Union Stock-Yards & Transit Co. v. Western Land & Cattle Co.

59 F. 49, 7 C.C.A. 660, 1893 U.S. App. LEXIS 2330

• Court: Court of Appeals for the Seventh Circuit
• Decided: December 1, 1893
• Docket: No. 8
• Status: Published

Opinion

JENKINS, Circuit Judge,

(after stating the facts.) If the contract constitutes a bailment of personal property, and Hall was an agister, the judgment is clearly right. If, on the other hand, the contract should be construed as a conditional sale of personal property, reserving title in the vendor until payment of the purchase price, then, by force of the statutes of Missouri, (Rev. St. c. 34, §§ 2505-2508,) .the contract is void as to Hall, Greer & Co., who, for the purposes of this case, as presented to us, must be deemed purchaser» for value, without notice of the rights of the cattle company. The purpose of that statute is to avoid, as against subsequent purchasers in good faith, and creditors, all secret liens upon personal property. Hervey v. Locomotive Works, 93 U. S. 664; Fosdick v. Schall, 99 U. S. 235, 250; Harkness v. Russell, 118 U. S. 663, 7 Sup. Ct. 51; Coover v. Johnson, 86 Mo. 533; Peet v. Spencer, 90 Mo. 384, 2 S. W. 434.

The cause must therefore be determined by the construction to be placed upon the contracts under which possession of the cattle was delivered to Hall. In the solution of that question, we must search for the intention of the parties, as it may be gathered from a reading of the entire instrument, and not from any separate provision of if, — the real design of the contracting parties, as disclosed by the whole contract. We should not regard any mere formula, of words, nor permit parties to avoid the statute by any cloaking of intent. If, as is asserted, the contract, as expressed, is a mere device to evade the law of Missouri, it undoubtedly becomes the duty of the court to tear away the mask, and declare the real nature of the transaction. The true intent and meaning of the contract does not depend upon “any name which the parties may have given to the instrument, and not alone on any particular provisions it contains, disconnected from all others, but on the ruling intentions of the parties, gathered from-all the language (hey have used. It is the legal effect of the whole which is to be sought for. The form, of the instrument is of little account.” Heryford v. Davis, 102 U. S. 235, 243.

It is of the essence of a contract of sale that there should be a buyer and a seller; a price to be given and taken; an agreement to pay, and an agreement to receive. “Bale;” is a word of precise legal import. “It means, at all times, a contract between parties to give and to pass rights of property for money, which the buyer pays, or promises to pay, to the seller, for the thing bought and sold.” Williamson v. Berry, 8 How. 544. A conditional sale implies the delivery to the purchaser of the subject-matter, the title passing only upon the performance of a condition precedent, or becoming reinvested in the seller upon failure to perforin a condition subsequent.. It is not infrequently a matter of difficulty to accurately distinguish between a conditional sale and a bailment of property. The border line is somewhat obscure, at times. The difficulty must, be solved by the ascertainment of the real intent of the contracting parties, as found in their agreement. There are, however, certain discriminating earmarks, so to speak, by which the two may be distinguished. It is an indelible incident to a bailment that the bailor may require restoration of the thing bailed. Insurance Co. v. Randell, L. R. 3 P. C. 101; Jones, Bailm., (3d Ed.) pp. 64, 102; 2 Kent, Comm. § 589. If the identical thing, either in its original or in an altered form, is to be returned, it is a bailment. Powder Co. v. Burkhardt, 97 U. S. 116; Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99. In a contract of sale there is this dist inguishing test, common to an absolute and to a conditional sale: that there must be an agreement, expressed or implied, to pay the purchase price. In a bailment, if a bailment for hire, there must be payment for the use of the thing let or bailed. Heryford v. Davis, supra. If service is to be rendered the subject-matter of the bailment, there must be compensation for the service, unless the bailment be a mandate. In a contract of conditional sale the agreement to pay the purchase price may be masked so as to give it the appearance of an agreement to pay for use. In such case the court must ascertain the real intention of the contracting parties from the whole agreement, read in the light of the surrounding circumstances.

We must therefore Subject the provisions of the contracts in question to the tests declared, to ascertain the real design of the contracting parties; to determine whether, under them, the cattle were bailed, or conditionally sold. Careful scrutiny of the agreements, in the light of legal principles, compels us to the conviction that they must be held to be contracts of bailment. Their essential terms are within narrow compass. Hall agreed to transport the cattle to his farm at his own expense, and there feed them, that they might be profitably marketed by the cattle company. He covenanted that they should not deteriorate in flesh or condition. He bound himself to pay, at an agreed valuation, for all losses of ,the cattle arising from “death, disease, escape, theft, or any cause whatever.” He was to employ at his own expense a herdsman selected by the cattle company. The pasturage was to extend over a period of some 14 weeks, during which time the cattle company should ship the cattle to market, or sell them in pasturage. Hail was to receive, in full compensation for his services and expenditures, all moneys realized from the sale of the cattle by the cattle ¡company in excess of $36.05 per head, after deducting the expenses iof shipment and sale. He also waived any lien upon the cattle for his own services. There is wanting here an essential element of a 'sale, — an agreement to pay a'price. Hall took upon himself no obligation of that character. He assumed no debt to the cattle company. If the cattle, upon sale, should produce less than the stated amount per head above transportation and expense of sale, the loss would fall upon the cattle company, not upon Hall. The latter took no risk of the market, except as it might affect his compensation for care and feed of the cattle during the period of pasture. The value of the cattle would depend largely upon their condition when exhibited in market. That condition depended largely upon the character of their care and pasturage. This being within the peculiar duty of Hall, it was wisely provided; to stimulate him to diligent care of the cattle, that compensation for his sendee should be contingent upon the amount realized upon sale. So to that extent he took the risk of the market. But if, by reason of a general depreciation in the value of cattle, the stated sum per head should not be realized, Hall would lose compensation for his service, and the cattle company would suffer the decrease in value. So that each party assumed a hazard of the venture, — the one having at risk his property; the other, his compensation for service in the care of that property. Hall was a mere agister, with compensation for service contingent upon the price obtained upon sale of the cattle. He was under no obligation to purchase the cattle, nor to pay for them, nor did he warrant their market value. We perceive no suggestion in the writings that any. conditional sale of the cattle to Hall was contemplated. In no event was he to be invested with the title. He was in fact, in any event, to return these cattle to the cattle company. .The company, not Hall, had the power of dispositiou. The company, not Hall, was to select the time of sale and the market. The company, not Hall, was to transport the cattle to market; and while in transit, and thereafter while awaiting sale, the cattle were to he in the possession of, and at tin? risk of, i lie company.

It cannot be denied that one stipulation of the contraed., considered by itself, gives countenance to the suggestion of a conditional sale. We refer to the provision that Hall should be liable “for all losses of said cattle arising from death, disease, escape, theft, or any cause whatever.” Standing alone, this danse would be strong to show that Hall assumed the burden of ownership. It would be most unfair, however, to judge the contract by a single clause disconnected from the other stipulations contained in it. We must have regard to the entire agreement to determine the meaning of any part of it. It may well comport with a bailment of property that the bailee assumes the character of insurer of the thing bailed while it remains in his possession, and as to those disasters which he, hv the exercise of care, could largely guard against, and which would be greatly promoted by his negligence. It is competent for a bailee so to enlarge his responsibility. Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99. Such a clause, read in connection with the other stipulations of the contract, may well be held a wise provision, imposing upon the bailee, in the care of the cattle while in his custody, the liability of tui insurer, stimulating the exercise of care for them. Nor are we able to place upon the language employed the construction contended for, which would impose upon Hall accountability for depreciation in market value. We iind no warrant, for such suggestion. The provision is limited to the period' that the cattle remain in Hall’s care, not after the redelivery of them to the company, when and when only they were to be sold. The provision comprehends “losses of said cattle” only, not loss by depreciation in market value; and that loss must arise from “death, disease, escape, theft, or any cause whatever.” “Noscitur a sociis.” We cannot indulge a strained construction of the stipulation to qualify the clear intent of the agreement considered in its entirety.

It, may be, as suggested by counsel, that Hall could pay to the cattle company the stated sum per head, and so obtain title to the cattle. That would result, because he was entitled, as reward for his service, to the proceeds of the cattle in excess of the stated sum per head. He possibly had that option, but was under no obligation to pay. There was no debt io discharge. There can be no sale without an agreement, express or implied, to pay. An option is not a sale, (Hunt v. Wyman, 100 Mass. 200,) and possession of property under an option to purchase, when that possession is delivered, for service to be rendered the thing bailed, will not transmute into a conditional sale that which is otherwise a bailment.

'Nor are we able to discover in these contracts, read in the light of surrounding circumstances, any design to avoid the law of the state of Missouri. Tlie statutes which, are claimed to avoid the contracts are these:

“Sec. 2505. * * * No sale of goods and chattels when possession is delivered to the vendee shall be subject to any condition whatever as against creditors of the vendee, or subsequent purchasers from such vendee in good faith, unless such condition shall be evidenced by writing, executed and acknowledged by the vendee and recorded as now provided in cases of mortgages of personal property.” Laws 1877, p. 320, § 1,(f.)

“Sec. 2507. Conditional Sales, Void as to Creditors unless Recorded. In all cases where any personal property shall be sold to any person, to be paid for in whole or in part in installments or be leased, rented, hired, or delivered to another on condition that the same shall belong to the person purchasing, leasing, renting, hiring, or receiving the same whenever the amount paid shall be a certain sum, or the value of such property, the title of the same to remain in the vendor, lessor, renter, hirer, or deliverer of the same, until such sum or the value of such property or any part thereof shall have been paid, such condition, in regard to the title so remaining until such payment, shall be void as to all subsequent purchasers in good faith, and creditors, unless such condition shall be evidenced by writing executed, acknowledged and recorded, as provided in cases of mortgages of personal property.” Laws 1877, p. 321, § 1.

“Sec. 2508. Duty of Vendor, before Taking Possession of Property. Whenever such property is so sold or leased, rented, hired, or delivered, it shall be unlawful for the vendor, lessor, renter, hirer, or deliverer, or his or them agent or servant, to take possession of said property without tendering or refunding to the purchaser, lessee, renter, or hirer thereof, or any party receiving the same, the sum or sums of money so paid, after deducting therefrom a reasonable compensation for the use of such property, which shall in no case exceed twenty-five per cent, of the amount so paid, anything in the contract to the contrary notwithstanding, and whether- such condition be expressed in such contract or not, unless ,sueh property has been broken or actually damaged, and then a reasonable compensation for such breakage or damage shall be allowed.” Laws 1877, p. 321, § 2.

It is to Tbe observed tbat the statute is directed to sales, not to bailments, of property. It sought to prevent, as against purchasers and creditors, the sale, leasing, hiring, or delivery of goods on condition that the title should pass on payment of the price or value of the property. Peet v. Spencer, 90 Mo. 384, 2 S. W. 434. It was aimed at such transactions as were under consideration in the cases to which we are referred, (Hervey v. Locomotive Works, 93 U. S. 664; Heryford v. Davis, 102 U. S. 235; Sumner v. Cottey, 71 Mo. 121; Whitcomb v. Woodworth, 54 Vt. 544; Hine v. Roberts, 48 Conn. 267; Stadtfeld v. Huntsman, 92 Pa. St. 53; Greer v. Church, 13 Bush, 430; Murch v. Wright, 46 Ill. 487; Lucas v. Campbell, 88 Ill. 447,) and others of that class, where -an undoubted sale of property was thinly disguised under the mask of a lease, and the purchase price cloaked under the guise of rent. In all these cases there was the absolute undertaking of the vendee to pay the price, and there was the manifest intention to vest the title in the purchaser upon payment. But here there is no suggestion in -the writing that the title should ever pass to Hall; the cattle were to be returned by him, and sold by the cattle company. There was no obligation on his part to pay any sum as the price of the cattle, or for their use. He was merely to fatten the cattle,- and receive for their pasturage, and the care bestowed upon them, the amount over and above a stated sum per head, if the cattle company should realize so much upon their sale in the market. Without further enlarging upon the subject, we are satisfied that the agreement was a bailment, not a conditional sale, and is not within the condemnation of the statute.

With respect to the ruling upon evidence offered at the trial, and rejected by the court, we think the ruling correct. It is elementary that in the absence of fraud, accident, or mistake, parol evidence of prior negotiations should not be allowed to contradict the terms of a written agreement. The written agreement speaks conclusively the conclusion to which the parties to it have arrived, and all prior negotiations are merged in it. Willard v. Tayloe, 8 Wall. 557; Forsyth v. Kimball, 91 U. S. 291; Bast v. Bank, 101 U. S. 93, 96. Resort may he had to proof of the circumstances out. of which the contract grew, and which surrounded its adoption, to ascertain its subject-matter, and the standpoint; of the parties in relation to it, but not to vary the contract by addition or substitution. Mr. Greenleaf thus announces the rule:

“TIio writing, it is true, may be read by the light of surrounding circumstances, in order to understand (lie intent and meaning of the parties; but, as they have constituted the writing to be the only outward and visible expression of their moaning, no other words are to be added to it, or substituted in its stead. The duty of the courts, in such cases, is to ascertain, not what the parties may hare secretly intended, as contradistinguished from what their words express, but wliat is the meaning of the words they have used. It is merely a duty of interpretation (that is, to find out the true sense of the written words, as the parties used them) and of construction, (that is, when the fine sense is ascertained, to subject the instrument, in its interpretation, to the established rules of law.) And, when the language of an instrument lias a settled legal construction, parol evidence Is not admissible to contradict that construction.” Greenl. Ev. § 277.

But resort to surrounding circumstances is not allowed, for the purpose of adding a new and distinct undertaking, Maryland v. Railroad Co., 22 Wall. 105. The circumstances surrounding the making of a contract is one thing. The parol negotiations leading up to the written agreement is another and a different thing. Farol evidence may be received of the existence of an independent oral agreement, not inconsistent with the stipulations of the written contract, in respect to a matter to which the writing does not speak, but not to contradict the contract. The cases of Machine Co. v. Anderson, 23 Minn. 57, and Machine Co. v. Holcomb, 40 Iowa, 33. which are urged upon our attention, if in opposition to the rule stated, cannot he followed. The one case is rested upon the ground that the sale and delivery were absolute and complete before the written instrument, and that the subsequent lease was repugnant to the contract of absolute sale, and void for want of consideration. In the latter case it was held that the writing did not contain the whole contract. It is unnecessary to consider whether those cases can he upheld. We do not consider them relevant here, for the reason that the evidence offered does not bring the matter here within the cases cited. The offer here, 'and the evidence adduced to the court thereunder, was only to the effect that Hall, previous to the contracts, had negotiations with certain agents of the cattle company to purchase the cattle on credit. There is, however, no suggestion that the company agreed to sell upon credit; and if we may rest upon the statement of the trial judge in his opinion, the evidence not being preserved in the bill of exceptions, the agent of the company refused to sell to Hall upon credit, or to take chattel mortgage security upon the cattle, but was willing to intrust them to Hall under a feeding contract, and upon the terms stated in the writing. The offer of evidence expressly states that none of the cattle were delivered into the possession of Hall before execution and delivery of the contract of September 6,1884, and were delivered under and in pursuance of the contract. This would seem to conclude the contention, and demonstrates that the writing speaks the actual and entire contract.

The further offer to prove “that the declared purpose of said contract, at the time it was so made and delivered, was that the cattle company should retain the title to said cattle, and should sell the same, giving Hall the benefit of any increase in the value of the cattle by reason of the feeding, in the market, above $35 per head and twelve per cent, per annum interest,” would throw no light upon the intention of the contracting parties, if it were admissible. The contract itself so speaks, giving the increase to Hall for his services as agister.

The judgment must be affirmed.