Story Case

Sam Bernstein, a junk dealer, had several tons of scrap-iron piled in his yard. The Western Molten Mills Company sent its purchasing agent to examine the scrap-iron and make a contract for its purchase. The parties entered into a contract, whereby Bernstein agreed to sell the pile of scrap-iron for $5 per ton. Bernstein agreed to load the iron; the "Western Molten Mills Company agreed to pay the freight and weigh it at the Molten Mills plant, after the silt had been removed. After the iron was loaded, ready for shipment, Bernstein had an opportunity to make a bargain at $6 per ton, and sold it to W. H. Mead. The Western Molten Mills Company claim title to the iron and sue Bernstein for conversion. Did Bernstein have title to the iron when he sold it to Mead?

Ruling Court Case. Standard Oil Company Vs. Hatch, Volume 100, United States Reports, Page 124

John and Alfred Merritt entered into a contract with the Standard Oil Company by which they agreed to manufacture a quantity of staves, and to pile them on land, adjoining their mill. In the contract it was provided that the staves should be counted each week. It was also agreed that, at the end of each week, the oil company should be under obligation to the Merritts to pay for the work which was done: and that, as to the staves which were counted the contract should be deemed completed. Before the total number had been sawed, and before payment had been made in full, Hatch, who was a creditor of the Merritts, caused an execution to issue, and a levy made upon the staves which had been counted and piled. This was an action by the oil company to recover the staves from Hatch.

Hatch contended that the title to the staves was in the Merritts, and that his levy was good, as against any claim which the oil company had. He contended the oil company had merely a mortgage which was not enforcible, because not recorded as required by law.

Mr. Justice Clifford said: "Nothing was required at Common Law to give validity to a sale of personal property, except the mutual assent that the one should transfer the absolute property in the thing, to the other, for a money price. The contract was considered as completely proven and binding on both parties. If the property, by the terms of the agreement, passed immediately to the buyer, the contract was deemed a bargain and sale; but if the property in the thing sold was to remain for a time in the seller, and only to pass to the buyer at a future time or on certain conditions inconsistent with its immediate transfer, the contract was deemed an executory one.

The court was of the opinion that title to the staves, which were counted and piled, had passed to the oil company, and, therefore, Hatch received no interest by his execution and levy." Judgment was given for the oil company.

Ruling Law. Story Case Answer

At Common Law, no formalities were necessary, in order to make a sale. It was necessary merely that the seller should intend to sell, and the buyer intend to buy, a given article. It was not required, that it should be evidenced by writing, or that payment should be made, or that the article sold should be delivered. The intention of the parties, at Common Law, was the index of the passage of title, and this intention to sell could be disproven only by circumstances which indicated that there was no sale, but that the passage of title depended on some subsequent act.

In the Story Case, it might seem that, inasmuch as the iron had not yet been delivered, weighed, and paid for, there was no sale. At Common Law, however, the weighing, delivery, and payment were not intended to have any effect upon the passage of title. If it should be known that the seller intended to sell and the buyer intended to buy at the time the agreement was made, then it followed that the sale was consummated and title passed at that time. Consequently, Bernstein did that which he had no legal right to do, under Common Law, when he sold the iron to Mead, and he must be held for conversion.