Hamilton v. National Loan Bank

DILLON, Circuit Judge. It is very doubtful whether this case is properly before the court upon the appeal of the assignee, or whether any errors of law appear of record properly saved by bill of exceptions or special findings of fact. But as counsel have made no questions of this kind, and have argued the case in this court upon the merits, and as upon the merits it must be affirmed, I will dispose of it upon the assumption that it is rightfully here and that the material facts are those appearing in the statement of the case. This is a contest between the bank and the assignee in bankruptcy of the railroad company. Before the bankruptcy of the company the bank had purchased of it six of the twenty bonds of the county of Lafayette, then in the hands of Withers. The bank paid the company in full therefor, and the bona lides of the transaction is not impeached. But the company could not then deliver the bonds to the bank because they were in the hands of Hr. Withers, and because it had not then completed its road to Lexington. Afterwards the bank gave notice to Mr. Withers of its purchase of the six bonds, and in April or May, 1872, the company completed its road to Lexington, thus becoming fully entitled to the bonds, as between it and the county. All this occurred before the bankruptcy of the company. The twenty bonds are still in the hands of Mr. Withers, who claims no interest in them, and is ready to abide the orders of the court. The assignee in bankruptcy relies upon this point, viz: That the purchase of the six bonds by the bank is void because the particular six of the twenty which it purchased were not determined by any description thereof, or by separating them from the residue, and therefore, it is argued, the title or property in the six bonds did not pass to the bank, but remained in the company. As the bonds were all exactly alike in date, amount, time of payment, etc., there are not wanting respectable' authorities that the title or property in six of the twenty would pass without any actual separation of them from the others. Kimberly v. Patchin, 19 N. Y. 330; Russell v. Carrington, 42 N. Y. 118; Young v. Miles, 20 Wis. 615, 23 Wis. 643; Chapman v. Shepard, 39 Conn. 413; Pleasants v. Pendleton, 6 Rand. (Va.) 473; Waldron v. Chase, 37 Me. 414; Warren v. Milliken, 57 Me. 97; Cushing v. Breed, 14 Allen, 380. The authorities, however, are not harmonious on the point, and will be fouqd very fully collected in the American edition of Benjamin on Sales (sections 78, 81, 308, 318, 355). It is not necessary to the determination of the present case to decide whether the legal title to the six bonds passed, or could pass, to the bank before the particular six were identified, set apart, or appropriated under the contract. At the very least the contract between the company and the bank would be valid as an executory agreement on the part of the company, for a consideration actually received, to sell and transfer six of the twenty bonds, in the hands of Withers, to the bank; and this agreement having been made in good faith and the bonds having been paid for by the bank, gave to the bank a right or equity as agáinst the company or its assignee in bankruptcy, to six of the twenty bonds. This right or equity would attach directly to the bonds in the hands of Withers, and could be enforced against the company if bankruptcy had not supervened, and it is not defeated by the subsequent bankruptcy of the company, to whose rights, and to whose rights only, in this respect, does the assignee in bankruptcy succeed. If the railroad company afterwards sold the remaining fourteen bonds to Beid, and designated the fourteen, leaving six, and only six, in the hands of Withers for the bank, this would amount to an appropriation of the six or a separation of them, and the title of the bank would be unquestionably complete. In short, if the legal title to the six bonds passed to the bank, the assignee in bankruptcy of the vendor has no right to them. But if the absolute property in the six bonds did not pass to the bank the transaction gave to the bank a consummated and specific right or equity to six of the twenty bonds which are yet in the hands of the bailee, and this right or equity is recognized and preserved to the bank by the bankrupt act. Actual delivery of the bonds at the time of the sale is not necessary, for, says Willes, J., in Meyerstein v. Barber, L. R. 2 C. P. 38, 51; “Since the judgment of Lord Wensleydale (then Justice Parke), in Dixon v. Yates, 5 Barn. & Adol. 313, it has never been doubted [364] that by the law of England the sale of a specific chattel passes the property to the ven-dee, without delivery.” Benj. Sales, § 308; How v. Taylor, 52 Mo. 592; Massmann v. Holscher, 49 Mo. 89. And in equity, “A contract for the sale of chattels, to be after-wards acquired, transfers the beneficial interest in the chattels as soon as they are acquired to the vendee.” Benj. Sales, § 81, and cases cited. Frazer v. Hilliard, 2 Strob. 309; Story, Eq. Jur. (10th Ed.) §§ 421b, 421c, 1040. In the case under consideration the railroad company had already paid the county for the bonds by its stock, and was entitled to the bonds in the hands of the custodian thereof as soon as its road was completed to a given point; clearly it could transfer the beneficial interest in bonds thus held, and it did so by the sale to the bank, if indeed it did not pass the title to them, which became perfect and absolute when the road was finished and operated to Lexington. But whether the bank has the legal title or only the beneficial or equitable title, in either event its rights are superior to those of the company or its assignee in bankruptcy. Affirmed.