Fourth Nat'l Bank v. St. Louis Cotton Compress Co.

• Decision Date: 10 January 1882
• Citation: 11 Mo.App. 333
• Parties: FOURTH NATIONAL BANK, Respondent, v. ST. LOUIS COTTON COMPRESS COMPANY ET AL., Appellants.
• Court: Missouri Court of Appeals

11 Mo.App. 333

FOURTH NATIONAL BANK, Respondent,

v.ST. LOUIS COTTON COMPRESS COMPANY ET AL., Appellants.

St. Louis Court of Appeals, Missouri.

Jan. 10, 1882.

1. Warehouse-receipts made payable to bearer, not transferred by indorsement are not negotiable.

2. “Cotton-notes” are warehouse-receipts, and the transfer of a cotton-no

without indorsement, conveys no greater rights than a transfer of the cotton would have given.

3. A transfer of a cotton-note is effectual to pass title to the cotton represented by it.

4. An innocent pledgee of a cotton-note takes a title superior to the lien of a vendor who permits the note to pass into the hands of the vendee in such a way as to enable him to pledge it.

APPEAL from the St. Louis Circuit Court, ADAMS, J.

Affirmed.

SILAS B. JONES, for the appellants: So long as the seller may insist on payment concurrently with delivery he has his lien; and this he may always do unless he has agreed to the contrary. The seller retains his lien until he ““““utterly relinquishes his possession.”--Story on Sales (4th ed.), sect. 283. Marking, boxing, or setting the goods aside does not destroy his lien.-- Id., sect. 287; Benj. on Sales (2d Am. ed.), sect. 807. So, if possession is only surrendered for a special purpose, even to the buyer himself, the lien is not gone.--Story on Sales, sect. 292; Benj. on Sales, sect. 807. Before the seller's lien is gone, he must have intentionally parted with his possession. It is a question of the intention and prupose of the seller, and until he has intentionally abandoned his possession for the purpose of giving the buyer possession as buyer, the lien exists.--Story on Sales, sect. 292. The seller's possession and lien cannot be divested by the wrongful act of the buyer.-- Parks v. Hall, 2 Pick. 206, 214. The following authorities state and illustrate the doctrine.--Benj. on Sales (2d Am. ed.), sect. 796 et seq.; Story on Sales (4th ed.), sect. 281 et seq.; South Co. v. Stanard, 44 Mo. 71; South Co. v. Plant, 45 Mo. 517; Arnold v. Delano, 4 Cush. 33; Cornwall v. Haight, 8 Barb. 327; Clark v. Draper, 19 N. H. 419; Bowen v. Burk, 13 Pa. St. 146; Bloxam v. Sanders, 3 Barn. & Cress. 941, 948. The mere entrusting of possession of a chattel without more to a bailee does not give him the power to divest the owner of his property.-- Marine Bank v. Fiske, 71 N. Y. 353; Fawcett v. Osborne, 32 Ill. 411; Dean v. Yates, 22 Ohio St. 388; Heacock v. Walker, 1 Tyler, 338; Covill v. Hill, 4 Denio, 323; Nixon v. Brown, 57 N. H. 34; Folson v. Batchelder, 22 N. H. 47; Saltus v. Everitt, 20 Wend. 267; McNeil v. National Bank, 46 N. Y. 325; Moore v. Metropolitan Bank, 55 N. Y. 41. Nor does the mere entrusting of possession of a bill of lading, though indorsed in blank, or warehousereceipt or delivery order, give the person so entrusted the power to divest the owner of his property.--1 Smith's Ld. Cas. (pt. 2), 1195 (ed. of 1872); Gurney v. Behrend, 3 El. & Bl. 622, 634; Dows v. Perrin, 16 N. Y. 325, 333; Bank v. Railroad Co., 13 N. Y. 598, 628; Decan v. Shipper, 35 Pa. St. 239; Barnard v. Campbell, 55 N. Y. 456; Stollenwerck v. Thacher, 115 Mass. 224; Kingsford v. Merry, 1 Hurl. & N. 503.

FINKELNBURG & RASSIEUR, for the respondent: The possessory right or right of lien which Senter & Co. still retained in the cotton, was represented by the warehousereceipts called cotton-notes. These cotton-notes, according to the evidence of uniform custom in St. Louis, are symbolical of the property itself, and delivery of possession is uniformly effected by surrender of these notes. They would have this effect under the common law in this country, independent of special proof. Warehouse-receipts, though not negotiable in the strict sense, have long been recognized as sufficient to effect delivery of the property they represent.-- Gibson v. Stevens, 8 How. 384; Adams v. Folly, 4 Iowa, 44; Gibson v. Bank, 11 Ohio St. 311. The alleged private arrangement between Senter & Co. and Moss & Co., with its ingenious and complicated scheme of checks and balances, could not affect the Fourth National Bank, which stood in the position of an innocent third party dealing with this property in the ordinary course of business.-- International Bank v. German Bank, 71 Mo. 183, 197; Brundage v. Camp, 21 Ill. 331; McNeil v. TenthNational Bank, 46 N. Y. 329; Day v. Swift, 48 Me. 368; Way v. Davidson, 12 Gray, 466. There is a well-settled distinction between the cases where possession of goods is acquired by felony or by fraud. Under the former no rights can pass even to a bona fide purchaser; but when the possession has been obtained by fraud under color of a contract, a bona fide purchaser from the fraudulent vendee obtains title.-- Arendale v. Morgan, 5 Sneed, 703, 712; Rowley v. Bigelow, 12 Pick. 307, 312; Dittson v. Randall, 33 Me. 202; Hoffman v. Noble, 6 Metc. 68, 73. The lien of a pledgee and of a vendor are practically identical, so far as the foregoing points are concerned. The lien of a pledgee may be lost against third parties, though good as against the pledgeor.-- Bodenhammer v. Newsom, 5 Jones L. 107; Way v. Davidson, 12 Gray, 466; Day v. Swift, 48 Me. 368.

BAKEWELL, J., delivered the opinion of the court.

This is an action of replevin to recover possession of thirty-nine bales of cotton. Plaintiff, on making demand of the compress company, was informed by it that the cotton had been already taken from its possession by defendants Senter & Co., under a writ of replevin, and that the company held the cotton for that firm. On the institution of this suit, Senter & Co. gave bond, and retained the cotton. There was a verdict and judgment for plaintiff.

Plaintiff is a corporation doing a general banking business in the city of St. Louis. The defendant corporation conducts a public warehouse in the same city, for storing and compressing cotton. For the cotton received by it on storage, it issues a receipt, commonly called a cotton-note; one of these notes being issued for each bale. These notes, by the custom of the trade in St. Louis, pass from hand to hand, instead of the cotton itself. The custom, in case of sale or pledge, is to deliver the cotton-notes, and to suffer the cotton to remain in the warehouse until it is needed for shipment. Each bale is numbered, and there is a corresponding number on the cotton-note. Defendants Senter & Co. are cotton factors in St. Louis. Their business, as such, is to sell to the cotton buyers, who assort and grade the cotton, and sell it to the Eastern consumers. The cotton-notes are delivered together with samples of the cotton, by the compress company to the cotton factor. The cotton factor sells by these samples. When a sale is made by the factor, he sends an order to the compress company to turn the cotton out in the warehouse for inspection. The buyer and the employees of the factor then report to their principals what cotton comes up to the sample; such cotton only as does so, is accepted. The buyer then calls upon the factor for the cotton-notes. On surrender of these notes to the compress company, the cotton represented by them is delivered by the company to the buyer, or to the transportation company indicated by him. Nothing but the cotton-notes entitles the buyer to take the cotton. If the buyer delays examining the cotton and taking the cotton-notes, he pays the storage after the lapse of five days. After inspection by the buyer, the bales are weighed and marked by the buyer's marks; and then, if he does not remove them for shipment, they are re-stored in his name.

One J. H. Moss was a cotton buyer in St. Louis, who, before April, 1878, had bought cotton largely from Senter & Co., and from others. In April, 1878, Moss failed and left the state. About six months after his failure, Moss returned to St. Louis. Senter & Co. were heavy losers by the failure of Moss. His credit was gone, and he could no longer get cotton without paying for it. Moss, however, hit upon a plan by which he hoped still to get cotton and to transact business without capital. In order to do this it was necessary to adopt some plan by which the factor would be induced to believe that he was not giving credit to Moss, or looking to his personal responsibility, and that Moss got none of his cotton until he paid for it. The plan would have been safe enough, if Moss could have been relied upon to carry it out in good faith on his part. Moss, however, acted in bad faith in the matter, and his misconduct led to the present litigation.

The plan suggested by Moss, and accepted by Senter & Co., was this. After the sale, inspection, weighing, and marking of the cotton, Senter & Co. retained possession of the cotton-notes representing the bales then sold, without which Moss could not get them out of the warehouse. When Moss was ready to ship a parcel of cotton, he sent to Senter & Co. a written order for the bales, described by marks and numbers, directing that they should be delivered to one Mears, agent of the North Atlantic Freight Line, by which Moss shipped his cotton. When the cotton-notes were delivered to Mears, he gave to Senter & Co. a receipt of which the following is a specimen: “No. 729. Office North Atlantic Fast Freight Line, Wm. H. Mears, Agent, 312 Chestnut Street, St. Louis, April 26, 1880. Received of Senter & Co. 157 cotton-notes representing 157 bales of cotton; for which bales of cotton, bills of lading will be issued on return of this receipt. Wm. H. Mears, Agent.” These receipts were a printed form, the freight line doing business in like manner with other factors. It was agreed between Moss and Mears, that Mears would get the bales out of the warehouse, and take the trouble of arranging them for shipment. Mears did this in order to get the transportation for his line. Mears was not to deliver the bills of lading to Moss until Moss redelivered the transportation-receipts to Mears, which receipts Moss could not get from Senter & Co. until he had paid for the cotton...