Brooks v. Paper Co.

31 S.W. 160, 94 Tenn. 701

• Court: Tennessee Supreme Court
• Decided: April 25, 1895
• Status: Published

Opinion

McAuster, J.

The object of this suit is torecover the value of certain wall paper sold by the Geo. Id. Friend Paper Company, of Carrollton,. Ohio, to the firm of Brooks & Cole, conducting-business at Memphis, under the name and style of the “Tennessee Paper Company.” The suit as-originally commenced was in replevin, but the officer failing to get possession of the goods, the case has been prosecuted in detinue. Code, § 4119. The Circuit Judge, sitting without the intervention of a jury, found the issues in- favor of the plaintiff, ’and pronounced judgment in its favor for $374.15. The defendant, Brooks, appealed, and has assigned errors.

The main controversy presented in the record is-whether, the title to the goods had passed to the purchasers, Brooks & Cole, so as to he embraced in an assignment made by this firm to L. S. Brooks, trustee. The Geo. H. Friend Paper Company had frequently sold goods to Brooks & Cole, and when the latter firm made their assignment, January 31, 1893, they were indebted to the former not only for the goods in controversy, but likewise for several other purchases. The particular invoice of paper sued for in this case was ordered by letter January 14, 1893, in which terms of payment were not mentioned. The goods were shipped by the Geo. H. Friend Paper Company January 21, 1893. They reached Memphis Saturday, January 28, and remained in the railroad warehouse until Monday,. the thirtieth, when they ' were delivered to Brooks & Cole. On the following day — to- wit, January 31 — Brooks & Cole made an assignment. This assignment had been contemplated for several days, and, in fact, the instrument had been prepared and was ready for execution on Saturday, January 28. It was actually signed and delivered, as already stated, on January 31.

This assignment, it is claimed, was brought about by the failure of the Harding Paper Company to permit Brooks & Cole to renew a note for $1,500 which they owed that company, and which would mature February 1, 1893. Mr. R. W. Brooks testified that, about ten dajrs before the date of the assignment, a representative of the Harding Paper Company came to Memphis and “called upon me in regard to the Harding Paper Company debt, and, I learned, was making investigation as to the financial standing of my firm, * * and was endeavoring in every way possible to pry into my business. He announced his determination to remain in Memphis until maturity of his debt and collect the same. The Harding Paper Company had theretofore promised an extension of this paper. I thereupon wrote to this company and reminded them of their promise. If this note could have been extended, my firm would have' been able to continue business, but not being able to make any arrangement with the Harding Company, or its agent, * • * * by direction of my firm our attorney prepared a special assignment on January 28, 1893, as a prudential measure, and dated. it that day, * * * trusting the Harding Company would still agree to extend ' the note, but, being unable to procure an extension of the paper, or an interview with Mr. • Harding, on the thirty-first of January the deed was acknowledged and filed for registration. It embraced ‘ all that portion of our. property now contained in the certain three story brick building-belonging to L. B. McFarland, No. 343. Second St., Memphis, Tenn. ’ Also our stock of goods, wares, and merchandise now in said above mentioned and before described three story brick building * * * consisting of wrapping paper,” etc.

The assignment was special and preferential. The debt sued for in this action is not mentioned, although six other debts due plaintiff, amounting to $1,130.86, are specified but not included in the preferred class.

It should be stated that, on February 27, 1893, plaintiffs, by their attorneys, made demand, in writing, for the goods of the trustee, L. J. Brooks. The letter concluded, viz.: “Our clients look to you either for the goods or their value.” The trustee, however, continued to sell off the stock until March, 13, 1893,. when the writ of replevin was sued out. The sheriff was unable to find the goods and so returned the writ. The plaintiff thereupon elected to prosecute the case in detinue.

The plaintiff in error bases his assignments of error upon the special findings of the trial Judge. There was no request for the Circuit Judge to reduce his findings to writing, and, under the well-established practice of this Court, such findings are equivalent to a • general verdict upon a correct charge, and, if there is any evidence upon which such general verdict might have been based, it will not be disturbed. If, therefore, the Circuit Judge was in error upon all his findings, or if his findings were all correct, but wholly immaterial, if there was still any theory supported by material evidence upon which a general verdict might be based, it would be in conformity with the well-recognized practice to affirm it.

The Circuit Judge, in his written opinion, states, viz.: “On January 28, 1893, 119 reams of this order arrived in the city hy rail, and were delivered on January 30. The next day, January 31, at 1:15, the firm had executed the trust and put it of record. R. W. Brooks at that time left out the amount of this last order to plaintiff, although he specifies six other purchases made of this plaintiff and the amount of each, amounting in all to $1,130.80. I am satisfied,” says the Court, <¡that R. W. Brooks left this claim out because he did not consider that he owed it. At that time the firm did not , authorize the payment of this claim, so I must conclude that it was not intended to be paid for by the trustee.” * * * The Court also found that the sale was not completed until the goods were received by Brooks & Cole.

We think the Circuit Judge was in error in concluding that, because the debt due the Friend Paper Company was not secured by the special assignment of Brooks & Cole to L. J. Brooks, trustee, or named therein, therefore, Brooks & Cole did not consider that they owed it, and did not recognize the goods as their property. The Circuit Judge, in this finding, overlooked the fact that this assignment was special, and did not purport to embrace the entire indebtedness of this firm, or to include all of its assets. No inference prejudicial to their title is to be drawn from such omission. This case is not controlled by the principle settled in Belding v. Frankland, 8 Lea. That was a general assignment, in which the assignors conveyed all their property of every description for the benefit of all their creditors. The assignors, Levison & Bro.,- were utterly insolvent at the time of their purchase of the goods from Belding Bros. & Co., and must have known the fact, their assignment being made only three days after the shipment of the goods. They did not include the goods in their assignment to the defendant, nor mention the plaintiffs in their schedule of liabilities; and, as soon as they learned that the goods had been received by the trustee after the. assignment, they desired him to ship them back to plaintiffs. The facts presented in this case are entirely dissimilar.

It does not appear that Brooks & Cole were insolvent at the time the goods were ordered, and the firm intended in good faith to pay for them; nor does it appear that this firm was insolvent on January 21, when the goods were shipped. The sale was complete, and the title to the goods vested in Brooks & Cole the moment the goods were delivered to the carrier for shipment, subject alone to. avoidance for fraud and stoppage in trandtu. Boyd v. Mosely, 2 Swan, 661; 6 Heis., 483; Mississippi Mills v. Bank, 9 Lea, 314. The fact that the purchasers, Brooks & Cole, made a special assignment the day after these goods Avere received did not affect their title or authorize the vendor to re claim the goods, no fraud being shown.

The case of Pike v. Wieting, 49 Barb., cited by counsel, does not support the contention of ap-pellee. The syllabus of that case is, viz.: “A-liquor merchant in Syracuse, in former good standing with the plaintiffs’ -firm in New York, gave a verbal order to the plaintiff's for a bill of goods on credit, which were sent to him by railroad, and left in a storehouse at Syracuse. The merchant was in fact insolvent, and became fully aware of it before he paid the freight and took the goods into custody. Held, that the Judge properly instructed the -jury that it would be a fraud upon the plaintiff's sufficient to avoid the sale if they believed, upon the evidence, that the purchaser received the goods with a preconceived design not to pay for them, although he had no such design when he gave the order.

This case is cited in Belding v. Frankland, 8 Lea, and would seem, from the head note, to be a direct authority for the contention of plaintiff — to wit: That, although Brooks & Cole may have been solvent when they ordered the goods, if they became insolvent before the goods were received, and, notwithstanding knowledge of such insolvency, received the goods, this would constitute such a fraud as would vitiate the sale and authorize the vendor to reclaim the goods.

When, however, we look to the body of that opinion, we perceive a very important distinction, and that is, the sale being verbal, the title to the goods, under the New York statute of frauds, had not vested in the purchaser.

The Court said: £‘ The single question presented is whether, in an executory sale, void by the statute of frauds, the intervening insolvency of the purchaser and the ' preconceived intent not to pay for the goods, formed at the time they were received and accepted by the purchaser, .avoids the sale upon the ground of fraud. * * * It was claimed on the trial' by defendant’s counsel that the contract was complete when the purchaser received the bill of goods. * * * But I think it is too plain for argument, that an acceptance cannot be based upon the receipt of the bill by the purchaser, for he is not to be concluded until he has an opportunity of examining * the goods. The contract of purJ chase was not only executory, but remained invalid until the receipt and acceptance of the goods by the purchaser on July 2. Until then, it was open to either party to refuse to complete the sale. * * * In my opinion, ’ ’ says the Court, £ £ a purchaser of goods under an executory contract of sale void until acceptance, is guilty of fraud, if, before he concludes the purchase, he becomes hopelessly insolvent, and afterwards takes a delivery of them with a design not to pay.'’

The soundness of this opinion we do not question, but it is wholly inapplicable to the case now being decided. We grant that if the title to the goods had not vested in Brooks & Cole before their insolvency, the property could be reclaimed, as held by the New York case.

There is in this case, however, no executory, contract of sale contingent upon the performance of any annexed conditions, nor void under our statute of frauds until an actual acceptance of the goods by the purchaser. Under the uniform holdings of this Court, this is a bargain and sale as contradis-tinguished from an executory agreement. By the delivery to the carrier the paper became vested in the purchaser, subject only to the seller’s • right of stoppage in tra-mitn or avoidance for fraud. Boyd v. Mosely, 2 Swan, 661; Mississippi Mills v. Bank, 9 Lea, 314; Harding v. Metz, 1 Tenn. Ch., 610.

The fact that . the purchaser became insolvent before the goods reached their destination, does not divest a title which vested, without fraud.

• It is next insisted by counsel for appellee that the judgment below should be sustained, for the reason that the sale was impliedly for cash, and that neither the purchaser nor their assignee had any right to take possession without payment, and that this condition precedent was not waived by the vendor in permitting -the purchasers to take possession without a compliance with this condition. This contention is based mainly upon the authority of Harding v. Metz, 1 Tenn. Ch., 610. In that case it appeared that Harding sold to Steifel & Pfeiffer 1,000 bushels of barley, “to be paid for on delivery.” About the time all the barley had been delivered Steifel & Pfeiffer became embarrassed, and made an assignment of all their property to Metz, trustee, for the benefit of all their creditors.

The question raised in that case was whether the title to the barley passed by the delivery to- Steifel & Pfeiffer or remained in Harding because of the failure to pay the price. The Court said: “If parties agree upon the terms of sale of personalty and annex no condition t( U;e contract, the property passes to the buyer wi:hout delivery or tender of price. * * * But the parties may annex a condition which will prevent the vesting of title to the property, although actually delivered, until the condition is performed. Thus the sale may be on condition that the title remain in the seller until the price is paid, and in such case, until payment, the seller may, follow the property even into the hands of a purchaser for value and without notice. The usual condition annexed to contracts of sale is, as in the ^present instance, the payment of the price. If this,' condition be not express, even if the sale be fcp'r cash, it would ordinarily be waived by a delivery of the property to the vendee without more. But/' continues the Court, “if the condition be express that the goods are to be paid for on delivery, and they are delivered under the expectation that t}¡íe condition will be immediately performed, and the aellor comes with reasonable speed and demands performance, the English and American authorities are agreed that, if performance is refused, no property in the goods passes to the vendee, and the vendor may maintain replevin for them in the hands of the vendee or a purchaser with notice, or any person such as an assignee under a general assignment for creditors who stand in the shoes of the assignor.”

It was held that case fell within the principle just announced. But the case at bar' cannot be assimilated to that case. When the goods were ordered by Brooks. & Cole and shipped by the Geo. H. Friend Co., there was no stipulation expressed that- the goods were to be paid for in cash on delivery, as in the case of Harding v. Metz. Nor was there, .any such condition to be implied from their course of dealing, for it appears that it had previously been the custom of these firms to deal on credit, and, at the date of this purchase, Brooks & Cole were indebted to the paper company on account of six purchases already made and \past due. It is very plain, therefore, that there is mo room in this record for the application of decided in Harding v. Metz. See, also, MeClure v. Williams, 5 Sneed, 716.

Our conclusion is that plaintiffs are not entitled to recover. This may result 'in a hardship to plaintiffs, but we are unable to perceive any sound basis upon which a recovery in their favor can be rested.

Reversed, and judgment here in favor of L. ¿T. Brooks. I