monwealth Finance Corp v. Schutt (1922) 97 N. J. L. 225, 116 Atl. 722. According to the court, the arrangement created the dealer the agent of the finance company to sell the trucks for its benefit, and, having put them into possession of such agent for the purpose of selling, trusting him to apply the results of the sale to the finance company's claim, the latter will be estopped to deny the agency in the ordinary course of business. But a factor's act declaring that every person in whose name any merchandise shall be shipped shall be deemed the true owner thereof so far as to entitle the consignee of such merchandise to a lien thereon, for any money advanced or negotiable security given by such consignee to or for the use of the person in whose name such shipment shall have been made, and for any money or negotiable security received by the person in whose name such shipment shall have been made to or for the use of such consignee, was held to give the consignee of cotton who had accepted and paid a bill of exchange drawn on him by the consignor, priority over one who had sold the cotton to the consignor and delivered it into his possession, with the understanding that it should be fully paid for before it was disposed of. Bates v. Cunningham (1877) 12 Hun (N. Y.) 21.

An assignee in good faith and for value, of the rights of the conditional buyer, under a contract of conditional sale made by him, takes priority over the original conditional seller and his assignee. Anglo-California Trust Co. v. Pacific Acceptance Corp. (Cal.) supra. See Pacific Acceptance Corp v. Bank of Italy (1922) 59 Cal. App. 76, 209 Pac. 1024, and Chucovich v. San Francisco Securities Corp. (1923) 60 Cal. App. 700, 214 Pac. 263, infra, II. e.

One who sells machinery to the secretary of a mining corporation, with knowledge of an agreement between the secretary and the president of the corporation that the secretary will buy the machinery and sell it to the company as a credit on his indebtedness to the company, cannot obtain priority over the company by taking a bill of sale from the sec

retary, in which he reserves title to the property until certain deferred payments on the purchase price are met, where neither the mining company nor its president, who negotiated the transaction with the secretary, had notice prior to the time of the consummation of the sale. Crenshaw v. Wilkes (1910) 134 Ga. 684, 68 S. E. 498.

The fact that the conditional buyer of an automobile sells the same to a dealer in secondhand cars, without the knowledge of the conditional seller, thereby allowing the automobile to become a part of a shifting stock, does not deprive the conditional seller of his title thereto as against the bona fide purchaser for value from the secondhand dealer, without knowledge or notice of the contract. Rudolph v. Farmers' Supply Co. (1921) 131 Va. 305, 108 S. E. 638.

b. Binding effect of conditions in sale.

1. In general.

It is necessarily implied from the cases cited in subd. II. a, that the condition that title shall remain in the conditional seller until payment of the purchase price is invalid as against a subvendee. This is expressly stated in some of the cases. See infra, II. c. Authority from the conditional seller. to the conditional buyer is sometimes coupled with conditions other than the general one just mentioned. It is generally held that these conditions are invalid as against a bona fide holder. Thus, the conditional seller of sawmill timber to a buyer who is to saw it into lumber and market it cannot impose upon a purchaser in good faith, and without knowledge of the condition, the duty of seeing that the check for the purchase price is made payable to the conditional seller. Clarke Bros. v. McNatt (1909) 132 Ga. 610, 26 L.R.A. (N.S.) 585, 64 S. E. 795.

The conditional seller of a mule, who, subsequent to the sale, authorized the conditional buyer to sell the animal and turn the proceeds of the sale over to him, cannot impose upon a subvendee who bought in good faith, and without knowledge of the condition, the duty of seeing that the proceeds are paid to the conditional seller.

Tucker v. Mann (1906) 124 Ga. 1003, 53 S. E. 504.

Nor can the conditional seller of sheep under an agreement that his buyer was to have authority and power to sell the sheep, or any part of the same, but was immediately to apply all amounts realized from the sale upon the purchase price, impose upon a bona fide purchaser the obligation to see that the purchase price is properly applied. Peasley v. Noble (1910) 17 Idaho, 686, 27 L.R.A. (N.S.) 316, 134 Am. St. Rep. 370, 107 Pac. 402.

The fact that the original conditional buyer breaches his contract to account to the original seller for the proceeds of a resale made by the former does not affect the second buyer. Anglo-California Trust Co. v. Pacific Acceptance Corp. (1924) 70 Cal. App. 41, 232 Pac. 489; Commonwealth Finance Corp. v. Schutt (1921) 97 N. J. L. 225, 116 Atl. 722; Ufford v. Winchester (1897) 69 Vt. 542, 38 Atl. 239. That the purchaser is not bound to see that the conditional seller secures his money was held in Ufford v. Winchester (Vt.) supra, where the conditional seller of horse gave his vendee a license to sell the horse "in any way he sees fit and at any price he sees fit, and give me the proceeds, be it more or less," of the terms of which the purchaser had knowledge. The court distinguishes White v. Langdon (1858) 30 Vt. 599, a case in which there was a license "to trade off the horse provided the pay or avails were paid to him, the plaintiff," saying that under the license in White v. Langdon there was conferred only an authority to sell, but not to receive pay, while in the case at bar the authority to sell and receive the pay was unlimited; the conditional buyer, having unlimited authority to sell and receive the pay, a purchaser was not bound to show that payment was actually made to the conditional buyer.

It frequently happens that, subsequent to the conditional sale, the conditional seller authorizes the buyer to resell. Where such authority is given and the conditional buyer resells, the subvendee gets good title where he purchases in good faith and for value,

notwithstanding the authority is coupled with the condition that the conditional buyer pay to the conditional seller the money received from the sale, an agreement which he fails to perform; the subvendee is not required to see that the conditional buyer complies with those conditions. Tucker v. Mann (1905) 124 Ga. 1003, 53 S. E. 504.

In Ezzard v. Frick (1886) 76 Ga. 512, it was held error, in an action by the conditional seller against a subvendee in conversion, to strike a plea of the defendant to the effect that he bought without any notice of title in the plaintiff, but afterward learned that his vendor bought from an agent of the plaintiff, with the understanding that title was to remain in the plaintiff until payment in full; that the conditional buyer failed to pay, whereupon the agent, without making any effort to collect the purchase money from him, or out of the property, agreed with him that he might sell the property, and thereby raise the money to pay for the same, provided he would pay the agent a stipulated sum out of the money which he expected to receive from a trade about to be made; but the buyer, failing to consummate the trade, could not carry out the contract with the agent, but in the meantime had sold to the defendant, who bought without notice of any encumbrance upon the property and without any notice from the agent that the conditional buyer had no title. In a subsequent part of the opinion the court assumes that the agent made the agreement with the conditional buyer that he sell the property to the defendant, and it is stated that if he did this without notifying the defendant of the reserved title, but allowed him to think that he was buying a perfect title from the conditional buyer, and to pay the buyer for it, a case of fraud was made out. Ibid.

Under a contract expressly stipulating that all sums of money received by the conditional buyer upon the sale of the goods should be moneys had and received by the conditional seller, the conditional seller can recover money so received upon such sale. Weston

v. Brown (1899) 158 N. Y. 360, 53 N. E. 36.

2. Effect of record.

The conditional seller cannot, by recording his contract containing conditions, impose upon a bona fide purchaser the duty of complying therewith. Clarke Bros. v. McNatt (1909) 132 Ga. 610, 26 L.R.A. (N.S.) 585, 64 S. E. 795. Thus, it has been held that the conditional seller of timber to be manufactured into lumber and sold by the conditional buyer, under a contract expressly providing that the subvendee should make the check for the purchase price payable to the conditional seller, cannot, by recording his contract, impose the duty upon a bona fide purchaser without notice of so making the check payable. Ibid.

This does not mean, however, that he is not chargeable with notice from the record that the purchase price is not paid. McNatt v. Clarke Bros. (1915) 143 Ga. 159, 84 S. E. 447.

c. Theory.

It is the general theory of the cases adhering to the rule stated in II. a, supra, that a reservation of title in a sale of goods for resale is invalid as against a subvendee. Star Clothing Mfg. Co. v. Nordeman (1906) 118 Tenn. 384, 100 S. W. 93; Re Meyer (1924; D. C.) 1 F. (2d) 513, dealing with the rule in Tennessee.

A transaction in which the title is reserved, but the buyer authorized to sell, has been characterized as fraudulent. Winchester Wagon Works & Mfg. Co. v. Carman (1887) 109 Ind. 31, 58 Am. Rep. 382, 9 N. E. 707; Wilder v. Wilson (1886) 16 Lea (Tenn.) 548. It has been stated that, in a conditional sale of property with power in the buyer to sell it as the property of the seller and deliver the proceeds to the latter, the property ceases to be security to the seller upon such a sale by the buyer, the subvendee acquiring a good title, and if the buyer does not pay to the seller, but retains the proceeds of the sale and uses them, the buyer becomes a debtor to the seller therefor, and the latter has no priority over other creditors. New Haven Wire Co. Cases (1888) 57 Conn. 352, 5 L.R.A.

300, 18 Atl. 266. In Robinson's Appeal (1893) 63 Conn. 290, 28 Atl. 40, a contract by the terms of which absolute title was to remain in the seller until payment had been made by the purchaser, who was invested with the right to transfer an absolute title to any or all of the goods that constituted the subject-matter of the conditional sale, to all persons with whom he might deal in the usual course of trade as a plumber, and with a provision that, upon a default in making the agreed payment, he was to return the property, with any accretions, upon the demand of the seller, or so much of it as had not been "lawfully used" in the regular course of his business, was held to be a contract of conditional sale under which the buyer could transfer a greater title than his own, not as owner, but under a power conferred by the owner.

In Mishawaka Woolen Mfg. Co. v. Westveer (1911) 112 C. C. A. 109, 191 Fed. 465, where there was a general power of sale, with no limitation except one forbidding the purchaser to sell any of the goods "to any retail or wholesale dealer except with the previous consent of the company," a mortgagee of the retail dealer's entire stock and fixtures, including the goods in controversy, was held to obtain title. This case arose in Michigan, where a distinction is observed between a true conditional sale and one in which the title is reserved by way of security. The contract in question reserved title to the goods, and provided, under certain conditions, the seller might reclaim and take possession "of so much of the said goods as shall then remain in the hands of the purchaser unsold." This contract was held to be at the most an ineffective reservation of title as security, and, as the mortgagees made their loan and received their mortgage on the goods without knowledge, either actual or constructive, of any claim of right or interest therein of the appellants, their rights were sustained. The contract was not recorded as a chattel mortgage.

If the sale has taken place as expressly or impliedly authorized, there is no necessity for the purchaser to

rely on his bona fide character in claiming priority over the conditional seller. Title passes on the general principles of agency. From the fact, subsequently shown to exist, that many of the cases rely on the principles of estoppel, it seems evident that an apparent rather than an implied authority existed in those cases. The true distinction between implied and apparent authority is observed by the court in Brett v. Foorsen (1907) 17 Manitoba L. R. 241. Although the court refers to the fact that the purchaser bought the horses, the property involved in that case, bona fide and without knowledge of the conditional seller's claim, and, in some parts of the opinion, seems to base its decision upon his bona fide character, yet it is stated that the principle on which the subvendee's rights can be given priority "is based on the implied authority which the maker of the lien note [the seller] has to sell the goods covered by it in the ordinary course of his business." The court then states that it might also be based upon the principle of estoppel.

Some of the cases, however, insist upon the purchaser being a bona fide purchaser even in case of (so-called) implied authority. South Bend Iron Works v. Reedy (1905) 5 Penn. (Del.) 361, 60 Atl. 698 (this case involved a sale out of the ordinary course of business, and this fact probably accounts for the requirement as to the purchaser's bona fide character); Flint Wagon Works v. Maloney (1911) 3 Boyce (Del.) 137, 81 Atl. 502 (obiter); American Process Co. v. Florida White Pressed Brick Co. (1908) 56 Fla. 116, 47 So. 942, 16 Ann. Cas. 1054 (obitercase involved sale to contractor); Spooner v. Cummings (1890) 151 Mass. 313, 23 N. E. 839; Fitzgerald v. Fuller (1879) 19 Hun (N. Y.) 180; Rogers v. Whitney (1917) 91 Vt. 79, 99

Atl. 419.

It seems clear from the fact that these cases insist upon the subvendee being a bona fide purchaser, that an apparent, rather than an actual, authority, was involved in the case. This is clear in some of the cases; "implied authority" is treated not as actual au

thority, but as resting upon principles of estoppel. Spooner v. Cummings (1890) 151 Mass. 313, 23 N. E. 839.

In Mississippi River Logging Co. v. Miller (1901) 109 Wis. 77, 85 N. W. 193, the court makes no distinction between an implied authority to sell and an apparent authority to sell. It is stated that, if a seller conditionally sells goods and gives the buyer the indicia of ownership, "with the agreement, express or implied, that he is to sell them as his own, then there can be little doubt but that the vendor will be estopped from asserting title thereto as against an innocent third person who has purchased of the vendee in ignorance of any infirmity or reservation of title."

Where the authority to sell is merely apparent, then it is necessary that the purchaser be bona fide to cut off the conditional seller's rights. Clarke Bros. v. McNatt (1909) 132 Ga. 610, 26 L.R.A. (N.S.) 585, 64 S. E. 795; Citizens' Sav. & Invest. Co. V. Hunt's Garage (1922) 128 Miss. 535, 91 So. 133; 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; Wesbrook v. Willoughby (1895) 10 Manitoba L. R. 690.

Or, where the conditional buyer has failed to comply with certain conditions of the sale, the priority of the subvendee must rest upon an estoppel. Peasley v. Noble (1910) 17 Idaho, 686, 27 L.R.A. (N.S.) 216, 134 Am. St. Rep. 270, 107 Pac. 402.

The Uniform Act (§ 9) protects purchasers from the buyer for value in the ordinary course of business, where the conditional seller has either expressly or impliedly consented to a resale. The fact that a conditional sale contract to a dealer contains an agreement by the dealer that he will not resell the goods or his interest therein, or mortgage or dispose of the same in any way, or remove the property without the confines of the county wherein sold prior to payment in full, without the written permission of the seller or his executors, administrators, or assigns, does not, therefore, prevent the operation of 8 9 of the Uniform Act.

d. Effect of record.

Since, as shown in the preceding subdivision, the authority to sell is regarded as invalidating the reserved title, the fact that the seller has complied with all statutory requirements as to filing or recording is immaterial. Crenshaw v. Wilkes (1910) 134 Ga. 684, 68 S. E. 498. See Clarke Bros. v. McNatt (1909) 132 Ga. 610, 26 L.R.A. (N.S.) 585, 64 S. E. 795, supra, II. b. 2.

In some instances, the courts have relied upon the protection afforded a good-faith purchaser by a statute requiring contracts of conditional sale to be recorded. The conditional seller of property who has authorized a resale, either actually or apparently, having failed to comply with the statute, his rights are held inferior to those of a purchaser. Becker v. La Core (1920) 211 Mich. 684, 179 N. W. 344; Holley v. A. W. Haile Motor Co. (1919) 188 App. Div. 798, 177 N. Y. Supp. 429; Eisenberg v. Nichols

(1900) 22 Wash. 70, 79 Am. St. Rep. 917, 60 Pac. 124; New England Auto. Invest. Co. v. St. Germaine (1923) 45 R. I. 225, 121 Atl. 398. (The same was held with reference to a trust receipt in Clark v. Flynn (1923) 120 Misc. 474, 199 N. Y. Supp. 583.)

The failure of one who had advanced money to enable an automobile dealer to pay the draft attached to the bill of lading for cars shipped to him, and to whom the automobile dealer gave storage receipts, which were treated as conditional sales, to comply with the statute requiring such contract to be recorded, is given as one of the reasons for denying the right of such person as against the purchaser of an automobile from the dealer, in Commonwealth Finance Corp. v. Schutt (1922) 97 N. J. L. 225, 116 Atl. 722.

This is true, also, in case of sales by a retail buyer out of the ordinary course; failure to comply with the recording laws is held to defeat the conditional seller's rights as against a bona fide purchaser. F. B. Hauck Cloth Co. v. Brothers (1895) 61 Mo.

sen (1909) 84 Neb. 525, 121 N. W. 573.

This protection has been held to extend to purchaser at judicial sale; as, for example, at a sale by the retailer trustee in bankruptcy. F. A. Ames Co. v. Slocomb Mercantile Co. (1910) 166 Ala. 99, 51 So. 994.

e. Conditional sales to dealers.

1. In general.

A conditional sale of goods to a dealer in those goods raises certain implications or appearances of a power to resell that do not exist in ordinary conditional sales. The principles, however, which govern the subvendee's rights are no different in the one case than in the other, if a power of sale is found to exist. But, as just stated, from a sale to a dealer a power to resell may be found to exist by implication or because of an indicia of such power in the dealer which will estop the conditional seller from asserting title as against a subvendee. The implied or apparent power of sale that arises from a sale to a dealer will now be discussed.

Implied authority may arise from various situations; it is a question of fact to be proven as other facts. In Spooner v. Cummings (1890) 151 Mass. 313, 23 N. E. 839, the implied authority of the conditional buyer of a horse from a dealer to resell the same was allowed to be proven by testimony as to the course of dealing between the dealer and his conditional buyer, involving a long series of transactions, all of the same kind and conducted generally in the same way; the court stating that such evidence was competent as tending to show an expectation or understanding on the part of both that the conditional buyer would sell the horses which he bought of the dealer as he had opportunity, and that he was impliedly authorized to sell the particular horse in question to the defendant.

It has been held that an implied power to resell arises from a sale of goods to a dealer in such goods. Brett v. Foorsen (1907) 17 Manitoba L. R. 241.

More often the authority which is