Fishback v. G. W. Van Dusen & Co.

22 N.W. 244, 33 Minn. 111, 1885 Minn. LEXIS 19

• Court: Supreme Court of Minnesota
• Decided: January 21, 1885
• Status: Published

Opinion

Mitchell, J.

When nothing is said in a contract for the sale of goods as to the time of payment, the law presumes that the sale is for cash. Upon a sale for cash, payment and delivery are concurrent and mutually-dependent acts. Neither party is bound to perform without contemporaneous performance by the other. Where payment of the purchase-money, or giving security for its payment, and the delivery of the goods, are expressly or impliedly agréed to be simultaneous, and the payment or security is omitted, evaded, or refused by the purchaser upon getting possession of the goods, the seller may immediately reclaim them; the title in such case not passing to the purchaser, the delivery being merely conditional, and the purchaser taking simply as trustee for the seller until the condition is performed. But where there is a condition made at the contract of sale favorable to the vendor, and solely for his benefit, he may, if he choose, waive it. Hence a conditional sale may become an absolute one by an unconditional delivery of the goods to the purchaser. By an unconditional delivery the title to the goods passes to the vendee. A cash sale is not necessarily a conditional sale. It is as competent for the vendor to waive the condition of payment concurrently with delivery, as any other condition in his favor. Scudder v. Bradbury, 106 Mass. 422. To constitute a conditional delivery, it is not necessary that the vendor should declare the conditions in express terms at the time of the delivery. It is sufficient if the intent of the parties that the delivery is conditional can be inferred from their acts and the circumstances of the case. Hence, after a conditional sale has been made, and a delivery has taken place upon the expectation that the purchase-money will be shortly paid, or the contemplated security given, the delivery would ordinarily be conditional without any express declaration to that effect, because there is an implied understanding that the vendee will act honestly, and that he takes the goods subject to tbe contract. Therefore a sale does not, ipso facto, become absolute when a delivery is made, unaccompanied by any express declaration that it is conditional. Any such rule would be unreasonable, and greatly embarrass sales. 2 Kent, *497; Leven v. Smith, 1 Denio, 571; Smith v. Dennie, 6 Pick. 262.

But the doctrine is uniform and well established that if the vendor unqualifiedly and unconditionally delivers the goods to the vendee without insisting on performance of conditions, intending to rely solely on the personal responsibility of the vendee, the title passes to the latter, and the vendor cannot afterwards reclaim the property, even if the condition is never performed. His only remedy is upon the contract for the purchase-money. 2 Kent, *496; Benj. Sales. § 320, note d; Carleton v. Sumner, 4 Pick. 516; Smith v. Dennie, supra; Dresser Manuf’g Co. v. Waterston, 3 Met. 9; Farlow v. Ellis, 15 Gray, 229; Goodwin v. Boston & L. R. Co., 111 Mass. 487; Scudder v. Bradbury, 106 Mass. 422; Haskins v. Warren, 115 Mass. 514; Freeman v. Nichols, 116 Mass. 309; Bowen v. Burk, 13 Pa. St. 146; Mixer v. Cook, 31 Me. 340.

The weight of authority seems to be that a delivery, apparently unrestricted and unconditional, of goods sold for cash, is presumptive evidence of the waiver of the condition that payment should be made on delivery in order to vest the title in the purchaser. Scudder v. Bradbury, 106 Mass. 422; Upton v. Sturbridge Cotton Mills, 111 Mass. 446; Hammett v. Linneman, 48 N. Y. 399; Smith v. Lynes, 5 N. Y. 41; Farlow v. Ellis, supra. No secret or undisclosed intent of the seller is of itself sufficient to make the delivery conditional. This is not enough to make the purchaser a trustee of the vendor. Upton v. Sturbridge Cotton Mills, supra. Waiver is a voluntary relinquishment of some right, which, but for such waiver, the party would have enjoyed. Hence voluntary choice is of the essence of waiver, and not mere negligence, though from such negligence, unexplained, such intention may be inferred. Hence the important question, in determining whether there has been a waiver of a condition of sale, is: Has the vendor manifested, by his language or conduct, an intention or willingness to waive the condition, and make the delivery unconditional and the sale absolute, without having received payment or the performance of the conditions of sale? This must depend on the intent of the parties at the time, to be ascertained from their conduct and language, and not from the mere fact of delivery alone. Whether there has been a waiver is a question of fact. It may be proved by various species of evidence: by declarations, by acts, or by forbearance to act. But, however proved,-the question is: Has the vendor voluntarily and unconditionally delivered the goods without intending to claim the benefit of the condition? Fuller v. Bean, 84 N. H. 290-303; Smith v. Bennie, supra,; Farlow v. Ellis, supra; Hammett v. Linneman, supra.

In the ease at bar the court has found that the sale by Van Dusen & Co. to Cole was for cash; hut he also finds that all the wheat delivered to Cole was so delivered to him absolutely, without insisting upon payment at the time of delivery, no condition, expressed or implied, being annexed to the delivery. If this is justified by the evidence, it is, under the rules of law already announced, conclusive against the right of Van Dusen & Co. to reclaim the wheat because of non-payment of the purchase-money.

We shall not attempt to state the evidence. The substance of it is very fairly and succinctly stated in the findings of fact by the trial court.

The contract between the parties not having been in writing, and Cole being dead, the evidence was, necessarily, mostly circumstantial, consisting largely of facts showing the course of dealing between the parties in reference to this and numerous other prior and similar transactions. Payment had never been insisted upon at the time of delivery. The delivery of grain in this, as well as former deals, was apparently unrestricted and unconditional; at least, it was never accompanied'by any express declaration that it was conditional. According to the usual course of dealing between the parties, it appears that while Van Dusen & Co. were accustomed to send Cole their bills from time to time, as one or more car-loads were delivered, yet immediate payment was never insisted upon — Cole paying in whole or in part, from time to time, as was convenient; sometimes within a day or two, sometimes not for weeks or even months after the delivery of the grain.

The evidence shows that Cole bought wheat exclusively to be ground in his mill. It also tends to show that he never kept it separate from other wheat until paid for, and that he was accustomed to use it by grinding it up at any time after delivery, without reference to whether he had paid for it or not. From the situation of the parties it is almost impossible that Van Dusen &Co. were not fully aware of this mode of dealing with the wheat by Cole. In fact, the evidence tends strongly to prove that they perfectly understood it. Cole’s standing was good, and it appears that Van Dusen & Co. had entire confidence in his personal responsibility. Such a state of facts amply sustains the finding of the court to the effect that the delivery of the grain to Cole was absolute and unconditional, and was intended to be such, and that Van Dusen & Co. had no expectation of asserting the condition of payment before the title should pass, but, on the contrary, relied solely upon the vendee’s personal responsibility.

Van Dusen & Co. also contend earnestly that the sale and delivery of the whole 12,000 bushels was an entirety, and the payment also to be an entirety upon the delivery of the whole, and therefore that the delivery was not complete when Cole died, and hence there could have been no waiver of conditions as to the part delivered. This theory of the transaction is entirely at variance with the course of dealing between the parties, both in reference to this and prior sales. While it is true that the bargain for the purchase of the 12,000 bushels was a single contract, yet it was evidently the understanding of the parties that it was to be delivered in instalments of one or more car-loads, the purchase-money for which was payable at any time on demand after delivery, without reference to whether the whole amount contracted for had or had not been delivered. It was precisely on this theory that Van Dusen & Co. acted in reference to this very transaction, for, if their present theory be correct, there was nothing due until the whole 12,000 bushels was delivered. The grain being thus deliverable and to be paid for in instalments, the delivery of each instalment was just as complete as if no more remained to be delivered. The evidence fully warranted the court in finding that the wheat was to be delivered and paid for in car-load lots, as it should arrive from the several warehouses of the vendors. And this finding is fairly within the issues made by the pleadings.

2. This brings us to the consideration of the claims of the defendant banks. The facts as found by the court are as follows: Cole was a miller operating a flouring-mill, and engaged in purchasing wheat and manufacturing it into flour, and shipping and selling the same. He was not a general warehouseman, and had no warehouse except an elevator, which was a part of his mill. His principal and exclusive business was that of miller, although, as an incident to that business, he was accustomed to receive into his mill from farmers, for storage, wheat, until such time as they desired to sell it, issuing to them therefor the usual storage or warehouse tickets. In 1880 twenty-five persons so stored wheat with him; in 1881, twenty-one; in 1882, four; in 1883, two. He never sold, delivered, or shipped wheat out of his mill, or redelivered any wheat left with him for storage, but all wheat thus received into his mill he ground up, using it as a part of his current stock in his business of milling. In April, 1882, he borrowed $5,000 from the First National Bank of Winona, for which he gave his note, and at the same time executed and delivered to the bank the following instrument: “Received in store, for account of First National Bank of Winona, 5,000 bushels of No. 2 wheat, deliverable to them or their order on return of this receipt: provided, always, that if a certain note, bearing even date, and due July 9, 1882, for $5,000, shall have been paid, this receipt is null and void, otherwise in full force.” In May, 1882, he had a precisely similar transaction with the Second National Bank, except that the loan was $3,000 and the instrument in the form of a receipt which he gave, did not contain the proviso contained in the other. Neither loan was ever paid. These instruments were, and by all parties were intended to be, collateral security for the repayment of these loans, and for no other purpose. Otherwise than as above stated, Cole never sold any wheat to these banks, nor did the banks ever store any wheat with him, or ever deliver any wheat to him, and never had any wheat in his possession. Between August 2d and 8th, 1883, the mill was entirely cleared out of wheat, -so that on the 8th of August there was no wheat of any kind in the mill that had been placed there prior to that date, the whole having been ground into flour in the usual course of operating the mill.

The court does not find, and there was no evidence tending to prove, that there was any wheat in the mill at the date of either of these transactions with the banks. The wheat found in the mill at Cole’s death, which is the wheat here in controversy, was purchased by him from defendants Van Dusen & Co., and others, subsequent to August 8, 1883.

It seems to us that to state these facts is to prove that the banks cannot maintain their claim to this wheat. The act of 1876, commonly known as the “Warehouse Act,” (Laws 1876, c. 86; Gen. St. 1878, c. 124, §§ 13-20,) has no application to such transactions. The banks never actually delivered any wheat to Cole for storage. They never bought any wheat of him, and he never sold them any. All that can be possibly claimed is that he executed these receipts for the purpose of pledging or mortgaging his own wheat to the banks as security for his own debt. Now the act above cited, as its title and contents clearly indicate, was designed to protect the rights of actual depositors — those who deliver grain to another for storage. The act is too long to quote in extenso, but its language throughout shows that this was its exclusive scope and purpose. The very first ■expression in the first section furnishes the key to the whole act, viz.: “Whenever any grain shall be delivered for storage.” Such expressions as “whenever any grain shall be deposited,” “the person so storing,” “the amount of grain so stored,” “the terms of storage,” “charges for storage, ” and like expressions, are to be found all through the act. But aside from the strict letter of the act, its provisions as a whole, the evil sought to be removed, and the remedy sought to be ■applied, clearly show that it was never in the legislative mind that it should apply to transactions where there was in fact no deposit of .grain for storage, but simply an attempt by a party to pledge or mortgage his own property in his own possession to secure his own debt. 'To extend its application to such transactions would practically result in important modifications of the law of pledges and mortgages of •personal property, — a thing not to be presumed to have been contemplated by the legislature. We do not mean to say that a vendor may not become the bailee of the vendee, so as to bring the transaction •■within the statute. It might with force be claimed that there would be no substantial reason for requiring the parties in such a case to go through two ceremonial deliveries. But that is not this case. To bring a case within the provisions of this statute, there must be a delivery by an actual depositor. See Greenleaf v. Dows, 8 Fed. Rep. 550; Adams v. Merchants' Nat. Bank, 2 Fed. Rep. 174.

Therefore, in our judgment, this statute has no application to the present case, and hence the rights of the banks must be determined according to common-law principles alone. If these transactions, amounted to anything, it was either as a pledge or a mortgage. For the purposes of this case it is immaterial which it be called. One of the counsel for the banks avoids stating which of the two he claims, it to be. The attorney of record claims it was a pledge. We are inclined to think it was an attempt to create a pledge; and as that is the view most favorable to the banks, we shall consider the case from, that stand-point.

We shall assume (without deciding the question) that a warehouseman, having property of his own in his warehouse, may pledge it as-security for his own debt by merely issuing to his creditor an instrument in the form of a warehouse receipt. This is, certainly, as far as any authority goes. We will also assume that Cole was, within the meaning of the authorities, a “warehouseman,” which we very much doubt. But, conceding these, still there never was any executed contract of pledge, because no specific property was ever appropriated to the contract so as to pass title to the pledgee.

It is an elementary principle of law, applicable alike to sales, mortgages, and pledges, that the contract becomes executed only by specifying the goods to which it is to attach; or, in legal phrase, by the-appropriation of the specific goods to the contract. Until this is done-the contract is executory, and the property does not pass. There was no such appropriation of any specific grain to these contracts, even under what may be termed the modern American doctrine, that, where the mass, from which the sale, mortgage,»or pledge is made, is-uniform in character and quality, as wheat in an elevator, separation from the mass is not necessary to constitute an appropriation of the property to the contract. But in this case, out of what mass was this-wheat to be taken ? There is no evidence that there was any wheat. in the mill when these receipts were executed, and, if there was, there is nothing to show that it was the wheat referred to. So far as appears, the banks might with equal propriety claim any other wheat situated elsewhere. But even if it be further conceded that there was, at the dates referred to, wheat in the mill, and that this was the wheat referred to in the receipts, yet there is still a conclusive reason -why the banks cannot recover. As found by the court, Cole was accustomed to use all the wheat in his mill as a part of his stock in the milling business, grinding it into flour, which he shipped and sold. This appears to have been his usual and long-continued practice. In view of this fact, and also the well-understood usages of the grain trade as to the time within which it is ordinarily marketed, it could never have been in the contemplation of the parties that Cole would keep this wheat on hand from the spring of 1882 until the late summer of 1883. The banks must have understood that Cole would, and tacitly assented that he might, use and grind up this wheat, and ship and sell the flour. The most that can be claimed for the transaction is that he was, on demand, to deliver to the banks out of his stock an amount of wheat corresponding in quantity and grade to that named in the receipts. Even if they had actually deposited their own wheat with Cole, under such circumstances, it hardly needs the citation of authorities at this day to the proposition that it would have, in the absence of a statute, constituted a sale and not a bailment. The very object of the statute already considered was to change the rule in this regard as to actual depositors. See Rahilly v. Wilson, 3 Dill. 420; Chase v. Washburn, 1 Ohio St. 244; South Australian Ins. Co. v. Randell, L. R. 3 P. C. App. 101.

No case to which we have been referred goes far enough to support the claim of the banks on the facts of this case. In almost all of them we think it will be found that not only was specific property appropriated to the contract, but the identity of the subject of the the pledge was preserved. Merchants’, etc., Bank v. Hibbard, 48 Mich. 118, which takes quite advanced positions on some questions, comes nearer supporting the claim of the defendants than any case we have found. But the identity of the property pledged with that claimed seems to have been assumed or taken for granted. On no other theory, we think, could the result in that case have been reached. In the ease at bar, all wheat in the mill had been removed between August 2d and 8th, and the wheat in dispute purchased by Cole subsequent to the latter date.

Our conclusion is that the banks have no title to the wheat, and have no right to any preferences over other creditors of the estate in the distribution of its proceeds.

Judgment affirmed.