Edwin K. Scranton and William H. Otis, Respondents, v. Alvah Clark, Appellant

Edwin K. Scranton and William H. Otis, Respondents, v. Alvah Clark, Appellant. A party contracting to sell a chattel not in possession at the time is not liable upon an implied warranty of title. Should such chattel subsequently come to his possession by purchase, and be transferred to a bona fide purchaser, the title would be complete in such purchaser, and would not inure to the benefit of the party first contracting to purchase the same. This is an appeal to this court, from an order of the Supreme Court, at G-eneral Term, reversing a judgment for the defendant, and ordering a new trial; the defendant giving the usual stipulation on such appeal. The action was upon a promissory note made by Clark, the defendant, for' $2,673.37, dated October 16, 1855, payable one year after date to the order of E. B. Litchfield. Elisha B. Litchfield transferred the note, before its maturity, to A. G-. Jerome, indorsing it without recourse. A. Gr. Jerome sold and transferred the note to Edwin C ' Litchfield, in December, 1857. And when he sold and transferred the note, Jerome delivered it to Edwin C. Litchfield, who had possession of it from December, 1857, to August, 1860, and Jerome had no interest in the note, nor any_ control or possession of it during that period. In August or September, 1860, Edwin C. Litchfield transferred the note back again to Jerome, in some transaction between them, and delivered it to him. In September^ 1860, a few weeks after Jerome had thus again received and became the owner of the note, he sold, transferred and delivered it to Elisha B. Litchfield. Elisha B. Litchfield shortly afterward transferred and delivered the note to Scranton and Otis, the present plaintiffs. They sued upon it in September, 1860. Each of the transfers thus enumerated was accompanied by delivery of the note in question. The defense was, that the note was paid. The alleged payment was made to William W. Leland, by crediting him $300 on a note of his, in the fall of 1858. Leland, in 1858, exchanged some wild land in Wisconsin, which he considered comparatively worthless, with Jerome, for certain overdue notes of which he thought no better. He supposes, that this note was one of this parcel. Leland never had this note in his possession at all. He left other notes, which he undoubtedly bought in the transaction, with Jerome, or with a clerk of Jerome’s, and took them away, from time to time, as he had occasion to use them. In the fall of 1859, after the transaction between Clark and Leland, in which Clark claims to have paid this note to Leland, Leland gave Clark an order on Jerome for the note. Clark presented this order to Jerome, who was, at the time, out of health and out of business. He supposed, from Clark’s statements, without having any means of refreshing his recollection, or looking at papers, that this note was one of those which he sold to Leland, and signed a paper admit,ting it, under that impression: The court charged the jury as follows : 1. That if Jerome was the owner of the note in 1858, when it was said he sold it to Leland, and he did so sell it, but did not deliver it, then the note is paid, and the plaintiffs cannot recover. 2. That if Jerome was not the owner of the note in 1858, at the time he is said to have sold it to Leland, and he did so sell it, and he afterward became the owner of it, then if Clark had paid it to Leland, who had purchased it, the plaintiff cannot recover, because Jerome must be deemed to have warranted the title, and if he acquired the title after a sale to Leland, it then became extinguished by operation of law. To this proposition the plaintiffs’ counsel excepted. The jury returned a verdict for defendant, upon which judgment was duly entered, and upon appeal, the General Term reversed that judgment and ordered a new trial; and the defendant appeals from this judgment to this court. Chatfield, for the appellant. Emott, for the respondents. [MAJORITY — Bacon, J.] Bacon, J. If the charge of the learned judge upon the trial had stopped at the first .proposition enunciated by him, it is possible the verdict might be upheld, because it may, perhaps, be said that there is some evidence from which the jury might possibly have found that Jerome was the owner of the note in 1858, when it is claimed that ho sold it to Leland. The uncontradicted and, indeed, overwhelming evidence is, that, in December, 1857, the note in controversy was sold and delivered to Edwin C. Litchfield who held it as owner from that time until August or September, 1860, when he sold and transferred it to Jerome, who soon after disposed of it to Elisha B. Litchfield, from whom the plaintiffs derive their title. It is quite likely, that, in the transaction between Jerome and Leland, which occurred in the fall of 1858, both parties supposed that'this note was among the bundle of securities that were traded off for the wild land, but it is as nearly certain, as it can well be rendered by testimony, that Jerome had not then either the possession or ownership of the note, and it can hardly be claimed that the jury, if that‘naked proposition had been left to them upon the testimony, could have found any such fact. The utmost that can be insisted the testimony conduces to prove" is, it seems to me, that Jerome agreed to sell this note, with others, in exchange for the lands; that the other notes were handed to the clerk of Jerome, or to Jerome himself, who held them as the depository of Leland, but that this note was not among .the number, and was never in the possession of Leland, or that of his agent. Assuming this to be the state of the case, the jury were instructed, that, if ijhey believed that Jerome sold, that is, in effect agreed to sell, this note to Leland, although he was not the owner at the time of this agreement, yet, as he afterward became the owner, his agreement implied a warranty of title, and this subsequently acquired title inured to the benefit of Leland, his "vendee, and payment to him extinguished. the note. Upon this proposition the jury were authorized to find, as they did, a verdict for the defendant; and the question is, whether the proposition is sound in law; in other words, is there an implied warranty of title in the sale of a chattel where the owner is not in possession ? It is to be assumed that there was no express affirmation of title by Jerome to Leland. There was, on the one hand, a sale of wild lands, and on the other, a sale and transfer by delivering of certain notes, and an agreement to sell another note, but of which no assignment or delivery was made, and no written transfer executed purporting to convey a present interest, or one in futuro. On this precise question, as to the.implication of a warranty on the sale of a chattel not in possession of the vendor at the time, Chancellor Kent, in his commentaries, states the doctrine, without qualification, to be, that the rule of caveat emptor applies, and the party buys at his peril. (2 Com. 478.) He adds, that, if the seller has possession of the article, and sells it as his own, and not as agent for another, and for a fair price, he is understood to warrant the title. In support of the rule, as thus stated, he cites two or three old cases in the English books. The first is, the remark of Taufield, Chief Baron (in Cro. Jac. 197), to the effect, that, if one sell lands, whereof another is in possession, or a horse, whereof another is possessed, without covenant or warranty for the enjoyment, it is at the peril of him who buys, and it is not reason, that he should have an action at the law, where he did not provide for himself. In Medina v. Stoughton (1 Salk. 219), Holt, Ch. J., decided, that, where one having possession of a chattel sells it, the affirmation, that it is his, amounts to a warranty, but, aliter, where the seller is out of possession, for there may be room to question the seller’s title, and, caveat emptor^ in such case, to have either an express warranty, or a good title. These cases seem to have settled the law in England, in conformity with the principle laid down, by Kent, and we have been cited to no authority doubting or questioning them, unless such an inference may arise from the remark of Buller, in Paisley v. Freeman (3 Term, 58), which, however, is merely to the effect, that, if the seller affirms the chattel not in his possession to be his, he is bound to answer for the title; for, in such case, the vendee has nothing else to rely upon. This places the liability upon the ground of an affirmation, amounting to a warranty, and is not at all inconsistent with the principle enunciated in the two cases on which the rule as stated by Kent is founded. In this State the same question was presented, and is very fully discussed both on principle and authority in the case of McCoy v. Artcher (3 Barb. 323). The effect upon the question of warranty of title upon a sale where the property is in or out of the possession of the vendor, is there considered, and the propositions are established that possession by a vendor of chattels is equivalent to an affirmation of title, and, in such case, the vendor is held to an implied warranty of title, even although nothing be said on the subject between the parties. But, if the property sold be at the time of the sale in the possession of a third party, and there be no affirmation or assertion of ownership, no warranty of title will be implied. In these circumstances, in order to attach any liability to the vendor upon a sale, there must he an affirmation which will amount to a warranty of the title. The principle established by this case, is followed and approved in Edict v. Crim (10 Barb. 445), where the court cite the case in Cro. Jac. 197, and say the general rule is that the vendor of a chattel impliedly warrants the title, yet, when the chattel is not in the vendor’s possession, but in that of another, this rule does not prevail. In Hopkins v. Grinnell (28 Barb. 533), where the same point arose, the decision was to the same effect, and the proposition in the terms laid down by Kent, was reiterated and approved. It is not important to cite authorities from other States, several of which are quoted in the opinion of the court in the case of McCoy and Artcher, and are to the same effect. These cases, in our own courts, settle the doctrine with us, from which there has been no dissent from the earliest case to the present time. The effect of these decisions is sought to he evaded by the assertion of the defendant’s counsel, that, in these cases, the vendor never had possession of the thing sold, either before or after the sale, while here Jerome not only had possession before he sold, but afterward. It is not perceived how this fact, conceding it to exist, can vary the principle. The counsel, in this part of his argument, also insists that Jerome was the owner, and had possession of the note when he sold. If this were conceded, the argument would be at an end, and the proposition of law we have been discussing would be immaterial, but, it is to be remarked that the weight of evidence is entirely otherwise, and, in the proposition laid down by the court in this case, the judge assumes that Jerome was not the owner of the note at the time of the alleged sale (as he undoubtedly was not in fact), but that it was his subsequent acquisition of the title that jnnred to the benefit of the vendee so that he could hold the vendor upon an implied warranty, which, as we have seen, the law does not create, but expressly repudiates. In the case of McCoy v. Artcher, the note, which was the subject of the sale, was potentially in the possession of the defendants, being held by an agent, for their benefit, some time prior to the transaction, by which they were sought to be charged. It is said, by the defendants’ counsel, that the certificate of Jerome to Clark estops him from making any claim on the note against Clark, and this estoppel follows the note into the hands of those deriving title from or through Jerome. It is quite questionable whether this certificate was properly admitted in evidence, the effect being, if it had any, to impeach the title to a chose in action in the hands of ' mother party, after Jerome li§d parted with it. But it could not operate as an estoppel, for the simple and obvious reason that it was given long after the time that Clark had dealt with Jerome, and had professedly bought the note, and he was induced to no action whatever upon the strength of that certificate, or of any representation made in it. It lacks all the elements of a legal or equitable estoppel, and should properly, have had no influence in the case. I think the judgment of the General Term should be affirmed, and judgment in accordance with the stipulation rendered for the plaintiffs for the amount of the note and nterest, with costs. All the judges concurring, except Mason, J., Judgment affirmed.