Case VIII: When Is Ownership Transferred?

Case.—A buys a horse from B for $300. He pays the money at once, but makes no agreement as to delivery of the horse. He allows the horse to remain in the stables of B. During the following night the horse died.

Question. 1. Who bears the loss? 2. Was ownership transferred when the buyer paid the money; or was actual delivery required in order to transfer ownership in the case?

Solution.—All the elements required for a genuine contract are here present and hence the contract entered into by A and B is valid. When A paid over to B the sum agreed upon he acquitted himself of his part of the contract. But the question arises did B meet his obligations? If he relinquished his claim to the horse, so that A was free to remove the animal to his own stables, then it can be said that B did all that was required of him in strict justice. If B placed no objection to the removal of the horse by A, then he must have acknowledged the ownership of A over the horse. The fact that the horse was de facto not removed does not alter the case, as it did not deprive A of his right to the horse acquired by the payment of the $300. Had he so desired he could have removed his property at any time, and in not doing so he assumed all responsibility in connection with his bargain. If there had been any agreement on the point of delivery the question at issue would have to be decided according to that agreement. But from the statement of the case as given above, there was no such agreement. Hence it can be said that A assumed ownership when he paid down his money; that B did not contest this ownership, as he placed no impediment to the exercise of proprietorship on the part of A, and hence in every respect the horse was as much under the dominion of A as if he had placed him in his own stable. B kept the animal in his stable as a matter of convenience for A, and in so doing he cannot be held to have assumed any responsibility for the wellbeing of A’s property. If A had not paid the money, then as long as the object of the bargain was under the control of B, all responsibility was his: but as soon as A deposited the purchase money then he became possessed of the horse in question. Among retail horse dealers it is an admitted principle that transportation is at the risk of the new owner unless otherwise specified in the contract or a custom to the contrary exists. This exception is made by a few only of the very largest dealers. As, therefore, the horse was in the stable of B as a convenience for A, the burden of loss must rest upon A. If B sold this horse to A in bad faith; if the horse was diseased when sold and died in consequence of that disease, then B is bound to restitution. If the horse died as a result of maltreatment or of culpable negligence on the part of B, then surely A is entitled to a return of his $300. In private sales, however, custom (which here has the force of an agreement) determines that ownership begins only with the delivery of the horse, but in this case the horse is not paid for till he has been delivered. The decision in the case is that A was the owner and must stand the loss.