Virginian-pilot. (Norfolk, Va.) 1898-1911, 1899-02-21

The defendants executed and deliver
Ell 10 Iindheim. a dealer Of tobacco in
New York city. five promisory notes.
Llndheim sold the notes TO the plaintiff
before ma turity, and 70" value. The
plaintins sued on the notes and among
other defenses the defendant set up Il
counterclaim for the value OF Il broken
package OF tobacco belonging 10 the de-
PENDANTS, and averred to have been
wrongfully converted by the plaintiffs.
Alter the execution of the notes sued
on the defendants had consigned 10
lindhem the broken package of tobac-
co To be sold by him: the proceeds to
be accounted fer to them. Before either
OF the notes fell due Lindheim conveyed
TO the plaintiffs all Of his stock and
accounts as collateral security for what
he might owe them, and under this
conveyance Lindhcim stated that the
plaintiffs took possession of the broken
package Of tobacco, which the plaintiffs
denied. The lower court instructed the
jury that the defendants must prove
the plaintiffs got the tobacco without
consideration: and that if Lindhcim
transferred ii To them for valuable con
sidcration the defendants could not set
off its value. plaintiffs had no notice or
knowledge that Lindhcim held it as
agent of the defendants.
The Supreme Court SAYS:
There was error in that instruction
His Honor had already told the jury
that an existing indebtedness of Lind
holm 10 the plaintiffs -raliIa BILE
consideration: and the jury, of course
understood his Honor to mean that the
transfer of the broken package of to-
Dacco TO the plaintiffs by Lindhem. for
Il debt which he owed the plaintiffs.
was valuable considerable and sup
ported the transfer of the tobacco for
that purpose against the rights of tho
defendants rs conSignors. But a prin-
cIpal who c0nsgns goods to an agent
or factor. to be sold. has Il right to en-
pcct the proceeds Of sale to be returned
to him. Where a factor sells the goods
OF the principal, lie must keep that
sale. so far as his principal is cons
cerned unconnected with his private
aiiairs, and not mix Il; up with his
own interests, to the injury of his prin-
cpal. The same principle is announced
In warner vs.. Martin. IL How 200.
where 1t is said: 1T has been supposed
tnat the right of Il factor to sell the
merchandise of his principal to his own
creuitor IN payment of an antecedent
uebt finds its sanction in the fact of
the creditors belief that his debtor is
the owner of the merchandise and his
ignorance that ii belongs TO another
and IL in the last he has been deceived
That the person by whom the delin-
qucnt factor has been trusted shall he
the case. Where Il contract is proposed
between factors. or between a factor
ana any other creditor. to pass propcrty
Tor an antccedcnt debt. it IL not n
sale, III the legal sense of that word. or
IN any sense in which ii is used in re.
ference to the commission which n
factor has to sell. When such
transfer is made by n factor for his
debt it is the violation of oll
mat n factor contracts to do with the
property of his principal. II
does not matter that the creditor may
not Know when he takes the property.
mat the factors principal owns IL.
mat he believes it to be the factors
IN good faith" The same principle of
law VIII apply with equal force where
me factor conveys the property of
MS principal to his own creditor bv
way OF mortgage or pledge to secure
debt of his. own.
The court did not consider the other
points raised. but directed a new trial