Spargo, who was an automobile sales agent, to retain possession of the machine for demonstration purposes, as Wilson had to be away from home for a time, and otherwise would have had to store the machine. While in such possession Spargo mortgaged the machine to Walrath, who had no knowledge of the sale to Wilson. Wilson brings replevin proceedings. Walrath claims that by allowing Spargo to remain in possession, the sale by Spargo to Wilson became in law fraudulent and void as to third persons relying on the evident ownership indicated by such possession. Point Involved: If a buyer in an absolute sale of goods, permits the seller to remain in possession after sale, and such seller during such possession resells to an innocent purchaser [or has creditors whose liens accrue during such possession] is the first sale to be disregarded as a fraud upon such second seller [or such creditors]? If to be treated as fraudulent is it conclusively so, as a matter of law, or is it merely presumptively so, leaving the first buyer to show his honesty and good faith? ELLIOTT, J.: "2. In the thirteenth year of Elizabeth, there was enacted the famous statute which made all conveyances not made bona fide and for value, with intent to injure and delay or defraud the creditors, void as to such creditors. Stat. 13 Eliz., chap. 5. A later statute extended this protection to subsequent purchasers as well as creditors. Stat. 27 Eliz., chap. 4. These statutes did not in terms apply to personal property, but from the time of Sir Edward Coke's decision in Twyne's Case, 3 Coke, 80b, 5 Eng. Rul. Cas. 2, sales of personal property, made with intent to delay and defraud creditors or subsequent purchasers, have been regarded as within the provisions. of the statutes. The question soon arose whether, under these statutes, possession by the vendor was fraudulent per se, and therefore conclusive, or merely presumptively fraudulent. In Twyne's Case, in speaking of the indicia of fraud, it was said that 'continuance of the possession in the donor is the sign of trust for himself.' In Edwards v. Harben, 2 T. R. 587, it was held that, 'if there be nothing but the absolute conveyance, without the possession, that, in point of law, is fraudulent.' For some time thereafter this was the established rule in the English courts, but it was finally held that the proper construction of the statute made such a conveyance presumptively fraudulent only. Hale v. Metropolitan Saloon Omnibus Co., 28 L. J. Ch. N. S. 777; Gregg v. Holland, (1902) 2 Ch. 360. To clear up the difficulty which arose under the statute, Parliament enacted the various bills of sale acts, which are fully discussed and explained by Lord Blackburn in Cookson v. Swire (1884) L. R. 9 App. Cas. 653, 670. See also references to these acts and decisions thereunder in notes to the fifth English edition of Benjamin on Sales, p. 496, and appendix, p. 1029, and in the note to Twyne's Case in 5 Eng. Rul. Cas. 27-39. See also Mr. Bennett's note to the sixth American edition of Benjamin on Sales, pp. 458-462, and Jones, Chat. Mortg. §§ 320 et seq. In the United States, Edwards v. Harben was followed by Chancellor Kent in Sturtevant v. Ballard, 9 Johns. 337, 6 Am. Dec. 281, and by the Supreme Court of the United States, in Hamilton v. Russell, 1 Cranch, 309, 2 L. ed. 118. But in Warner v. Norton, 20 How. 488, 15 L. ed. 950, Mr. Justice McLean stated that 'for many years past the tendency has been in England and in the United States to consider the question of fraud as a fact for the jury, under the instruction of the Court.' This is now the established doctrine of the Court. Jewell v. Knight, 123 U. S. 426, 31 L. ed. 190, 8 Sup. Ct. Rep. 193; Smith v. Craft, 123 U. S. 436, 31 L. ed. 267, 8 Sup. Ct. Rep. 196. See note to 18 L. R. A. 604. "Section 3496, Rev. Laws 1905, and the previous statutes which are embodied therein, were enacted for the purpose of removing any doubts as to whether the retention of possession by the vendor is conclusive or only presumptive evidence of fraud. It provides in express terms that such possession shall be presumed to be fraudulent and void as against subsequent purchasers in good faith, unless those claiming under such sale make it appear that the sale was made in good faith, and without any intent to defraud such purchasers. The effect is to cast upon the vendee the burden of rebutting the statutory presumption of fraudulent intent by proving his own good faith and want of knowledge of fraudulent intent on the part of the vendor. Leqve v. Smith, 63 Minn. 24, 65 N. W. 121. The statute controls this case. If Wilson proved that he purchased the machine in good faith, without knowledge of any intent on the part of Spargo to defraud his creditors or subsequent purchasers, he was entitled to the possession of the property. [Here the Court considers the evidence.] "It is not contended that there was any actual bad faith on the part of Wilson. In his brief, the respondent thus states his position: The sale was not accompanied with immediate delivery and followed by an open and continuous change of possession, within the meaning of § 3496 Rev. Laws 1905; and hence, 'while in this case it may be true that on April 25, 1906, appellant, in the utmost good faith, purchased the automobile, yet, from that time on, the action of the appellant in permitting and agreeing to allow Mr. Spargo, the vendor, to keep and use that machine in exactly the same manner after the sale as before, was a fraud per se upon any person who might either purchase or take the same as security without notice of the rights of a prior purchaser.' This is the doctrine of Lanfear v. Sumner, 17 Mass. 110, 9 Am. Dec. 119, and the other cases of the group to which reference has been made. As an abstract principle of law, that doctrine is sound and controlling when applied to appropriate facts and conditions. But the effect which shall be given to possession under the particular circumstances disclosed in this record is declared by the statute, and the statute should not be disregarded and annulled by the application of the doctrine of equitable estoppel. Upon the evidence, Wilson sustained the burden which the statute imposes upon him, and the finding of the trial court was thus erroneous.' Question 344: (1) State the facts in this case, the question presented and what the Court held. (2) What two doctrines are there on the effect of retention by the seller of the goods sold? (3) What was the early English statute? What did it pro'vide? (4) What did Twyne's case hold? Edwards v. Harben? Was the early English doctrine adhered to in England? (5) In the above case, on whom was the burden of proof in reference to good faith? Why? How was this burden sustained? Case 345. Ticknor v. McClelland, 84 III. 471. Facts: "A" sold "B" 135 acres of standing corn, three stacks of hay, seven machines, four horses and twenty-nine hogs. All of these items were selected and segregated, but no possession was taken at the time. Before "B" took possession, "C," a creditor of "A,' had the property seized by the sheriff. The sheriff took possession and "B" brought replevin. Point Involved: Same point as in above case; the other view taken; whether the rule applies to growing grain, ponderous articles, etc., not capable of immediate removal. * MR. CHIEF JUSTICE SHELDON delivered the opinion of the Court: "As regards the standing corn and stacks of hay, we consider the delivery of possession sufficient. In case of the sale of standing crops, the possession is in the vendee until it is time to harvest them, and until then he is not required to take manual possession of them. Where goods are ponderous and incapable of being handed over from one to another, there need not be a manual delivery of them. the rest of the property which was the subject of the sale, it was that character of property that was capable of being immediately and readily removed, and a different rule governs. As to "The policy of the law in this state will not permit the owner of personal property to sell it, and still continue in the possession of it. Possession being one of the strongest evidences of title to personal property, if the real ownership is suffered to be in one, and the appar-. ent ownership in another, the latter gains credit as owner, and is enabled to practice deceit upon mankind. It is the well-established doctrine of this Court, that an absolute sale of personal property, where the possession is permitted to remain with the vendor, is fraudulent per se, and void as to creditors and purchasers. * "We can come to no other conclusion, than that suffering this portion of property, which was capable of being readily removed, to remain with the vendor, as was done, rendered the sale of it fraudulent in law, and void as to creditors, and that it was subject to the levy of the execution." Question 345: (1) State the facts, the question presented and the Court's decision in this case. (2) Is it in accord with Wilson v. Walrath? (Note: Twyne's case is one of the celebrated leading cases in Anglo-American law. It decided that the sale to Twyne was void as against the seller's creditors because it appeared to be a fraudulent sale. It had various signs of fraud, one of which was the retention by the vendor, for it was an absolute sale. But the question is: Is such retention an absolute legal fraud on creditors and purchasers, or is it permissible for the buyer to show that he was in fact guilty of no fraudulent intention? The authorities divide on this point, some jurisdictions holding the former view, and some the latter. The student frequently criticizes this rule as inconsistent with the doctrine that a true owner is not estopped to assert title by merely permitting another to have possession. But in those cases a person has been an owner and in possession and yields that possession to another for lawful purposes. To hold that the real owner in such a case could not assert his ownership because he had given possession to another would be an intolerable doctrine in a business world where such practices are so numerous and so necessary. But if goods are sold by a person who has been the owner, or are levied upon by the creditors |