William M. Lacy James Kent.

Commentaries on American law, Volume 2 online

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" The memorandum must be made before action. Gibson v. Holland, L.
R. 1 C. P. 1; Horton v. McCarty, 53 Me. 394. It need not be written at one
time on one piece of paper. Khoades v, Castner, 12 All. 130; but the differ-
ent papers must be consistent. The note or memorandum may lie addressed
to a third party. Gibson v. Holland,' L. B. 1 C. P. 1; 35 L. J. C. P. 5; Clark
V. Tucker, 2 Sandf. 157; Tufts v. Plymouth Gold Mining Co., 14 Allen, 407;
Townsend v Hargraves, 118 Mass. 335; Buck o. Pickwell, 27 Vt. 1G7. As
to pencil writing, see Geary v. Physic, 5 B. & C. 234; Draper v. Pattani, 2
Spears, 292; Clayson t;. Bailey, 14 John. 484.

The .signature need not be placed in any particular part of the instrument.
Davis V. Shields, 24 Wend. 322; Williams v. Wood, 16 Md. 221; Feasenden
V. Massey, 11 Cush. 127; James v. Patten, 8 Barb. 344; Merritt r. Clason, 14
John.son, 484; McConnell v. Brilhart, 17 111. 534. See, however, under New
York Revised Suit., where the word "subscribed** is used. Champlin r.
Parrish, 11 Paige, 410; James v. Patten, 2 Selden, 9; Viclie v. Osgood, 8
Barb. 130.

An auctioneer is the agent at the sale for both buyer and seller, and his
memorandum is sufficient. Doty v. Wilder, 15 HI. 407; The Baptist Church
V. Bigelow, 16 Wend. 28; Sale v. Darrah. 2 Hilton, 184; Wiley r. Robert, 27
Mo. 388; but only at the sale and not afterwards. White t;. Watkins, 23
Mo. 423; Hicks v. Whitmore, 12 Wend. 554.

Tne names or description of both parties mustappear in the memorandum.
Calkins v. Falk, :i8 How. Pr. (N. Y.)62; Harvey v. Stevens, 43 Vt. 653; Os-
borne V. Philps, 19 Conn. 73; Salmon Falls Manf. Co. v. Goddard, 14 How.
(U. S.) 446. The terms and conditions of the sale must be shown. Ridg-
way r. Ingram, 50 Ind. 145. But not all the details of the particulars. Cod-
dington v, Goddard, 16 Gray, 442; Ives ». Izard, 4 R. I. 145; Kay r. Curd, 6
B. Mon. 100; Sanborn t;. Flagler, 9 Allen, 476. As to the price being stated,
see Wain r. Walters. 2 Smith L. C. *280; Salmon Falls, &c., v. Goddard, uhi
supra ; Soles u. Hickman, 20 Pa. St. 180. As to Massachu.setts, see Gen. Sts.
c. 105, J 1, 2; Packard v. Richardson, 17 Mass. If the time of performance
is fixed it must appear. Salmon Falls, &c., v. Guddaixl, uhi supra ; Buck v.
Pickwell, 27 Vt. 167; McFarrow's App., 11 Pa. St. 303; Davis r. Sands, 26
Wend. 341. The consideration should also appear. Kerr r. Shaw, 13 Johns.
236; Elliott v. Giese, 7 Harr. & J. 457; Taylor r. Pratt, 3 Wis. 674; Under-
wood V. Campbell, 14 N. H. 393; Soles r. Hickman, vhi supra. In' some
states this point is now regulated by statute. See New York Rev. Stat, part
2, ch. 7, tit. 2, sec. 2; and the law is the reverse in other stotea. See Massa-
chusetts Gen. Stat. c. 105, ? 2; Indiana Rev. Stat. 1852, ch. 42, sec. 2..

See further hereon I>ord Blackburn on Sales (Text Book Series £d.), Ben-
jamin on Sales, Chitty on Contracts, 11th Am. ed.



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[ * 512 J ♦IX. Of sales of gooda^ as affected by fraud.

Though there be a judgment against the vendor, and
the purchaser has notice of it, that fact will not, of itself, affect

the validity of the sale of personal property. But if
[ ♦ 513 ] the * purchaser, knowing of the judgment, purchases,

with the view and purpose to defeat the creditor's exe-
cution, it is iniquitous and fraudulent, notwithstanding he may
have given a full price, for it is assisting the debtor to injure the
creditor. The question of fraud depends upon the motive. The
purchase must be bona fide, as well as upon a valuable considera-

if the article sold existed at the time in aotido, and was capjible of delivery,
the contract is within the statute of frauds, but if the article is to be after-
wards manufactured, or preimred by work and labour for delivery, the con-
tract is not within the statute. Rondeau r. Wyatt, 2 R. Blrtcks. Rrp. 63.
Cooper r. Elston, 7 Term Rep. 14. Smith r. Surman, 9 B. & Cress, 561. Ben-

* nett V. Hull, 10 Johns, Rep. 364. Crookshank v. Burrell, 18 Ibid. 58. Sewall
V. Fitch, 8 Cowen's Rep. 215. Jackson r. Covert, 5 lVe}i<tell, 139. These
latter cases admit the distinction above state<1 to be well settled, and that
it goes to sustain the correctness of the decisions in Strange, if not in Burrow,
though not entirely, upon the ground assumed in them. And yet. in Gar-
butt I*. Watson, 5 Barnto, & Aid. 613, the decision of Clayton v. Andrews is
strongly and justly shaken, as having pushed the distinction to an exti^me
of refinement; and though, in the last case, the sacks of flour sold were not
then prepared, but were to be got ready for delivery in a few weeks, yet the
sale was held to be within the statute, and that though the flour was not
ground at the time, it was still a contract for the sale of goods, and not for
work and labour and materials found. This seems to be the most reasonable
construction of .such a contract.

The court of appeals, in Maryland, in Eichelberger r, M'Cauley, 5 TTarr. <fi
Johns. 213, followed, with some reluctance, the case of Clayton i». Andrews,
and declared, that it was not to be extended to cases where the 'work and
labour to be done might be, of themselves, considere<l parts of the contract.
The English statute of 9 Geo. IV. ch. 14, entitled, **An act for rendering a
written memorandum necessary to the validity of certain promises and en-
gagements,'' has provided for this case, by declaring that the statute of
frauds of 29 Car. II. ch. 3, shall extend to all contracts for the sale of goods
of the value of ten pounds and upwards, notwithstanding the goods .may be
intended to be delivered at some future time, or may not, at the time of the
contract, be actually made, procured, or provided, or fit, or ready for deliv-
ery, or some act may be requisite for the making or completing therer)f, or
rendering the same fit for delivery. It was said, in the la.st century at West-
minster llall, that the statute of frauds, of 29Car. II,, had not been explained
at a less exi)ense than one hundred thousand pounds sterling. I should sup-
pose, from the numerous questions and decisions which have since arisen
upon it, that we might put down the sum at a million and upwards. How
hazardous it would now seem to be, to attempt to recast the statute in new
language, or to disturb the order and style of its composition, considering
how costly its judicial liquidation has been, and how applicable its provis-
ions are to the daily contracts and practical aflaii's of mankind. It ha.s been
affirmed in England, that every line of it was worth a subsidy; and uniform
experience shows how difficult it is, by new provi.sion.s, to meet every ctiu-
tingency, and silence the tone of sharp, piercing criticism, and the restless
and reckless spirit of litigation.



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tion. The rule has been repeatedly declared and established (a).
Whether it would be an act of fraud sufficient to vacate the con-
tract, if the purchaser, knowing of his own insolvency, and utter
incapacity to make payment, but without using any device or con-
trivance to deceive the vendor, purchases goods of another, who
is ignorant of his insolvency, and sells them under the belief of
the solvency as well as'good faith of the buyer, is a ques-
tion which * was raised, but left undecided, in Conyers [ ♦ 514 ]
V. Ennia (6). It has been since decided in another
case (c), that the mere insolvency of the vendee, and the liability
of the goods to immediate attachment by his creditors, though
well known to himself, and not disclosed to the vendor, would
not, of itself, avoid the sale. In that case there was no false
assertion, or fraudulent misrepresentation or deceit practised, or
concert, or secret agreement, with any other person, and there was
no direct evidence that the vendee knew at the time that he was
insolvent The decision was put upon the ground that the credit
was in fact obtained without any fraudulent intent, and the val-
idity of the sale would depend upon the decision of the question,
whether there was fraud in fact (d).*'

(a) Lord Mansfield, 1 Burr. Rep, 474. Cmop. Rep. 434. Dallas, Ch. J., 8
Taunl. Rep. 678. Beals v. Guernsey, S Johns. Rep. 446. Duncan, J.^7 Serg.
i& Rawfe. 89.

(ft) 2 Masian'H Rep. 236.

(c) Cross V. Peters, 1 GreenJeaf^s Rep. 376.

[d] It was settled in the conrt of errors of New York, in Lupin r. Maire, 6
WendeWs Rep. 77, that where goods are delivered unconditionally to the
vendee, a mistake or error as to his solvency will not invalidate the con-
tract, or entitle the vendor to relief ; for the vendor of personal property has
no lien on the gooclssold and delivered. But it there be fraud in fact on the
part of the buyer in respect to the purchase, the vendor may elect, either to
affirm the sale, and sue for the price, or to treat the sale as void, and follow
the goods or proceeds, even into the hands of a third person, who received
them without paying any new consideration. Lloyd v. Brewster, 4 Paige^s
Ch. Rep. 537. A fraudulent purchase of goods, gives no title as against the
vendor, nor will such a purchaser's transfer of the goods to pay or secure a
bona fide creditor for a pre-existing debt, vest a title in the creditor. . But if
the under or second purchaser obtains the goods bona fide, in the usual course

® A sale is not avoided by the buyer^s mere insolvency, or his knowledge
of insolvency, or inability to pay, provided there is no intention not to pay.
Redington v. Rol)ert8, 25 Vern. Gf^; Bidault v. «Vales, 20 Mis. 546: Smith
V. Smith, 21 Penn,367; Buckley v. Anther, 21 Barb. 585; Michell r. Woi-den,
20 Barb. 253. The fact that the vendee knew him.self to be insolvent, and
had no reasonable expectation of being able to pay, is not enous:h. Biggs v.
Barry, 2 Curt. 259. The fact of the purchaser immediately selling the goods
at gi-eatly reduced pTices4s good evidence of a fraudulent intention. Irving
r. Motly, 7 Bing. 551; Backendoss r. Speicher, 31 Pa. 324; Dow v. Sanborn,
3 Allen, 181; Pottinger v. Kecksher, 2 Grant, 309; Nichols v. Punier, 38 N.
Y. 295.



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If the vendee discovers that he is insolvent, and that it is not
in his power to pay for the goods, the coorts have allowed him
to rescind the contract, and return the goods to the seller, with
his assent, provided he did it before the contract was consum-
mated by an absolute delivery and acceptance, and provided it
was done in good faith, and not with the colourable design of
favoring a particular creditor. He cannot rescind the contract
after the transit has ceased, and the goods have been actually re-
ceived into his possession, and the rights of other creditors have

attached (a)/*
[ * 515 ] *(1*) On the subject of fraudulent sales, another and

and a very vexatious question has arisen, as to the legal
consequence and effect of an agreement between the parties at
the time of the sale, that possession was not to accompany and
follow the bill of sale of the goods. There is no doubt of its be-
ing evidence of fraud; but the great point has been, whether the
fraud which was to be inferred in such a case, was an inference
of law to be drawn by the court; and resulting inevitably from
the fact, or whether the fact was only evidence of fraud- to be

of trade, by giving value, or incurring responsibilities on the strength of a
pledge of the goodie, he may hold the goods ns against the qriginal vendor.
Root V. French, 13 Wendeff, 576. Trott v. Warren, 2 Fairfield, 227. Vide
supra, p. 324, note. In the Jurisprudence of some parts of continental no-
rope, it is admitted that there exists a presumption juris ei dejure of fraud,
if the buyer becomes insolvent within a few days (and which, in some cases,
has been fixed at three) alter receiving the goods. Voei, Cotn. ad Pand. 6, 1,
14, cites several authorities in support of this rule. In 1736 it was attempted
to be introduced into the law of S(X)tlan. d as a rule, that the cessiofori^ within
three days after the purchase, should be received as evidence perse of fraud;
but such a .strict and preci.se test was finally rejected, in 1788, in the case of
Allan <& Stewart v. The Creditors of Stein, 1 BelVs Com. 244—248.

(a) Barnes v. Freeland, 6 Term Rep. 80. Richardson v. Goss, 3 Boss. ^
PhU. 119. Neate v. Ball, 2 East's Rep. 117. Dixon v. Baldwin, h'lbid. 175.
Salter v. Feld, 5 Term Rep. 211. In Neate r. Ball, I^rd Kenyon said, it
was much to be wished, that where goods continued in bulk, and discernible
from the general mass of the trader's property at the time of bankruptcy,
that they could be returned to the original owners who had received no
compensation for them, but that it could not be done without breaking in
upon the whole system of the bankrupt laws.

^° This question always turns upon the point: First, Whether the buyer
has left anything undone for the perfect transfer of the property to himself,
in which case, the sale beiftg incomplete, he may honestly decline to com-
plete it to the prejudice of his vendor, or, second, Whether, although the
transfer of the property be complete, the transit into his possession remains
incomplete, in which event he may honestly refuse the possession, so as to
leave the vendor the right of stoppage in trannitu, which will be equally
available to the latter if he can accomplish it before the assignees get posses-
sion. See Nicholson ». I^wer, E. & E. 172; 28, L. J. Q. B. 97; Whitehead f.
Anderson, 9, M. & W. 529; Bolton r. I^ncashire & Yorkshire Rv. Co., L.
R, IC. P. 431 Dixon v. Baldwin, 5 East, 175; Grout r. Hill, 4 Gray, 361.


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drawn by the jnry, and susceptible of explanation. The history
and diversity of the decisions on this subject form a curious and
instructive portion of our jurisprudence.

By the English statutes of 3 Hen. YIL and 13 Eliz. ch. 5,
which have been re enacted in N'>w York (a), and the essential
provisions of which have been adopted generally throughout the
United States, all conveyances of goods and chattels not made
bona fide and upon good consideration, but in trust for the use
of the person conveying them, or made to delay, hinder, or de-
fraud creditors; are declared to be void; and it is every where
admitted (6), that the statutes of fraud of 13 and 27 Eliz. were
declaratory of the principles of the common law; and the de-
cisions of the English courts are, therefore, applicable to ques-
tions of constructive fraud arising in this country (c).
. Twyne's case (d), whi^h arose in the star chamber in the 44th
Eliz.y is the basis of the decisions on the question of fraud aris-
ing from possession 'being retained by the vendor.

Among other indicia of fraud upon which the court
relied, *and adjudged the deed fraudulent in that case, [ * 516 ]
a prominent one was, that the vendor, after a bill of
sale of chathels for a valuable consideration, to a creditor, con-
tinned in possession, and exercised acts of ownership over the
goods. Afterwards, in Stone v. Qrubham (e), upon a bill of sale of
chattels, being a lease for years, the vendor continued in posses-
sion; but as the conveyance was only conditional upon payment
of money, it was held, that the possession did not avoid the sale,
as by the terms of the deed the vendee was not to have posses-
sion until he had performed «the condition. The rule was ex-
plicitly declared in Sheppard^s Touchstone, in the time of James
/., that if a debtor secretly made a general deed of his goods to
one creditor, and continued the use and occupation of the goods

(<i) Wdetnipra, p. 440,

(6) Lord Mansfield, Cotrp. Bep. 434. Marshall, Ch, J., 1 CrnncVs Rep.
316. Kobertson v. Ewell, 3 Mnnf. Rep. 1. Story, J., 1 Gall. Rep. 423.

(c) By constructive frauds are meant such contracts or acts, ra though not
originating in any actual evil design or contrivance, to perpetrate a positive
fraud or injury upon other persons, are yet, by their tendency, to deceive or
mislead other persons; or to violate public or private confidence; or to im-
pair or injure the public interests, deemed equally reprehensible with posi-
tive fraud; and therefore are prohibited by law, as within the same reason
and mischief as contracts and acts done tnalo animo. Story^a Coinm. on E^
Juriaprudeince^ 261.

(d) 3 Co. 87.

(e) 2 BuM. Rep. 225.



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as his own, the deed was f raudalent, and void against a subsequent
jndgment and execation creditor, notwithstanding the deed was
made upon good consideration (a). Again, in Bucknal v. Boi8'
ton (6), a bill of sale of goods was given hj way of secority or
pledge for money lent, and a trust in the vendor to keep the
goods, and sell them for the benefit of the vendee, appeared on
the face of the deed; and for that reason it was held by the lord
chancellor not to be fraudulent One of the counsel in that case
observed, that it had been ruled forty times in his experience at
Guildhall, that if a man sells goods, and still continues in posses-
sion as visible owner of them, the sale was fraudulent and void
as to creditors. The case of a mortgage of goods was afterwards
held, in Ryall v. Bowles (c), not to form an exception to the
general rule recognized in the former cases. It was declared by
very strong authority in that case, that a mortgagee of goods, per-
mitting the mortgagor to keep possession, had no specific lien
against general assignees under a commission of bankruptcy;
and he was understoo') to confide in the personal credit
[ * 517 ] of the vendor, and not in any security. Though *that
case was decided upon the bankrupt act of 21 James I.,
and not upon the statutes of Elizabeth^ the reasoning of the court
relative to the distinction between absolute and conditional sales
and mortgages, was founded on general principles applicable to
every case. It was the doctrine of the case, that in a mortgage
of goods, the mortgagee takes possession; and that there was no
reason, unless in very special cases, why an absolute or condi-
tional vendee of goods should leave them with the vendor, unless
to procare a collusive credit There was. no distinction, it was
admitted, under the 13 Eltz,^ between conditional and absolute
sales of goods, provided they were fraudulent; and continuance in
possession by the mortgagor was fraudulent at common law, and
void by the statute of Elizabeth.

The doctrine of that case was powerfully sustained by Lord
Mansfield, in Worseley v. Demattos & Slader (d). That case
arose under the bankrupt act of 21 James /., and it was held by
the K B., that a mortgage of .goods, with possession retained by

(a) Shep. TouchHfone, 06.
b) Prec. iu Ck. 285.
» 1 Vesey, 348. 1 Atk, Bep. 166.
(f) 1 Burr. Rtp. 467.



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the mortgagor, was fraudulent ia law, equally as it would be
upon an absolute sale. To giye a creditor priority by such a
mortgage, when the mortgagor is allowed to appear and act as
owner, is enabling him to impose upon mankind by false apppar-
ances; for where possession is not delivered, goods maybe mort-
gaged a hundred times over, and open a plentiful source of de-
ceit But in Cadogan v. Kenviet (a), where household goods
by settlement before marriage, in consideration of the marriage,
and of the wife's marriage portion, were conveyed to trustees in
trust for the settler for life, remainder to his wife for life, and
remainder to the sons of the marriage, it was held, that those
goods were protected from execution in favor of a creditor ex-
isting at the time of the settlement, though the grantor con-
tinued in pDssession of the goods. The transaction was fair and
honest in point of fact, and it was part of the trust that
the goods should continue in the house. * Other sub- [ * 518 J
sequent cases have established the rule, that the wife's
goods may, before marriage, be conveyed to trustees with her
husband's assent, for her use during coverture, and such pro-
perty will not be liable to his debts (6). Again, in Edwards v.
Harben (c), the K B. laid down the principle emphatically, that
if the vendee took an absolute bill of sale, to take efiPect immedi-
ately by the face of it, and agreed to leave the goods in possession
of the vendor for a limited time, such an absolute conveyance,
without iihe possession, was such a circumstance per se as made
the transaction fraudulent in point of law. It was admitted,
however, that if the want of immediate possession be consistent
with the deed, as it was in Bucknal v. Boiston, and Lord Cadogan
Y. Kennety and as it is if the deed be conditional, and the vendee
is not to have possession until he has performed the condition,
the sale was not fraudulent, for there the possession accompanied
and followed the deed within the meaning of the rule.

After the English rule on this subject had been thus discussed,
declared and settled, it was repeatedly held, that an absolute bill
-of sale of chattels, unaccompanied with possession, was fraudu-
lent in law, and void as against creditors (d). The change of

id) Oowp. Rep. 432.

\h) Haselinton v. Gill, 24 Geo. III., 3 Tenn, Rrp. G20. n. Jarman r. WooUo-
ton, 3 Ihid. 618.
(c) 2 7Wrf. 687.
(rf) Paget c. Perchard, 1 Esp. N. P. Rep. 205. Wordell v. Smith, 1 Campb.



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possession was required to be substantial and exclosive. But,
on the other hand, there have been many exceptions taken, and
many qnalifications annexed to the general rule; and it has be-
come difficult to determine when the circumstance of possession
not accompanying and following the deed, be per ae a fraud in the
English law, or only presumptiye evidence of fraud, resting upon
the facts to be disclosed at the trial. It certainly is not any

thing more, if the purchaser was not a creditor at the
[ * 519 ] time, and * the goods were under execution, and the

transaction notorious, and not, in point of fact, either
clandestine or fraudulent

In Kidd v. Bawlingon (a), goods were purchased on execution
by a stranger, and left in possession of the debtor for a tempo-
rary, and honest, and humane purpose; and as the parties did not
stand in the relation of debtor and creditor, Lord Eldon, as Gh.
J. of the C. B., held, that the title was in the vendee. He ad-
mitted, that a bill of sale of goods might be taken as security on
a loan of money, and the goods fairly and safely left with the debtor-
The decision in this case was conformable to one made by Lord
Holt under similar circumstances (6); and Lord Eldon, many
years afterwards, when lord chancellor (c), adhered to the same
doctrine, and declared, that possession of chattels by the vendor
was only prima facie evidence of fraud. If the property cannot
be reached by bankruptcy, and the possession be according to the
deed which crei^tes the title, and the title be publicly created, it
is not fraudulent Other cases have protected the purchaser of
goods seized on execution, (and whether the purchase was from
the sheriff or the defendant seemed to be immaterial,) from sub-
sequent executions, though the goods were suffered to continue
in the possession of the defendant, on the ground that the trans-
action was necessarily notorious to the whole neighborhood, and
the execution notice to the world; and the cases being free from
fraud in fact, were, under those circumstances, free from the infer-
ence of fraud in law (d). The question of fraud in such cases

N. P. Bep- 332. In Eastwood r. Brown. 1 Bjfan <jfr Moody, 312. Lord Ten-
terden dissented from the doctrine in Wordell v. Smith, and he held non-
delivery into possession to be on\j prima facie evidence of fraad.

(a) 2 Bos, <C- Pull, 59.

{h) Cole r. Davies, 1 Lord Baym, 724.

{c) I^dy Arundell v. Phipps, 10 Vetiey, 145.

{d) Watkins r. Birch, 4 Taunt. Bep. 823. Joseph v. Ingraham, 8 Tbid, 338.
Latimer v. Batson, 4 Barnw. dk Creas. 652.



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is declared to be a qaestion of facfc for the jury. The purchaser
of goods sold at auction, by trustees, under an assignment by an
insolvent debtor, is also protected, though he leave the
goods in the possession of *the prior owner, provided it [ * 520 ]
be a matter of fact to be found by a jury, that t^e assign-
ment was not made with a fraudulent intent, and that the sale

Online LibraryWilliam M. Lacy James KentCommentaries on American law, Volume 2 → online text (page 87 of 108)