Carnahan v. Bailey

28 F. 519

• Court: United States Circuit Court
• Decided: June 15, 1886
• Status: Published

Opinion

Welker, J.,

(orally, charging jury.) As a general rule, the property in goods passes to the purchaser when be obtains, without fraud, .unconditional possession of the goods sold by the seller; but to this there is this exception: If the property was purchased with the intent not to pay for it, the property does not pass to the purchaser. That a contract for the purchase of goods on credit, made with intent on the part of the purchaser not to pay for them, is fraudulent; and, if the purchaser has no reasonable expectation of being able to -.pay, it is equivalent to an intention not to pay. But where the purchaser intends to pay, and has reasonable expectations of being able to do so, the contract is not fraudulent, although the purchaser knows himself to be insolvent, and does not disclose it to the vendor, who is ignorant of the fact. The intent not to pay in this case must be shown to exist at the time the goods in dispute were ordered, or at the time the goods were ordered to be forwarded, and received by Rodgers.. If the intent not to pay was conceived and formed by Rodgers after he had obtained possession of the goods, and commenced the .sale thereof, and not before, such afterwards formed intent would not authorize the plaintiffs to repudiate the sale, and retake the •goods.

This intent to defraud may be shown by facts and circumstances. To establish this intent, the relations of the parties, and their dealings; what took place before and after the sale; the conditions and circumstances surrounding the parties at the time, — must be com •sidered.

The defendant, Bailey, at the time this suit was brought, was in possession of the goods in dispute, under a sale before that time made to him by Rodgers. If the defendant was an innocent purchaser of the goods from Rodgers, who had possession of them when sold to •him, he would be protected in such possession against the plaintiffs’ claim of title thereto. Was the defendant such innocent purchaser ?

If the defendant knew, at the time of the sale to him by Rodgers, that Rodgers had purchased the goods in dispute from the plaintiffs, on credit, and then owed for them; and that Rodgers had purchased the goods with the intent not to pay for them; or had information of such facts and circumstances as would lead a reasonably prudent man to believe that such purchase had been so made with such intention not to pay for them, — he would not be an innocent purchaser. But if he did not have this knowledge or information at the time he purchased the goods then in the possession of Rodgers, he would be an innocent purchaser, and the plaintiffs cannot recover the goods from him in this action. So, if the sale by Rodgers to him was without consideration, and a mere sham to aid Rodgers to carry out his intention to defraud the plaintiffs out of the-goods, he would not be such innocent purchaser.

Yerdict for the plaintiffs.