Case Name: Francis A. Drexel et al., Resp'ts, v. Eliza A. Pease, Ex'rx, Impl'd, Def't. George St. Amant, App'lt
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1892-04-12
Citations: 44 N.Y. St. Rep. 264
Docket Number: 
Parties: Francis A. Drexel et al., Resp’ts, v. Eliza A. Pease, Ex’rx, Impl’d, Def’t. George St. Amant, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 44
Pages: 264–270

Head Matter:
Francis A. Drexel et al., Resp’ts, v. Eliza A. Pease, Ex’rx, Impl’d, Def’t. George St. Amant, App’lt.
(Court of Appeals,
Filed April 12, 1892.)
1. Lien—On mebchandisb fob advances.
One D, a packer, St. A., the purchaser in France, and defendant Pease in New York were engaged in a joint enterprise for the shipment and sale of sardines, and after payment of expenses the profits were to he divided equally among them. Plaintiffs, with knowledge of the arrangement, ad-0 vanced money on the. sardines upon letters of credit under an agreement in which Pease said, “And I further pledge to you as security for any other indebtedness of my firm to you any surplus that may remain either in the goods or the proceeds thereof, after providing for the acceptances under this credit.” Meld, that plaintiffs had no general lien on the sardines as against the equitable title of St. A. to secure them for other and prior indebtedness of Pease’s firm upon letters of credit issued by plaintiffs at request of Pease to other parties.
2. Same—Estoppel.
The letters of credit issued to St. A. provided that the drafts should be drawn in Prance “for the cost of the merchandise to be exported to an Atlantic port, and advice thereof to be given to (plaintiffs) the advice to be accompanied by abstract of invoice and bills of lading to our order.” St. A. drew for only forty per cent of the cost, which represented the amount to be paid by Pease. Held, that this did not vest the full ownership in plaintiffs, por did the wording of the agreement give foundation for the inference that the drafts must represent in all cases the full amount of the cost, and there was a clear notice to plaintiffs that sixty per cent had not been drawn for, and that some one else was interested to that extent.
Appeal -from a judgment of the supreme court, general term, first department, affirming interlocutory judgment in favor of plaintiffs rendered at special term.
Oliver J. Wells, for app’lt; F. 8. Bangs, for resp’ts.

Opinion:
Peckham, J.
The judgment in this action gave plaintiffs a specific lien on the merchandise (principally sardines) upon which they made advances, up to the full amount of those advances. In addition to the specific lien the judgment awarded the plaintiffs a general lien upon the surplus in the merchandise or the proceeds thereof remaining after providing for the payment of their advances as security for the other indebtedness of Pease's firm to the plaintiffs.
St. Amant, one of the defendants herein, is dissatisfied with the latter provision in such judgment. The cause of his dissatisfaction lies in the fact that he has an equitable title to and interest in this merchandise, which is as he claims superior to any lien of the plaintiffs thereon, excepting the specific lien for the advances .actually made on such merchandise'by the plaintiffs.
The agreement by which Pease gave to plaintiffs a specific lien on all merchandise to an amount equal to the sum advanced on the same by plaintiffs, as stated in such agreement, is one with which no fault is found by any of the parties hereto, and no one disputes plaintiffs' rights as regards their lien on such merchandise to the extent above indicated.
The trouble comes by reason of the clause in the agreement with the plaintiffs with reference to all the letters of credit, in which Pease says: And I further pledge to you as security for any other indebtedness of my firm to you any surplus that may remain either in the goods or the proceeds thereof, after providing for the acceptances under this credit. The sardines which made up the greater part of the merchandise in question on this appeal, were procured pursuant to the provisions of a contract which was under consideration by us on an appeal in this action from that part of the judgment which adjusted the conflicting claims of the «defendants between themselves upon the merchandise or the proceeds arising from a sale thereof.
Upon that appeal we held that under this contract one Dumagnou, who was the packer of the sardines, together with St Amant, the one who made, the purchase in France, and the defendant Pease were engaged in a joint enterprise for the shipment and sale of these sardines, and, after payment of expenses, the profits were to be divided equally between them. We also held that St. Amant (to whom Dumagnou assigned his interest) had an equitable title to the merchandise which was superior to that of the individual creditors of Pease, and that such equity-attached to the funds in the receiver's hands, which were the proceeds of the sale of such merchandise. Drexel v. Pease, 129 N. Y., 96; 41 St. Rep., 236. The question now to be determined is'whether; such equitable title is not also superior to the general lien of the plaintiffs. Can plaintiffs hold the merchandise for any sum 'other than the advances made by them on its security ? If all the facts were known to plaintiffs or their correspondents in Paris at the time when the latter advanced the money on the sardines, it is plain that they would have a specific lien thereon up to the amount of their advances on them, and I think it equally plain they would have no general lien thereon as against the- defendant St. Amant to secure plaintiffs for other and -prior indebtedness of Pease's firm upon letters of credit issued by plaintiffs at request of Pease to other parties. At least they would have no such lien upon anything more than the share of Pease in the goods. This would be so because the other interest or shares in the merchandise would hot belong to Pease, and as the plaintiffs, under the supposition, would be aware of that fact, the agreement of Pease to give plaintiffs á general lien for other and prior indebtedness not incurred upon the faith of the merchandise, upon an interest therein which they knew he did not own, would be worthless as against those who did own such interest and had not consented to such lien. '
The history of the " other indebtedness " which plaintiffs desire to hold the St. Amant merchandise as security for, is in brief this: The defendant Pease had different correspondents in Europe, wholly disconnected with each other, who were purchasing merchandise for him at different places. At about the time of the issuing of the letters of credit to St. Amant, of Paris, by plaintiffs at request of Pease, the plaintiffs also upon like request issued letters to the firm of C. Richard Colin & Co., of Bordeaux.
The- latter purchased merchandise,- drew drafts upon Drexel, Harjes & Co. in payment for the cost thereof, and gave invoices and bills of lading to plaintiffs' order in the same manner as in the case-of St. Amant, and plaintiffs advanced the money upon such merchandise on the faith thereof, and on the invoices and the bills of lading to tbéir order. In the case of the Cohn merchandise the plaintiffs will be unable to get back the full amount of their advances thereon unless they are allowed a lien on the surplus of the St. Amant merchandise after paying their advances made thereon, and before any other claim upon such surplus is allowed. This is claimed by plaintiffs by virtue of the agreement for a general lien above referred to.
Plaintiffs' advances upon the merchandise purchased under the Cohn letters of credit were not made on the faith or credit of the merchandise purchased under letters issued to St. Amant, and as it does not appear that the latter was aware that Pease had attempted to pledge his (St. Amant's) property as security for Pease's general indebtedness, it cannot be argued that St. Amant consented to such pledge when he used the letter of credit to raise funds to pay Pease's share of the purchase money for the sardines. The plaintiffs, however, claim there are facts (not yet stated) which form an equitable estoppel preventing the defendant St Amant from setting up hjs title to the merchandise as against the plaintiffs, and under which the plaintiffs are entitled to claim their general- lien upon it. The plaintiffs state that the letters of credit issued by them to both St. Amant and Cohn upon request of Pease, and which constituted the only authority for St. Amant's or Cohn's drafts upon Drexel, Harjes & Co., of Paris, who were plaintiffs' correspondents and agents herein, provided that the drafts should be drawn.in France "for the cost of the merchandise to be exported to an Atlantic port, and advice thereof to be given to Messrs. Drexel, Harjes & Co.; the advice to be accompanied by abstracts of invoices and bills of lading to our order." St. Amant, instead of drawing for the full and entire cost of the merchandise, drew only for forty or fifty per cent thereof pursuant to the contract above mentioned between him and Pease, and the provisions of which have already been construed by us on the former appeal herein.
This forty per cent represented only the amount - of the cost which was to be paid by Pease, the balance of such cost in the case of the sardines being paid by and divided between Dumagnou and St. Amant, the latter paying forty and the former the remaining twenty per cent. The court found that "St. Amant on receiving invoices of said goods from Dumagnou, advanced thereon eighty per cent of the amount of said invoices, and thereafter delivered the bill of lading arid invoices to Messrs. Drexel, Harjes & Co., and received their acceptances for forty per cent of the invoice value of. the merchandise, the cost of stamps and certificates being in some cases added." This was pursuant to the agreement between plaintiffs and Pease, by which it was provided that the parties to whom the letters were issued and who purchased the merchandise, should when the drafts were drawn give advice thereof to Drexel, Harjes & Co., and the advice was to be accompanied by abstracts of invoices and bills of lading to plaintiffs' order, remaining bills of lading with certified invoices and consul's certificates to be sent to plaintiffs direct by vessel.
From these facts the plaintiffs claim that St. Amant by his own act vested the ownership of the property in the plaintiffs and under such circumstances as were equivalent to- a representation by him that any claim of his for the cost of merchandise had been satisfied. St Amant cannot, as plaintiffs claim, be now permitted to prove as against them that the transaction was not a sale and. delivery of the goods, or that the acceptance and payment of the drafts drawn on them or their agents by St. Amant did not constitute a full payment of the whole cost of such merchandise. They also say that Pease's right to pledge the merchandise generally for all his indebtedness "to plaintiffs is beyond question if his ownership were -conceded or proved, and St, Am-ant is bound to concede such ownership as to. the plaintiffs in view .of his tacit representation that the drafts were for the cost (meaning the full cost) of the merchandise.
We think this claim is inadmissible.
The cases in regard to the vesting of the title to property in the bankers or others who advance money upon such property and take bills of lading therefor to their order, do not go the length necessary for the plaintiffs here.
As stated -in those cases the doctrine is that where a commercial correspondent advances his own money or credit for a principal for the purchase of property for such principal and takes the bills of lading in his own name., looking to the property -as security -for reimbursement, such correspondent becomes the owner of the property instead of the pledgee up to the moment when the original principal shall pay the purchase price, and the correspondent occupies the position of an owner under a contract to sell and deliver when the purchase price is paid. This doctrine is stated in Moors v. Kidder, 106 N. Y., 32; 8 St. Rep., 877, and founded upon the cases cited by Finch, J., in that case. Nothing therein gives color to the idea that the correspondent's ownership is of that character which would permit' hisi exaction, even though agreed to by the principal, of a 'general lien upon the property for other and prior indebtedness of the principal as against one in the situation of St. Amant. The correspondent's position is one of ownership so far only as is necessary to secure him for the advances be made upon the merchandise described in the bill of lading, and in such a case as this he is bound to sell upon receipt of the purchase price from the principal, or in other words upon receipt of the amount he advanced upon its credit. In no other sense is the correspondent the owner of the property.
Nor does the wording of the agreement - as to the drawing of the drafts for the cost of merchandise give foundation for the inference that the drafts must represent in all cases the 'full amount of such cost.
The language does not bear such interpretation. Its meaning plainly is to limit the amount for which the draft is to be drawn by the cost of the merchandise against which it is drawn and upon which the advance is to be made. It must not in any event be for more than such cost and it must be on account thereof. Within the limits of the full amount of such cost the draft may be drawn for any sum, so long as it is on account of the cost and for no other consideration.
That this was the understanding of the parties is~also plain. St. Amant advanced -in the first instance but eighty per cent, of the cost of the sardines, and he then took the invoices of the mer chandise to the Paris correspondents of the plaintiffs, and obtained their acceptances for only forty per cent, of the invoice valve 'of the goods. There was in such transaction a clear notice to the plaintiffs' correspondents that sixty per cent of the value of the merchandise had not been drawn for, and that there must be some one interested in the merchandise not represented by the draft for but forty per cent of its value.
The practical construction given to the contract by the parties thereto is at war with the claim now made by the plaintiffs.
If it be assumed, however, that the plaintiffs' later construction is the correct one, and that the drafts drawn by St. Amant operated as an implied representation that they were for the full cost of the merchandise, I do not see that the plaintiffs' position is favorably affected even upon such assumption. They did not alter their position with regard to the Cohn indebtedness already incurred by reason of any representation expressed or implied in regard to the St. Amant merchandise.
There is no reason why the fact of St Amant's interest in the merchandise should not be asserted as against a claim of plaintiffs for a general lien thereon to secure them for the payment of other and prior indebtedness arising out of another transaction with another person, and which was wholly unconnected with and entirely separate from such merchandise and all representations in regard thereto.
It is too plain for discussion that the plaintiffs in fact made no advances to Cohn upon the faith of merchandise which might or might not thereafter be purchased by St. Amant. The advances they made Cohn were made upon the faith of the merchandise he purchased, and which he transferred to them when their agents accepted his drafts and took the invoices and bills of lading for such merchandise in the names of the plaintiffs. Whether St Amant would ever thereafter purchase -another dollar of merchandise for or on account of Pease and come to Drexel, Harjes .& Co. with drafts for any part, or the whole of the cost thereof, was something of which plaintiffs were of course wholly ignorant. It is idle to say that under such circumstances any advances to Cohn were made upon the. faith of property which plaintiffs or their Paris agents knew nothing of and which St Amant might never purchase, and which if he did purchase they were to make advances on to him at the time he would draw upon their agents.
It is equally plain that the only advances made to St Amant were made in payment of the drafts drawn for but forty (in some cases fifty) per cent of the cost of that particular merchandisa They have been repaid those advances.
The agreement for a general lien in favor of plaintiffs upon the St Amant merchandise to secure them for their prior advances on the Cohn merchandise has no basis to stand upon when opposed to the equitable title of St. Amant As the plaintiffs parted with no value beyond the amount for which they have a specific lien on the merchandise, there is no reason why St Amant should not be permitted to now show the truth, even as against his prior implied representation. The plaintiffs in answer to this statement claim that under their agreement with Pease they in legal effect did make advances to Cohn in part at least upon the faith of •the merchandise purchased by St. Amant. They say that in view of the agreement for a general lien every draft paid by their correspondents, which was drawn by St. Amant or Cohn, constituted an advance made by plaintiffs without reference to the particular letter of credit upon which the draft might be drawn, and that the consideration was three-fold. (1) Pease's engagement to repay; (2) the engagement that the merchandise purchased should stand as security for the repayment of the particular draft drawn against it; (8) the engagement that the merchandise-should- stand as security for any other indebtedness of Pease,, including a prior one.
There is no doubt of the validity, of the agreement for a general lién as between the parties -to it. The consideration was sufficient, and if the plaintiffs had in fact made the advances to Cohn, not. only upon the faith of the merchandise purchased by him and upon his-delivering the invoices and bills of lading to plaintiffs'order, but also upon the faith of merchandise^ already purchased by St. Amant, it might perhaps be claimed on their- part that plaintiffs were entitled to t-heir general lien upon the St. Amant. merchandise as security for their claim by reason of the loss on the Cohn merchandise. This is not the case, however, and a discussion of the rights of the parties upon that assumption is beside the question. The Cohn indebtedness had no connection with the St. Amant merchandise.
The judgment must, therefore, be' modified by deducting from the amount of the plaintiffs' recovery the amount of the-deficiency arising upon the Cohn merchandise,' being $2,249.79, with interest from-the time of the entry of such judgment, and also by reducing the extra allowance to the amount of five per cent on the plaintiffs' modified recovery, and the defendant St. Amant is - entitled to recover his costs of appeal as against the plaintiffs-herein. .
All concur.
Modifying 32 St. Rep., 853.