Bank v. J. K. Armsby Co

• Decision Date: 13 May 1904
• Citation: 47 S.E. 589,120 Ga. 74
• Court: Georgia Supreme Court
• Parties: COMMERCIAL BANK . v. J. K. ARMSBY CO.

47 S.E. 589

120 Ga. 74

COMMERCIAL BANK .

v.J. K. ARMSBY CO.

Supreme Court of Georgia.

May 13, 1904.

BROKERS — CONVERSION OF PROPERTY — BONA FIDE PURCHASERS.

1. Where a merchant ships goods to his broker without conveying title to him, but purely for the purpose of distribution to others, and sends to the broker a bill of lading indorsed in blank for the goods, the possession of which, by the general custom of trade, is regarded as evidence of the right to dispose of the property for which it is issued, he cannot; in an action of trover, recover the goods from a bank which has, in good faith, and without notice of the owner's title, taken the bill of lading as security for a loan of money to the broker on his individual account, and converted the property upon default in the payment of its debt.

(Syllabus by the Court.)

Error from City Court of Richmond County; W. P. Eve, Judge.

Action by the J. K. Armsby Company against the Commercial Bank. Judgment for plaintiff, and defendant brings error. Reversed.

Wm. H. Fleming, for plaintiff In error.

Jos. B. & Bryan Cumming, for defendant in error.

CANDLER, J. The J. K. Armsby Company, an Illinois corporation, shipped to Walton & Carr, their brokers in Augusta, a quantity of salmon for distribution to different parties to whom the goods had been sold. Walton & Carr were merely agents of the Armsby Company, and had no right or title to the salmon. The goods were shipped from a point in Oregon, by parties from whom they had been ordered by the Armsby Company, on a through bill of lading to Augusta, and were consigned to the order of the consignor, with directions to notify Walton & Carr. The Armsby Company sent Walton & Carr a check for the amount of the freight, which was paid, and it also mailed them the original bill of lading, which was indorsed blank. Carr, a member of the firm of Walton & Carr, took the bill of lading to the Commercial Bank of Augusta, and hypothecated it for a loan of money. Shortly thereafter Walton & Carr failed, and the bank converted the salmon for the payment of its debt, whereupon the Armsby Company brought against it the present suit, which was an action of trover. The case was tried before the judge of the city court of Richmond county, without a jury. The bank showed that it was the general custom of trade in Augusta that bills of lading "to order notify" were attached to drafts for the purchase price of the goods represented by them, that possession of the bill of lading could only be obtained by payment of the draft, that possession of such a bill of lading was considered prima facie evidence of ownership of the property for which It was issued, and that they were treated by banks as negotiable paper. It was also shown that the J. K. Armsby Company had done business in Augusta for a number of years, and that, while Walton & Carr were merchandise brokers, they also bought and sold goods on their own account. It was admitted that neither the bank nor any of its officials knew or had reason to suspect that Carr had no right to convey the salmon, and that, in the event the bank should be held liable, the proper amount to be recovered was §700. The judge found in favor of the plaintiff, and rendered judgment in its favor for the amount mentioned. The defendant excepted.

"Where an owner has given to another such evidence of the right of selling his goods, as, according to the custom of trade or the common understanding of the world, usually accompanies the authority of disposal, or has given the external indicia of the right of disposing of his property, a sale to an innocent purchaser divests the true owner's title." Civ. Code, § 3539. The sole question for our determination, then, is, does a bill of lading of the character of the one involved in this suit constitute such an external indicium of the right of disposing of the property for which it was issued as to bring the case within the operation of the rule laid down in the Code section cited? As a general rule, the transferee of a bill of lading can obtain no better title to the goods which it covers than that which was in the person by whom it was transferred. Indeed, it is a self-evident proposition that no man can convey that which he does not possess. But the true owner of property may, by placing it in the power of another to defraud innocent purchasers by an apparently valid transfer of the property, cut himself off from claiming It, and thereby divest the title from himself. In 4 Am. & Eng. Enc. L. (2d Ed.) 551, it is said that...