date of maturity, and in description of the property; that Phelan & Ferguson took possession of the property in Idaho, where it was at the date of the contract, and remained in possession until the second day of December, 1882, and then sold and delivered the same to the defendant in part payment of an indebtedness due him and one Longsdorf. The court also found that defendant knew, at the time he received the property, that it had not been paid for by Phelan & Ferguson, and that plaintiff claimed title thereto; that Phelan & Ferguson were, at the date of their contract, residents of Idaho; that the value of the property on the second day of December, 1882, was $1,600, and that nothing had been paid on the notes. It also appears there was a chattel mortgage act in Idaho, which, among other things, provided that chattel mortgages should not be valid, except between the parties, unless made, executed, and recorded in conformity with that act, and that no such mortgage was executed to the plaintiffs.

The defendant insists that the terms and conditions of the contract manifest an intention to create a secret lien on the property, and should be construed to be a chattel mortgage, and invalid, because not executed and recorded according to the Idaho statute. The plaintiff claims that the intention was, as shown by the contract, that plaintiff should retain the title unless payment should be made according to the terms of the notes, and that the purchaser should have a right to the possession and use of the property until the seller should feel insecure, or until default in payment. The intention of the parties, as expressed in the contract, evidently was to give to the purchaser the possession and use of the property until the seller should feel insecure for reasonable cause, or until payment according to the notes. In the latter case the purchaser was to have the title also, and, in case of default in payment, the right to have the proceeds of the sale, or the value of the property, credited on the notes; and the seller was to have the price, with interest, according to the notes, and, for security, the title with the possession of the property, if he felt insecure for reasonable cause, and the further right to sell the property, and to credit either the proceeds or the value of the property without sale, and also the right to collect the difference and retain the same as damages in case the proceeds should be less than the amount due.

By this contract the vendor expressly retained the title to the property. This right cannot be likened to a lien. A lien is a claim which one person has on the property of another as a security for some debt or charge. "It is not in strictness either a jus in re or a jus ad rem; that is, it is not a property in the thing itself, nor does it constitute a right of action for the thing; it more properly constitutes a charge upon the thing." Nor can it be construed as a mortgage. A mortgage is made by the person having the property or title to another for security. Heryford v. Davis, 102 U. S. 235, cited by defendant's

counsel, was a sale of certain cars to a railway company in Missouri. The contract, in some respects, is like the one in hand; in others, not. The parties to it characterized the transaction as a loan of cars for hire, when it clearly was not. The notes executed were all due within four months. This contract gave a much longer time. In that case collateral security in hands to a larger amount than the notes secured was taken, and in the receipt given the seller acknowledged that he received the bonds as collateral security for the notes given in payment for the property. In this, no collaterals were taken. And by the contract in the case cited, the proceeds of the sale, in case they exceeded the notes, were to be paid to the purchaser. In this, the vendor retained such surplus as damages. In the case cited, the court held that the contract passed the title to the purchaser; that it did not amount to a lease or a conditional sale; and that it was invalid as a mortgage. Hervey v. Rhode Island Locomotive Works, 93 U. S. 664, case taken up from Illinois, involved the construction of a contract similar to that in the case of Heryford v. Davis, supra. This contract also professed to be a lease; but the court held that it clearly was not, but did not determine whether it was a conditional or an absolute sale. The court followed the decisions of the courts of Illinois in construing the chattel mortgage act of that state, and held the contract invalid as to third parties obtaining interests in property under the purchaser. The contract in the case of Call v. Seymour, 40 Ohio St. 670, is more analogous to the contract in hand, except that it did not give the vendor authority to credit the value of the property on the notes without a sale, or to collect as damages the difference, if any, between the proceeds or value of the property and the amount of the notes. The court held that the contract constituted a conditional sale, and was binding upon the vendee, and all persons ' acquiring an interest in the property under him.

Russell & Co. were the owners of the property with respect to which this contention has arisen. They sold upon condition that they were to retain the title unless the consideration should be paid at the times agreed upon, and the possession was given to the purchaser. It dif fers from a contract in which the parties agree that the creditor shall take the title as security, the debtor retaining the possession. The possession remains the same. Possession and its change involve actions and are accompanied with circumstances which do not attend the mere change of title and ownership without possession. The presumption of ownership from former possession and title is added to the presumption from present possession, and therefore more likely to mislead persons wishing to deal with the vendee with respect to the property. The change of possession is more likely to be known to third parties than the mere change of title. Nor is the contract now in question like one in which a stock of goods is sold to a merchant for retail, the seller retaining the title and giving possession to the purchaser. Retaining the goods is an indication of ownership

in addition to that of possessing. Nor is this contract like one by which property which is consumed in its use, for consumption, (as of provisions,) is sold on the condition that the title shall pass upon payment. Possession is indicated by acts incident to it, and consumption by those incident to it. The right of consumption and the right of possession each indicate ownership, and both are of more weight than either.

Courts have sustained contracts belonging to each of these three classes. They have held that the purchaser of the debtor, as well as the debtor himself, is bound when the latter, by agreement in good faith, puts the title to his property in his creditor as security; and that the possession in the case named, with the mere right to sell at retail, cannot, as against his vendee, pass the title in any other way; that the right to consume in the case named gives no authority to dispose of by sale; that the right of the purchaser of the vendee, the consumer in such case, is subject to the right of the person holding the title according to the first contract.

The courts of Illinois and some other states hold that conditional sales of the class involved in this case are invalid as against creditors and purchasers of the conditional vendee. The purpose of the rule is to prevent fraud. The argument against such sales is that possession of personal property is evidence of ownership, and to intrust persons with that evidence, without the title, gives them the means of defrauding and imposing upon others. This argument may also be made against loans, bailments, and leases of personal property. But it has been uniformly held that the purchaser of the borrower, the bailee, or lessee takes subject to the rights of the vendor or the bailor or the lessor.

In considering this contract we may refer to some general principles. Every person competent to contract is presumed to know that possession alone is not sufficient to confer title as against the owner, and if the purchaser relies upon it without inquiry, he does it at his peril. The law construes contracts according to the intention of the parties, and allows them to contract with whomsoever and upon whatever terms they may desire. A man should have a remedy according to his agreement, and should not be held to have trusted where he never intended to trust. The logic of these principles clearly sustains the rights of a conditional vendor against those of the purchaser of his vendee.

In an early case in Massachusetts, (Coggill v. Hartford & N. H. R. Co. 3 Gray, 545,) BIGELOW, J., said:

"The vendee in such cases, having no right to the property, can pass none to others. He has only a bare right of possession, and those who claim under him, either as creditors or purchasers, can acquire no higher or better title. Such is the necessary rule of carrying into effect the intention of the parties to a conditional sale and delivery. There is no good reason or equity in placing the burden of a fraudulent sale by a vendee, in violation of the condition on which he received the property, upon a bona fide vendor, rather than

upon a bona fide purchaser. On the contrary, if either is to lose by his fraudulent act, it should be the latter, who has dealt with a party having no authority, instead of the former, who relies upon a valid subsisting contract as the foundation of his claim. It is the duty of the purchaser to inquire and see that his vendor has a good title to the property which he undertakes to sell."

From the terms and conditions of the contract between the plaintiffs and Phelan & Ferguson, we are of the opinion that their intention was that the title to the engines, boilers, and saw-mills should not pass to the latter until the price agreed upon should be paid by them according to the notes given. And we hold that plaintiffs' title must prevail over the claim of the defendant. These conclusions, we think, are supported by reason and stand upon principle. They appear to be in harmony with the weight of authority. Brown v. Haynes, 52 Me. 578; Rogers v. Whitehouse, 71 Me. 222; Kimball v. Jackman, 42 N. H. 242; Fisk v. Ewen, 46 N. H. 173; Armington v. Houston, 38 Vt. 448; Coggill v. Hartford & N. H. R. Co. 3 Gray, 545; Burbank v. Crooker, 7 Gray, 158; Goodell v. Fairbrother, 12 R. I. 233; Cragin v. Coe, 29 Conn. 51; Hine v. Roberts, 48 Conn. 267; Ballard v. Burgett, 40 N. Y. 314; Cole v. Mann, 62 N. Y. 1; Parmlee v. Catherwood, 36 Mo. 479; Ridgeway v. Kennedy, 52 Mo. 24; Hall v. Draper, 20 Kan. 137; Cole v. Berry, 42 N. J. Law, 308; Couse v. Tregent, 11 Mich. 65; Whitney v. McConnell, 29 Mich. 14; Knoulton v. Redenbaugh, 40 Iowa, 114; Sumner v. Woods, 67 Ala. 139; Hunter v. Warner, 1 Wis. 141; Pitts v. Owen, 9 Wis. 152; Kohler v. Hayes, 41 Cal. 455; Cardinal v. Edwards, 5 Nev. 37; Singer Manuf'g Co. v. Graham, 8 Or. 17; Call v. Seymour, 40 Ohio St. 670; Bradshaw · v. Warner, 54 Ind. 58; McGirr v. Sell, 60 Ind. 249; 1 Benj. Sales, (4th Amer. Ed.,) §§ 309, 437, 439, 442, 443.

The judgment of the district court is affirmed.

EMERSON and Twiss, JJ., concurred.

SUPREME COURT OF NEVADA.

(19 Nev. 171)

THOMPSON V. RENO SAVINGS BANK and others.

Filed September 18, 1885.

1. CORPORATIONS-SUBSCRIPTION TO STOCK-SUIT BY CREDITOR TO ENFORCE Pay

MENT OF.

Where subscriptions to the capital stock of a corporation are payable upon the call of the company, it is not necessary that a creditor of such corporation must, before instituting suit to compel the payment of such subscriptions, make an effort to compel the corporation to make the call.

2. SAME-STATUTE OF LIMITATIONS.

Where subscriptions to the capital stock of a corporation are payable upon call, and when no call is made, the obligation is a subsisting one, and the statute of limitations is not available as a defense unless set in motion by some adverse action.

Appeal from a judgment of the Seventh district court, Washoe county, entered in favor of plaintiff, and from an order denying defendant's motion for a new trial. For a full discussion of one branch of the case, see Thompson v. Reno Savings Bank, 7 Pac. Rep. 68. Wm. Webster and S. D. King, for appellant.

John F. Alexander, for respondent.

BELKNAP, C. J. This is a suit in equity brought by respondent, a judgment creditor of the Reno Savings Bank, against appellant Huffaker, to recover the amount of his unpaid subscription to the capital stock of the bank. The suit is based upon facts corresponding in all essential respects with those in Thompson v. Reno Savings Bank, 7 Pac. Rep. 68, and the decision in that case, in so far as it is applicable, will be treated as decisive of this one, without further notice. The first objection which we are asked to consider is that the complaint does not state a case entitling the plaintiff to sue. It is urged that subscriptions to the capital stock of the corporation are payable upon the call of the company, and that a creditor, to maintain a suit of this nature, must, before instituting it, make an effort to induce the corporation to make the call, and that no proper effort in this behalf has been made. In support of this view we are referred to a number of cases holding that a stockholder or creditor of a corporation may, under certain circumstances, and to prevent a failure of justice, institute and control a suit in his own name involving the rights of the corporation, if it has refused to take action. In this class of cases the right of action is primarily in the corporation, and it is entitled to the fruits of the litigation; but the stockholder or creditor is allowed to sue in order to protect the rights or property in which he has an interest. The principle involved in these cases has no application to cases of the nature of the one at bar, which is of the nature of a creditors' bill, brought by a plaintiff entitled in his own right to the relief which the judgment affords.