Whitfield v. United States

delivered the opinion of the court:

In'his petition, the claimant avers that he was the owner of the cotton, the proceeds of which are heroin claimed; but at the trial the case was not rested upon the mere ground of ownership. The sale of the cotton by him to the rebel government was not denied; but it was insisted that he has a legal right to reclaim the proceeds thereof, because, after the sale and before the cotton came into the possession of the agents of the United States, the rebel confederacy became insolvent, and therefore the bonds received by him in payment for the cotton were valueless, and he therefore has a right of stoppage in transitu to enforce his lien as a vendor for the unpaid purchase-money.

This is a new application of the doctrine of stoppage in trans-itu. We have always supposed that the right existed only as to the goods sold, and have not before known it to be claimed to extend to the proceeds of the property after its conversion into money by the vendee or those claiming under him.

*284The right of stoppage in transitu is, moreover, a right growing out of contract. This court has no jurisdiction of any contract but such as the United States have entered into; but here is an attempt to enforce in this forum a contract alleged to have been entered into between the claimant and the rebel government. Of such contracts this court has no jurisdiction.

The right to enforce a vendor’s lien for the purchase-money of personal property sold rests upon the vendor’s not having been paid for the property. If he has been paid for it, there is no lien, and hence no right of stoppage. If the vendor knowingly accepts in payment that which is worthless, or accepts that which is at the time of value but afterward becomes worthless, he does not in either case, by the fact of worthlessness, acquire a right to reclaim the property sold.

It seems clear to us that the claimant had sold the cotton in question, and received payment in full for it according to his own agreement with the rebel government. When it was captured, he was holding it “subject to future delivery,” that is, subject to delivery whenever called for by that government; and if it had been so called for, he could not have withheld delivery. While the property was in this condition, the United States succeeded, by conquest, to all the rights of property of the rebel confederacy, and in virtue of that succession was entitled to seize this cotton and to sell it. And it is clear, from his own acts, that the claimant did not consider himself the owner of it, for he agreed with the United States Treasury agent to put the 177 bales in order, and receive one-third thereof as compensation for his services in that regard.

The petition of the claimant must be dismissed.

concurring:

The legal question presented in this record is of great delicacy and interest, and, under the English authorities, when viewed purely as an individual and commercial transaction, the-decision, as it seems to me, ought to be for the claimants. But as the record presented to us involves, in some degree, the right of the National Government to succeed to the movable property controlled by the Confederate States for war purposes at the time of their overthrow, I yield to the opinion just read by the Chief Justice, but with hesitation and doubt.

dissenting:

I think this case is within the rule of commercial law shown by the English and American authorities cited by the learned counsel for the petitioner.

And that rule is that, in a sale of specified goods on credit or for negotiable notes, bonds, &c., on time, the insolvency of the buyer before the notes, bonds, &c., are due or negotiated authorizes the seller, if in possession of the goods, to retain them as security for the price.

This rule transcends the rule of the common law, that gives an unpaid vendor a lien for the price, because it acts where both the right of property and the right of possession have vested in the buyer; and it differs from the right of stoppage ira trcms-iiu, because it acts only when the seller has retained the actual possession of the goods, while the right of stoppage in transitu .acts only when the seller has parted with the actual possession ■of the goods.

The rule is referred in the books to the civil law, as are many of the rules of our commercial law, and it arose from the system of sales on credit and for negotiable instruments, which created commerce. And the reason of the rule is, that a sale on credit implies between the parties that the buyer shall keep his credit good for the transaction in reference to which the credit is given; so that the unpaid vendor has a stronger equity .against the goods still in his hands than the creditors of the buyer in other transactions. ^

Of the cases cited in the argument on this point that most analogous to this is the case of Arnold v. Delano, (4 Cush., p. 33,) in which the opinion of the court was read by Chief Justice Shaw, whose professional practice and whose judicial eminence belonged especially to commercial law.

In that case the defendant, Delano, sold sixty-five cords of wood, which were on his laud, and part of a larger quantity, to Sowerby & Grant; the wood was piled, measured and staked off, to show the extent of the sixty cords, and a negotiable note, at six months, was given for the price, and a bill of sale of the wood was given by the seller, receipted thus : u Received payment by note at six months, at Northampton Bank.” And it was agreed that the buyers might remove the wood at their convenience at any time within a year.

*286Afterward Sowerby & Grant, the buyers, dissolved partnership, and Sowerby assumed the debts and took, by transfer, the property of the firm ; and before the woo.d was removed or the note was due or negotiated he became insolvent. His assignee in insolvency brought the suit for the wood, and the seller claimed the right to retain it till payment or its equivalent.

Chief Justice Shaw thus states the legal result of the facts and the question raised by them :

“In the present case the wood was marked off and identified, and the vendees had a license for one year to come on the vendor’s land and to take it away. This was a complete sale, and a constructive delivery, to vest the property in Grant and Sow-erby ; and on their dissolution and transfer it vested in Sow-erby, and by the assignment in his assignee. Then the question is, whether the defendant had, under the circumstances, a lien for the price, and we think he had.”

And the chief justice proceeds to argue on the facts thus : “ The vendees did not enter and take the wood; it remained on the vendor’s land and in his possession in the same manner as before and at the time of the sale. The vendor acted in no new capacity; he was to receive nothing for the keeping; he was precisely in the condition of a vendor who has not parted with' the possession and custody of the goods sold. And this was the state of things when Sowerby went into insolvency, upon which event we think the vendor was remitted to his right to keep possession of the wood as a security for the price. Such a vendor in possession is regarded as having a higher equity to-retain for the price than the assignee of a debtor who has not paid for the property has to claim it for the general creditors.”

And the chief justice states the abstract rule of law thus : “ The law, in holding that a vendor who has thus given credit for goods waives his lien for the price, does so on one implied condition, which is, that the vendee shall keep his credit good. If, therefore, before payment, the vendee becomes bankrupt or insolvent, and the vendor still retains the custody of the goods or any part of them, * * * then his lien is restored, and he may hold the goods as security for his price.”

In the case cited and in this before us the material facts were the same; in both the sale was complete and the property vested in the buyer, and the negotiable paper given was *287secured expressly as payment. In both the property sold was in the possession of the vendor, free of rent and subject to the disposition of the buyer, who could immediately, and before the paper given had become due, have taken it into his possession, and in both he became insolvent before the paper given in payment became due.

And on the rule of law affirmed iu the case cited, I think that the petitioner, on the insolvency of the Confederate government, had the right to hold the cotton against them as security for the price, and that he has the same right as against the United States, claiming as successors of the Confederate government.

And I think it immaterial that, in arranging the payment by the bonds with the Confederate government, a small sum was paid in cash to the petitioner. The bonds were on interest, and when the January coupons were detached did not make the precise price of the cotton, and the money was paid to make tip that price precisely, and this fractional payment could not of itself entitle the Confederate government, after its insolvency, to the delivery of the cotton sold to them.

And I think it immaterial that, after the cotton was seized, it was agreed between the agent of the Treasury Department and the petitioner that the latter should put the cotton in order for sale. Such arrangement grew out of the circumstances of the case.

The cotton had been seized, and the petitioner had notified the Department of his claim in July, 1865. In September, 1865, the cotton was not to be returned to him, but was to be sold under the statute, and its net proceeds paid into the Treasury, and the title to those adjudicated here. It was for the interest of both parties that the cotton should be put in order for sale, and under the arrangement made, if the claim of the petitioner was sustained here, he would have put his own cotton in order at his own cost. If the title was adjudged in the United States, they would have paid the petitioner for the service received from him. The arrangement made, therefore, was a consequence of the petitioner’s claim, and not evidence of its abandonment.