buyer, who allowed the seller to retain possession. In favor of the subsequent purchaser, the original sale is void because of the failure to have a delivery. The Uniform Sales Act, Section 25, contains a clear statement of the law on this point as follows:

When a person having sold goods continues in possession of the goods, the delivery or transfer by that person of the goods under any sale, pledge, or other disposition thereof, to any person receiving and paying value for the same in good faith and without notice of the previous sale, shall have the same effect (that is, as to the rights of the last purchaser) as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same.

As to Creditors. Ordinarily creditors may sieze any goods belonging to a debtor. If he holds possession of the goods and claims that someone else owns them, it is presumed that the claim is fraudulent. In most states this evidence is only presumptive, and if the debtor can prove that the goods have already been sold in good faith, the tale will stand.*

EXAMPLES

1. Ingalls bought from Lougee 21 bales of wool, which were left for the time being in Lougee's warehouse. While they were there, the sheriff took possession of them in behalf of some of Lougee's creditors. Ingalls proved that he had bought and paid for the wool in good faith and that he had not removed it at once on account of its bulk, but that he would have done so within a short time. The court allowed Ingalls to recover the wool from the sheriff, the law being that while the transaction was presumptively fraudulent he had proved that it was not so in fact, and could therefore assert his title in the goods. Ingalls vs. Herrick, 108 Mass. 351.

2. A sale in which the seller keeps possession is not absolutely void as against creditors, but is merely presumptive evidence of fraud. Martindale vs. Booth, 3 B. & A. (Eng.) 498. McKibben vs. Martin, 64 Pa. St. 352.

The safe business practice, when for any reason the seller is allowed to retain possession of the goods sold, is for the buyer to require a formal bill of sale, and to record the bill of sale with the proper officer, usually the town, city, or village clerk. This serves to give notice to all subsequent parties, who cannot then

*In other states the same rule is applied in regard to creditors as is applied to protect innocent subsequent purchasers, that is, that the buyer loses all rights as against third parties by allowing the seller to retain possession. These states are California, Colorado, Connecticut, Idaho, Illinois, Iowa, Kentucky, Maryland, Missouri, Montana, Nevada, New Hampshire, Oklahoma, South Dakota, Utah, Vermont and Washington.

claim to have innocently and ignorantly relied upon the seller's retention of possession as evidence that he was still the owner of the goods.

264. Sufficiency of Delivery. The buyer may avoid all danger of losing his rights in the goods, either to subsequent purchasers or to creditors of the seller, if he insists upon the goods being delivered to him. The requisites essential to a valid delivery depend upon the nature of the article sold. If the article is of extreme bulk and cannot be removed, the buyer must enter into active, open, and notorious possession and perform acts which will indicate generally that he and not the seller is the owner of the goods. The execution of a bill of sale constitutes such an act.

265. Conditional Sales. Not only does the buyer, in actual business, often allow the seller to retain possession of the goods after title has been transferred, but even more often is the buyer allowed to enter into possession of the goods before the title has passed. This is accomplished by a conditional sale, the parties contracting that the title shall not be transferred until the buyer has paid the price, which is often to be paid in installments. Pianos, sewing machines, and typewriters are often sold by contracts of conditional sale. The rule of the common law was that the buyer in such a case acquired no title which he could transfer even to an innocent purchaser from himself for value, and that the seller could always regain the goods no matter into whose hands they might have passed. This rule has been quite generally changed by statute in the several states.* These statutes usually provide that conditional sales are void against any innocent purchaser for value from a buyer who has been placed in possession of the goods, unless the contract of conditional sale is recorded in writing in a specified public place, usually the office of the town, city, or village clerk. As between

* Such statutes exist in Alabama. Arizona, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Maine, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming. In Tennessee the only requirement is that conditional sales must be written to be valid as to third persons. In Massachusetts the recording statute applies only to sales of household furniture.

the buyer and the seller, the parties may contract validly for the retention of the title by the seller as security for the purchase money, but innocent parties who rely on the possession of the goods under such transactions as an apparent evidence of ownership and title will not be allowed to suffer by such agreements, if secret; if they are recorded as public documents, all persons are presumed to know of them.

266. A Chattel Mortgage from its form would appear to be a form of conditional sale, but it is in reality only security for a debt. The parties to it are the mortgagor, who is the debtor who pledges his property to secure a debt, and the creditor, who is called the mortgagee. It forms a popular means of securing a debt by a pledge of personal property, and does not constitute a sale of the property. The instrument, known as a chattel mortgage, is a formal document by which the owner of property agrees that another person shall hold the title to the property as security for the payment of a debt. It provides that upon the payment of the debt, the title shall revest in the original owner, the mortgagor.

So far as the parties themselves are concerned, chattel mortgages may be either oral or written. But in order to prevent fraud upon third persons, by allowing one person to hold the title to goods as security, and another to have possession of the goods, the statutes of the various states provide that they must be formally executed and registered or recorded with some designated public officer, usually the town clerk. The statutes usually provide that a chattel mortgage shall have no effect against innocent third parties unless it is executed and recorded in the manner provided by law.

The mortgagee's rights depend largely upon the statutes of the state in which the mortgage is made, and also upon the conditions of the instrument itself. The mortgagee is frequently given the right by the instrument to enter the premises of the mortgagor at any time and take possession of the goods upon the failure of the debtor and mortgagor to pay the debt at its maturity, or if he has reason to believe that some act of the mortgagor has imperiled his security. Regulations are usually provided for the advertisement and public sale of the property so

taken, and unless the mortgage expressly permits it it cannot be sold at private sale.

EXAMPLE

Ames borrowed money from Bates, and to secure the debt gave Bates a chattel mortgage on all his cattle. This was recorded with the town clerk two weeks later, on June 1. On May 25, Call, a creditor of Ames, levied upon three cows, as did Dale, another creditor of Ames, on June 5. Call could claim the cows as against Bates, but Dale could not, for the recording of the mortgage had preceded his levy.

REVIEW QUESTIONS

1. A contracted to sell to B 100 bushels of wheat, to be put up by A in sacks furnished by B, and subsequently to be called for by B. B paid the price at the time of the bargain. Thereafter B sent A enough sacks to hold the wheat, and A at once began to fill them. He completely filled and tied up a quarter of the sacks. A quarter of the sacks he partially filled. He was then interrupted and shortly after became bankrupt. The creditors of A claimed the wheat, as did B. Who was entitled to the wheat? Which part? 2. A agreed to sell to B his drove of cattle, with the exception of five fat calves which A was to select to keep. B paid one-half the purchase money down, and was to call the next day for the drove and pay the balance. That night the cattle were destroyed by a flood. Does the loss fall on A or B? Why?

3. At Mahoney's request Fisher sends a stove to Mahoney, to be returned if not found satisfactory, no specified time being given in which the stove must be returned. Mahoney keeps the stove a year without offering to return it, and then, when a bill is presented for the stove, he says it is not satisfactory, that he has used it only once, and had stored it in his attic ready for Fisher to get it any time, and now offers to pay a delivery man to return it to Fisher. Has the sale been completed, and can Mahoney be compelled to pay for the stove?

4. X sells B 250 bags of coffee, marked and designated, but X agrees to weigh the bags in order to ascertain the total price, the sale being by the pound. Has title passed to B?

5. A sold B an automobile for cash, but as B had no place to keep it, A agreed that it might be left in his garage for a few weeks until B had time to build a garage. During this time B used the machine frequently, coming to A's house to get it and leaving it there when it was not in use. A did not use the automobile at all after the sale to B, but later sold and delivered it to X, who paid cash and had no notice of the previous sale to B. As A was financially worthless B sued X to recover the automobile. May he recover? Why?

CHAPTER XXVI

TRANSFER BY BILLS OF LADING AND

WAREHOUSE RECEIPTS

267. Introduction. The ordinary conception of a sale assumes that it includes the delivery of the goods by the seller to the buyer. It is not always desirable, however, or even possible, to effect a physical transfer. In such a case a constructive delivery can be made. When goods are in the hands of a common carrier, or a warehouseman, it is important to know how they may be transferred from seller to buyer, and just when such transfer takes place. One who holds the goods of another is called a bailee.

It has long been the mercantile custom for the bailee, if a carrier or warehouseman, to issue to the owner a receipt for the goods which will entitle the owner to receive the goods upon its presentation. A receipt from a carrier is called a bill of lading; one from a warehouseman, a warehouse receipt. Both are commonly known as documents of title, and are governed by the same rules of law. In the warehouse receipt the bailee usually promises to deliver the goods to the person who has deposited them. In the bill of lading the carrier ordinarily promises to deliver the goods to the person to whom they were shipped, who is called the consignee. In the following discussion reference will be made principally to bills of lading, for convenience of treatment, but it is to be noted that the same rules are applicable to warehouse receipts.

In Two Forms. Bills of lading are issued in two forms. The first, called a straight bill of lading, names a particular person to whom the goods are to be delivered. The second type, which is called an Order bill of lading, and is negotiable, states that the goods will be delivered to some particular person, or to his order.