City Bank v. Easton Boot & Shoe Co.

Opinion by

Mr. Justice Mitchell,

Although the findings in answer to specific requests by the parties, and the supplemental findings in the court’s opinion, present the facts at great length, yet the real controversy in this case lies within a very narrow compass. It is agreed, first, that the title to the leather in suit is to be determined by the law of New York; secondly, that the transaction by which the plaintiff acquired title from Moffatt Bros., the former owners, though in form a warehouse receipt, was in legal effect a chattel mortgage; and thirdly, that by the law of New York, the mortgage to the plaintiff not having been accompanied by a change of possession, nor having been filed of record, was void against a subsequent purchaser in good faith. The whole controversy turns on the single question whether defendant was such purchaser.

On this question the learned judge found the facts to be that defendant having been a purchaser from Moffatt Bros, for some time and to a large extent, and in February, 1895, having a contract for future delivery then running, made on February 1, a further purchase of leather to be delivered between April and September, and on February 15, gave Moffatt Bros, promissory notes amounting to $9,000, as part payment in advance under this last contract. These notes were at once discounted by innocent holders, and at maturity were paid by defendant. On May 20 the leather now in suit was shipped by Moffatt Bros, by common carrier to defendant at Easton, and on May 24 was received by defendant as a delivery on account of the purchase of February 1. It, or a largo part of it, was leather made from the hides mortgaged in January to the plaintiff, but defendant had no notice of any interest on the part of plaintiff until the day the leather was received, when plaintiff telegraphed notice of its claim.

On these facts the court below held that the defendant was a purchaser in good faith, whose title under the New York law would prevail against plaintiff’s unrecorded mortgage, saying: “ It is the accepted rule that title passes to the buyer in sales, for future delivery, whenever the price is paid, and the goods to be sent are separated by the seller and identified from his general stock, or manufactured and consigned to the common carrier for transportation. The delivery of this leather by Moffatt Bros, to the railroad company in New York, for carriage-to the defendant, was done with the intent to transfer the property. Defendant had no notice of plaintiff’s claim to it before it was shipped, but was apprized by telegram of the adverse-title before it was received, and the contract with the seller required the leather to be delivered ‘ f. o. b., Easton.’ Having three months previous to this, however, fully paid for it, the notice by the plaintiff becomes immaterial, if in point of fact the defendant is the first to acquire possession. Qui prior est tempore potior est jure.”

The appellant contends that defendant was not a bona fide purchaser under the law of New York, because the contract with Moffat Bros, was merely executory, no particular leather being designated, set apart or referred to in the contract, and the defendant did not advance its notes on the faith of the leather in suit. The argument on this point is rested very largely upon the case of Barnard v. Campbell, 55 N. Y. 456, and 58 N. Y. 73, but we do not find that it sustains appellant’s position. In that case the defendants bought linseed from one Jeffries and paid him in advance. Jeffries at the time of sale and payment had no linseed, but subsequently obtained a quantity from plaintiffs by fraud, and delivered it to defendants. Plain tiffs,, on the discovery of the fraud, at once rescinded their contract with Jeffries and reclaimed the linseed. It was held that they might do so, as defendants had not paid on the faith of any apparent ownership by Jeffries or authority to sell. The ground of the decision appears plainly from the following extract from-the opinion: “The defendants paid for the merchandise by remitting to Jeffries on the 21 of August, at which time Jeffries had neither the possession nor the right of possession of the property, nor any documentary evidence of title, or any indicia of ownership or of dominion over the property of any kind.” And in the opinion on the motion for reargument, 58 N. Y. 73, it is again said the plaintiffs “would have lost their right absolutely if, during the interval between the delivery of the goods, the vesting of this defeasible title in Jeffries, and the disaffirmance of the sale by the plaintiffs, the goods had been sold to an innocent third party for a valuable consideration.” We do not see that this introduces any new element into the usual definition of a bona fide purchaser, though some difference of opinion might arise, as it did in fact in the court of first instance, as to its application. The facts of the present case are so entirely different that we do not think they are within the same application of the general rule. The leather in question, or the hides from which it was made, was at the time of defendant’s purchase in the possession of Moffatt Bros., and as to defendant it was and continued to be Moffatt Bros.’s property. Plaintiff was not an owner who was fraudulently deprived of his property, but a purchaser from Moffatt Bros, who, as against defendant, never acquired any title at all. The property was left in the hands of its former owners from whom defendant bought in the regular course of business, for future delivery. Payment in advance was none the less payment, and nothing remained to make the sale complete but delivery. Until delivery both parties held incomplete and defeasible titles. If plaintiff had taken possession first, under its mortgage, its title would have been the superior, but as delivery was first made to defendant, the latter’s title first became complete and must prevail.

The application of the law of another state is always a matter of some delicacy,, and not entirely free from doubt. But the phrase “purchaser in good faith” is of such general use and established meaning that it is highly improbable that it has any special or different signification in the great commercial state of New York, and certainly no authority has been shown to lead us to suppose so. On the contrary, the cases cited by appellant are all in accord with the general common-law definition, whatever difference of opinion might arise as to the results reached upon the different facts.

The learned judge below also rested his judgment on another view of the case, based on the authority permitted to Moffatt Bros, under the contract with plaintiff, to manufacture the hides into leather and sell it, and a large part of appellant’s argument is devoted to this aspect of the case. But as we deem the judgment entirely sound and well founded on the principle already discussed, it is not necessary to enter on the other branch.

Judgment affirmed.