In this country, Mr. Chancellor Kent, in his Commentaries (vol. ii. lect. 39, p. 478), states the distinction, and says: "In every sale of a chattel, if the possession be at the time in another, and there be no covenant or warranty of title, the rule of caveat emptor applies, and the party buys at his peril. But if the seller has possession of the article, and he sell it as his own, and not as agent for another, and for a fair price, he is understood to warrant the title." The cases relied upon by him in support of this doctrine are Roswel v. Vaughan, Cro. Jac. 197, and Medina v. Stoughton, 1 Salk. 210, which we have considered above. In the note, however, he says of Mr. Justice Buller's comment on the latter case, overruling it, in Pasley v. Freeman, 3 T. R. 57, " There is good sense and equity in the observation." His statement therefore stands on the old case of Roswel is intended by both parties to be conveyed, is not, by necessary implication, an affirmation and profession of ownership, crev. Vaughan. But he goes on to say "a fair price implies a warranty of title, and the purchaser may have a satisfaction from the seller, if he sells the goods as his own, and the title proves defective. The distinction between the responsibility of the seller as to the title and as to the quality of the goods sold, is well established in the English and American law." In Gookin v. Graham, 5 Humph. 480, the court say: "In a sale of personal property there is always an implied warranty of title, unless it be purchased under such circumstances as clearly show that the vendee intended to risk the title; as if the vendor be not in possession, but the same be held adversely by another." Undoubtedly, where the circumstances indicate that the vendor does not intend to warrant, and that the vendee takes the risk of the title, there would be no warranty. Still the question remains, whether in the absence of all circumstances importing a refusal to warrant the title, such as an adverse holding by a third person, of which the vendee has notice, the fact that goods are not in the possession of the vendor, of itself, absolves the vendor from an implied warranty of title. The rule laid down in this case would seem to indicate that it does not. Certainly the mere fact that the goods are in the possession of a third person, does "not clearly show that the vendee intended to risk the title," although if the goods be held adversely, and the vendee know such fact, it might have such an effect.
The only case in which the distinction between sales of goods in the possession of the vendor and sales of goods out of his possession has formed the basis of an adjudication in this country, is McCoy v. Artcher, 3 Barb. 323 In this case the very point under discussion is fully and elaborately examined, and the learned judge concludes, after commenting upon the cases, in favor of the distinction stated by Lord Holt. He says: " I find no case, either in Great Britain or in this country, sustaining the position that a vendor who makes no affirmation or representation on the sale of a chattel in the possession of a third person can be held liable for a failure of title on an implied warranty. On the contrary, when any reason is given for the rule, the possession of the vendor is, even in the cases cited by Story, evidently regarded by the courts as the foundation of the implied warranty of title." "The maxim with regard to sales is Jides servanda; and if there be no express contract of warranty, general rules of implication should be adopted with this maxim constantly in view. A warranty should only be implied when good faith requires it I think it is fair and equitable to hold that the possession of the vendor is equivalent to an affirmation of title, and that in such case the vendor shall be held to an implied warranty of title, though nothing be said on the subject between the parties. But if the property sold be, at the time of the sale, in the possession of a third person, and there be no affirmation or assurance of ownership, no warranty of title should be implied. If, howating a warranty thereof. Of course, no warranty of title will arise by implication, where it is expressly or impliedly negaever, there be an affirmation of title where the vendor is not in possession, the vendor should be subject to the same liability as if he had the possession of the property. We have not, on this subject, adopted the civil law rule, caveat venditor; but the rule of the common law, caveat emptor, is our law." The final decision of the case does not seem to have turned wholly on this question, for it appears, and is stated by the learned judge, that there are circumstances tending strongly, if not conclusively, to show that "the property" was purchased by the vendor "at his own risk."
But this decision, able and elaborate as it is, does not fully recommend itself on principle, and must be difficult of application. The only case by which it is supported is that of Roswel v. Vaughan, Cro. Jac. 197, which was decided as long ago as 1607, when the doctrine of caveat emptor was much sterner in its operation than it now is, and when the form of action on a warranty was in tort and not in assumpsit, the latter form being adopted at a later day. This very case was "an action on the case in the nature of deceit," and the ground upon which the argument and decision proceeds is that there is no evidence or indication of tort or deceit by the seller, without which he would not by the form of the action be liable. So, also, Cross v. Gardner, 1 Show. 68; Furnis v. Leicester, Cro. Jac. 474, and Medina v. Stoughton, 1 Salk. 211, are all actions on the case. So, also, Pasley v. Freeman, 3 T. R. 58, was an action in the nature of a writ of deceit. Indeed, nearly all the old cases are of this kind.
The introduction of assumpsit as the true form of declaring on a warranty (see Stuart v. Wilkins, Doug. 18) avoided the necessity of proving deceit or fraud, and threw the basis of the claim upon the promise of the defendant. Then arose the doctrine of implied warranty, limiting the old rule of caveat emptor, which before always obtained, except in cases of express warranty or deceit. Under the previous course of pleadings, whether the seller were out of possession or in possession, if there were no affirmation operating to deceive, no action could be maintained. If there were an affirmation, the seller being in possession, it was considered as an assumption of fraud, because the vendee might have no means of examining into the title, and the circumstances of the case indicated no adverse rights. But where the vendor was out of possession no such presumption of fraud arose, because it was considered as being too violent. The bare assumption of ownership without possession being evidently not so strong a badge of fraud as an assumption of ownership with possession. Therefore, in the latter case, the vendee was bound to prove fraud. Yet, even in these cases, Mr. Justice Buller says: "If an affirmation at the time of the sale be a warranty, I cannot feel a distinction between the vendor's being in or out of possession. The thing is bought of him, and in consequence of his assertion; and if there be any tived by the vendor.1 And there may also be cases where the seller, from his very character and position in relation to difference, it seems to me that the case is strongest against the vendor when he is out of possession, because then the vendee has nothing but the warranty to rely on. These cases then are so far from being authorities against the present action, that they show that if there be fraud or deceit the action will lie; and that knowledge of the falsehood of the thing asserted is fraud and deceit."Pasley v. Freeman, 3 T. R. 58. Circumstances which afford a presumption of fraud may, however, well be required to be more stringent than those creating a presumption of title. But in the action of assumpsit no fraud need be proved or alleged, the gist of the action being the breach of the promise or undertaking of the defendant. The question is, then, whether, when a person undertakes absolutely to sell an article, he impliedly asserts that he has a title to it. Undoubtedly he agrees to sell something, and the purchaser agrees to buy something. But if he have no title, he sells nothing, and the purchaser buys nothing. The implication of title is necessary to the very existence of the contract. It is the very groundwork of the whole undertaking. Such being the case, we confess ourselves to be utterly at a loss to perceive the ground of any distinction between his undertaking to sell goods in his possession, and to sell goods in the possession of a third person, and are in the same predicament with Mr. Justice Buller. Indeed, the reasoning of that eminent judge perfectly recommends itself to us. "And if there be any distinction, it seems that the case is strongest against the vendor when he is out of possession, because then the vendee has nothing but the (implied) warranty to rely on." Whether the warranty be express or implied the reasoning is the same. The vendor undertakes to sell goods out of his possession. Now unless he has a title he cannot sell them, except as agent for one who has a title. Therefore, if he sell them, he asserts his title by the simple fact of sale. Can it be said that the mere fact of the goods not being in his possession creates an agreement on the part of the vendee to take the risk of title, the vendee having no knowledge or notice of adverse claims by such third person or by any other person ? This certainly would be a very violent and injurious implication, and one which ought not to supersede the natural and necessary implication of title growing out of the vendor's undertaking to sell. There may undoubtedly be cases where there are other circumstances indicating that the vendee assumed the risk, but the mere fact of non-possession cannot legitimately lead to such an inference. Indeed, it would seem that it ought, on general principles, to be the duty of the vendor to the goods, would necessarily be understood not to warrant the title; as in the case of a pawnbroker who sells goods pawned, advertise the vendee of any adverse claim, or directly to disclaim any warranty of title, if he would avoid a liability therefor. Mere silence is a representation of title in a person who sells goods.