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action is, therefore, rather executed than executory, and, what is the important point, is so regarded by the parties. The loss accordingly should fall on the buyer.
A sale of goods with an option on the part of the buyer to return, as the title and all beneficial interest are transferred, necessarily throws the risk upon the buyer, for the impossibility of performing one half of his alternative promise to return the goods or pay for them cannot excuse non-performance of the other half.1 On the other hand, when goods are delivered with an option to purchase, as the buyer has never entered into an obligation to buy, the risk necessarily remains with the seller.2 In England this distinction between a sale or return" and a "sale on trial," important as it is for the correct decision of many questions, has not been brought out by the decisions.
Still another principle is involved in Smith v. Hale, 158 Mass. 178. It was there held that the purchaser of a buggy, the springs of which are warranted, was not precluded from returning it for breach of warranty by the fact that the springs were broken and the buggy was therefore not in the same condition as when it was bought. The decision is correct, for by warranting the springs the seller assumed the risk of injury to them by ordinary use. Had an accidental injury happened to any other part of the buggy, deed to the springs from any other cause than ordinary use, -- the loss would, it seems, have fallen upon the purchaser, under the
had no interest remaining in them except by way of security for the payment of the notes given for the price."
The common statutes requiring a conditional sale, like a chattel mortgage, to be recorded, show a general recognition of the similarity of the two transactions.
1 See Hotchkiss v. Higgins, 52 Conn. 205, and cases cited. Compare Newburger v. Hoyt, 86 Ga. 508.
2 Hunt v. Wyman, 100 Mass. 198; Jacob Strauss Saddlery Co. v. Kingman, 42 Mo. App. 208.
3 In Head v. Tattersall, L. R. 7 Ex. 7, and in Elphick v. Barnes, 5 C. P. D. 321, the buyer was held to be under no obligation to pay the price of a horse which, in the one case had been injured, and in the other case had died. The later case seems to have been a case of sale on trial, but in Head v. Tattersall the title was apparently intended to pass at once. In neither case was the point discussed. In Elphick v. Barnes, a dictum in Moss v. Sweet, 16 Q. B. 493, 495, to the effect that in case of a sale with right to return the risk was on the buyer, was explained away by the suggestion that it only applied where the loss was due to the fault of the buyer. Again, in the Sales of Goods Act, § 18, Rule 4, no distinction is observed. The same rule of presumption is laid down for a "sale or return" and a "sale on approval." Chalmers in his annotation of the act, however, points out the distinction p. 42. The cases in this country are collected in Benjamin, Sales (Am. ed. 1892), pp. 568, 569.
principles discussed in the last paragraph, even though the warranty had in fact been broken.1
The development of the law in regard to risk of real property under contract of sale has been entirely apart from the law governing sales of chattels, and has taken place in courts of equity rather than courts of law. The matter was first touched upon by Sir Joseph Jekyll, M. R., who said, "If I should buy an house, and, before such time as by the articles I am to pay for the same, the house be burnt down by casualty of fire, I shall not, in equity, be bound to pay for the house." 2
The leading case on the subject is Paine v. Meller, a decision by Lord Eldon. This was a suit for specific performance. The contract was made on September I for a conveyance at Michaelmas. Owing to the seller's failure to make out a good title, the conveyance was not made then, but on December 16th or 17th the parties continued treating with each other, and there was evidence that the defect in the title was remedied to the buyer's satisfaction. On December 18th the house was burned. Lord Eldon held that if the buyer had accepted the title he was bound to complete the purchase, but otherwise not. The case is generally cited as a decision that the buyer is liable from the date of the contract, and it seems that such is the effect of it, though it has been cited also as
1 See McKnight v. Nichols, 147 Pa. 158.
Stent v. Bailis, 2 P. Wms. 217, 220. The case of Cass v. Rudele, 2 Vernon, 280, s. c. Eq. Cas. Ab. 25, pl. 8, is not in point, because according to the reports the houses in question were destroyed after the purchaser was in default, and, according to a note in the latter report, after conveyance. There is also a whole series of cases which should be distinguished. White v. Nutt, 1 P. Wms. 61, may be taken as an instance. That was a suit to enforce a contract to purchase an estate for two lives. Before the time for conveyance one of the lives determined. Specific performance was decreed. This clearly follows from the nature of the contract. The contingency the happening of which lessened the value of the estate was an ordinary one necessarily in the contemplation of the parties. An agreement for the purchase of an annuity is subject to a similar risk. Mortimer v. Capper, 1 Bro. C. C. 156. Cf. Pope v. Roots, 1 Bro. P. C. 370. On the same principle, the case of Akhurst v. Jackson, 1 Swanst. 85, is entirely right. There a trader agreed to take two persons in partnership for a period of eighteen years, in consideration of a sum payable in several instalments. Five months later, when only one instalment had become due, the trader became bankrupt. It was held that his assignees were entitled to recover the remaining instalments when they became due. Such cases do not differ in principle from appreciation or depreciation in the market value of property between the days of contract and conveyance, and do not fall properly within the subject of this article, which relates to risks not only accidental, but extraordinary.
3 6 Ves. 349.
deciding the contrary.1 As the time for performance had passed, owing to the seller's default, the buyer could clearly not be compelled to take the property unless this default was waived, and it was for this reason that Lord Eldon made the question turn on the acceptance of the title. His language makes his view clear: "As to the mere effect of the accident itself, no solid objection can be founded upon that simply; for if the party by the contract has become in equity the owner of the premises, they are his to all intents and purposes. They are vendible as his, chargeable as his, capable of being encumbered as his; they may be assets; and they would descend to his heir."
Since the decision of Paine v. Meller it has not been doubted in England that the buyer is not excused from fulfilling his promise to purchase by an accidental injury to the property.2 It is not surprising that the English law has had a marked effect upon the decisions in this country. A majority of the courts which have dealt with the subject have, either in dicta or decisions, indicated
1 A Brief Survey of Equity Jurisdiction, C. C. Langdell, I HARVARD LAW REVIEW, 375, note 1. "Lord Eldon held that the vendee must bear the loss, provided he had been put in default by the vendor before the loss happened, but not otherwise." The vendee could hardly be considered in default on any view. Though it rested with him to make the deeds, he would certainly not be in default immediately upon expressing himself as satisfied with the title. He would have a reasonable time thereafter to prepare the deeds, and in fact it was said when the title was accepted that the deeds would be ready in two or three days, a time which had not expired at the time of the fire.
2 There are dicta to this effect in Rawlins v. Burgis, 2 Ves. & B. 382, 387; Harford v. Purrier, I Mad. 532, 539; Acland v. Gaisford, 2 Mad. 28, 32; Robertson v. Skelton, 12 Beav. 260, 266; Coles v. Bristowe, L. R. 6 Eq. 149, 159, 160. In Poole v. Adams, 12 Weekly Rep. 683, Kindersley held, at suit of a cestui que trust, that a vendee from the plaintiff's trustee was bound to pay the price for an estate though the house had been destroyed, and could not claim the benefit of insurance money collected by the trustee and under agreement with the vendee allowed as part payment of the price, the trustee having misapplied the insurance money and become bankrupt. In Rayner v. Preston, 14 Ch. D. 297, it was held that a vendee of a house who after its destruction by fire before the time fixed for conveyance had paid the price in full, could not recover insurance money collected by the vendor. This decision was affirmed by the Court of Appeal, Brett and Cotton, L. JJ., James, L. J., dissenting. Thereafter in Castellain v. Preston, 8 Q. B. D. 613, 11 Q. B. D. 380, the Court of Appeal, reversing the decision of Chitty, J., unanimously held the insurers entitled to recover back the insurance money paid, on the ground that it was paid in ignorance of the fact that the vendee had previously paid the price in full. In both cases all the judges recognized the doctrine of Paine v. Meller. 8 Osborn v. Nicholson, 13 Wall. 654, 660 (but see The Tornado, 108 U. S. 342, 352, where Wells v. Calnan, 107 Mass. 514, was cited with approval); Willis v. Wozencraft, 22 Cal. 607, 618; Hough v. City Fire Ins. Co., 29 Conn. 10; Lombard v. Chicago Sinai Cong., 64 Ill 477, 482; Kuhn v. Freeman, 15 Kan. 423; Gammon v. Blaisdell, 45 Kan. 221; Johnston v. Jones, 12 B. Mon. 326; Calhoon v. Belden, 3 Bush, 674, Marks v
their assent to Lord Eldon's view. But there is, nevertheless, a strong dissent.1
The reason stated in the case for what may be called the English view is variously put. It is sometimes said that equity regards as done what is agreed to be done; sometimes that from the moment of the contract the vendor is trustee for the vendee; sometimes that from that moment the vendee is the owner in equity. So far as these statements are not question-begging ways of saying the law is so because it is, they involve the idea that the vendee from the time of the contract acquires the substantial rights of ownership, and will therefore be treated by equity as having the rights and being subject to the liabilities of a legal owner. There are reasons for this theory when applied to real estate not applicable to chattels. That a contract to sell chattels without transfer of possession gives only a personal right against the seller for damages in case of breach has already been shown. A contract to sell real estate, however, may be specifically enforced against the vendor; and not only against the vendor, but against any one who, with notice of the vendee's rights, takes title from the vendor. In this country, moreover, by recording his contract, the vendee is able to charge every one with constructive notice of his rights. He thus acquires in fact a right in rem.2 This effect of the Tichenor, 85 Ky. 536; Martin v. Carver's Adm. (Ky.) 1 S. W. Rep. 199; Brewer v. Herbert, 30 Md. 301; Blew v. McClelland, 29 Mo. 304, 306; Snyder v. Murdock, 51 Mo. 175, 177; Walker v. Owen, 79 Mo. 563; Gilbert v. Port, 28 Ohio St. 276, 292; Richter v. Selin, 8 S. & R. 425, 440; Morgan v. Scott, 26 Pa. 51; Siter's App., 26 Pa. 178, 180; Reed v. Lukens, 44 Pa. 200; Hill v. Cumberland Co., 59 Pa. 474, 478; Miller v. Zufall, 113 Pa. 317, 325; Huguenin v. Courtenay, 21 S. C. 403, 405; Christian v. Cabell, 22 Gratt. 82, 105. A decision to the same effect in Australia is Smith v. Hayles, 3 Victorian L. R. Law, 237.
1 Cutcliff v. McAnally, 88 Ala. 507, 512; Gould v. Murch, 70 Me. 288; Thompson v. Gould, 20 Pick. 134; Gould v. Thompson, 4 Met. 224; Wells v. Calnan, 107 Mass. 514; Wilson v. Clark, 60 N. H. 352; Powell v. Dayton, &c. R. R. Co., 12 Ore. 488. The question is expressly left open in Wetzler v. Duffy, 78 Wis. 170. In New York there are dicta in a few early cases in accord with the English law, Rood v. New York, &c. Co., 18 Barb. 80, 83; McKechnie v. Sterling, 48 Barb. 330, 335; Clinton v. Hope Ins. Co., 45 N. Y. 454, 465; but in view of the later decisions it seems probable that the vendee would not be bound to fulfil his contract if the property were accidentally destroyed or seriously injured before the time for the completion of the contract, unless he had by the contract a right to the possession of the premises. Wicks 7. Bowman, 5 Daly, 225; Smith v. McCluskey, 45 Barb. 610; Goldman v. Rosenberg, 116 N. Y. 78; Listman v. Hickey, 65 Hun, 8.
2 Another instance of the same effect of the system of registration is found in the law of equitable easements. In this country, as every one has constructive notice of a recorded equitable easement, such an easement is as completely a right in rem as a legal easement, which also only becomes a right in rem when recorded.
registration laws has never been adverted to in connection with the question under discussion, but it seems obvious that the right of the vendee between the time of the contract and the time for performance corresponds more nearly to actual ownership where such laws prevail than where they do not.
If the promise of the vendee is expressly conditional upon receiving a conveyance of the property in good condition, it can hardly be doubted that no liability will arise unless the condition is complied with. If there is no express condition to the vendee's promise, but an express promise by the vendor to convey and deliver in good condition, it is held in Kentucky that failure to comply with the promise, though excused by impossibility, will prevent any right of action for the price.1 Reasonable as this doctrine seems, it leads to the destruction of the whole English rule, for a promise to convey must always mean a promise to convey in substantially the same condition as at the time of the contract.
On any view, too, the vendor is not entitled to the price unless at the time of the calamity the obligation of the vendee to take the property was absolute. If, therefore, the vendor had not at that time a good title, or was in default, or if either the vendor or the vendee had any option in regard to performance of the contract,1
1 Marks v. Tichenor, 85 Ky. 536, 538. Indeed, it has been held in Indiana that such a promise binds the promisor to pay damages. Goddard v. Bebout, 40 Ind. 114. But see Maggort v. Hansbarger, 8 Leigh, 532; Warner v. Hitchins, 5 Barb. 666; Young v. Leary, 135 N. Y. 569. Similarly, a promise to return leased personal property in good condition has been held to amount to an assumption of the risk. Harvey v. Murray, 136 Mass. 377. It may be doubted whether this is the true construction of the promise. The contrary decisions of Seevers v. Gabel (Ia.), 62 N. W. Rep. 669; Young v. Bruces, 5 Litt. 324; McEvers v. The Sangamon, 22 Mo. 187; and Harris v. Nicholas, 5 Munf. 483, seem better.
2 Paine v. Meller, 6 Ves. 349; Calhoon v. Belden, 3 Bush, 674; Christian v. Cabell, 22 Gratt. 82.
8 Paine v. Meller, 6 Ves. 349.
4 Counter v. Macpherson, 5 Moo. P. C. 83; Lombard v. Chicago Sinai Cong., 64 Ill. 477; Blew v. McClelland, 29 Mo. 304; Gilbert v. Port, 28 Ohio St. 276. On this principle the decision in Goldman v. Rosenberg, 116 N. Y. 78, would clearly have been the same had the court admitted the general doctrine of the English courts of equity. One partner had conveyed real estate to a firm of which he was a member, agreeing to purchase it on the expiration of the partnership. As the property was at the risk of the business, the right of the vendee was subject to a contingency. For the same reason, a judicial sale does not throw the risk on the vendor until the sale is confirmed, for though the vendee is bound before that time, the vendor is not, since the court may refuse to confirm the sale. Ex parte Minor, 11 Ves. 559; Twigg v. Fifield, 13 Ves. 517.