Firestone Tire & Rubber Co. v. Anderson

Ladd, J.

i sabes- transfer under16^‘trade acceptance.” — I. In the fall of 1918, one G-alliher, by oral contract, bargained for the personal property in, and leased, defendant’s garage. He went into possession, and, on February 18, 1919, orderecl <*£ plaintiff company 27 automobile casings and 18 tubes, at the total price of $645.10. About the 6th of March following, Galliher yielded possession of the garage, including the tubes *440 and all but 3 of the casings, which had come a few days before, to defendant. Whether, in so doing, Galliher informed defendant that these belonged to plaintiff, or directed him to invoice the tires and credit him with their value, is in dispute. Plaintiff contended that the proposed sale to Galliher was never completed; while defendant insists that the transaction amounted to a conditional sale. The trial court ruled that there was a conditional sale, and submitted the cause to the jury on that theory. We find no evidence in the record tending to sustain this view. If there was a completed sale, it was absolute. The order for the goods was obtained by one of the plaintiff’s salesmen, being indorsed below the items and prices:

“Taken on trade acceptance basis with tax. H. A. Galliher, Purchaser.”

This was forwarded to its branch house at Omaha, Nebraska, where its agent caused the goods to be shipped to the purchaser, and mailed the bill of lading, to which was attached an invoice of the goods and trade acceptance, and mailed to Galliher. Following is the form made use of:

“Trade Acceptance.

“No....... ......191..$.................

“......after date pay to the order of ourselves ...................................... Dollars in settlement of the purchase of goods as billed in our invoice No....... dated............... “The Firestone Tire & Rubber Co.

“Tó.......................

■n

The blanks were filled out, and stamped across the face:

“Accepted. Date..............(Date accepted) 191.... Payable at (designate bank); location of bank (place of payment) ; signature (signature of acceptor).”

Accompanying this was a letter, instructing Galliher that, “upon the receipt of our invoice and bill of'lading as evidence of shipment, you are to sign the trade acceptance made payable to your bank on May 10, 1919, and return to this branch at *441 once. The amount of trade acceptance will be net,, all discounts having been deducted.” The acceptance was neither signed nor returned, nor cash remitted instead. Plaintiff’s agent testified that the forms used were those approved by the Federal reserve banks; that he knew what is meant by trade acceptance in the automobile trade.

“A trade acceptance terms are an order, a contract or an arrangement whereby the purchaser agrees to sign a draft payable at a certain time on receipt of B/L, providing that the goods were shipped, the signing of which draft constitutes the changing of ownership, and acknowledges the entire transaction as correct; or, if he prefers otherwise, he may pay the cash, which will answer the same purpose. Q. In the automobile trade, what is the custom as to the ownership of goods shipped on trade acceptance ? A. The ownership is passed at the time the trade acceptance is signed, or at the time payment»is made, instead of the acceptance being-signed.”

A trade acceptance with the B/L is forwarded immediately after the goods are shipped, but the sale is not effected until the goods are paid for, or the draft on the local bank is accepted by the purchaser. Such a sale, when made, is without condition ; but until payment, either in cash or acceptance required, the contract was conditional: that is, the sale was subject to a condition precedent, namely, the signing of the trade acceptance, or payment to the seller in cash. The distinction between a conditional contract of sale and a contract of conditional sale is pointed Out in 1 Meehem on Sales, Section 584:

“The great weight of authority is to the effect that agreements of the kind now under consideration, by whatever name called, are contracts of sale, subject to a condition precedent, namely, the payment of the price. In other words, they are conditional contracts to sell, and are most appropriately described as conditional contracts of sale, to distinguish them from the true conditional sale, which is a sale subject to a condition subsequent; though the shorter term, ‘conditional sale,’ seéms to be so firmly fixed in our legal nomenclature that it is not likely to be abandoned.”

Later on (Section 585), the author observes that:

*442 “Until full payment of the price, no title passes to the prospective purchaser, unless this condition precedent of payment is waived.”

To constitute a conditional sale, within the terms of the statute, there must be a delivery of possession to the purchaser, with the intention of passing immediate ownership, subject only to the reservation of title in the seller, as security for the purchase money. Donnelly v. Mitchell, 119 Iowa 432 ; Amundson v. Standard Ptg. & Mfg. Co., 140 Iowa 464 ; Budlong v. Cottrell, 64 Iowa 234 ; Gaar, Scott & Co. v. Nichols, 115 Iowa 223 ; Davis Gas. Eng. Works Co. v. McHugh, 115 Iowa 415 . The proposed sale was not effected, and title did not pass to Galliher, as he had none to pass, nor to defendant.

2’iuagm0SNin™ieuyor of specific article, II. The petition particularly described the several casings and tubes, and prayed that plaintiff be put in possession of “said above-described personal property, as set forth in Exhibit I; or, if the same cannot be found, or any item part thereof cannot be found, that plaintiff an(j reC0yer 0f and from defendant judgment for each and every item of property in the sum of $645.10, with interest.” On motion of defendant’s attorney, the court struck therefrom “any claim for damages by reason of the goods sold, it being a misjoinder in a replevin action.” The record does not disclose what became of about two thirds of the goods, and we know of no reason for denying plaintiff recovery of those not found, or their value, under Section 4178 of the Code, which provides that:

“If a party found to be entitled to property be not already in possession thereof by delivery under the provisions of this chapter or otherwise, he may at his option have an execution for the delivery of the specific property, or for the value thereof as determined by the jury, and if any article of the property cannot be obtained on execution, he may take the remainder, with the value of the missing articles.”

The ruling was erroneous. — Reversed.

Weaver, C. J., Stevens and Arthur,- JJ., concur.