In re Allen , 183 F. 172 ( 1910 )

TRIEBER, District Judge

(after stating the facts as above). On behalf of the intervener, it is claimed that, until the articles claimed are paid for by the vendee, it is merely a bailment, and he is entitled to a return of them, or, at most, that it was an option to purchase. On the other hand, it is claimed on the part of the trustee that it was1 a contract of "sale and return.”

A.“bailment” is properly defined as being a delivery of goods in' trust upon a contract, express or implied, that the trust shall be duly executed and the goods restored by the bailee as soon as the purpose of ,the:báilment shall be served, 2 Kent, Com. 558:

...On the other hand, a “contract of sale” is when there is an agreed price, a vendor, a vendee, an agreement of the former to sell for the agreed .price, and an .agreement of the latter to buy and pay the agreed price. An “option to purchase” is merely’ an agreement whereby the.vendee may, upon compliance with certain terms and conditions, become the- owner of the property; the vendor giving him that option.

The’leading case'-upon which the intervener relies is Westcott v. Thompson, 18 N. Y. 363. In that case the contract was for the sale of beer and provided for the sale of the beer to the vendee at a certain price. The beer was to be shipped in barrels and the barrels to be returned to the plaintiff when emptied of the beer, and if not returned the vendee was to pay for every barrel not returned the sum of $2, and thereupon become the owner thereof. On the other hand, in the case at bar, the contract provides that the vendee is to be charged and pay for the cases and bottles, but in case he wishes to return any of the cases and empty bottles he is to be allowed a rebate on his bill of $1.50-for each case of empty bottles returned to .the intervener.

Is this an option to purchase or a contract of sale and return? The distinction between these two forms of agreement has been aptly pointed out in Hunt v. Wyman, 100 Mass. 198, as follows:

“An option to purchase if he liked is essentially different from an option to return a purchase if he should hot like. In one case the title would not pass until the option is determined; on the other hand, the property passes at once, subject to the right to rescind and return.”

See, also, Guss v. Nelson, 200 U. S. 298, 26 Sup. Ct. 260, 50 L. Ed. 489; In re Schindler (D. C.) 158 Fed. 458; Hotchkiss v. Higgins, 52 Conn. 205, 52 Am. Rep. 582; Martin v. Adams, 104 Mass. 262.

Applying this rule to the contract between the intervener and the bankrupt, it clearly appeárs that it was not an option to purchase, but a 'contract of sale and return, while, on the other hand, the contract in Westcott v. Thompson was merely an option to purchase. In the latter case it was optionary with the vendee to keep the empty barrels and pay the sum of $2 for each barrel kept by him or to return them. In the case at bar the bankrupt was charged and promised to pay for the cases and bottles unless he desired to return the same, and if he did he was to be paid or given credit on his account therefor the sum of $1.50 for each case and bottles therein.

Great stress is laid upon the fact that under the contract the bankrupt was to pay the net price only on the bottled beer, still the charge was made against him, and until he returned them he was liable to the intervener who had a cause of action against him. In Herryford v. Davis, 102 U. S. 235, 20 L. Ed. 100, the contract between the par-lies spoke of the cars sold as being leased until paid for, but notes were executed by the vendee for the full purchase money. The cars, before they were paid for, having been seized under execution, the vendor claimed them as his property, but the court held that calling it a lease did not make it so, nor was it a conditional sale, but merely an attempt to retain a lien for the purchase money, and, the same not having been recorded as required by the laws of the state of Missouri, it was void as against creditors.

In Re Rahilly v. Wilson, 3 Dill. 420, Fed. Cas. No. 11, 532, grain was stored in a warehouse with the understanding that it should be sold by the warehouseman, and when the depositor would surrender the receipt therefor the warehouseman had the right to return an equal amount of grain of equal quality or pay the then market price of the grain. Upon these facts it was held by Judge Dillon that it was a sale and not a bailment. The distinction between bailments and sales is clearly shown by the opinion of that eminent jurist, who carefully reviews the authorities on that subject.

In Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99, 37 L. Ed. 1093, the court held that “a transaction is a ‘sale,’ as distinguished from a ‘bailment,’ when there is no obligation to return the specified article.” In this case there was no obligation on the part of the bankrupt to return the property claimed by the intervener; but, if he saw proper, he had the right to do so and receive a credit for the amount specified in the agreement. If the property had been destroyed by fire or hv any other cause, even if without any fault or negligence on the part of the bankrupt, the loss or destruction would still have fallen on him. This is the rule applicable to contracts of sale and return. Moss v. Sweet, 16 Q. B. 493; Martineau v. Kitching, L. R. 7 Q. B. 436; Schlesinger v. Stratton, 9 R. I. 578.

As this was a contract of sale and return and not a mere option to purchase, nor a bailment in any sense, the title passed to the bankrupt, and the trustee is entitled to the possession of the property.

The finding of the referee will be set aside, and judgment entered dismissing the intervention, with costs.