In Connecticut the common-law rule still prevails that an unauthorized sale by a factor of his principal's goods confers no title on an innocent purchaser for value, unless the principal ratifies the sale, or by his own act has clothed the factor with an appearance of ownership beyond that involved in an ordinary contract of consignment. Romeo v. Martucci, 72 Conn. 504, 45 A. 1, 99. Under such a contract the factor, in the absence of trade usage to the contrary, has no right to dispose of the goods by barter or exchange ( Kearns v. Nickse, 80 Conn. 23, 25, 66 A. 779) or by a sale or transfer otherwise than in the usual course of the business in which the factor is engaged. Romeo v. Martucci, 72 Conn. 504, 45 A. 1, 99.
It has also been held that a consignee is a person to whom personal property of any kind is delivered for the purpose of sale. ( Commonwealth v. Harris, 168 Pa. 619 [32 A. 92]; Powell v. Wallace, 44 Kan. 656 [25 P. 42]; Romeo v. Martucci, 72 Conn. 504 [77 Am. St. Rep. 327, 47 L.R.A. 601, 45 A. 1, 99].) It would seem that the latter definition of the term "consignee" as it is used in subdivision 2 of section 813 of the Code of Civil Procedure is the only one which could be applicable to the facts of this case.
And it was held that, where a conditional bill of sale was not recorded, the sale was absolute as to the trustee in bankruptcy. Unmack v. Douglass, 75 Conn. 635, 55 A. 12; American Clay Machinery Co. v. New England Brick Co., 87 Conn. 369, 87 A. 731; Romeo v. Martucci, 72 Conn. 509, 45 A. 1, 99, 47 L.R.A. 601, 77 Am. St. Rep. 327; Jester v. Naples, 94 Conn. 569, 109 A. 894; Bohmann v. Perrett, 97 Conn. 575, 118 A. 42. "The parties, including the trustee, are bound by the evidence as to the delivery of the contracts in Connecticut, and the subsequent removal of the trucks to Long Island City, and by the admission that they were not filed or recorded, as required by sections 4744 and 4746 of the General Laws of Connecticut; so that the failure to file the contracts in Connecticut rendered such sale absolute under the laws of that state, and the vendor thereby lost his lien as a conditional vendor.
MADAME JUSTICE TODDThis Court granted allowance of appeal in the instant case to determine the proper test for evaluating whether an oil or gas lease has produced "in paying quantities," as first discussed by this Court in Young v. Forest Oil Co., 194 Pa. 243, 45 A. 1 (1899). After careful consideration, we hold that, where, as here, production on a well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase "in paying quantities" must be construed with reference to an operator's good faith judgment.
Ed.) ยง 314, see also ยงยง 313, 315-317, where at page 249, it is pointed out that, even if entrusting possession to a dealer to obtain offers for its sale will not suffice to estop the true owner, "slight additional circumstances may turn the scale." In Romeo v. Martucci, 72 Conn. 504, in protecting the original owner against a purchaser in bulk of the inventory of a dealer to whom the owner had shipped goods on consignment, the opinion (at page 510) recognized that a consignee, as distinguished from an ordinary bailee, "is authorized to sell in the ordinary course of business" at retail, as was done in the present case. O'Loughlin v. Erwin M. Jennings Co. Inc. 107 Conn. 365, involved the sale of an automobile by a distributor to a dealer under a conditional sale agreement with a view to the resale of the automobile in the usual course of business.
Where the principle was held not to apply, the transactions were of a nature quite different from those usual in the ordinary conduct of the business in which the vendee was engaged. In a number of cases it was held, although there was authority to the contrary, that one who bought the entire stock of goods of a vendee was not protected; Burbank v. Crooker, 73 Mass. 158; Bass, Heard Howle v. International Harvester Co., 169 Ala. 154, 159, 53 So. 1014; and see Romeo v. Martucci, 72 Conn. 504, 511, 45 A. 1. Other instances where a transaction was held not to be in the ordinary course of trade were where a stock of goods was turned over to certain persons who had become indorsers upon a note of the vendee; Pratt v. Burhans, 84 Mich. 487, 489, 47 N.W. 1064; where there was merely a sham sale by the vendee; Ufford v. Winchester, 69 Vt. 542, 38 A. 239; and where a factor bargained his entire stock of goods for land in another state. Potter v. Dennison, 10 Ill. 590.
Harris v. Coe, 71 Conn. 157, 163, 41 A. 552. While possession by a person to whom goods are sent is not inconsistent with the relationship of consignment, there are considerations affecting the conduct of the person sending them which may be inconsistent. Of this character is the act of billing the goods claimed to be consigned, as goods sold, or, generally, where the person sending them does that which is misleading as to the real nature of the transaction. Romeo v. Martucci, 72 Conn. 504, 510, 45 A. 1, 99. The record shows that thirteen machines were under attachment besides certain used trucks and other personal property and a large amount of automobile parts, and there was evidence which the court could reasonably have believed that the parts alone were then worth approximately $3000. The conclusion of the trial court, therefore, that the interest of the defendant company in these goods under attachment, was in excess of $4000 at the time the bond was given, must be sustained.
"The delivery and record of a bill of sale absolute in form, but intended as security, without change of possession, does not have the legal effect of a chattel mortgage." Petello v. Teutonia Fire Ins. Co., 89 Conn. 175, 180, 93 A. 137; Romeo v. Martucci, 72 Conn. 504, 509, 510, 45 A. 1, 99; 2 Swift's Digest, 164. A conditional contract of sale is a contract by which the general property in the personal property constituting the subject of the sale remains in the vendor, but is ultimately to pass to the vendee for an agreed consideration on the performance by him of named conditions. "Where this is intended to be the effect, operation and main purpose of the contract, it will, as a rule, be held to be one of conditional sale, without much regard to the name or the form the parties may give to it." In re Wilcox Howe Co., 70 Conn. 220, 228, 39 A. 163. "The effect of the Act of 1895 [now General Statutes, ยง 5206] was to render conditional sales which should thereafter be made and which should not be made, acknowledged and recorded in conformity with the provisions of the Act, absolute sales as to creditors and bona fide purchasers of the vendee.
The defendant has complied literally with that direction, and it is found that in so doing he acted in good faith. As we said in Romeo v. Martucci, 72 Conn. 504, 516, 45 A. 1, 99: "`Whether or not a principal is bound by the acts of his agent, when dealing with a third person who does not know the extent of his authority, depends, not so much on the actual authority given or intended to be given by the principal, as upon the question, what did such third person, dealing with the agent, believe and have a right to believe as to the agent's authority, from the acts of the principal.'. . . The apparent authority of the agent which thus binds the principal, beyond that actually conferred, must always be deduced from authorized acts of the agent, and from surrounding facts with a knowledge of which the principal is chargeable, and not from the acts of the agent himself in excess of his authority and of which the principal had no notice." Under this rule, the declaration of Phillips that it made no difference whether the check was drawn to his order or to the order of the plaintiff, was not admissible for the purpose of proving the extent of his apparent authority.
See also Bicocchi v. Casey-Swasey Co., 91 Tex. 259, 42 S.W. 963; Blake v. Meadows, 225 Mo. 1, 123 S.W. 868, 30 L.R.A. (N.S.) 1, 18. In Romeo v. Martucci, 72 Conn. 504, 509, 45 A. 1, 99, this court said: "There is no question of fraud on the part of the owner; the good faith of his conduct is neither directly or indirectly impugned. The sole claim is that he has `voluntarily permitted another to hold himself out to the world as being the true owner, and for this purpose entrusted him with the exclusive possession or other indicia of title, under circumstances which would naturally tend to mislead.