Case ID: ad_171/html/0666-01.html
Source: Caselaw Access Project
Author: {"author": "Jenks, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Grove G. Thompson, Respondent, v. William Goldstone, Appellant.
    Second Department,
    February 28, 1916.
    Bailment — wrongful pledge of personal property by bailee — action by owner — erroneous charge — when pawnbroker entitled to benefit of Factors’ Act — statute construed.
    Where the plaintiff intrusted jewels to a person for the purpose of sale to a particular purchaser with a reservation of title, but the bailee being in possession pledged them with the defendant, a pawnbroker, it is error for the court to charge that if the bailee’s agency was limited the defendant acquired no lien upon the property and that the plaintiff is entitled to recover.
    The defendant pawnbroker, having no knowledge of the limitation placed upon the bailee’s powers and he being in full possession of the jewels and the apparent owner thereof, was entitled to the protection of the Factors’ Act (Pers. Prop. Law, § 43).
    Hence, notwithstanding the limitation placed upon the bailee’s authority, where the defendant in good faith dealt with him in reliance upon his apparent ownership resting in possession, the defendant is not affected by the character of such possession of which he had no notice, actual or constructive.
    The expression “ upon the faith thereof,” contained in section 43 of the Personal Property Law, means upon the faith of the possession.
    
      It seems, that the rule might be different if the person pledging the jewels had obtained possession by a crime.
    Appeal by the defendant, William Goldstone, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Nassau on the 14th day of June, 1915, upon the verdict of a jury, and also from an order entered in said clerk’s office on the l'fth day of June, 1915, denying defendant’s motion for a new trial made upon the minutes.
    
      Jerome Eisner, for the appellant.
    
      Charles C. Clark, for the respondent.
   Jenks, P. J.:

The plaintiff was' a dealer in jewels. The defendant is a pawnbroker with whom certain of the plaintiff’s jewels were pledged. • The plaintiff had the verdict at Trial Term for .the full value of the jewels, regardless of the defendant’s assertion of his lien for his loan on them. The plaintiff intrusted the possession of the 'jewels to Shattuck, to sell them, hut Shattuck pledged them with the defendant.

The plaintiff made proof that he was induced to give Shat-tuck possession of the jewels by Shattuck’s representation that he had particular purchasers in view. And there was proof tending to show, as between him and Shattuck, the reservation of the title to the plaintiff. The contention of the defendant was that he knew nothing of these things, and that Shattuck came to him as any ordinary pledgor in full possession of personal property.

The learned court charged the jury, “If Mr. Shattuck’s position or agency here was limited, then Mr. Goldstone acquired no lien upon the property and the plaintiff is entitled to recover.” We think that the defendant’s exception to this instruction was well taken, because in effect the jury were instructed that to entitle the plaintiff to their verdict they had but to determine whether the plaintiff had parted with the possession of the jewels to Shattuck with the understanding between them that Shattuck had specified purchasers only in view. There can be little, if any, doubt that the jury understood the reference of the court by the use of the word “ limited,” because theretofore the court had dwelt upon this feature of alleged limitation and had explained fully the particulars thereof.

But if Shattuck came to the defendant in full possession of the jewels and apparently the owner thereof, the court charged the rule of common law, whereas we think that the defendant, although a pawnbroker, was entitled to the protection of the Factors’ Act, “now in substance a part of the Personal Property Law ” (Consol. Laws, chap. 41 [Laws of 1909, chap. 45], § 43). (Freudenheim, v. Gütter, 201 N. Y. 94.) In that case Vann, J., for the court, after discussion of the departure made from the common law by this statute, the policy and the effect thereof, says: “Possession is the controlling word in the statute and the controlling fact in nearly all cases. Possession is evidence of ownership, and the statute makes it conclusive evidence that the agent in possession as the apparent owner is the real owner so far as necessary to protect bona fide purchasers from his fraud. It makes the owner vouch for the honesty of his agent. The real theory of the act is that the selection of the faithless agent and intrusting him with the property is the cause of the loss and, hence, that loss is placed not upon the third party who is wholly innocent, but upon the owner, because by appointing and trusting a' dishonest agent he brought about the loss.” Notwithstanding that there may have been this limitation upon the agency of Shattuck, if the defendant appeared as an innocent person who dealt with Shattuck in reliance upon Shattuck’s apparent ownership resting upon his possession, the defendant could not be affected by the character of such possession of which the defendant had no notice, either actual or constructive. (New York Security & Trust Co. v. Lipman, 157 N. Y. 551; Gass v. Astoria Veneer Mills, 134 App. Div. 188; Oakland Manufacturing Co. v. Linde Co., 162 id. 543, 553.) The expression in the final sentence of subdivision 1 of section 43 of the Personal Property Law (Factors’ Act), “upon the faith thereof,” means upon the faith of such possession. (Kingston Cotton Mills v. Kuhne, No. 1, 129 App. Div. 257, 258, and cases cited; Gass v. Astoria Veneer Mills, supra.)

The consideration of this instruction as given does not require discussion of the contention that Shattuck procured possession by a crime. We do not differ from this court in its First Department when it declares: “The possession of personal property obtained by common-law larceny confers no title which can protect an innocent purchaser from the thief.” (Phelps v. McQuade, 158 App. Div. 528, 530.) In that case also we note that the court made distinction between a fraud which is made a felony by statute only and which was not a felony in common law. We confine our reversal to the error in the instruction, without discussion or decision upon the other features of the case.

The judgment and order are reversed and a new trial is granted, costs to abide the event.

Thomas, Stapleton, Mills and Putnam, JJ., concurred.

Judgment and order reversed and new trial granted, costs to abide the event. 
      
       Since amd. by Laws of 1915, chap. 273.— [Rep.