The People's State Bank of Michigano Valley v. Brown

• Decision Date: 03 July 1909
• Docket Number: 16,083
• Citation: 103 P. 102,80 Kan. 520
• Parties: THE PEOPLE'S STATE BANK OF MICHIGAN0 VALLEY v. G. W. BROWN
• Court: Kansas Supreme Court

103 P. 102

80 Kan. 520

THE PEOPLE'S STATE BANK OF MICHIGAN0 VALLEY v. G. W. BROWN

No. 16,083

Supreme Court of Kansas

July 3, 1909

Decided July, 1909.

Error from Osage district court; ROBERT C. HEIZER, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. SALES--Right of Seller to Reclaim for Non-payment. When a bargain is completed for the sale of specific personal property for cash, and delivery is made, if the buyer fails to pay the price promptly the seller has a right as between the parties or against an attaching creditor to reclaim the property, which is not lost by delay to assert it, unless an intention on his part is shown that the title should pass absolutely; and whether that is the case is ordinarily a question of fact to be determined in view of all the circumstances.

2. SALES--Payment by Check--Delay in Presentation--Waiver of Right to Reclaim. In an action for conversion the evidence tended to show these facts: A farmer residing some miles from a town delivered wheat to a buyer there with the understanding that it was to be paid for at once; he received therefor a check on a local bank, which he took home with him, it being after banking hours; he did not present the check until his next trip to town, between two and three weeks later, when payment was refused; the buyer had no funds on deposit when the check was drawn, but had an arrangement with the bank under which it paid his checks and took bills of lading on the shipment of grain as security; a week after the issuance of the check the buyer became insolvent and the bank attached the wheat; after the dishonor of the check the seller sued the bank for the value of the wheat. Held, that his failure to make an earlier presentment of the check did not conclusively show a waiver of his right to reclaim the wheat.

A. B Crum, and O. B. Hartley, for the plaintiff in error.

J. H. Stavely, and F. A. Waddle, for the defendant in error.

OPINION

MASON, J.:

G. W. Brown sold and delivered some wheat to the Quenemo Mill and Elevator Company, and received therefor the company's check on the People's State Bank of Michigan Valley, situated in the same town. He carried the check home with him, a distance of some eight miles, having received it after banking hours. Between two and three weeks later he took the check to Ottawa, where he did his banking, this being the first time since receiving it that he had been to either town. The check was then in due course of business presented to the drawee for payment, which was refused. When it was drawn the elevator company had no funds on deposit, but had an arrangement with the bank by which its checks given for wheat were to be paid, the grain to be shipped and the bill of lading turned over to the bank. The bank paid checks under this arrangement as they were presented, until about August 28, when the company became insolvent and the practice was discontinued. The bank then sued the company and attached the wheat referred to, with other property. About September 19 Brown demanded of the bank either the payment of the check or the return of the wheat, and, receiving neither, on October 17 brought action against it for conversion. The plaintiff recovered judgment, and the defendant prosecutes error upon the sole ground that the evidence, the substance of which has been stated, showed conclusively that the title to the wheat had passed to the elevator company.

It was of course competent for Brown and the elevator company to make any agreement they saw fit as to when the absolute title to the wheat should pass, but in the absence of anything to indicate the contrary the transaction between them must be taken to have been the ordinary one of the sale of specific personal property for cash, delivery being made in the expectation of immediate payment. (24 A. & E. Encycl. of L. 1095, note 10.) In such a case the failure of the buyer to pay the purchase-price authorizes the seller to reclaim the property. "Where the sale is for cash, payment, it is said, must precede the transfer of title." (24 A. & E. Encycl. of L. 1052. See notes to the paragraph from which the sentence quoted is taken, including those found in the supplements.) In these notes cases are cited having a contrary tendency, but so far as they are irreconcilable with the proposition stated they are out of harmony with what is now the established doctrine on the subject. It is true that as a matter of theory a consistent and logical argument can be made to support the view which is thus expressed in a recent text-book:

"If after bargaining for a cash sale the seller subsequently, voluntarily, delivers to the buyer the goods with the intent that the buyer may immediately use them as his own [i. e., not for inspection or a similar purpose], and without insisting upon contemporaneous payment, this action is absolutely inconsistent with the original bargain. Such a delivery is not only evidence of the waiver of the condition of cash payment, it should be conclusive evidence." (Williston, Sales, § 346.)

But as a practical necessity, to avoid the inconvenience of requiring the seller of an article to keep one hand upon it until with the other he grasps the currency tendered in payment, there must be some relaxation of this rule. Delivery and payment as a practical matter can not be absolutely simultaneous. Some slight interval between the two acts is inevitable, and the criterion upon which the courts have agreed with substantial unanimity is that such interval does not conclusively prove a total abandonment of title and the right of possession by the seller unless under all the circumstances of the case it in fact shows that result to have been intended. Some ingenuity has been exercised, with doubtful profit, in defining the character of the right remaining in the seller after a delivery and before payment, where there is no purpose to give credit. Whether it is more properly described as a lien, a retention of title, or an option to rescind the contract, is not very important so far as affects the solution of the problem presented here. It is a right of the seller to repossess himself of the goods if the buyer fails in the performance of the agreement on his part which was intended to be contemporaneous with the delivery. It is a peculiar right growing out of a peculiar situation, and it is not necessary to give it a name the use of which might seem to decide controversies growing out of other relations. This right has long been recognized in Kansas (Daugherty v. Fowler, 44 Kan. 628, 25 P. 40) and is now generally acknowledged elsewhere.

"It may be stated as a general rule, fully established by the cases, that, if goods are sold on condition to be performed immediately, and the vendor makes an actual delivery upon the faith that the condition will be immediately performed, and demands such performance with reasonable speed, and it is refused, no property in the goods passes to the purchaser, but that he simply holds them in trust for the vendor until such payment is made or waived." (120 Am. St. Rep. 869, note.)

The fact that Brown accepted a check did not imply an extension of credit or preclude the exercise of the right of reclamation in the case of its non-payment upon timely presentation. (Hodgson v. Barrett, 33 Ohio St. 63; National Bank of Commerce v. Chicago, Burlington & N. R. Co., 44 Minn. 224, 46 N.W. 342; Johnson-Brinkman Co. v. Central Bank, 116 Mo. 558, 22 S.W. 813; Hall & Robinson v. The Mo. Pac. Ry. Co., 50 Mo.App. 179; Mathews et al. v. Cowan et al., 59 Ill. 341; Canadian Bank v. McCrea et al., 106 Ill. 281; P. & P. U. Ry. Co. v. Buckley et al., 114 Ill. 337; Charleston Railway Co. v. Pope, 122 Ga. 577, 50 S.E. 374.) The fact that the check might have been paid if it had reached the bank within a week from its date did not convert its acceptance by Brown into a payment. That would have been the result if payment had been prevented by the failure of the bank in the meantime, but such effect follows only where loss is occasioned to the drawer. (22 A. & E. Encycl. of L. 572; Mordis v. Kennedy, 23 Kan. 408; Brown v. Schintz, 202 Ill. 509, 67 N.E. 172; Manitoba Mortg. & Inv. Co. v. Weiss et al., 18 S.D. 459, 101 N.W. 37.) The elevator company had no funds in the bank, and therefore was not injured by the delay in the presentation of the check. The bank as an attaching creditor was not a purchaser in good faith and was entitled to none of the peculiar rights growing out of that relation. (13 L.R.A. N.S. 705, note.) On the other hand, it had the same standing as any other creditor: it had committed no wrong, and if the title to the wheat had actually passed absolutely to the elevator company there was no reason why it might not seize it to satisfy its claim against that company.

So far there is no room for a substantial difference of opinion. But the real question upon which the affirmance or reversal of the case must turn is this: Did the delay of Brown to present the check for between two and three weeks, as a matter of law, amount to a waiver--or afford conclusive proof of a waiver--of his right to reclaim the wheat, thereby causing the elevator company's title to become absolute? This question must be determined upon principles entirely different from those involved under similar circumstances where the rights of innocent purchasers have intervened. There the question presented is one of equitable estoppel and delay is important as tending to mislead others to their prejudice. Here the question is one of evidence, and delay is important as tending to show an. intention that title should pass. Equitable considerations are not involved. True, it seems but fair and just that the plaintiff should have either his wheat or his money, but the...