Ellis & Meyers Lumber Co. v. Hubbard , 123 Va. 481 ( 1918 )

Sims, J.,

after making the foregoing statement, delivered the following opinion of the court:

The questions raised by the assignments of error will be considered and passed upon in their order as our conclusions axe stated below.

1. The contract involved in this cause, when made, was an executory contract of sale of lumber conditionally—the lumber at the time of the contract not being in existence. The subject of the contract, therefore, was not specific at that time, and the conditions specified in the contract being unperformed, the contract, with respect to all of its conditions was entirely executory.

■ Two things only were essential to convert this executory contract into a complete bargain and sale of the lumber, to the extent of passing the property in or title to the lumber to the vendees (the appellants), namely: (1) The lumber becoming specific—i. e., its coming into existence and being segregated and set apart as the subject of the contract, as stipulated therein should occur as conditions precedent to the passing of the property, or title; and, (2) the performance of the other conditions precedent, if any, to the passing of the property or title, as stipulated in the contract,

(a) That the subject thereof must be specific is essential to the validity of every contract of bargain and sale. It inheres in the very nature of the transaction that a bargain and sale cannot be. made of chattels not yet identified—the ownership cannot change, the property or title cannot pass, until the particular property which is the subject of the contract becomes ascertained. This is true independently of the intention of the vendor and vendee. So long as the subject of the contract remains, undetermined, the law will conclusively presume that the contract is executory, and no property or title can pass from vendor to vendee. Benj. on Sales (4 Am. Ed.), section 78, pages 95-6, section 310, page 323. This, however, is the sole element in such a contract which is independent of the intention of the parties.

That is to say, when the subject of the contract is or has become specific, then—■

(b) Whether or not the property or title thereto passes becomes wholly a matter of the mutual intention of the parties, vendor and vendee—wholly a matter of contract between them. In s,uch case, neither delivery of the chattel to the vendee, nor the completion of its manufacture, or anything else to be done to it so that it may be ready for such delivery, nor the measurement or testing of it (when it is to be measured or tested in any way), nor anything further to be done to ascertain the quality, or the quantity, or the price; nor the payment of the purchase money, or any part of it; is essential to the passing of the property or title to the vendee, if the contract provides it shall so pass at a stated time and when the chattel is in a condition stated in the contract. The conditions stipulated in the contract as to these matters are the sole -conditions precedent to the passing of the property or title, all other conditions precedent being thereby waived;.the vendor being bound by the contract to pass and the vendee to accept the property and title thereto when such conditions have been performed or exist—and hence the property or title then passes to the vendee under the term of the contract. Benj. on Sales, supra, sec. 309, p. 322, sec. 311, pp. 323-4, sec. 325, p. 333 section 324, p. 338, et seq., p. 368 et seq.; United States v. Ansonia Brass, etc., Co., 218 U. S. 425, 31 Sup. Ct. 49, 54 L. Ed. 1107.

In the instant case, the lumber which was the subject of the contract, after it came into existence, by being sawed, was piled on sticks on the leased land on the top of Chestnut Ridge, as provided for in the contract—which was away from the mill and other lumber of the vendor—there being no other lumber, than that which was the subject of the contract, on such leased land; so that there was no confusion or intermingling of such lumber with other lumber; and no question arises in the instant case of the identity of the lumber—as to its being the specific lumber which was the subject of the contract. We are thus relieved from any consideration of whether the lumber was of uniform quality and value, and other nice distinctions to which a sale of goods in mass gives rise, upon the question of ascertainment of whether the subject of the contract is specific. The following cases bear on this subject, which are cited and relied upon for appellees, but which, therefore, have no controlling bearing upon the instant case, viz.: New England Dressed Meat, etc., Co. v. Standard Worsted Co., 165 Mass. 328, 43 N. E. 112, 52 Am. St. Rep. 516; Hubler v. Gaston, 9 Or. 66, 42 Am. St. Rep. 794; Elgee Cotton Cases, 22 Wall. 120, 22 L. Ed. 863; Groff v. Belche, 62 Mo. 400.

In the instant case, the lumber in question was segregated, set apart, by delivery on the leased land as aforesaid. This was “in legal phase * * the appropriation of specific goods to the contract. The sole element deficient in a perfect sale * * ” (was) “thus supplied. Benj. on Sales, supra, sec. 488, p. 441. And this was done, not under subsequent mutual agreement of the parties—which would have been sufficient to convert the prior executory contract into a complete bargain and sale (Idem. sec. 488)—but under the very terms of the contract in writing aforesaid. And with respect to the intention of the parties upon the subject of whether the property or title in the lumber should then pass to the vendee, or such passing should be suspended until some other condition or conditions precedent should be performed or exist, the contract itself provides in express terms as follows: “* * Whereupon the delivery of said lumber shall be deemed complete, and said lumber shall thereupon become and thenceforth remain the property of the second party” (the vendees) “absolutely and unconditionally.”

In the language of Benj. on Sales, supra, sec. 309, p. 322, we must say: “The agreement is just what the parties intend to make it, if that intention is clearly and unequivocally manifested, cadit questio.” And language could scarcely be more unequivocally manifest than that of the contract in the instant case, above quoted, as expressing the mutual intention of the parties thereto that the property in and title to the lumber in question should pass absolutely and unconditionally to the vendees when it was delivered on said leased land as aforesaid. Consequently it did so pass by the terms of the contract, unless there be some other provision or provisions in the contract which negative this conclusion.

(c) It is urged for appellees upon our consideration that the lumber contracted, for was to be of various kinds of timber, of various grades, of various sizes, and to be merchantable under the rule of each grading; that, hence, an inspection of the lumber by appellants, to ascertain whether it came up to the contract specifications, or what part of it did so, was essential to the ascertainment of whether the lumber delivered on said leased land was such lumber as was called for by and was the subject of the contract; that the contract provided merely for an inspection and for an account and tally (or counting) by the vendor as the lumber was delivered on the leased land and did not provide for any inspection of the lumber by the vendees before or when it was delivered on the leased land, but only when a subsequent delivery of it should be made to the vendees at Honaker (all of which facts are true); that in fact there was no inspection of the lumber by the vendees until this later time (which fact is also true) : and, hence it could not be and was not the intention of the parties that the property in and title to the lumber should pass to the vendees until the lumber was identified by inspectors.

(d) It is also alike urged upon our attention that, in view of the facts aforesaid, (which are all unquestionably true), the amount of the purchase price for the lumber could not be ascertained and was not to be ascertained, indeed, or paid, in accordance with the contract, until after the lumber was subsequently inspected, i. e., tested, measured, recounted and accepted by the vendees at Honaker, „ and subsequently delivered there f. o. b. cars; and that something more remained to be done to the lumber by the vendor after its delivery, on the leased land, namely, he was bound by the contract to expend further time and money upon the hauling of the lumber to Honaker, and hence it could not have been and was not the intention of the parties, when the contract is construed as a whole in the light of such facts and circumstances of the case, that the property in or title to the lumber should pass, until, these things were all done.

The position of appellees, referred to in paragraph (c): next above, amounts to this: Under the contract, as per its provisions and as acted upon, the vendor may have delivered on the leased land some of the lumber there delivered, which did not comply with the contract specifications as to kind of timber, or grades, or sizes, or merchantable quality. That since by the contract the vendees were to finally accept and pay for only such of the lumber as complied with the contract specifications, the fair and reasonable construction of the whole contract is that title to none of the lumber passed until it was inspected by the vendees at Honaker, and was thereafter loaded on board cars, the provision of the contract next above quoted to the contrary notwithstanding. That position loses sight of the consideration that a complete bargain and sale of chattels maybe made subject to a condition subsequent that the chattels shall conform to any stipulated specifications. In such case, the title to the chattels passes at the time of the bargain and sale, notwithstanding the fact that the sale is subject to be defeated in whole or in part by the failure of the chattels to fulfil the stipulated specifications, when such fact is subsequently ascertained. The bargain and sale in such case is a conditional one, to be sure; but the condition is a subsequent and not a precedent condition to the passing of the title, and in no way prevents the latter taking place.

With respect to the positions of appellees referred to in paragraph (d), next above, it is deemed sufficient to say that they all concern circumstances which may be important in cases where the contract is not express, or if express, is not plain and unequivocal as to the intention of the parties as to when the property or title shall pass. They are circumstances to which, in such cases, the courts apply certain rules of construction as furnishing tests for determining the intention of the contracting parties, but in such cases only. To such cases only are the famous rules, known as the rules of Lord Ellenborough, which are relied on by the appellants, applicable. Where the contract is express, plain and unequivocal, as aforesaid, as is true of the instant case, such circumstances are immaterial, and . such-rules of construction are inapplicable, since they do not have to be resorted to in order to ascertain the intention of the parties to the contract. | See authorities above cited.

In the instant cases all of the provisions of the contract relied on for appellees as conditions precedent to the passing of the property or title thereto, appear from the contract itself as conditions precedent only to the payment in full of the purchase money, and not to the passing of the property or title thereto—a wholly different thing. The only conditions precedent to the passing of the property or title, is expressly provided in the contract, were those and those only which were to serve to segregate and identify the lumber—to appropriate it—as the subject of the contract, as aforesaid.

Hence, we are of opinion that the authorities cited and relied on for appellant, illustrating various applications ox Lord Ellenhorough’s rules of construction, are inapplicable to the instant case. Such authorities, in addition to those next above referred to, are: Dixon v. Myers, 7 Gratt. (48 Va.) 240; 35 Cyc., p. 292; Arbuckle v. Gates, 95 Va. 802; Thomas v. Hubbard, 79 W. Va. 138, 90 S. E. 817; Hahn v. Fredericks, 30 Mich. 223, 18 Am. Rep. 119; 2 Schouler on Per. Property., sec. 250; 2 Benj. on Sales, sec. 3; Black-wood v. Cutting Packing Co., 76 Cal. 212, 18 Pac. 248, 9 Am. St. Rep. 199, 203; 2 Va. Law Reg. 58; and none of them concerns a contract which expressly provided in plain and unambiguous terms when the property or title in the chattels should pass to the vendee.

• We are, therefore, of opinion that there is no merit in the positions taken by appellees above considered and that the assignments of error of appellants with respect, thereto are well taken.

• We come now to the sole remaining positions taken by appellees in defense of the assignments of error by appellants, which are, in effect, as follows:

2. That the appellants, by their recognition and acqiescence in the deed of assignment and the action of the trustee, Shoemaker, thereunder, in hauling! ¡the lumber from said leased land to Honaker, and loading it on board cars there and shipping it to appellants, recognized and acquiesced in the trustee’s right to take over such lumber while on the yard on said leased land by his having it hauled therefrom; and appellants having inspected such lumber when delivered to them by the trustee at Honaker and received shipment of it from Honaker by the trustee, are estopped to deny that they purchased the lumber from the trustee, and hence that appellants, if they ever had jtitle ¡to- the lumber lender the ¡contract ¡aforesaid, are estopped from asserting such title, or any right or set-otf against the purchase money for such lumber by reason of any advances or loans made by appellants to the original vendor (Morgan) of the lumber under said contract; and that the law, under such circumstances, will imply a contract of purchase by appellants of and a consequent implied promise of appellants to pay the trustee for such lumber.

Now, as appears from the provision of the deed of assignment quoted in the statement of the case above, such deed did not convey the lumber, or any part of it, to said trustee 1 Shoemaker), but only “all.remainder of the purchase price due to • * * (the original vendor, Morgan) from * * (appellants) for timber or lumber sold and delivered to * * (appellants) as shown by contract of......day of December, 1912,” (being the contract aforesaid). There was, therefore, nothing in the deed of assignment in coiiflict with the rights of appellants as owners of the lumber under the contract aforesaid. On the contrary, the deed of assignment expressly recognized such rights. Hence, no estoppel, as against appellants, could grow out of their acquiescence in such deed.

In regard to the acquiescence of appellants in the action of the trustee in delivering the. lumber at Honaker, by hauling it from the leased land thereto, thus incurring the expense of such hauling, and the inspection and acceptance by appellants of the lumber at Honaker, and the receiving of the shipments of it from Honaker by the trustee, there was nothing in all of this inconsistent with the provision of said contract. By the deed of assignment the remainder of the purchase money for the lumber which would be due from appellants under said contract was conveyed to Shoemaker, the trustee. If the trustee had “failed to draw (haul), ship and forward the lumber” from the leased land to Honaker, then, by the express provisions of the contract, the appellants were “authorized to procure the same to be done through other agencies and to deduct all the expense of every kind which shall attend such drawing, shipping and forwarding from the balance of the contract price * *,” in which event the amount the trustee would have realized from the “remainder” of purchase money aforesaid, conveyed to him as aforesaid, would have been to that extent reduced. Therefore, because of the conveyance to him by the deed of assignment, the trustee had the right to do what he did under the provisions of the contract itself, (he being in the shoes of his grantor, the original vendor party to such contract) ; hence such action was in no respect in violation of or hostile to the contract or to the rights of appellants thereunder. Therefore, the acquiescence of appellants in such action could not operate by estoppel to deprive them of any of their rights under such contract.

■ The same is true of the answers of the appellants filed in the two actions of assumpsit, quoted in the statement of the case above. Those answers recognized merely the obligation of appellants for whatever balance of indebtedness might be ascertained to be due from them upon a settlement of accounts under said contract. There was nothing in this inconsistent with their claim of title to the lumber itself under such contract or their right to charge their vendor, Morgan, with any advances or loans they may have made to him under such contract or otherwise.

And as to there being ah implied contract of purchase by appellants of and a consequent implied promise of appellants to pay the trustee for the lumber, there being an express and an enforceable contract in existence which governed the rights of the parties, the law will not imply a contract in contravention thereof. It is only in the absence of an express or of an' enforceable contract between parties, that the law (whether at law or in equity) will, from circumstances, imply a contract between them. Grice v. Todd, 120 Va. 481, 91 S. E. 609, L. R. A. 1917 D, 512.

With respect to the loans or advances of $400 and $200 and $363.85, made by appellants to their vendor (Morgan), it is true that by the contract- aforesaid itself, the appellants bound themselves to lend to Morgan only $400 as an advance upon the purchase money for the lumber. But there was nothing in this which forbade the appellants from subsequently also lending Morgan the further sums of $200 and $363.85. And having done so, prior to the deed of assignment made by Morgan, appellants would have had the equitable right to set off such $200 and $363.85, with interest thereon, aforesaid, against Morgan in any settlement of accounts with him thereafter involving the purchase money owing to him by appellants for the lumber; and Morgan having thereafter become insolvent and made the assignment aforesaid to the trustee, Shoemaker, appellants had and have, in a court of equity, the same right of set off against the trustee. Feazle v. Dillard, 5 Leigh (32 Va.) 31; Barnes v. Barnes, 106 Va. 519, 56 S. E. 172.

For the reasons above stated, we are, therefore, of opinion that there was error in the decree complained of, and it will be set aside and annulled, and this court proceeding to enter such decree as the court below should have entered, will decree that the appellees recover of the appellants the sum of $159.10, with interest thereon from October 17, 1913, until paid, $150.98 parcel- thereof being all the remainder of the purchase price due and owing by appellants to said trustee for the lumber which was the subject of the contract aforesaid of December 6, 1912, and $8.12, the residue thereof, being for eleven hundred and sixty feet of cull lumber shipped by said trustee to appellants and received by the latter, which was not the subject of said contract; and that the appellants recover of the appellees their costs in this behalf expended. And the cause will be remanded to the court below for such further proceedings therein as may be necessary or proper, not in conflict with the views expressed in this opinion.

Reversed and remanded.