Case Name: Harry S. Cowen and Another, Respondents, v. Reginald W. Pressprich et al., Appellants
Court: New York Supreme Court, Appellate Term
Jurisdiction: New York
Decision Date: 1922-01
Citations: 117 Misc. 663
Docket Number: 
Parties: Harry S. Cowen and Another, Respondents, v. Reginald W. Pressprich et al., Appellants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 117
Pages: 663–687

Head Matter:
Harry S. Cowen and Another, Respondents, v. Reginald W. Pressprich et al., Appellants.
(Supreme Court, Appellate Term, First Department,
February, 1921, Term
Filed January, 1922.)
Bailment — conversion — involuntary bailee exercising dominion over article bailed — stockbrokers liable for delivery to wrong person of bond sent by mistake.
An involuntary bailee, so long as the lack of volition continues, is not in duty bound to care for or guard the subject of the bailment and cannot be held, in. respect to custody, for what would even be the grossest negligence in the case of a voluntary bailment.
Where, however, an involuntary bailee does exercise any dominion over the thing so bailed, he becomes as responsible as if he were a voluntary bailee and is absolutely liable in conversion for delivery of the subject of the bailment to' the wrong person.
Plaintiffs, a firm of stock exchange brokers, in order to fill an order for the sale and delivery of a fully negotiable bond of a certain railroad company to the defendants who are engaged in the same line of business, ordered the bond from a third bond house which by mistake sent to plaintiffs a bond of another railroad company, which the plaintiffs also by mistake sent to the defendants in the following manner: Said bond and a slip briefly describing a bond of the first railroad company were enclosed in an envelope and taken to defendants’ place of business by one of the messenger boys in the employ of plaintiffs, who dropped the envelope into a slot above a closed window of opaque glass, where deliveries were wont to be made and left. Immediately after a member of defendants’ firm opened the window and an unidentified boy, not plaintiffs’ messenger, stepped up and in answer to the direction to make the statement on the slip agree with the bond, said: “All right,” took the bond and left. Upon affirming a judgment in favor of plaintiffs for the conversion of the bond, held, that defendants upon the delivery of the bond to them became involuntary bailees thereof and when they undertook to re-deliver the same, they acted as greatly at their peril as if they had been voluntary bailees.
Defendants could have protected themselves by telephoning to the plaintiffs that the wrong bond had been delivered' or they could have sent the bond back to plaintiffs by one of their own messengers.
Krumshy v. Loeser, 37 Misc. Rep. 504, distinguished.
Where an action is tried as one for conversion a judgment in favor of plaintiff can be sustained, if at all, only upon that theory.
Burr, J., concurring in result, Lehman, J., dissenting.
Appeal by defendants from a judgment of the Municipal Court of the city of New York, borough' of Manhattan, first district, in favor of plaintiffs, after trial by the court without a jury.
Winthrop & Stimson (Frederick W. Steele, of counsel), for appellants.
Louis F. Doyle (Warren Bigelow, of counsel), for respondents.

Opinion:
Mullan, J.
Conversion, for the defendants' alleged wrongful delivery of a bond. The parties on both sides are stock-exchange brokers. Plaintiffs had agreed to sell and deliver to defendants a bond of the Oregon Short Line Railroad, of the par value of $1,000. To fill that order plaintiffs ordered the bond from a third bond house arid the latter, by mistake, sent plaintiffs an Oregon and California Railroad bond, and plaintiffs, also by mistake, sent this Oregon and California bond to defendants. There is no controversy as to the manner of the sending. Plaintiffs handed the Oregon and California bond to Goldberg, a youth of seventeen years, who was one of plaintiffs' two messengers, or " runners " as they seem to be called. With the bond was a memorandum (also called slip " or " statement ") briefly describing an Oregon Short Line bond. The bond and slip were inclosed together in an envelope. Goldberg took the envelope to defendants' place of business in a Wall street office building. Defendants' suite of offices had two entrance doors from the office-building hall, one for general use, and the other for persons, such as Goldberg, making deliveries. Goldberg entered at the latter door, and was then in a tiny outside room, described as about two feet by six feet. There was no door for passage between this small outside room and an inside, and presumably larger, room. Deliveries were made by dropping papers in a slot in one of the partitions partly forming this small outer room. Above the slot was a window, of opaque glass, that swung inwards. That Avindow Avas kept closed unless or until the person acting for defendants at the delivery Avindow should desire to talk to one making a delivery, when he would open the Avindow. Next to the partition containing that slot and AvindoAV, and in the inner room, was a desk at which was kept seated either a member of defendants' firm or a clerk. At the time here in question there were two persons at that desk, Mr. Quackenbush, of the defendants' firm, and an employee, one Campbell. Goldberg dropped the envelope through the slot. His testimony was: "I Avaited until he (the person at the desk) took it in and then I left. I told him I Avill call back for a check. Q. Why didn't you ask for the receipt? A. Well, I was in a hurry, I had many deliveries that day, and I had to make them. Q. How long would you say you were in that delivery room in front of' that delivery Avindow — from the time you put the bond in until you left? A. It was from a minute to a minute and a half." Goldberg could not recall whether the person at the other side of the window said anything. He thought, but was not sure, that there was " somebody " else in the little outside room when he was there. It does not appear, from Goldberg's testimony, whether or not the delivery window was open during any part of his stay while mating the delivery. Mr. Quackenbush testified as follows: " Q. Will you tell us what took place ,at the time of that delivery? A. It was about ten-thirty in the morning; Mr. Campbell and myself stood there making, up our loans, when a bond shoots through the window like a streak of lightning ; it goes right down my desk — that was my desk about the width of this table (indicating stenographer's table)—right down in front of us. As it rolls over, I opened it up, just pulled the bond open that way instantly. [Indicating.] The statement called for an Oregon Short Line five bond; I could see immediately that the bond was an Oregon and California, and we handle thousands of them. Q. What did you do then? A. I immediately opened the window. Q. Where was that, right in front of you? A. Right like that [indicating] and I yelled ' Cowen..' A young man steps right up and I says make your statement agree with the bond. The Court: Sir? The witness : Make your statement agree with the bond. He mumbled, all right,' and takes the bond and goes out immediately like that. Q. And he took it? A. He took it. Q. When you say man—? A. A young boy nineteen or twenty years old. Q. What did you do then, close the window? A. Closed the -window* went about my work. Q. You were expecting from Cowen and Company at that time a Short Line bond, were you not? A. Yes. We had purchased one, looking for it. Q. You were looking for it? A. Yes, some day. Q. And you say you instantly .found it was not—? A. It was not more than fifteen seconds. Q. And you were under no contract to purchase from Cowen and Company a California bond? A. No sir. Q. How long would you say it took between the time that bond came into your slot on to your desk and the time you opened the window and yelled Cowen? A. Not a second more than fifteen. Q. Fifteen seconds? A. Not a second more than that. Q. When you opened the window where did the hoy come? A. To my left from the main door. Q. You heard the Goldberg boy testify, did you not, that when he put that bond into your window, he waited about a minute and a half, is that correct? A. I will say no. Q. Did you hear him say anything? A. Nothing. Q. The only thing you know is seeing the bond .shoot into the window. A. Exactly. Q. Was there a receipt on that bond to be signed by you? A. No sir, it was not. Q. It wasi merely a sale memorandum? A. Exactly. Q. Neither one of them is the young man to whom you delivered the bond? A. No sir. Q. You delivered the bond to some one else? A. Neither one of those (plaintiffs) boys." Mr. Campbell substantially corroborated Mr. Quackenbush's version.
Concededly, the boy to whom Quackenbush returned the bond delivered by Goldberg was not Goldberg, but some unidentified boy who made away with the bond. The bond was of the hearer type, fully negotiable.
The defendants have refused to make good the plaintiffs' loss, contending that they were chargeable only with due diligence, and that, accepting the version of the plaintiffs as given by Goldberg, it appears that they exercised all the care required of them. The plaintiffs contend that there was an absolute obligation on the part of the defendants to redeliver the bond to the plaintiffs, and that no question of negligence enters into the case. They also argue that if the negligence question does enter, there was sufficient evidence to warrant a finding that the defendants did not, in fact, exercise due care. The learned trial judge did not state the ground of his decision in plaintiffs' favor.
A person who has been put, through no act or fault of his own, in such a situation as that in which the defendants were put upon the delivery to them of ,the wrong bond, has come to. be known as " involuntary bailee " (1 Halsbury Laws of Eng. 528; Heugh v. L. & N. W. R. R. Co., L. R. 5 Ex. 51 (1870); 5 Cyc. 166, n. 27; Story Bailm. [7th ed.] § 44a, 83a), or bailee by casualty (T. J. Moss Tie Co. v. Kreilich, 80 Mo. App. 304) or constructive or quasi bailee (Schouler Bailm. [3d ed.] ¶ 3):
In the field of voluntary bailments, whether they be for hire or be otherwise coupled with an interest on the part of the bailee, or whether they be merely gratuitous, no rule is better settled than that it is the duty of the bailee to deliver the bailed article -to- the right person, and that delivery to the wrong person is not .capable of being' excused by any possible showing of care or good faith or innocence. Willard v. Bridge, 4 Barb. 361; Hawkins v. Hoffman, 6 Hill, 586; Esmay v. Fanning, 9 Barb. 176; Packard v. Getman, 4 Wend. 613; Carroll v. Mix, 51 Barb. 212; Coykendall v. Eaton, 55 id. 188; McEntee v. N. J. Steamboat Co., 45 N. Y. 34; Price v. Oswego & Syracuse Ry. Co., 50 id. 213; Bank of Oswego v. Doyle, 91 id. 32; Ouderkirk v. Central National Bank of Troy, 119 id. 263; Sonn v. Smith, 57 App. Div. 372; McKillop v. Reich, 76 id. 334; Cohen v. Koster, 133 id. 570; Hasson v. Platt, 163 id. 366; Stewart v. Frazier, 5 Ala. 114; Lichtenhein v. Boston & Providence Railroad Co., 11 Cush. 70; Hall v. Boston & Worcester Railroad Co., 14 Allen, 439; Jenkins v. Bacon, 111 Mass. 373; Jones v. Dowle, 9 M. & W. 19; 6 C. J. 1143; 27 Eng. R. Cas. 252, 253; 1 Halsbury Laws of Eng. 527.
Such distinctions as have been drawn between the duties of voluntary bailees for compensation, and voluntary gratuitous bailees, relate solely to the degree of care the bailee - should exercise in respect of the custody of the thing bailed. In respect of delivery to the proper person, no such distinction is drawn; the duty in both cases is absolute.
What, then, is the difference, if any, between the duty of a voluntary gratuitous bailee, and that of a wholly involuntary bailee? There is an astonishing paucity of decision and text opinion upon the subject. I think, however, that all that can be found upon it points to the conclusion that the involuntary bailee, as long as his lack of volition continues, is not under the slightest duty to care for or guard the subject of'the bailment, and cannot be held, in respect of custody, for what would even be the grossest negligence in the case of a voluntary bailment (1 Halsbury Laws of' Eng. 527, 528; Howard v. Ellis, 1 Cab. & El. 253; Smith v. Nashua & Lowell Railroad Co., 27 N. H. 86); but that in case the involuntary bailee shall exercise any dominion over the thing so bailed, he becomes as responsible as if he were a voluntary bailee. 1 Halsbury, 528, ¶ 1078; Story Bailm. (7th ed.) § 85-88; Smith v. N. & L. R. R. Co., supra; T. J. Moss Tie Co. v. Kreilich, 80 Mo. App. 304; Hiort v. Bott, L. R. 9 Ex. 86.
In Hiort v. Bott, supra, the plaintiff shipped barley to defendant, at the same time sending to defendant an invoice stating that the barley was ordered by defendant through G., described in the invoice as a broker acting for both parties, and with the invoice was a " delivery order " that made the barley deliverable to the order of ' ' consignor or consignee. ' ' The defendant had not ordered the barley, and had never had any dealings with either the plaintiff or G. A few days later G. called upon defendant, informed defendant that the shipment to him was made by mistake, and asked defendant to-indorse the delivery order to him, G. The defendant complied, and G., concededly an impostor, obtained the barley and absconded. It was held that as the defendant by reason of his affirmative act exercised dominion over the barley, thus causing a misdelivery, he was liable in conversion as matter of law. The defendant there relied largely upon an earlier case in the Exchequer, Heugh v. L. & N. W. R. R. Co., L. R. 5 Ex. 51 (1870). In the Heugh case the plaintiff shipped goods upon the supposed order of a concern that had in fact gone out of business, the order having been forged by one Nurse, a former employee of the consignee. The defendant carrier tendered the goods at the stated address of the consignee, and acceptance was refused by the persons who had succeeded to the possession of the premises. The carrier then mailed an " advice note " to. the consignee, at the same address, asking for instructions. Nurse shortly thereafter called upon the carrier, with the .advice note, and the carrier turned the goods over to him. It was held that the defendant carrier, described by Kelly, C. B., as an " involuntary bailee," was not .under an absolute duty to deliver to the proper person, but that it was properly a question for the jury whether the carrier had " exercised reasonable and proper care." One of the barons, Channell, said that " some American cases " were cited in support of the propor sition that the delivery to Nurse amounted in law to a conversion, but that they failed to satisfy 'him that any greater duty was cast upon the carrier than to exercise reasonable care. It may be said, in passing, that the decision in the Heugh case is directly opposed to the doctrine of the American cases. In Price v. Oswego & Syracuse R. R. Co., 50 N. Y. 213, 221, the doctrine of the Heugh case was expressly disapproved, and in Jenkins v. Bacon, 111 Mass. 373, it was said that " if the case of Heugh v. London & North Western Railway Co., L. R. 5 Ex. 51, can be said to present a case of delivery to the wrong person, (which is open to considerable doubt,) the doctrine there asserted is directly opposed to the above-cited decisions of this court. ' '
The distinction sought to be made by the judges in the Hiort case to escape the holding in the Heugh case is so far from clear to me that I shall not attempt to state it.
In T. J. Moss Tie Co. v. Kreilich, 80 Mo. App. 304, the organizers of a railroad company, which never became an accomplished fact, purchased a right of way with reversion to the grantor in case the road was not constructed. Prior to the abandonment of the project, railway ties were placed upon the land so purchased. After abandonment, the reversioner refused to give the ties up. It was held that he was held to an absolute liability to give them up to the true owner, and that, the only question in the cáse was as to who that owner was.
In Krumsky v. Loeser, 37 Misc. Rep. 504, the facts, as stated by Mr. Justice Greenbaum in his opinion, were as follows: " The plaintiff is a manufacturer of ladies' wrappers. The defendants are the proprietors of a large department store in Brooklyn. The parties had never had business relations with each other. On April 19, 1901, two swindlers purporting to represent the defendants ordered a bill of goods of the plaintiff, with directions to deliver them to the defendants' place of business. The plaintiff, after satisfying himself of the financial ability of defendants, as he asserts, sent the goods to the defendants by an expressman. It appears that the defendants' establishment is in the habit of receiving about 350 packages from various houses daily and that the goods were received under the assumption that they had been ordered by the defendants. Later in the day the man in charge of the receiving department of the defendants was called upon the telephone by a person who represented himself to be the plaintiff and who stated that the case of wrappers had been delivered to the defendants by mistake and that the goods would be called for. Shortly after this conversation a person called with an order, purporting to be signed by plaintiff, addressed to the defendants, requesting the redelivery of the case to bearer. The order explained that the mistake was occasioned by wrongly addressing the goods to the defendants instead of ' E. Losier, Savannah, G-a.,' and expressed the hope that the defendants had not been inconvenienced. The goods were thereupon handed over to the bearer of the order. It subsequently transpired that the plaintiff and the defendants were the victims of a swindle and the question is presented as to which of the parties must bear the loss of the goods." The opinion then proceeds: " The plaintiff attempts to fasten a liability upon the defendants as gratuitous bailees upon the theory of the defendants' negligence in accepting. the goods and delivering them up to a stranger. Were defendants bailees? A bailment must be predicated upon some contractual relations, express or implied, upon the delivery of the goods, between the bailor and bailee. In this case the goods were by trick, the result of a fraud practiced upon plaintiff, thrust upon the defendants, who thus for a short time were, unconsciously and unknowingly, the custodians of the plaintiff's goods. Where one becomes possessed of another's goods by chance or accident, no bailment obligation will arise unless the possessor is aware and has knowledge of the fact that goods have come into his possession which belong to another. In the case at bar, the knowledge that the defendants became possessed of the goods not belonging to them was communicated to them by the swindler to enable him to carry out his scheme of obtaining the property of the plaintiff. If I am apprised by another that a certain article belonging to him has been sent to me by mistake, am I not justified in assuming, from the very fact of such party first making me aware of its possession, that he is the true owner and entitled to its return? Am I obligated or beholden to the real owner, if I have been deceived, to account for the value of the article thus secured from me through trick? I think not. If, however, by any process of reasoning, the duty of a gratuitous bailee could be fastened upon the defendants, then I am of the opinion that, inasmuch as they would only be chargeable in that case with gross negligence (First National Bank v. Ocean National Bank, 60 N. Y. 278), they should not be here held liable. They were certainly no more negligent than was the plaintiff in parting with his goods. The defendants, indeed, acted in the matter as any ordinarily prudent man could have been expected to act under the circumstances."
I am of the opinion that the Krumsky case is clearly distinguishable from that at bar. As I read the opinion there, the holding of the court was predicated upon two considerations, neither of which touches the instant case, namely, that the possession of the defendants there was due to a trick and a fraud and defendants' total lack of knowledge of the true owner. As to the effect of fraud, there is support to be found for the Krumsky decision in Metzger v. Franklin Bank, 119 Ind. 359 (and see Schouler Bailm. [3d ed.] 72), but there was analogous fraud in the Hiort case, and in Duff v. Budd, 3 Brod. & B. 177, and in Price v. Oswego & Syracuse R. R. Co., 50 N. Y. 213, and numerous other of the cases I have cited, and not only do the decisions in those eases, holding the defendants to an absolute liability, negative the materiality of the fraud consideration, but in the Price ease that very point is discussed and rejected.
As to the effect of the total lack of knowledge on the part of the bailee concerning the identity of the bailor, the decision in the Krumsky case does, however, find strong support in the case of Morris v. Third Ave. R. R. Co., 1 Daly, 202. There a satchel was found in a street car by the conductor. No one knew how it got there. Presumably, it was unintentionally left behind by some passenger. The conductor brought it, at the end of his run, to the railroad office. A few minutes later an impostor called for the satchel and, upon testimony which the trial and appellate courts held warranted a finding that there was an inadequate description by the impostor of the contents of the satchel, the railroad officials delivered the satchel to the impostor. The ruling was that the defendant's duty was merely to exercise reasonable care. I think it is possible to agree that the case was correctly decided, without admitting that the decision touches the instant case, or that it was rested upon entirely correct principles. The court there described the defendant carrier as a bailee for hire at the time of its delivery over of the satchel. Had that been so, clearly the duty of the defendant to deliver to the right person was absolute. But, although the court fell into that undoubted error, I am inclined to think it. reached the right conclusion, and upon the proper ground, viz., that because the defendant carrier did not have any reason to know who the true owner was, nothing more conld have been required of it than to exercise due care to see to it that the satchel should come into the hands of the true owner.
I have reached the conclusion that while, at first blush, it may seem to be imposing upon the defendants an unduly severe rule of conduct to hold them to an absolute liability, the rule is no more severe than the occasion calls for. The exchequer judges in the Hiort case were reluctant to hold the defendant there to the rule of absolute liability, but they were, nevertheless, unanimous in doing so; and I think the rule worked more harshly there than it would here. There, the parties never had any relations with each other. Here, the plaintiffs were at least attempting to fill an order given by the defendants. The defendants could easily have protected themselves by telephoning the plaintiffs that the wrong bond had been delivered, or they could have sent the bond back to the plaintiffs by one óf their own messengers. Instead, they chose to take the chance of delivering it to the wrong messenger. As the delivery window was closed when the bond was dropped through the slot, and remained closed for an appreciable time, they could not have known what messenger had made the delivery.
As was said by one of the judges in the Hiort case, many ingenious supposititious cases might be suggested involving erroneous deliveries of parcels at one's home or business place, but, as was there observed, " probably the safest way of dealing with (any such case) is to wait until it arises."
The plaintiffs, as has already been mentioned, urge that if the defendants are not to be held in conversion they are, at least, liable in negligence. The action, however, was brought in conversion, and both sides insist that it was tried as a conversion action. The judgment, therefore, may only be sustained, if at all, upon that theory.
Since writing the foregoing, I have had the benefit of the opinion of Mr. Justice Lehman, in which, with characteristically cogent reasoning, my learned brother supports the view that there was no such exercise of dominion on defendants' part as to make applicable the rule of absolute obligation. I am not at all sure that, if the matter were wholly of first impression, I would not be inclined to agree with him; and, certainly, no one would justly criticize our higher courts if they should adopt Mr. Justice Lehman's view, and make it the basis of the rule of conduct it leads to. We shall permit an appeal, if the defeated party should so desire. In law, the most important of all things is that there be established rules that are well understood. I am holding as I do for the reason that ivhile at present there is very little law upon the subject, I am of the opinion that such authority as I have been able to fin'd seems to force the conclusion that when the defendants undertook to redeliver the bond they acted as greatly at their peril as if they had been voluntary bailees.
For the reasons stated, I vote to affirm.
Judgment affirmed, Avith twenty-five dollars costs, Avith leave to defendants to appeal to the Appellate DiAdsion.