Against third persons an owner of goods by merely investing another with their possession for a lawful purpose is not thereby estopped to assert his title against any one claiming under the possessor's title.
The owner loses no rights to assert his title by merely clothing another with possession. There must be some additional element. It is true that by reason of such possession, the possessor may be enabled to deceive his creditors or purchasers as to his ownership. He may seem to have more assets than he really has. Yet the exigencies and conveniences of commercial life override this consideration and it is well settled everywhere that the true owner may still assert his rights. As illustrating this principle the following particular instances are cited.
A mere consignment of goods to be sold by consignee for the benefit of the consignor gives the creditors of such consignee no rights against such goods.
It is a usual practice among merchants for a wholesaler to consign goods to a retailer, that is, to send the goods to the consignee as agent to sell them. This must be strictly distinguished from a sale on credit. In a sale on credit the buyer owns the goods and the seller has parted with his title in return for the buyer's promise. One who purchases from a consignee gets of course a good title, for that is the purpose of and the authority conferred by the consignment, but a creditor gets no rights even though he may have allowed the credit in reliance upon the apparent value of the assets conferred by the possession of such consigned goods. Therefore, such goods cannot be seized for the debts of the consignee, and may be reclaimed from the trustee in bankruptcy.72
72. See Example 4 in Bailments and Carriers; supra.
Conferring mere possession upon an agent or bailee for purposes other than those of sale gives neither creditors of such consignee nor purchasers from him any rights against such goods.
Whether an agent is entirely within one's employ upon salary or commission or is specially employed for a particular purpose it may be necessary or desirable to supply him with goods whereby he may accomplish his agency or perform the terms of the contract. In such a case the owner may assert his title against any one claiming under or against such agent or bailee. In such a case it is to be remembered, there must be a true case of bailment. The possessor must be obliged to return the same goods in their present or an altered form, for otherwise the possessor as purchaser has a title he may convey.
Even though the party with whom possession was placed is a dealer in such goods, still if no authority were given him to sell he could give no valid title.
Example 27. A jeweler has a watch left with him for repair. He sells it to B, an innocent customer who pays value for it. M, the owner, can take it from B. B must rely on his rights against A.73
73. Biggs v. Evans, (1894) 1 Q. B. 88; Fawcett v. Osborne, 32 111. 411