class. Acts of this class apply only when the relation of agency for the owner exists, 10 and therefore they do not include a person to whom the owner delivers his property as agent for a third person, so as to enable such agent to transfer title to a bona fide purchaser.11 For this reason such acts do not apply so as to enable an impostor who represents himself as the agent of a third person and induces the owner of property to sell to such third person and deliver the property to him (the impostor) to transfer a good title to a bona fide purchaser.12 The operation of this class of acts in this country and in England as regards the Factors Act of 1889 is confined to mercantile agents whose usual business is to sell for their principals and is not extended to every class of agents.18 An earlier English Act, however, seems to have been construed to include all classes of agents intrusted with the possession or documents of title. The language of this earlier act was very broad and by its terms applied to "any agent." 14 It has been held in England that the fact that the person intrusted with the goods, such as a jeweler, is also engaged in selling his own goods will not prevent him from being considered a mercantile agent within the meaning of the English Act of 1889.15 To entitle one to protection under those acts he must have taken the property in good faith and for value.16

668. Who Are Bona Fide Purchasers Generally. To entitle a purchaser of a chattel to protection as a bona fide purchaser, he must be a purchaser for value, and where he claims protection as such the burden is on him to show that he has paid value. Likewise to entitle one to protection as a bona fide purchaser he must have purchased without notice of his seller's want of title; 18 and ordinarily,

9. Soltau v. Gerdau, 119 N. Y. 380, 23 N. E. 864, 16 A. S. R. 843 (in this case the order was directed to a warehouseman who did not have the goods in store, the agent, to whom the order was given and who had procured their possession by fraud, having stored them in another warehouse).

10. Note: 27 Eng. Rul. Cas. 180. 11. Fowler v. Hollins, L. R. 7 H: L. 757, 44 L. J. Q. B. 169, affirming L. R. 7 H. L. 616, 41 L. J. Q. B. 277, 2 Eng. Rul. Cas. 409.

Cas. 1913C 1299; 2 Eng. Rul. Cas. 435; 27 Eng. Rul. Cas. 176.

14. Note: 2 Eng. Rul. Cas. 433. 15. Weiner v. Harris, [1910] 1 K. B. (Eng.) 285, 18 Ann. Cas. 87.

16. Warner v. Martin, 11 How. 209, 13 U. S. (L. ed.) 667 (holding that under the New York statute one who takes the goods in payment of an antecedent debt of the agent is not a purchaser for value). Allen v. St. Louis Nat. Bank, 120 U. S. 20, 30 U. S. (L. ed.) 573.

Note: 58 Am. Dec. 166.

17. Tillman v. Heller, 78 Tex. 597, 14 S. W. 700, 22 A. S. R. 77, 11 L.R.A. 628.

12. Fowler v. Hollins, L. R. 7 H. L. 757, 44 L. J. Q. B. 169, affirming L. R. 7 H. L. 616, 41 L. J. Q. B. 277, 2 Eng. Rul. Cas. 409. See supra, par. 115, as to the rights of one purchasing in good 18. Kitchell v. Vanadar, 1 Blackf. faith from a buyer who induces (Ind.) 356, 12 Am. Dec. 249; Wateranother to sell to him by misrepresen- ston v. Getchell, 5 Greenl. (Me.) 435, tation of his identity or authority. 17 Am. Dec. 251; Crocker v. Crocker, 13. Notes: 18 Ann. Cas. 87; Ann. 31 N. Y. 507, 88 Am. Dec. 291.

if he has notice of facts which should put him on inquiry, he will be held to have implied notice of what the inquiry if made would have disclosed.19 Notice acquired by the buyer, before he has paid the price, though after the purchase, will ordinarily prevent his claiming protection as a bona fide purchaser.20 If the purchaser has shown that he is a purchaser for value, the affirmative or burden rests upon the party charging notice to prove the same. An assignee for the benefit of creditors merely succeeds to the rights of his assignor and is not entitled to protection afforded bona fide purchasers for value. He takes subject to all equities existing in favor of third persons.* Thus, the assignee of a fraudulent buyer cannot hold the goods as against the defrauded seller's right to rescind the sale for the fraud and recover the goods. So under both the earlier and the late federal bankruptcy statutes the trustee in bankruptcy is not as a general rule entitled to the protection frequently afforded bona fide purchasers for value.

669. Where Pre-existing Debt Is Consideration.-There is considerable discord in the authorities on the question as to whether one who takes negotiable paper in payment of or as security for a pre-existing debt is to be regarded as a purchaser for value in due course; and in case of a sale of chattels there is also considerable discord. In jurisdictions in which it is held that a purchaser of negotiable paper in satisfaction of a pre-existing debt is not a purchaser for value, it is also consistently held that such a purchaser of chattels is not to be considered a purchaser for value; and in most jurisdictions, even though in the case of negotiable paper the rule prevails that such a purchaser is entitled to protection as one for value, the courts refuse to extend the rule to purchasers of chattels. And protection has

19. See NOTICE, vol. 20, p. 346. 20. Fowler v. Merrill, 11 How. 375, 13 U. S. (L. ed.) 736; Young v. Kellar, 94 Mo. 581, 7 S. W. 293, 4 A. S. R. 405 and note; Tillman v. Heller, 78 Tex. 597, 14 S. W. 700, 22 A. S. R. 77, 11 L.R.A. 628.

1. Calais Steamboat Co. v. Van Pelt, 2 Black 372, 17 U. S. (L. ed.) 282.

2. Roberts v. Corbin, 26 Ia. 315, 96 Am. Dec. 146. See ASSIGNMENTS FOR THE BENEFIT OF CREDITORS, vol. 2, p. 656 et seq.

3. See supra, par. 598.

4. Gibson v. Warden, 14 Wall. 244, 20 U. S. (L. ed.) 797. See BANKRUPTCY, vol. 3, p. 231 et seq.

6. Gavin v. Armistead, 57 Ark. 574, 22 S. W. 431, 38 A. S. R. 262; Nuxton v. Fait, etc., Co., 1 Penn. (Del.) 483, 42 Atl. 431, 73 A. S. R. 81; Adam, etc., Co. v. Stewart, 157 Ind. 678, 61 N. E. 1002, 87 A. S. R. 240; Reid v. Cowduroy, 79 Ia. 169, 44 N. W. 351, 18 A. S. R. 359; Reed v. Brown, 89 Ia. 454, 56 N. W. 661, 48 A. S. R. 406; Hurd v. Bickford, 85 Me. 217, 27 Atl. 107, 35 A. S. R. 353; Buffington V. Gerrish, 15 Mass. 156, 8 Am. Dec. 97; Schloss v. Feltus, 96 Mich. 619, 55 N. W. 1010, 103 Mich. 525, 61 N. W. 797, 36 L.R.A. 161, 164; Phenix Iron Works Co. v. McEvony, 47 Neb. 228, 66 N. W. 290, 53 A. S. R. 527; Sleeper v. Davis, 64 N. H. 59, 6

5. BILLS AND NOTES, vol. 3, p. 1057 Atl. 201, 10 A. S. R. 377; Lloyd v. Brewster, 4 Paige Ch. (N. Y.) 537, 27

et seq.

been denied a chattel mortgagee taking as security for a pre-existing debt on the ground that he is not a purchaser for value, and also to a pledgee. In other jurisdictions, however, the courts have refused to recognize any valid basis for a distinction between purchasers of commercial paper and purchasers of chattels and consider one who takes a chattel in satisfaction of a pre-existing debt a purchaser for value and entitled to full protection as such. And protection has been extended to a chattel mortgagee 10 or pledgee 11 who takes a chattel as security for a pre-existing debt. The question as to whether one who takes a chattel in payment of a pre-existing debt is a purchaser for value has very frequently arisen in cases where a buyer has by fraud induced his seller to make the sale and has himself resold, and in this particular aspect is treated heretofore.12

385

670. Purchaser "in Good Faith."-On the question whether one who takes in payment or as security for a pre-existing debt is a purchaser or mortgagee "in good faith" when a statute affords protection to purchasers or mortgagees in good faith without saying anything as to value, the authorities are again in discord. The view generally taken seems to be that the phrase "in good faith" is used as meaning "for a valuable consideration without notice," and that as one who takes a chattel merely in satisfaction of or as security for a pre-existing debt. is not a purchaser for value, he is not entitled to the protection extended by a statute to purchasers or mortgagees of chattels "in good faith." ." 18 Other authorities, however, take the view that to render one a purchaser or mortgagee "in good faith" he need not be a purchaser for value in the strict sense, and therefore if he takes in payment or as security for a pre-existing debt without notice he is entitled to the protection afforded by the statute.14 And the latter view would undoubtedly be taken in jurisdictions where it is held that one taking in payment of or as security for a pre-existing debt is a purchaser for value.

671. Remedy against Purchaser.-As the owner's title to the chattel is not affected by a sale by a tortfeasor, he may of course maintain an action of replevin to recover possession. On the question whether the true owner may maintain replevin against a bona fide purchaser without a prior demand, the authorities, however, are not in accord. The better view would seem to be that the purchaser, if his seller was a tortfeasor, also occupies a similar position and no demand need be made upon him.15 In other cases, however, the view is taken that a demand for the return of the chattel must be made by the owner of a bona fide purchaser, even from a wrongful taker, before he is liable to. an action to recover the possession, although the one who wrongfully took the chattel is liable without demand.16 Ordinarily a purchaser of goods from one without title will be liable to the true owner in

13. People's Sav. Bank v. Bates, 120 U. S. 556, 7 S. Ct. 679, 30 U. S. (L. ed.) 754. See also Wright v. Larson, 51 Minn. 321, 53 N. W. 712, 38 A. S. R. 504.

Note: 33 L.R.A. 305.

Thus in People Sav. Bank v. Bates, 120 U. S. 556, 7 S. Ct. 679, 30 U. S. (L. ed.) 754, in construing a Michigan statute rendering unrecorded chattel mortgages invalid against subsequent purchasers or mortgagees "in good faith," the court considered the phrase "in good faith" to have been used to mean the same thing as a mortgage for "a valuable consideration without notice" and that therefore a second chat

tel mortgagee taking as security for a
pre-existing debt was not entitled to
protection.
14. Knowles Loom Works V.
Vacher, 57 N. J. L. 490, 31 Atl. 306,
33 L.R.A. 305.

Note: 33 L.R.A. 305.

15. Strubbee v. Cincinnati Ry., 78 Ky. 481, 39 Am. Rep. 251; Galvin v. Bacon, 11 Me. 28, 25 Am. Dec. 258; Trudo v. Anderson, 10 Mich. 357, 81 Am. Dec. 795; Velsian v. Lewis, 15 Ore. 539, 16 Pac. 631, 3 A. S. R. 184.

16. Wood v. Cohen, 6 Ind. 455, 63 Am. Dec. 389 and note. See REPLEVIN, vol. 23, p. 888, as to the necessity for a demand before suit.

trover if he converts them to his own use,17 and his resale of the goods is itself a conversion, though his purchase was in good faith. There is no difference in principle between the recovery of the property itself from the person in whose possession it may be found and the recovery of its value from one who has bought and sold it.18 No demand is necessary to be made upon the buyer after he has resold for the reason that the sale is an actual conversion,19 and if the buyer merely takes possession under his purchase from one without title, this has been held a conversion rendering him liable in trover without a previous demand.20 It has been held that a joint action of trover cannot be maintained against the seller and the bona fide purchaser from him. The want of precedent for such a joint action has been strongly relied on as a reason for not permitting such an action; and on principle it would seem unjust to subject a bona fide purchaser from a tortfeasor to a joint suit with him, to the costs and damages which may be recovered in such an action, and to have them fixed on him as a joint liability with his seller. On the other hand, if he were sued severally he could give notice to his seller of the pending of the suit, and require him to defend it. And if there should be a recovery in the suit, his remedy against his seller would be plain.1 Though the usual action resorted to by the owner is an action of replevin or trover, it has been held that he may also maintain an action of trespass de bonis asportatis against the purchaser, though he purchased in good faith.2

XIX. PURCHASES AND SALES BY AGENTS

Sales by Agents

672. Rule Stated as to Authority Generally.-The general rule of agency that persons dealing with agents are bound at their peril to ascertain the scope of the agents' authority and that an agent cannot bind his principal by acts beyond the actual or ostensible scope of his

17. Milner, etc., Co. v. Deloach Mill 20. Hyde v. Noble, 13 N. H. 494, 38 Mfg. Co., 139 Ala. 645, 36 So. 765, 101 A. S. R. 63; Heckle v. Lurvey, 101 Mass. 344, 3 Am. Rep. 366; Hills v. Snell, 104 Mass. 173, 6 Am. Rep. 216; Velsian v. Lewis, 15 Ore. 539, 16 Pac. 631, 3 A. S. R. 184.

18. Sharp v. Parks, 48 Ill. 511, 95 Am. Dec. 565; Newton v. Porter, 69 N. Y. 133, 25 Am. Rep. 152; Woods v. Nichols, 21 R. I. 537, 45 Atl. 548, 48 L.R.A. 773; Courtis v. Cane, 32 Vt. 232, 76 Am. Dec. 174.

Note: 3 A. S. R. 205.

Am. Dec. 508; Velsian v. Lewis, 15
Ore. 539, 16 Pac. 631, 3 A. S. R. 184.
As to the necessity for a demand gen-
erally before bringing trover, see TRO-
VER.

1. Larkins v. Eckwurzel, 42 Ala. 322, 94 Am. Dec. 651. As to the effect of a recovery against the buyer by one claiming under a paramount title as evidence of the breach of the seller's warranty of title, see supra, par. 507.

2. Stanley v. Gaylord, 1 Cush. 19. Courtis v. Cane, 32 Vt. 232, 76 (Mass.) 536, 48 Am. Dec. 643; Gray Am. Dec. 174. v. Stevens, 28 Vt. 1, 65 Am. Dec. 216.