56

an election.55 Mere attendance at a meeting, however, is not so necessarily, as it is explicable as merely an endeavor to get information, or to recover a subscription which has been paid; but taking part as a stockholder in such a meeting seems not thus explicable,57 and paying calls or assessments is also conclusive.58 Knowledge of the facts justifying a subscriber to refuse to complete his subscription is essential to a binding election; 59 and it has been held that intent to waive the condition is also necessary; 60 but such a decision is due to the failure to observe that the situation involves an election between inconsistent benefits.

§ 727. Surrender of rights accompanied by delivery of tangible property.

It is only for the creation or discharge of intangible rights that consideration or a seal is required by the common law. Tangible property may be given away, though delivery is es

113 Cal. 382, 45 Pac. 695; Corwith v. Culver, 69 Ill. 502; Hager v. Cleveland, 36 Md. 476.

"Sharpley v. Louth, etc., Ry. Co., 2 Ch. D. 663. See also Butler v. Aspinwall, 33 Fed. 217, affd. in 133 U. S. 595, 33 L. Ed. 779, 10 S. Ct. 417; Dallemand v. Odd Fellows' Savings Bank, 74 Cal. 598, 16 Pac. 497; Canfield v. Gregory, 66 Conn. 9, 33 Atl.

536.

Wontner v. Shairp, 4 C. B. 404; New Hampshire v. Johnson, 30 N. H. 390, 64 Am. Dec. 300; Orynski v. Loustaunan (Tex.), 15 S. W. 674. Cf. Tredwen v. Bourne, 6 M. & W. 461.

Cabot, etc., Bridge v. Chapin, 6 Cush. 50, 53; International, etc., Assn. #. Walker, 88 Mich. 62, 49 N. W. 1086, 97 Mich. 159, 56 N. W. 344; Portland and Fairview R. Co. v. Spillman, 23 Oreg. 587, 32 Pac. 688.

58 California S. H. Co. v. Callender, 94 Cal. 120, 29 Pac. 859, 28 Am. St. Rep. 99; Callahan v. Chilcott Ditch Co., 37 Col. 331, 86 Pac. 123; Myers v. Sturgis, 123 N. Y. App. Div. 470,

108 N. Y. S. 528, affd. 197 N. Y. 526, 90 N. E. 1162.

59

Strong v. Southwestern, etc., Co. (Tex.), 38 S. W. 546; Denny Hotel Co. v. Gilmore, 6 Wash. 152, 32 Pac. 1004.

60 Wright v. Agelasto, 104 Va. 159, 161, 51 S. E. 191. "The instruction should have stated that 'if the jury believe from the evidence that the defendant. . . was named as one of the incorporators, participated in the proceedings of its stockholders, and acted as a director of the company, and at the time of such action and participation in said meetings he did not know that bona fide, valid subscriptions to the amount of $15,000 had not been obtained, and did not intend by such acts to waive the benefit of the condition, such action and participation cannot be construed as a waiver of the condition on which his subscription was made, and they must find for the defendant." The instruction actually given was held erroneous for omitting the italicized words.

sential to complete the gift; and where tangible property is delivered, intangible rights connected with it may be at the same time be surrendered. On strict logic this is inconsistent with the rules of consideration generally recognized in the discharge of contracts, but at this point the law of contracts yields to the law of property. Thus it is well settled that where property is in the possession of a bailee, an effectual gift may be made by the bailor to the bailee without any retransfer of possession.61 This involves the conclusion that the bailee's contract or obligation to return the property may be discharged without a seal, and without consideration. If this intangible right may be thus surrendered, it seems logically to follow that other intangible rights may similarly be surrendered in connection with the transfer of tangible property. Thus it may be supposed that parties agree to buy and sell goods for a fixed price, but afterwards agree that no price shall be paid, and that the property shall be transferred as a gift. Until delivery of the goods this agreement is ineffectual. It cannot impose a binding obligation to give, since there is neither consideration nor delivery. It cannot, it seems, even rescind the earlier agreement since the buyer's assent to surrender his rights under the original contract must be regarded as conditional on the performance of the promise to give. Where, however, delivery is actually made, the ownership is transferred and the donee will not be liable for the price agreed upon in the original bargain. If the logic of the doctrine of consideration were applied to the situation, it would have to be said that even after delivery, the transferee remained liable for the price under the original contract, since the transferor has received no consideration for the surrender of that right. Though it would be possible for the parties first to rescind the original bargain, and then to make an effectual gift, they have not taken this course. It cannot be assumed that the transferee would have been willing to rescind except as part of the total agreement

61 Re Alderson, 64 L. T. R. (N. S.) 645; Re Stoneham, [1919] 1 Ch. 149; Eden v. Bohling, 69 Ill. App. 307; Tenbrook v. Brown, 17 Ind. 410; Wing v. Merchant, 57 Me. 383; Allen v. Cowan,

23 N. Y. 502, 80 Am. Dec. 316; Miller v. Neff, 33 W. Va. 197, 207, 10 S. E. 378. See also Kilpin v. Ratley, [1892] 1 Q. B. 582.

which provided for the gift of the property. Taking the agreement as a single and indivisible transaction, as it has been stated, it is evident that the seller agrees to give up a right originally secured to him under the contract, and the other party to the contract agrees to give up nothing.62 It cannot be successfully maintained that the mere acceptance of the gift is sufficient consideration without admitting the indefensible consequence that the promise to give was enforceable prior to delivery, being supported by a promise to accept. That an intangible right may be surrendered, however, as part of a transaction involving the delivery of tangible property, seems not only the legal, but the desirable result. The principle finds application in a variety of cases where a seller surrenders a title or lien, or right of action, to which he previously had been entitled under a bargain. In this connection should also be considered cases, whether all of them defensible or not, where a buyer on acquiring property, or a seller on transferring property,64 surrenders a right.65 The case must be sharply distinguished where an attempt is made not to discharge an obligation, but to create one, by means of the transfer of property, greater than that for which the obligor would be bound under the terms of a previous contract. This cannot be done without satisfying the requirements of the law concerning consideration.66

65

Cf. cases where paying an insufficient sum of money is held not to discharge a debt, supra, § 120.

In W. E. Caldwell Co. v. Steckel, 143 La. 564, 121 N. W. 376, a contract had been made for the sale and purchase of tanks. The contract stated a lump sum for them. The seller, however, contended that the price named was for each of the tanks. The buyer with knowledge that such was the seller's claim, took the tanks. It was

63

held that he might thereafter assert the true construction of the contract.

In Napier Iron Works v. Caldwell, etc., Iron Works, 60 Ind. App. 317, 110 N. E. 714, 716, the court said: "We are satisfied that, as the iron was not delivered to appellee during the first half of the year 1910, the title and possession thereof were both in appellant, relieved from any of the agreements contained in the contract, and to again bring it within the provisions of the original contract, and extend the time for delivery, such agreement as to extension, under the facts of this case, to be valid, would have to be supported by a new consideration." See also supra, § 130.

§ 728. Discharge of seller's lien in sales of chattels.

The law governing the sale of goods gives an unpaid seller in possession a lien for the price in the absence of an agreement to the contrary. This lien may be lost in various ways. Primarily it may be lost by surrendering possession voluntarily without an agreement for continuance of the lien.67 Here though neither consideration nor a seal supports the discharge of the vendor's right, the surrender of possession like the delivery of a gift, puts the transaction in the category of dealings with tangible property, rather than intangible choses in action. The lien may also be lost by agreement or by conduct. Generally where the vendor is still in possession, and his right is held to be destroyed, there is what amounts to an agreement supported either by consideration, or by a promissory estoppel. Such an estoppel precludes an assertion of the lien against a third person who has bought the goods from the original buyer, being induced thereto by an attornment of the seller to the subbuyer, or by any circumstances indicating deception of the sub-buyer as to the relations between the seller and the original buyer.68 Permitting the buyer greatly to increase the value of the goods, has been held to destroy the lien.69 It is sometimes laid down broadly that one having a lien waives it by asserting mistakenly a greater right than the law allows him. The true doctrine, however, is doubtless that stated by the Supreme Court of Minnesota: "An examination of the authorities on the subject, from the early case of Boardman v. Sill,70 down, satisfies us that they all proceed upon principles essentially of equitable estoppel, and limit the application of the doctrine invoked by counsel to cases where the refusal to deliver the property was put on grounds inconsistent with the existence of a lien, or on grounds entirely independent of it, without mentioning a lien. Thus it has been repeatedly held that a lien is not waived by mere omission to assert it as the ground of refusal, or by a general refusal to surrender the goods,

67 As to the effect of surrender of the goods under an agreement that the lien shall continue, see Williston on Sales, § 515.

68 Williston on Sales, § 558.

69 Douglas v. Shumway, 13 Gray,

498. Timber had been cut into firewood on the seller's premises in pursuance of the contract with the seller. There is in such a case an element of promissory estoppel.

70 1 Campb. 410, note.

without specifying the ground of it, except in certain cases, where the lien was unknown to the person making the demand, and that fact was known to the person on whom the demand was made. In such cases, if the ground of refusal is one that can be removed, the other party ought in fairness to have an opportunity to do so." 71

There will rarely be a case of surrender of a lien by mere election because even judgment in an action for the price does not destroy the lien.72 But if the buyer becomes bankrupt, a seller with a lien is a secured creditor, and like any secured creditor he has the election of surrendering his security and proving for his full claim or of realizing on his security and proving for the balance. Proof of the full price as an unsecured creditor would be a waiver of the lien,73 though doubtless if proof was made under a misapprehension the court would allow it to be withdrawn.

It seems probable, however, that even without consideration or estoppel a lien holder's right may be surrendered. It has indeed been said that an agreement without consideration to give up an existing lien is ineffectual; 74 but both the English Sale of Goods Act 75 and the American Uniform Sales Act 76 provide that an unpaid seller loses his lien by "waiver thereof." The meaning of waiver is not defined, but presumably is intended to include any express intention to surrender. It is also stated in both Acts 77 that