Section 7. (1) Where the Parties Purport to Sell Specific Goods, and the

goods without the knowledge of the seller have wholly perished at the time when the agreement is made, the agreement is void.

(2) Where the parties purport to sell specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale:

(a) As avoided, or

(b) As transferring the property in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the full agreed price if the sale was indivisible, or to pay the agreed price for the goods in which the property passes if the sale was divisible.

Sec. 8 (1) Where there is a contract to sell specific goods, and subsequently, but before the risk passes to the buyer, without any fault on the part of the seller or the buyer, the goods wholly perish, the contract is thereby avoided.

(2) Where there is a contract to sell specific goods, and subsequently, but before the risk passes to the buyer, without any fault of the seller or the buyer, part of the goods perish or the whole or a material part of the goods so deteriorate in quality as to be substantially changed in character, the buyer may, at his option treat the contract:

(a) As avoided, or

(b) As binding the seller to transfer the property in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the full agreed price if the contract was indivisible, or to pay the agreed price for so much of the goods as the seller, by the buyer's option, is bound to transfer if the contract is divisible.

CONDITIONAL SALES.--Certain transactions in which personal property is held as security, which are somewhat analogous to mortgages and which are very common, may now be referred to. They may be classed thus: Conditional sales, consignments, leases and chattel mortgages. A conditional sale, as that term is commonly used, is a transfer of the possession of personal property under an agreement to sell, the seller expressly retaining the title. Here we have possession and title divided. If it were not for the express agreement that title should remain in the seller, the delivery of the goods to the buyer, with his agreement to pay for them, would indicate a transfer of title to the buyer. The purpose of the seller in making a conditional sale is to retain security for the price which the buyer cannot pay all at once. Conditional sales are most common in regard to furniture and machinery of various kinds. Creditors of the buyer naturally suppose that the goods in his possession are his, and it is to avoid deception, or possible deception, that most States require that the conditional sale be recorded, so that creditors and everybody else may have notice that, although the buyer seems to be owner of this property, he is not so in reality. But, in Massachusetts, record is not required, and conditional sales, other than those of household furniture, need not even be in writing. The seller is secured by this sort of bargain in several ways. If the buyer does not pay the price when it is due, the seller may take the goods back. They are his goods and therefore he may reclaim them. Or the seller may conclude that it is better to sue for the price, and may decide to let the buyer keep the goods and himself collect a judgment for the price by levying on any property the buyer may have, including that which was conditionally bought. Even though the buyer has paid a large part of the price of the goods, the seller may, nevertheless, reclaim the goods. The seller's course will be dictated largely by how much of the price has been paid. If a large part has been paid, the seller will very likely prefer to reclaim the goods unless they are household furniture. Why, it may be asked, does a buyer enter into a conditional sale, which is rather a poor bargain as far as he is concerned? The reason, of course, is that he cannot pay cash and he wants the use of the goods at once, and the conditional sale enables him to get them. By statute, in some jurisdictions, the conditional buyer is protected after he has paid a considerable portion of the price; either by extending the time within which he may pay the balance due, or by requiring a sale of the goods and the return to the buyer of any surplus.

CONSIGNMENT.--How does a consignment differ from a conditional sale? When goods are sent or consigned it means that the person to whom they are sent is agent for the person who sends them. The consignment is like the conditional sale in this respect, that the person who has possession of the goods has not the title. The consignment differs vitally from a conditional sale in this respect, however, that the consignee is not a debtor for the price. If the consignee sells the goods, then he, of course, must turn over the price to the consignor less such commission as he takes, or if the transaction was not on commission, then the consignee must pay to the consignor the price it was bargained the consignor should receive. But until the goods are resold they remain the consignor's and at his risk. If goods conditionally sold are destroyed, the conditional buyer must, nevertheless, pay for them. They are at his risk and he is an absolute debtor for the price; but the consignee merely holds the goods as agent until a purchase takes place.

LEASES OF CHATTELS.--Sometimes goods are leased. Here, again, we have the same point of similarity, that the person who has possession of the goods is not the owner. The lessee, like a consignee, is not a debtor for the price; he is a debtor for rent, but he is not a debtor for the price of the goods. Often leases contain an option to purchase, and a lease with an option to purchase is used by piano dealers and others as an alternative mode of dealing with customers unable to pay cash, instead of a conditional sale; but it is not the same thing, for if a piano were destroyed without fault of either party after it had been leased with an option to purchase, the loss would be on the seller. If the option to pay had been exercised, of course, the loss would be on the buyer.

CHATTEL MORTGAGES.--The goods are here owned originally by the mortgagor, and they ordinarily remain in his possession after he has transferred them by the mortgage. The fundamental principles governing chattel mortgages are the same as those which govern mortgages of real estate. Chattel mortgages must be in writing and recorded, or the mortgaged property must be delivered to the mortgagee; otherwise they are invalid against the creditors or trustee in bankruptcy of the mortgagor; that is, one may mortgage his chattels, either by delivering them to the mortgagee or by making a writing and having that recorded. Even without record or delivery it is good between the parties, but it is not good in case of bankruptcy against the trustee in bankruptcy of the mortgagor, nor is it good against attaching creditors if there is no bankruptcy.

MORTGAGES OF FUTURE GOODS.--An agreement is sometimes made to make a mortgage of goods which do not at the time exist, or are not at the time defined. This is especially common in regard to a stock of goods. A wants to borrow money on his stock of goods in his shop. His stock may be worth $25,000 and A has not capital enough to get along without mortgaging it. Of course, he can mortgage the existing stock of goods without difficulty, but the trouble is he wants to keep on doing business, and sell in regular course of business the mortgaged stock of goods. That, too, would be easy enough if the mortgagee were willing to agree to it, but the mortgagee is not willing to agree unless equal security is substituted for any goods that are sold. What they would like to provide is that the mortgagor shall have power to sell the existing goods if he chooses in the ordinary course of business, provided he always keeps a stock of goods on hand equal to that on hand at the time the mortgage was made, the idea being that as one thing is released from the lien of the mortgage other things, of at least equal value, shall replace it. It is not an unreasonable transaction, from a business standpoint, but the law generally does not allow it validity except to this extent. It is valid as between the parties so far as to give the mortgagee a power at any time to take possession, and when he does take possession the mortgage is valid as to the goods of which he takes possession against creditors or anybody else. The mortgagee may thus take possession right up to the time of the mortgagor's bankruptcy, or at any time prior to actual seizure of the stock of goods on an attachment. This gives the mortgagee some security if the mortgagor will be good enough to give the mortgagee a hint when it is wise for the mortgagee to take possession, because, as the mortgagee can take possession just before bankruptcy or just before an attachment, the mortgagee will be protected. But, of course, there is a chance that the mortgagee may not get the goods, and therefore this form of security, in most States, is not now advised, although it has been much attempted in the past. In some States, however, such a mortgage gives a right against goods afterwards acquired, which is superior to that of attaching creditors or of a trustee in bankruptcy, even though the mortgagee does not take possession.

GIFTS.--A gift is the immediate voluntary transfer of personal property. To make a valid gift, therefore, it must be voluntary, gratuitous, and absolute. As has been explained, a gift is distinguished from a sale or a contract to sell by the fact that it is gratuitous. Gifts are usually divided into two classes: gifts "inter vivos" and gifts "causa mortis." There is no distinction between these two kinds of gifts, so far as the necessity of the intent to deliver title and delivery of the property are concerned, but the distinction lies in the fact that in gifts "causa mortis," the change in title is defeasible upon certain conditions. The ordinary gift "inter vivos," "between living people" is irrevocable when completed. The gift "causa mortis," that is, one made by a person in immediate apprehension of death, is always subject to the condition that if the person recovers, the title to the property, which he has given away, reverts to him. For A, who is in his last illness, to say to B, who is sitting near his bedside, "I wish you to have my gold watch when I am gone, but my brother is wearing it now in Europe" would not be a gift "causa mortis." There is no delivery. It would not pass title, upon his death, to his friend because in order to dispose of property after one is dead, a will is necessary. Even between the parties gifts are invalid unless accompanied by delivery, or made by deed under seal. The transaction without delivery or deed is, in effect, a promise to give, and there being no consideration the promisor may subsequently refuse to keep his promise. If a savings-bank book, a bond, a stock certificate, a life-insurance policy, a note or check of a third person (but not one made by the giver), or any chattel property is delivered to the donee, the gift is binding and irrevocable; but otherwise the donee gets absolutely nothing and the donor's executor is entitled to the property attempted to be disposed of by gift, and must treat it as part of the assets of the estate.

ILLUSTRATION.--A recent case in New Jersey shows clearly the effects of the application of the rules just described. In Bailey v. Orange Memorial Hospital, 102 Atl. 7, the facts were that the testatrix died about June 10, 1893, leaving a will, which had been duly probated, and under which the complainants had qualified as executors. Among the papers, which the executors found in the testatrix's safe deposit box after her death, was a certificate made in her name for fifty shares of the capital stock of the United N. J. Railroad and Canal Co., bearing the following indorsement, "For value received I hereby assign and transfer unto the Orange Memorial Hospital fifty shares of the capital stock represented by the within certificate and do hereby irrevocably constitute and appoint ................ attorney to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

Mary Campfield.

"Dated Oct. 28, 1911.

"Witnessed by James C. MacDonald."

In the same envelope containing this certificate the executors also found the following letter in the handwriting of Mrs. Campfield: "To my executors: The accompanying certificate of fifty shares of the United, etc. Co. is my gift to the Orange Memorial Hospital for a bed to be called the 'Mahlon Campfield Bed.' The stock has been retained since its date of transfer because I desire to be benefited by the dividends thereon as long as I live.

Mary Campfield.

"Dated Oct. 28, 1911."

In this box Mrs. Campfield kept her bonds and mortgages, stock certificates, and other valuable papers relating to her own property and to the estate of her husband, of which she was executrix. There were two sets of keys to the box, one of which was in Mrs. Campfield's possession, and the other in the possession of one of her executors, who assisted her for some time in the management of her affairs. Shortly before the indorsement on the certificate was made, and the letter written, Mrs. Campfield requested Mr. Everett, the executor, to take the stock certificate from her box and deliver it to her attorney, stating that she would let her attorney know in a few days what to do about it. A few days later the attorney handed Mr. Everett an envelope containing the stock certificate, and told him there was a letter with it. Mr. Everett saw the certificate but did not see the letter, and he placed the envelope containing the certificate in the safe deposit box. The attorney had sealed the envelope after showing him the certificate. After Mr. Everett had told Mrs. Campfield what had been done, she said, "Well, that is for the hospital and that settles it," and she added: "It is in an envelope, as you probably saw, and addressed to my executors, and they will find a letter inside telling them what to do with it." After this, Mrs. Campfield continued to receive the dividends paid on these shares, and there is some evidence to indicate that she had access to the safe deposit box and examined its contents during the winter preceding her death. The court, in its opinion, said: "I do not think there can be any doubt of Mrs. Campfield's donative intention regarding these shares of stock, and it is equally clear that she never consummated that intention to make the gift, by the actual delivery of the stock to the hospital, or to any one as trustee for it; and it also appears that she intended the gift should be effective only after her death. She expressly retained the ownership and dominion over the stock for the purpose, at least, of collecting and enjoying the dividends paid thereon. * * * The gift of the stock not having been completed by delivery, or by the relinquishment of control over the certificate representing it, the stock must be declared to be an asset of the estate."