(142 Va. 190, 128 S. E. 506.) instead of paying the balance due the Gump Company to it and releasing the lien, the Kite Company kept the whole amount. Who should be the victim of this fraud, the Gump Company or W. N. Jackson? To ask the question is to answer it. Our attention was called to the general rule that a vendor can convey no greater right or title than he has. The general rule is conceded, but this court held in Boice v. Finance & G. Corp. supra, that it had no application to the facts of that case, and it has none here. Affirmed. West and Campbell, JJ., absent. ANNOTATION. Right of purchaser from party to conditional sale as affected by actual or apparent authority in party to sell property. I. Introduction, 85. [Sale, § 96.] II. Priority as between conditional seller and purchaser from buyer: a. General rule, 87. b. Binding effect of conditions in sale: 1. In general, 90. 2. Effect of record, 92. c. Theory, 92. d. Effect of record, 94. e. Conditional sales to dealers: 1. In general, 94. 2. Sales out of usual course: (a) In general, 99. (b) Rule protecting subvendee's rights, 100. (c) Rule giving conditional seller priority, 102. III. Priority as between assignee of conditional seller's rights and subsequent buyer from conditional seller, 104. the question in another form, What is the validity of a reservation of title in a sale of goods for resale? The other situation, which is covered in this annotation, is exemplified by the state of facts appearing in the reported case (GUMP INVEST. Co. v. JACKSON, ante, 82). In general, this subdivision of the annotation may be said to include all cases involving the right of one who holds through the conditional seller as against one who has subsequently purchased from the conditional seller, relying upon his actual or apparent authority to sell. The two situations are alike in this, that the rights of a purchaser of property-usually from a dealer-are asserted against one who claims rights through a prior conditional sale. The question of practical interest that is included in the annotation is whether one may safely purchase property from a dealer in that property without investigating the dealer's title. With the exception of Louisiana, a reservation of title in a sale of personal property is now valid as against bona fide purchasers from the conditional buyer in every state, if there has been a compliance with any registration statute that may exist. In Colorado and Kentucky such a transaction is regarded as a chattel mortgage, and is required to be filed as required by the chattel mortgage statute. In Michigan, also, where the reservation of title is by way of security, a registration is required as in case of chattel mortgages. Estrich, Instalment Sales, p. 173. The question for consideration in this annotation is whether the general rule above outlined is modified where there is a conditional sale to a dealer or another for purposes of resale. The authority to resell that may be conferred by the conditional seller of property, upon the conditional buyer, is of various kinds. It may roughly be divided into actual and apparent. Actual authority may be expressly conferred or it may be implied. Express authority needs no definition. Implied authority to sell may arise from facts and circumstances which authorize the inference by the trier of facts that actual authority was in fact given. Apparent authority likewise arises from facts and circumstances, but unlike implied authority, it operates by way of estoppel. The distinction, however, between apparent and applied authority is not always observed in the cases. Strictly speaking, an implied authority, when found to exist, is equivalent to actual authority, and is not based upon an estoppel, while apparent authority, on the contrary, operates by way of estoppel, because the conditional seller has created a situation in which the conditional buyer is vested with the indicia of title so that to deny to a purchaser from the conditional buyer priority over the conditional seller would be a fraud upon such purchaser. It is obvious that if a sale has been made by the conditional buyer within. the authority conferred upon him, either express or implied, the purchaser at such sale obtains title. It has been said that he obtains title directly from the conditional seller, and not from the conditional buyer. See Robinson's Appeal (1893) 63 Conn. 290, 28 Atl. 40, infra, II. c. However this may be, it is. clear that he obtains title by reason of his purchase. It is not necessary that he be a bona fide purchaser for value any more than if he had purchased directly from the conditional seller. In other words, the sale having taken place within the actual authority conferred upon the conditional buyer, title passes to the subvendee. If, on the contrary, the conditional buyer has only an apparent authority, or has exceeded the authority conferred upon him in making the sale, then it is necessary that the priority of the subvendee must rest upon his bona fide character. Some principle of estoppel must intervene to give him priority over the conditional seller. As previously stated, the courts have not observed the distinction between protecting the rights of the subvendee, on the ground that there was an implied authority in the conditional buyer to make sale, and giving him priority on the ground of estoppel. In many cases where an implied authority is stated. to exist, the decision giving the subvendee priority is actually based upon an estoppel, thus indicating that what the court had in mind was not an implied authority, but an apparent authority. Implied authority may be negatived by express restrictions upon the authority of the conditional buyer. Apparent authority, however, cannot be so negatived. If a situation is created such as to give rise to an apparent authority in the conditional buyer to resell the property, and he does resell to a bona fide purchaser in good faith and for value, the estoppel operates Lotwithstanding the sale has taken place directly contrary to the conditional seller's instructions. II. Priority as between conditional seller and purchaser from buyer. a. General rule. Where goods are sold on conditional sale, with express or implied authority to the buyer to resell them, a purchaser from the buyer obtains good title thereto. United States. Re Agnew (1909; D. C.) 178 Fed. 478 (obiter). Alabama. Bass, Heard & Howle v. International Harvester Co. (1910) 169 Ala. 154, 33 L.R.A. (N.S.) 374, 53 So. 1014 (dealer). California. Rogers Lamb Co. v. Coast Securities Co. (1922) 58 Cal. App. 744, 209 Pac. 246 (dealer); Anglo-California Trust Co. v. Pacific Acceptance Corp. (1924) 70 Cal. App. 41, 232 Pac. 489 (dealer). See also Chucovich v. San Francisco Securities Corp. (1923) 60 Cal. App. 700, 214 Pac. 263, infra, III. Delaware. South Bend Iron Works v. Reedy (1905) 5 Penn. 361, 60 Atl. 698 (dealer); Flint Wagon Works v. Maloney (1911) 3 Boyce, 137, 81 Atl. 502 (obiter). Florida. American Process Co. v. Florida White Pressed Brick Co. (1908) 56 Fla. 116, 47 So. 942, 16 Ann. Cas. 1054 (obiter; case involved sales to contractor). Georgia. Clarke Bros. v. McNatt (1909) 132 Ga. 610, 26 L.R.A. (N.S.) 585, 64 S. E. 795 (sale of sawmill timber to purchasers, who were to saw it into lumber and sell it); Crenshaw v. Wilkes (1910) 134 Ga. 684, 68 S. E. 498. Idaho. Peasley v. Noble (1910) 17 Idaho, 686, 27 L.R.A. (N.S.) 216, 134 Am. St. Rep. 270, 107 Pac. 402 (sale of sheep); Trousdale v. Winona Wagon Co. (1913) 25 Idaho, 130, 137 Pac. 372 (dealer). Indiana.-Winchester Wagon Works & Mfg. Co. v. Carman (1887) 109 Ind. 31, 58 Am. Rep. 382, 9 N. E. 707 (dealer); Sears v. Shrout (1900) 24 Ind. App. 313, 56 N. E. 728 (obiter). Massachusetts. Spooner v. Cummings (1890) 151 Mass. 313, 23 N. E. 17 Manitoba L. R. 241. See Carmack v. Gordon (1873) 13 Ohio Dec. Reprint, 979, infra, II. e, 2, (c), and Garrett v. Rahily (1922) 132 Va. 226, 111 S. E. 110, infra, this subdivision. As subsequently shown, some of the foregoing cases insist on the subvendee being a bona fide purchaser, thus indicating that the authority was apparent rather than implied. In other cases, it clearly appears that the authority to sell was apparent, and it is held that the conditional seller is estopped to claim ownership as against bona fide purchasers. Citizens' Sav. & Invest. Co. v. Hunt's Garage (1922) 128 Miss. 535, 91 So. 133 (holding that the conditional seller of an automobile to a dealer could not assert his title as against a finance company which took an assignment of a conditional sale contract executed by the dealer to himself, for which the assignee gave to the dealer a sum of money, whether as a loan or as a purchase of the contract does not appear); McCombs v. Guild (1882) 9 Lea (Tenn.) 81 (obiter); Mississippi River Logging Co. v. Miller (1901) 109 Wis. 77, 85 N. W. 193; Stubbings v. Curtis (1901) 109 Wis. 307, 85 N. W. 325. The above Wisconsin cases are approved in Oconto Land Co. v. Wallschlaeger (Wis.) supra (a case in which there was actual authority to sell). This same rule is held to apply in the case of statutory reservation of title as upon a cash sale; authority in the buyer to resell the property defeats the statutory reservation. Mason v. Farmers' Cotton Oil Co. (1923) 29 Ga. App. 418, 116 S. E. 123. This Georgia statute was applied in Larendon v. Ocean S. S. Co. (1918) 183 App. Div. 559, 170 N. Y. Supp. 830. The sale by the conditional buyer must, however, be a bona fide sale. A fraudulent transaction designed by the buyer, a dealer, to raise money, which takes the form of a pretended sale (apparently conditional), and assignment of the contract as security for a loan, does not give the lender priority over the conditional seller. Rogers Lamb Co. v. Coast Securities Co. (1922) 58 Cal. App. 744, 209 Pac. 246 (apparently lender acted in good faith). The necessity that the sale be bona fide is further illustrated by the decision in Ufford v. Winchester (1897) 69 Vt. 542, 38 Atl. 239. In this case, some time after the conditional sale of a horse, the vendor gave to the vendee a written consent in writing to sell the horse as follows: "I hereby give B. D. Piper leave to dispose of the Phillips horse, on which I have a lien on, in any way he sees fit, and at any price he sees fit, and give me the proceeds, be it more or less." The conditional buyer made a sham sale of the horse to his brother, who, in turn, sold to one who knew the contents of the license to sell. It was held that, if the sale to the brother was a sham sale, the subsequent purchaser from the brother would hold subject to the lien of the conditional seller. In Virginia it is held that the stock of a retail dealer cannot be made the subject of a duly recorded chattel mortgage to secure the repayment of money lent to enable the dealer to secure the property for sale. as against a bona fide purchaser of the property from the dealer without notice (Boice v. Finance & G. Corp. 127 Va. 563, 10 A.L.R. 654, 102 S. E. 591; O'Neil v. Cheatwood (1920) 127 Va. 96, 102 S. E. 596); and this rule is applied to a conditional sale to a dealer in Garrett v. Rahily (1922) 132 Va. 226, 111 S. E. 110. In this case an automobile was sold and delivered by the state agents for an automobile at the place of their residence, to a local agent in another place, with the knowledge that the local agent would take it to his place of business for use in connection with his business. It was claimed by the sellers that, although they had such knowledge, they thought it would be. used for demonstration purposes only. The conditional sale contract was recorded in the place where the state agents resided, and thereafter, before its recordation in the place where the local agent resided, he made a sale thereof to one who paid the purchase price in full. It was held, under the rule of the above cases, that, if the purchaser was an innocent purchaser of the car for value and without notice, he obtained good title. It has been admitted in Pennsylvania in a case involving a bailment lease of motor trucks to a dealer, that if the bailor permits the bailee so to act with the property (other than having possession), or so clothes him with apparent ownership as to mislead or deceive the public, an estoppel may arise against the owner, but it is held that such conduct must affirmatively appear from the evidence. Leitch v. Sanford Motor Truck Co. (1924) 279 Pa. 160, 123 Atl. 658. And it is held in this case that the fact that the bailee put the truck on exhibition in the salesroom where he was engaged in buying and selling the vehicles would not convert the bailment into a conditional sale, or estop the owner from asserting his title. The power of sale conferred upon the buyer in a contract of conditional sale is not terminated by a default in payments by the buyer, if he is allowed to continue in possession of the property; a sale after such default passes title to the purchaser. Peasley v. Noble (1910) 17 Idaho, 686, 27 L.R.A. (N.S.) 216, 134 Am. St. Rep. 270, 107 Pac. 402. At least this is true where the conditional vendor refuses to take possession of the property, but insists upon the buyer continuing in possession in the same manner as before the breach or default. Ibid. It is not essential that there be an absolute change of possession of the property. Thus, where the purchaser of a wagon from a retail dealer, for which he had paid, who was not going directly home, and was not prepared to take the wagon with him, requested permission to leave it with the dealer, and this permission was granted by the dealer, who attached a tag to the wagon indicating that it had been sold to the purchaser and marked it in large letters, there was held to be such a change of possession as precluded the transaction from being within the condemnation of a statute making a transfer of personal property without a change of possession conclusively fraudulent. Trousdale v. Winona Wagon Co. (1913) 25 Idaho, 130, 137 Pac. 372. The consideration may be money or other property. Bent V. Jerkins (1895) 112 Ala. 485, 20 So. 655. The rules thus established have been embodied in the Uniform Conditional Sales Act, 89 of which reads as follows: "When goods are delivered under a conditional sale contract, and the seller expressly or impliedly consents that the buyer may resell them prior to performance of the condition, the reservation of property shall be void against purchasers from the buyer for value in the ordinary course of business and as to them, the buyer shall be deemed the owner of the goods, even though the contract or a copy thereof shall be filed according to the provisions of this act." The operation of this section of the Uniform Act is not prevented by that provision in § 13 which requires that "unless the contract otherwise provides, the buyer may without the consent of the seller remove the goods from any filing district and sell, mortgage, or otherwise dispose of his interest in them." Fi nance Corp. v. Jones (1922) 98 N. J. L. 165, 119 Atl. 171. The rules above stated have been embodied in other statutes also. See California Civil Code, § 1142, referred to in Anglo-California Trust Co. v. Pacific Acceptance Corp. (1924) 70 Cal. App. 41, 232 Pac. 489. In the California statute the purchaser is required to be a bona fide purchaser for value. It has been held that a purchaser from an agent authorized to sell cannot claim an estoppel against the principal, who reserved title in his sale to the agent, where the principal, before the goods were shipped or payments made, notified the purchaser of the reserved title. Excelsior Iron Works v. Lee (1900) 123 Mich. 499, 82 N. W. 207. That the subvendee acquires title is true, whether or not the conditional buyer is a dealer. The fact, however, that he is a dealer, does have an effect upon the implied or apparent power of sale that may arise. This question is discussed in subd. II. e, 1, infra. In the following additional cases it is recognized that a subvendee acquires title as against the conditional seller: A purchaser of a monument from a dealer who himself had purchased it and executed to his vendor an agreement to sell the monument, the bill of sale reciting that the dealer was to have the privilege of selling the monument for his vendor, was held to obtain good title, although he gave a note for the purchase price to a creditor of the dealer, which was unpaid. Townsend v. Frazee (1900) 21 Ky. L. Rep. 1183, 54 S. W. 722. A finance company advancing money to an automobile dealer to enable him to pay the draft attached to a bill of lading and thereby secure trucks shipped to him, and which took a storage receipt for each of the trucks, but allowed the automobile dealer to retain possession thereof for the express purpose of selling them, upon an agreement that he would pay the proceeds of the sale to the finance company to the extent of its advancements, cannot recover the possession of the trucks from one who purchased them from the dealer. Com |