Story Case

The Russian Government, through its consul in New York, ordered 10,000 army wagons from the Springfield Wagon Company. The Russian Government paid cash in advance, giving special, minute instructions and specifications regarding the building of the wagons. The Springfield Wagon Company agreed to have the wagons ready for the government's shipping orders, in June and July of the year 1915. On May 15, 1915, all the wagons had been built, but not painted with the special paint ordered by the Russian Government. Therefore, the wagon company at once sent all the wagons to a new paint shop, built for this purpose. On June 10, when 1,000 wagons were in this shop, a fire occurred, destroying the entire lot. Out of this number 400 wagons were complete in every respect, awaiting inspection and orders of the Russian officer; the other 600 were not painted. The Springfield Wagon Company in its haste with this business had failed to insure either the paint shop or its contents. It claims, however, that the wagons belonged to the Russian Government, and were, therefore, its loss. Is this a correct statement of the law?

Ruling Court Case. Andrews Vs. Durant, Volume 11 New York Reports, Page 35; Volume 62 American Decisions, Page 55

Bridger and Company, ship builders, agreed to build a ship for Durant. They were to provide all materials, and to build the barge, subject to the inspection and approval of the superintendent of the intending purchaser, and to deliver her to the purchaser, Durant, on a certain day. Durant was to pay a fixed price - one thousand dollars when the keel was laid, one thousand dollars when planked and calked, and the balance of two thousand dollars when completed and delivered. Before the completion and delivery of the barge, the builders became insolvent and the ship was seized by the sheriff on execution for a debt of the builders. Durant, claiming that title had vested in him as the work progressed, replevied the barge. He completed her at a cost of seven thousand dollars, and treated her as his own. In the meantime, the builders had made a general assignment for the benefit of creditors, and Andrew, the assignee, now brings this action against Durant to get possession of the boat or recover its value.

Mr. Denis, Chief Justice, said: "In general, a eon-tract for the building of a vessel or other thing not yet in being does not vest any property in the party for whom it is agreed to be constructed, during the progress of the work, nor until it is finished and delivered, or at least ready for delivery and approved by such party, and the law is the same, though it be agreed that payment shall be made to the builder during the progress of the work." Judgment was, accordingly, given for Andrew, the assignee.

Ruling Law. Story Case Answer

It is a fundamental principle of the law of sales that a man cannot sell that which he does not own, nor that which does not exist. It is possible, however, for a person to contract to sell property which he expects to own at some future time, or which will come into existence, subsequent to the contract; but no title passes until he does become owner of the subject matter, or until it comes into existence, and some act is done, or intention shown indicating the passing of title.

In the Ruling Court Case, it was possible for the parties to agree that title to the part finished should pass at the time of completion, but, unless it was expressly so stated, the court will presume that the parties did not intend to pass the ownership until the ship was completed.

In the Story Case, the same rule holds true. The court will presume that it was the intention of the parties that title should not pass until after the inspection and approval of the Russian officer. Had it not been for this last stipulation, the court might reasonably presume that the parties intended title to pass when the last work had been done by the company. In this case, the Russian Government would have suffered the loss of the 400 completed wagons.