CHAPTER IV.-SALES OF PERSONAL

PROPERTY.

What a Sale Is. - A Sale is the transfer by one person to another of the ownership of some specific article of personal property for a price in money.

A sale must be for cash. An exchange of goods for goods is a barter and not a sale.

The seller is often called the vendor, and the buyer the vendee.

A sale is an executed contract.

If it is executory, it is simply a contract to sell in the future. The buyer, under such a contract, would not get a title to the goods, but only a right to damages in case the contract is not performed.

The Thing to be Sold. - Its Existence and Ownership by the Seller. In general, a man cannot sell what does not exist, or what he does not own at the time of sale.

But a potential interest in a thing not actually existing is capable of an immediate sale.

For example: an owner or lessee of land has such an interest in those future natural crops which are not planted from year to year, as hay, fruit, etc.; and in annual crops when planted and growing. But this potential interest must be more than a mere possibility of acquiring property in the future.

A sale cannot be made of the expected halibut catch of a vessel then on a cruise. Nor can one make an assignment of future wages, who is not then under contract of hire.

Generally, however, if one sells goods not then owned by him, and afterwards acquires them, the title to them will then pass at once to the buyer.

This would not be so in Massachusetts and perhaps other states,

unless the seller acted as though he intended to appropriate them to the contract.

An executory contract for the sale of goods not then owned is perfectly valid. But, to prevent such transactions as stock-jobbing, if the parties to a future sale never intend any actual delivery or payment, it is invalid.

Its Appropriation. The rule originally was that, until the thing sold was actually set apart and appropriated to the purposes of the contract, there could be no sale.

For example: A sold B two hundred and fifty barrels of pork, part of a larger lot of the same quality lying in his cellar; B took away one hundred barrels, and sold the one hundred and fifty remaining barrels to C; A agreed to keep this lot for C, but they were not separated at all from the main lot in A's cellar; B failed, and A refused to deliver to C; and the court held there had been no sale to C.

This rule is followed in Iowa, Alabama, New York, Massachusetts, Maine and Pennsylvania. If, however, it is agreed that the buyer shall make the selection, and he is given possession of the whole mass for this purpose, he cannot be deprived of this privilege.

The other states do not hold that such a physical separation is necessary before there can be a sale.

In all the states, if the sale is of the seller's interest as an owner in common with others of certain property, there need be no actual separation from the mass.

Such would be the case of grain stored in an elevator along with other grain of the same quality. The sale is completed here as soon as the elevator man has agreed to hold the grain for the buyer instead of for the seller.

Should the seller appropriate goods, which the buyer refuses to accept as not in accordance with the contract, this would not prevent the seller from appropriating other goods within the time allowed by the contract.

:

Thus if A sold a cargo of grain of a certain quality to B, to be delivered within one month, and tendered the cargo of a certain vessel, which B refused as not of the right quality, B would have a right to tender another cargo, if there was still time within the month.

As soon as the seller has selected the goods for the contract, and has taken the proper steps to place them in the buyer's possession, the title to the goods passes to the buyer.

For example: a delivery of the goods at the proper express office, or railroad, or carrier, directed to the buyer, passes the title.

But, if they were sent in the seller's name and subject to his order, the title to them would still belong to the seller; and probably also if they were sent C. O. D., though this point is not definitely settled.

In all cases, however, the actual intention of the parties, as to when the title shall pass, will usually decide the question.

When a contract calls for the manufacture and sale of an article, the title will not pass to the buyer till the article is completed and delivered to him and accepted by him.

If the buyer is to pay in instalments as the work progresses (as in case of a ship or house), it must be finished before the title passes; though, if the instalments are arranged proportionable to the work done, then the title to as much as is finished would pass on the payment of an instalment. Such at least is the rule adopted in Indiana and Pennsylvania; but the New York, Massachusetts, New Jersey and United States courts, have decided that the actual intention of the parties in each case shall settle the time for the title to pass.

Change of Possession. In a sale there must be a change of possession, either actually or constructively.

An actual change of possession is of course simply changing hands, as is the case in most sales. But the change may be accomplished by a constructive or symbolical delivery; as by transferring a bill of lading, or by giving a mortgage of goods.

After the goods are set apart and appropriated by the seller, no actual delivery to the buyer is needed to pass the title, so far as the parties to the sale are themselves concerned.

But to prevent sales whose object is to defraud creditors, if the seller still retains the article sold, a creditor can attach it as the property of the seller, unless the seller can show that the sale was not fraudulent.

A very common example of the sort of sale this is intended to prevent, is the practice of insolvent men putting all their available property in their wife's name.

In Connecticut, Delaware, Kentucky, Missouri, Nevada and California, retention of the possession by the seller, is conclusive evidence of an intention to defraud creditors.

In Maryland, Iowa and Canada, unless the sale is recorded of goods still in the apparent possession of the seller, the sale is invalid as against creditors or subsequent purchasers for value.

Even if the sale is honest but without a change of possession, and the seller subsequently sells the article again, the second purchaser has a good title, if he gets the article into his possession first.

Thus, a bill of sale given the first purchaser would not be sufficient to deprive an innocent second purchaser of his title, if he was the first to get possession.

But, if the goods are at sea or on the road, a delivery of the bill of lading is sufficient; or, if the goods are in a warehouse or grain elevator, subject to the seller's order, a delivery of the warehouse receipt, and a transfer on the books of the warehouse or elevator, is sufficient.

If the buyer is already in possession, or is the partner of the seller, no change of possession is of course necessary.

In transferring stock, where it is not regulated by the charter or by statute, the delivery of the stock certificate is sufficient without a transfer on the books of the corporation.

If the goods are so bulky or far away as to prevent an immediate transfer, or if they are kept by the seller for repair and alteration, the buyer is protected against a subsequent purchaser or the creditors of the seller, if he is diligent in securing his possession.

Effect of the Statute of Frauds.—By the Statute of Frauds, "No contract for the sale of goods, wares or merchandise for the price of fifty dollars (or thirty in some states) or upwards, shall be allowed to be good, except the buyer shall accept part of the goods so sold and actually receive the same, or give something in part of payment, or that some note or memorandum in writing, of the bargain, be made and signed by the parties to be charged on such contract, or their agents thereunto lawfully authorized."

This or a similar law has been enacted in all the states and in Canada, except in Rhode Island, Delaware, Virginia and Alabama. It applies to executory contracts for sale and also to barter. It does not apply to contracts for manufacture.

"Goods, wares and merchandise" include stocks, promissory notes and bonds (except in New Hampshire, Indiana and Alabama), and annual crops, as well as the articles ordinarily referred to by these words.

If several articles of small value but in all amounting to fifty dollars (or thirty) and over, are bought at the same time and as one transaction, the statute applies.

The memorandum must set forth the terms of the contract sufficiently to identify the thing to be sold, and which party is buyer and which seller; and must be at least signed by the party to be charged thereon.

In general the goods must be accepted and actually received, wholly or in part, by the buyer, to make an oral contract for a sale, amounting to fifty dollars or over, binding.

For example: A agreed orally to buy some hides of B, who set apart the required number at the doorway of his store ready to be called for by A; that night the store was burned; and the court allowed A to refuse to pay for the hides because he had not "accepted or actually received the same."

Acceptance and actual receipt, however, if only for a moment, is sufficient.

Unless the buyer is to have an opportunity to examine the goods, such acts of the seller as will pass the title ordinarily to the buyer will be an acceptance within the meaning of the statute.

It would also be an acceptance, if the buyer neglected for an unreasonable time to reject goods sent to him for inspection, or if he acted towards goods not actually received as though he was their owner (for instance, by selling them to another).

But an acceptance of a sample is not an acceptance within the meaning of the statute, unless it was accepted as a part of the whole bulk.

Where goods are in a warehouse, delivery of the warehouse receipt and a transfer on the books is a sufficient receipt within the statute. So, too, if goods are already in the buyer's hands. But so long as the seller retains his lien (see Lien below), there can be no receipt to satisfy the statute.

Giving any amount of money, however small, in part payment, will take the whole contract out of the operation of the statute.