The First Nat'l Bank Of Macon v. Charles Nelson & Co

• Decision Date: 31 December 1868
• Citation: 38 Ga. 391
• Court: Georgia Supreme Court
• Parties: THE FIRST NATIONAL BANK OF MACON, plaintiff in error. v. CHARLES NELSON & CO., defendants in error.

38 Ga. 391

THE FIRST NATIONAL BANK OF MACON, plaintiff in error. v. CHARLES NELSON & CO., defendants in error.

Supreme Court of the State of Georgia

(Atlanta, December Term, 1868.)

Equity. Pledges. Notice. Tried by Judge Cole. Bibb Superior Court. May Term, 1868.

Megrath & Patterson were grocers and commission-merchants, on Poplar street, Macon, Georgia. On the 10th of December, 1867, they mortgaged to one Holmes, all their stock of goods, wares and merchandize, and their choses in action, to secure about $10,000 00, due by them to said Holmes. This mortgage was not recorded till the 4th of January, 1868. It was foreclosed, and a levy of the mortgage was made upon the. stock in store, including certain whiskey and bacon, on which The First National Bank of Macon had a claim. Its claim was as follows: On the 2d of December, 1867, it advanced to Megrath & Patterson, $1,000 00 on twenty-five barrels of whiskey, and took from them a paper, as follows:

"$1,000 00. Macon, Ga., December 2, 1867.

Received from The First National Bank of Macon, one thousand dollars, as advance by it, on twenty-five barrels whiskey, marked "E, " now stored in our store, on Popular street, which whiskey we hereby place in its control and possession, to be used by said bank as its own property, for its reimbursement of said amount, with interest, insurance, and all other expenses thereon, should we fail to pay the same when due, to-wit: on the 1-4 day of January, 1868, but if paid when due, or before said whiskey is disposed of by said bank, for its reimbursement as aforesaid, then the said whiskey to be returned to us. MEGRATH & PATTERSON."

The bank made other advances to them, on whiskey, as follows: In December, 1867, on the 14th, $1,300 00, on fifteen barrels; on the 23d, $3,000 00, on twelve barrels (and twelve casks of bacon); on the 24th, $1,000 00, on ten barrels, and on the 24th, $1,000 00, on ten barrels, and on the 28th, $2,120 00, on thirty-five barrels. These advances were each evidenced by a receipt, a fac simile of the one above quoted, mutatis mutandis. When they were made, the bank officers were ignorant of the existence of said mortgage. Megrath & Patterson were instructed, by the *bank's agent, to set said whiskey and bacon apart, as the property of the bank, and it is believed that this was done. But Megrath & Patterson sold thirty-one barrels of said whiskey, and all of said bacon, to-wit: $4,500 00, worth, and paid no part of the proceeds to the bank. Megrath & Patterson were failing, their store was in the sheriff's hands, and there was reason to apprehend that they would depart the realm without reimbursing the bank.

Under this state of facts, set forth in its bill, the bank prayed that Holmes's fi. fa. should be enjoined from selling said whiskey, that the unsold whiskey, as also the proceeds of that sold, if it could be traced, should be given to the bank, and that Megrath & Patterson should give bond and security for the eventual condemnation money, in the cause, etc. The Judge granted the injunction, and required the security. Holmes made no fight with the bank. But Charles Nelson & Co., of Nashville, Tennessee, came into Court, and filed their petition to be made parties to the litigation, for the following reasons stated by them: They were largely engaged in manufacturing whiskey, and had made Megrath & Patterson their special agents for the sale of it. This agency had lasted for eighteen months, and Megrath & Patterson had sold a great deal of whiskey for them. Their authority, as agents, was special and limited, they were to sell for cash only, and had no authority to pledge, pawn, or mortgage it, or in any way to use it in their business. Their only right was to sell for cash, deduct five per cent. for commissions, and remit the balance to them. Since the first November, 1867, they had sent Megrath & Patterson one hundred and thirty-two barrels of whiskey, and they had accounted for none of it; the ninety-seven barrels claimed by the bank, are of these one hundred and thirty-two. Megrath & Patterson had published their agency in the gazettes of Macon, and had emblazoned it in large and conspicuous signs upon their store-house, and Charles Nelson & Co. were persuaded that the bank's officers were cognizant of the agency before the advances were made. If they did not know it, their ignorance proceeded from carelessness. From the anomalous *style of receipt taken, from the facts that Megrath & Patterson never had ninety-seven barrels of whiskey in store at any time in December, 1867, and that, of the barrels in controversy, forty-three did not reach Megrath & Patterson till the 26th of said December, and because the prices fixed were not over two-thirds of the value of the whiskey, etc., they charged that the bank never relied upon the whiskey as a pawn or pledge. The bank never undertook to control any of it till said levy was made, but, on the contrary, the whiskey remained in the exclusive possession of Megrath & Patterson, and with the knowledge of said officers, they sold said whiskey, just as if said advances had not been made. The sixty-seven barrels of whiskey in the sheriff\'s hands, are worth $4,800 00, which amount Megrath & Patterson owe them. For these reasons, they prayed that they should have this whiskey, or its proceeds. Charles Nelson & Co. became parties, and the whiskey was put into the possession of a Receiver. They and the bank then agreed that the Judge should try the cause, without a jury; that his decision of facts, and law should be subject to exception by either party, and that if he had doubt as to any fact, material to the decision, he (or the Supreme Court, if it went there), should direct an issue made up, and submitted to a special jury. Holmes and Megrath & Patterson consented to this, Holmes disclaiming any right to the whiskey. The decision was to be final, unless excepted to as aforesaid.

On the trial, the bank introduced, as evidence, their said receipts from Megrath & Patterson, and each party examined several witnesses.

It was shown that this whiskey was part of that sent to Megrath & Patterson by Chas. Nelson & Co., and that the bank had charged one and a half per cent. per month in said advances, one per cent. being, as the witness said, for the advance, and the half per cent. for interest. Charles Nelson & Co. contended that even if the whiskey had been pawned to the bank, Megrath &, Patterson had no right to pledge it, and if they undertook to pledge it, the contract was void, because the bank took usury for itsmoney.

*The whiskey pledged was never separated from the balance of the stock, but was treated in every way as if it had not been pledged. The bank officers, however, testified that they expected Megrath & Patterson to set it apart, and hold it as the bank's property, and subject to its order. Plant, the president of the bank, was in Megrath & Patterson's store when theofficer came to make the levy; Patterson, pointing to a lot of sixty-six barrels of whiskey, said to Plant, "that is your whiskey, " and to the officer, "you can not levy on that, it belongs to the bank;" Patterson said something about a consignment, and when Plant asked what he meant by consignment, he replied, "from a man in Nashville, I can fix that with him." The main controversy was as to whether the bank had notice that Megrath & Patterson were the agents of Charles Nelson & Co., for the sale of their whiskey. On this point Plant testified, that he had been in Megrath & Patterson\'s store several times, but had never noticed any sign of their being agents, and that he took the city papers, but had not noticed their advertisement therein, and denied any knowledge of their said agency. The cashier of the bank testified, that he had noticed on their sign at the store, "Nelson & Co.\'s copper-distilled whiskey, " but not that they were agents for its sale, and that he had seen their advertisement, but did not take notice of it, nor have any knowledge of such agency. The collecting clerk of the bank also testified to his ignorance of such agency. Chas. Nelson & Co. produced the following evidence to charge the bank with such notice. Patterson said he thought the bank officers knew it, because Megrath & Patterson advertised it in the city papers, in hand-bills and circulars, and in large letters in their sign, on the side of the store, put up about the first of November, 1867; because their agency was generally known throughout the city, and because Mr. Ross was one of the bank\'s directors, and a member of the firm of J. B. Ross & Son, which firm knew of said agency. (It was shewn that Ross, the director, was absent from Macon when these advances were made, and knew nothing of them, and that the business of *the bank was conducted by the president, etc., and the directors gave no attention of such matters as this.)

Several merchants of Macon testified, that they knew of such agency, (one said he had known it for two years,) that the sign and their advertisements so denominated them, and that it was generally known among wholesale whiskey dealers in Macon.

A letter, written by Megrath & Patterson, was on commercial note paper, three sides of which contained a printed advertisement of their business. On the first page, in a conspicuous place, was "Agents for Chas. Nelson & Co.'s Copper-distilled Whiskies." Its date was the 19th of February, 1867. The words on the sign were not shewn. In a long and conspicuous advertisement in the daily city papers, they said: "We are sole agents for Chas. Nelson's celebrated Copper-distilled Whiskies."

The Judge held that no title to said whiskey passed from Megrath & Patterson to the bank under the contracts and facts aforesaid; that the bank could not hold the whiskey as apawn against Chas. Nelson & Co., because there was no delivery to the bank, and because the bank had constructive notice of the said agency. But before any order was taken, the bank\'s...