Many jurisdictions either deny or qualify the mortgagee's equitable interest; and unless recording statutes distinguish between the two no reason can be given why a contract to mortgage existing specified goods should be dealt with differently from an agreement to mortgage future goods as soon as they become specified.32

It has been assumed not infrequently that an attempted transfer by way of sale of future goods would give a similar equitable property right to the buyer. 33 The analogy between mortgages and sales, however, is imperfect. It is generally recognized that equity will not give specific performance of a contract for the sale of ordinary personal property, and while damages may be an inadequate remedy in case of an agreement to mortgage such property because it is impossible to estimate accurately the amount of the damage, this is not true of a contract to sell it; and there is weighty authority denying the application of any such principle to a contract to sell.34 As in the case of mortgages, it seems impossible to distinguish, so far as

32 See infra, § 1421, authorities sustaining the jurisdiction of equity to enforce a mortgage of the latter kind.

33 It is so stated by Benjamin on Sale and the statement is left unchanged in the latest edition (5th Eng. ed. 134), which has been the subject of careful revision by the editors and in which not a few hasty statements of the author have been corrected. See also Hamilton v. Nat. Loan Bank, 3 Dill. 230; Post v. Corbin, 5 Nat. Bkcy. Reg. 11; Block v. Shaw, 78 Ark. 511, 95 S. W. 806; Close v. Independent Gravel Co., 156 Mo. App. 411, 138 S. W. 81; Godwin v. Murchison Nat. Bank, 145 N. C. 320, 59 S. E. 154; Scammon v. Bowers, 1 Hask. 496.

34 In Belding-Hall Mfg. Co. V. Mercer & Ferdon Lumber Co., 175 Fed. 335, 338, 99 C. C. A. 123, Mr. Justice Lurton of the Supreme Court of the United States, said: "It must be conceded that although the

sale included the entire cut of this particular sort of lumber for the season of 1907, and although there had been a payment made on account of the contract of a sum largely in excess of the lumber which had been shipped and nearly equal to the price of the entire cut up to August 31, 1907, the title to the lumber cut to fill this order had not passed prior to August 31st, because the contract provided for delivery free on board cars at Bogardus, the railway station nearest the mill. If before that had been done bankruptcy had ensued, the title would have passed to the bankrupt's trustee, and the buyers remitted to their rights as creditors by reason of this advance payment. So if the lumber had been seized under execution, the execution creditor would have at law the better claim. So, also, if the lumber had been destroyed by fire or flood, the loss would have fallen upon the vendor."

the matter under discussion is concerned, a contract to sell future goods which afterwards become identified and a contract to sell existing specified goods.

It may be urged that equity has in either case jurisdiction to enforce the agreement of the parties, but that it will refrain from exercising its jurisdiction unless damages are inadequate and that in this event (as in case of insolvency) the jurisdiction will be exercised. Though as appears from the following section insolvency will not be generally a proper ground for specific enforcement, the argument may otherwise be conceded, if the validity of the criticism elsewhere made,35 of throwing the risk on one who has contracted to buy real estate be accepted. If it be contended that the mere jurisdiction of a court of equity over a contract to buy and sell makes the contracting purchaser owner in equity and subject to the risk of loss, an assertion of such jurisdiction over all contracts to buy and sell specific chattels would be inconsistent with the well-established rule that in the sale of chattel property risk attends title. 36

In dealing with the matter now, either in England or in such jurisdictions of the United States as have enacted the Uniform Sales Act, a provision of the latter statute copied from the English Sale of Goods Act must be taken into account. The American statute provides,-"Where the seller has broken a contract to deliver specific or ascertained goods, a court having the powers of a court of equity may, if it thinks fit, on the application of the buyer, by its judgment or decree direct that the contract shall be performed specifically, without giving the seller the option of retaining the goods on payment of damages. The judgment or decree may be unconditional, or upon such terms and conditions as to damages, payment of the price and otherwise, as to the court may seem just." 37

See supra, §§ 928-954. *See supra, §§ 961-967.

It is true that cases on this point are in actions at law, but this should not affect the question in any jurisdiction where equitable defences are allowed at law.

* Section 68. A list of jurisdictions where the Uniform Sales Act has been

enacted may be found supra, § 506, n. 2. These sections of the English and American statutes have not hitherto been much relied on by the courts in making decisions but they seem to afford a clear warrant for an extension of previously existing rules. See Jones v. Tankerville, [1909], 2 Ch. 440, 445.

§ 1420. Insolvency as a ground for specific performance.

It has been held or stated in a number of cases that insolvency of the defendant affords a sufficient reason of itself or in connection with other facts for the specific enforcement of a contract to transfer personal property though apart from the defendant's insolvency no right to specific enforcement exists.38 Such cases are often qualified however, by a statement in effect that if "insolvency stands alone as the only real danger urged in plaintiff's complaint for equitable relief, then he must fail." 39 There seems to have been little discussion in these decisions of the effect upon such a doctrine of equity of a bankruptcy act which forbids preference in the American sense of the word. 40 As an insolvent is not precluded by the Bank

38 Doloret v. Rothschild, 1 S. & S. 590, 598; Dowling v. Betjemann, 2 J. & H. 544; Hamilton v. National Bank, 3 Dill. 230; McNamara v. Home Land &c. Co., 105 Fed. 202 (rev'd on other grounds in 111 Fed. 822, 49 C. C. A. 642); Dilburn v. Youngblood, 85 Ala. 449, 451, 5 So. 175; Southern Iron &c. Co. v. Vaughan, (Ala. 1918), 78 So. 212, L. R. A. 1918 E. 594; Treasurer v. Commercial Mining Co., 23 Cal. 390, 393; Williams v. Carpenter, 14 Colo. 477, 24 Pac. 558; Crawford v. Williams, (Ga. 1918), 99 S. E. 378; Parker v. Garrison, 61 Ill. 250; Ames v. Witbeck, 179 Ill. 458, 475, 53 N. E. 969; Clark v. Flint, 22 Pick. 231, 33 Am. Dec. 733; Rothholz v. Schwartz, 46 N. J. Eq. 477, 19 Atl. 312, 19 Am. St. 409; Zeiger v. Stephenson, 153 N. C. 528, 69 S. E. 611; Doty v. Doty, 171 N. Y. S. 852; Corn Bank v. Solicitors Co., 188 Pa. 330, 41 Atl. 536, 68 Am. St. Rep. 872; Allen v. Freeland, 3 Rand. 170, 174; Avery v. Ryan, 74 Wis. 591, 600, 43 N. W. 317; Glassbrenner v. Groulik, 110 Wis. 402, 85 N. W. 962. See also Neal v. Parker, 98 Md. 254, 57 Atl. 213.

39 Ridenbaugh v. Thayer, 10 Idaho, 662, 671, 80 Pac. 229, citing 26

Am. & Eng. Encyc. of Law (2d. ed.), 19; Strang v. Richmond, F. & C. R. Co., 93 Fed. 71, 75; Lasar v. Baldridge, 32 Mo. App. 362, 366; Townsend v. Fenton, 32 Minn. 482, 484, 485, 21 N. W. 726; Miller v. Lorentz, 39 W. Va. 160, 174, 19 N. E. 391; McLaughlin v. Piatti, 27 Cal. 451, 463; Crawford v. Bradford, 23 Fla. 404, 406, 2 So. 782, 783; Heilman v. Union Canal Co., 37 Pa. St. 100; Cincinnati, etc., R. Co. v. Washburn, 25 Ind. 259, 261; McConnel v. Dickson, 43 Ill. 99. See also Hendry v. Whidden, 48 Fla. 268, 37 So. 571; Union Coöp. Co. v. Adolfson (Neb.), 171 N. W. 902; Gillett v. Warren, 10 N. Mex. 523, 62 Pac. 975; Livesley v. Johnson, 45 Oreg. 30, 76 Pac. 13, 946, 65 L. R. A. 783, 106 Am. St. Rep. 647.

40 The English Bankruptcy Law does not forbid transfers by an insolvent debtor to his creditor unless the dominant motive of the debtor was to give the creditor an advantage. Williston, Cases on Bankruptcy (2d ed.), 245. The American statute seeks to prevent any transfer by insolvent debtors on account of preexisting obligations, by making it an act of bankruptcy; and if bankruptcy supervenes within four months, mak

ruptcy Act from making a transfer for any return, other than a preëxisting debt, if honestly bargained for as an equivalent, there is no objection to the performance by him of a fair contract wholly executory on both sides, if made in good faith,41 (and therefore no objection to the enforcement of it by a court of equity); but if the insolvent prior to performance on his part has already received the whole or part of the consideration for his own promised performance, so that a debt or obligation is due him, the situation is different. In that event insolvency can never properly be a make-weight for the decision of a court. In the law of bankruptcy an insolvent debtor's obligations by way of mere contract must be sharply distinguished from his obligations to surrender specific property because the legal or equitable ownership is in another. If under the facts of the case apart from the defendant's insolvency equity regards the plaintiff as having an interest in the property in question, specific enforcement of the obligation to transfer to him that interest should be granted, 42 and if the defendant becomes bankrupt, the court of bankruptcy should recognize the plaintiff's interest in the property. Whatever the character of specific personal property, however readily purchasable for a money equivalent, the distinction is always vital in bankruptcy between a right to the return of specific property from the bankrupt estate and a claim for its money value. Therefore bankruptcy courts, as they have equity powers, always give in specie to a claimant of personal property of any kind the property itself, if he has an equitable property right, and do not relegate him to a claim for damages. 43 But if a bankrupt had contracted to sell ordinary chattels, and still retained title and possession, they are assets of the estate, and if the bankrupt had been

ing the transaction voidable, if the creditor had reasonable cause to believe that a preference would be effected. The motive of the debtor is immaterial.

"Tiffany v. Lucas, 8 Bky. Reg. 49; In re Strenz, 8 Fed. 311; Remington on Bankruptcy (2d ed.), § 1316.

42 As in Crawford v. Williams, (Ga. 1919), 99, S. E. 378, where the contract in question was an option on land.

43 This commonly occurs when the bankrupt has acquired property by fraud. See, e. g., In re American Knit Goods Mfg. Co., 173 Fed. 480, 97 C. C. A. 486; Gillespie v. Piles, 178 Fed. 886, 102 C. C. A. 120; In re Appel Suit & Cloak Co., 198 Fed. 322; In re Gold, 210 Fed. 410, 127 C. C. A. 142; Remington on Bankruptcy, 1879.

paid in advance before the bankruptcy and had subsequently delivered the goods within four months prior to the filing of the bankruptcy petition he would have given a preference.44 For a court to decree specific performance of such a contract because of insolvency is not only a violation of the maxim that equality is equity but is nothing less than ordering the debtor to do something which the Bankruptcy Statute has forbidden him to do. Unless the situation is such that a court of bankruptcy would recognize and enforce a right on the part of the claimant to the property, if it should come into the hands of the court, it will always be improper for an insolvent debtor to transfer it without receiving a contemporaneous equivalent, and a fortiori it will be improper for a court of equity to decree the transfer.45 Moreover, as has been pointed out, 46 an insolvent debtor is not necessarily execution proof, and on the other hand a solvent debtor, possibly may be. If the defendant's financial condition may properly have a bearing on the plaintiff's right to specific performance, not insolvency, but lack of property which can be seized should be the test. The conclusion, therefore, is:

1. Unless a contract for specific chattel property gives an equitable property right in the chattel, or unless the decree requires the plaintiff to make a full contemporaneous exchange for the property in question equity should not enforce the contract specifically because of insolvency. To do so is inconsist ent with bankruptcy legislation, which is based on a system of law itself built up by courts of equity.

2. Cases in bankruptcy and on risk of loss indicate that a

44 See quotation from Belding-Hall Mfg. Co. v. Mercer & Ferdon Lumber Co., 175 Fed. 335, 338, 99 C. C. A. 123, supra, § 1419a, n. 34. It is true that Templeton v. Kehler, 173 Fed. 575; Mills v. Virginia Carolina Lumber Co., 164 Fed. 168, 90 C. C. A. 154, seem contrary authorities, but of these cases it is well said in Remington on Bankruptcy (2d ed.), § 1316, that in order to prevent such a transfer from being preferential "It must always appear that title to the goods

has already passed or that an equitable lien exists or that the money paid in advance is to be kept intact as a distinct fund to become the bankrupt's only on delivery of the things purchased."

45 See as supporting the argument of the text, Roundtree v. McLain, 4 Hempst. 245; City Fire Ins. Co. v. Olmsted, 33 Conn. 476; Chafee v. Sprague, 16 R. I. 189, 13 Atl. 121.

46 G. L. Clark, 31 Harv. L. Rev. 275.