Smith v. Jefferson Bank

Decision Date30 October 1906
Citation120 Mo. App. 527,97 S.W. 247
PartiesSMITH et al. v. JEFFERSON BANK.
CourtMissouri Court of Appeals

A principal consigned goods to a factor. A company of which the factor was president procured possession of the goods and reconsigned them to a third person. A bank bought the drafts drawn on the third person for the price of the goods, on the faith of the bill of lading. Evidence examined, and held not to show that the bank bought the drafts with bills of lading attached with knowledge that the company did not own the goods and was insolvent and was going to appropriate the proceeds, instead of turning it over to the principal, and the latter could not follow the goods or the proceeds thereof into the hands of the bank.

2. BANKS AND BANKING — DRAFTS — COLLECTION.

A principal consigned goods to a factor with authority to sell or reconsign. A company of which the factor was president reconsigned the goods and transferred the draft drawn against them to a bank. Evidence examined, and held to show that the draft was not taken by the bank for collection, but was bought by it.

3. TROVER AND CONVERSION—QUESTION FOR JURY.

In an action for the conversion of goods consigned by a principal to a factor with authority to sell or reconsign, evidence examined and held, that the question whether a company had authority to act for the principal in reconsigning the goods, drawing a draft for the purchase price, and selling the same to a bank was for the jury.

4. FACTORS — AUTHORITY — RIGHT TO DELEGATE.

A factor with authority to sell or reconsign goods consigned to him by his principal has no authority to delegate to another the authority to sell or reconsign the goods without the principal's knowledge and consent.

5. SAME—UNAUTHORIZED TRANSACTION.

Where a principal consigned goods to a factor, with power to sell or reconsign, and a company of which the factor was president took possession of the goods and reconsigned them and sold to a bank the draft drawn on the new consignee for the purchase price, the transaction was not binding on the principal unless authorized by the previous course of dealing, there being no estoppel.

6. CARRIERS — SALE OF GOODS — DRAFT SECURED BY BILL OF LADING.

A principal consigned goods to a factor with power to sell or reconsign. A company reconsigned the goods to a third person, and a bank, in good faith, bought a draft drawn by the company against the new consignee, secured by a bill of lading, and took possession of the goods and retained the proceeds. Held that, if the company was empowered to reconsign the goods and draw against them, the bank was not liable to the principal.

7. FACTORS—RATIFICATION BY PRINCIPAL OF UNAUTHORIZED ACT.

A principal consigned goods to a factor with authority to sell or reconsign. A company of which the factor was president reconsigned the goods and sent its own draft in payment of the goods to the principal. The principal, when accepting the draft, believed that the factor had reconsigned the goods. Held, that the principal's belief was such a misunderstanding as would prevent his use of the draft, by transmitting it to a bank for collection, from constituting a ratification of the acts of the company.

8. TRIAL—INSTRUCTIONS—ISSUES.

A principal consigned goods to a factor with authority to sell or reconsign. A company reconsigned the goods and sold the draft drawn against them to a bank. The bank took possession of the goods and retained the proceeds on a sale thereof. The principal sued the bank for conversion. The bank answered that the principal's acceptance of the company's draft in payment of the goods was a ratification of the act of the company. Held, that an instruction that, as the draft sent by the company in payment for the goods was dishonored, the principal's use of it was not a payment unless he intended to accept it as payment was misleading, because introducing a new issue.

9. FACTORS—RATIFICATION—EFFECT.

A subsequent ratification by a principal of an unauthorized act by one purporting to act as his factor is equivalent to previous authority, unless to so hold will prejudice the intervening rights of third persons.

10. SAME.

A principal consigned goods to a factor, with authority to sell and reconsign. A company reconsigned the goods, drew a draft against them, and sold the draft to a bank, which, by virtue of the bill of lading transferred to it, took possession of the goods, sold them and retained the proceeds. The company sent its own draft to the principal in payment of the goods, but, on account of the subsequent insolvency of the company, the draft was dishonored. The principal accepted the draft and transmitted it to a bank for collection. Held, that the principal was not bound to inquire into the company's solvency before accepting the draft, and takes the risk of loss if the company did not pay it, but his knowledge of facts, which should have warned him of the previous state of the company, was a circumstance from which a jury might conclude either that the principal knew that the company was insolvent when he took the draft or intended to assent to the reconsignment of the goods whether the company was solvent or not.

11. SAME—BURDEN OF PROOF.

The burden of proving an implied ratification by a principal of the unauthorized act of one purporting to act as his factor, together with the act of the principal relied on to establish ratification, with knowledge of the material facts, is on the person who seeks to bind the principal.

12. SAME — REPUDIATION OF UNAUTHORIZED ACT.

A principal consigned goods to a factor, with authority to sell and reconsign. A company of which the factor was president took possession of the goods, reconsigned them, and sent its own draft to the principal in payment therefor. The principal accepted the draft and delivered it to a bank for collection. Held, that if the principal accepted the draft supposing that the company was solvent, when it was not, he might afterwards repudiate the reconsignment, provided a third person would not be prejudiced thereby.

13. SAME — RATIFICATION — QUESTION FOR JURY.

Whether a principal consigning goods to a factor, with authority to sell and reconsign, ratified the acts of a third person in reconsigning the goods, drawing a draft against them for the purchase price, and transferring the draft to a bank secured by a bill of lading, held, under the facts, for the jury.

14. SAME—ACTS CONSTITUTING RATIFICATION.

A principal consigned goods to a factor, with authority to sell and reconsign. A third person reconsigned the goods, drew a draft against them for the purchase price, and sold the draft to a bank, secured by a bill of lading. The third person sent its own draft to the principal in payment of the goods. The draft, on the insolvency of the third person, was dishonored. Held that, if the principal, with knowledge of the facts, retained the third person's draft in payment for the goods, he thereby ratified the acts of the third person, and the bank, which subsequently sold the goods and retained the proceeds, was not guilty of conversion.

15. APPEAL—ERRONEOUS ADMISSION OF EVIDENCE—HARMLESS ERROR.

The error in admitting in evidence telegrams containing no statement of facts not testified to by witnesses is not prejudicial.

16. EVIDENCE — HEARSAY—FACTORS—CONVERSION.

A principal consigned goods to a factor with power to sell or reconsign. A third person reconsigned the goods and transferred the draft drawn for the purchase price and the bill of lading to a bank, who sold the goods and took the proceeds. Held, in an action by the principal against the bank for conversion of the goods, that a telegram by the factor to the principal, to the effect that he had wired the new consignee that the goods belonged to the principal, and a letter written by an officer of the third person, to the effect that he had wired the new consignee to remit direct to the principal, were incompetent, as hearsay.

17. FACTORS—CONVERSION OF GOODS—RATIFICATION BY PRINCIPAL—EVIDENCE.

Where, in an action by a principal, consigning goods to a factor with power to sell or reconsign, for a conversion of the goods, based on the action of a third person in reconsigning the goods and transferring the draft drawn for the purchase price and the bill of lading to a bank, which took possession of the goods, sold them and retained the proceeds, it was admitted that the principal rejected the third person's action after he learned it was insolvent, and that its draft, transmitted to him for the purchase price of the goods, would not be paid, letters which passed between the principal and third persons containing statements that the transaction was without the knowledge of the factor were not admissible to show that the principal did not ratify what the third person had done, but repudiated it.

Appeal from St. Louis Circuit Court; Daniel D. Fisher, Judge.

Action by J. O. Smith and others against the Jefferson Bank. From a judgment for plaintiffs, defendant appeals. Reversed and remanded.

This is an action for damages for the alleged conversion by defendant of two car loads of eggs belonging to plaintiffs. Plaintiffs were partners doing business in the city of Fredonia, Kan., under the name of the Fredonia Produce Company. Defendant is a banking institution in the city of St. Louis. The car loads of eggs in question were shipped by plaintiffs from Fredonia on the 12th and 14th of July, 1904, and consigned to B. W. Redfearn in St. Louis. The terms of the shipments are shown by two ordinary bills of lading in which plaintiffs are designated as consignors and Redfearn as consignee. Invoices were sent to Redfearn along with the bills of lading notifying him of the shipments and that the terms were cash on delivery. The bills of lading are not contained in the record, but, as we understand, they were issued...

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