Grout v. Hill , 70 Mass. 361 ( 1855 )

Shaw, C. J.

The court are strongly inclined to the opinion that, even if there had been a concluded agreement in New York for the sale of the leather, by Loup & Co. to Washington Hill, to be forwarded to Spencer by common carriers, there would have ->een a good right of stoppage in transitu by the New York house, and that this right was duly exercised. By the theory of the common law, a conclusive bargain for the sale of goods, at a price agreed, without actual delivery, so far vests the property in the vendee, that they are at his risk; but the vendor has a lien for the price, and is not bound to deliver them without payment. If sold on credit, and actually delivered, this lien is of course gone. But if agreed to be sold on credit, and delivered to a common carrier, to be delivered to the consignee or purchaser, though this is a good sale and constructive delivery, still, if the purchaser fail or be come bankrupt before the goods have actually reached their destination, and the consignor, the vendor on credit, can stop the goods before the termination of the transit, he has a right to do so, and will thereby reestablish his lien, so that neither the purchaser, nor his assignee or attaching creditor, can take the property without paying the price. The right of stoppage in transitu, therefore, is an extension, by the law merchant, of the lien for the price, which the vendor has befon. d livery, after a contract of sale.

What actually amounts to a stoppage in transitu, in a particular case, may be a question of difficulty. But it was very early held, that where the consignee, being a purchaser of goods on credit, finds that he shall not be able to pay for them, and gives notice thereof to the vendor, and leaves the goods in possession of any person, when they arrive, for the use of the vendor, and the vendor, on such notice, expressly or tacitly assents to it, it is a good stoppage in transitu, although the bankruptcy of the consignee intervene; and the goods revest in the consignor. Atkin v. Barwick, 1 Stra. 165. This was approved and confirmed in the case of Salte v. Field, 5 T. R. 211. The same principle was adopted in this commonwealth, though the facts led to a different result, in Lane v. Jackson, 5 Mass. 157.

In the present case, Washington Hill, having, by an investigation, ascertained his insolvency, before he knew of the arrival of the leather at the Spencer station, gave notice to his son Luther that he should not receive it, and, for that purpose, made a bill of it back to Loup & Co., and handed it to his son for their use, and requested him immediately to give them notice of it, which he did; and afterwards, and before the plaintiffs were chosen assignees, one of the firm of Loup & Co. came to Spencer and received the bill of sale from Luther, which had been left with him for them, and thus acceded to Washington’s offer to rescind the sale. This brings the case within the authority of the cases cited, and others to the same effect.

But there is another ground which, in our opinion, is still more decisive for the defendants, and that is, that no conclusive contract of sale and purchase between Loup & Co. and Washington Hill was ever made ; there was no delivery of the leather, actual or constructive, and no right of property in the leather ever vested in the vendee.

The facts show that Washington Hill went to Loup & Co. and found they had the kind of leather which he wanted, and after inquiry, they were willing to sell it to him at the usual credit. But, for some reason, the leather was not then selected, but the arrangement was left on this footing, that they would select leather of the quality he wanted, and the quantity he desired, and forward it to him at Spencer by railroad, with a bill by mail, and if, on arrival and examination, he should find it satisfactory, he was to accept it, and forward his note, at the agreed term of credit, for the payment. This was a conditional bargain, upon a condition precedent; or, as we believe it is expressed in the more significant term of the Scotch law, a condition suspensive. Here, after the leather arrived at the station, there was no examination of it by Hill, no acceptance, no note given; on the contrary, notice was given that it would not be received or paid for, and this put an end to the provisional bargain. The fact that Hill put his renunciation into the form of a bill of sale could make no difference ; it could not operate as a sale, because the property was already in Loup & Co., and not in Hill; but it was a decisive expression of Hill’s determination not to conclude the former conditional bargain, and in the mean time, as far as he could, to put it out of his own power, and into the custody of a third person, for the original party. It was not a resale ; for no property had vested in the first vendee.

There is a fact mentioned in the agreed statement, which we suppose was thought to have some influence in this case, to the effect that Luther Hill, one of those against whom this action is brought, supposed and believed that Washington Hill had bought these goods of Loup & Co. and given his note for them, that the property had vested in the vendee, and that the arrangement for making a bill of sale back was designed for the purpose of giving these creditors a preference; and so he could not be a bona fide purchaser without notice of the fraud, when he purchased the goods of Loup & Co. It is very true, that if the reconveyance by Washington Hill to Loup & Co. had been a conveyance of Hill’s property to Loup & Co. by way of preference, it would have been fraudulent against the creditors of Hill; and the knowledge of that fraud, which Luther Hill had, would have prevented him from claiming them under a conveyance from Loup & Co., as a bona fide purchaser without notice, even if he gave a full consideration for them. But if Loup & Co. took the bill,without fraud, merely to regain their own property, whatever may have been the purpose of Washington Hill 1 lien the creditors of Hill could not have defeated such title of Loup & Co., and a transfer by them, who had an indefeasible title, not contaminated by any fraud, would make a good title to Luther Hill, although the latter had full knowledge of the original fraudulent purpose of W. Hill. The ground is this, that although a sale, to defeat the creditors of the vendor, is voidable, at the election of the creditors, by an attachment or other suitable mode, yet it is valid between the parties, and conveys a title defeasible only by creditors. The grantee is es-topped, by his fraudulent participation in an attempt to defeat creditors, from setting up that title; for he shall not take advantage of his own wrong. But, having such title, he can transfer it. If he transfers it to one having notice of the fraud, and of the defeasible title of his grantor, he takes it mala fide; he is under the same estoppel for the same reason. But if he transfers it to one having no notice of such fraud, the title passes; and as he has committed no wrong to the creditors, nor aided in doing it, he is under no such estoppel, and takes the title purged of the fraud. This principle is important to a bona fide purchaser ; otherwise, though he holds a perfect title himself, he might meet great difficulty in finding a purchaser who could safely make the purchase, after the fraud in the preceding transaction had become generally known. This principle, just in itself, is well established by authority. Brown on Sales, § 599. Trull v. Bigelow, 16 Mass. 406. On the grounds on which we decide, this principle is not essential to the present case; but the point having been raised, it seemed proper to allude to it.

As it appears to us that the determination of Washington Hill not to receive the goods of a confiding vendor, for the purchase of which he found that he could not make payment, whilst the transaction was inchoate and within his own power, originated in a just sense of honor and integrity, it is satisfactory to find that its validity is sustained upon strict principles of law.

Judgment for the defendants.