scinded are entirely different from those which exist where the right of stoppage in transitu, only, is exercised. From November, 1891, until February, 1894, the plaintiffs asserted, in effect, by their pleadings and by their conduct, that the contract of sale had been rescinded, and prevented the grain company and the intervenor from paying the contract price and taking the grain, had they desired to do so. Certainly, this was conclusive evidence of rescission, so far as it could be effected. But it is said that the relief which the plaintiffs have at all times sought was obtainable by an action for the recovery of the grain, and that it was within their right to modify their claim as to their interest in the grain by 729 amending their pleadings at any time before the trial. Their right to amend is not disputed, but the effect of the amendment is another matter. The fact that the property in question might have been recovered by an action of replevin, whether the plaintiffs were the absolute owners of the property, or were merely entitled to the possession of it for the purpose of enforcing a lien, is not decisive of their right to recover, even if the averments of the pleadings as amended be sustained. The controlling considerations arc, that with knowledge of the facts, they elected to rescind the contract of sale, and acted upon that election, and that their subsequent attempt to revive the contract, and treat it as in force, is wholly inconsistent with the election as first made. They sought to recover the property in each case, it is true, but in the first case on the ground that they had not sold it, and in the other on the ground that they had sold it, and were entitled to it, as a means of securing payment of the price. As we have seen, they cannot affirm the contract, after having elected to disaffirm it.

2. The appellants deny that they had a choice of remedies, and insist that the facts set out in their pleadings did not show that they were entitled to rescind the sale, but only to stop the grain in transit for the purpose of enforcing against it their demands for the unpaid purchase price. It may well be questioned whether the plaintiffs, after having derived all possible benefits from their election to rescind, should be permitted to avoid the effects of their election on the ground that what they did was in violation of law. But we do not find it necessary to determine that question. Ordinarily, the effect of the exercise of the right of stoppage in transitu is to vest in each party to the contract. of sale the rights he had before the possession of the goods sold was delivered to the carrier: Cox v. Burns, 1 Iowa, 68; Babcock v. Bonnell, 80 730 N. Y. 244; Tiffany on Sales, 226; Story on Sales, sec. 320; 2 Kent's Commentaries, 540; 1 Parsons on Con

tracts, 598; 23 Am. & Eng. Ency. of Law, 932. And it is, perhaps, true that the mere insolvency of the buyer will not authorize the seller, who has effected a stoppage in transitu, to rescind the sale: 2 Benjamin on Sales, secs. 1166-1299, note. It is also probably true, as a general rule, that the intent of the buyer, formed after the sale of the goods and their completed delivery to him, not to pay for them, would not be sufficient to authorize the seller to rescind the sale on the ground of fraud: Starr v. Stevenson, 91 Iowa, 684; Burrill v. Stevens, 73 Me. 400; 40 Am. Rep. 366; Tiedeman on Sales, sec. 170. But it is well settled that when goods are sold on credit, the seller has the right to rely on the presumption that the buyer intends to perform his obligations by paying for the goods; and, if the latter then has a secret intention not to make payment, that intent, and his failure to disclose it, will entitle the seller to rescind the sale and recover the goods, even though they have passed into the possession of the buyer: Reid v. Cowduroy, 79 Iowa, 169; 18 Am. St. Rep. 359, and cases cited therein; Bughman v. Central Bank, 159 Pa. St. 94; 2 Pomeroy's Equity Jurisprudence, sec. 906. In this case, the admitted facts show that the plaintiffs did not know of the insolvency of the grain company, nor of its contemplated fraud, when the sale was made; that the plaintiffs learned those facts while the grain was in transit; and that they then notified the carrier not to deliver the grain to the grain company, and recovered the actual possession of the grain. The question on this branch of the case which we are required to determine is, whether the plaintiffs had the right to rescind the contract of sale. We are of the opinion that they did have the right as against the grain company. If the company had been insolvent and unable to pay for the grain when the sale was made, and if 731 it then had the intention not to pay for the grain, and if these facts had been concealed from the sellers until after the sale and delivery of the grain, it is clear that the plaintiffs could have rescinded the sale and recovered the grain. We think it logically follows that if such facts were discovered after the sale, but before the delivery, the seller could have refused to deliver the grain, and rescinded the sale. In the case as it is submitted to us, it appears that the plaintiffs rightfully prevented a delivery of the property and secured possession of it. When that had been done they knew that the buyer could not pay for the grain if it were delivered, and that it intended not to pay for it. We know of no rule of law which could compel the sellers to treat the contract of sale as in force, under such circumstances. Ordinarily, if a party to a contract is unable or refuses to proceed with it,

the other party may rescind it: Bishop on Contracts, sec. 827. If a contract of sale is not completed, by reason of the failure of the buyer to comply with his part of the agreement, the seller may treat the goods as still his property, and sue the buyer for damages: Tiedeman on Sales, sec. 333. In Morris v. Rexford, 18 N. Y. 552, it was said that "a vendor may reclaim his goods after a delivery upon a sale for immediate payment, if the vendee, on getting the property into his possession, refuses to make payment. If there be no terms of credit expressed or implied in the delivery, the delivery in such case is deemed to be conditional, and subject to revocation on the refusal or failure of the purchaser to pay the price": See, also, Palmer v. Hand, 13 Johns. 435; 7 Am. Dec. 392. In Henry v. Vliet, 36 Neb. 138, it was held that where goods were sold on condition that they were to be paid for on delivery, and they were delivered without payment being made, the seller could reclaim them. It is not necessary to go so far as do some of the cases cited to sustain 782 the right of the appellants to rescind the sale. Time was not given for the payment of the grain in question, but it was to be paid for on the presentation of the drafts, which were presented for payment before the grain had reached its destination; and possession had been taken by the appellants before there had been any actual delivery to the buyer. They found themselves entitled to the possession of the grain, without liability to surrender it to the buyer, excepting under a contract of sale, which the buyer could not and would not perform on its part. Under the circumstances, the sellers were fully authorized to rescind the contract. Having done so, and sold the grain under a claim of absolute ownership, their election was final. On the trial of the case they relied upon an alleged right to a lien which was shown not to exist, and, as there was no material conflict in the evidence in regard to it, the motions for verdicts were properly sustained.

3. The questions we have determined are controlling, and it is unnecessary to consider other questions discussed. It is proper to say, however, that we incline strongly to the opinion that the result reached effects, substantially, justice between the parties. The plaintiffs might have secured their claims for the grain by sending the bills of lading, with the drafts drawn for the purchase price, to the banks for collection; but they failed to do so, and, by sending the bills of lading to the grain company, enabled it to exchange them for similar bills held by the intervenor as collateral security. There is nothing in the record which shows lack of good faith on the part of the intervenor. Its transactions with the grain company were in the ordinary course of business,

without knowledge of the fact that the price of the grain in question had not been paid. It may be that the 733 plaintiffs would have been entitled to recover, as against the intervenor, had there been no election to rescind; but, if so, it would have been on technical grounds. For the reasons shown, we are satisfied with the judgment of the district court, and it is affirmed.

ACTIONS-ELECTION BETWEEN INCONSISTENT REMEDIES-WHEN IRREVOCABLE.-When one has a choice between two inconsistent rights or remedies, and deliberately makes his choice, such election becomes conclusive upon him and precludes him from subsequently pursuing the other right or remedy: Crook v. First Nat. Bank, 83 Wis. 31; 35 Am. St. Rep. 31, and note; extended note to Thomas v. Joslin, 1 Am. St. Rep. 626-629. For a thorough discussion of the subject, see the monographic note to Fowler v. Bowery Sav. Bank, 10 Am. St. Rep. 487-494. That such an election is not irrevocable until the elected remedy is pursued to final judgment, in the absence of intervening rights, see Johnson-Brinkman etc. Co. v. Railway Co., 126 Mo. 344; 47 Am. St. Rep. 675, and note. SALES-INTENTION OF BUYER NOT TO PAY-RESCISSION. When a sale of goods is made in which fraud arises from the intention of the purchaser not to pay for the goods, the sale is voidable only, not absolutely void: Union etc. Co. v. Mallory etc. Co., 157 III. 554; 48 Am. St. Rep. 341. Such a fraud enables the seller to rescind the sale, although there were no false representations or pretenses: People v. Healy, 128 Ill. 9; 15 Am. St. Rep. 90, and note; Thompson v. Rose, 16 Conn. 71; 41 Am. Dec. 121; unless the property has passed to the possession of a bona fide holder for value: Nichols v. Michael, 23 N. Y. 264; 80 Am. Dec. 259, and note. See monographic note to Thurton v. Blanchard, 33 Am. Dec. 708-710.

CASES

IN THE

SUPREME COURT
COURT

OF

KENTUCKY.

BEMENT V. OHIO VALLEY BANKING AND TRUST CO.

[99 KENTUCKY, 109.]

GIFT, WHEN REVOKED AND CANCELED.-If a father assigns certain indebtedness to his son without any valuable consideration, and, as the result of the subsequent compromise of an action between the debtor and the father, lands are conveyed to the son, who, on his part, agrees to pay such indebtedness to the father, this shows that the former transaction was no longer treated by the parties thereto as a gift, and that the son is liable to the father for the amount agreed to be paid to him.

LIMITATION.-A GIFT BY WHICH ONE PERSON stipulates to pay to another a debt due to the latter from a third person continues to be a subsisting liability, under the statutes of Kentucky, for fifteen years.

GIFT OR VOLUNTARY TRANSFER, WHEN NOT VALID AS AGAINST CREDITORS.-A release of indebtedness executed by a creditor to his debtor without consideration is not valid as against the creditors of the former.

VOLUNTARY TRANSFERS, WHO MAY ATTACK.-A holder of a covenant of warranty in a conveyance of land must be regarded as a creditor of the warrantor from the date of the deed, though it is not until several years afterward that there is a breach of the covenant. Hence, such covenantee may attack a voluntary conveyance made by his covenantor before the breach of the covenant.

RES JUDICATA, AVOIDING FOR FRAUD.-Though an administrator prosecutes a suit in equity for the settlement of his accounts and obtains a decree, it may be avoided by a creditor of the decedent on showing that such administrator fraudulently concealed property in his hands or debts due from him to the decedent of which the creditors of the latter had no knowledge. The rule of res judicata should not be applied in a subsequent controversy introducing new issues as to material, distinct matters which were not, either through the fraud of one party or the unavoidable casualty or misfortune of the other, presented and determined in the former suit.

H. F. Turner and Montgomery Merritt, for the appellant.

R. H. Cunningham and S. B. & R. D. Vance, for the appellee.