Opinion
[Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] 29 Cal. 467 at 474.
Original Opinion of January 1866, Reported at: 29 Cal. 467.
JUDGES: Currey, C. J. Mr. Justice Sanderson expressed no opinion.
OPINION
CURREY, Judge
[The foregoing opinion was delivered at the October term, 1865. On petition for a rehearing, the following opinion was delivered at the January term, 1866.--Rep.]
By the Court, Currey, C. J.:
We have examined the plaintiff's petition for a rehearing and the authorities to which reference is therein made. Much is said in the argument which accompanies the petition in relation to a constructive delivery and possession of personal property of a cumbrous and ponderous nature. It was quite unnecessary to make an issue with the Court upon the language used in the opinion delivered, as to the necessity of an immediate delivery and an actual and continued change of possession of the property in controversy, in order to satisfy the requirements of the Statute of Frauds. The distinction between an actual and a constructive possession was therein referred to and explained. In the sense of the terms " immediate delivery" and " actual and continued change of possession," employed in the statute, a delivery and possession of cumbrous articles of personal property may be fully consummated. The mode and manner are indicated in the opinion, and by the cases of Stevens v. Irwin and Lay v. Neville, therein referred to. The plaintiff's counsel is quite mistaken in supposing that we overruled Godchaux v. Mulford, ex necessitate, by anything said in our opinion in this case. In that case, it is distinctly held that the vendor " cannot be allowed to remain in the apparently sole and exclusive possession of the goods after the sale, for that," it is said, " would be inconsistent with such an open and notorious delivery and actual change, as the statute exacts, in order to exclude from the transaction the idea of fraud." The Court found that from the time of the verbal delivery of the property, there was no change in the possession and management of it from that which existed before then, and that from that time until the burning of the kiln of bricks was completed, O'Neill used and controlled the property as he had done before the sale or assignment; and further, that the plaintiff had done no acts to give notice or notoriety of his possession of the property. The facts so found rendered the transfer of the property invalid as to creditors, not only within the rule prescribed by the statute, but also in accordance with the doctrine declared in Godchaux v. Mulford.
The rule which our statute prescribes admits of no excuse dispensing with an actual and continued change of possession of the property sold, assigned, or mortgaged, in order to place it beyond the reach of the creditors named therein; and when consulting the decisions of other Courts than our own, it should be remembered that we have a statute more definite and exacting than those under which the decisions of such other Courts were made. The statute of 13th Elizabeth contained no provisions similar to the fifteenth and seventeenth sections of our Statute of Frauds, but it did contain a provision, of which the twentieth section of our statute is in substance a transcript. Under that act, the Courts held that the continuance of the vendor in possession after sale was presumptive evidence that the sale was designed to hinder, delay, and defraud the creditors of the vendor. In Edwards v. Harben, 2 T. R. 587, it was the unanimous opinion of the Court that unless possession accompanies and follows the sale, it is fraudulent and void.
In that case, the Court held that where there was nothing but an absolute conveyance, without the possession, the want of possession was not merely evidence of a fraudulent sale, but that the sale was to be deemed fraudulent in law. But upon this point the tendency of the later decisions of the Courts of Westminster Hall has been to qualify and perhaps to overthrow the doctrine declared in Edwards against Harben, and to leave the entire circumstances of each case to the jury to decide whether the presumption of fraud to be deduced from a want of change of possession should prevail. In the American States, the decisions of the Courts respecting sales and mortgages of chattels without a transmutation of possession have been various and diverse. In some States, the principle has been established that unless possession follows the sale, the sale is by the statutes 13th and 27th Elizabeth to be held fraudulent in law and void as to creditors and subsequent bona fide purchasers; while in others it has been held that the vendor's retaining possession inconsistently with the conveyance is only prima facie evidence of fraud which may be rebutted. That the question of fraud is one of fact to be passed upon by the jury. In Hamilton v. Russell, 1 Cranch, 97, Mr. Chief Justice Marshall approved and adopted the doctrine laid down in Edwards v. Harben, holding that an " unconditional sale, where the possession does not accompany and follow the deed, is, with respect to creditors, on the sound construction of the statutes of Elizabeth, a fraud, and should be so determined by the Court." Such a deed, he said in the same case, must be considered as made with an intent to delay, hinder, and defraud creditors. In Meeker v. Wilson, 1 Gallison, 423, Mr. Justice Story followed the Court in Hamilton v. Russell. In both these cases, it was said the statute of 13th Elizabeth was only declaratory of a principle of the common law. The decisions made under the statutes of 13th and 27th Elizabeth observe a distinction between a sale absolute in terms and one made upon condition which does not entitle the vendee to immediate possession. Without discussing or explaining the principle on which the distinction is founded, we may say it was long ago discovered that sales upon terms apparently consistent with the continued possession of the vendor might be and were made an effectual means of accomplishing frauds against the creditors of the vendor. We may remark, at this point, that our statute has abolished all distinctions between absolute and conditional sales.
The Courts which have attempted to follow the doctrine of Edwards v. Harben have necessarily been much embarrassed by the many exceptions to the rule there laid down. The Statute of 13th Elizabeth was reenacted in New York in 1787. In Sturtevant v. Ballard, 9 John. 337, Mr. Chief Justice Kent, in an effort to introduce the rule declared in Edwards v. Harben and Hamilton v. Russell, into the jurisprudence of his State, found it encumbered with eight exceptions, and by subsequent decisions of the Courts of England and of the several States of America the exceptions became multiplied until in the year 1824, Judge Cowen, then Reporter, in an elaborate note to the case of Bissell v. Hopkins, 3 Cow. 189, particularly enumerated and considered twenty-four. Upon which, as if in despair of ascertaining the status of the law on this subject so fruitful of controversies, he said: " When we look at the nature of the twenty-four different exceptions to the rule in Edwards v. Harben, which are above enumerated, it is time to ask what does the rule amount to? What is it worth? And does its preservation deserve a struggle? Some of the exceptions are almost as broad as the rule itself. The nature of the instrument of sale, the kind of sale, whether directly between the parties, or on execution, or distress for rent, necessity, convenience, customs of doing business, the nature, quantity, relative value, distance, and place of the articles sold, the consideration, the relation of the parties, honesty, fairness, humanity, friendship, special circumstances, special reasons, etc., etc., have in their turn been called in by the different cases to fritter down the rule. Sometimes the attempt to apply it strikes the Judges with such evident absurdity that they no longer proceed by way of exception. Instead of attempting to untie, they cut the knot at once by denying the existence of the rule." So the law on this subject remained in New York, except perhaps the engrafting upon the rule a few more exceptions, until in December, 1827, an act concerning fraudulent conveyances and contracts was passed, which, however, did not go into effect until the first of January, 1830. By this act it was attempted to establish a rule settling for the future the controversies which, by diverse and conflicting opinions of Judges, had become inveterate to a degree rendering it doubtful at least whether any stable rule existed for the prevention of frauds upon creditors by pretended transfers of personal property. But the rule established by the New York Act failed to prevent the frauds against which the statutes 13th and 27th Elizabeth were aimed, as the judicial history of that State since the act went into effect abundantly attests. The fifth section of the New York Act, in its phraseology, bears a resemblance in part to the fifteenth section of our statute, but its import is very different. The fifth section referred to reads as follows: " Every sale made by a vendor, of goods and chattels in his possession, or under his control, and every assignment of goods and chattels by way of mortgage or security, or upon any condition whatever, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things sold, mortgaged, or assigned, shall be presumed to be fraudulent and void as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith, and shall be conclusive evidence of fraud, unless it shall be made to appear, on the part of the persons claiming under such sale or assignment, that the same was made in good faith, and without any intent to defraud such creditors and purchasers." By the section here quoted, the want of an immediate delivery, and thereafter an actual and continued change of possession of the things sold, mortgaged, or assigned, raised a presumption only that the transaction was fraudulent and void as to creditors, etc. The fact in the first instance presumed became a matter conclusively established by the fact of a want of delivery and an actual and continued change of possession, provided it was not made to appear that the sale, mortgage, or assignment was made in good faith and without intent to defraud such creditors and purchasers. The fifteenth section of our statute declares that a sale or assignment so made, unless it be accompanied by an immediate delivery and be followed by an actual and continued change of possession of the things sold or assigned, shall be conclusive evidence of fraud as against the creditors of the vendor or the creditors of the person making such sale or assignment, or subsequent purchasers in good faith. Our statute, it will be observed, makes that conclusive evidence which the New York Act makes only presumptive evidence. The New York Act not only permits but suggests that the party claiming under the sale or assignment impeached for want of a delivery and an actual change of possession, may " make it appear that the same was in good faith and without intent to defraud creditors and subsequent purchasers." Our statute admits of no explanation excusing the delivery and change of possession. Therein is the difference which it is manifest the Legislature intended, in order to exclude all inquiry as to the consideration paid by the purchaser, or as to his motives and intentions in the premises. If in fact there was not an actual and continued change of possession given, the statute pronounces the transfer fraudulent as to creditors, and the Courts have no right to seek to evade its force and effect. No excuse or explanation for want of an actual and continued change of possession can be entertained; and it is quite useless to cite decisions made under the statutes of Elizabeth and of New York, or other States, allowing the want of an immediate delivery and an actual and continued change of possession to be explained or accounted for as authoritative expositions of the rule which our statute has prescribed.
The rehearing must be denied.