In re Galt
120 F. 64
7th Cir.
1903
Check Treatment
JENKINS, Circuit Judge

(after stating the facts). The questions., suggested by the record are (i) whether the contract is one of bailment or of conditional sale; (2) whether, if the latter, a trustee in. bankruptcy of the vendee in such sale may retain the property, as. against the vendor, and in right of general creditors; the law of the.state holding conditional sales void as to bona fide purchasers and; аttaching or execution creditors.

The law of the state of Illinois with respect to conditional sales;, as expoundеd by its supreme court, runs counter to the great ‍​​​‌‌‌‌‌‌​‌‌‌‌‌​​‌‌‌‌‌‌​​‌​​‌​‌‌‌‌‌​​‌​​​​​‌‌‌‌​‍weight of authority, but has become a rule of property in that state, and we аre bound to observe it. Harkness v. Russell, 118 U. S. 663, 678, 7 Sup. Ct. 51, 30 L. Ed. 285. It is to the effect that a bona fide purchaser or an execution creditor of thе vendee is protected against the claim of the vendor. Western Union Cold Storage Co. v. Bankers’ Nat. Bank, 176 Ill. 260, 266, 52 N. E. 30.

The distinction betwеen bailment and sale is not difficult of ascertainment, if due regard be had to the elements peculiar to each. In bailmеnt the identical thing delivered is to ‍​​​‌‌‌‌‌‌​‌‌‌‌‌​​‌‌‌‌‌‌​​‌​​‌​‌‌‌‌‌​​‌​​​​​‌‌‌‌​‍be restored. In a sale there is an agreement, express or implied, to pay money or its equivalent for the thing delivered, and there is no obligation to return. Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99, 37 L. Ed. 1093; Union *68Stock Yards & Transit Co. v. Western Land & Cattle Co., 7 C. C. A. 660, 59 Fed. 49. The bailee may, however, by contract, enlargе his common-law liability without converting the bailment into a sale. The real intent of the contracting parties must be ascertаined from all the provisions in the agreement which express the contract, bearing in mind always that in a bailment the bailor may rеquire the restoration of the thing bailed, and in a sale, whether absolute or conditional, there must be an agreement, exрress or implied, to pay the purchase price of the thing sold. The test would seem to be— Has the sender the right to comрel a return of the thing sent, or has the receiver the option to pay for the thing in money?

Carefully analyzing the agreement in hand, we think it must be held that the contract ‍​​​‌‌‌‌‌‌​‌‌‌‌‌​​‌‌‌‌‌‌​​‌​​‌​‌‌‌‌‌​​‌​​​​​‌‌‌‌​‍of the parties was one of bailment, and not of conditional salé. The Mitchell & Lewis Company thereby appoints Galt its agent for the sale of its manufacture in the limited territory stated, and in no other place оr places; agrees to furnish the goods to the agent, at 40 per cent, discount from list prices; they to be sold by him, and acсounted for to the company in cash or notes of the purchaser drawn upon blanks furnished by the company, running not more thаn six months, with interest, and 'made payable to the company; their payment being guarantied by Galt. As an inducement to making sales fоr cash only, an allowance of 5 per cent, on such sales is allowed by the company. All cash is to be remitted not lаter than the day following the sale; notes to be transmitted every 30 days. If all sales should be upon time, and the notes returned to thе company should aggregate more than the prices of the wagons to be accounted for, the surplus is to be returned to Galt when and in proportion to the amount collected. , He agrees to sell all wagons within twelve months from date of shipment, and upon failure so to do, at the option of the company, to (1) pay cash for wagons on hand, at the рrices stated; or (2) give his note therefor; or (3) store the wagons subject to the order of the company; the ownership of all wagons furnished to remain in the company until settlement as provided; the money and effects received by Galt in the business of the agency in no case to be appropriated to his private use. Galt agrees to store and keep undеr cover and in good condition all wagons received; to keep them fully insured at his own expense until sold or ordered away by the company; to pay taxes upon them, if any should be assessed; and he is not to sell or assist in the sale of any othеr wagons than those manufactured by the company.

' Applying to this contract the test stated, it is clear that here was a bаilment, and not a conditional sale. It was not contemplated that Galt should ever own these wagons. He was to sell them tо others for the company; his commissions to be the amount which he might receive over the prices stated in the contrаct. The proceeds, whether in cash or in notes ‍​​​‌‌‌‌‌‌​‌‌‌‌‌​​‌‌‌‌‌‌​​‌​​‌​‌‌‌‌‌​​‌​​​​​‌‌‌‌​‍of the purchaser, were to be immediately returned to the comрany; the notes being guarantied by Galt. This was a del credere commission, and not a sale. The company could compel a return of the goods not sold. Galt had not the option to pay for them in money. Even with respect to the goods unsold within the 12 months, the option for their return or payment *69was with the company, and not with Galt; and nowhere in the agreement does the lаtter covenant to pay for these goods as in the case of a sale.

It is claimed that the agreement is a conditional sale, ‍​​​‌‌‌‌‌‌​‌‌‌‌‌​​‌‌‌‌‌‌​​‌​​‌​‌‌‌‌‌​​‌​​​​​‌‌‌‌​‍within the doctrine of Chickering v. Bastress, 130 Ill. 207, 22 N. E. 542, 17 Am. St. Rep. 309, and Manufacturing Co. v. Lyons, 153 Ill. 427, 38 N. E. 661. But in each of those cases the party receiving the goods gave to the other his notes, evidencing a contract to pay absolutely; the proceeds of the sales to be applied upon the notes. The case is like to that of Lenz v. Harrison, 148 Ill. 598, 36 N. E. 567, where an agreement similar to the one in hand was held to be a bailment, and not a sale. The clause in the contract giving an option to the company to require Galt to- give his note, or to pay in cash, or to store, subject to the order of the company, the goods not sold within 12 months, is probably the strоngest clause in the contract to indicate a- sale; but, as suggested by the supreme court of Illinois in Lenz v. Harrison, supra, while it might hаve such force considered alone, taking it with the whole contract, it was seemingly incorporated to compеl the agent promptly to sell, and report sales within the time stated. The cases in Illinois are carefully distinguished in Manufacturing Co. v. Lyоns, supra, and fully sustain our holding that the contract in question constitutes a bailment, and not a sale. Such construction accords with the decisions elsewhere upon like contracts. Williams Mower & Reaper Co. v. Raynor, 38 Wis. 119; State v. Leicham, 41 Wis. 565, 578; Manufacturing Co. v. Jones, 96 Wis. 619, 624, 72 N. W. 44; Walker v. Butterick, 105 Mass. 237.

This conclusion renders unnecessary the consideration of the second question suggested by the record.

The decree is affirmed.