credit of it, without notice of the fraud. No one can 'claim' protection except a purchaser, as distinguished from a mere donee without consideration ; and he must have been ignorant of the fraud practiced on the deceived vendor. — 1"Addison on Torts (Dudley and Baylie’s Ed. 1876), 420 ; Benj. on Sales, § 433, note (i); Thames & Co. v. Rembert’s Adm’r, 63 Ala. 561.

There is no evidence in this case showing, nor is it insisted in argument, that Farley, Spear & Co., who defended this suit, for appellants, and in their name,, in the lower court, had any notice of the alleged fraud practiced on appellees by Munter & Brother. The notice- given the warehousemen was no notice to them.—Magee v. Billingsley, 3 Ala. 679.

The appellees, Maury & Co., had procured the warehouse receipts to be taken in the name of Munter & Brother. This fact enabled them to practice the imposition complained of, upon the parties to whom the receipts were transferred. There is anille scope here for an estoppel against them, upon the familiar and just principle, declared long ago by Lord Holt, in Hern v. Nichols, 1 Salkeld, 289 : “ Seeing somebody must be a loser by this deceit, it is' more1 reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger.”

The charges given by the couit below did not recognize this principle as affecting the rights of Farley, Spear & Go., and were erroneous.

Beversed and remanded.