Merchants' Exchange Bank v. McGraw

• Decision Date: 19 October 1896
• Docket Number: 294.
• Citation: 76 F. 930
• Parties: MERCHANTS' EXCH. BANK OF MILWAUKEE, WIS., v. McGRAW, Sheriff.
• Court: U.S. Court of Appeals — Ninth Circuit

76 F. 930

MERCHANTS' EXCH. BANK OF MILWAUKEE, WIS., v. McGRAW, Sheriff.

No. 294.

United States Court of Appeals, Ninth Circuit.

October 19, 1896

This action was brought by the plaintiff in error, a banking corporation of Milwaukee, Wis., against the defendant in error, sheriff of King county, Wash., to recover damages for the alleged wrongful conversion of 100 bales of hops. The plaintiff, in its amended complaint, alleged general ownership and right of possession in the hops, December 15 1890, and down to January 27, 1891; that the defendant, at Seattle, in King county, Wash., unlawfully took possession of the hops December 15, 1890, and continued his possession until January 29, 1891, when he unlawfully converted and disposed of the same, to the plaintiff's damage. The defendant, in his answer, denied plaintiff's ownership and right of possession, and affirmatively alleged that on December 8, 1890, the hops were owned by and were in the possession of A. F. Luening & Co., at Seattle, King county Wash.; that in an action brought against Luening & Co. by G F. Livesley & Co., in the superior court of King county, the defendant, as sheriff, duly attached the hops as the property of Luening & Co.; that afterwards, on June 29, 1891, he duly sold the same under and by virtue of an execution issued upon the judgment rendered in that action. The plaintiff filed an amended reply, denying that Luening & Co. ever were the owners of the hops, or had any property in them, and affirmatively alleged that the defendant should not be permitted to plead title in Luening & Co., or the levy of attachment or execution upon the hops in the action of Livesley & Co., because the plaintiff had, on December 8 1890, purchased 69 bales of the hops of Livesley & Co.; that on that day Livesley & Co., at Seattle, sold and delivered such hops to the plaintiff; that in the same way one Catlin had, at the same time and place, sold and delivered to plaintiff the remainder of the 100 bales of hops; that at that time Livesley & Co. and said Catlin knew that plaintiff had advanced the money for Luening & Co.; that Livesley & Co. concealed from plaintiff the fact of their having any demand against Luening & Co.; that their course was fraudulent against plaintiff; that the hops were purchased at Seattle for the benefit of Luening & Co., but that the purchase was made by the plaintiff; that plaintiff at the time paid the purchase price to the vendors, and that it then and there received the title and possession of the hops from them. Upon the first trial the court granted a nonsuit at the close of plaintiff's testimony. The case was then presented to this court upon writ of error, and the judgment of the circuit court was reversed. Bank v. McGraw, 8 C.C.A. 420, 59 F. 972. On the third trial the jury found a verdict in favor of the defendant. The present record discloses substantially the same facts as set forth in the former opinion, except that it did not then 'appear from the testimony whether the levy was made before or after the negotiation of the draft at the Seattle bank.'

The facts upon the last trial are as follows: About December 2 1890, August F. Luening, of Milwaukee, a sole trader, as A. F. Luening & Co., in the business of buying and selling hops, ordered and contracted for 100 bales of choice hops from Kuehn, Metzler & Co., who were brokers and dealers on commission in hops at Seattle. The price of said hops was 32 cents per pound at Seattle, and the understanding was that they were to be paid for in cash at Seattle before shipment from Seattle to Milwaukee. Luening had no money to pay for the hops at that time, and applied to plaintiff, of which he was a regular customer, to grant him a credit or guaranty a draft to be drawn by Kuehn, metzler & Co. on him for the amount of his purchase, in order that the draft might be cashed at Seattle. Luening was then largely overdrawn in his account as a depositor of the plaintiff, and for that reason his credit with plaintiff was not good for such a guaranty without security; but, upon his stating that the bank should have the security of the hops and bill of lading, it was then agreed between the plaintiff and Luening that such guaranty would be made for his by the bank on the security of the hops, and that the bank should have the hops, the bill of lading, and the invoice bill of the hops as its security. The plaintiff then telegraphed to the First National Bank of Seattle as follows: 'Draft Kuehn, Metzler & Co. on A. F. Luening & Co. for one hundred bales hops at 32 cents per pound B.L. and value bill attached will be paid. Mer. Ex. Bk.' The First National Bank had previously refused to cash such draft on the security of the hops as an independent banking transaction, and in its subsequent conduct relied on this guaranty. The guaranty was communicated to Kuehn, Metzler & Co., who thereupon contracted with George F. Livesley & Co., a firm of hop dealers at Seattle, for the purchase of 69 bales of hops, and with Jerome Catlin, another hop dealer at Seattle, for the purchase of 31 bales,-- each lot at 31 1/2 cents per pound. Kuehn, Metzler & Co. did not disclose to either of said dealers their principal's name, but did inform George F. Livesley & Co. that their purchase was on account of an order; and they were known by each of said dealers to be engaged in the hop business as commission men. No specific terms as to time of payment were agreed on with said dealers, but there seems to have been a tacit understanding that it was a cash transaction, such as is usual between brokers of agricultural products. On December 6 or 8, 1890, said 69 bales were delivered by said George F. Livesley & Co. to Kuehn, Metzler & Co., and accepted by them. About the same time the 31 bales were delivered by Catlin, and accepted. Each lot was marked by Kuehn, Metzler & Co. with a distinguishing mark, and the whole were billed at the freight warehouse at Seattle, on the morning of December 8th, over the Northern Pacific Railroad to A. F. Luening & Co., at Milwaukee. The railroad company issued and delivered to Kuehn, Metzler & Co. a railroad bill of lading, in the usual form, on a printed blank, for 100 bales of hops, describing their marks and approximate weight, and naming Kuehn, Metzler & Co. as consignors, and A. F. Luening & Co., Milwaukee, Wis., as consignees, and stipulating for carriage and delivery to consignee or order. Shortly before or after the bill of lading was issued, Livesley & Co. ascertained, either from Kuehn, Metzler & Co. or by inquiry at the freight office, that they were bought for Luening, and thereupon had legal papers prepared for a suit and attachment against Luening upon a former indebtedness of him to them, not arising out of or connected with this transaction. A writ of attachment was issued from the superior court of King county, Wash., in favor of George F. Livesley & Co., plaintiffs, against A. F. Luening, defendant, about 1:20 o'clock p.m. of December 8th, and placed in the hands of the defendant as sheriff, and shortly thereafter levied by him on the 100 bales, being still at the warehouse, and under said consignment. After the issue of said bill of lading the consignors prepared a value bill or invoice of the hops, stating their marks, weight of each bale, total gross and net weights, the total price at 31 1/2 cents per pound, with 1 cent per pound added for their commission, and the fact of drawing a draft for the whole, $6,548.42, on A. F. Luening & Co., and signed the same. They also drew such draft, payable to the order of the First National Bank of Seattle, and took said draft, bill of lading, and invoice, retaining the duplicate bill of lading, to the First National Bank of Seattle, about 3 o'clock p.m. of December 8th. Thereupon said draft, with the bill of lading and invoice attached, was delivered by them to the bank, and the amount of the draft, less discount and exchange, was credited by the bank on its books to Kuehn, Metzler & Co., who were customers of it. Both of the Livesleys were active in the attachment, but after the attachment, and before the draft was cashed, George F. Livesley had been at the office of Kuehn, Metzler & Co., followed Mr. Kuehn to the bank, and got his check there for the 69 bales shortly after the deposit. During this transaction the Livesleys did not inform Kuehn, Metzler & Co. of the attachment, nor did they or the bank know of it until afterwards. On the same or the next day, Kuehn, Metzler & Co. paid Catlin the price of his 31 bales by their check drawn on the same bank account. The bank forwarded said draft, bill of lading, and invoice by mail to the plaintiff, with instructions to remit the amount to the bank's correspondent at Chicago. These papers reached the plaintiff on or about December 15th, and the draft was presented to Luening, and payment demanded, but refused by him, because the draft was drawn for one-half cent per pound too much, and the hops had been attached. The draft was then protested. The plaintiff then wired to the Seattle bank that fact, and Luening's reasons. The Seattle bank replied by wire, insisting that the amount was correct, and the plaintiff must pay the draft, because it had been cashed in reliance on its guaranty. Later on the same day, December 15th, the Seattle bank ascertained from Kuehn, Metzler & Co. that the draft was drawn for one-half cent per pound too much, had them draw a new draft for $6,434.88 in the same form as the first, forwarded that draft to the plaintiff with the same instructions, and wired the plaintiff to that effect, and also wrote a letter explaining the overcharge. The second draft was received by the plaintiff on December 20th, and the bill of lading, which had meantime remained in the possession of ...