Fairbanks, Morse & Co. v. Eureka Co. , 67 Ala. 109 ( 1880 )

BRRJKELL, C. J.

— In Sumner v. Woods, 52 Ala. 94, it was decided, that a sale of a chattel, the vendor parting with possession, -upon the condition that the title should not pass until the purchase-money was paid, was valid between the parties, but, as to bona fide purchasers from the vendor, he would be deemed the true owner, and they would acquire a title which would prevail over that ©f the vendor, though the condition was never performed. The reason given for the decision was, that “ the great mark of ownership of personal property is possession ; and when a contract is made, by which it is intended that the property should be apparently in one, while it is in fact in another, the world has a right to suppose that the one in possession is the owner; and such a contract cannot be set up, to the prejudice of bona fide creditors and purchasers without notice. As has been justly said, such contracts are out of the usual course of business, unnecessary, and directly tend to the injury of those who are not in the secret.” The only authority cited is Martin v. Mathiot, 14 Serg. & R. 211.

In Dudley v. Abner, 52 Ala. 572, there was a very elaborate discussion of the question by Justice Manning, who was of the opinion, that a sale upon condition that the title to the chattel should remain in the vendoruntil the purchase-money was paid, was in its nature a parol chattel mortgage, void as to bona, fide purchasers, and as to creditors, unless there was registration of it in pursuance of the statute. The contrary doctrine was asserted in Holman v. Lock, 51 Ala. 287, in which it was in effect decided, without discussion, that a sale and delivery of goods, on condition that the property was not to vest in the vendor until the purchase-money was paid, did not pass the title until the condition was performed. If the condition was not performed, the vendor could reclaim and re-possess himself of the property, from one acquiring possession from the vendee, by a purchase for a valuable consideration, in good faith, and without notice.

The court was soon involved in difficulty and embarrassment, by the decisions in Sumner v. Woods, and Dudley v Abner, supra, when it was sought to apply the principle on which they rest to executory agreements of sale, and to other cases in which the owner had voluntarily intrusted the possession of goods to another, not clothing him with any other indicia of ownership than mere possession and use. — Leigh v. M. & O. R. R. Co. 58 Ala. 165. In view of the conflict of decisions in this court, and of these embarrassments and difficulties, in Sumner v. Woods, at the present term, the former decision in the cause, and that of Dudley v. Abner, supra, was overruled, and the authority of Holman v. Lock, supra, was restored.

The authorities, English and American, with but few exceptions, — and some of these, as in Illinois, dependent on statutes,' — are conclusive on the right of a vendor, inthe sale and delivery of a chattel, to stipulate for a retention of title until the performance of conditions agreed upon as precedent to the passing of title. — Story on Sales, §■ 813, and notes ; Benjamin on Sales, §§ 320 et seq., and notes ; 2 Kent’s Com. 498; Fosdick v. Schall, 99 U. S. 235. In such a case, the vendee is clothed with no other apparent indicia of ownership than the possession ; and with that a mere bailee is clothed. . The contract is not illegal, or immoral, or violative of public policy, unless it can be said that it is wrong for the owner ever to part with possession, because the world, may be induced to suppose that the possessor is the owner, and as such to deal with him. The truth is, possession is but prima facie evidence of ownership of all species of personal property, except commercial paper; and whoever deals upon the faith of it, as evidence of ownership, must accept it as the law declares it — prima facie, or presumptive evidénce only, subordinate to the paramount title, which would prevail if the possession was not changed by the transaction into which he enters. If he complains that the owner has misled him by parting with the possession, the answer is, that the possession is but presumptive evidence of title, and beyond it, if protection is sought, inquiry ought to be made. — Leigh v. M. & O. R. R. Co. 58 Ala. 178. The observation of Williams, C. J., in Forbes v. Marsh (15 Conn. 398), has been often quoted,- as eminently just: “ 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 on 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 bonafid.e, have been held good as against attaching creditors, as well as against the parties.” It is only when some one has relied on possession, as conclusive evidence of ownership, while the law authorizes him to treat it as simply prima facie, or presumptive evidence, that there is complaint of this and kindred principles, which have long prevailed in the law of sales of personal property.. The law has not invited such reliance, and it is folly, or misfortune, that he ascribes to it a higher dignity, and a conclusiveness the law has not ascribed. When the owner of personal property parts with the possession merely, not conferring any other indicia or evidence of ownership, it is a wrong to him, a deprivation of his property without his consent, if the possession is converted into more than prima facie evidence of title. That the possession is coupled with a contract, by which, on the performance of a condition, the possessor can acquire title, cannot be material: for, if the purchaser from him has notice of the contract, he is without equity to protection against it; and if he has no notice, he is merely in the condition in which the most prudent have often been placed, purchasing property from one who has no title, or an infirm title.'

It is a universal and fundamental principle of the law of personal property, that the owner shall not be deprived of his property without his consent, except by due process of law, “ The maintenance of the principle,” as was said by Justice Fields, in Telegraph Co. v. Davenport, 97 U. S. 372, “ is essential to the peace and safety of society, and the insecurity which would follow from any departure from it, would cause far greater injury than any which can fall, in eases of unlawful appropriation of property, upon those who have been misled and defrauded.” — Saltus v. Everett, 20 Wendell, 270; Blackman v. Lehman, 63 Ala. 547; Leigh v. M. & O. R. R. Co. 58 Ala. 165. Upon this principle rest numerous cases, to be found in the books, many of them seemingly hard and distressing, in which honest and innocent persons, trusting to possession as the evidence of ownership, have.been compelled to yield to the true title, even though they were without remedy to recover the money paid, or the property with which they had parted.

It has been, for many years, a necessity here to make contracts for the purchase of personal property, dependent on the condition of paying the purchase-money. Such contracts are, and have been, of almost daily occurrence; _and no greater insecurity in the transaction of business could be introduced, than would follow from a continued departure from the well-settled law affirming the validity of such contracts, and a continued adherence to the doctrine announced in Sumner v. Woods, and Dudley v. Abner, supra. Take this case as an illustration : a chattel of considerable value was sold'; one-third of the purchase-money was paid in cash, and the remainder to be paid in equal installments, at four and six months, with a stipulation that the title was not to pass until full payment of the purchase-money. The contract is in writing, and it was made before the decisions were rendered in the cases referred to, and doubtless in reliance upon the rule, so well established by the great weight of authority. The contract was recorded ; but the record, not being authorized by statute, does not afford notice to the world and so it was claimed by the appellee, who' purchased from the vendee, without notice of the contract by which he acquired possession. If the rulings of the Circuit Court are sustained, the vendor, against his consent, and when he had taken every precaution to avoid it, is deprived of his- property, because the appellee purchased relying wholly on possession as evidence of ownership. The possession was merely prima facie? or presumptive evidence of ownership, and, without injustice, and introducing insecurity and uncertainty into the transactions of business, cannot be regarded and relied upon as evidence of a higher degree, divesting the true owner of hi» property.

The rulings of the Circuit Court are erroneous; and the judgment must be reversed, and the cause remanded.