Case ID: la-ann_1/html/0393-01.html
Source: Caselaw Access Project
Author: {"author": "Rost, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Farmers and Merchants Bank of Memphis v. Franklin et al.
    Where merchandize is shipped to a factor, with directions to sell it, and apply the proceeds to the payment of a bill drawn by the owner in favor of the shipper for the repayment of an advance made by the latter, the factor who receives the consignment is bound to comply with the conditions upon which it was delivered to him. He cannot apply the proceeds to the payment of any debt due to himself by the owner.
    The commercial books and counting-house furniture of a merchant, and iron chests found in his counting-house, in which his books and papers are kept, are exempt from seizure. C. P. 644.
    APPEALS from the Commercial Court of New Orleans, Watts, J.
    
      Benjamin and Micou, for the plaintiffs. Maybin, Claiborne, and Gcrymes, for the defendants.
   The judgment of the court was pronounced by

Rost, J.

Z. L. Gower, a needy speculator, operating at Memphis, in the State of Tennessee, purchased one hundred and ninety-eight bales of cotton from the firm of Goodman & Means, merchants of that place. The terms of the sale were cash. For the purpose of paying for the cotton, Gower offered to the plaintiffs for discount the bill on the defendants at ten days sight, for the sum of $6200, upon which this action has been instituted. The plaintiffs refused to discount, or purchase the bill, until the payment was fully secured by the drawer. One of the vendors went with Gower to the bank, and informed its officers that the cotton was in the ware-house of Goodman & Means, and would be shipped by them to the defendants, who are factors in the city of New Orleans, for account of Gower, but subject to the payment of the bill. It was expressly agreed between the plaintiffs, Gower, and Goodman & Means, that the latter should retain the exclusive possession of the cotton, and that it should be shipped by them to the defendants, under specific instructions to sell it, pay the bill out of the proceeds of the sale, and account to Gower for the balance. On the faith of that agreement the plaintiffs took the bill, and the cotton was shipped by Goodman & Means to the defendants. Letters of advice were transmitted to the defendants with the bills of lading, advising them that Gower had drawn upon them in favor of the cashier of the plaintiffs for $6200, at ten days sight, that the cotton was shipped by them to cover and protect the amount of the bill, and was to be sold for account of Gower. The defendants took possession of the cotton, and sold it for a sum more than sufficient to pay the bill; but, instead of obeying their instructions, they suffered the bill to be protested for non-acceptance and also for non-payment, and converted to their own use the whole proceeds of the sale of the cotton, amounting to $6608 46, under the pretence that Gower, the drawer, was indebted to them in the sum of about $3000, which he had promised to cover by shipments, and for which they had, as factors, a privilege upon the sum in their hands, superior in dignity to the claim of the plaintiffs. The plaintiffs have instituted this action to recover the amount of the bill, and the case is now before us on the devolutive appeal, taken by the defendants from the judgment rendered against them by the court of the first instance.

If the privilege claimed by the defendants had rpally existed in their favor, it would still be difficult for them to explain, by what rule ‘of law, or precept of mol.a]g) ti10y have retained to the day of their insolvency the balance of $3600, due by them over and above the amount of that privilege. But it is clear that Abe privilege could not be enforced to the prejudice of the plaintiffs’ rights. In the case of Fetter v. Field, ante p. 80, we held that, “ according to the course of trade in this city, the bill of exchange drawn on a particular shipment, accompanied by the bill of lading, usually represents the price of the property sold or the means of reimbursement of the price to some party.”

The fact that the bills of lading were accompanied by a letter of advice, informing the defendants that a bill had been drawn which the shipments were intended to cover and protect, would have affected them with notice that the cotton had not been paid for, if Gower himself had been the shipper ; but he was not the shipper; the cotton never was in his possession; but was shipped by Goodman Sf Means, subject to their instructions alone. When the defendants received the cotton, they became the agents of Goodman Sf Means, and Gower had no right in it till after the instructions of the shippers had been complied with. The defendants were bound to comply with the conditions upon which they obtained possession of the cotton. Had they refused to receive it, that possession would have remained in Goodman & Means, and the defendants could not have frustrated the rights of the plaintiffs by attaching it as the property of Gower, before delivery to him. We are satisfied that the court below has done justice between the parties.

The record contains another appeal taken under the following circumstances : The plaintiffs caused the commercial books and counting-house furniture of the defendants, and also two iron chests found in the counting-house, and in which the books and papers were kept, to be seized under execution. The defendants took a rule upon them to show cause why the seizure should not be set aside, on the ground that the effects seized are protected from seizure by law. After hearing, the rule was made absolute, and the plaintiffs appealed. The defendants rely upon article 644 of the Code of Practice, which exempts from seizure under execution the tools and instruments necessary for the exercise of the trade or profession by which a debtor gains a living. They also rely upon the dicta of the late Supreme Court in the case of Lambeth and another v. John Milton, 2 Robinson, 81.

There is no dispute between the parties as to the facts of this part of the case, and we are constrained to say that the judge of the first instance has made a correct application of the law to them. , Since the repeal of the laws authorizing the creditors of bankrupt merchants to proceed against them for a forced surrender, that class of debtors stand on the same footing as other insol • vents, and are entitled to the same immunities under the laws regulating the execution of judgments.

For the reasons assigned, it is ordered that the judgment of the Commercial Court be affirmed on the appeals, the defendants paying all the costs of the original suit, and those of their appeal to this court; the plaintiffs paying the costs upon the rule in both courts.