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The case of Terney v. Doten, 70 Cal. 399, 11 Pac. 743, arose under a statute which rendered invalid all sales of personal property or agreement to buy or sell unless there was a note or memorandum in writing, or an accep
nce by the buyer at the time of sale paid as part of the price. In that case defendant agreed to sell plaintiff one hundred unbroken horses at the price of seventy-five dollars each. The defend. ant was to gather up a number of horses from the band, from time to time, and place them in corrals, from which plaintiff was to select not less than twenty and commence rough-breaking them, having for that purpose 57 the use of defendant's harness, cart, etc., after which the numbers so selected and broken were to be turned into defendant's pasture field and another selection made in a like manner and for a like purpose, and so on until the whole number agreed upon had been bought and sold. Under the contract, the plaintiff later on went to defendant's ranch, got together a number of horses, from which plaintiff selected twenty-two, and commenced breaking them, upon the conclusion of which he turned them into the pasture field of defendant and waited for defendant to gather another lot. It was held that none of the horses forming the subject matter of the contract ever passed into the absolute control and possession of the plaintiff, and that there was no acceptance and receipt of any of them by the plaintiff within the meaning of the statute. The question whether there had been payment to the defendant by the plaintiff upon the contract was not involved, as it obviously could not have been urged on plaintiff's behalf, for the reason that there was no pretense that any payment was made at the time of the sale, which is the requirement of the California statute. It is needless to repeat that our statute contains no such requirement.
The cases of Galbraith v. Holmes, 15 Ind. App. 34, 43 N. E. 575, and Hudnut v. Weir, 100 Ind. 501, are very similar in their facts. In Galbraith v. Holmes it appeared that plaintiff made an agreement with the defendant by the terms of which defendant was to ship him flour to apply upon an indebtedness owing from defendant to plaintiff. Plaintiff also agreed to deliver to defendant his own sacks in which to put the flour and return to the plaintiff. In the case of Hudnut v. Weir the arrangement was very similar, except that the purchaser agreed, as a part of the consideration of the sale. to furnish the bags in which to put corn when shelled, but it was said, and very properly, that the delivery of the sacks to the seller was a matter for the purchaser's own accommodation, and was not part payment, and that therefore this did not take the transaction out of the statute. But in Weir v. Hudnut the averment of the declaration being 58 that the use of the sacks was to be treated as part consideration for the purchase of the property, the court held that this stated a case. It will be noted that in these cases there was no passing of the title of the sacks from the purchaser to the seller. In the present case, any work done upon the hay in baling the same passed a present benefit from the purchaser to the seller, and as it was done in pursuance of the contract, it could be nothing else than payment upon the contract. None of these cases, therefore, militate against the conclusion which we announce, that this contract was validated by the receipt of the benefit of baling the hay in pursuance of the contract.
None of the other questions presented call for discussion, as they relate to the other feature of the case. For instance, it is contended that the rule of damages was improper if the case is rested upon the view that the title to the hay had passed from defendants to the plaintiff. It does not lie with the defendants to urge that the title had passed by delivery and receipt. They have repudiated that view of the case, and having refused to perform on their part, the plaintiff's remedy under the contract, as an executory contract, would seem to be complete, and properly applied in this case: See Davis v. Strobridge, 44 Mich. 157, 6 N. W. 205.
The judgment is affirmed.
Grant, C. J., and Ostrander, Hooker, and Carpenter, JJ., concurred.
STATUTE OF FRAUDS—WHEN SATISFIED BY PART PAYMENT
OF PURCHASE PRICE UNDER ORAL CONTRACT FOR SALE
a. Ancient and Modern Distinctions, 394.
1. In General, 400.
2. To Agent, 400.
I. Scope. The discussion in this note will be limited strictly to the subject indicated by the title. The effect of acceptance and delivery as taking a contract for the sale of goods out of the statute of frauds will be found fully treated in the monographic note appended to Devine v. Warner, 96 Am. St. Rep. 215, and also in the note appended to Shindler v. Houston, 49 Am. Dec. 325. What acts constitute part performance, so as to take an oral contract for the sale of chattels out of the statute of frauds is the subject of the note appended to Christy v. Barnhart, 53 Am. Dec. 539.
II. Introduction. Speaking of the statute of frauds, with reference to an oral contract for the sale of personal property, Judge Gardiner, in an early case before the New York court of appeals, said: "The statute of frauds has been pronounced by high authority. (2 Kent's Commentaries, V, 494), to be, in many respects, the most comprehensive, salutary and important legislative regulation on record, affecting the security of private rights. Its benefits, it is believed, will be most effectually secured, by rejecting refined distinctions, overlooking the supposed equity of particular cases, and adhering steadily to its language as the best exponent of the intention of the legislation”: Shindlor v. Houston, 1 N. Y. (1 Comst.) 261, 49 Am. Dec. 316. But the courts have not always followed Judge Gardiner's advice and overlooked the "supposed equity of particular cases," for there has been such difference of judicial opinion as to when an oral contract is or is not relieved from the operation of the statute of frauds, that Judge Houston, of the supreme court of Idaho, in speaking of when part payment in a particular case took the contract out of the statute, said: “To undertake to reconcile the numerous opinions upon this statute 'were a task as rash as ridiculous.'" There is no doubt, as we shall presently see, that notwithstanding there is no actual transfer and delivery of chattels under an oral contract of sale, that such contract will be taken out of the statute of frauds, by the purchaser making a part payment of the price, in addition to the contract, but there are many limitations to the rule, as will appear hereafter.
III. Earnest or Part Payment. Ancient and Modern Distinctions.--It was a custom under the common law to require a purchaser to give "earnest” to bind an oral contract, but this "earnest” was not necessarily a part payment; and we are told by Mr. Benjamin, in his admirable work on Sales, seventh edition, section 196, that there was a species of earnest under the Roman law which contemplated the payment of a sum for the option of purchase, which was to be deducted from the price, if the sale took place, but if the purchaser declined to complete the purchase, he forfeited the earnest-money, and if the seller refused to perform, he was bound to return the earnest-money or an equivalent amount by way of forfeiture on his part. Whether this system of forfeit money,
as it was called under the civil law, was ever a species of "earnest” under the common law is now of no practical importance, for in both this country and England earnest and part payment are regarded as the same thing. “As used in the statute of frauds, 'earnest' is regarded as a part payment of the price": Howe v. Hayward, 108 Mass. 54, 11 Am. Rep. 306; and to the same effect is Weir v. Hudnut, 115 Ind. 525, 18 N. E. 24, and Binell v. Balcom, 39 N. Y. 275.
b. General Rule as to Effect of Part Payment and Illustration.The general rule that part payment of the agreed purchase price, un. der an oral contract for the sale of goods, will take the contract out of the statute of frauds, is universally recognized, and the following cases will serve to show how it has been applied. Thus, in C. R. Shaw Lumber Co. v. Manville, 4 Idaho, 369, 39 Pac. 559, a purchaser had requested the seller to obtain for him certain articles not kept by the seller. The seller did so, and notified the purchaser of their arrival, exhibited to him the bill of lading, and notified him where the articles had been stored. The purchaser declined to examine the articles, but said he "guessed they were all right," and that he would remove them in a few days, and paid the seller $100 on the price. It was held that the purchaser had made a part payment on the articles, and the contract was therefore not within the statute of frauds. So, also, where, under an agreement to deliver certain merchandise, the place and time of delivery and price were fixed, and part of the price paid, and the seller agreed to be present on the next day and receive a further sum and reduce the contract to writing, but failed to do so and refused to perform his agreement, though the buyer was present and ready, the part payment took the contract out of the statute of frauds: White v. Allen, 9 Ind. 561. In French v. Boston Nat. Bank, 179 Mass. 404, 60 N. E. 793, a pledgor, to save his col. lateral, which was about to be sold, in order to permit the pledgee to participate in insolvency proceedings against the pledgor, as an unsecured creditor, for the balance due after crediting the proceeds of the sale of the collateral, agreed to procure a purchaser for one item of the collateral; and the pledgee thereupon agreed to bid at the sale, for the other items thereof, stipulated sums, for which they were thereafter accordingly sold, and to hold the same for the pledgor till he repaid the amount of such bids, with interest, and the balance due on the secured obligation. It was held that assuming the pledgee's agreement was within the statute of frauds relating to the sale of goods, the statute was satisfied by the payment of the stipulated price and the acceptance and receipt of the specified collateral by the purchaser, furnished by the pledgor under his agreement. And in Berwin v. Bolles, 183 Mass. 340, 67 N. E. 323, the plaintiff had purchased certain shares of stock through defendants, through whom he had also bought shares of stock in other companies, but had received no certificate or memorandum therefor in writing, but claimed that he had made partial payments on his general account; held, that pay. ments made by the plaintiff to the defendants generally on account were applicable to all the stock, and took the transaction out of the statute of frauds. So, too, in Burhans v. Corey, 17 Mich. 282, the action was to recover damages for breach of an oral contract for the sale of wool. The plaintiffs, by their agent, sold each his several parcels of wool in a single sale, to defendant for the agreed price of $600. The defendant paid plaintiff's agent $30 in part payment of the price. It was held that the $30 paid as earnest would be regarded as belonging ratably to the plaintiffs, and would therefore constitute a sufficient part payment under the statute of frauds as to all of the plaintiffs. In Dow v. Worthen, 37 Vt. 108, plaintiff had bought from defendant a lot of poultry, the contract of sale was a verbal one. Plaintiff had previously sold to defendant a lot of apples. At the time of closing the poultry sale, it was agreed that the price of the apples sold by plaintiff to defendant, and which had not been paid for, should be $75, and this amount was to be as part payment on the poultry. It was held that the contract for the poultry was binding within the statute of frauds.
In Lilly v. Lilly, Bogardus & Co., 39 Wash. 337, 81 Pac. 852, the action was to recover damages for breach of contract in failing to ship and deliver fifty tons of hay and fifty tons of oats under an oral agreement between plaintiff and defendants. Plaintiff, who was a merchant in Dawson, Yukon Territory, in pursuance of the contract, paid defendants $1,769.68, it being then agreed that the sum of $1,075 of said amount was to be applied in an indebtedness due from plaintiff to defendant, and the remainder of said payment, $694.68, was to be applied and credited as part payment in advance on ac. count of the hay and oats purchased as aforesaid. Defendants shipped five tons of the hay and oats and no more. It was held that for the reason that there was a part payment, and also a part delivery, the contract was not within the statute of frauds. And in Cooper v. Bay State Gas Co., 127 Fed. 482, the defendants had contracted to purchase all of the stock of a corporation for $160,000, and paid $25,000 of that sum, it being understood that the seller should hold the stock for the balance of the purchase price. It was held that the $25,000 paid would take the sale out of the statute of frauds.
In Organ v. Stewart, 60 N. Y. 413, the defendant was the owner of three lots of wool. He entered into an oral agreement with plaintiff for the sale of two of the lots, and a sale of the third upon certain conditions. Two of the lots were delivered, but a dispute arose over the conditions upon which the bargain as to the third lot depended, and defendant refused to deliver said lot and plaintiff declined to pay for those that had been delivered. They finally compromised, defendant agreeing to deliver the third lot, and plaintiff paid the price of the other two. The defendant failed to carry out his part of the compromise agreement, and refused to deliver the wool, and in an action therefor pleaded the statute of frauds. It was held that the payment made by the plaintiff on the compromise could not be deemed to have been made on the three lots so as to take the contract for the third lot out of the statute of frauds