B!,;ACKWELL lie WALXFlR.
& CO.v. WALKER
(Oirouit Court, E. D. Arkansas. - - , 1880.)
1. CoNIllTIONAL BALES STATE OF ARKANSAS. STATUTB Oil' FRAuDs- RECORDING'
Conditional sales were valid' at common law, and their validity was not affected by the English statute of frauds, nor are they within the recording acts of the state of ArkansaB.
2. SAME-VENDOR AND VENDEE CREDrrOR8 AIm PuRCHABERS.
Such sales, oral or in writing, are valid in Arkansas, and 'creditors of and purchasers from the conditional vendee acquire no right to the propertyaB against the vendor, who has been guilty of no fraud and no laches in aBBerting his rights. '
BAME-STATUTE OF ARKANSAS, GANTr'S DIG. §
2957. If conditional sales are within the statute of'frauds of the state of Arkansas, (section 2957, Gantt's Dig.,) it has no operation on them until the posseBBion has continued .in the vendee for five years.
These cases raise the question of the validity of conditional sales. In the first case the plaintiffs agreed toeell one Cowger a gin, portable steam-engine, and fixtures for the sum of six hundred and twenty-three dollars and seventy-eight oents, ($623.78,) upon his paying the a,greed price.' Cowger' executed his note for the price, and plaintiffs gave him possession of the articles upon the distinct v:erbal agreement that the right of property therein should not pass to him,' but should remain in the plaintiffs until the price agreed upon was fully paid. The defendants were creditors of Cowger at the time he received possession of the chattels from the plaintiffs, and subsequently recovered Judgment on their debt and caused an execution to be levied on the 'chattels as the property of Cowger. Cowger still owes $400 on the purchase. '' The vendors here filed a petition setting up these facts, and asking that the property be from levy of the execution, and :the marshal ordered to deliver same to them.: In the last case there was a conditional sale, substantially!
in the same terms as in the first, of work oxen and wagons, and ,the difference in the two cases is tha.t, in the latter case, the conditional sale is evidenced by a written contraf:t of the parties; and the without paying the stipulated price for the property, sold and delivered it to the defendant, who purchased it in good faith and without notice of the vendors' of title, and the plaintiff, the first vendor,has brought an action of replevin for the property. M. W. Benjamin, for' plaintiff in first case. Erb d; Erb, for defendant in first case. J. M. Moore,.for;pla#ltiff in second case. Henderson. d; Caruth, for defendant in second caso. CALDWE'LL, D.J. Conditional sales were valid by the common law, and their validity was not affected by the provisions of the English statute of frauds, nor are they within the recording acts of this state. In the case of a chattel mortgage, the property and possession of the chattel, in this state, is in the mortgagor, and neither the property nor the possession is changed by the mortgage; but the mortgagee acquires, in the language of the statute, "a lien on the mortgaged property from the, time the same is" filed for record. Gantt's Digest, § 4288. ' In a conditional sale, the property in the chattel is separated from the possession, the property remaining in the vendor, and the possession only passing to the vendee. The same thing happens upon the loan, hire, or other like bailment of chattels; in all such cases the right of property in the thing bailed remains in the bailor, and the actual possession passes to the bailee. If one loan or hire his horse to his neighbor, he does not have to reduce the contract for the bailment to writing, and have it signed, acknowledged, and recorded, in order to prevent the bailee from making an effectual sale of the horse, or his creditors from seizing it on execution for .his debts. The possession of personal propertyis undoubtedlypresumptive evidence of title, but it is also a general rule that a vendor in possession of such property can impart no better title to it than he himself possessed. There are some exceptions to this rule, but the case of a vendee in possession of chattels,
not to be consumed in their use, under a conditional contract of sale like these we are consid:el.-ing, is not one of titem. One of the earliest cas'es in this country' on the subject of conditional sales was Hussey v. Tlwrnt01i, 4 Mass. 465. In that case the contest was between the vendor and an'aUaching creditor of the vendee whose'debt was' contracted p1ior to the conditional sale. The court held the conditional sale valid against the attaching creditor, but in the course of the opinion in the case Parsons, C. J., said: "Had the demands of these attaching creditors originated while the £OO-lS were in.thepossession of Tood &; W'Orthly, [the conditional Y8udces,] so that it might be fairly presumed that a false credit was given them, or had they sold them bona fide for a valuable consideration, our opinion would have been otherwise." This expression of opinion was not necessary to a decision of the case before the court, and afterwards, when a case did arise making it necessary to decide whether such sales were valid against creditors whose debts were contracted while the vendee was in possession of the property under such conditional purchase, the dictum in Hussey v. Thornton was disapproved, and Parker, C. J., who delivered the opinion of the court, said: "If the transaction is fraudulent, the vendor setting up a condition to the sale, yet suffering'the \Tendee to be in possession. exercising full rights over the property, with the intent and purpose of enabling him to obtain credit on the strength of the property, he will not be able to avail himself of such condition, but the sale will be held to be absolute in regard to creditors. But if bona fide, and the object of the condition was merely security to the vendor, he shall not lose his property because some creditor of the vendee supposed it to belong to him." Ayer v. Bartlett, 6 Pick. 71. Later cases in the same state affirm the law as laid down in Ayer v. Bartlett, and it seems to be the settled doctrine of the courts in this country. Arrington v. Houston, 38 Vt. 448 ; Bigelow v. Huntly, 8 Vt. 151; Buckmaster v. Smith, 22' Vt. 203; Okaffe v. Sherman, 26 Vt. 237; Bradley v. Arnold, 16 Vt. 382; Pari, v. Vale, 18 Vt. 277; Barrett v. Pritchm'd, 2 Pick. 512; S. C. 13 Am. Dec. 449, note; Marston v. Bald.
win, 17 Mass. 606; Merrill v. Rinker, 1 Bald. C. C. R. 528; Bloor}, v. Palmer, 11 Me. 414; Miller v. Bascom, 28 Mo. 352; Rogers' Locomotive Works v. Lewis, 4 Dillon, 158; S. C. 3
Cent. L. J. 784. And it seems to me to be equally well settled that the veudor, who has been guilty of no laches in to the property, may recover it from a asserting his bona fide purchaser from the vendee. Coggill v. Hartford R. Co. 3 Gray, 545; Ballard v. Burgett, 40 N. Y. 314; Bigelow v. Huntly, 8 Vt.151; Sargent v. Metcalf, 5 Gray, (Mass.) 306; Hart v. Carpente'r, 24 Conn. 427; Parmelee v. Catherwood, 36 Mo. 479; Griffin v. Pugh, 44 Mo. 326; Little v. Page, 44 Mo. 412; Berrner v. Puffer, 114 Mass. 378; 'Thomas v. Winters, 12 Ind. 383; DUilull;' v. Rawles, 28 Ind. 322; na:lcy v. Harris, 8 Iowa, 333; IIci,inans v. Newton, 4 FED. REP.880. m this state the settled rule of the common law, that .. purchaser of a chattel acquires no better title than his vendor possessed, has not been changed by statute in its application to conditional sales; and creditors and purchasers of the conditional vendee acquire no right to the property as against the vendor, who has been guilty of no fraud and no laches in asserting his rights. If the property had been of a kind to be consumed in its use a different question would be presented. Counsel for defendants insist that conditional sales not reduced to writing, and acknowledged and recorded, are void against purchasers and creditors of the vendee under the statute of frauds of this state. Section 2957, Gantt's Digest. This section of the statute of frauds of this state originated in Virginia at an early day. Though applicable to all goods and chattels, it is said to have had its origin in a practice connected with slave property. It had come to be comUlon for slave owners to transfer the mere possession and use of some podion of their slaves to members of their families-particularly to daughters' upon tl18ir mar,riage-by way of loan, or "lpOn some verbal agreement or understanding whereby the property in the slaveS,did not pltSS with the possession. In this way, without the intervention of a trustee, the beneficial use of
BLACKWELL V. WALKER.
the slaves was secured to the wife, free from thE! marital rights of the husband and the claims of his' creditors. The possession thus acquired was often continued for many. years, under circumstances calculated to mislead persons dealing with the party in possession, and the object of the statute was to make the apparent ownership arising from such possession, whatever the nature of the bailment or trust might be, actual and effectual against the real owner, in favor of creditors and purchasers of one who had so rt::mained in possession for a period of five years. The section was adopted in Kantucky in 1796, and in tho revision of the statutes of that state, in 1852, conditional sales brought within its operation. It was adopted were in by the territories of Missouri and Arkansas, and by each of and Illinois and Texas.. As'originally adopted by Kentncky, and the territdries of Missouri and Arkansas, and by the state of Missouri in her first code of laws, it read as follows, including the clause in brackets, which are inserted for the purpose of calling attention to subsequent alterations: "Where, any goods ·or chattels shall be pretended to have been loaned to any person, with whom or those claiming under him possession shall have remained for the space of five years,without demand made and pursued by our process of law on the part of the pretended lender; or limitation shall be pretended to have been Illade of any use of property by way of condition, reservation, or remainder, [or otherwise in goods or chattels, the possession whereof shall have so remained in another, as aforesaid,] the same shall be taken, as to all creditors and purchasers of the persons so remaining in possession, to be void, and that the absolute property is with the possession, unless such loan, reservation, or limitation of the use of property were declared bywill or deed in writing, proved or acknowledged, and recorded as required by this chapter." In the Revised Statutes of this state the clause in brackets is omitted, except the words "in another." Whatever the design of this omission may have been-if, indeed, it was designed, anel not a c'erical misprision-it is still clellr that the
words "so remaining in possession," in the latter part of the section, refer to the "possession - '* · for the space of five years," previously mentioned. If this be not so, then those words have nothing to rest on, and are meaningless. But they are not meaningless. They perform an important office, and make the five years' possession qualify the whole section. In the revision 0'- 'he statutes of Missouri, in 1835, the words "as aforesaid," italicized in the clause in brackets, were omitted; and in Miller v. Bascom, 28 Mo. 352, it was contended that a verbal conditional osale of chattels was a "reservation or remainder," in favor of a vendor, and void as against the creditors and purchasers of the vendee, with. out reference to the period of his possession. But the court held otherwise, and declared the act, notwithstanding the omission of these words, had no operation in such cases, unless the possession of the chattels had continued in the vendee for five years. And everywhere, and always, it has been held that the possession in all the cases of bailment, trust, condition or reservation embraced by the section must have been continued for five years before the owner's rights are affected. In the enrolled act there is a comma after the, word "lender," and not a semicolon, as in the printed statute. Punctuation marks are no part of the English language, and connot be admitted to control the proper sense of words used; but they are sometimes used in such a way as to lead to a misinterpretation of a statute on a casual reading, and such is the tendency of the erroneous punctuation in this section. Conceding, but not deciding, that this section embraces conditional sales, still the defence based on it must fail, because the possession of the vendees, under tne conditional sales in these cases, was less than a year.
"v. CITIZEN:'.,' IKS.
(Uircuit Oourt, D. Indiana.
January, 1881. )
The Citizens' Insurance Company, a.corporation of Indiana, doing an insurance business at Evansville, in that state, issued an open policy No. 38, to its own agents, Drew & Bennett, at Evansville, to cover all risks indorsed thereon, or certified in insurance slips to be covered thereby. It appointed Hudson & Bro., of Ohio, to solicit and obtain risks for it in the latter state, and, to avoid the laws of that state in relation to foreign insurance COmpanies doing business in the state issued slips to Hudson & Bro. covering such property, under the policy No. 38, issued to its agents at Evansville, as Hudson & Bro. might agree to insure. Hudson & Bro. obtained a risk from tbe plaintiff, Daniels, of $2,500 upon 2,500 bushels of salt, then in a barge towed by tbe steamer Robin, and received the premium, $45, from Daniels therefor. The insurance company, through its agents, Hudson & Bro., issued an insurance slip certifying that Hudson & Bro. were insured in the property therein described under policy No. 88 preViously issued to Drew & Bennett. Hudson & Bro. had- no interest in the salt. Held, 'fhat Daniels could sue the insurance company in bis own name upon the insurance contract, and prove by parol that the insurance was taken out for his benefit; that the insurance company was bound to know wbat its agents, Hudson & Bro., knew, and could not set up their want of interest in the property, or that the contract, as shown by the policy No. 38 and the insurance slip, was not legal and binding upon them.
3. PAROL CONTRACT OF INSURANCE.
And hel,d,!urther, that even if the contract, as shown by the writings, was void for the reason that Hudson & Bro., while acting for the insurance company, couid not insure themselves, yet that Daniels could recover, as the writings and the parol proof showed an agreement to insure Daniels, which was valid as a parol contract of insurance. 4. INSURANCE-Loss PAYABLE TO CONSIGNEE-Wno MAy SUE. The insurance slip insured Hudson & Bro.; loss, if anv, payable to John K. Speed. The salt was c nsigned to Speed, and he f"as e:l. pectcd to receive and pay drafts on account thereof, and to him for such payments the ioss was made payable to him. The property having been lost before any such payment was made by Speed. held, that tbe suit was properly brought by Daniela in bis own name. -Reported by Florien Giauque and J. C. Harper, of the Cincinnati bar,