may stop the goods as a security for the price. But if they are stopped without good cause, or through misinformation, the buyer is entitled to the goods, and to damages which he may have sustained in consequence of their stop

page.

§ 10. In the sale of a chattel, if the seller has possession of the article, and sells it as his own, he is understood to warrant the title. A fair price implies a warranty of title; and the purchaser may have satisfaction from the seller, if he sells the goods as his own, and the title proves deficient. But if the possession is at the time in another, and there is no covenant or warranty of title, the party buys at his peril. It is thought, however, if the seller affirms that the property is his own, he warrants the title, though it is not in his possession.

§ 11. With regard to the quality of the thing, the seller is not bound to make good any deficiency, except under special circumstances, unless he expressly warranted the goods to be sound and good, or unless he made a fraudulent representation or concealment concerning them. The rule is, if there is no express warranty by the seller, nor fraud on his part, and if the article is equally open to the inspection of both parties, the buyer who examines the article for himself, must abide by all losses arising from latent defects equally unknown to both parties.

§12. But this rule does not reasonably apply to those cases in which the purchaser has ordered goods of a certain character, or in which goods of a certain described quality are offered for sale, and, when delivered, they do not answer the description. There being no opportunity of examining them, there is an implied warranty of the quality of the article. An intentional concealment or suppression of a material fact, when both parties have not equal access to means of information, is deemed unfair dealing, and renders the contract void. As a general rule, each party is bound to communicate to the other his knowledge of material facts, provided he knows the other to be ignorant of them, and they are not open and naked, or equally within the reach of his observation. The moral law, however, and fair dealing, require, in all cases, a full disclosure of all defects within the knowledge of the contracting parties.

CHAPTER LIII.

FRAUDULENT SALES AND ASSIGNMENTS; GIFTS, &C.

§ 1. To protect the rights of the contracting parties alone, is not the only object of laws for the regulation of contracts. Contracts are often made which injuriously affect the rights of third persons, who are persons other than the contracting parties. Contracts by which third persons are most frequently injured, are those by which property is fraudulently conveyed by gift, sale, or assignment. A debtor, to place his property beyond the reach of his creditors, either transfers it to some other person by gift; or he sells or assigns it to another, under the false pretense of securing the payment of a debt; the property to remain with the assignor, with the secret understanding that the assignee is never to take it into his possession.

§ 2. Any agreement which operates as a fraud upon third persons, is void. It is a rule of common law, that all deeds of gift, and all transfers of goods and chattels made by any person to secure them for his future use, shall be void as against creditors; that is to say, such transfers shall not exempt the property from being taken to satisfy the demands of his creditors. And as a sale or an assignment is more likely to be fraudulent when the property remains with the seller or assignor, than when the assignee takes it into his own possession, it has long been a principle of law, that if property assigned or sold remains with the person assigning or selling it, the transaction is presumed to be fraudulent. But whether such conveyance of goods is only prima facie evidence of fraud, which the vendee or assignee may be permitted to rebut by proof, or whether the transaction is fraudulent in point of law, and void, is a question upon which the decisions of the courts in England as well as those in this country differ, and which, therefore, may be considered as not conclusively settled.

§ 3. Some have made a distinction between bills of sale and assignments that are absolute, and those that are conditional. The Supreme Court of the United States has affirmed the doctrine, that an absolute and unconditional bill

of sale or conveyance, when the property is retained in possession, is of itself conclusive evidence of fraud; in other words, it is presumed to be fraud in point of law, whatever it may be in fact. It has been held by the same court, that a conveyance with a condition that the property is to remain with the vendor until the condition shall be performed, or which is in the nature of a mortgage or security, expressing an agreement between the parties that the mortgager shall retain possession, is valid.

§ 4. In some states, the doctrine established by the courts is, that a continuance of possession is only prima facie evidence of fraud; in which case, the mortgagee or assignee is allowed to show by proof, that the conveyance was made in good faith, and for a valuable consideration. In other states, the strict rule prevails, that, without a change of possession, the transaction is fraudulent in law; in which case the assignee, or person claiming the property under the assignment, is not permitted to show that, in point of fact, the transaction was bona fide, (made in good faith.)

§ 5. Although a rule that holds every conveyance to be fraudulent, unless followed by an immediate change of possession of the property conveyed, may be deemed necessary to prevent frauds upon third persons, it often operates to the injury or inconvenience of honest debtors. A debtor may be obliged to part with property, however convenient or needful its present use may be to him, in order to satisfy a debt; when, but for this stringent rule of law, he might borrow the money to pay the debt, or procure a forbearance of it, by pledging property without losing the benefit of its use.

§ 6. Why this perplexing question has been left so long unsettled in the different states, it is not easy to perceive. In the state of New York, it has been set at rest by an express statute, declaring, that unless a sale or an assignment is accompanied by an immediate delivery, and followed by an actual and immediate change of possession, it shall be presumed to be fraudulent and void, as against creditors, and shall be conclusive evidence of fraud, unless the party claiming the property under the assignment, shall make it appear, that the same was made in good faith, and without any attempt to defraud. The essential provisions of this

statute are believed to prevail at present in most of the states.

§ 7. In the sale of personal property, though there should be a judgment against the vendor, and the purchaser should have notice of it, that fact would not of itself render the sale fraudulent. But if the purchaser, knowing of the judg ment, purchases with the view or purpose to defeat the creditor's execution, the transaction is fraudulent. The question of fraud depends upon the motive.

§ 8. Assignments are sometimes made by debtors for the benefit of their creditors. A person deeply indebted, or in embarrassed circumstances, assigns his property, in trust, to one or more persons, to be by them disposed of, and the avails to be applied to the payment of all his creditors, or of a part of them; for the law which we have been considering, does not apply to assignments of this kind so as to forbid a debtor giving a preference to one or more creditors over others, provided the assignment is for a sufficient consideration. A debtor may directly assign or transfer all his property to a single creditor, and the assignment be valid : but if the value of the property is manifestly excessive, and disproportionate to the debt which it is intended to cover, the other creditors have a right to the surplus.

§ 9. When a debtor in embarrassed circumstances enters into an arrangement with all his creditors, to pay them a certain proportion of their claims, in consideration of a discharge of their demands, if he privately agrees to give a better or further security to one than to others, the contract is void; because the condition upon which they agree to discharge the debtor is, that each creditor shall receive an equal benefit, and take a proportionate share.

§ 10. A gift or conveyance founded merely upon a consideration of affection, or blood or consanguinity, may be set aside by creditors, if the grantor was in embarrassed circumstances when he made it; for a man is bound, both legally and morally, to pay his debts before giving away his property. But if he is indebted to only a small amount in proportion to his property, and wholly unembarrassed, the gift is not rendered voidable by his indebtedness, even though he should afterward become insolvent.

CHAPTER LIV.

PRINCIPAL AND AGENT, OR FACTOR; BROKER; LIEN, &C.

§ 1. A PRINCIPAL is one who employs another, as agent, to transact his business. A factor is an agent; but the word factor is generally understood to mean a commercial agent; that is, one who is employed by merchants residing in a distant place, to buy and sell, and transact business for them. Thus, country merchants send their wheat, flour, pork, and other country produce, to their agents in the cities, to be disposed of. The owners of the property are called principals; their agents are factors, or, as they are sometimes called, commission merchants. As receivers of property consigned to them, they are also called consignees, and the persons who consign or commit to them their property, are consignors.

§ 2. For the accommodation of the principal, the factor sometimes pays him a part of the value of the produce before it is sold. For the money thus advanced, the factor has a claim upon the property until the advance money shall be refunded, and all charges against the owner paid. And as a factor does not always know who is the actual owner, the person in whose name the goods are shipped, is to be deemed the owner.

§3. This claim which a factor has upon goods intrusted to him for sale, is called lien; and the factor may sell the goods, and retain out of the proceeds of the sale what is due him; and the remainder he must pay to the principal, or owner. But a person can not sell or pledge property committed to him for transportation or storage only; nor can a factor pledge goods intrusted to him for sale, as security for his own debts. A factor who disposes of any merchandise intrusted or consigned to him, and applies the avails to his own use, with intent to defraud the owner, may be punished by fine and imprisonment.

§4. How far, in ordinary business, a principal is bound by the acts of an agent, it is not easy to determine. As a general rule, however, a general agent, that is, one who either transacts all kinds of business for his employer, or