Court Opinion

ID: 6582539
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:27.017881+00
Date Added: 2024-06-11T15:56:56.352385
License: Public Domain

Carpenter, J.,
(dissenting.) I will give as briefly as possible some of the reasons which lead me to dissent in these cases.
The New Haven Wire Company, a Connecticut corporation, desired to import iron rods from Europe to be used in its business of manufacturing wire. For that purpose they caused to be issued by Baring Brothers & Co. of London, a letter of credit to E. S. Wheeler & Co. of Liverpool; the credit to be used only in importing such rods. The Wire Company then constituted E. S. Wheeler & Co. its agents to purchase or order the rods. Wheeler & Co. then ordered a quantity of rods to be manufactured by a German manufacturer. When manufactured they were delivered to a steamship company in Antwerp to be transported to this country. The steamship company issued a bill of lading in blank and delivered it to Wheeler & Co. A consular invoice was also delivered to them. They then drew on the Barings by virtue of the credit for the amount stated by consular invoice to be the cost of the rods; and when the draft was presented for acceptance they caused to be delivered to the Barings the bill of lading and consular invoice filled up to their order. The draft, payable at a future day, was thereupon accepted. Wheeler & Co. then sold the draft, and with its avails paid to the manufacturer the price of the rods. The goods were then carried to New York, Baring Brothers & Co. consignees.
The Wire Company agreed to furnish funds in London, before the 'maturity of the draft, sufficient to meet it, together with commissions. The rods were delivered to the Wire Co. on giving its receipt, called a trust receipt, in which it agreed to hold the goods in trust for the Barings, as their property, and subject to their order, with liberty however to sell the same, provided that in case of sale it should account for and forthwith pay and deliver the proceeds or avails of the sale to the Barings. It also appears that the Wire Company used the rods in its business, confusing them with other goods of the same general character as it pleased. This had been the course of business for several years. All previous drafts *401were provided for at maturity, as per agreement. On this occasion the draft was not provided for when the Wire Co. failed and its property and affairs passed into the hands of a receiver. That this is briefly a correct history of the transaction will not be denied.
This proceeding is an application by the Barings asking the court to direct the receiver to deliver to them, as their property, such rods as can be identified as having been imported with the avails of the draft accepted by them.
The pivotal question in the case is—what title did the Barings have in the goods in question ? And that I apprehend depends largely upon the answer to another question, namely, from whom did they acquire that title ?
The majority of the court have adopted the theory of the applicants’ counsel, and hold that they acquired title from the German manufacturer; that in some way which I do not fully comprehend, they became the general absolute owners, under a contract to sell and deliver to the Wire Company on payment of the purchase money; and that when the goods were delivered to the Wire Company, it became a perfected conditional sale, the sole condition being that the title should not vest in the Wire Company until the price was paid.
To sustain this theory the learned counsel for the applicants virtually ask us not to be governed wholly or mainly by the written contract between the parties ; not to adhere too closely to the settled policy of our law relative to the possession of personal property by creditors claiming a lien thereon; not to accept what the parties have expressed in their contract as their intention; but to find another and radically different intention, from what the parties have done and from the object they had in view, interpreted by technical commercial phrases, by the laws of trade of unusual application, and by the necessities of international commerce. The majority of the-court, by adopting their theory, seem also to have sanctioned the reasoning by which it was supported.
On the contrary, my view of the case is that the Barings *402acquired no title from the manufacturer, but did acquire title from the Wire Company; that that title was not a general absolute one, but a special and qualified one, as mortgagees.
This view does not require me to imply a contract of a different nature from the one expressed, but does allow me to stand firmly and securely on the written contract of the parties ; and in interpreting that contract I have no occasion to ignore or explain away any of its provisions, or to disregard the law of this state, which I believe to be the same as that of New York and of England. Nor am I required to inject into it any obscure and hidden meaning, not expressed, derived from technical phrases, the laws of trade and modern mercantile usage; nor, above all, am I required to introduce into our system of jurisprudence a principle of doubtful expediency', and one which, at least so far as this case is concerned, strikes a blow at the favorite policy of this state to divide the assets of insolvent persons and corporations equally among all the creditors ; and that too for the benefit of foreign creditors at the expense of our own citizens.
It will be observed that I travel side by side with my associates to this extent—I agree that the Barings had a title, that that title was good against everybody until they delivered the possession to the Wire Company, and that the title is now good against the Wire Company. But I differ from them in toto as to the origin, nature and present validity of the title as against the creditors of the Wire Company. The latter is the important question; the two former are only important as bearing upon that.
As to the origin. Before stating my own ground I wish to notice the theory of the majority that the Barings were the original purchasers, or in some other way .derived title from the German manufacturers. They were never authorized to purchase these goods, but Wheeler & Co. were. They did not in fact purchase them, but Wheeler & Co., as agents of the Wire Company, did. They were utter strangers to the transaction until the draft was presented to them for acceptance; and at that time the goods were purchased *403and in the hands of the carriers. They did not furnish the money with which to pay for them, but they with others furnished the means of raising the money. If that of itself gave them title, it for the same reason gave title to Wheeler & Co., the Wire Company, and E. S. Wheeler & Co. of New Haven; and with greater reason, so far as the Wheeler companies are concerned, for they were not secured, and the applicants were.
But it is said that they received the bill of lading, and that that gave them a title. But a bill of lading is not ordinarily a muniment of title, but a symbol of possession. It may in some instances be evidence of title, precisely as possession is, but always subject to explanation. For the explanation we must look to the circumstances of each particular case ; and in looking at the circumstances and documents in this case, it conclusively appears that the bill of lading was delivered to them for the sole purpose of vesting them with the possession in order to complete and give effect to their title as mortgagees. Any other view seems to me to be giving that instrument an effect which the parties never contemplated. Should we not go directly to the only true source of light—the contract? There it appears, in terms, that the Wire Co., aside from the bill of lading, conveyed title to the Barings. The inference is inevitable that the bill of lading was not to give title but simply to give possession.
My own claim, that they derived title from the Wire Co., can be sustained in few words. In the letter of credit they stipulated with the Wire Co. that the bills drawn by virtue of the credit should be duly honored “ upon presentation at their banking house in London, if drawn and negotiated within six months from this date, and if accompanied by bills of lading for such goods filled up to the order of Baring Brothers & Co., and by consular invoice of the same to their order, for the account of whom it may concern.” When the letter of credit issued they took a receipt from the Wire Co., in and by which it agreed that the goods purchased with the avails of drafts drawn by virtue of said credit, the *404proceeds thereof, with satisfactory insurance, “ together with the bills of lading for the same, are hereby, in consideration of this credit, sold, assigned and transferred to Baring Brothers & Co.”
This assignment the Barings required, as an essential requisite to issuing the letter of credit, and accepted the goods and bill of lading thereunder from the Wire Co. Here we have in the written or printed documents, required and signed by these parties, that which explicitly shows how, and from whom, these applicants derived title, with no intimation in those documents, or in the finding of the court, that they derived title in any other manner or from any other source. With this record before us it is difficult to see how we can regard them as having acquired a title directly from the German manufacturer.
What is the nature of that title ? Is it general and absolute, or special and qualified, as that of mortgagees ? The Court of Appeals in New York, in Moors v. Kidder, 106 N. York, 32, a case cited and relied on by the majority, virtually sustained the claim of these very applicants, made by their counsel in that case, that a similar contract, in which the operative words were “ pledge ” and “ hypothecate,” was a mortgage as distinguished from a pledge. It seems however that the exigencies of that case did not require them to notice the distinction between a title as general owner, and a special title as mortgagee—the vital question in this case— and they do not further allude to it.
But authorities are not needed; for the parties themselves have answered the question in language too plain to be misunderstood. Immediately following the operative words quoted above, is this significant and expressive language :—“ as collateral security for the payment as above promised, and also of any other sums which may at the time of such purchase, or at any time before the making of the payment above promised, be owing by us to Baring Brothers & Co.” And again:—“ the provision for such bills of lading and other documents being intended merely for the purpose of affording additional security,” etc.
*405If parties may be permitted to make their own contracts and express their own intentions, no further argument would seem to be required to sustain my position.
But why is this anxiety on the part of the counsel for the applicants to’ have the court practically ignore the real contract made by the parties, and regard them clients as general owners? I can see but one answer. It is because they know that in no other way can their claim be sustained. They know that the moment they concede that they are mortgagees, they must also concede that when they parted with the possession to the Wire Company, with permission to treat it in all respects as its own, that moment their lien on the goods, as against creditors, was irrecoverably gone. Hence their desire to change their clients from mortgagees to conditional vendors, and to convert a surrender of mortgaged chattels to the mortgagor into a delivery to a conditional vendee, the condition being that the title should not vest until the purchase price should be paid. By this device the rules of law regarding chattel mortgages can be circumvented and foreign creditors of an insolvent corporation can be preferred.
But I propose to examine this device a little more in detail. Where and with whom did the supposed conditional sale originate? Certain it is that the parties have made no such contract. We shall search this record through in vain to find any intimation that the parties or either of them entertained any such idea. It is said that the contract which the parties made is in legal effect a conditional sale. But the two kinds of contract have but few elements in common. They are radically different, and are followed by very different legal consequences. This case is a good illustration of the truth of that proposition. Does the court intend to sanction the claim, in substance, that a conditional sale should be inferred from what was done, the laws of trade, and the supposed necessities of modern commerce? There is one answer which should be regarded as fatal to that claim, that where there is an express contract the law will never imply one, especially a different one, covering the *406same transaction. The law does not take it upon itself to make contracts for parties; and it never implies one except to carry into effect the presumed intention of the parties. There is no room here to presume an intention, and such an intention, for the parties have plainly expressed an entirely different one. Here is an express conditional sale from the Wire Company to the Barings; but it is upon the condition that it was to be defeated upon the performance of a condition subsequent. There is therefore no room to imply a conditional sale from the Barings to the Wire Company, the condition being a condition precedent.
The law declares the respective rights and duties of mortgagors and mortgagees; and by the application of that law hitherto there has been no difficulty in doing justice between the parties. The view taken by my brethren seems to me to introduce a change in their legal relations, and to give other and different rights and impose new obligations.
We agree, I think, that if this is a mortgage it is invalid as against creditors, in consequence of the delivery of the property to the Wire Company. That being so, it may be suggested that the decision will only affect these cases; and that if it is a mistaken interpretation of a contract, it will not be regarded as a precedent to disturb well settled rules of law. The vice of the decision, if there is any, is twofold. It is a precedent for all similar cases. Here are three before us now involving a large amount of money. How many more contracts of this nature now exist, and how many more will come into existence in consequence of this decision, it is impossible now to know. Again, I apprehend it will be urged as a precedent for treating all chattel mortgages as conditional sales. If it is, I must confess that at present I do not know how the claim can be answered. I can discover no sufficient ground on which a distinction can be made between this mortgage and any other.
I cannot see that the trust receipt materially affects the question I have discussed. It is simply air attempt to keep in force the provisions of the mortgage, notwithstanding the change of possession. It would seem that the parties regarded *407it as essential for that purpose. I will only say that if the mortgage cannot continue of its own force, I do not see how it is aided by the receipt.