Parker v. Byrnes
18 F. Cas. 1119
D. Mass.
1871
Check Treatment
LOWELL, District Judge.

The mere fact that goods imported from abroad upon the order of a buyer have come into the hands of the officers of the customs, and have been by them put into a warehouse, the buyer exercising no acts of ownership over them, has been held not to determine the transit Burnham v. Winsor [Case No. 2,180]; Donath v. Broom*1120head, 7 Barr [7 Pa. St.] 301. Nor does the seller’s right depend on the question whether the property has passed. In the ease of Barrett v. Goddard [Id. 1,046], cited at the bar, the lien of the seller was disallowed, although the goods remained in his own warehouse, because the title had fully vested in the purchaser. But I take the modern doctrine to be, that if the buyer stops payment before the seller has actually parted with possession, though after he has parted with the title, if no rights of innocent third persons have intervened, his lien revives, if he is able to give up the note received for the price; and that an assignee in bankruptcy stands in this, as in all other cases not involving fraud, on the'precise footing of the bankrupt himself. Arnold v. Delano, 4 Cush. 33. So that if it were true, as assumed by the defendant in his letter of the ninth of February, that ■the possession was still in him, he had a lien somewhat analogous to the right of stoppage in transitu, which he might enforce against the bankrupt, and against the present plaintiff. In the case of the two lots entered, and warehoused by Oakes, it is now admitted that there was no scintilla of possession left in Byrnes. And it seems to me equally clear that Oakes was in possession of the Ashton salt. The defendant had made over all the papers necessary for the withdrawal of this salt from the warehouse; the warehouseman had agreed to look to Oakes as his principal, and the order itself shows that the salt was all that remained of a certain cargo, and so must have been separate and distinct, from all other goods. This was all the delivery that the nature of the case required, and Nay-lor & Company thereby became the agent of Oakes, and ceased to be the agent of Byrnes, which is the usual test. Hollingsworth v. Napier, 3 Caines, 182; Carter v. Willard, 19 Pick. 1; Foster v. Frampton, 6 Barn. & C. 107. In the case of Mottram v. Heyer, 5 Denio, 629, it is said by the chancellor that the mere entry of the goods by the consignee will not put an end to the light of stoppage, nor will the storing them by the revenue officers for safe-keeping; but he adds that if they were warehoused under the direction of the consignee in accordance with the acts of congress, the deliveiy would be complete. It is argued that the order on Naylor & Co. contained the implied condition that the duties should be paid before deliveiy, and this is true. But it was not a condition imposed by the seller, and had no relation to the contract between these parties. The order was, in effect, to hold for Oakes as the warehouseman had before held for Byrnes, subject to the act of congress which requires payment of duties before the removal of the goods out of custody. The word delivery, therefore, as thus used in argument introduces a fallacy. The seller parted with all the possession which he had, unconditionally; and the constructive delivery by order and acceptance, was a legal equivalent for actual delivery, and put an end to all transit, and all lien on his part.

The evidence does not satisfy me that there-was fraud in the purchase. Byrnes says that Oakes told him that his note was good and would be paid, and it seems that Oakes must at that time have been insolvent. No questions were asked of Oakes by either side concerning this representation, an oversight which may have arisen form the irregular mode in which the case was prepared, the answer buying been filed after his deposition was taken.' But he undertakes to tell all that passed between the parties, and his silence on this point is to some extent contradictory of the statement of the seller. I take it to be the law of Massachusetts, which governs this contract, that a fraudulent misrepresentation by the buyer, relied on by the seller, will avoid the sale. And a purchase of goods with a distinct intention not to pay for them will have a like effect This doctrine has been denied in some other states, but is adhered to in this commonwealth. Dow v. Sanborn, 3 Allen, 181; Kline v. Baker, 99 Mass. 253; Biggs v. Barry [Case No. 1,402]. It may be difficult of application, but there are cases in which it would apply. If it were proved that a merchant, knowing himself to be insolvent, bought goods for the express purpose of putting them or their proceeds into the hands of a favored creditor, and expected then to stop payment, the sale could be avoided within the meaning of the Massachusetts authorities as I understand them. This is, in substance, the ground taken by the defendant; but I am not satisfied that it is made out in evidence. All the circumstances of the sale tend to prove that Oakes was acting as a buyer usually acts, that he made a good bargain, and was tempted by the low price; and there is nothing but the actual state of his affairs and of his dealings about this time in the way of paying off his friends that has any tendency to establish fraud. He swears that he did not know of his insolvency, and did not expect to stop payment, and that he was forced into failure by the conduct of his brother in holding money, put in his hands for another purpose, as a set-off for a large debt due him. Undoubtedly there are circumstances which tend to throw suspicion on this transaction with the brother; but they are not sufficient to enable me to say that the bankrupt’s whole conduct for two months was fraudulent, and that his business was kept alive merely to enable him to prefer his friends; and to this extent must the evidence go before this, particular contract can be set aside on the ground of an intent not to pay, because as to these particular goods there is no evidence whatever that he intended to use them as a means of fraud; so that this sale can be avoided on that ground only if all sales made to the bankrupt at or after that time can be avoided.

As to the misrepresentation, it appears that the defendant had dealt with Oakes for *1121years, and had no reason to make any particular inquiries, and made none excepting casually and in very general terms; anfl when Oakes stopped payment, the rescission was demanded on totally different grounds without any allusion to a misstatement. The bankrupt is not asked about it, and mentions no inquiries or representations; but does say that he had no knowledge of insolvency or intention or expectation of failure. Upon the whole, I do not find that there was a fraudulent misrepresentation made by the buyer and relied on by the seller. If any thing was said it was scarcely more than is implied in the giving a note on four months, and I am not satisfied it was fraudulently said, and it seems to have made but little impression on the mind of the seller, and not to have been recalled even when the failure was made known to him. Decree for the plaintiff.