Lewis v. James McMahon & Company, a Corp.

• Decision Date: 09 April 1925
• Docket Number: 24706
• Parties: F. J. LEWIS and WM. H. LEWIS, Partners, Doing Business as F. J. LEWIS PETROLEUM COMPANY, Appellants, v. JAMES McMAHON & COMPANY, A Corporation, and FIDELITY NATIONAL BANK & TRUST COMPANY OF KANSAS CITY (Formerly FIDELITY TRUST COMPANY)
• Court: Missouri Supreme Court

271 S.W. 779

307 Mo. 552

F. J. LEWIS and WM. H. LEWIS, Partners, Doing Business as F. J. LEWIS PETROLEUM COMPANY, Appellants, v. JAMES McMAHON & COMPANY, A Corporation, and FIDELITY NATIONAL BANK & TRUST COMPANY OF KANSAS CITY (Formerly FIDELITY TRUST COMPANY)

No. 24706

Supreme Court of Missouri

April 9, 1925

Appeal from Jackson Circuit Court; Hon. O. A. Lucas, Judge.

Reversed and remanded (with directions).

Edwards Kramer & Edwards and G. C. Weatherby for appellants; Thos. Hackney of counsel.

(1) The sale from plaintiffs to McMahon & Company was a cash sale. The check was given and accepted as conditional payment. There is nothing in the evidence justifying the contention that the sale by plaintiffs was not a cash sale. The worthless check was given at the time the bills of lading were delivered, and there is nothing in the evidence from which it could be inferred that the sale was on credit. (2) Delivery of the bills of lading was conditional upon payment of the check, and the check being dishonored the delivery was not absolute and the title to the oil and bills of lading was never vested in McMahon & Company, and plaintiffs, on dishonor of the check, could reclaim the property. Johnson-Brinkman Co. v. Central Bank, 116 Mo. 558; Strauss Pritz & Co. v. Hirsch & Co., 63 Mo.App. 95; Wright v. Miss. Valley Trust Co., 144 Mo.App. 640; Strother v. McMullen Lbr. Co., 200 Mo. 647; Ballard v. First Natl. Bank, 195 S.W. 559; Hall v. Railroad, 50 Mo.App. 177. (3) Delay in presenting the check was not a waiver of payment in cash for the oil, and the court erred in its conclusion of law that plaintiffs had waived payment in cash. (4) Plaintiffs had the same title to the substituted bills of lading which they had to the original bills. The original bills of lading were regarded as so much oil, being the symbols of the ownership of the same and likewise the substituted bills of lading took the place of the originals and represented and were symbolic of the ownership of the same commodity. Friedlander v. Railroad Co., 130 U.S. 416. (5) The bank was not a purchaser for value of the bills of lading. Section 37, Federal Bills of Lading Act, 39 Statutes-at-Large, p. 544; Sec. 8604-s, U.S Compiled Statutes, 1916; Thompson v. Sioux Falls Natl. Bank, 150 U.S. 231; Southern Trust Co. v. Vaughn, 277 F. 145; 1 Daniel Negotiable Inst. (4 Ed.) sec. 779-b; Randolph Commercial Paper, sec. 994; 6 Am. Law. Rep. 253-255; 2 Morse on Banks & Banking, sec. 603; Merchants Natl. Bank v. Marden Co., 234 Mass. 161; Natl. Bank of Commerce v. Armbruster, 42 Okla. 656. (6) The bank had no lien on McMahon & Company's deposit, and therefore had no right to take of the proceeds of the drafts and apply $ 7500 thereof to the payment of the unmatured note. Homer v. Bank of Commerce, 140 Mo. 225, 239; Zelle v. German Savings Inst., 4 Mo.App. 401; Corn Exchange Natl. Bank v. Locher, 151 F. 764; Columbia Natl. Bank v. German Natl. Bank, 56 Neb. 803; East River Bank v. Hoyt, 32 N.Y. 119, 39 Cyc. 959. The only semblance of a lien the bank had was on the proceeds of the $ 10,000 loan. This it released ratably as it paid the $ 5000 and the $ 2500 checks and foreclosed as to remaining $ 2500 applied on note. (7) McMahon's telegram to the bank on March 21st did not create any lien or equity in favor of the bank on the oil or bills of lading in controversy. McMahon could create no trust, nor attach any legal or equitable right or claim to property which he did not then own, might never own, and which he did not even describe in his telegram. 9 Am. & Eng. Ency. Law (2 Ed.) 4; Porter v. Woods, 138 Mo. 539, 552. The telegram had no effect to create a lien, or equity, in favor of the bank on any fund arising from future purchases of oil by McMahon. Kansas City ex rel. Barrett Co. v. Spitcaufsky, 239 S.W. 812; Corn Exchange Natl. Bank v. Locher, 151 F. 766. (8) The bank's agreement to finance McMahon was terminated by the bank on account of McMahon's breaches of the agreement in issuing the two checks. (9) The court erred in holding that the bank was a purchaser in good faith. Johnson-Brinkman Co. v. Central Bank, 116 Mo. 573. (10) The bank, pending the suit, having disposed of the property sought to be replevined, the case was then resolved into an action for damages to the same effect as though the action had been brought originally in conversion. Sec. 2085, R. S. 1919; Dillard v. McClure, 64 Mo.App. 492.

Bowersock & Fizzell for respondent.

(1) The finding of facts is conclusive if supported by any evidence. Minor v. Burton, 228 Mo. 558; Nickey v. Leader, 235 Mo. 30. (2) The conclusions of law are correct. (a) The sale was not for cash. (b) If it was for cash, payment was waived. Smelting Co. v. Lead Works, 102 Mo.App. 158. (c) Appellants are estopped to claim a cash sale. Commercial National Bank v. Bank & Trust Co., 239 U.S. 520; Dymock v. Ry. Co., 54 Mo.App. 400; Smelting Co. v. Lead Works, 102 Mo.App. 158; Third National Bank v. Smith, 107 Mo.App. 178; Midland National Bank v. Mo. Pac. Ry. Co., 132 Mo. 492; Pollard v. Reardon, 65 F. 852; Munroe v. Philadelphia Warehouse Co., 75 F. 545; Commercial Bank v. Armsby Co., 120 Ga. 74. (d) The bills of lading are negotiable. Sec. 458, Compiled Laws of Oklahoma 1909; Hutchings v. Ry. Co., 84 Kan. 479; Roland M. Baker Co. v. Brown, 214 Mass. 196; Secs. 13527, 13550-1, 13553, 13554, 13560, R. S. 1919; U.S. Comp. Sts. 1916, secs. 8604 (b), (n), (nn), (oo), (p), (s). (e) The bank is a purchaser. Benton v. German American Bank, 122 Mo. 332; Hendley v. Globe Refining Co., 106 Mo.App. 20; Ayres v. Bank, 79 Mo. 421; Southern Land Co. v. People's Savings Bank, 101 Ark. 266. (f) The bank gave value. Pollard v. Reardon, 65 F. 848; R. S. 1919, secs. 812, 13575; Sec. 4460, Comp. Laws Oklahoma 1909; 8 U.S. Comp. St. 1916, secs. 8604 (aaa), 8604 (w); Re United States Hair Co., 239 F. 703.

OPINION

Railey, C.

This is an action in replevin, tried by the Circuit Court of Jackson County, Missouri, without a jury, on a third amended petition, in which appellants sought to recover twenty-five separate shipper's order bills of lading, representing twenty-five separate tank cars of fuel oil, shipped in interstate commerce from Coffey-ville, Kansas, to Findlay, Ohio. It is alleged in the above petition, and admitted in the answer of the defendant bank, that plaintiffs were and are a copartnership, doing business under the firm name and style of F. J. Lewis Petroleum Company, with their chief office in the city of Chicago and State of Illinois; that defendant James McMahon & Company is a corporation, organized under the law, with its chief place of business in the city of Tulsa and State of Oklahoma; that defendant Fidelity National Bank & Trust Company of Kansas City, formerly Fidelity Trust Company, is a corporation organized according to law and doing business as a banking and trust corporation, with its chief office and place of business in Kansas City, Jackson County, Missouri.

The bills of lading were duly indorsed by the shipper, the Kansas Oil & Refining Company, and, together with invoices for each of said cars, were sold to the plaintiffs at Tulsa, Oklahoma. After this purchase by the plaintiffs, on March 28, 1918, they sold to defendant, James McMahon & Company, at an agreed price, aggregating for the twenty-five cars of oil, $ 11,189.47, for which McMahon & Company gave to plaintiffs their check drawn on the respondent Fidelity National Bank & Trust Company of Kansas City, Missouri, then the Fidelity Trust Company of said city. The bills of lading with a separate invoice for each car, were delivered by plaintiff's to McMahon & Company contemporaneously with the giving of said check.

On delivery of the twenty-five bills of lading, McMahon & Company surrendered them to the issuing carrier, and took out interstate shipper's order bills of lading for the twenty-five cars, reconsigning them to Cleveland, Ohio. The new or substitute bills of lading disclosed that they had been issued in exchange for the prior bills of lading.

The above check given plaintiffs by McMahon & Company, was deposited for collection in the bank of Tulsa, Oklahoma, and was forwarded through the mails to defendant bank for payment. On receipt of the check the defendant bank refused to pay it, and thereupon it was protested. The bills of lading had in the meantime been placed by McMahon & Company in the hands of defendant bank and, on the refusal of the latter to pay the check, the plaintiffs demanded from said bank and McMahon & Company the bills of lading aforesaid, which they refused to deliver to plaintiffs and, hence, the institution of this suit followed.

After the commencement of the suit, and before the writ of replevin was served, the bank sold the twenty-five cars of oil at Kansas City, Missouri, and delivered to the purchaser the bills of lading therefor, sought to be recovered by plaintiffs, and this case thereupon proceeded as an action for damages, for the conversion of the oil represented by the bills of lading.

The bank, in its answer, claimed to be an innocent purchaser, for value, of the bills of lading in question, and that by reason thereof it was entitled to their possession as against the plaintiffs. The answer also alleged that the sale by plaintiffs to McMahon & Company was not a cash sale, and that the title to said oil passed to McMahon & Company on delivery of the bills of lading to them; and that plaintiffs waived their right to immediate cash payment. It likewise charges that plaintiffs were guilty of laches, and were estopped from claiming the bills of lading in the hands of the bank.

Plaintiffs' reply consisted of specific denials of the new matter pleaded in said answer.

At the conclusion of the evidence, both sides asked for specific findings...