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An infinitely more usable test, or rule, is the one that where two persons have each an equity in the goods-as sharply distinct from an equity against some personthat one will prevail who has also the legal title. If it be assumed that one who has been wrongfully, e. g. fraudulently, or by an act of conversion, deprived of possession has an equity in the goods, that one who has paid money, or otherwise acted, in reliance on the payee's possession of goods has also an equity in them and that one who relied on another person, but not on his possession, has not an equity in the goods, it will be found that courts give judgment with great consistency in favor of the person who, coupled with an equity, has the legal title, general or special. This principle is not often stated, at least in this particular connection, but it is undoubtedly the most positively applicable rule.
Of course, if the true owner has given the person in possession authority to sell, a sale by him, in accord
, with that authority, will vest the rights of ownership in the buyer. This is merely the established principle of agency applied to the specific case of a sale. In such case the title passes directly from the original owner and not from the first buyer. It passes not because the seller had title, but because he was agent of the real owner to pass it.ba
Furthermore, the authority to sell need not be expressly given-it may be shown by the implication of all the circumstances. The leading case on this point is Pickering v. Busk. The plaintiff, who had bought certain hemp through one Swallow, had the warehouseman who stored it transfer it on his books to the name of Swallow. Another parcel was carried on the books in both of their names. Swallow afterwards sold this hemp to the defendants, who supposed him to be the owner. The court held title to be in the defendant. Lord Ellenborough put it on the ground that Swallow had an ostensible authority to sell, but without saying just what demonstrated that ostensible authority. The real basis of the decision, however, is that Swallow had a real, though implied rather than express, authority to sell. Justice LeBlanc said, “the mere possession of personal property does not convey a title to dispose of it. * . . Now for what purpose could the plaintiff leave it in the name of Swallow, but that Swallow might dispose of it in his ordinary business as broker
title to his property by his own act, or by the operation of law. Every person is bound at his peril to ascertain in whom the real title to property is vested, and however much diligence he may exert to that end, he must abide by the consequences of any mistake." (Author's italics.) Ketchum v.
Brennan, 53 Miss. 596, "A buyer may trust to appearances; but if they prove false and delusive, he takes the risk, and must abide the result.” Johnson v. Credit Lyonnais Co., 3 C. P. Div. 32.
5a-Robinson's Appeal, 63 Conn. 290.
6-15 East 38.
And Justice Bayley said, “if a person puts goods into the custody of another, whose common business it is to sell, without limiting his authority (author's italics), he thereby confers an implied authority upon him to sell them."
As we have seen, and as Justice LeBlanc said, merely putting one in possession of goods does not imply in him any authority to sell them. There must be something more in the facts. Pickering v. Busk indicates that
. putting them in the possession of one whose common business it is to sell such goods, does create such an implication. But even in such case there will be no authority implied, as Justice Bayley said, if other facts negative it.” And the fact that the person in possession has also some other business than that of selling, by virtue of which the goods might have been entrusted to him, is enough, as the authorities cited above show, to negative an inference of agency.
Just what other combination of circumstances will imply, in the person entrusted with possession, an agency to sell, can be determined only from particular precedents. It is a matter of individual conclusion in each case and can not be determined by rule.
7-Levi v. Booth, 58 Md. 305; Bank v.Johnson, 104 Wash.550, 177 Pac. 340, possession of automobile by corporation engaged generally
in selling automobiles held not to give them apparent authority to sell.
Pledges.-Even when the person in possession does have authority to sell, express or implied from the circumstances, it does not follow that he has also implied authority to pledge the goods.**
When Seller Has a Right to Acquire Title.—That the innocent purchaser will not be protected against the real owner is true at Common Lawlo even when the person in possession has a contractual right to acquire the title. That is to say, one who has possession of goods under a "conditional sale” contract, whereby he is to acquire title upon performance of a stipulated condition, can not pass a title, even to a bona fide purchaser for value, before performance of the condition 11
8-“The implied authority must Am. Rep. 382, person in posses. arise from the natural and obvious sion was a dealer; Wright v. Solointerpretation of facts according mon, 19 Cal. 64, 79 Am. Dec. 196; to the habits and usages of busi- Quinn v. Davis, 78 Pa. 15. ness." Saltus v. Everett, 20 Wend. 9-Paterson v. Tash, 2 Strange (N. Y.) 267; Lewenberg v. Hayes, 1178; Commercial Bank of Selma 91 Me. 104, 94 Am. St. Rep. 215; v. Hurt, 99 Ala. 130, 12 So. 568; Ladd v. Brewer, 17 Kan. 204; Prentice v. Page, 164 Mass. 276. Calais Steamboat Co. v. Scudder, 10-All of these rules have been 2 Black, (67 U. S.) 372; Smith v. more or less modified by statutes. Clews, 105 N. Y. 283, acquiescence But it seems desirable to discuss in prior sales by the one entrusted the Common Law as a whole, with possession held sufficient; without interruptive digressions Commercial Bank v. Kortright, 22 concerning statutory change, in Wend. (N. Y.) 348, 34 Am. Dec. order to give a clear background 317; Cowdry v. Vandenburg, 101 against which to observe the U. S. 572, indorsing a non-negoti- various statutes. able instrument in blank held 11-Lorain Steel Co. v. Norfolk enough; Winchester Wagon R. R. Co., 187 Mass. 500; Payne v. Works v. Carmen, 109 Ind. 31, 58 June, 92 Ind. 252; Lippincott v.
*This rule has been changed by statute in a number of states, al. though not by the Uniform Sales Act. These provide, in general, that if an agent has been entrusted with goods, or documents of title, with authority to sell them, a pledge by him may also be effective. The provisions vary, however.
In a few jurisdictions, however, this does not hold and one in possession under a contract of conditional sale can sell in such a way that his buyer will be protected against the original owner.12 This doctrine, embodied in statutes in many other states, may be economically wise, but it is inconsistent with kindred rules. Either it is illogical, or they are. When the seller is in possession, his appearance of ownership is the same whether he acquired that possession by contract to buy, by hire, by loan, or by theft. If the buyer knows how his seller got possession, he knows that his seller has no title. If the buyer does not know how his seller got possession, then the manner of possession can not affect the seller's appearance of title, or right to sell. The doctrine of these decisions, which protect the innocent purchaser when the seller is in possession under a conditional sale contract, can not be estopped, for the same reasons would apply to other cases of possession, in which the innocent buyer is not protected. The only other explanation is to say that the “conditional buyer” really has title and that what the seller by conditional sale really reserves is something less than title. This finds express support in some cases which allow suit for the purchase price after the conditional seller has retaken possession on account of the buyer's default. But other cases are quite out of harmony. The real reason is probably economic.
Rich, 22 Utah 196; Albany Warehouse Co. v. Fisk Cotton Co., 16 Ala. Ap. 256, 76 So. 988, person in possession would ordinarily have had title save for statute which declared that title should not pass till payment, but buyer from him was not protected; Riley v. Dillon, 148 Ala, 283, dictum; Harkness v. Russell, 118 U. S. 663, citing much authority; Ballard v. Burgett, 40 N. Y. 314, citing authority and settling doubt in New York; Menke v. First Natl. Bank., - Tex.—, 206 S. W. 693; Ocean S. S. Co. v. So. States Naval Stores Co., 145 Ga. 798; Palmer V. Howard, 72 Cal.
293; Studebaker Bros. v. Mau, 13 Wyom. 358; Freed Furniture Co. v. Sorenson, 28 Utah 419; Leighton v. Stevens, 22 Me. 252, attaching creditors.
12–Coors v. Reagan, 44 Colo. 126; Lincoln v. Guynn, 68 Md. 299, 6 Am. St. Rep. 446; Mertz v. Stewart, 211 Ill. Ap. 508, “possession of personalty is prima facie evidence of ownership.” VanDuzor v. Allen, 90 Ill. 499; M. C. R. R. Co. V. Phillips, 60 Ill. 191; Haak v. Lind. erman & Skeer, 64 Pa. 499; Cf., Chamberlain v. Smith, 44 Pa. 431; Wender Coal Co. v. Louisville Property Co., 137 Ky. 339.
Whatever interest in the goods the seller does have, however, will pass to his buyer and such buyer stands in his seller's place in respect to trespassers, or as to the right to acquire title from the real owner.
But purely contractual rights do not pass to the buyer except by specific assignment.14
Estoppel.--Although merely to entrust another with possession of property does not give him such appearance of ownership as reasonably to mislead one who buys from him, and though the real owner is not in such case estopped from setting up his title against one who claims to have been misled, the owner may do such other things in addition to giving possession as will create in the possessor a legally sufficient appearance of ownership. In such case, the real owner, having so acted as to mislead a buyer from the one in possession, will be precluded from asserting his title against that buyer. Thus, in Leavitt v. Fairbanks,15 the real owner was held estopped to assert his title because, for many months after he knew that the defendant had bought the goods, he sat quiet and made no attempt to recover them. So, in Grace v. McKissock,16 the real owner lost his title because, having been asked by the buyer if he had an interest in the goods, he said nothing about his title. Again, in O'Connor v. Clark, the real owner of a wagon allowed the person in possession to paint his, the possessor's, own name on it for the very purpose of making him appear to be owner. The court held the real owner estopped to set up his title.18
13-Ante, p. 176. 14–Ante, p. 199. 1592 Me. 521. 16-49 Ala. 163. 17-170 Pa. 318.
18-Johnston v. Milwaukee, etc. Co., 46 Neb. 480; cf., as to unindorsed notes, Sublette v. Brewington, 139 Mo. Ap. 410,122 S. W.1150; Marling v. Fitzgerald, 138 Wis. 93, 120 N. W. 388.