In re Galt
In re Galt
Opinion of the Court
(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; attaching or execution creditors.
The law of the state of Illinois with respect to conditional sales;, as expounded by its supreme court, runs counter to the great weight of authority, but has become a rule of property in that state, and we are 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 the 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 between bailment and sale is not difficult of ascertainment, if due regard be had to the elements peculiar to each. In bailment 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
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 or places; agrees to furnish the goods to the agent, at 40 per cent, discount from list prices; they to be sold by him, and accounted for to the company in cash or notes of the purchaser drawn upon blanks furnished by the company, running not more than six months, with interest, and 'made payable to the company; their payment being guarantied by Galt. As an inducement to making sales for cash only, an allowance of 5 per cent, on such sales is allowed by the company. All cash is to be remitted not later 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 the 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 prices 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 under 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 other wagons than those manufactured by the company.
' Applying to this contract the test stated, it is clear that here was a bailment, and not a conditional sale. It was not contemplated that Galt should ever own these wagons. He was to sell them to others for the company; his commissions to be the amount which he might receive over the prices stated in the contract. The proceeds, whether in cash or in notes of the purchaser, were to be immediately returned to the company; 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
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 strongest 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 have such force considered alone, taking it with the whole contract, it was seemingly incorporated to compel the agent promptly to sell, and report sales within the time stated. The cases in Illinois are carefully distinguished in Manufacturing Co. v. Lyons, 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.
Reference
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- In re GALT
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- 1. Bailments — Construction of Contract — Bailment or Conditional Sale. Whether a contract by which one party agrees to send to the other goods to be sold by him constitutes a bailment or a conditional sale depends on whether the sender has the right to compel a return of the thing sent, or whether the receiver has the option to pay for the same in money. 2. Same — Contract Construed. A manufacturing corporation entered into a contract by which it appointed a man its agent for the sale of its wagons at a place named. It agreed to furnish him with wagons at certain discounts from the list prices; the wagons to be sold by him, and accounted for as sold in cash or purchasers notes. All notes taken were to be indorsed by the agent and sent to the company, and, in case they should be for a greater amount than the price of the wagons to be accounted for, the “surplus of commission” contained therein was to be paid to the agent when and in proportion to the amount collected. All wagons not sold within 12 months were, at the option of the company, to be.paid for by the other party in cash or by note, or to be turned over to the company. The contract further provided that the ownership of all wagons, or their proceeds, should remain in the company until settlement should be made therefor, and that the money and effects received in the course of the business of the agency should “in no case or under any eircum-' stances be appropriated to the private use of the party of the second part.” It also provided that the company might revoke the appointment at its pleasure, and at any time take possession of all or any part of the property. UeU, that such contract was one of bailment, and not of conditional sale, and that on the bankruptcy of the agent the company was entitled to reclaim the goods remaining in his possession.