"This action was brought by the First National Bank of Cuero against the San Antonio & Aransas Pass Railway Company for the conversion of 222 bales of cotton. The appellant alleged that it held the bills of lading for the cotton, and that the appellee had refused upon demand to deliver the same. It sought to recover the value of the cotton as the owner thereof upon the liability of the appellee in the alternative as common carrier and as warehouseman. It also alleged that, if it were not the absolute owner of the cotton, nevertheless said bills of lading were pledged to it to secure an indebtedness of $6,241.86 owed to it by the firm of Koenig & Van Hoogenhuyze. Appellee made the members of the firm of Koenig & Van Hoogenhuyze and the Cuero Cotton Compress Company parties defendant, and prayed judgment over against each of them. There was a trial by jury. After the evidence was all in, the appellee took a nonsuit as to the Cuero Cotton Compress Company. The case was then submitted to the jury, and resulted in a verdict and judgment in favor of the appellee.
"At the beginning of the cotton season of the year 1899 the appellant bank and the firm of Koenig & Van Hoogenhuyze entered into an arrangement by which the appellant agreed to advance Koenig & Van Hoogenhuyze money for the purpose of buying cotton, both locally at Cuero and also at different points on the San Antonio & Aransas Pass Railway west of Cuero. As security for the money to be advanced by the appellant, Koenig & Van Hoogenhuyze deposited with them as a margin six shares of the stock of the Cuero Compress Company, and agreed that the appellant should have a lien on the local cotton purchased by them, and that they would turn into the bank the bills of lading for the cotton shipped in by railroad. The stock was deposited as agreed, and the course of dealing in carrying out the agreement for the advancement of the money by the bank to pay for the cotton purchased by Koenig & Van Hoogenhuyze was that the cotton bought in Cuero was paid for by the bank upon checks drawn against it by Koenig & Van Hoogenhuyze, and was sold by them, and the proceeds paid were deposited by them to their account with the bank. And cotton bought by Koenig & Van Hoogenhuyze at points on the railroad was shipped to Cuero on bills of lading to order of the sellers, with directions to notify the buyers, and the bills of lading were attached to drafts of the sellers on Koenig & Van Hoogenhuyze for the price of the cotton, and the drafts with the bills of lading attached were sent to the bank at Cuero for collection. On presentation of the drafts and bills of lading to Koenig & Van Hoogenhuyze they paid them with their checks on the appellant bank, which were accepted as cash by the collecting banks, and the drafts and bills of lading were delivered to them. The checks of Koenig & Van Hoogenhuyze were charged by the appellant to their account, and they turned in the bills of lading to the bank. The checks were paid on presentation, without waiting for the delivery of the bills of lading, which were afterwards either turned in by Koenig & Van Hoogenhuyze themselves, or sent for to them by the bank. The cotton represented by the bills of lading was sold by Koenig & Van Hoogenhuyze without consultation with the officers of the bank, and whenever a sale was effected Koenig & Van Hoogenhuyze would send to the bank for the bills of lading for the cotton sold, and the bank would deliver them to Koenig & Van Hoogenhuyze. The bank did not require the proceeds of a sale to be deposited before giving up the bills of lading, but trusted Koenig & Van Hoogenhuyze to turn them in, which they usually did. The officers of the bank kept themselves informed as to the condition of the account by noting the daily balances and the number of bales of cotton shown to be on hand by the bills of lading in its possession and the amount of local cotton that appeared to be on hand, which would be ascertained by a casual inspection in riding by the back yard of Koenig & Van Hoogenhuyze's place of business, where it was usually stored. Koenig & Van Hoogenhuyze were also engaged in business as general merchants, and made deposits of money and did their banking business with appellant bank. Their merchandise and cotton accounts were kept separately, but in some instances credits were transferred from the cotton to the merchandise account; the state of the account and the amount of security on hand appearing to the officers of the bank sufficient to authorize the transfer. The account for a balance due upon which this suit is brought began September 1, 1899, but by a deposit on September 2d this balance was reduced to $550.55. Up to September 27th, when they became bankrupt, and the account was closed, the total amount loaned Koenig & Van Hoogenhuyze by the bank, including interest on overdrafts, etc., was $87,934.05. They had paid to the bank an amount sufficient to reduce the balance to $6,241.05, which should be credited with the
proceeds of the compress stock December 22, 1900, $384. The several bills of lading, seven in number, upon which suit is based, were issued by the railroad company for several lots of cotton, amounting in all to 222 bales, sold to Koenig & Van Hoogenhuyze by parties at Karnes City and Runge stations on the San Antonio & Aransas Pass Railway. They were issued to the sellers of the cotton as the shippers thereof. The cotton was to be carried to Cuero, and was consigned to shipper's order, notify Koenig & Van Hoogenhuyze, Cuero, Tex., and the bills had noted thereon a memorandum, `Compress in Cuero.' The sellers of the cotton drew drafts on Koenig & Van Hoogenhuyze for the price of the cotton, and attached to them the bills of lading indorsed in blank, and sent them to banks in Cuero other than appellant bank for collection. The several drafts, with the bills of lading attached, were presented to Koenig & Van Hoogenhuyze for payment, and were paid by their checks on the appellant bank, which were cashed on presentation, and charged to the account of the drawers. The bills of lading and the receipted drafts of the sellers of the cotton on Koenig & Van Hoogenhuyze were delivered to the latter by the collecting bank upon the receipt of their checks on the appellant. The bills of lading were not attached to the checks of Koenig & Van Hoogenhuyze on the bank, but they were afterwards delivered to it, and were in its possession when Koenig & Van Hoogenhuyze failed, and were produced by it at the trial below. The original receipted drafts remained in the hands of Koenig & Van Hoogenhuyze, and never went into the possession of the bank. The purchases of the cotton were made September 19th and 20th, and the cotton was...
