George W. Green and others v. John W. Hall

George W. Green and others v. John W. Hall. When a contract is entered into for an article not then in existence, but which is afterwards to be made or constructed, it does not become the property of the person for whom it is to be made, until it is completed and delivered to him, or is at least ready to be delivered to him; unless it is otherwise specially provided in the contract. For notwithstanding this is the general principle of the common law in such cases, it is competent for the parties by express agreement to contract that the article shall become the property of the purchaser at any particular stage of the work upon it; but in the absence of any such stipulation between them in the contract, the general principle of the com- mon law, as before stated, must prevail in regard to the ownership of it. A contract to build the hull of a sloop at a stipulated price per ton, to be paid in three equal instalments at specific stages of the work as it progressed, the builder to find all the materials and do all the work, and deliver her by a certain day to the purchaser in Philadelphia, subject to the inspection of two persons, if. required by him, does not appropriate, or vest the property in the vessel during the progress of the work in the purchaser, although he has paid to the builder the two first instalments at the specific stages of the work agreed upon when about two-thirds built; but the ownership of the vessel remains in the builder, and may be seized in execution and sold in that condition as his property at the suit of his judgment creditors. If abandoned by the builder after the levy of the executions upon it, and it is finished by the party for whom it was to be built, at his own expense, the measure of damages, in an action by the purchasers at the sale of it upon the executions, to recover the value of it from him, will be the value of the vessel at the time of the levy of the executions upon it. This was an action of traver by the plaintiffs to recover from the defendant the value of the unfinished hull of a sloop sold in the process of its construction under sundry executions levied upon it as the property of James H. Tubbs, the builder, and bought by the plaintiffs. The proof was, that Tubbs had entered into a contract with Hall, the defendant, on the 31st of August, 1854, to build the hull of the sloop for him, of certain dimensions, and find all materials, and deliver it complete in Philadelphia, by the 1st day of March, 1855, to pass the inspection of two persons, if required by Hall, at the rate of twenty-eight dollars per ton, one-third to be paid by him when the keel, stem, sternpost and floors were laid, one-third when the deck-frame and decks were laid, and the other third when it should be delivered in Philadelphia, all complete and according to contract. Tubbs proceeded under the contract to procure the materials and to build the sloop at Concord, in Sussex County, and whilst engaged upon the work and when the hull was about two-thirds finished, several executions were sued out on judgments against him by various parties, some of whom had obtained judgment for timber and material furnished him for the purpose, and were levied upon it, and by virtue of which it was afterwards sold at public sale and was bought by the plaintiffs as his property. At the time of the levy of the executions, Hall had paid to Tubbs, upon the work in the aggregate, $951.38, which exceeded the sum then due him by the contract one hundred dollars. On the levy of the executions upon the property as his, Tubbs notified Hall of the fact, and at once abandoned the contract and his work upon the vessel and did no more upon it. Hall was present at the sale, and gave notice to the bidders that he claimed the property at his own, by virtue of the contract and the payments he had made under it; and afterwards, on the formal demand of the plaintiffs as the purchasers, refused to deliver it to them. He then proceeded to procure materials and employ workmen, and to complete the hull at his own expense, and when finished had it taken to Philadelphia. C. M. Cullen, for the plaintiffs: When a person makes or constructs an article, he is. in law the owner of it: this is the general principle; and when it is built under a contract, the property continues in him until it is finished and delivered. Archb. N. P. 597. In this ease the vessel, by the terms of the contract, was to be finished and taken to Philadelphia by Tubbs, the builder, where ,she was to pass an inspection, if. required, by the defendant, before delivery; and had not the contract been abandoned, and the hull, in its unfinished condition, been relinquished by Tubbs to him on the levying of the executions.upon it, the property in it would have continued in the builder until the delivery there. As it was, it remained in him until he abandoned his contract and relinquished the work, after the levy of the executions, to the defendant. Mucklow v. Mangles, 1 Taunt. 319; Woods v. Russell, 7 Eng. C. L. R. 310; Bishop v. Cramshay, 10 Eng. C. L. R. 136; Atkinson v. Bell, 15 Eng. C. L. R. 216; Oldfield v. Low, 17 Eng. C. L. R. 333; Maberley v. Shephard, 25 Eng. C. L. R. 43; Clark et al. v. Spence, 31 Eng. C. L. R. 107. In the case last cited, the work and materials were to be inspected and approved by a superintendent, and the ship was to be paid for by instalments, at certain stages of the work, as it proceeded. But, in the present case, there was no superintendent provided for in the contract, in which respect it is stronger than that case. The principle on which we rely is also ruled in the case of Laidler v. Burlinson, 2 Mees. & Welsby, 602, and in the case of Demerritt v. Johnson, 7 Johns, 472, which was almost identical in its circumstanées with the case now before the Court, except it was not quite as strong against the defendant, as he furnished a part of the materials himself'in that case; and.yet it was held that the sloop continued the property of the builder until it was finished and delivered. I would also refer, in further support of the principle, to Johnson v. Hunt, 11 Wend. 137. W. Saulsbury, for the defendant: We do not mean to controvert the general principle of law relied upon by the plaintiffs, that an article contracted to be made and delivered to another, does not become the property of the latter until it is finished and delivered. But the principle is otherwise in the case of a ship, when it is built under a special agreement, and is to be paid for by instalments, at specific stages of the work as it progresses; and this distinction rests on the doctrine of special appropriation ; for in such a case the ship becomes the property of the person for whom it is to be built, from the time the keel is laid, on the ground of the special appropriation of it to him by the contract, which vests the property in him from that moment. Abb. on Ship. 5; Woods v. Russell, 7 Eng. C. L. R. 310; Clark et al. v. Spence, 31 Eng. C. L. R. 107; Laidler v. Burlinson, 2 Mees. & Wels. 602. Mow, had not Hall, the defendant, a right in this case to demand of Tubbs, the builder, the delivery of the specific vessel, on which the two first instalments and one hundred dollars of the last had been paid by him, although the work stipulated to be performed, that is to say, two-thirds of the work upon her, had not then been done by him ? It is the payment of the instalment, under such a special contract, that appropriates and vests the property in the purchaser, as the work proceeds and the.payments are made at the specified stages of it, pursuant to the contract. And is not this both just and reasonable to all concerned—to the party paying, and to the builder, who receives his compensation for his work and materials at regular intervals, according as he progresses with it; and to his creditors, who should look rather to the fruits of his industry, and to the compensation thus received by him, than to the property of another, for the satisfaction of their demands against him? Has not the party who has progressively purchased and paid for the ship in this manner, whilst, the builder is constructing her, such an interest and property in her, at the stages paid for according to the contract, as the law will protect against all other claimants, and especially the creditors of the builder, who may rest entirely easy until she is nearly finished and as nearly paid for, and then seize her in execution for the debts of the latter, as was done in this instance? It is true that the property of the purchaser in the ship is not completed and perfected by the actual delivery of her to him, neither can it be under the contract, until she is finished. But the completion of each successive stage of the work, and the receipt of payment for it, pursuant to the contract, may be considered, under the circumstances, as equivalent to a partial delivery, as far as practicable; or as a constructive delivery of the ship, as far as built, to be finally consummated by an actual delivery of the whole when finished; and this is the light in which the law regards it, when it denominates it an appropriation of the property hy the builder to the purchaser under the circumstances, according to the authorities which I have cited. All the other cases cited by the counsel for the plaintiff, with the exception of Demerrit v. Johnson, from 7 Johns, 472, have nothing to do with, and do not even raise or involve this principle of appropriation; because the work, in those cases, was not to be paid for, at stipulated stages, by instalments, as it proceeded, and only affirm the general principle of law, which is not disputed. And as to that case, he would remark that it was decided on the general principle referred to as early as the year 1811, without argument, and prior to the case of Woods v. Russell, which was decided in England in 1822, and before the distinction in that case was taken and ruled in that country, and which was afterwards recognized and affirmed in the cases of Clark et al. v. Spence, and Laidler v. Burlinson, which I have already cited, and upon the authority of which we contend that the plaintiffs in this case cannot recover. C. S. Layton, on the same side: In this case, as my colleague has remarked, Hall had entered into a special agreement with Tubbs, to build this vessel for him, the latter to be paid by instalments, at specified stages of the work, as it proceeded to completion. In good faith Tubbs begun the work, procuring the materials for the purpose, and had proceeded to nearly two-thirds of the entire construction of it; whilst Hall, acting in equal good faith, and relying upon his interest and property in her under their contract, had actually paid in the aggregate nearly a thousand dollars under it, and'had overpaid the amount then due hy the instalments, as stipulated to be paid in it, when certain judgment-creditors of Tubbs sue out sundry executions against him, levy them upon the unfinished article on which he is at the time busily engaged under the contradi, and sell it at public sale to the highest bidder, notwithstanding the claims and remonstrances of Hall, and thus not only arrest the builder in his employment, and seize the vessel out of his hands, but claim the right to deprive the purchaser, Hall, of the benefit of every dollar which he has-paid and advanced upon it. Is this just? Is it fair? Is it law ? We say it is neither. The distinction is this: when the vessel contracted for is to be built under a special agreement, and to be paid for by instalments as the work proceeds, and they are promptly paid as they fall due in the progress of the work, the vessel becomes the property of the purchaser, or the party for whom she is to be built, as soon as the first instalment is paid, by what the books term appropriation and accession, and is vested in him. Bell on Contr. of Sale, 50 Law Libr. 13; Glover v. Austin, 6 Pick. 209; Sumner v. Hamlet, 12 Pick. 76; Buterworth v. McKinley, 11 Humph. Rep. 206; 24 Eng. C. L. R. 220. But if such were not the law of the case, the defendant should then certainly have a lien on the specific article under the circumstances, for the amount of money which he has paid in good faith upon the work as it proceeded, under the contract. E. D. Cullen, for the plaintiffs: By the terms of the contract, the vessel was to be completed and delivered to the defendant in Philadelphia; and until it was delivered to him pursuant to the terms of the agreement, he had, and could have, no property in her. In all the cases cited on the other side, it will be found that there was some special fact or circumstance, which the Court regarded as equivalent to an actual delivery of the article. In the case of Woods v. Russell, the Court expressly relies on the fact, that the builder had furnished the party for whom the ship was built with the necessary certificate to procure the enrolment of her in his name as a finished vessel, which was regarded as a constructive delivery of her by him to the purchaser; and in the case of Clark et al. v. Spence, the Court rests the decision on the sole ground, that there was a superintendent, on the part of the purchaser, to inspect and approve of the materials and the work, in every stage of it, as it progressed, and which was treated as a delivery to him, and through him to his principal, the purchaser. The case in 7 Johns, decided in 1811, is referred to and affirmed in the case of Johnson v. Hunt, 11 Wend. 137, which was decided as late as 1834. As to the cases cited T> on the other side from “ Pickering’s Reports,” they do not proceed on the principle of appropriation, and have no bearing whatever on the question of law involved in the present action. [MAJORITY — Gilpin, Ch. J.,] The Court, Gilpin, Ch. J., charged the jury: This is an action of trover, brought by the plaintiffs to recover from the defendant the value of the hull of a sloop, contracted' to be built for the latter by James H. Tubbs, to be delivered to him when completed, by a certain time, in the city of Philadelphia, subject to inspection there, if the defendant should require it. By the terms of the contract, Hall, the defendant, was to pay Tubbs, the builder, for the work at specific stages'of it by instalments, as it progressed, Tubbs to supply all materials, as well as to do all the work at the stipulated price of twenty-eight dollars per ton. It is in proof that the defendant had paid to Tubbs the two first instalments, and one hundred dollars over, amounting to $951.38, and to one hundred dollars more than the two-thirds of the whole price agreed to be paid for it. Afterwards, and when the vessel had been about two-thirds built, several executions were sued out by certain judgment creditors of Tubbs, the builder, and were levied on the vessel as his propertyupon which Tubbs at once abandoned his work upon it, and gave up the vessel in her unfinished condition to the defendant; in which she was afterwards sold at public sale under these executions and levies, and was purchased by the plaintiffs. They then made a formal demand on the defendant for the vessel, but he refused to deliver her to them, claiming her as his own property; and proceeding to have the work upon her completed at his own expense, he afterwards carried her away and converted .her to his own use. Upon this state of facts it is contended on the part of the plaintiffs, that the vessel was the property of Tubbs, the builder, at the time when the executions were levied on it; whilst on the contrary, it is insisted upon the other side, that she was at that time the property of Hall, the defendant, by virtue of the written contract which has been proved between them, and the instalments duly paid by Hall to Tubbs during the progress of the work upon her up to that time; on the ground that these instalments having been paid pursuant to the agreement as the work proceeded, it constituted what is termed an appropriation of the vessel as the work upon it progressed, to the defendant as his property. And it is upon this point the decision of the case depends; for if the principle of law applicable to the case under the facts proved, is such as it has been stated to be by the counsel for the defendant, then the verdict should be in his favor; but if it is otherwise, then it should be for the plaintiffs. The general principle of the common law on this subject has. been correctly stated, and is admitted on both sides, and that principle is this: when a contract is entered into for an article not then in existence, but which is after-wards to be made, or constructed, it does not become the property of the person for whom it is to be made, until it is completed and delivered to him, or is, at least, ready to be delivered to him, unless it is otherwise specially provided in the contract. Because, notwithstanding this is the general principle of the common law in such cases, it is competent for the /parties to provide by. express agreement in their contract, that the article shall become the property of the purchaser at any particular stage of the work upon it; but in the absence of any such stipulation between them in the contract, the general, principle of the common law, as before stated, must prevail in regard to the ownership of it. But as there is no such provision or stipulation in the contract proved in this case, on the com, trary, it is wholly silent on this point, and inasmuch as it expressly provides that the hull of the sloop was to be finished and delivered by Tubbs to the defendant on or before a certain day in Philadelphia, subject to the inspectian of two persons, if required by the latter, we consider and feel bound to say to you that the ownership of the vessel and the property in her'was in. contemplation of law in Tubbs, the builder, at the time when the executians in question were sued out and levied upon her as. his property, and that the subsequent sale of all Ms- right, title and interest in her, upon these executions, conveyed the legal title and property in her to the plaintiffs as the purchasers, notwithstanding the instalments paid and the money advanced on account of the work up to that time by the defendant to the builder; and that the plaintiffs are therefore entitled to recover. Several adjudicated cases have been cited by the counsel for the defendant, to show what has been the ruling of the courts inxEngland on the doctrine of appropriation, as it is termed, in cases of this nature, or at all events, somewhat similar to this. But without entering into a particular examination of these cases, some of which appear to ,rest on no very satisfactory or well-established principle, suffice it to say that we know of no case in which that doctrine has been ruled, or recognized in the courts of this country. On the contrary, the decision^ here have been the other way; and in the latest case which appears to have arisen in our courts, which was the case of An drews et al. v. Durant et al., 1 Kern. 35, very recently decided in the Court of Appeals in Hew York, the principle of the cases as ruled in England on this question was expressly repudiated and denied as law in this country. As the defendant was suffered, after the sale to the plaintiffs, to proceed and finish and complete the construction of the hull of the sloop at his own cost and expense, should the jury find for the plaintiffs, the measure of the damages will he the value of it at the time of the levy of the executions upon it. Verdict for the plaintiffs.