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does pass to the buyer but subject to defeasance by the seller if he so desires. It is very common expression of the courts to refer to the sale as "void”, but often, too, it is spoken of as “voidable”. It is in fact, however, treated as “void” in many decisions, notably those which allow a suit in replevin to be maintained without any formality of rescission, even by way of demand upon the buyer.170
On the other hand, it is very evident in some cases that, even as between the parties, the courts consider a title to have passed, subject to defeasance.171 Such are the cases in which it is held that a defrauded seller who might, on account of the fraud, have rescinded the contract has lost his right to repossession of the goods because of undue delay in acting. The courts do not give specific reasons for this, but the only harmoniously logical basis for it must be that title passed by virtue of the original contract; that the right to defeat it was lost by the delay and not that it passed by the delay.17 That title did pass by virtue of the agreement, although subject to avoidance, must be the basis also of those cases recognizing suit for the purchase price as an affirmance of the buyer's title; and of those similar cases in which the seller is held to have “ratified” the contract so as to fix title in the buyer.178
The net result appears to be that, as between the parties, the court will treat the title as not having passed at all if the seller wishes it so treated, and acts thereon in time, or as having actually passed, if the seller desires so to consider it.174
170-Butters v. Haughewat, 42 III. 18; Oswego Starch Co. v. Lendrum, 57 Iowa 573; Root V. French, 13 Wend. (N. Y.) 570; Hunter v. Hudson River etc. Co. 20 Barb. (N. Y.) 493; Loeffel v. Pohlman, 47 Mo. Ap. 574.
171—When the rights of third persons are under consideration there is no doubt but that the transaction is considered as haying passed a title. See post, p. 225.
172—World Pub. Co. v. Hull, 81 Mo. Ap. 277; Johnson etc. Co. v.
Missouri Pac. R.R., 52 Mo. Ap. 407; McDonald v. Goodkind, 22 Mont. 491; Smith v. Chadron Bank, 45 Neb. 444; Wertheimer etc. Co. v. Faris, Tenn., 46 S. W. 336; Load v. Green, 15 M. & W. 216.
173—Moller v. Tuska, 87 N. Y. 166; Conrow v. Little, 115 N. Y. 387; Little Rock Bk. v. Frank, 63 Ark. 16; Gallup v. Fox, 64 Conn. 491; Mapes v. Burns, 72 Mo. Ap. 411; Chadron Natl. Bk. v. Tootle, 59 Neb. 44; Seeley v. Seeley-Howe Co., 130 Iowa 626.
-What Constitutes Fraud.—What acts of the buyer will amount to a fraud upon the seller is a question of law to be decided by the court; whether those acts were in truth committed by the buyer is a question of fact for the jury.175 As we have already seen, mere concealment of insolvency is not of itself such fraud as will permit rescission.176 An intent, existing at the time of purchase, not to pay for the goods is, however, such fraud. The intent must be not to pay at all. “A mere intent not to pay for the goods when the debt becomes due is not enough; that falls short of the idea. The inquiry is not whether the buyer had reasonable grounds to believe he could pay the debt at some future time, and in some way, but whether he intended in point of fact not to pay it."1177 If he did not intend to pay, there is such fraud as will justify rescission.178 And the fact that a buyer knows he is insolvent at the time of purchase will be considered as evidence in respect to his intention. It “bears upon the question of quo animo, the intent, the fraudulent purpose."179
174—Clough v. London & Nw. Ry. Co., L. R. 7 Ex. 26, p. 34. It should be noted that the seller can not so far treat the transaction as void but that he must return to the buyer, before he can insist on possession of the goods sold, whatever of value he has received. Doan v. Lockwood, 115 Ill. 490; Moriarity v. Stofferan, 89 Ill. 528.
But an unnegotiated note is not considered as a thing of value in this sense, Thurston v. Blanchard, 22 Pick. (Mass.) 18; Nichols v. Michael, 23 N. Y. 264.
175—Freeman v. Topkis, 1 Marv. (Del.) 174.
176-Ante, p. 147.
177—Burrill v. Stevens, 73 Me. 395.
178-Oswego Starch Factory v. Lendrum, 57 Iowa 573; Belding v. Frankland, 8 Lea (Tenn.) 67; Hennequin V. Naylor, 24 N. Y. 139; Talcott v. Henderson, 31 O. S. 162.
179—Rowley v. Bigelow, 12 Pick. (Mass.) 307; Talcott v. Henderson, 31 O. S. 162; Belding v. Frankland, 8 Lea (Tenn.) 67..
While mere concealment of insolvency is not fraud, any positive misrepresentation, either express or by implication, may amount to fraud.180 This is true even though the buyer be really solvent.181
Misrepresentation in respect to financial condition is, of course, not the only fraud that will make a sale voidable. This is simply the most frequent type of case. In general, any actual fraud in the inducement of the contract will permit of its rescission.
180-Schweizer v. Tracy, 76 Ill. 345; Weitheimer etc. Co. v. Faris, Tenn., 46 S. W. 336; Skinner v. Michigan Hoop Co., 119 Mich. 467;
Seeley V. Seeley.Howe Co., 130
181-Richardson etc. Co.
The discussion of the seller's rights and remedies has necessarily suggested the lack of right in the buyer which is the converse of the seller's rights. Obviously, for instance, if the seller has a right of continued possession until payment, the buyer has no right of possession until payment. Likewise, whenever the seller has no right to rescind a sale and take back the goods because of nonpayment the buyer has a right to keep the goods without paying for them. These so obvious converse rights need not be repeated by positive expression. On the other hand, a discussion of other rights and remedies of the buyer will develop by their implied converse certain lack of right in the seller which was not referred to under the particular topic heading.
Breach of Contract. If neither title nor possession has passed to the buyer, he has acquired no right in respect to the property itself. If the seller fails to perform according to the terms of the contract, the buyer is limited to an action against him personally for breach of contract. Having no title, the buyer can not bring replevin or other possessory action on the ground of title, and the law recognizes no other right of possession as a result merely of the contract of sale. Even equity will not grant specific performance except in certain cases of sale of an absolutely unique chattel.**
1-Deutsch v. Dunham, 72 Ark. contract, by refusing or failing to 141; Backhaus v. Buells; 43 Ore. give the plaintiffs possession of 558; Chellis V. Grimes, 72 N. H. the property * * * did not trans. 104, “The mere fact that defend- fer the title to the plaintiffs. Their ants committed a breach of their refusal to deliver the property was not equivalent to a performance titled, the jurisdiction (of equity, on their part. * * * Nor did the for specific performance) is propplaintiffs have the legal right of erly invoked, otherwise not. * * * possession, since that right fol- Insolvency of the party against lowed the title, which they never whom relief is sought, standing had.” Carpenter v. Glass, 67 Ark. alone, will not confer jurisdiction 135; Platter v. Acker, 13 Ind. Ap. to enforce specific performance. 417; Gibson v. Roy, 28 Ky. L. R. . * * The fact of insolvency, 444.
-Measure of Damages.—If the buyer does sue for breach of contract his measure of damage is, in accord with the general rule of damages, the sum which will put him in the same position financially as though the contract had been carried out. But this basic principle is, as usual, modified by the rule that the buyer must mitigate his damage so far as possible and must accordingly be presumed to have protected himself as soon after the seller's breach as he could reasonably be expected to do and by all reasonable means. Accordingly, the measure of his damage will be the difference between the price at which the seller had contracted to sell and the price at which the buyer could buy precisely similar goods in the market within a reasonable time after his knowledge of the seller's breach.3*
when combined with other causes 2-There is some conflict, how- for equitable interposition, may, ever, as to whether or not equity however, become a potent or even will decree specific performance
controlling factor in determining in cases where the buyer has paid the fact of jurisdiction.” As to his money and the seller has be.
unique chattels see, Lowther V. come insolvent. Livesley v. Johns- Lowther, 13 Ves. 95, painting; ton 45 Ore. 30, “When, therefore, Falcke v. Gray, 4 Drew. 651; Pusey an award of damages would not v. Pusey, 1 Vern. 273. put the party seeking equitable re- 3–Saxe v. Penokee Lumber Co., lief for the delivery of personalty 159 N. Y. 371; Austrian & Co. v. in a situation as beneficial as if Springer, 94 Mich. 343; Goodrich the agreement were specifically v. Hubbard, 51 Mich. 530; Grand performed, or where compensa- Tower Co. v. Phillips, 23 Wall. 471, tion and damages would fall short price at nearest available place of of the redress to which he is en- purchase plus increased cost of
*See Uniform Sales Act, Section 68.