New York Sec. & Trust Co. v. Lipman

• Decision Date: 10 January 1899
• Parties: NEW YORK SECURITY & TRUST CO. v. LIPMAN et al.
• Court: New York Court of Appeals Court of Appeals

157 N.Y. 551

52 N.E. 595

NEW YORK SECURITY & TRUST CO.

v.LIPMAN et al.

Court of Appeals of New York.

Jan. 10, 1899.

Appeal from supreme court, general term, First department.

Action by the New York Security & Trust Company against Hong Kong & Shanghai Banking Corporation and others. From a judgment of the general term (36 N. Y. Supp. 355) affirming a judgment of the special term in favor of plaintiff, the banking corporation and other defendants appeal. Affirmed.

Michael H. Cardozo and S. Sidney Smith, for appellants.

William B. Hornblower and Howard A. Taylor, for respondent.

VANN, J.

This action was brought to settle conflicting claims to the proceeds of a quantity of burlaps sold by the plaintiff under a warehouse receipt, pledged to secure a loan of money, no question being raised by any defendant as to the propriety of an action in equity. All the claimants derived title through the firm of Lipman & Co., manufacturers and importers of Dundee, Scotland, who were represented in this country by one Ludwig Gutmann as their general agent. Their business was to finish goods taken in the rough from the looms, put them in shape for the market, and export them. The plaintiff claimed special title, as pledgee, to all the burlaps, consisting of 200 bales, while the Hong Kong & Shanghai Banking Corporation, Antony Gibbs & Sons, and Cotesworth & Powell, who alone are before us as appellants, claimed general title to 22, 15, and 9 of said bales, respectively. Other claims were presented by different parties, but they are not now material, as the owners or representatives thereof have not appealed.

The question presented is whether any of the appellants had any title to the bales claimed by them, and, if so, whether that title was good as against the plaintiff. The trial was before the court at special term, and, as the decision was general in form, all the facts warranted by the evidence and necessary to support the judgment are presumed to have been found. Amherst College v. Rich, 151 N. Y. 288, 320,45 N. E. 876. Evidence was given tending to show that on the 1st of December, 1891, Lipman & Co. had on storage with the Terminal Warehouse Company in the city of New York 801 bales of burlaps, for 500 of which negotiable warehouse receipts were subsequently given to that firm. When their agent, Mr. Gutmann, first took out receipts of that kind, he was asked by the representative of the warehouse company for which bales he wanted them, and whether he wanted them for any particular bales, and he said no, that he wanted no bale marks in the receipts, so that he could substitute other bales equal in kind and quality for those in storage whenever he liked. After this conversation, the warehouse receipts were always made out as thus requested, without identifying marks, and substitutions were made from time to time as bales were taken out of the bonded warehouse and sold, until none of the bales on hand December 1, 1891, were in the warehouse on December 15, 1892, when the controversy before us arose. The shipping documents accompanying each importation of Lipman & Co., and delivered by Mr. Gutmann to the custom house authorities, consisted of a bill of lading, a consular invoice, and a warehouse entry. The bill of lading was made out to Lipman & Co. as both consignor and consignee, except in the case of Antony Gibbs & Sons, who were themselves named as consignees, but they indorsed on the back of the instrument the words, ‘Deliver to the order of Messrs. Lipman & Co., New York,’ and signed the same by their firm name. The consular invoice contained a declaration signed by a member of the firm of Lipman & Co. to the effect that he was the manufacturer of the goods imported, and the United States consul at Dundee certified, among other things, that he was satisfied that the person making the declaration was the person he represented himself to be. The warehouse entry, dated at the custom house, New York, was headed, ‘Entry of merchandise imported,’ at a date named, ‘by Ludwig A. Gutmann,’ and to it was annexed the declaration of Gutmann, acknowledged before a notary public, that he was the ultimate consignee of the merchandise mentioned in the annexed entry and invoice, and that Lipman & Co. were the owners thereof. All these papers, except the last, were mailed to Gutmann, who, on presentation thereof at the custom house, was enabled, in the usual course of business there, to take out the warehouse entry and obtain a permit to send the goods to a bonded warehouse, where they were stored subject to the order of Lipman & Co. The Terminal Warehouse Company was accustomed to issue to Lipman & Co. two kinds of receipts for goods thus stored, one of which was nonnegotiable and simply a memorandum that the goods were held on storage for Lipman & Co., and the other, which was the kind issued for the bales in question, was negotiable, and stated in substance that the warehouse company had ‘received in Rositer stores No. 4 U. S. bonded on storage for account of Lipman & Company’ so many bales of burlaps, ‘marks various * * * deliverable only upon return of this receipt and the payment of charges accrued thereon.’ The word ‘negotiable’ was printed across the face of the receipt.

After December 1, 1891, the exact date not clearly appearing, Lipman & Co. borrowed $50,000 from the plaintiff upon their note at four months, in the usual form, with the added statement that said firm had pledged to the plaintiff as security five negotiable receipts of the Terminal Warehouse Company, dated December 1, 1891, for 100 bales of burlaps each, with authority to sell the same, ‘or any securities that may be substituted in lieu thereof,’ upon certain conditions duly named. Said warehouse receipts, which were in the form already described, were annexed to the note and delivered therewith, duly assigned by Lipman & Co. in blank, at the time the loan was made, and at the same time the plaintiff learned from actual inspection in the warehouse that 500 bales of burlaps were stored therein subject to the order of Lipman & Co. At the date of the loan Lipman & Co. gave the plaintiff to understand that the goods represented by the receipts belonged to them, and nothing was at any time said to indicate that any one else had any claim upon them. The plaintiff had no information as to the financial standing of the borrowers, and the loan was made upon the strength of the facts thus stated. On the 7th of September, 1892, said note was renewed, upon the same security and in reliance on the same facts. Subsequently Lipman & Co. paid $30,000 upon the note then held by the plaintiff, and three of the receipts were thereupon surrendered, so that on the 15th of December, 1892, when Lipman & Co. failed, they still owed the plaintiff $20,000 on said note, to secure which it held the two remaining receipts, for 100 bales each, running to Lipman & Co. and indorsed in blank, and upon the day last named it delivered to the warehouse company said two receipts and received in exchange one receipt for 200 bales made out in its own name. There were just 200 bales then on hand. Upon on the strength of this receipt, and pursuant to the terms of the note, the plaintiff took possession of the 200 bales in question, and sold them on the 28th of January, 1893, for the sum of $22,823.84. Nothing was said to the plaintiff at any time by any person about substituting new bales for those covered by the original receipts, but in fact Lipman & Co. took out old and put in new bales almost daily. Mr. Gutmann, who was well qualified to speak upon the subject from actual observation, testified that all the bales of burlaps were substantially equivalent in value, and there was no evidence to the contrary. The title of the appellants rests upon certain trust receipts, so called, signed by Lipman & Co. through Mr. Gutmann, dated at New York, to the effect that said firm had received from the appellants, respectively, a bill of lading for a certain number of bales, which, as the receipt further stated, ‘we hereby agree to hold as their property and to keep insured against fire, * * * and on sale of said goods, or any portion thereof, we further bind ourselves to remit * * * the proceeds thereof as soon as received; the intention of the undersigned in giving this trust receipt being to protect and preserve unimpaired the title and interest of’ the appellant named ‘in said goods, and to act in the premises entirely as their trustees; it being further understood that on the proceeds of the said goods being handed over to’ such appellant ‘the trust which has been hereby created shall thereupon cease.’ In the case of Cotesworth & Powell there was also evidence showing a large sum due them from Lipman & Co. on a balance of account, and certain correspondence was read showing that Cotesworth & Powell had agreed to lend money to Lipman & Co. on the security of such trust receipts. All this evidence was...