City Bank v. Rome, Watertown, & Ogdensburgh Railroad

44 N.Y. 136, 1870 N.Y. LEXIS 136

• Court: New York Court of Appeals
• Decided: December 28, 1870
• Status: Published

Opinion

Hunt, C.

Many points were raised upon the trial, and argued in the court helow, that are not now insisted upon. The determination of the questions of, fact was of more difficulty than the disposition of the questions of law. The latter are all that are presented for our consideration. I will take up, in their order, the objections to the recovery now presented by the counsel for the appellants.

It is alleged that the plaintiff failed to establish any title to the wheat in question, because the bill of lading was not indorsed to the plaintiff, but to C. P. Egert. If I understand the implication of the appellant’s points, it is substantially conceded that the transaction amounted to an hypothecation of the wheat as security for the payment of the debt in the event that Egert failed to accept and pay the draft. In the defendant’s supplemental points, it is expressly conceded-that a special property in the wheat passed to the plaintiff. Three cases are cited to show that a special property will not authorize an action for its recovery. (Rawles v. Deshler, 3 Keyes, 572; Wait v. Green, 36 N. Y., 556; Ballard v. Burget, 40 N. Y., 314.) These cases do not sustain the position. The contrary has been held in this State many times (Dezell v. Odell, 3 Hill, 215; Miller v. Adsit, 16 Wend., 335; Wheeler v. McFarland, 10 Wend., 318.) This title is sufficient to justify the plaintiff’s claim and sustain their recovery of the value of the wheat.

I suppose, however, that the title to the wheat passed to the plaintiff by the delivery of the bill of lading. The delivery of a bill of lading with intent to pass the title has that effect, although it he not payable to “ assigns,” or although if so payable, it be not indorsed. (Par. Merc. Law, 346; 2 Kent’s Com., 207; see also Chandler v. Belden, 18 J. R., 157.) The Bank of Rochester v. Jones (4 Com., 497) is quite in point to this question. One Foster shipped 200 barrels of flour from Rochester to B. P. Jones in Albany, taking from the master of the boat a receipt simply in these words:

“Received, Rochester, July 15th, 1843, of W. C. Foster, two hundred barrels of flour to be forwarded to B. P. Jones, Albany, in good order without delay, subject to forty-five cents freight.

“R. D. HAMAH.”

To enable Foster to buy and ship this flour, it was agreed between him and the plaintiff, that the plaintiff would advance $950 for the purpose, Foster to procure the forwarder’s receipt of the flour to tie purchased, and leave such receipt with the bank as security for the acceptance of a draft to be drawn on Jones, the defendant. Foster delivered the draft and receipt to the bank and received the money on the draft. It was a part of the parol agreement that the flour should be held by the bank as security; that Jones should accept the draft, the bank to have the right to hold and sell the flour. If accepted the receipt was to be for Jones’ security, and the bank was to look to him. The bank forwarded the draft for acceptance with the receipt pinned to it, which was presented to the defendant, Jones, for acceptance. Jones took off the receipt, retained it and refused to accept the draft. He then sent his clerk to Utica, who there met the flour and sold it. It was held, 1. That Jones obtained no title to the flour. 2. That the discount of the draft by the plaintiff, and the delivery to it of the receipt, amounted to a transfer of the flour to the bank, in trust to deliver it to the defendant in case he accepted the draft, or in case of his refusal, in trust to sell the flour and pay the draft.

It will be observed that the receipt in that case was in the name of Jones alone as consignee, with no words of negotiability, and that there was no indorsement by him. Still the mere delivery of the receipt to the bank under the circumstances, transferred the title to the flour, and the bank recovered against Jones. (See also 3 Kent’s Com., 207; Par. Merc. Law, 497.) In the case before us, it is expressly found as a fact, that the bills of lading were delivered to the plaintiff as collateral security for the payment of the draft.

The appellant insists, secondly, that if the plaintiff did acquire the title to the wheat or a special property therein, it so conducted itself as to forfeit its rights as against subsequent innocent purchasers for value. This argument is based upon bringing in juxtaposition two of the findings of fact by the judge, viz.: That the purchasers of the wheat paid for the same in good faith, without notice of any claim thereon, and the further finding that Groundwater had from the plaintiff an implied authority to dispose of the wheat in such way, consistent with the rights of the plaintiff therein, as would enable' Groundwater to raise the money to pay the drafts; but that he had no authority to dispose of it, except subject to the plaintiff’s lien, and that such lien would not be discharged until the drafts were paid. The appellant argues that this is a finding to the effect that the sale was to be valid, if the proceeds were paid to the plaintiff, and void if not. He omits to consider the further finding, that the plaintiff did not know that Groundwater intended to make any other disposition of the wheat than to deliver it to Egert or Burt & Co., on acceptance of the drafts, nor was Groundwater authorized by the plaintiff to make any other disposition of the wheat. Even in this limited view of the findings, it is difficult to see where would be the illegality, when we remember that it is a finding not of law, but of fact, and that the findings of fact are conclusive upon us. Although such an agreement would be extraordinary, it would not be illegal. Any restrictions, negative or affirmative, may be placed upon the power of a limited and special agent. If he sells in violation of it, his principal is not bound and no title passes. But the judge finds, as a further fact, that these purchasers knew that the wheat had been discharged from vessels at Gape Vincent, and they did not make any inquiry for bills of lading. How could they be protected, when guilty of such neglect ?

It is difficult, however, to see in what way the point insisted upon is available to the defendant. The defendant was a warehouse-man, who retained and refused to deliver the wheat after notice of the plaintiff’s claim, and then actually delivered it to other parties. It is the law that a carrier or a warehouse-man is bound to ascertain whether a bill of lading was delivered to the shipper; and if delivered, he must retain the property until it is demanded by one claiming under that title. (Howard v. Shepard, 9 M. Gr. & Scott, 296; Tyndal v. Taylor, 4 Ellis & Bl., 219.) If the purchasers or the defendants had inquired of the master of the vessel they would have learned that a formal bill of lading had been issued. They could scarcely have failed, in fact, to know what the law inferred, that the title to the goods had passed under it, and was then in some party other than the shipper.

The defendant is not a bona fide purchaser, nor were the purchasers bona fide purchasers in law. The defendant’s duty, as a warehouse-man, to deliver only to the party holding the bill of lading was clear, and the duty of the purchaser to inquire for the bill of lading was equally clear.

The knowledge that the title followed the bill of lading affected all parties. The absence of this document at Cape Vincent and the failure of the purchasers to inquire for it, are conclusive, under the cases above cited, that no title passed to them by Groundwater’s sale.

The appellant insists, in the third place, that the leaving with the plaintiff the drafts given to Groundwater on the sale of the wheat, to be applied on his demand and their surrender by the plaintiff without consideration, together with the other facts in the case, operate as an estoppel on the plaintiff in asserting a claim to the wheat in question, as against the honafide purchaser. This point, in the form that the plaintiff knew that Groundwater was going to Cape Vincent to sell the wheat, and that the plaintiff consented to its sale, was urged on the trial as a matter of fact, and is discussed in the opinion below. It is not an estoppel if at all, by record or deed, creating an estoppel in law. In any event it was a question of fact, and should have been submitted as a question of fact on the trial. I do not perceive that it was presented in such form to the judge, nor do I see how he could have held it to be an estoppel consistently with his other findings, that the plaintiff did not know that the drafts were the proceeds of the wheat sold discharged of their lien. If the plaintiff surrendered certain drafts in ignorance of the fact that they were connected with their lien, or that they were the proceeds of the wheat discharged of their lien, it is difficult to see how it can be, in fact or in law, a discharge of their lien.

The defendant has not the necessary facts before the court, on which to base this argument.

The only remaining point made by the appellant’s brief, is that the railroad company had not the possession of the wheat when the plaintiff demanded it. This, too, is a question of fact, which does not arise upon the case before us.

Many other questions, some of them of much interest, were argued in the court below, and passed upon in the opinion of the Supreme Court judges, accompanying the case. They are not now insisted upon, and we are not called upon to discuss them.

The judgment should be affirmed with costs.

All concur for affirmance.

Judgment affirmed with costs.