William M. Lacy James Kent.

Commentaries on American law, Volume 2 online

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was notorious (a).

So, a person may lend his goods for another's use, and, except
in cases of bankruptcy under the statute of 21 James I., they will
be protected from the creditors of the person for whose use they
were supplied (6). In Steward v. Lombe (c), so late as 1820, the
court of C. B. even questioned very strongly the general doctrine in
Edwards v. Harben that actual possession was necessary to trans-
fer the property in a chattel, and the authority of the case itself
was shaken (d). The conclusion from the more recent English
cases would seem to be, that though a continuance in possession
by the vendor or mortgagor be prima facie a badge of fraud, if •
the chattels sold or mortgaged be transferable from hand to hand,
yet the presumption of fraud arising from that circumstance may
be rebutted by explanations showing the transaction to be fair
and honest, and giving a reasonable account of the retention of
the possession. The question of fraud arising in such cases, is
not an absolute inference of law, but one of fact for a jury; and
if the personal chattels savour of the realty, as, for instance,
the engines, utensils and machinery belonging to a manufac-
turing establishment, no presumption of fraud will arise from
the want of delivery (e). So a bill of sale of goods is good as
between the parties, though no possession be given at the time,
when the interests of third persons are not concerned (gf).

(a) Leonard v. Baker, 1 Maule & Selw. 251.
lb) Dawson v. Wood, 3 Taunt Rep. 256.

(c) 1 Brod, <fe Bing. 506.

[d) The case was, however, corroborated in Reed v. Wilmot, 7 Bingham, 583,
and by Mr. Jastice Lawrence, in 1 lyiunton, 382.

(c) Eastwood v. Brown, 1 Ryan <fe Moody, 312. Wooderman v. Baldock, 8
Tauni, Rep. 676. Joseph v. Ingraham, Ibid. 838. Reed v. Blades, 5 Ibid,
312. Hoffman v. Pitt, 5 E>p. N. P. Rep. 22. Armstrong r. Baldock, 1 Oow's
N. P. Rep. 33. Storer v. Hunter, 3 Bamw. & Cress. 368. Martindale v. Booth,
3 Bamw. & Adofph. 498. On the other hand, where goods were seized on fi.
fa., and not sold by direction of the plaintiff, but left under the control of
the defendant from March to November, the execution and levy were deemed
fraudulent, and the goods were held to be liable to a subsequent fl. fa. Lovick
V. Oowder, 8 Bamw. <&. Cress. 132.

(g) Warren v. Magdalen College, 1 Ro. 169. Martindale v. Booth, 3 B. <&
Aid, 505. Jones v, Yates, 9 B. <& Cress, 512. Doe ex Roberts i?. Roberts, 2
43 VOL. II. KENT. 673



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♦ 521 OP PERSONAL PROPERTY. [Part V.

The law on this sabject is still more unsettled in this ooontry
than it is in England,
i * 521 ] *In the Supreme Court of the United States, the doc-
trine in EdwardsY, Harden has been explicitly and fully
adopted; and it is declared, that an absolute bill of sale is of itself
a fraud in law, unless possession accompanies and follows the
deed (a).'* This decision, of course, leaves open for discussion the
distinction taken in that case between a bill of sale absolute, and
one conditional upon its face, and also the conclusions in the other
cases where the continuance of possession in the vendor is con-
sistent with the deed. The principle of the decision at Washing-
ton has been adopted in the circuit courts of the XJuited States,
and we may consider it to be a settled principle in federal juris-
prudence. In pursuance of the rule, if property be abroad, and
incapable of actual delivery at the time, as in the case of a ship
at sea, cthe possession must be assumed as soon as possible on the
arrival of the vessel in port (6)."

In Virginia, the same principle has been directly and repeatedly
adjudged to be well settled ;^ and it is declared, that an absolute
bill of sale of personal property, with possession continuing in
the vendor, is fraudulent per se as to creditors, without other evi-

B. iit A. 369. A deed constructively fraadulent as to creditors, raay be good
to every other intent and purpose, and stand both in law and equity. 1 Siory^a
Eq. 364, 3&5, :?71.

(a) Hamilton v. Russell. 1 Craneh'a Rep. 309.

{b) United States v. Conyngham, 4 Dall. Rep. a'>8. Meeker v. Wilson, 1
Gall Rep. 419. Mair v. Glennie, 4 Maule d- Selw. 240.

'* Such a conveyance is good, however, as between the parties Ihemselves.
Sherk v. Endi-es, :i Watts «& S. 255; Hall v. Gaylor, 37 Conn. 5o0; Thompsjn
f». Moore, 36 Me. 47; Horner v. Zimmerman, 45111. 14; Keichart v. Castator,
6 Minn. 109; Harvey r. Vamey, 9S Mass. 118; Stevens v. Harrow, 2ti Iowa,
458.

^' At common law an absolute bill of sale, unless accompanied by posses-
sion, is void as to creditors. The bona Jides of the transaction as between
the parties, and the fact that the possession remained with the seller for
justifiable purposes, would not vary the rule. S. Dtst. of N. Y. 1845. The
Komp. OU:. 196. Such want of possession is not merely evidence of fraud to
be submitted to the jury under the direction of the court, but is such a cir-
cumstance of itself, under the statutes of Elizabeth, as makes the transaction
fraudulent in point of law. Meeker v. Wilson, 1 Gall. 419. But the ten-
dency of the modem decisions is to hold such want of possession in the
grantee, only evidence of fraud for a jury; and not ground for holding it void
and fraudulent in law. Warner p. Norton, 20 How. 448.

In Maine, it has been held that it is competent for the parties (independ-
ent of statute. ) to stipulate that the pofscssion shall remain with the mort-
gagor until breach. Mitchell v. Winalow, 2 Story, 6.W. In Cessna r. Nimick,
113 Pa. St. 70, where the mortgagees were marking the goods and carrying
them away as fast as possible: when they w^erc taken under an execation,
it was held there had been a sufficient delivexy.
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Lee. XXXIZ ] OF PERSONAL PROPERTY. ♦ 523

dence of fraud, or being connected with other circum-
stances (a)." In South Carolina, the *8ame doctrine was [ * 522 ]
alluded to, as being founded on the better authority (6);
and in one case in equity (c) it was decided, that if possession
did not accompany a bill of sale of chattels which was not re-
!corded, it was void as to creditors, though there was no doubt of
(the fairness of the transaction* Afterwards, in the constitutional
!conrt, the doctrine of the English law in Edwards v. Harben was
declared by all the judges to be a settled rule (d). In Tennesee,
also, the doctrine of the English law, as stated in Edwards v.
Harben^ is clearly asserted (e).'* In Kentucky, the same prin-

(a) Alexander v. Deneale, 2 Munf, Rep, 341. Robertson o. Ewell, 3 Ibid. 1.
In Loud r. Jeffries, 5 Randolph's Rep. 211, the rule was somewhat qualified;
and it was held, that when the grantor of personal property remains in pos-
session after an absolute conveyance, the conveyance is prima facie fraudulent;
but such possession is not conclusive evidence of fraud barring every expla-
natidu. It will lay with the purchaser to explain and rebut the presumption
of fraud; as if a slave be purchased, and not taken away in several months,
it may be shown that he was too sick to be removed; or if a horse be pur-
chased, and to be sent for the next day, a levy upon him in the intermediate
time upon execution against the seller, it was supposed, would hardly be
sustained. In Clayton v. Anthony, 6 Randofph's Rep. 285, Judge Green
elaborately investigates the doctrine, and ably sustains the rule established
by the previous authorities. Again, in Sydnor r. Gee, 4 Leigh's Rep. 535,
the court of appeals held, that in case of an absolute sale and delivery of
chattels, and an immediate re-delivery to the vendor, upon bailment, for a
limited time, on valuable consideration, and whtn thesaleand re-delivery were
fair transactions, the bailment was not inconsistent with the sale, and good
within the rule of Edwards v. Harben. It was also deemed within the rule,
and good, if on an absolute and fair sale of chattels, possession be not im-
mediately passe<l to the vendee, but is taken before the rights of any cred-
itor or vendor attaches. This is the Massachussets doctrine in Bartlett v,
Williams, 1 Pick. Rep. 288. So. the statute of executions in Virginia, au-
thorizes the sheriff to take forthcoming bonds for delivery, at the day and
place of sale, of property taken in execution.

(6) Croft V. Arthur, 3 Eq. Rep. S. C. 229.

(c) De Bardeleben v. Beekman, 1 J hid. 346.

(rf) Kennedy v. Ross, 2 Const. Rep. S. C. 125. Hudnal v. Wilder, 4 3rCord*a
Rep. 294, S. P. But in Terry v. Belcher, and Howard ». Williams, 1 Bailey's
8. C. Rep. 568, 575, and Smith v. Henry, 2 Ihid. 118, the court of appeals in
South Carolina recurred to and adopted the more modem and prevalent, and
less stem doctrine of the cases, that a vendor or donor retaining possession
after an absolute and unconditional sale or gift of chattels, was not conclu-
sive, but only prima facie evidence of fraud, for it was susceptible of expla-
nation. See infra, p. 529, note a, to the S. P.

(e) Ragan v. Kennedy, 1 Tenn. Rep. 91. Since that decision, it has been
declared, in Callen v. Thompson, 3 Ycrger, 475, and in Maney r. Killough, 7

" It would seem, however, now to be well settled that the English doc-
trine prevails in Virginia. Wray v. Davenport., 78 Va. 19; Davis v.. Turner.
4 Grattan, 422; Curd r. Miller, 7 Grattan, 185. The inconsistency of the
debtor's possession with t^e deed is the matter which constitutes the fraud.
Landr. Jeffries, 5 Rand. 211.

^* In Tennessee, all chattel mortgages must b^ registered. They may be
made of goods not consumable in the use, but those upon stock from which

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* 522 OP PERSONAL PROPERTY. [Part V.

ciple, under the modifications it has snbseqnentlj undergone in
England, seems to have been adopted; for after an absolute bill
of sale, if the property remains in the possession of the yendor,
it is held to be fraudulent; and yet, when such possession is not
inconsistent with the sale, the fraud becomes a matter of fact for
a jury (a). Afterwards in Wash v. Medley (6), the milder doc-
trine was declared, that a transfer of chattels by deed, without
any change of possession, was not per ae fraud, but only a matter
of inference for a jury (c)/*

In Pennsylvania, the English doctrine is adopted and followed
in its fullest extent. The general principle is explicitly and em-
pathically recognized, that on an absolute sale or assignment of
chattels, possession must accompany and follow the deed, and
vest exclusively in the vendee, or it is fraudulent in law, though

Terger, 440, and again in Mitchell i\ Beal, Ih. 142, that possession remain-
ing with the vendor after an absolute sale, or with the grantor or mortgagor
in deeds of trust and mortgages, after the time of payment, is prima facie evi-
dence of fraud, but the presumption may be repelled by proof. It was far-
ther held that the retaining of possession by mortgagor of personal property
before the day of payment, is not prima facie evidence of fraud, because it is
understood to be a tacit or presumed agreement, that the mortgagor should
retain possession. See. also, m/m, p. 526, note c.

(a) Baylor v. Smithers, I LiUelVs Eep, 112. Goldsbury v. May, 1 Litt. R,
256. Hundley v. Webb, 3 J. J. Marshall, 643.

(&) 1 Dana'9 Ken. Rep. 269.

(c) Again in Brummel v. Stockton, 3 DaruCn Ken. R. 134, and Langhlin
V. Ferguson, 6 Ibid. 117, the rule is laid down strictly, that on an absolute
sale of moveable property, possession must go vnth the title, or the sale will
be per se void as to creditors and subsequent purchasers, notwithstanding any
agreement, however fair, that the seller may retain possession. And such
seems to be the law in Missouri, Sibly v. Hood, 3 Missouri Rep. 290. Foster
V. Wallace, 2 lb. 231, and as laid down in Georgia, in Howland v. Dews, R.
M. Charllon'8 Rep. 386. The rule in Kentucky, applies only to sales by
private voluntary contract, and not to^sales on execution, where the simple
retention of possession by the debtor is not necessarily fraudulent; nor to
sales upon a mortgage condition, provided the condition be inserted and the
deed recorded. 6 I)ana, 120. Vernon v. Morton, d lb. 253. Sweigert v.
Thomas, 7 lb. 222.



sales are being made are void. It would seem to be the doctrine now, how-
ever, in this state, that the continuance of the debtor in possession is only
evidence of, and not fraud per «<», and may be explained away, in order to
show the bona fides of the transaction. Callen r. Thompson, 3 Yerg. 475;
Darwin v. Handley, Id. 502; Mitchell v. Beal, 8 Id. 142; Ragan r. Kennedy,
1 Tenn. 91; Carney v. Carney, 7 Baxter, 284; Neuffer i». Pardue, 3 Sneed.
191; Maney v. Killough, 7 Yerg. 440.

'* From the cases of Jarvis v. Davis, 14 B. Mon. 529; Hildebum v. Brown,
17 Id. 779, it would seem to be fraudulent per se and void as against cred-
itors; but see Daniel v. Morrison, 6 Dana, 182; Cnmfiiiugs v. Grigg, 2 Duv. 78;
Short V. Tinsley, 1 Met, 397.

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Lee. XXXIX.] OF PERSONAL PROPERTY. ♦ 623

there be no fraad ia fac't.^ As between the vendor and vendee,
the property will belong to the vendee; but if the vendor sells
and delivers it to a bona fide purchaser, without notice, the pur-
chaser will hold against the original vendee (a). As an exception
to the general rule, it is admitted, that goods may, after they have
been levied upon, or after a fair purchase of them at a
sale * on execution, be safely left in the possession of [ ''^ 523 ]
the defendant, without a necessary inference of fraud;
though the exception in the case of a levy merely, was afterwards
restricted to household furniture (&). Delivery of the goods is held
to be as requisite in the case of a mortgage of goods, as of an abso-
lute sale of goods under the statutes of 13 and 27 Eliz. ; and merely
stating on the face of the deed, that possession was to be retained,
is not sufficient to take the case out of the statute, even in the case
of a mortgage of goods; and the transaction has been adjudged
to be fraudulent per se, and void against a subsequent bona fide
purchaser without notice (c). The just policy and legal solidity
of the rule that holds all such deeds of chattels fraudulent in
law, were asserted in the case to which I have last alluded,
with distinguished ability and effect The retention of possession
must not only be part of the contract, but it must appear to be
for a purpose, fair, honest and necessary, or conducive to some
fair object in view. Appearances must not only agree with the
real state of things, but the real state of things must be honest
and consistent with public policy. Such were the cases of Buck-
nel V. Royston, and Cadogan v. Kennet Where the motive of
the sale is the security of the vendee, and the vendor is permitted
to retain the visible ownership for the convenience of the parties,
it is a fraud, though the arrangement be inserted in the deed or
mortgage. The policy of the law will not permit the owner of
personal property to create an interest in another, either by mort-

(a) Dawes r. Cope, 4 Binney^sBep, 258. Babbr. Clemson, lOSerg. dt Rawle,
419. Shaw V. Levy, 17 Ibid. 99. Howerc. Geesman, Jbid. 251. Streeperr.
Eckart, 2 If AaWow, 302.

{b) Levy r. Wallis, 4 DaU, Sep. 167. Waters v, M'Clellam, Ibid. 208.
Chancellor v. Phillips, Ibid. 213. Myers v. Harvey, 2 Penn. Rep. 478.

(c) Clow 17. Woods, 5 Serg. & Rawle, 275. Welsh v. Hayden, 1 Penn. Rep.
57, S. P.

^* Whenever the case permits of it there must be a change of possession;
and any retention on the assignee's part which is not bona fide is a fraud.
There need not be an actual removal. McClure v. Forney, 107 Pa. St. 414;
Buckley f. Duff, 114 Pa. St. 596; Thompson v. Paret, 94 Psu St. 275; Mc-
Bride v. McClelland, 6 W. & S. 94; Hugus v. Robinson, 24 Pa. Sc 9.

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• 524 OF PERSONAL PROPERTY. [Part V.

gage or absolute sale, aod still coniinQe to be the visible owner.
The law will not stay to inquire whether there was actual fraud
or not, and will infer it at all events; for it is against sound
policy to suffer the vendor to remain in possession, whether an
agreement to that effect be or be not expressed in the deed. It

necessarily creates a secret incumbrance as to personal
[ * 524 J property, when, to the world, the vendor *or mortgagor

appears to be the owner, and he gains credit as such,
and is enabled to practice deceit upon mankind. If the posses-
sion be withheld pursuant to the terms of the agreement, some
good reason for it, beyond the convenience of the parties, must
appear; and the parties must leave nothing unperformed within
their power, to secure third persons from the consequences of the
apparent ownership of the vendor. If it be the sale or mortgage
of articles undergoing a process of manufacture, to be delivered
when iinished, or of various other goods and chattels, and pos-
session can properly be retained, there ought to be a specific in-
ventory of the articles, so as to apprise creditors of what the con-
veyance covered, and to prevent the vendor from changing and
covering property to any extent by dexterity and fraud."

The supreme court of Pennsylvania have regretted, that even
in the excepted case of household furniture, the goods seized on
execution may be left in the hands of the defendants. This was
contrary to the common law, which would not endure the levying
on goods only as a security (a), and wisely gave a subsequent
execution creditor the preference, if goods levied on by execution
were suffered to remain in the hands of the defendant The ex-
ception of household furniture has notoriously occasioned collu-
sion and fraud, and been productive of gross abuse. The levy
was a very imperfect notice to third persons (b),

(a) Bradley v. Wyndam, 1 mis. Rep. 44.

(b) Cowden v. Brady, 8 Serg. d- Jtawte, 510. Dean v. Patton, 13 Ibid. 345.
In Barnes v. Bittington, 1 Wash. Cir. Rep. 38, Judge Washington held, that

^^ Under statate June 14th, 1836, all deeds of assignment most be regis-
tered within thirty days after execution, together with a ftill and complete
inventory of the property and an affidavit confirming the same. Brightly's
Pardon's Digest, 10th ed. p. 92. And it has been held that when the pro-
visions of the statute are complied with the deed is not fjandnlent by rea-
son of the vendor's remaining in possession. Fitler v. Maitland, 5 Watts
& Sergt. 307; Dalian r. Fitler, 6 Id. 323. And a deed of assignment for the
benefit of creditoi-s is not fraudulent by reason of the vendors remaining
in possession, provided it is not fraudulent in itself. Klapp's Assignee v.
Shirk, 13 Pa. St. 589; Milne p. Henry, 40 Id, 352; Dunlap v. BournonviUe,
26 Pa. St. 72.

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Jjec, XXXIX.] OF PEB80NAL PROPERTY. ♦ 525

^The Bame doctrine has been declared to be the law [ *525 ]
in New Jersey, Connecticut and Vermont. Delivery of
poBsession, in the case of a sale or mortgage of chattels, is held
to be necessary whenever it be practicable; and to permit the
goods to remain in the hands of the vendor, is declared to be an
extraordinary exception to the usual course of dealing, and re-
quires a satisfactory explanation* There must be an actual and
not a colourable change of possession. The leading decisions, in
England and in this country, in favour of the legal inference of
fraud in such cases, are referred to, and the conclusion adopted,
that on a sale or mortgage of goods, an agreement, either in or
out of the deed, that the vendor may keep possession, is, except
in special cases, fraudulent and void, equally against creditors
and bona fide purchasers (a)."

household furniture did not properly form an exception to the general rule,
that if the goods be levied on under afi, fa., and left in the possession of
the defendant for any length of time, no lien attached by the levy, as against
subsequent executions, or purchasers. The rule, as it was afterwards de-
clared, in Berry v. Smith, 3 Ibid. GO, does not require the officer to remove
the goods, or sell them immediately, provided he does it in a reasonable time,
and does not leave the debtor in the mean time with the power to deal with
the property as owner. So, in Wood v. Van Arsdale, 3 Uawlc\ Bep. 401, it
was held, that the sheriff was only bound to take possession of goods levied
on execution, within a reasonable time; but if on a levy he be directed by
the plaintiff to stay further proceedings until further order, and the object
be security for -the debt, the lien createid by the levy is discharged. Com-
monwealth V. Stremback, 3 Rawle's Rep. 341. In South Carolina the courts
do not follow the rule in most of the other states, that a* senior execution
creditor will lose his lien as against a junior creditor by inactivety. Local
considerations have led to this policy. Adair v. M'Daniel <& Cornwell, 1
Bailey'H Rep. 158.

(a) Chumar v. Wood, 1 Halsfed^a Rep. 155. Patten v. Smith, 5 Conn. Rep.
196. Smith r. Thompson, 9 Ibid. 63. Toby v. Reed, 9 Ibid. 216. But in
New Jersey, the subject has Ijeen since more fully discussed, and* a rule of a
more qualified character declared. In Sterling v. Van Cleve, 7 Halsled^a

^In New Jersey the continuance in possession of the vendor is not now
conclusive evidence of fraud but may be explained away. Martin Safe
Co. V. Norton, 48 N. J. L. 410; Miller v. Pancoast, 29 Id. 250; Parr v. Brady,
37 Id. 201. It is, however, looked upon with suspicion and as a badge of
fraud. Embury «..Klemm, 30 N. J. Eq. 517.

In Connecticut if is looked upon as conclusive evidence of fraud notwith-
standing the bona fides of the transaction. Hull v. Sigsworth, 48 Conn. 258;
Mead v. Noyes, 44 Conn. 487; Norton v. Doolittle, 32 Conn. 405; Kirtlandv.
Snow, 20 Conn. 23. Tliere may, however, be a concurrent possession in
cases of cotenancy, and there may also be a holding as agent or bailee.
Webster r. Peck, 31 Conn. 495. The vendor will be protected provided he
gets possession before a creditor takes action. Gilbert v. Decker, 53 Conn.
401.

In Vermont the vendor must wholly divest himself of the use, enjoy-
ment and possession. Weeks r. Preston, 53 Vt. 57; Hart v. Farmers' Bank,
33 Id. 252; Rothchild r. Kowe, 44 Id. 389. Concurrent possession will render
it void. Mills v. Warner, 19 Vt. 609; Wilson v. Hooper, 12 Vt. 653.

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OF PERSONAL PROPERTY. [Part V.

[ * 526 ] *Id these American decisions, the stern condnsions of
the doctrine, that fraud in the given case is an inference
of law, are asserted not only in a tone equally explicit and decided
as in the English cases in the age of Mansfield and Buller, but
with much greater precision, and more powerful and convincing
argument. There is another series of decisions, however, which
have, under equal sanction, established a more lax and popular
doctrina

In North Carolina, it is held, that whether a deed be fraudu-
lent or otherwise, from the want of possession in the vendee, or

Rep. 285, it was held, after an elaborate view of the subject, that a mere
agreement by the creditor to delay the sale of a debtor's goods, levied on by
execution, was not, of Itself, evidence of fraud. There must be some proof
of actual ftSLudj to subject a prior execution to postponement. If the plain-
tiff suffers the goods levied on by execution to remain with the debtor for a
Bi)ecific time, on agreeing to ptfiy a rent therefor, equivalent to ke<>ping the
^>ods of the same value and in good order, it is not a fraud upon a subse-
quent execution creditor, and will not postpone the prior execution. In Ver-
mont, it was held, that in ordinary cases of sales of personal property, if the
vendor retains possession, the sale is fraudulent and void as to creditors.
Bona fide sales by sheriffs were deemed an exception. Boardman v. Eeeler,
1 Aiken's Ver. Rep. 158. Mott v. McNeil, 1 Ibid. 162. In Weeks v. Wood, 2 Ibid.
64, the same conclusion was adopted, after a full review of the authorities on
each side of the question; and it was declared, that in the sale of chattels,
if the conveyance be absolute, the want of a change of possession was nut
merely prima facie evidence of fraud, but a circunjistance per se which ren-
dered the transaction fraudulent and void; and no stipulation in the con-
tract, that the vendor should retain possession, would take the case out of
the rule, if, from tfie nature of the iranaaciion^ the sale was absolute, and posses-
sion could "accompany it. So, again, in Fletcher v. Howard, 2 Aiken's Ver.



Online LibraryWilliam M. Lacy James KentCommentaries on American law, Volume 2 → online text (page 88 of 108)