Weyerhaeuser Co. v. First Nat. Bank , 150 Or. 172 ( 1934 )

Original opinion sustained on rehearing April 23, 1935 ON REHEARING (43 P.2d 1078) This is a rehearing in a suit in equity brought by the plaintiffs to determine the right to the proceeds of certain lumber sold to the Henry D. Davis Lumber Company. Our former opinion contains a full statement of the facts. The Henry D. Davis Lumber Company purported to assign a part of the invoices on resale to the First National Bank of Portland. The lower court found a decree in favor of plaintiffs for the full amount; the First National Bank of Portland and Thomas H. Mills, as receiver for the Henry D. Davis Lumber Company, appealed.

There were involved nine parcels of lumber sold by plaintiffs to the defendant company, and, in our former opinion, we found that the bank was entitled to the proceeds of parcel 7, lumber sold by the Weyerhaeuser Timber Company and described in the invoice, Exhibit G, amounting to $1,928.94, known in the record as the Bremerton shipment. No rehearing was asked in regard to this parcel of lumber and, therefore, it is out of the case, except in so far as the circumstances in regard thereto might have a bearing on other parts of the case.

During the time from January 28, 1932, to February 13, 1932, both inclusive, the Weyerhaeuser Sales Company received from the Henry D. Davis Lumber Company seven orders for lumber for water shipment. Six of these orders directed that delivery be made F.A.S. Ship's Tackle, Mill Dock, and designated as places of final destination points on the Atlantic coast. The orders contained the words, of which the following is a sample, "Vessel destined to Philadelphia, Pa." The other orders named different places. Each of these orders specified the terms "100% Advance Less 2% Discount 15 Days". The Weyerhaeuser Sales Company seemingly was better informed, in regard to the financial standing of the Henry D. Davis Lumber Company, than the defendant bank, and refused to accept any of the orders on such terms, and, immediately upon receipt of each order, mailed to the Henry D. Davis Lumber Company an acknowledgment thereof, but specified the terms as "Terms 98% CASH IN EXCHANGE FOR DOCUMENTS", and on each of such acknowledgments was plainly printed the following: "Order accepted as written hereon. Please advise at once if not satisfactory." The Henry D. Davis Lumber Company made no objection to the cash terms, as stated in the acknowledgment.

Mr. W.W. Conger, who made most of the purchases for the Henry D. Davis Lumber Company, upon the trial, testified in substance, that the time for payment of fifteen days credit requested was so short, and that there was so little difference in the proposition that he did not take the matter up with the Sales Company, as he would if he had not accepted the terms as made by it to the Henry D. Davis Lumber Company. On cross-examination, he testified in part: "Q. When I say insisted, I mean you tried to get 15 days, and they came back and said, `No, we want cash.' A. Yes, that is right."

They proceeded to carry out the order as accepted by the Sales Company, and, no objection to the terms having been made to the Weyerhaeuser Sales Company, the Weyerhaeuser Sales Company allocated the orders, two to the Snoqualmie Lumber Company and the other five to the plants of the Weyerhaeuser Timber Company. They were all filled in due course, the shipments in each case being about two weeks subsequent to the receipt of the order and submission of the acknowledgment. Upon the different shipments being made, the documents, consisting of invoice, mate's receipt, and P.L.I.B. (inspection certificate) were mailed to the Henry D. Davis Lumber Company at Portland, Oregon, and were received by it.

On January 28, 1932, the Long-Bell Lumber Sales Corporation received an order for lumber from the Henry D. Davis Lumber Company, to be shipped by water. This order directed delivery F.A.S. Ship's Tackle, Mill Dock, and the point of ultimate destination was designated as follows: "Vessel destined to Norfolk, Va." This order also specified the terms: "100% Advance Less 2% Discount 15 Days". The Long-Bell Lumber Sales Corporation would not accept the order on such terms, and, on the following day, mailed to the Henry D. Davis Lumber Company an acknowledgment of the order specifying the terms as "Cash Less 2% Upon Receipt of Papers", and there was plainly printed on such acknowledgment a notice that the order was accepted on the terms written thereon, and to advise at once if the terms were not satisfactory. This acknowledgment was accompanied by a letter calling attention to the change in terms and advising the Henry D. Davis Lumber Company that the lumber would be sold only on cash terms. The Henry D. Davis Lumber Company made no objections to the cash terms, as contained in the acknowledgment. As explained in the testimony of one of its officers, the order was filled by the Long-Bell Lumber Sales Corporation, and the company prepared and mailed to the Henry D. Davis Lumber Company of Portland, Oregon, the proper documents, consisting of invoice, mate's receipt, and P.L.I.B., which were received. All of the invoices stated the terms as contained in the acknowledgment, namely, "Cash Less 2% Upon Receipt of Papers". Copies of the invoices were attached to the complaint and marked as exhibits. The shipment of the Long-Bell lumber was from three to four weeks subsequent to the receipt of the order and the submission of the acknowledgment. The deliveries of all the aforesaid lumber were made from February 15 to February 27, 1932, both dates inclusive.

It appears from the testimony that the Henry D. Davis Lumber Company well understood that the terms of the sale of the lumber were cash upon receipt of documents or papers, and it drew checks in favor of the respective plaintiffs for the amounts due them, but failed to mail the checks to plaintiffs, and none of the plaintiffs were ever paid for any of such lumber. The proceeds of the sale involved are in somewhat different categories. The appellant bank is not interested, other than as trustee, in parcels 1 and 2. One shipment was resold by the Henry D. Davis Lumber Company to private parties and the others were sold to the government. Soon after the Henry D. Davis Lumber Company received the documents for the parcels of lumber shipped to the Atlantic coast, it procured bills of lading therefor and caused the lumber to be shipped to purchasers on the Atlantic coast, designating the Henry D. Davis Lumber Company in the bills of lading as shipper, and the subpurchasers as consignees. None of the plaintiffs were advised of this. All the bills of lading were straight, nonnegotiable bills of lading; no order bills of lading were taken. The Henry D. Davis Lumber Company made out invoices on its own forms to its subpurchasers for the amounts of the subpurchase money, and purported to assign copies of such invoices covering all the lumber, except parcels 1 and 2, to the appellant bank.

March 5, 1932, the Henry D. Davis Lumber Company, being insolvent, made a general common-law assignment for the benefit of its creditors, and all of the lumber involved (except parcel 7) was then still on board ships and in the course of transit to subpurchasers on the Atlantic coast of the United States. Upon learning of such assignments, and of the insolvency of the Henry D. Davis Lumber Company, each of the plaintiffs gave notice of stoppage in transitu to the carriers transporting the lumber, notifying such carriers that the title to the lumber had not passed from the respective plaintiffs, for the reason that same was sold as a cash sale and the purchase price had not been paid, and in the event that title had passed plaintiffs claimed the right of stoppage in transitu as unpaid sellers.

A stipulation was then entered into between all of the parties hereto, except the appellant receiver who had not yet been appointed, whereby it was agreed that the plaintiffs should each withdraw their notices of stoppage in transit; that the lumber should be delivered to the subpurchasers and the appellant bank would collect the purchase money payable by the subpurchasers and hold the same in a special trust fund in lieu of the lumber, and that all rights, and interest of each and all of the parties involved, to any of the lumber mentioned in plaintiffs' complaint, or the proceeds thereof, should be determined in one judicial proceeding, to which all parties interested should be made parties plaintiff or defendant. After the appointment and qualification of said receiver, the court made and entered an order making him a party to said agreement and to such proceedings. Upon the signing of said stipulation, each of the plaintiffs withdrew its notice of stoppage in transitu and the lumber was delivered to the respective purchasers. The net proceeds of the different parcels involved were collected by the receiver and turned over to the defendant bank, except that the bank collected the proceeds of parcel 3 direct from the subpurchaser. The invoices for the lumber, parcels 3 to 9, inclusive, were assigned to the appellant bank by the Henry D. Davis Lumber Company in the following manner: In the case of parcel 3, the bill of lading (a straight nonnegotiable bill) was transferred to the bank. In the case of parcels 4 to 9, inclusive, no bills of lading were transferred; neither were the original invoices, but copies of the invoices were delivered to the bank with a form of assignment, assigning "the within invoice" indorsed thereon, with the verbal agreement that the Henry D. Davis Lumber Company would send the original invoice and bill of lading to the subpurchaser, collect the subpurchase money and remit the same when collected to the appellant bank. Each of such assignments was made as collateral security to secure the payment of a promissory note given by the Henry D. Davis Lumber Company to the appellant bank at the time of the assignment, and the bank would credit the Henry D. Davis Lumber Company's general deposit account with the amount of the money.

On March 10, 1932, the appellant bank was advised by the plaintiffs of the terms under which the lumber had been sold to the Henry D. Davis Lumber Company, and that it had not been paid for. At that time there was still on deposit in said bank, to the general account of the Henry D. Davis Lumber Company, the full amount of the loan made by the bank for the assignment of the invoice for parcel 6, namely, $270. On the following day the bank permitted the assignee of the Henry D. Davis Lumber Company to withdraw the same. None of the lumber involved (except parcel 7) was paid for by the subpurchasers prior to April 1, 1932.

The position of the plaintiffs is that the sale being made for cash on delivery of documents, and no payment having been made in conformity therewith, no title to the lumber passed to the Henry D. Davis Lumber Company, and the plaintiffs have a perfect right thereto and to the proceeds thereof; and, further, that if title to the lumber had passed, the plaintiffs had the right of stoppage in transitu and to reclaim the same; and that the assignments of the proceeds of the shipments to the United States government were void.

The contention of defendant bank is that although the sale was for cash on receipt of documents or papers, on account of a custom, the term "cash sale" means a short-term credit of five or 10 days.

"The term `cash sale' is used to define a kind of a sale where the payment of the price is a condition of the transfer of title to the buyer.": 1 Williston on Sales (2d Ed.) 804, § 341. "A `cash sale' is a sale conditioned on payment concurrent with delivery and not a sale on credit.": 1 Words and Phrases (2d Ser.) 586. Such a construction of the term "Cash on Delivery of Documents" is inconsistent with the contract made by the parties. Admittedly, the Henry D. Davis Lumber Company requested a credit of 15 days. Each of the plaintiffs refused to give such credit, and plainly stated the terms as "Cash Upon Receipt of Documents". To be regarded as part of a contract, the usage or custom must not only be shown to exist but it must be consistent with the contract. If this element is lacking, the usage or custom cannot be regarded as a part of the contract: 4 Page on Contracts (2d Ed.) § 2057; Shaw Wholesale Co. v.Hackbarth, 102 Or. 80, (198 P. 908, 201 P. 1066).

The Henry D. Davis Lumber Company was satisfied with the terms and received the documents on those terms, but failed to pay. The plaintiffs were the owners of the lumber which they manufactured; they could not be divested of that ownership except by their consent, and nowhere in the record do we find that they assented to the sale of the lumber except as specified.

In discussing cash sales, modern law, Mr. Williston, in his work on Sales, submits that the true test is this: "If the parties, when they make their bargain, contemplate an exchange of goods for the price immediately on making the bargain, the sale is to be regarded as a cash sale.": 1 Williston on Sales (2d Ed.) 811, § 343.

The general rule is, in a sale for cash, or cash on delivery, payment of the purchase price, unless waived, is a condition precedent to the passing of title; and this is true where the sale is expressly for cash, or cash on delivery, and in some jurisdictions where a cash sale is implied from the fact that the contract is silent as to the time for payment: 55 C.J. 567, § 577. "Where the contract stipulates for cash payment, the buyer must pay to secure a bill of lading, even though a right of inspection must come later. The fact that time is required in which to procure the money for payment does not alter the character of a cash sale.": 55 C.J. 514, § 507. "The rule that upon a sale for cash or cash on delivery payment of the purchase price is a condition to the passing of title applies, unless it is apparent from other provisions of the contract that the intention of the parties thereto is otherwise. If the agreement does not provide in express terms that payment shall be made on delivery and no provision is made for credit, the intent of the parties must control; * * *": 55 C.J. 570, § 577.

The rule that where personal property is sold for cash and no payment is made, or a check is given which is dishonored, no title passes to the buyer, even though possession is taken by him and the buyer can not convey title to an innocent purchaser, is adopted in this state: Johnson v. Iankovetz, 57 Or. 24 (102 P. 799, 110 P. 398, 29 L.R.A. (N.S.) 709). In that case an action of replevin was commenced in the justice court for the recovery of two guns valued at $45.05. One E.C. Adams contracted to purchase from plaintiff the two guns at the price named, and gave him his check for $45.30 on the Merchants' National Bank. He had no money in the bank and the check was dishonored. At the time of the transaction plaintiff delivered the goods to Adams, who, on the same day, sold them to defendant for the sum of $22. Upon appeal to the circuit court, judgment was rendered in favor of plaintiff. Defendant appealed, and on appeal the case was affirmed by this court. Mr. Justice EAKIN states, quoting with approval from Benjamin on Sales, as follows:

"The law presumes a sale to be for cash, when nothing is said to the contrary, and, upon a sale for cash, payment and delivery are concurrent acts. If the price is not paid at the time of the delivery of the goods, the vendor may immediately reclaim them. Mechem, Sales, § 551. `Where the buyer is by the contract bound to do anything as a condition, either precedent or concurrent, on which the passing of the property depends, the property will not pass until the condition be fulfilled, even though the goods may have been actually delivered into the possession of the buyer.' Benjamin, Sales, § 320.

And in his notes to this rule, at page 299, he says: `It being clear that, in the absence of any credit expressly or impliedly allowed, payment is a condition precedent, or at least concurrent, it necessarily follows that the right of property does not pass until that is done, even though the article is delivered.'

No title will pass even to an innocent purchaser, for value from the vendee, unless the circumstances show that the vendor waived his right to immediate payment."

In Hart-Wood Lbr. Co. v. Bonaly, 192 Cal. 180 (219 P. 432), it was stated as follows:

"According to the settled law in this state, where a contract calls for payment upon the delivery of goods, or is silent on the subject — when the obligation to make payment at that time will be inferred — title will not pass until the price is paid, unless it is apparent from other provisions of the contract that the intention of the parties thereto is otherwise."

The case of Commonwealth v. Devlin, 141 Mass. 423 (6 N.E. 64) is discussed in the notes in 1 Williston on Sales, p. 812, where it is stated:

"The defendant agreed to buy certain sheep for cash, which were weighed, and, about an hour after the weighing, the owner of the sheep and the defendant met to close the transaction. The weights were then reckoned and the seller demanded cash, but was induced to take a check on the representation of the defendant that the check was good. There was some evidence that by custom the weighing of the sheep and the recording of the weights constituted a delivery; but the jury were instructed that such a merely constructive delivery, or even a manual delivery, would not deprive the owner of his property. * * * The delivery of the sheep was a more cumbrous operation than handling goods over a counter; but, even if it was completed before the representations were made, we think that, on all the evidence, fairly construed, it must be taken to have been made on the understanding that the payment was to be substantially simultaneous." See also Hirsch v. Leatherbee Lbr. Co.,69 N.J.L. 509 (55 A. 645).

Also we find a discussion of Palmer v. Hand, 13 Johns. (N.Y.) 434 (7 Am. Dec. 392), in the notes in 1 Williston on Sales, p. 813, as follows:

"A raft of lumber coming down the North river was sold to be delivered at a dock in Albany. The lumber composing the raft was taken out of the water and nearly all piled on the dock, when the seller forbade any more to be piled because the buyer had absconded. The defendant had advanced the buyer money on the same day on the security of the lumber while it was being piled. The court held that the property had not passed. The contract was for the whole raft delivered on the dock. * * * The defendant's advances were made while the lumber was still in course of delivery." See Guarantee Title Trust Co. v. First Nat. Bank, 185 Fed. 373 (107 C.C.A. 429).

In Gunn v. Bolckow, L.R. 10 Ch. 491, 44 L.J. Ch. 732, defendants had contracted to make and sell to Aberdare Iron Company, for shipment to Russia, iron rails, and delivered to the Aberdare Company, in exchange for their acceptances, wharfingers' certificates in the following form:

"I hereby certify that there are lying at the works of Messrs. Bolckow, Vaughan Co., Ltd., of Middlesbrough, * * * tons of iron rails which are ready for shipment, and which have been rolled under contract dated * * * between the said company, and the Aberdare Iron Company. W. Roe, Wharfinger."

The Aberdare Company pledged to plaintiff these certificates, which they treated as warrants. Subsequently they filed a liquidation petition, and their acceptances were dishonored. Plaintiff claimed a charge on the rails mentioned in the certificates, upon the ground that they were warrants or documents of title divesting seller's lien, and were negotiable according to the custom of the iron trade. But this contention was repudiated by the Court of Appeal in Chancery.

"If the sale is a cash sale such that title is not to pass until payment is made, a tender of delivery or delivery without payment being made, unless it is such as to constitute a waiver of the condition of payment or the obtaining of possession by the purchaser will not operate to transfer the title." 55 C.J. 571, § 577.

"If it can be inferred from the acts of the parties and the circumstances surrounding the transaction that it was the intent that delivery and payment should be concurrent acts, the title remains in the seller until the condition of payment is complied with. Empire State Type Founding Co. v. Grant, 114 N.Y. 40,21 N.E. 49." Note 88-b, 55 C.J. 570.

"Where a sale is for cash, payment and delivery are concurrent and mutually dependent acts, and if the vendor makes delivery in expectation of immediate payment, such delivery is conditional only and he may reclaim his goods if payment be not made."Dalrymple v. Randall, 144 Minn. 27 (174 N.W. 520).

The plaintiff, Weyerhaeuser Timber Company, has an office in Tacoma, Wash., and the Long-Bell Lumber Company at Longview, Wash. The plaintiffs forwarded the lumber pursuant to the contract to the mill docks, evidently the docks belonging to the different mills, and forwarded the mate's receipt and P.L.I.B., or certificate of inspection, to the Henry D. Davis Lumber Company in Portland, Oregon. Nothing is shown to indicate that they waived their right to payment of cash on delivery. It appears that they had done business with the Henry D. Davis Lumber Company before, and evidently were not willing to make a sale to that company except for cash. Defendant bank apparently had done business with the Henry D. Davis Lumber Company before and were willing to trust it by taking its note and an assignment of the invoice and returning the bill of lading when one had been issued to the Henry D. Davis Lumber Company and accepting its promise that when it received the money from the United States it would pay the bank, and evidently relied on its promissory note. The bank, although it is familiar with a negotiable instrument, failed to demand or to take any negotiable instrument in connection with the lumber or the proceeds thereof. Henry D. Davis, the moving spirit of the company, had, for a long time, considerable influence with banks. See Du-Bois-Matlack Lbr. Co. v. Henry D. Davis Lumber Co.,149 Or. 571 (42 P.2d 152).

Our Uniform Sales Act provides as follows:

"(1) Where there is a contract to sell specific or ascertained goods, the property in them is transferred to the buyer at such times as the parties to the contract intend it to be transferred. * * *" § 64-402.

"A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document is a negotiable document of title." § 64-411.

"A document of title which is not in such form that it can be negotiated by delivery may be transferred by the holder by delivery to a purchaser or donee. A nonnegotiable document cannot be negotiated and the indorsement of such a document gives the transferee no additional right." § 64-415.

"A person to whom a document of title has been transferred, but not negotiated, acquires thereby, as against the transferrer, the title to the goods, subject to the terms of any agreement with the transferrer. * * *" § 64-418.

As stated, the bank received no negotiable document. Neither the copies of the invoices nor the one bill of lading were negotiable documents, but were nonnegotiable documents, and the transfer of such documents to the defendant bank gave it no additional right. The assignment of such an account, if we may so term it, while it was good as against the transferor, was subject to the terms of any agreement between the Henry D. Davis Lumber Company and the sellers of the lumber: Mariash on Sales, 498, § 226. The form of the document assigned to the bank was notice to it that there might be outstanding equities against the lumber, or the proceeds thereof.

By the terms of the contract, delivery at ship's tackle was to precede payment and such delivery is a qualified delivery and passes no title until the purchase price is paid. The Henry D. Davis Lumber Company, after the lumber was placed upon the mill docks, had no right to ship the same and they could not convey title to the lumber, or the proceeds thereof, without payment for the same. The law governing such sales is stated by the Supreme Court of Washington as follows:

"The general rule is that, where goods are sold upon condition that the price therefor shall be paid upon receipt of an invoice of the goods, the sale is for cash, and the title remains in the seller until the goods are paid for." Orilla Lbr. Co. v.Chicago, Etc. R. Co., 81 Wash. 611 (143 P. 152).

"While there is conflict among the authorities upon the question, we think the great weight of authority is to the effect that, where goods are sold upon condition that the price therefor shall be paid upon receipt of the invoice of the goods, the title remains in the seller until the goods are paid for, unless the original vendor is guilty of laches, or by some act has waived his right, or is estopped from claiming that the sale is one for cash." Orilla Lbr. Co. v. Chicago, Etc. R.Co., 84 Wash. 362 (146 P. 850). See Nugent v. Union AutomobileInsurance Co., 140 Or. 61, 68 (13 P.2d 343).

The plaintiffs, in the case at bar, were not guilty of laches and by no act waived their rights, and are not estopped to claim that the sale was for cash. The burden is on the buyer to prove that the seller waived the condition of cash payment:Sparkman v. Brown, 42 Ga. App. 335 (156 S.E. 240). Defendant company was entitled to a sufficient time to assemble the documents, examine the invoice to see if it conformed to their order, examine the mate's receipt to see that it covered the lumber, and the certificate of inspection, or P.L.I.B., to ascertain if it was in proper condition.

Where the seller gives the purchaser a short time for such purpose, it is not an extension of credit; it is a courtesy and not a right under the contract. In the case of Stone v. Perry,60 Me. 48, plaintiffs sold some flour for cash; the flour was shipped to the buyer and duly arrived. On the next day plaintiffs sent a bill for the flour, with the words "Terms Cash" printed on the margin. By the usage of trade in Boston, it appeared that when flour was sold for cash it meant that the seller had the right to call for the payment at any time he pleased, but the custom was not to call for 10 days; the 10 days is a courtesy and not a right. The seller, not being paid, was allowed to replevy the goods from an attaching creditor of the buyer.

There was no intention of waiver of cash payment in the instant case, and it is plain that no unreasonable period of time had elapsed, as the earliest sale involved was made less than three weeks before the vendee made an assignment for the benefit of creditors. See Sprague Canning Machinery Co.v. Fuller, 158 Fed. 588, where the seller was permitted to reclaim the machine from the buyer's trustee in bankruptcy several months after the sale and delivery.

In American Ry. Express Co. v. Voelkel, (Tex.) 252 S.W. 486, the seller's assignee was permitted to recover the purchase price of the machine from a third party to whom the buyer had transferred it, approximately a year after the delivery. InPeople's State Bank v. Brown, 80 Kan. 520 (103 P. 102, 23 L.R.A. (N.S.) 824), the syllabus reads:

"When a bargain is completed for the sale of specific personal property for cash, and delivery is made, if the buyer fails to pay the price promptly, the seller has a right, as between the parties or against an attaching creditor, to reclaim the property, which is not lost by delay to assert it, unless an intention on his part is shown that the title should pass absolutely, and whether that is the case is ordinarily a question of fact, to be determined in view of all the circumstances."

The Uniform Sales Act provides as follows:

"Subject to the provisions of this act, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has:

(a) A lien on the goods or right to retain them for the price while he is in possession of them.

(b) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them. * * *." § 64-602.

"Subject to the provisions of this act, when the buyer of goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu; that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession." § 64-606.

"Subject to the provisions of this act, the unpaid seller's right of lien or stoppage in transitu is not affected by any sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto. If, however, a negotiable document of title has been issued for goods, no seller's lien or right of stoppage in transitu shall defeat the right of any purchaser for value in good faith to whom such document has been negotiated, whether such negotiation be prior or subsequent to the notification to the carrier, or other bailee who issued such document, of the seller's claim to a lien or right of stoppage in transitu." § 64-611.

There is some difference of expression in the authorities in such cases, some terming the condition, where a seller is not paid and possession is delivered to the buyer, as one in which the buyer obtains a defeasible title but the seller retains the right to enforce his agreement and to have the title revest in him, which, as we understand it, is more a matter of expression than anything else.

We are constrained to hold that the plaintiffs, in the present case, did not part with their right to the lumber, or to enforce the condition specified in the contract that they should be paid, and that the Henry D. Davis Lumber Company, not being the owner of the lumber, could not sell or pledge the same, or the proceeds thereof, so as to divest the plaintiffs of their right.

On March 22, 1932, the interested parties, except the receiver in bankruptcy, who was afterwards made a party to the agreement, stipulated that the plaintiffs should withdraw their notices of stoppage in transitu given by them and not interfere with the delivery of said lumber to the respective consignees, and the invoices for such shipments should be sent to the respective consignees, and the proceeds to be derived therefrom, if and when received, should be turned over and delivered to the bank as trustee for the parties thereto, and should be held and disposed of by the bank as such trustee in a special trust fund. The stipulation further provided: "The moneys in and composing said trust fund shall, to all legal intents and purposes, stand and be in lieu of said lumber and in lieu of any rights or interests in the same or the proceeds thereof, and each and every party hereto shall have such right to and interest in said trust fund as such party had or might or could have lawfully claimed, asserted or established in or to said lumber, or any part thereof, or in or to any part of the proceeds thereof, by stoppage in transitu, replevin, claim and delivery, action in assumpsit, action for money had and received, action for trover and conversion, or by any other form of suit, action or proceeding whatever, in any court of competent jurisdiction or otherwise."

After mature deliberation we are of the opinion that the stipulation renders it unnecessary to consider the question of the right of stoppage in transitu, although the same is thoroughly briefed by the parties. The inquiry is, under the stipulation, which of the parties is entitled to the lumber, or the proceeds thereof?

The shipments of lumber here involved were interstate shipments and are governed by the United States statutes. U.S.C.A., Title 49, § 82, p. 390, defines a straight bill of lading as follows: "A bill in which it is stated that the goods are consigned or destined to a specified person is a straight bill." Section 83 defines an order bill of lading thus: "A bill in which it is stated that the goods are consigned or destined to the order of any person named in such bill is an order bill. * * *" Section 109 reads: "* * * A straight bill can not be negotiated free from existing equities, and the indorsement of such a bill gives the transferee no additional right." Section 112 provides, in part: "A person to whom a bill has been transferred, but not negotiated, acquires thereby as against the transferor the title to the goods, subject to the terms of any agreement with the transferor. * * *"

In the present case, in one instance pertaining to a parcel of lumber, a straight bill of lading was issued and assigned to the bank. If a straight bill of lading is subject to the terms of the agreement with the transferor, then it necessarily follows that the transfer of documents, usually issued prior to a bill of lading, such as an invoice or copy of invoice, would confer no greater right. Therefore, under the United States statute, which was enacted for the purpose of settling the rights of parties in such transactions so far as possible, any right or assignment from the Henry D. Davis Lumber Company to the defendant bank would be subject to the agreement between the different sellers with the transferor, the Henry D. Davis Lumber Company.

The voluntary assignment of the invoices, or copies of invoices, or attempted assignment of the shipments of lumber to the government of the United States, was illegal and void and of no force or effect. The United States statute provides:

"All transfers and assignments made of any claim upon the United States, or of any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, * * * shall be absolutely null and void, unless they are freely made and executed in the presence of at least two attesting witnesses, after the allowance of such a claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof. Such transfers, assignments, * * * must recite the warrant for payment, and must be acknowledged by the person making them, before an officer having authority to take acknowledgments of deeds, and shall be certified by the officer; and it must appear by the certificate that the officer, at the time of the acknowledgment, read and fully explained the transfer, assignment, * * * to the person acknowledging the same. * * *" § 203, Title 31, U.S.C.A. (§ 3477, Rev. St. of U.S.).

This statute plainly provides that claims against the United States are not assignable until after the allowance of the claim, the ascertainment of the amount due and the issuing of a warrant for the payment thereof, and such transfers or assignments must recite the warrant for payment and must be acknowledged before an officer authorized to take acknowledgments of deeds and certified by the officer. The attempted assignments from the Henry D. Davis Lumber Company to the appellant bank were made long prior to the allowance of the claims by the government, prior to the ascertainment of the amounts due, or the issuance of warrants in payment thereof, were not witnessed or acknowledged, and did not recite the warrant for payment. At that time there was nothing due the Henry D. Davis Lumber Company from the United States.

It is contended by defendant that this provision only applies as between the assignee of such claims and the United States. The statute does not make such purported assignments voidable or void as to third parties, but makes them "absolutely null and void", "whatever may be the consideration therefor".

This question is set at rest by the opinion in the case ofNational Bank of Commerce v. Downie, 218 U.S. 345 (31 S. Ct. 89, 54 L. Ed. 1065, 20 Ann. Cas. 1116), where the specific section above quoted (§ 3477, Rev. Stat. of U.S.) was thoroughly discussed and explained. It was contended in one case therein mentioned, as in the case at bar, that the act had reference only to claims asserted before the treasury department. That view was rejected. The act was held to be of universal application and covered all claims against the United States in every tribunal in which they may be asserted. The court said:

"We cannot say, when the statute declares all transfers and assignments of the whole of a claim, or any part or interest therein, and all orders, powers of attorney, or other authority for receiving payment of the claim, or any part thereof, shall be absolutely null and void, that they are only partially null and void, that they are valid and effective as between the parties thereto, and only invalid when set up against the government. It follows that, in our opinion, the accepted orders under which the appellant claims gave him no interest in the claim of the drawer against the United States, and no lien upon the fund arising out of the claim."

In the case of First Nat. Bank v. U.S.F. G. Co., 127 Or. 147,164 (271 P. 56), this court held that section 3477, Rev. Stat. of U.S., will not be permitted to defeat the enforcement of an agreement between the plaintiff and the surety company. The facts in that case were different from those in the case at bar. We feel bound by the construction so plainly given by the United States Supreme Court to the federal statute in the case ofNational Bank of Commerce v. Downie, supra.

We conclude that except as to the Bremerton shipment, the assignment of the invoices, or copies of invoices, was of no force and that the lumber having been sold upon the condition that the price thereof would be paid upon receipt of documents, and the invoice, with the other documents, was received by the buyer, but payment was not made, title never passed as between the original parties, or as between the plaintiffs and third parties, who were in no better position than the original buyer. Neither of the appellants is in any better position than the original buyer. Each of them stands squarely in the original buyer's shoes. To hold that the bank is in any better position than the original buyer would be to utterly disregard the statutes of this state and the federal statutes. We think the matter is governed by positive law. The plaintiffs had an absolute right to reclaim the lumber, except parcel 7, or recover the proceeds thereof.

Much stress is laid by counsel for the appellant bank on a letter dated March 8, 1932, written to the Henry D. Davis Lumber Company by the assistant treasurer of the Weyerhaeuser Timber Company, dunning the Henry D. Davis Lumber Company, wherein he states that "you will realize * * * that at no time was it our intention to extend credit". The letter states that "we allowed you time within which to negotiate your papers or prepare your papers". Evidently the word "negotiate" was used, as explained by the following words, "or prepare your papers". The word "negotiate" could not be applicable for the reason that the papers pertaining to the lumber were not negotiable and could not be negotiated. Plaintiffs never intended to extend credit to the Henry D. Davis Lumber Company, but refused to do so.

Counsel for the appellant bank complains bitterly because we did not discuss all of the authorities cited in its brief. The main trouble with the authorities is that they do not apply to the facts in this case, and to mention them all would extend this memorandum to too great length.

Upon the question of showing the meaning of "cash sales", the case of Stanfield v. Arnwine, 102 Or. 289 (202 P. 559), is cited by defendant, where a contract was made for the sale of lambs of "good size and merchantable condition". The quoted words are very general and obviously subject to explanation. The contention of defendant in this case that "cash sales" means a short-term credit would preclude the defendants from denying credit to the Henry D. Davis Lumber Company, when it questioned its financial responsibility. Plaintiffs had the right to make the contract.

Counsel for appellant bank refused to notice any difference between the Bremerton shipment and the other shipments, although it is in its favor. As shown in our former opinion, the complaint of plaintiff indicated this shipment to be delivered F.A.S. Everett, Wash., for shipment by scow to said buyer (Henry D. Davis Lumber Company). The invoice of this shipment from the Weyerhaeuser Timber Company to Henry D. Davis Lumber Company showed that the lumber was to be shipped to Henry D. Davis Lumber Company, Bremerton Navy Yard. The lumber was so shipped and sold; therefore, the Weyerhaeuser Timber Company having assented to such shipment, we considered it an evidence of an act of ownership and dominion over the lumber by the Henry D. Davis Lumber Company. None of the other shipments of lumber were invoiced in this manner.

The sum of $1,890.36 should be deducted from the judgment and decree of the trial court on account of the Bremerton shipment of lumber. The interest allowed by the trial court should also be deducted.

With these modifications or deductions mentioned, the decree of the circuit court is affirmed.

Each party will pay his or its own costs and disbursements in this court.

RAND and BAILEY, JJ., concur in the result.