
    IMPLIED WAIVER BY SELLER OF TERMS OF SALE.
    Common Pleas Court of Montgomery County.
    The Biggs-Watterson Company v. John Edward Sauer as Receiver of The Dairy Engineering Company.
    
    Decided, 1922.
    
      Sales — Presumption as to Payment — Machinery Sold and Put Into "Without Demand that Settlement he Made — Action in Replevin Against Assignee of the Purchaser.
    
    Where machinery is sold for one-third cash with ninety days accept-, anee for the balance, and no demand for settlement is made for three months after delivery and placing of it in use by the purchaser, the rescinding of the contract of sale by the seller does not afford a basis for an action in replevin by the seller against the receiver ¡of the purchaser, but the transaction will be treated as one where there was an extension of credit with the title vested in the seller.
    
      
       Affirmed by Court of Appeals on the reasoning herein «contained.
    
   Snediker, J.

This case is in replevin. The plaintiff claims that it is entitled to recover possession of a certain lathe and equipment which it sold to the Dairy Engineering Company, of which the defendant is now the receiver, and it claims that the property is being wrongfully detained by the defendant from it. The defendant filed an answer in which he denies that he wrongfully detains the property described in the petition of the plaintiff, and denies that the plaintiff is its owner, or entitled to the possession thereof.

There were examined but three witnesses, M. A. Wertman, who at the time of the purchase of the lathe by the Dairy Engineering Company from the plaintiff was the agent of plaintiff, which is a Cleveland corporation and had offices in this city; R. W. Cavanaugh, who is secretary and treasurer of the plaintiff, and whose place of business is in the office of plaintiff in Cleveland, and J. Edward Sauer, the defendant, on cross-examination, — all for the plaintiff.

When the plaintiff closed its ease, the defendant offered no evidence, and the case rested on both sides. It appears in proof that on September 11, 1919, an order (Exhibit B) was sent by the Dairy Engineering Company to plaintiff, in these words:

“Kindly enter onr order for one 16 inch x 7 feet 0 inches Chard Quick Change Gear Engine Lathe with double back gears, arranged for motor drive, electric control in the apron.
“Multiple cross feed stop.
“Multiple length feed stop. •
“Patented friction lever movement on the tail stock.
“Terms of payment to be arranged as suggested in your letter of the 10th inst., namely, one-third cash on delivery, balance on a three months trade acceptance note, with privilege of renewing one half at the end of three months.
“Note to carry 6 per cent, interest and secured by acceptable endorsement.
“We have made arrangements with the Fairbanks-Morse Co. to ship the motor direct to the Chard Co. with all the necessary information they may need.
‘1 Trusting that we may have a quick delivery on this machine, we remain, Yours truly.”

On September 15th, 1919, this order was accepted; as follows:

“We have your order of September 11th, covering one 16 inch x 7 feet Chard Quick Change Gear Engine Lathe arranged for motor drive, with apron control, multiple cross feed stop, multiple length feed stop and quick acting tail stock.
“Price f. o. b. Newcastle, Indiana ............$1,390.00
“Terms of payment to be one-third cash on delivery, balance covered by three months trade acceptance to carry interest at 6 per cent.
“We note that you have made arrangements with the Fairbanks-Morse Company to have your motor shipped direct to the Chard Lathe Company and have entered your order for shipment of the lathe within two weks after receipt of complete motor equipment.
“We will forward trade acceptance with invoice as soon as the lathe has been shipped.
‘ ‘ Thanking you for your ordr, we are,
“Yours very truly.”
On December 15th, invoice of the lathe was sent by the Biggs-Watterson Company to the Engineering Company as follows:
_ “Cleveland, Ohio, December 15th, 1919.
_ “Sold to the Dairy Enginering Co.
“Dayton, Ohio.
“Terms one-third cash; balance 90 day trade acceptance with 6 per cent, interest.”

Here follows a statement of the lathe and its parts.

“Price, f. o. b. Newcastle, Indiana, $1,390.001. Shipped from Chard Lathe Co. via Big Four Railroad, in Erie Car, etc. ”

The lathe was received by the Engineering Company, which failed to the time of the bringing of this action to make settlement. It does not appear from the evidence that either the cash was paid or the trade acceptance was made and delivered to the plaintiff. About January 12, 1920, Mr. .Wertman, the local agent of the Biggs-Waterson Company, left the city and went to the home office there to rmain. On cross-examiination of Mr. Cavanaugh, he testified:

“Q. After these goods were shipped, and in the ordinary course of human events, the goods would have been deliverd to the Dairy Engineering Company, some time in the month of December, 1919? A. Yes, siir.
“Q. During the entire month of January you never sent them a bill? A. No, sir.
“Q. And during the month of February? A. No, sir.
“During the month of March? A. No; sir.
“Q. There was no effort made by your company to collect the cash payment that was due until the receiver had been appointed in the common pleas court of this county ? A. No, sir.
“Q. What efforts did you make with reference to the Dairy Engineering Company to collect the money? A. Not direct; through the Dayton office.
“Q. Not what your Dayton office did or what took place between you and the Dayton office. I want to find out what was brought to the attention of the Dairy Engineering Company. Did you send any communication or make any demand upon the Dairy Engineering Company, during the month of January for the cash payment when it was not paid? A. Not direct.
“Q. Did you make any demaand during the month of February from your office? A. Not direct.
“Q. Did you during the month of March prior to the appointment of the receiver? A. Not direct.
“Q. The first action that was taken in the matter was after the receiver had been appointed some time in the month of Miarch, wasn’t it? A. It was during March.
“Q. You directed your local office at Dayton, Ohio, to get in touch or in communication with attorneys and start proceedings? A. Yes, sir.
Q. That was the first action that was taken by your company in regard to the transaction as far as you know? A. Directly, yes, sir. ”

When Mr. Wertman was cross-examined, in answer to the question, ‘' Q. Did you not have any negotiations or any dealings or any conversation with anybody connected with the Dairy Engineering Company in regard to this transaction after the 12th day of January, 1920?” his answer was, “I did not.” “Q. All the transactions you have had between you and the Dairy Engineering Company is embodied in this correspondence- A. •Yes, sir. ”

The evidence does not disclose any demand made upon the Engineering Company between the date of plaintiff’s invoice and March 3, 1920, when its counsel wrote the Dairy Engineering Company as follows:

“Our Mr. Murphy telephoned your Mr. Young yesterday in reference to the claim of $1,462.53 in favor of the Biggs-Watterson Company of Cleveland. We have instructions to proceed against you in this matter and we must insist that you call and arrange for the settlement, otherwise we will be compelled to follow instructions.”

We understand that on the following day Mr. Sauer was appointed receiver of the Engineering Company, and on that same day there was sent to him a letter of. the Biggs-Watterson Company signed by its attorneys to the effect that ‘ ‘ This is to notify you that the undersigned hereby rescinds sales made to the Dairy Engineering Company on certain machines .under invoices of December 15th, 18th and 22d, 1919.” It may here be interpolated that the sale of the 18th and 22d were of minor parts.

After sending this- notice of rescinder the plaintiff began its ease to recover possession of this lathe and these parts, on the theory that it was entitled thereto at the commencement of this action for the reason that the sales made to the Engineering Company were for cash, and that it was contemplated that there should be made a payment for the articles delivered at the time they came into the hands of the Engineering Company, which payment was not made.

It will be observed that in this evidence plaintiff makes no charge of fraud against the Engineering Company in obtaining credit.

The question which is here raised has been before the Supreme Court of Ohio at different times and beginning with the 23 0.‘ S'., page 311, the case of Wabash Elevator Company v. First National Bank of Toledo, we find this rule laid down in the syllabus:

1. “Where one agrees to sell and another to buy articles at a specified price, and there is no other stipulation as to payment, it is presumed to be a cash sale, and the delivery of the goods and payment of the price are to be simultaneous, and concurrent acts.”

2. “The delivery of the goods on such sale, with the expectation of receiving, immediate payment, is not an absolute delivery, and no title'vests in the purchaser till the price is paid.”'

• Again in the 33 O. S., at p. 63, in the case of Hodgson v. Barrett, the syllabi read:

1. “In the caase of an assignment by an insolvent debtor for the benefit of creditors, the rights of the assignee in. the property assigned are no greater than those of the debtor prior to the assignment.

2. “Where goods are sold for cash, delivery and payment are concurrent conditions of the sale; and, a delivery made in expectation of immediate payment is conditional only; so that if payment be refused, the vendor may reclaim the goods.”

■ Subsequent to the case in 33 O. S., there was before the Circuit Court of Hamilton County, (Judges, Cox, Smith and Swing) a ease of like chaaracter (1 O. C. C., p. 453) in which it was held in the first syllabus:

“Although it is clearly the law, that on a contract of sale of articles at a specified price, and there is no other stipulation as to payment, it is presumed to be a cash sale, and the delivery of the goods, and payment of the price are to be simultaneous and concurrent acts; and the delivery of the goods on such sale with the expectation of an immediate payment, is not an absolute delivery and no title vests in the purchaser till the price is paid, yet the seller may either expressly or impliedly waive this right, to immediate payment, in which ease the title will pass to the purchaser.”

Judge Smith rendered the opinion in this case, and in discussing the law he says:

It is conceded that Edwards, under his original contract, was entitled to demand payment for the tobacco, before any right to it would pass to Glancy. If he had actually turned it over to him, expecting immediate payment, and it was not made, he was at liberty to repossess himself of it, and Glancy would have had no right to it. The doctrine of the law on this point is stated very strongly in 23 O. S., 311, the syllabus of which is as follows:” (Here the Judge quotes the syllabi which we have here' tofore referred to.)

“But it is obvious that the language used in the second synabus is not to be understood in the broadest sense — that is, that under no circumstances will the title vest in the purchaser, when a delivery of goods is made, with an expectation of receiving immediate payment, till the price is paid. Such a construction of it would operate to prevent any subsequent arrangement between the parties that the title would overturn the well-established doctrine, that a condition in favor of one party to a contract, may be waiveu by him, either expressly, or that such a waiver may be implied from his conduct. Indeed, in the very case referred to, the judge, in delivering the opinion of the court,- states the doctrine of the law, with the proper qualification, which, however, is left out of the syllabus. He says, "A delivery with the expectation of receiving immediate payment, is not absolute but conditional, until payment is made, and where there is no waiver of payment, no title vests in the purchaser till the price is paid, citing many authorities, and adds, ‘in this case there was no waiver.’

“In the case of Hodgson v. Barrett, 33 O. S., 63, also cited by the plaintiff in error, and which affirms the general doctrine of the case of 23 O. S., the court to some extent recognizes the doctrine, that the seller may waive a condition of this kind, and the title pass to the purchaser without payment. Judge Scott says, ‘for some unexplained reason, the cash payment was not made until the next day’ (after delivery), ‘but we can not infer from the mere fact that a night intervened before the cash payment was made, that the plaintiffs consented to waive their right to require present payment, or to secure possession of the barge and its cargo if payment should be refused. Such temporary delay is quite consistent with the idea that the parties intended their respective rights to remain in statu quo, until payment is made.’ And in the syllabus of that case it was held, ‘that the giving of a check therefor, which when presented for payment is dishonored, will not prevent the vendor from retaking the property, though the check was not presented for four days, if the drawer had no funds in the hands of the drawee to meet it, and no injury has resulted to the drawer from the delay.’ ”

“That there may be a waiver of this kind, is clear on principle and authority. There can certainly be no good reason why it might not be done, and the books are full of cases in which the courts have held that it may. In Benjamin on Sales, note d to section 320, the rule is thus stated: ‘When there is a condition precedent attached to a contract of sale and delivery, the property does not vest in the purchaser on delivery, nor until he performs the condition, or the seller waives it,’ and a multitude of authorities are cited in support of the rule.

‘ ‘ What will constitute a waiver in such case ? Chancellor Kent in the second volume of his Commentaries, states the law thus: ‘If he (the seller) does deliver freely and absolutely, and without any fraudulent contrivance on the part of the vendee to obtain possession and without exacting or expecting simultaneous payment, there are a confidence and credit bestowed, and the precedent condition of payment is waived, and the right to property passes.’ * * * ‘If it was even a condition of the contract that the seller was to receive a note or security for payment at another time, he may dispense with that condition, and it will be deemed waived by a voluntary and absolute delivery without a concurrent demand of the security. But if the delivery in that case be accompanied with a declaration on the part of the seller, that he should not consider the goods as sold until the security be given, or if that be the implied understanding of the parties, the sale is conditional; and the property does not pass by the delivery, as between the original parties, though as to subsequent bona fide purchasers or creditors of the vendee the conclusion might be different. ’

“The eases cited in the brief'of counsel for defndant in error, viz., 106 Mass., 422-7; 111 Mass., 487-9; 115 Mass., 514, 533; 111 Mass., 309 and 13 Pa. St., 146, and many others that might be named, abundantly sustain this doctrine, and we see nothing in conflict with it. ”

. In the ease of B. & O. S. W. Ry. Co. v. Good et al, 82 O. S., p. 278, Judge Summers says in the opinion: “The payment as a condition may be waived by the seller, and if it is, the property vests in the buyer.”

And in the approved syllabus in this case we find this language: “In sales of specific chattels for cash on delivery, delivery and payment are concurrent acts, and delivery in expectation of rceeiving immediate payment is not absolute, but conditional, and when there is no waiver of payment the property does not pass until the price is paid.”

In the Circuit Court case just quoted from a waiver was held to have occurred when there was nothing which tended to show any claim on the part of the seller that he was the owner of the property in question, from the second day of April to the fifth day of May, same year.

In the ease at bar there is no evidence showing such claim on the part of plaintiff from the 15th day of December, 1919, the date when the lathe was shipped, f. o. b. Newcastle, Indiana, to the 4th day of March, 1920. Nor does it appear from the record that the failure of the plaintiff to so exercise its right, if it had been such right, was without knowledge of its privilege. From all the conditions such failure must be construed to have been intentional.

In his work on the law governing sales of goods at common law and under the uniform sales act, 'Williston at p. 557, in discussing a transaction similar to that with which we are here concerned, comes to this conclusion from all the authorities:

“ ' * * * Accordingly, if after bargaining for a cash sale the seller subsequently, voluntarily, delivers’ to the buyer the goods with the intent that the buyer may immediately use them as his own, and without insisting upon contemporaneous payment, this action is absolutely inconsistent with the original bargain. Such a delivery is not only evidence of the waiver of the condition of cash payment, it should be conclusive evidence. Even though the case warrants the conclusion that the buyer and seller agreed or understood that the seller should not part with his title until the price was paid, it is still true that the delivery and permission to the buyer to use the goods as his own and inconsistent with the theory of a cash sale. Instead, a conditional sale has been substituted, and the transaction should be dealt with according to the rules governing conditional sales.”

We think counsel will concede that the conclusion may fairly be drawn from the evidence before the court that this proprty was delivered to the Engineering Company by the plaintiff with the intent that the Engineering Company might immediately use it as its own. When the lathe was put oh the cars at Newcastle, Indiana, f. o. b. it was then delivered to the Engineering Company. Subsequently, if it was used in the business of the company, and no claim was made from the date of such delivery to the time which we have before specified, the conclusion may fairly be drawn that the buyer was intended to immediately and continuously during that period use it in its business.

Section 8426 of the General Code provides:

“When, in pursuance of a contract to sell, or a sale, the seller is authorized or required to send goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except as provided in Section 8399, Rule 5, unless a contrary intent appears.”

8391, Rule 5, does not apply to a sale like the one we are discussing.

In support of the position taken by Williston, a number of authorities may be quoted. In the case of Freeh v. Lewis, Appellant, 218 Pa. St., p. 141, the syllabus is:

1. “Where a contract of sale provides for payment of the purehaese price on delivery of the articles sold, and the seller delivers the goods but the buyer fails to pay, the right of property does not pass to the buyer with the possession, but remains with the seller, who may at his option reclaim the goods. The right to reclaim the goods, however, must follow the buyer’s default as promptly as the situation of the parties and the circumstances of the ease will allow.

2. “In such a case reliance upon a subsequent promise to pay that leads the seller to refrain from asserting his rights to retake the property, is in itself a waiver of the right, and makes absolute a delivery which in the first instance was conditional. The seller’s only remedy is against the buyer as a debtor.

3. “Fraud and artifice practiced by the buyer may excuse delay in attempting a recovery of property after delivery, but not mistaken confidence in the buyer’s promises.”

In the opinion Justice Stewart says:

“This does not mean that the seller must eo instanti begin legal proceedings to recover the goods; but it does mean that the seller when he discovers that his delivery is not followed by payment as he had the right to expect, is at once put to his election whether he will waive the condition as to the payment and allow the delivery to become absolute, or retake the property, and that he is to allow no unnecessary delay in making his choice. The object of the law is not to multiply his remedies because of his disappointment. He may not continue to hold his right to the goods, and at the same time hold the buyer as his creditor; one or the other he must relinquish, and do it promptly, or the law will forfeit his right to elect. Continued acquiescence in the buyer’s possession of the goods will be taken as a choice on his part to regard the delivery as absolute, notwithstanding the buyer’s default. The policy of the law, in requiring promptitude in the assertion of continued ownership of the goods, could easily be vindicated were it necessary. It answers every purpose here to show that the law requires it.”

Further along in the opinion the justice quotes Backentoss v. Speicher, 31 Pa. St. 324.

“A sale of goods for cash is, strictly speaking, a sale on condition. The contract is do ut des. The condition is more imperative than such as was in this case, but for that reason less easily waived; and yet, if the vendor acquiesced in a possession obtained in disregard of the condition, he waives it; and though he may recover the price by action, he can not recover the goods in specie. When the plaintiff found his condition disregarded, he should have promptly reclaimed the goods.”

In discussing the question as to what constitutes reasonable time in which a plaintiff under such a state of facts should act, the Justice says:

“By reasonable time is to be understood such promptitude as the situation of the parties and the circumstances of the ease will allow. It never means an indulgence in unnecessary delay, or in a delay occasioned by the vain hope and fruitless effort to obtain the money from the defaulting buyer. When the delay is to be accounted for by the latter consideration, it is accepted as an acquiescence in the delivery and the acceptance of the buyer as a debtor.”

In the case of L. C. Smith & Bros. Typewriter Co., Appellant, v. Luebkman, Respondent, 147 Wis. Rep., p. 317, the syllabi are as follows:

1. “Upon failure of the purchaser to make an agreed cash payment the vendor’s right to retake the goods sold must be asserted without unnecessary delay or will be deemed to have been waived.

2. “By a delay of forty-five days after receiving notice of non-payment of a check given for an agreed cash payment on a typewriter, before taking any steps to reclaim the property, the vendor waived the condition as to the cash payment and permitted the delivery to become absolute. ’ ’

In the 111 Mass., in the case of Upton v. Sturbridge Cotton Mills, Judge Wells says:

“Delivery as applied to a change of possession in pursuance of a sale, ordinarily includes both the act of the vendor in transferring the property and that of the vendee in receiving it. If unaccompanied by any word or act or circumstance to indicate that it is qualified, or made subject to a condition, the vendee has a right to understand it is to be absolute. To hold him accountable as custodian of the property belonging to another, requires his assent to the obuligation, either ■ eqpress or by implication. If there has been completed delivery the denial of a waiver involves necessarily the affirmative proposition that the other party to the delivery has accepted the possession subject to the condition. The reciprocal relations of the parties áre the same as in all matters of contract.”

There is nothing disclosed in the evidence before us to the effect that the Engineering Company in so many words, accepted the possession of the lathe subject to the condition that it was to remain the property of the plaintiff. The reliance of the plaintiff is upon the general rule of the common law with respect to cash sales. The provisions of the Code with respect to sales, which may be said to be arbitrary and controlling in all things with regard to which they afford legislation, are, as found at Section 8436: “The unpaid seller of goods looses his lien thereon — (a) When he delivers goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the property in the goods or the right to the possession thereof; (b) When the buyer or his agent lawfully obtains possession of the goods; (c) By waiver thereof.”

Of course, in the hands of the receiver, the property of the Engineering Company is held under the same obligations as before his appointment. But in view of the authorities quoted, we find the obligation which the Engineering Company owned to plaintiff at the date of the appointment of the receiver was that of debtor to creditor. We are, therefore, unable to find that at the commencement of this action the plaintiff was entitled to the possession of the chattels mentioned in the affidavit.

ON MOTION FOR REHEARING

Some months ago, after a consideration of the evidence and the briefs of counsel, the court passed upon the merits of this ease adversely to the claims of the plaintiff. Since that time there has been an application for a re-hearing and counsel were given the privilege of filing supplemental briefs and of re-arguing the ease.

It is unnecessary for us to again recite the facts which were proven at the trial.

In the opinion rendered after the original hearing we madet reference to the conduct on the part of the plaintiff which, we thought, amounted to a waiver, and applied to that condition the law as we understood it to be. Counsel’ for the plaintiff now contend that no waiver ought to be regarded by the court, for the reason that it is not pleaded by the defendant.

This is an action in replevin. The gist of the action is the •claimed wrongful detention by the defendant against the plaintiff.

“The usual rule that under a general denial (and in this case a general denial was interposed by the defendant) the simple inquiry is, has the plaintiff proved his allegations and that nothing can be shown under it not tending to disprove them does not apply in replevin under the code, but as in the action of ejectment and in part for the same reasons the general denial not only puts in issue every material allegation of the petition but will sustain evidence of any special matter amounting to a defense and will support affirmative relief of return of the goods and damages in favor of the defendant and hence is the only answer needed.” 3d Bates Pleading and Practice, p. 2580.

This rule is based upon a number of authorities in and out of the state. We refer counsel to the 7 Nebraska, 291; 10 Ohio Rep., 344; 12 Ohio Rep., 113; 45 O. S., 657; 26 O. S., 272-75.

If there was a waiver proven — as these authorities entitle the defendant to so prove under its general denial — then it is not difficult, after we have found that there was in fact a waiver— which we did in our former opinion — to also find that, by reason of the conditions amounting to a waiver, the contract oetween the parties, as a result of the delivery and of the delay on the part of the plaintiff in exercising its right, if any it had, became executed insofar as to entitle the defendant to the right of possession .

Some of the proof with reference to waiver was found in the testimony of Mr. Cavanaugh, and the plaintiff now asks that this be stricken from the record, for the reason that it had no application to the case, on his theory that it was not proper proof under general denial. What we have just said indicates that we regard it as our duty to deny such application.

The question of whether or not the sale made by the Biggs-Watterson Co., to the Dairy Engineering Co. was conditional does not in this case involve any creditor.

The question as to right of possession is between these parties only.

The whole transaction indicates an extension of credit. The bill sent to the Engineering Company recites: "Terms one-third cash; balance 90 days trade acceptance with six per cent, interest.” This account shows that the delivery was made with the intention of accepting as payment in greater part a trade acceptance, a higher form of security than the account itself. In other words, the contract between the- parties was for something definite in the form of a new agreement which was to be taken for the property delivered.

An entry may be drawn in conformity to this and the former opinion of the court.  