1. Inn Keepers.
2. Common Carriers.
There is a sale whenever ownership passes. In a bailment ownership does not pass. A bailment may be involved in a sale, as where ownership having passed, the seller has not yet delivered the goods to the buyer.
In transactions in which one delivers property to another it becomes a question whether the property continues to belong to him or becomes the property of the other. This question is important from a great variety of reasons, as follows:
(1) From the standpoint of the parties to determine upon whom is the risk of loss.
(2) From the standpoint of the parties to determine which party is entitled to the specific goods.
(3) From the standpoint of creditors of either party to determine whether the assets involved in the transaction are subject to seizure for debts.
(5) From standpoint of the state for purposes of taxation, etc.2a
The distinction between bailment and sale, and incidentally the nature of each is shown in the following examples:
Example 2. W delivers to F 6 sheep, F to return to W at the end of the year, an equal number of sheep of equal value. F did not return 6 sheep, and being sued by W replies that W's creditors took the sheep delivered by W for W's debts. This defense is not good. The sheep when delivered by W became F's sheep for he had no duty to return the same sheep. Therefore W's creditors took F's property to pay W's debt; and F should sue them for damages. The transaction was a sale and not a bailment.3
Example 5. A delivers to B jeweler's sweepings to be refined by B, who is then either to return the refined product or account for its value. This is not a bailment, but a sale, the sweepings necessarily becoming B's, although he has a right (not an obligation) to return the identical property.4
In cases of alleged consignment for sale, great difficulties arise, and the courts have not always been in harmony. Where one, as, for instance, a manufacturer
2a. See D. M. Ferry & Co. v. Hall, 188 Ala. 178, 66 So. 104. (Question whether the Ferry Company should be taxed on seeds supplied its retailers alleged to still belong to the Ferry Company as being merely on consignment, but held, that title had passed to the retailers.) or jobber, sends goods to another, as a dealer, he sometimes desires on the one hand to make the dealer absolutely his debtor, with no right to return unsold goods, and on the other hand he desires to be able to say in the event of the dealer's insolvency, that the goods were sent on mere consignment and that therefore all unsold goods on hand at the dealer's insolvency belong to him. This has resulted in drawing contracts of exceedingly ingenious nature, and upon the construction of which the courts have differed. The question would seem to be whether when the goods were delivered, the recipient became a debtor for the goods delivered to him. If so it is a sale, no matter what stipulations may have been made merely to avoid that consequence in the event of disaster.
3. Wilson v. Finney, 13 Johns. N. Y. 368.
4. Austin v. Seligman, 18 Fed. 519.
The following case will illustrate the nature of a simple consignment:
Example 4. A sends to B for goods on consignment which B is to sell, accounting to A for the proceeds, unsold goods to be returned to A. This is a bailment and not a sale and in the event of bankruptcy, A can recover the goods from the bankrupt or his trustee, and is not confined to mere proof of his debt against the insolvent estate.5
The fact that the consignee must pay freight and storage, that he must guarantee the payment of the purchase price on all goods sold by him, that he may make his own price to purchasers, do not prevent the transaction being one merely of bailment if the contract in its essential meaning shows no sale to the consignee, conditional or otherwise.6
5. In re Columbus Buggy Co., 143 Fed. 861.
6. Ludvigh v. Amer. Woolen Co., 231 U. S. 522; Lentz v. Harrison, 148 111. 508.
But if the party to whom the goods are sent cannot return them in the event of not disposing of them, but becomes in effect a debtor, the transaction is a sale and not a bailment, and the alleged consignor is a general creditor and in event of bankruptcy must prove up as such.
Example 5. A sent goods to K under an arrangement whereby K was to pay for all goods received within 60 days, whether sold by K or not. This arrangement was set forth in a contract by which K was called a "special selling factor" and in which it was recited that the title remained in A. But the court held that by the substance of the agreement K was a debtor with a single obligation to pay money, and that therefore the transaction was a sale and not a bailment.7
An entire book might be devoted to a consideration of the various cases in which the facts present the question whether the transaction constitutes a consignment or a sale. As has been said in an exhaustive note on this subject7a "much ingenuity has been employed by consignors in framing contracts to secure all the benefits and at the same time, avoid the disadvantages of contracts of sale, and also to secure the benefits, and avoid the detriments of agency contracts. The result is a hybrid contract, frequently involving essential elements both of sale and consignment contracts. * * * A contract cannot be both."
If goods are fungible, and are mixed with like
7. Arbuckle Bros. v. Kirkpatrick, 98 Tenn. 221; see also Taylor v. Fram, 252 Fed. 465.
7a. L. R. A. 1917B, 626ff. And see a form of consignment contract upon pianos set out in full in same volume on page 615.
goods of similar quality under an obligation to return an equivalent amount, the transaction is a bailment.
Fungible goods are those made up of particles necessarily for all practical purposes alike, so that it can make no possible difference whether one gets the same goods or some others.
Example 6. A deposits grain in a public warehouse, to be stored in a bin with other grain, and a like quantity to be returned on demand. This is a bailment and not a sale. The depositors are tenants in common.8
Fungible goods are such as grain, flour, oil, wine, the units of which are necessarily alike; but not such as bricks, logs, chairs, etc., the units of which may be alike, but not necessarily so, and therefore the importance of choice may be present.
8. Yorkey v. Smith, 181 111. 564.