Court Opinion

ID: 7197185
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:03:52.985217+00
Date Added: 2024-06-11T16:16:23.271428
License: Public Domain

On Application for Rehearing.
MilLer, J.
The very elaborate and vigorous brief for the rehearing, as well as the importance of this case, has prompted a re-examination.
The proposition that the pledge by the factor for his debts of the property of the principal can be maintained, derives, it is claimed, support from the English factor’s act and similar legislation of some of the other States. Our own jurisprudence is distinctly to the contrary, nor do we think the contention for the intervenor is materially assisted by the factor’s acts introduced into this discussion. The English act, as we understand it, maintained the pledge by the party intrusted with the bill of lading or warehouse receipt, provided the pledgee had no notice from the documents or otherwise that the party “intrusted” was not the real owner. We must presume “ intrusted” in this act has the usual significance. We can appreciate that if the owner intrusts an agent with his property or with the muniments of title creating all the indicia of ownership, the owner would be bound by the pledge as he would by any other disposition of his property by the agent, if the transferee was in good faith. In this case there was no intrusting by the owner of the factor with the indicia of title; all the owner did was to ship the *737rice to the factor for the purposes of sale, and might well be deemed to rely on that limitation the law imposes on the factor’s power and of which all who deal with him are by law deemed to be apprised. In those cases where the English statutes apply, the courts of England have held that pledges by factors are not deprived of the protection of the statute, if there is no evidence of bad faith in the pledgee other than knowledge that the pledgor is a factor. That knowledge our law implies in pledges by factors is (see 2 Kent, Secs. 626, 627) repeated in every phase of adjudications presenting the question. The Supreme Court of the Uuited States, in language guarded, it is true, because the question here was not determined, announce their dissent, or at least reluctance to accept the English interpretation, that taking the pledge from a party known to be factor, and to hold property as such is not in itself sufficient to show bad faith in the pledgee. Nor have the New York courts, in dealing with statutes on this subject, similar to the English statute with respect to pledges by factors, been able to maintain factor’s pledges upon the. English theory that knowledge of his relation or occupation was not enough to charge him with bad faith. Allen vs. St. Louis Bank, 120 U. S., p. 37. In none of the New York cases, as we understand them, of factors’ pledges was there any other basis to avoid the pledge than the fact it was made by one known to be a factor and was' of . property of that kind held by him as a factor. See 6 Hill, p. 512, and others cited in 120 U. S., p. 34. We do not therefore perceive that the English statute applying to those “intrusted with warehouse receipts” has any tendency to support the pledge by the factor not intrusted by the owner with the warehouse receipt or other similar indicia of title, and whose only function is to sell. Nor in the cases where the English act applies, does the construction of bad faith in the factor accord with the general current of American authority.
The New York factor’s act validates pledges by those holding warehouse receipts or bills of lading. That act entirely omitted that portion of the English act which saved the rights of the owner whenever the pledgee knew he was dealing with an agent. Yet under this New York statute their courts have held “ it was impossible to hold that the Legislature intended to enable the factor to commit a fraud on his principal by pledging or obtaining advances on the property when the pledgee knew he was dealing with an agent.
*738' The Missouri factor’s act followed the English and the New York act in upholding pledges created on the faith of warehouse receipts or bills of lading endorsed to the holders. The only, or rather the marked difference between the acts was that under the New York act, the pledgee accepting on the faith of apparent ownership was protected, and in the Missouri statute, the protection was to the pledge accepted on the faith of the receipt or bill of lading, duly endorsed. This Missouri act, as the Supreme Oourt of the United States observed, was not addressed to factors, nor does factor occur in any part of our statutes on which the intervenors rely. The act, said the court, was intended to regulate the issue and pledge of warehouse receipts. It does not seem to us any basis exists to give that statute any effect to protect pledges by factor, greater than that conceded to the New York act by the courts of that State. The act was designed to furnish the method of utilizing produce in warehouse by providing for loans on warehouse receipts, with no special reference to factors. The pledge by one known to be a factor carries a significance by legal implication inconsistent with good faith in the pledgee. Hence the New York courts excluded factors’ pledges from the protection of the act. To the extent deemed open to comment, the Supreme Court of the United States announced the same conclusion. This case in the Supreme Court of the United States arose under this Missouri act. The suit was on a note given to the St. Louis factor by his principal, and afterward transferred to the plaintiff bank. The defence was the note had been paid by cotton shipped by the maker to the factor, but instead of applying the shipments to the payment of the note, the factor pledged the cotton for his own debt to the bank. On the validity of this pledge the United States Circuit Court divided, and the question was certified to the Supreme Court of the United States. That court refused to enforce the pledge on the ground of non-compliance with the statutory conditions to create the pledge, but in the opinion occur expressions adverse to the protection claimed to be afforded by the Missouri statute to factor’s pledges, and indicating the appreciation the protection was only to bona fide endorsers of the receipt. Allen vs. St. Louis Bank, 120 U. S. 32, 35, 37, 39. It does not seem to us that these factor’s acts give material assistance to the intervenor’s pretension, even if we were at liberty to follow the acts.
We have, however, a well defined jurisprudence on this subject. *739From an early period our courts have enforced the principle that the factor could not for his own debts pledge the property of his principal, and that such pledge was no impediment to a recovery by the owner. Stetson, Avery & Co. vs. Gurney, 17 La. 164; Hadwin vs. Fisk, 1 An. 74; Bonniot vs. Fuentes, 10 An. 72; Miller vs. Schneider & Zuberbier, 19 An. 300; Young vs. Scott & Gage, 25 An. 313; Stern Bros. vs. Bank, 34 An. 1120; Lallande vs. His Creditors, 42 An. 705. Our jurisprudence is based as well on the theory of notice to the pledgee arising from the transaction, as on the broader ground that the factor, with power only to sell, can not pledge, and that no man can be deprived of his property without his consent. It is difficult to hold that a principle so well established and a jurisprudence so distinctly marked, has been completely overthrown by a statutory change hitherto unsuspected, and claimed to have begun more than a quarter of a century ago. It is required by the Constitution that the substantial object of every act shall find expression in the title. The acts relied on are entitled, one ‘‘ to prevent the issue of false receipts or bills of lading and to punish the fraudulent issue of cotton press receipts. Act No. 150 of 1868; another to define and regulate the business of public warehouses, the issue of warehouse receipts; to punish violations of the act and to repeal conflicting laws. Act No. 156 of 1888; and yet another with less .suggestiveness of the purpose now attributed to this legislation, “ to give a lien for the price on agricultural products sold in chartered cities. Acts 1890, No. 63. Would any legislator or citizen dream that under such titles it was proposed to displace a limitation of universal recognition on the power of the factor; radically change the contract of principal and agent, and clothe the factor with the power to appropriate for his own uses his principal property by procuring the issue of a warehouse receipt and pledging the receipt. When the factor’s pledge was attempted to be supported to the extent now claimed, under the act of 1868, the Supreme Court, discarding the interpretation sought, observed, that if any such purpose was ever designed, the act would fail on the constitutional objection to the title. It does seem to us that withont disregarding the constitutional requirement, it would be impossible to sustain these acts for the purposes now claimed, even if we believed that such purpose had been in the legislative contemplation.
The act of 1868, in its various sections, in so far as it is materia *740to this controversy, providing for the issue of cotton press receipts, enacted that the transferee shall be deemed to be the owner of the property so as to give validity to any pledge or transfer created by him. The act of 1888 mainly relied on, we presume, made the receipt of the warehouseman, negotiable, the same as promissory notes, the transferee to be deemed che owner to all intents and purposes of the property, subject only to the storage lien. The act of 1890 gave the lien to the vendor of agricultural products, with preference over all, including the holder of the warehouse receipt. The act of 1890 has, in our view, no sensible influence in this discussion. Of first impression, the acts of 1868 and 1888 seem designed to regulate the issue and pledge of warehouse receipts. Factors are not mentioned. The well defined relation of factor and principal does not seem to have been in the legislator’s contemplation, least of all, the intention to disturb it. Can we graft on these acts the displacement of a fixed limitation on his power and the substitution of his right to convert to his own use his principal’s property by the simple expedient it is supposed this statute affords. That is the exaction of the argument for the intervenor. The Missouri act, far stronger than our acts, in literal expression, to sustain the interpretation of the factor’s power, elicited from the Supreme Court of the United States a dissent from any such construction. Can more be claimed for the Louisiana statutes? In every commercial community there is apt to be a large quantity of property in warehouse awaiting the opportunity for sales. Legislation to facilitate loans on warehouse receipts of such property is of obvious importance. But the natural interpretation of such legislation is, it refers to owners, or those acting for the owner. It would be a strain to infer from such legislation, the legislative authority for the fraud by the factor on his principal, for that character, reason and law attributes to the pledge by the factor for his own uses of the principal’s property. We are not called upon, nor do we determine the scope of their acts save in respect to the purpose in hand. We are, however, at liberty to assign, as we have sought to do, the general scope of the acts. The pledge binds the owner who tenders the receipt; it binds the owner who “intrusts” (to borrow the word from the English act) the warehouse receipt or permits it to issue in another name. These instances we give, not as restrictive, but as illustrative. The shipper of rice or cotton to this market is no *741party to placing the property in the warehouse or causing the receipt to issue. He gives no assent to the pledge. All that, in this case, is the factor’s work. All that the principal has done is to ship his property under the mandate to sell it and remit him the proceeds. What we do hold if that, on no fair construction of the statutes is the proposition capable of support that cotton or rice, or other product, not sent here to be sold, can be taken from the owner by the factor’s piege for his own debts, and that the pledgee from the factor, with the notice the law conveys to him, can hold up any statute as a shield against the right of the owner, whose trust has been abused. Our legislation is in aid of all usual legitimate business purposes, but we more than pause on the other and different construction urged on us in this case. If the pledge is to be supported on the theory the pledgee is not to be deemed apprised of the violation of trust by the factor, the answer is in that significance unversally attached to such a pledge. The law presumes that knowledge, and the grounds of the presumption are too obvious to need, and certainly do not require discussion. “The pledgee is bound to know the extent of the factor’s power; he may call for the letter of advice, or make inquiry when the factor tenders the pledge, from whence the goods come,” is the terse expression of the text-books, repeated in the adjudged cases. 2 Kent, Sec. 9, pp. 62, 67. The burden of inquiry imposed by law is the equivalent of knowledge. In other words, what a man is required to know and can learn, he is presumed to know. Unless, then, we can construe our legislation to sustain pledges of another’s property with notice in the pledgee, this pledge can not be maintained. With the most careful consideration, we are utterly unable to interpret legislative acts designed to assist legitimate commercial necessities so as to overthrow long settled principles and sanction what the law deems frauds.
The law is the guide for courts, and fortunately the law is rarely, if ever, repugnant to public interest. We are told, in this case, that public policy requires factors’ pledges to be maintained. Under our law the factor can pledge his principal’s property to the extent of the factor’s advances. Acts 1876, No. 72. The act is to be construed with, and a limitation, if any was needed, on the other acts discussed. If not indebted to the factor and the principal desires his property to be pledged, he can give that direction. What other occasion exists for pledging his property? .Is the pledge to be made *742in the public interest, or for the factor’s benefit, or for the advantage of his creditors? We fail to appreciate the public policy that requires produce sent to this market for sale should be taken for either the public or any private interest, save that of the owner. Any interpretation of this court based on that kind of public policy does not strike us as calculated to promote any public interest.