Haskins v. Warren

115 Mass. 514, 1874 Mass. LEXIS 244

• Court: Massachusetts Supreme Judicial Court
• Decided: September 7, 1874
• Status: Published

Opinion

Wells, J.

Upon the facts stated in the bill of exceptions, independently of the evidence relating to usage, there was a sale of the cotton, by which the title passed to Jenkins Brothers & Chip man.

In a sale of chattels, when the specific articles are set apart, or identified for the purpose, and there is no stipulation for credit, the sale, as between the parties, takes effect at once to pass the title to the purchaser, unless there is some agreement to the contrary ; and the price is also due at the same time. The seller may maintain assumpsit for goods bargained and sold, without any further delivery. Until the delivery is complete and absolute he has a lien for the purchase money, and may retain possession until payment. Morse v. Sherman, 106 Mass. 430. Arnold v. Delano, 4 Cush. 33. Rowley v. Bigelow, 12 Pick. 307.

The promise to deliver, involved in an agreement of sale, and the promise to pay the purchase money, are mutually dependent. Neither party is bound to perform without cotemporaneous per formance by the other. Payment of the price is the condition upon which alone the purchaser can require the seller to complete the sale by delivery of the property. But it is so at the option of the seller. If he proceeds to deliver without insisting upon payment, and without qualifying the act in some way. the condition or mutual dependence is waived or severed. The contract is executed finally on his part, and he retains no lien upon the property. Delivery of possession, unqualified, is a release or waiver of his right, whether it be in the nature of a condition affecting the title, or only a hen for the price. Farlow v. Ellis, 15 Gray, 229. Smith v. Dennie, 6 Pick. 262. Carleton v. Sumner, 4 Pick. 516. When the sale is upon credit the seller ordinarily retains no hen, unless by special agreement.

The agreement of sale in this case was complete in all respects. Aside from the delivery, there were memoranda of the agreement in writing, sufficient to satisfy the statute of frauds. There being no provision for credit, the terms of payment are presumed to be cash. The principal question arises upon the point of delivery. There was a transfer of possession to the purchasers, with the assent or acquiescence of the sellers, such as to constitute a delivery that would discharge any condition or lien which attached to or grew out of the original transaction; unless controlled by some evidence to show that it was not for the purpose of enabling the purchaser to exercise the full rights of ownership. That the goods were bought by a trader, or for the purpose of a resale, may have an important bearing to show that an absolute delivery was intended. Smith v. Dennie, 6 Pick. 262, 266. Burbank v. Crooker, 7 Gray, 158.

To overcome the effect of such a delivery of possession to purchasers who were dealers in cotton, the plaintiffs relied mainly upon evidence of an alleged usage of trade. The offer of proof, held to be competent, was stated as follows : “ That by the usage of trade and the general understanding among merchants, in cash sales, the goods were delivered or put into the possession of the. buyer without prepayment, or first exacting payment of the money, with the understanding that it was not to pass title or be a waiver of the condition to pay cash.”

The testimony of the plaintiffs’ witnesses varied as to the details and effect of this alleged usage. The witnesses agreed, however, substantially, that it is to allow ten days “ in which to have the cotton turned out, weighed, and for the purchaser to examine it and see if the weight is correct, and see if the cotton is in every way merchantable; ” that in this process the goods pass into the hands of the purchaser, without reference to payment at the time; that in sales for cash “the custom and understanding is that the title vests in the seller until the cotton is paid for; ” that the delay for ten days in such cases is not a credit; and that delivery is not a waiver of the condition of payment. Whether the delay of payment for ten days is a right of the purchaser, or an in lulgence which may be withheld in the discretion of the seller, the testimony does not clearly indicate; but in the instructions to the jury it is assumed to be an indulgence merely, unless they should find that credit was given.

Upon the part of the defendants there was testimony that the examination is always made from redrawn samples before delivery ; that the allowance of ten days is a credit, for which a rebate of interest is allowed upon earlier payment; and that purchasers frequently resell within the ten days, and before making payment.

The instructions given to the jury allowed them to find, upon this evidence, that the sale was a conditional one, by which no title passed to the purchasers; that the delivery, although made intentionally, was no waiver of the condition ; and that the goods remained the property of the plaintiffs at the time Jenkins Brothers & Chipman undertook to sell and transfer them to the defendants. It is not clear, upon the report, that the instructions did not go further, and in effect direct the jury that the plaintiffs were entitled to a verdict if they had proved the usage to be as relied on by them.

We are of opinion that the effect thus given to usage, and the range of proof admitted to establish its existence and operation, exceeded the limits within which such evidence may properly be allowed to influence the interpretation of contracts and dealings between parties.

Usage is a matter of fact, not of opinion. Usage of trade is a course of dealing; a mode of conducting transactions of a particular kind. It is proved by witnesses testifying of its existence and uniformity from their knowledge obtained by observation of what is practised by themselves and others in the trade to which it relates. But their conclusions or inferences as to its effect, either upon the contract or the legal title or rights of parties, are not competent to show the character or force of the usage. Meitner is it competent for them to testify what is the understanding of others in regard to its effect. The effect is to be determined by the court, or by the jury under its direction. Like other facts and circumstances attending a transaction, usage serves to aid in interpreting and applying the words and acts or conduct of parties in their dealings with each other, when the words and acts themselves are equivocal or not explicit and decisive. Their dealings are supposed to be conducted with reference to, or at least in accordance with the usage, and it may therefore be resorted to for aid in supplying the unexpressed terms of their agreements, on the ground of presumed intention and mutual understanding, In this way it may modify the application of general rules of law. But it cannot be allowed to control the express intention of the parties to an agreement; nor the interpretation and effect which result from an established rule of law applicable to it; nor to en-graft on a contract of sale a stipulation or obligation different from or inconsistent with the rule of the common law on the same subject. Dickinson v. Gray, 7 Allen, 29. Dodd v. Farlow, 11 Allen, 426. Boardman v. Spooner, 13 Allen, 353. Reed v. Richardson, 98 Mass. 216. Odiorne v. New England Ins. Co. 101 Mass. 551. Snelling v. Hall, 107 Mass. 134. 1 Greenl. Ev. § 294. 2 Ib. § 252. 3 Kent Com. (12th ed.) 260, and note c.

'The understanding of a community, or of a class, as to a legal effect or an implication of law, is not a valid usage ; and evidence to prove it is not competent to determine legal rights under contracts. So, too, the intent or understanding with which parties enter into a particular contract, or conduct in its execution, is not properly shown by evidence of the intent or understanding with which others perform like transactions, although the evidence is sufficiently comprehensive to establish a custom or usage, if its nature would admit of it.

The evidence, upon which the question- of delivery in this case was submitted to the jury, was objectionable on one or both of these grounds.

Usage in regard to the mode of carrying out the transaction of a sale of cotton may be shown, upon a disputed question of deliver)". If there is any evidence tending to show that, in the particular instance, the turning out of the cotton and allowing it to go into the hands of the other party was, in fact, for the purpose of examination, or other special and limited purpose, and not to give them possession as purchasers, then proof that it was in accordance with the usual course of dealing to give opportunity for examination in that mode would be competent, in aid of the other evidence, and might become significant that such was the real character and purpose of the transfer of possession. If in fact there was no other purpose than to complete the sale by delivering the goods to them as owners by the purchase, the title would thereby become absolute in them, by operation of law; and any supposed usage to the contrary would be invalid.

Primd facie, the voluntary transfer of possession is delivery, and the effect of the usage which the testimony tended to prove, so far as competent and valid, would be to give to the purchasers a right to rescind for cause discovered within the ten days, and to the sellers the right to treat the contract as rescinded if the goods were not accepted and paid for within that time; or perhaps to revoke the delivery and restore their lien, if they could regain possession. If the allowance of ten days for examination and payment is a matter of indulgence merely, at the discretion of the seller, it is then not inconsistent with the general rule of law that delivery of possession is a waiver of the seller’s lien for the price, and a waiver of payment as a condition precedent. If the seller intends to insist upon either he must refuse the indulgence, or protect his right by a special and qualified delivery.

On the other hand, to give to the supposed usage the full effect claimed for it, to wit, that no title passes upon an ordinary sale and delivery without actual payment of the consideration, would require all such transactions to be construed as mere bailments or mandates, giving to the purchaser no right to control or deal with the property in any manner, except for the special purpose of examination. The expiration of ten days without payment would not discharge the condition and vest the title. What kind and degree of loches afterwards on the part of the seller might serve to do so ; and what exactly would be the relations of the parties, and the rights of those who should purchase the property while so held, are questions full of difficulty. The inevitable uncertainty of all titles to goods transmitted from hand to hand in the usual methods of sale and purchase, and the embarrassments to which commercial transactions would be constantly exposed from the operation of a usage which should so restrict the effect of a contract of sale apparently executed by delivery, are sufficient to justify if not to require its rejection as unreasonable. Seccomb v. Provincial Ins. Co. 10 Allen, 305.

Usage alone will not convert a voluntary and unqualified delivery, without payment, of goods sold for cash, into a mere deposit for examination. Such a deposit of goods that are the subject of a contract of sale to the depositary may exist, and be proved by appropriate evidence. We do not think it was so proved in this ease.

We cannot anticipate what the evidence may be upon another trial. Judging from what now appears, the only right of the plaintiffs was to revoke the delivery, or to rescind the contract of sale. But as the property has passed into the hands of others upon a valuable consideration, the right to regain possession of the property by recovery against them will depend upon the question whether they hold in good faith and without being chargeable with notice of the defect of title in Jenkins Brothers & Chipman.

Upon the other ground of fraud and deceit on the part of Jenkins Brothers & Chipman, in procuring the sale to be made to them, several exceptions are taken, mostly to the admission of evidence.

Other purchases made by them of other parties about the same time may be competent, if they are so connected as to show a general purpose in their transactions, or that they were conducting business in some unusual manner, indicating an expectation of failure. Rowley v. Bigelow, 12 Pick. 307-311. Jordan v. Osgood, 109 Mass. 457, and cases cited. The exceptions do not show that such was not the case here.

That some of the other parties, of whom they had so purchased, had brought suits and abandoned them was clearly incompetent, and rightly excluded as inter alios.

The state of their bank account and their mode of overdrawing, for a week or more before the purchase, was competent, as tending to show that they must have been aware of their condition. Jordan v. Osgood, supra.

The amount of their liabilities at the time of their failure was a fact competent to be proved in the case. It had some tendency to show what their financial condition was four days previously, when the purchase was made. It might be shown by the assignees in bankruptcy, if they had the means of knowing what it was. The exceptions do not show that they had not.

The amount realized from the assets of the firm might have aided in showing their value at the time of the failure, in connection with other evidence. The exceptions do not show that this testimony was incompetent or prejudicial.

The original petition in bankruptcy was in the nature of a subsequent declaration impeaching the sale previously made by them; and the record of adjudication was inter alios. Neither could properly affect the defendants, and both were wrongly admitted. Simpson v. Carleton, 1 Allen, 109, 115.

The ruling as to the burden of proof was substantially right. If the defendants undertook to set up a title better than that of Jenkins Brothers & Chipman, from whom they acquired it, it was incumbent upon them to make out the facts to sustain that proposition. Morgan v. Morse, 13 Gray, 150. The burden was upon them at least to show that they were bond fide purchasers for value. Easter v. Allen, 8 Allen, 7.

The case shows that Mead was not a partner having an interest in the capital or in the property held by the firm. He had merely a contingent interest in the profits. He was not a necessary party to the suit. Exceptions sustained.