O'Brien v. Norris, Caldwell & Co.

• Citation: 16 Md. 122
• Parties: MATTHEW O'BRIEN, and others, v. NORRIS, CALDWELL & CO.
• Decision Date: 14 June 1860
• Court: Court of Appeals of Maryland

16 Md. 122

MATTHEW O'BRIEN, and others, v. NORRIS, CALDWELL & CO.

Court of Appeals of Maryland.

June 14, 1860

The right of stoppage in transitu, existing at the time of an attachment laid on the goods, is not defeated or impaired by the attachment, nor altered by the sale of the goods, by an order of court, under the Act of 1839, ch. 39.

Such order of sale is a mere interlocutory proceeding, the effect being simply to convert the goods into money, which remains in the hands of the sheriff, to await the determination of the attachment, subject to any claims that might have been asserted against the goods themselves.

The filing, by the vendors, of a claim in the attachment case, to the fund in court, being the proceeds of the goods sold under the court's order, is a sufficient exercise of the right of stoppage in transitu.

The right of stoppage in transitu is not defeated by showing that the vendee was actually insolvent at the time of the purchase, unless it be shown that such insolvency was known to the vendor, and that he contracted with such knowledge.

The validity of the right of stoppage in transitu depends entirely on the bankruptcy or insolvency of the vendee, but it is not necessary that it should be a technical insolvency--if a stoppage of payment by the vendee be proved it is sufficient.

If the insolvency of the vendee, at the time of the purchase, be known to the vendors, and they contract with that knowledge they cannot assert the right; to entitle the vendors to the right, the insolvency of the vendee must come to their knowledge after the sale.

Where parties sell goods on a credit, the presumption of law, in absence of proof to the contrary, is, that they believed the purchaser to be solvent and able to pay for them.

APPEAL from the Superior Court of Baltimore City.

Attachment on warrant, issued on the 30th of September 1854, by the appellants against Turner and Barker their non-resident debtors, trading under the firm of I. N Turner & Co., returnable on the second Monday of January following, and returned, " Attached as per schedule--goods sold under order of court." On the 15th of January 1855, during the same term, the appellees filed their claim to certain of the goods mentioned in the schedule annexed to the return, and to the proceeds thereof in the hands of the sheriff, and resisted condemnation of the same, by pleas that said goods, at the time the attachment was laid, were not the goods of the defendants in the attachment, but were the goods of the claimants. The case was tried upon issues joined on these pleas.

Exception. The plaintiffs proved the execution of the promissory note of I. N. Turner & Co. in their favor, on which their attachment was issued, dated March 14th, 1854, at six months, for $1140.65, and that Turner was in the habit of buying goods in Baltimore, that he resided in Virginia, where he traded under the name of I. N. Turner & Co., and had a partner there by the name of Barker.

The claimants then proved that, on the 27th of September 1854, Turner bought of them, on six months' credit, certain groceries to the amount of $675.10; that, by Turner's direction, these goods were boxed and addressed to him at Columbiana, Fluvana county, in Virginia, and sent to the steamboat wharf in Baltimore, and put on board the steamer sailing thence to Richmond; that on the 30th of September 1854, the attachment in this case was issued, and also two others, out of the Common Pleas, against I. N. Turner & Co., at the suit of other parties, which attachments were levied on the goods on said boat, sold by the claimants, and other goods sold to Turner on the 27th of September 1854, by other merchants in Baltimore; that about the 1st of December 1854, on the application of the plaintiffs in all these attachments, all said goods were sold, by authority of the Common Pleas and Superior Court, acting under the provisions of the Act of 1839, ch. 39, and that the remaining proceeds, after satisfying the attachments from the Common Pleas, are now in the hands of the sheriff.

The claimants further proved that Turner, as a country merchant, was in Baltimore about the 16th of March 1854, and made various purchases at that time on six months' credit; that he then bought of the plaintiffs to the amount of their note in proof, and of other parties, to the amount of $1145, the obligations for which all fell due about the 16th of September 1854, and were none of them paid, but were, in fact, all lying over when he made his purchases from the claimants, and the other Baltimore merchants, of the goods attached. They further proved, by Joseph C. Whitney, that at the time of the purchase of the goods from the claimants, Turner owed witness $90, which he had promised to pay in September, when he came down for his goods, and having gone to see him, at his hotel, he told witness he would see and pay him before he went, but he left the city without doing so, and witness sent his account to a lawyer for collection, who returned him word that it was worthless, and he has not yet obtained it; that on the 27th of September 1854, Turner owed other debts to a large amount, and all of his creditors were treated in the same way, and witness believed that Turner was notoriously insolvent and unable to meet his liabilities at the time he purchased the goods from the claimants and up to the time of the laying of the attachment, and of the filing of the claim in this cause. The claimants then offered the following prayer:

If the jury shall find from the evidence in this case, that the articles of merchandise mentioned in the claim of the claimants were sold on the 27th of September 1854, by them to Isaac N. Turner, one of the defendants in the suit of the plaintiffs, on a credit of six months, and by the directions of said Turner, said merchandise was, by these claimants, packed and directed to said Turner, by his address being written thereon, and were, in pursuance of the instructions of said Turner, sent to a vessel lying at one of the wharfs of Baltimore city, to be transported and delivered to said Turner, at his place of business in Virginia, and that said merchandise was afterwards, with other property, seized by the sheriff, under the attachment in this case, on board of said vessel at said wharf, and that said property was sold by the sheriff, under the order of this court, and if the jury shall further find that at the time these claimants sold said goods to said Turner, he, the said Turner was insolvent, and that said insolvency continued to the time of the attachment, then these claimants are entitled to a verdict.

The plaintiffs then offered a prayer, that in order to entitle the claimants to recover upon the issues in this cause between them and the plaintiffs, on the ground of their right, as vendors, to stop the goods in controversy, it is necessary that the jury should find that the insolvency of the vendee, Turner, occurred after the sale of said goods to him, and before the interposition of any claim to the same by the claimants.

The court (LEE, J.) granted the claimants' prayer, and rejected that of the plaintiffs, and the latter excepted to the granting of the prayer of the claimants, and the verdict and judgment being in favor of the claimants, the plaintiffs appealed.

The cause was argued before LE GRAND, C. J., ECCLESTON and BARTOL, J.

Wm. F. Frick, for the appellants, argued:

1st. That under the circumstances of the sale, by the appellees to Turner, the title to the goods vested in the latter. They sold to him unconditionally, and on credit, and marked and delivered the goods as directed. This passed the right of property and possession to the vendee, and they became his goods, subject only to the vendor's right (if subsequent events should justify it) to stop them in transitu. This point was not disputed below and cannot be here. There was nothing of fraud or misrepresentation shown in the case, which could render the sale void ab initio, and there is nothing to support the claim of the appellees upon the ground that no title passed, by reason of the fraud, concealment, or misrepresentation of Turner. Chitty on Cont., 406. 1 Greenlf's Rep., 376, Cross vs. Peters. 2 Mason, 236, Conyers vs. Ennis. 9 G. & J., 244, Powell vs. Bradlee. 10 G. & J., 246, Harris vs. Alcock.

2nd. If then the claim can be supported, it must be on the ground of a right to stoppage in transitu. This does not proceed upon a right to rescind the contract and revest the title in the seller. It is only a continuation and enlargement of the seller's ordinary lien, and must be exercised strictly within prescribed limits. And whatever uncertainty and indefiniteness may be found in the early cases in the description of this somewhat anomalous right it is now well settled: 1st. That the insolvency of the vendee, which creates the right of stoppage in transitu, must not be a general inability to pay debts, but either a technical insolvency, or an insolvency evidenced by some overt act, as stoppage of payment, absconding, & c. 1 Parsons on Cont., 476, and notes. 1 Smith's Lead. Cases, 903. 2nd. That the right does not exist by reason of such insolvency before the sale, but that the insolvency, as described, must arise, or occur, after the sale and before the transitus is at an end. In other words, if before the sale there has been some overt act of insolvency by the buyer, the discovery of the fact subsequently by the seller does not give him the right to stop in transitu. He is in such case without remedy, so far as the technical right of stoppage in transitu is concerned, and must take the consequences of his want of prudence in making a sale and inchoate delivery without proper previous inquiries. It is not...