197 F. 252 (3rd Cir. 1912), 17, Century Throwing Co. v. Muller

Docket Nº:17 (1,585).
Citation:197 F. 252
Case Date:June 10, 1912
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 252

197 F. 252 (3rd Cir. 1912)



MULLER et al.

No. 17 (1,585).

United States Court of Appeals, Third Circuit.

June 10, 1912

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John W. Griggs (John W. Harding, of New York City, of counsel), for plaintiff in error.

Rounds, Hatch, Dillingham & Debevoise (Ralph S. Rounds, of New York City, of counsel), for defendants in error.

Argued before GRAY, BUFFINGTON, and McPHERSON, Circuit Judges.

GRAY, Circuit Judge.

The defendants in error, Muller, Schall & Co. (hereinafter called the plaintiffs) brought an action in trover in the court below against the Century Throwing Company, the plaintiff in error (hereinafter called the defendant). At the conclusion of the evidence, and before the case was submitted to the jury, both the plaintiffs and the defendant moved for the direction of a verdict. The learned judge of the court below refused the motion of the defendant and granted that of the plaintiffs, and from the judgment upon the verdict so directed (which was for damages amounting to $3,516.51) this writ of error was sued out by the defendant.

The action was for the recovery of damages for the detention of 888.9 pounds of raw silk, which plaintiffs claim as their property and allege that the defendant had converted. The material facts are as follows:

Vivanti Bros. were purchasers or brokers in the purchase and sale of raw silk, doing business in New York City and Yokohama, Japan. Neuberger-Phillips Silk Company was a New Jersey corporation, manufacturing silk goods in Paterson. The defendant company was engaged in throwing raw silk, and operation which consisted of twisting, spinning and preparing the raw silk for manufacture. This operation was well known in the silk trade, and carried on by various concerns, for manufacturers, at a certain price per pound.

Wishing to purchase raw silk in Japan, the Silk Company arranged with Vivanti Bros., in January, 1910, for the purchase of a quantity of the same at Yokohama, and in February, 1910, the Silk Company were notified by the said silk brokers that the purchase had been made as ordered. Under this arrangement, the shipment was to be made on the basis of a six months' sight draft drawn against the silk, provided

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that payment of the same should be guaranteed by a banker's letter of credit. Such letter of credit, in order to accomplish this importation, was obtained by the Silk Company from the plaintiffs, who were bankers doing business in New York, and was as follows:

'Muller, Schall & Co., Bankers, 44-46 Wall Street.

'No. 6169, for . . . 3,000.

'New York, February 9, 1910.

'Messrs. Vivanti Bros., Yokohama.

'Dear Sirs: We hereby open a credit in your favor for three thousand pounds Sterling for account of the Neuberger, Phillips Silk Co., Paterson, New Jersey, to be used by your Drafts on Direction der Disconto Gesellschaft, London, at 4 or 6 months' sight for Invoice cost of Raw silk to New York. And we agree with yourselves as Drawers and with the Endorsers, and bona fide holders respectively of your drafts, that they will be duly accepted on presentation in London by Direction der Disconto Gesellschaft on receipt of due advice, provided they are drawn as aforesaid and accompanied by one Bill of Lading, insurance certificate and abstract of invoice (Original and Duplicate draft to be accompanied by one Bill of Lading and abstract of Invoice each). The other Bills of Lading are to be sent direct to Messrs. Muller, Schall & Co., New York, one of which with Consular Invoice by the Vessel carrying the goods. The Bills of Lading have to be made out to the order of Muller, Schall & Co. The Marine Insurance on the shipments hereunder is cared for by the shippers. This Credit to be in force in Yokohama till June 1, 1910. Please fill up drafts as follows: 'Against Letter of Credit No. 6169. Dated New York, February 9, 1910.'

'We are, Dear Sirs, Your obedient Servants,

'Muller, Schall & Co.'

Upon obtaining this letter of credit, the Silk Company made the following acknowledgment:

'New York, February 9, 1910.

'Mess. Muller, Schall & Co., New York City.

'Dear Sirs: We beg to acknowledge having received from you Letter of Credit No. 6169, and we hereby confirm to you that the Letter of obligation which we signed for previous Letter of Credit in favor of Messrs. Vivanti Bros., Yokohamma, is also to be considered in force for and to apply to the above mentioned Letter of Credit.

'Yours very truly.

Neuberger-Phillips Silk Co., 'By I. Neuberger, Pst.'

Relying upon the plaintiffs' guaranty, as set forth in this letter of credit, Vivanti Bros., on February 15, 1910, shipped the silk to New York, taking a bill of lading, deliverable to the order of plaintiffs. The duplicate bills of lading, with the consular invoice, were sent direct to the plaintiffs and in due course received by them, as was also the original bill of lading attached to the draft. About March 11, 1910, the goods themselves arrived in New York, and on the same day the plaintiffs indorsed the bill of lading and delivered it to Mr. Neuberger, president of the Silk Company, receiving from him at the same time the so-called trust receipt, signed on behalf of his company. This trust receipt read as follows:

'Received from Messrs. Muller, Schall & Co. the merchandise specified in the Bill of Lading per S.S. 'Inaba Maru' to N.Y. via Seattle.



30 bales raw silk. imported under the terms of their Letter of

Credit No. 6169 issued for our account, together with Consular Invoice, Invoice and Insurance Policy; and

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in consideration thereof, we agree to hold the said merchandise, on storage, as the property of Messrs. Muller, Schall & Company, and subject to their order, with liberty to sell the same for cash, and in case of sale to pay over to them the proceeds as soon as received, to be held and applied by them against the acceptances of Direction der Disconto Gesellschaft, London, on our account under the terms of the said Letter of Credit and to the payment of any other liability or indebtedness of ours to Messrs. Muller, Schall & Company or to Direction der Disconto Gesellschaft, London, the intention being to protect and preserve unimpaired the title of the said Muller, Schall & Company to the said merchandise and the proceeds thereof. It is further agreed that the undersigned shall keep said merchandise insured against fire at its full value, loss, if any, payable to Messrs. Muller, Schall & Company, and that said Muller, Schall & Company shall not be chargeable with any storage, insurance premiums or other expenses incurred thereon, and that nothing in this Receipt contained shall impair or alter any of the provisions or obligations of the said Letter of Credit or of our agreement accepting the same.

'New York, 3/11/10.

'Neuberger-Phillips Co., by J Neuberger, Pst.'

The draft drawn on the London bankers for the purchase price, with bill of lading attached, payable six months after sight, was presented and accepted in London on March 8, 1910, in accordance with the stipulations of the letter of credit, thus becoming payable in London September 8, 1910. On March 17, 1910, the plaintiffs made the following written statement to the Silk Company:

'Muller, Schall & Co., 44-46 Wall Street.

'To the Neuberger-Phillips Silk Co., New York City.

'New York, March 17, 1910.

'Dear Sir: We have received from Direction der Disconto Gesellschaft, the following advice of maturities for your account. ------------------------------------------------------------------------------ Under L/c Amount Due in Due in N.Y. Valued Against ------------------------------------------------------------------------------ No. London 6169 6m/s 3,137.11/ -Sept. 8, '10 Aug. 27, '10 30 bales raw silk per S. S. 'Inaba Maru' 'Yours truly, Muller, Schall & Co.'

When the plaintiffs handed over to the Silk Company the possession of the silk, by indorsing and delivering the bill of lading, there is no direct evidence that it was for the purpose of passing title to the Silk Company, or waiving or abandoning any of their rights of property, as security for the liability incurred by reason of their acceptances of the purchase money drafts, which were to be cared for at maturity by the Silk Company. On the contrary, that there was no such purpose may legitimately be inferred from the facts as testified to and from the stipulations of the letter of credit, apart from the trust receipt. The trust receipt, however, given by the Silk Company expressly negatives such purpose, by setting forth the nature and character of the transaction under which the silk was delivered by the plaintiffs to the Silk Company, and closing with the stipulation 'that nothing in this receipt contained shall impair or alter any of the provisions or obligations of the said letter of credit or of our agreement accepting the same.'

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Shortly after receiving the bill of lading from the plaintiffs, which was necessary in order to enable it to receive possession of the goods from the carrier, the Silk Company handed over a portion of the importation of 30 bales to the defendants, as throwsters, to be thrown...

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