Opinion of the court by
Burford, C. J.:
A number of errors are complained of relating to the admission and exclusion of evidence, and to the giving and rejection of testimony, but none of them go to the merits of the case. If upon the entire record it appears that the judgment of the court is correct, and that in no state of the case should it have been otherwise, unsubstantial errors^will be disregarded. It is contended by counsel for plaintiff in error'that Blaine was a factor representing Prick Company in the sale of the engine to Sutphen, and had a lien upon the notes taken for the purchase money for his compensation, and hence had a right to sell the notes to compensate himself and satisfy his lien.
The contention under the facts as proved does not contain a single element to commend it. In the first place, Blaine was not the agent of Prick Company to negotiate the sale of the engine, but was the representative of Shockey. Shockey was the agent of Prick Company to sell the engine, and had no power to delegate his authority or employ sub-agents, and charge Prick Company with their acts. If Blaine had been the agent of Prick Company, he was without authority to take the purchase notes in his own name, and when he did so, he became the trustee of Prick Company, bound to deliver the notes to the corporation, or it could do as it did in -this case, and elect to repudiate his entire acts and make a settlement direct with the purchaser. Again, a factor has no lien unless he has possession of the property, and he must be in possession of the property which
be sells for his principal in order to constitute Mm a factor. In this ease, Blaine never was in possession of this engine; it was sMpped by Frick Company in 1892 to Shoekey, at Abilene, Kansas. Shoekey sold it to Hall Bros., who failed to pay for it, and Frick Company took it back, and it again went into the possession of Shoekey for resale; then Shoekey shipped it direct to Sutphen at Enid, who paid the charges on it and received it into his exclusive possession. He retained possession until it was found in the possession of Jones, who held it for the plaintiff in error.
If Blaine was in fact the agent of Frick Company for the sale of the engine, yet he would ha,ve no lien on the notes taken for the purchase money of the engine. A factor may have a lien, but in order to constitute a seller a factor, he must' have possession of the property sold. The important difference between a factor and an agent is, that the agent. need not have possession of the property of his principal, while the factor must be in possession. The lien of a factor belongs to the class known as possessory liens, and it is a well settled and universal rule that the factor must have either the actual or the constructive possession of the goods, in order that his lien may attach thereto. Blaine was never in possession of the engine, either active or constructive, and hence was not a factor, and had no lien. Neither could he have a lien upon the notes taken by him for purchase price of the engine,' for it must necessarily follow that if he was not a factor in the sale of the engine, he could not be a factor in the handling of the notes and mortgage taken for the purchase price of the engine. The possession of a factor in order to entitle him to a lien on the property of the principal in his possession, must have been acquired lawfully, and in
good faith. Blaine does not stand in this relation, and the Bank of Pratt can stand no better than Blaine. Blaine was a mere .employe or agent of Shoekey; he negotiated the sale of the engine to Sutphen under an express agreement that' Shoekey was to remunerate him for his services, and he can look only to Shoekey for his compensation. After the sale was made, and settlement‘made by Sutphen, as per instructions of Shoekey, Blaine became dissatisfied' about his com? pensation from Shoekey, and at that late day entered into a questionable arrangement with Sutphen to cancel the notes and mortgage executed in favor of Frick Company, and execute notes' in his own favor, in order that he might force such settlement from Frick Company as he might contend for against Shoekey. His purpose is apparent from his letters and statements; and constitutes bad faith and unwarranted practices. Having obtained the notes in this manner, the law will’ treat him as a mere intermeddler, and he could obtain no' lien.
A factor may, if not directed otherwise, sell on credit and take notes in his own name for his principal, but he cannot apply such notes to his own indebtedness, nor negotiate them without rendering himself personally liable for the debt due his principal; but a mere agent cannot take notes payable to himself, unless specifically so authorized by his principal, and where he. does such wrongful act with the knowledge of the buyer, the principal may at his option either ratify or repudiate the agent’s acts. It is clear, we think, that Blaine had neither actual nor implied authority to take the notes payable to himself. Sutphen did not owe Blaine anything, and he knew that Blaine was not the owner of the engine. The notes to Blaine were without considera
tion, and the mortgage to secure them created no lien on the engine or other property. The whole scheme between Blaine and Sutphen was a sham and a delusion, and the Peoples Bank had notice of such facts as would put a reasonably prudent person on inquiry before they took the notes, and is in no better position to claim under the mortgage than Blaine himself.
If Blaine took these notes for Erick Company, and from his letters and oral statements this is the only reasonable conclusion, then he had no power or authority to sell or transfer them. He was not the agent of Frick Company for any such purpose, and his contention that he sold them to satisfy a hen he claimed on them for his commission is without any foundation.' If he did take the notes and mortgage for Frick Company, then they became the property of Frick Company, and Blaine, .being without authority to transfer or assign the notes, the Peoples Bank took no title, and Frick Company is entitled to possession under the terms of this mortgage, for the purpose of divesting the title of Sut-phen by foreclosure.
On the other hand, if the' Blaine notes are void for want of consideration or other cause, then the mortgage' of the Frick Company is a valid lien, and it is entitled to possession under this mortgage. So in either event the Frick Company is entitled to the possession of the engine as against any of the parties to this controversy.
It is contended that Frick Company ratified the acts of Blaine in taking the notes in his own name. The facts do not support this contention. Blaine went to the office of Frick Company in Pennsylvania and offered to transfer the notes and mortgages held by him to the company, on con
dition that the company would guarantee payment of the amount he claimed against Shockey for the sale of this engine and other services, and claimed that Shockey had violated an agreement to give him a Minnesota Chief separator for his services. Frick Company declined this proposition, and offered to allow him fifty dollars, the amount Shockey had directed them to pay on his account, provided Blaine would transfer the Sutphen notes and mortgage to the company.
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Opinion of the court by
Burford, C. J.:
A number of errors are complained of relating to the admission and exclusion of evidence, and to the giving and rejection of testimony, but none of them go to the merits of the case. If upon the entire record it appears that the judgment of the court is correct, and that in no state of the case should it have been otherwise, unsubstantial errors^will be disregarded. It is contended by counsel for plaintiff in error'that Blaine was a factor representing Prick Company in the sale of the engine to Sutphen, and had a lien upon the notes taken for the purchase money for his compensation, and hence had a right to sell the notes to compensate himself and satisfy his lien.
The contention under the facts as proved does not contain a single element to commend it. In the first place, Blaine was not the agent of Prick Company to negotiate the sale of the engine, but was the representative of Shockey. Shockey was the agent of Prick Company to sell the engine, and had no power to delegate his authority or employ sub-agents, and charge Prick Company with their acts. If Blaine had been the agent of Prick Company, he was without authority to take the purchase notes in his own name, and when he did so, he became the trustee of Prick Company, bound to deliver the notes to the corporation, or it could do as it did in -this case, and elect to repudiate his entire acts and make a settlement direct with the purchaser. Again, a factor has no lien unless he has possession of the property, and he must be in possession of the property which
be sells for his principal in order to constitute Mm a factor. In this ease, Blaine never was in possession of this engine; it was sMpped by Frick Company in 1892 to Shoekey, at Abilene, Kansas. Shoekey sold it to Hall Bros., who failed to pay for it, and Frick Company took it back, and it again went into the possession of Shoekey for resale; then Shoekey shipped it direct to Sutphen at Enid, who paid the charges on it and received it into his exclusive possession. He retained possession until it was found in the possession of Jones, who held it for the plaintiff in error.
If Blaine was in fact the agent of Frick Company for the sale of the engine, yet he would ha,ve no lien on the notes taken for the purchase money of the engine. A factor may have a lien, but in order to constitute a seller a factor, he must' have possession of the property sold. The important difference between a factor and an agent is, that the agent. need not have possession of the property of his principal, while the factor must be in possession. The lien of a factor belongs to the class known as possessory liens, and it is a well settled and universal rule that the factor must have either the actual or the constructive possession of the goods, in order that his lien may attach thereto. Blaine was never in possession of the engine, either active or constructive, and hence was not a factor, and had no lien. Neither could he have a lien upon the notes taken by him for purchase price of the engine,' for it must necessarily follow that if he was not a factor in the sale of the engine, he could not be a factor in the handling of the notes and mortgage taken for the purchase price of the engine. The possession of a factor in order to entitle him to a lien on the property of the principal in his possession, must have been acquired lawfully, and in
good faith. Blaine does not stand in this relation, and the Bank of Pratt can stand no better than Blaine. Blaine was a mere .employe or agent of Shoekey; he negotiated the sale of the engine to Sutphen under an express agreement that' Shoekey was to remunerate him for his services, and he can look only to Shoekey for his compensation. After the sale was made, and settlement‘made by Sutphen, as per instructions of Shoekey, Blaine became dissatisfied' about his com? pensation from Shoekey, and at that late day entered into a questionable arrangement with Sutphen to cancel the notes and mortgage executed in favor of Frick Company, and execute notes' in his own favor, in order that he might force such settlement from Frick Company as he might contend for against Shoekey. His purpose is apparent from his letters and statements; and constitutes bad faith and unwarranted practices. Having obtained the notes in this manner, the law will’ treat him as a mere intermeddler, and he could obtain no' lien.
A factor may, if not directed otherwise, sell on credit and take notes in his own name for his principal, but he cannot apply such notes to his own indebtedness, nor negotiate them without rendering himself personally liable for the debt due his principal; but a mere agent cannot take notes payable to himself, unless specifically so authorized by his principal, and where he. does such wrongful act with the knowledge of the buyer, the principal may at his option either ratify or repudiate the agent’s acts. It is clear, we think, that Blaine had neither actual nor implied authority to take the notes payable to himself. Sutphen did not owe Blaine anything, and he knew that Blaine was not the owner of the engine. The notes to Blaine were without considera
tion, and the mortgage to secure them created no lien on the engine or other property. The whole scheme between Blaine and Sutphen was a sham and a delusion, and the Peoples Bank had notice of such facts as would put a reasonably prudent person on inquiry before they took the notes, and is in no better position to claim under the mortgage than Blaine himself.
If Blaine took these notes for Erick Company, and from his letters and oral statements this is the only reasonable conclusion, then he had no power or authority to sell or transfer them. He was not the agent of Frick Company for any such purpose, and his contention that he sold them to satisfy a hen he claimed on them for his commission is without any foundation.' If he did take the notes and mortgage for Frick Company, then they became the property of Frick Company, and Blaine, .being without authority to transfer or assign the notes, the Peoples Bank took no title, and Frick Company is entitled to possession under the terms of this mortgage, for the purpose of divesting the title of Sut-phen by foreclosure.
On the other hand, if the' Blaine notes are void for want of consideration or other cause, then the mortgage' of the Frick Company is a valid lien, and it is entitled to possession under this mortgage. So in either event the Frick Company is entitled to the possession of the engine as against any of the parties to this controversy.
It is contended that Frick Company ratified the acts of Blaine in taking the notes in his own name. The facts do not support this contention. Blaine went to the office of Frick Company in Pennsylvania and offered to transfer the notes and mortgages held by him to the company, on con
dition that the company would guarantee payment of the amount he claimed against Shockey for the sale of this engine and other services, and claimed that Shockey had violated an agreement to give him a Minnesota Chief separator for his services. Frick Company declined this proposition, and offered to allow him fifty dollars, the amount Shockey had directed them to pay on his account, provided Blaine would transfer the Sutphen notes and mortgage to the company. Blaine declined this offer, and after that he was notified by letter that his acts in the matter would hot be recognized. This does not constitute the first principles of ratification, and we are unable to find any ratification in the evidence.
Counsel for plaintiff in error seek to invoke the familiar principle that where one of two innocent parties must suffer from the wrongful acts of a third person, that he who has put it in the power of the third person to perpetrate the wrong must be the loser. This rule has no application to the facts in this case. Frick Company never employed Blaine to sell its property, and the Peoples Bank are not innocent purchasers. The cashier of the bank who transacted the business with Blaine was informed that there was litigation concerning the notes he purchased, and that the property covered by the mortgage had never been the property of Blaine. He knew that Sutphen did not owe Blaine for this engine, and at the time he took the assignment of the notes and mortgage, the mortgage to Frick Company for the purchase price notes for the engine was on. record in Garfield county, Oklahoma, where the property was situated. Blaine was indebted to the bank over $1,400, and the notes were credited on his account; two of the notes were past due, and
none of the notes were negotiable in form, so that under all the circumstances, the bank is not an innocent purchaser for value, and takes no better right than Blaine had.
The judgment of the district court is clearly right upon the facts as shown by a great preponderance of the evidence, and is therefore affirmed at the costs of the plaintiff in error.
Beauchamp, J., not participating in the decision; Gillette, J., absent; all the other Justices concurring.