Complete Works. Lysander Spooner
and use of each are to remain with its seller for thirty days. Each purchaser, of course, takes the same risk as the other, of the commodity he has purchased, while it remains in the hands of its seller.
If A, the seller of the horse, while the horse remains in his possession, after the sale, should use it in any mode different from what it was understood that he should use it; or should neglect to take such reasonable care, in the use and treatment of the horse, as good faith towards the owner of the horse required of him; and should thereby be the cause of injury or death to the horse, he (the seller) would be still liable for the value of the horse; not, however, on his contract, nor in an action of trover for the horse itself, but in an action on the case for damages, for the loss occasioned by his fault, as has before been explained. By the same rule, if B, the seller of the money, while it remained in his possession, should intentionally or negligently expose it to any other than the usual risks, to which it was understood that it was to be exposed, and thereby the money should be lost, then he (the seller of the money) would be still liable to the owner of it for the amount; not, however, on his contract, nor in an action of trover for the money itself, but in an action on the case for damages, for the loss occasioned by his fault.21
But if A, the seller of the horse, used the horse with such reasonable care, while it remained in his possession after the sale, as the law of bailments and good faith towards B; the owner of the horse, required of him, and the horse, nevertheless, came to injury or death, B, the purchaser and owner of the horse, must bear the loss. By the same rule, if B, the seller of the money, use such care in the preservation and management of it, while it remains in his possession after the sale, as the law of bailments and good faith towards A, the purchaser of the money, require of him, and it (the money) should, nevertheless, be diminished or lost, A, the purchaser and real owner of the money, must bear the loss.
Now the only objection which the lawyers will raise to this doctrine, or to the application of the principles of bailee and bailor to the cases of debtor and creditor, is simply this: They will say that the specific property, to which the contract of debt (at the time it is entered into) attaches, may, before the time agreed on for the delivery, be exchanged, by the debtor, for other property; and that the same contract, which attached to the original property, cannot attach to the new property for which that is exchanged.
They get this false idea from looking solely at the general rule in regard to bailments, and keeping the exceptions and qualifications to the rule out of sight; when, in fact, these exceptions and qualifications cover nearly or quite as many cases, in actual life, as the rule itself. For instance: the general rule, in bailments, is, that the specific thing loaned or entrusted to the bailee, is to be restored to the bailor. The exceptions or qualifications are, where there is either an express or implied authority given to the bailee to exchange the property bailed for something else. Wherever there is either an express or implied authority given to the bailee to make such exchange, the same right of property which the bailor had in the original commodity bailed, attaches to the new commodity, or equivalent, for which that has been exchanged. In the cases of the various kinds of commercial agencies, where the agent is entrusted with commodities of one kind, to be exchanged by him for money, or other commodities, the right of property in the money or other commodities, received by the bailee as the equivalent of the commodities bailed, vests in the bailor on the instant of the exchange, and never becomes vested in the bailee. In many, perhaps in the larger number of cases of commercial agencies, the bailee receives express anthority for making the exchange; but not in all, nor nearly all. In many cases the authority is implied from collateral facts. And an implied authority is as good, in law, in any case whatever, as an express authority. All that is necessary, is, that there be valid grounds for the implication.
Considering, then, the relations of debtor and creditor to be those of bailee or bailor, are there any valid grounds for the implication of an authority, from the creditor to the debtor, to exchange, and traffic with, the property bailed, or loaned to the debtor?
There are several.
1. Inasmuch as the contract makes no designation of the particular form in which the value, to which the contract attaches, exists at the time the contract is entered into, it, of course, prescribes no particular form in which it must exist at any time, except at the time of delivery, when it must be in money. Since, then, there is, in the contract, no express or implied requirement that the debtor shall retain the value in any particular form, it impliedly allows him to use all reasonable discretion as to the form in which it will be expedient to keep it. And such a discretion allows him to convert it, by exchanges, into such different forms as a prudent and careful man might reasonably deem beneficial. Unless he were allowed this discretion, he would not be allowed to convert it from a perishable commodity into a durable one; nor from an unproductive into a productive one.
2. The capital loaned, is loaned to be used. This must always be presumed, because no other reasonable motive for the loan can be supposed. And if it be loaned to be used, and the form in which it is to be used is neither expressed nor implied by the contract, (as is the case in the instance of a promissory note,) it must be presumed that it was intended, by the creditor, that the debtor should use it in such manner as prudent men use their own capital. And as the habit of prudent men is to convert their own capital, by exchanges, or traffic, from one form into another; and as, in many kinds of business, they are obliged to do so, to derive any profit from their capital, it must always be presumed, (in the absence of any express or implied prohibition,) that the debtor was to be allowed the same discretion in the management of the loan, and in converting it from one form into another, by traffic, as prudent men exercise in the management of their own capital.
3. The contract of debt never describes the particular form, in which the amount of value, to which the contract attaches, exists at the time the contract of bailment or debt is entered into; but only the form in which it is finally to be delivered, to wit, that of money. The contract, therefore, only implies that the amount of value exists, in some shape or other, in the hands of the debtor. If, therefore, the debtor have not money for the contract to attach to, at the time it is entered into, it must attach to value existing in some other form, else it would attach to nothing, and therefore be void. When, then, the contract does attach to value existing in some other form than money, it certainly implies an authority to exchange the commodities, (in which the value is invested,) for money, at least, if for nothing else; because the contract expressly prescribes that the value to which the contract attaches shall finally be delivered to the creditor in the shape of money, and the debtor, therefore, could not fulfil his contract, unless he could convert this value into money. And if the debtor is authorized to convert into money, the value to which the contract attaches, there is no reason, that I know of, why he has not all fair and reasonable discretion as to the mode of converting it into money; nor why he may not do it by means of half a dozen intermediate exchanges, if he thinks he can thus do it more advantageously.
4. If the value, to which the contract attaches, do exist in the shape of money at the time the contract is entered into, (as in the case where money itself is loaned, and the debtor has no other property, than the loan, for the contract to attach to,) then the contract certainly implies an authority to exchange that money for other commodities, and those commodities back into money; because the money is obviously loaned to be used; as is proved by the facts, that no other reasonable motive for the loan can be supposed, and that, in most cases, the debtor agrees to pay interest for its use, which he could not afford to do unless the money were to be made productive to him. Now money itself can neither be used, nor made productive, in any other way than by being exchanged for other commodities, or by being wrought into some other shape than coin. These facts, then, are enough to prove that it must have been the intention of the lender, or bailor, that the borrower, or bailee, should be at liberty to exchange the money loaned, for other commodities. And then the fact that the amount of value, promised to be paid to the creditor, is finally to be delivered to him in the shape of money, proves that the debtor has the consent of the creditor to convert these other commodities back into money again.
Whether, therefore, the contract of debt attach, at the time it is entered into, either to value existing in the shape of money, or to value existing in any other shape, (not designated in the contract,) the