Commercial Law

by Richard D. Currier; Richard William Hill; Samuel Williston

THE RIGHTS OF OWNERSHIP.—Exclusive ownership implies:

1. The right of exclusive possession for an indeterminate time.

2. The right of exclusive enjoyment for an indeterminate time.

3. The right of disposition.

4. The right of recovery if the thing be wrongfully taken or withheld.

But, you say, this is not the idea one ordinarily has of the term "property." One speaks thus of his watch: "I own this watch. It is my property." The answer is, property is a term with a double meaning. In the ordinary sense "property" indicates the thing itself, rather than the rights attached to it. Therefore it is that we have a law of personal property, and a law of real property.

PERSONAL PROPERTY AND REAL PROPERTY DISTINGUISHED.—Real property has been defined to be co-extensive with lands, tenements, and hereditaments; to put it more simply, we may say that it consists of land and anything that is permanently affixed to the land. Personal property embraces all objects which are capable of ownership except land. One fundamental difference between the two is that real property is generally considered to be immovable, while such property as is movable is usually termed personal property. It is important that the distinction between the two forms of property be kept in mind because different results follow where the property is held to be one or the other. For example, on the death of the owner of real property, it passes to his heir or devisee, while in the case of personal property, it goes to the personal representative, the executor or the administrator, and through him to the legatee or distributee. Again, in settling the estate of the deceased person, personal property is always to be used first to pay the decedent's debts. The modes of transferring personal property and real property differ. Real property is transferred by deed. Personal property may be transferred without any writing and even in the case of a transfer of personal property, by a bill of sale, the requirements for recording it are generally quite different from those relating to the recording of deeds. Again, the transfer of real property is governed by the law of the place where the real property is situated, whereas the transfer of personal property is governed by the law of the domicile of the owner. Taxation is another subject where the distinction is most important.

SALES OF PERSONAL PROPERTY.—The most important branch of the law of personal property, in the field of commercial law, is that relating to the sale of personal property. We shall confine the balance of this chapter to a consideration of that subject. As we have a uniform Negotiable Instruments Law, so we also have a Uniform Sales Act which has now been adopted in many of the States. The Sales Act defines a sale and a contract to sell as follows: (1) A contract to sell goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price. (2) A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price. (3) A contract to sell or a sale may be absolute or conditional. (4) There may be a contract to sell or a sale between one part owner and another.

SALES AND CONTRACTS TO SELL.—Sales are to be distinguished from contracts to sell. A sale is an actual transfer of property, whereas a contract to sell is an agreement to make a sale in the future. Sales at a shop, for instance, are made without any contract to sell, but orders for goods at a distance, and agreements to ship them, frequently precede the actual sale of the goods, which is made in pursuance of the prior contract to sell. The sale of personal property is subject to different rules from the sale of real estate. In the transfer of real estate, formalities of deed and seal are necessary, which are not required in personal property, and the subjects must be considered separately.

A SALE DISTINGUISHED FROM SIMILAR TRANSACTIONS.—At the outset, a sale must be distinguished from several other similar transactions. The law of sales is a branch of contract law, hence consideration is necessary in a sale. A gift, on the other hand, which may result in the transfer of personal property in practically the same manner as a sale, does not require any consideration. Hence, an agreement to sell goods is unenforceable if not supported by consideration. A promise to make a gift is always unenforceable because the very idea of a gift negatives any idea of consideration. A sale and a bailment must also be distinguished. A bailment is the rightful holding of an article of personal property by one, for the accomplishment of a certain purpose, with an obligation to return it after the completion of that purpose. Where there is a sale, the entire property right passes to the new buyer, and if the article is destroyed, providing title has passed, the new buyer must pay the purchase price if he has not already done so, although he gets nothing for it. In a bailment, the title does not pass. The case of the cobbler repairing the shoes is an illustration of a bailment. If, while the shoes are in his possession, his shop is burned, through no fault of his, the owner of the shoes would stand the loss. If I borrow a person's automobile, and while using it the car is struck by lightning and totally destroyed, the loss falls on the owner because this also is a bailment. On the other hand, had I bought the car and temporarily kept it in the seller's garage, awaiting the completion of my own garage, and it is burned while in his garage, the loss is mine. By such a transaction, I become the owner when the sale is made, and the former owner becomes the bailee.