Court Opinion

ID: 9305338
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:16:29.180959+00
Date Added: 2024-06-11T17:13:52.657731
License: Public Domain

Jackson, J.
This suit is brought to recover the proceeds of a certain lot of cotton as the property of the plaintiffs, which it is claimed was wrongfully converted by defendants to their own use. There is no controversy or dispute as to the material facts of the case, which are the foL lowing: In December, 1885, the plaintiffs were the consignees and owners of 79 bales of cotton, which were shipped to them from points on the Tennessee river near Huntsville, Ala., by the' steam-boat Myra, to be carried to Chattanooga,, and from there reshipped by way of the Cincinnati Southern Railroad to the plaintiffs at Cincinnati, where they resided and did business. There was also upon the steam-boat on this trip another small lot of cotton (about 18 bales) in addition to that belonging to plaintiffs. Before the Myra reached Chattanooga, her port of destination, so far as plaintiffs’ cotton was concerned, a fire occurred on the boat, winch damaged a portion of her cotton cargo, by burning off the bagging, obliterating the marks, and scorching the cotton in such a way as to render it difficult, if not impossible, to separate or distinguish such damaged portion as between the plaintiffs and the owners or consignees of the small lot. On the arrival of the Myra at Chattanooga, *332only 45 of the 79 bales consigned to plaintiffs could be clearly identified. These 45 bales were, by warehousemen at Chattanooga, duly forwarded to and received by plaintiffs. The cotton damaged by fire and water, embracing 34 bales of plaintiffs’ cotton, and 18 bales belonging to other parties, was first stored in a common mass in a warehouse at Chattanooga, and was shortly afterwards shipped by G. A. Samuels, the master of the Myra, to the defendants, Hill, Fontaine & Co., cotton factors and commission merchants at Memphis, Tenn., to whom said Samuels ordered the railroad bills of lading for said 52 damaged bales. On the arrival of the boat at Chattanooga no notice wras given plaintiffs of the fact that 34 bales of their cotton were damaged, and its marks obliterated; norw'ere they,informed of the fact that it had been stored in a warehouse at Chattanooga; nor were they asked to give instructions in reference to its disposition. They had no knowledge or information that said Sam-uels would or had shipped the cotton to the defendants, and never consented to his so doing. In making this shipment of said 52 damaged bales of cotton to the defendants, Samuels took the bills of lading therefor in his own name, and in forwarding to defendants the bills of lading for the same, with his blank indorsement thereon, he did not disclose to them the facts in connection .with the cotton. He made the consignment to defendants not as master of the Myra, or in any agency capacity, but in his own name, as the owner of the cotton. The defendants were entirely ignorant of the plaintiffs’ interest in the cotton, nor was there anything in connection with the shipment to lead them to doubt or suspect that Samuels was not the owner, as he assumed to be in making the consignment. In a letter inclosing the bills of lading, and advising the defendants of the shipment, Samuels notified them that he had drawn certain drafts on them to the amount of $1,348.51. He, however, between the 5th and 10th of December, 1885, drew drafts on defendants to the amount of $1,448.51,'which w'ere duly honored and paid by them on and between said dates. The cotton was received by defendants at Memphis on or about December 12, 1885. In order to put the cotton in condition for sale, it had to be repacked, and in the repacking it made or turned out only 48 bales, which the defendants thereafter sold for account of said Samuels, with whom defendants opened an account current on their books, in which account they .charged said Samuels with the amount of his several drafts as paid, together with the balance of interest against him, amounting December 7, 1886, to $10.20, and credited him with the net proceeds arising from the sales of the cotton. The net proceeds thus realized from the cotton by the defendants, with the dates of sales and the dates of credits given Samuels therefor, as appears from a statement furnished by defendants, were the following, viz.: December 31, 1885, 3 bales cotton sold, net proceeds, $93.24, credited to Samuels J.anuary 18,1886; December 31,1885, 4 bales cotton sold, net proceeds, $121.22, credited to Samuels January 13, 1886; January 2, 1886, 14 bales cotton sold', net proceeds, $439.76, credited to Samuels January 14, 1886, January 4,1886,4 bales cotton sold, net proceeds, $115.99, credited to Samuels January 15,1886; January 4,1886, 3 bales cotton sold, *333net proceeds, $108.29, credited to Samuels January 16, 1886; January 13, 1886, 15 bales cotton sold, net proceeds, $429.59, credited to Sam-uels January 22, 1886; January 14, 1886, 1 bale cotton sold, net proceeds, $35.14, credited to Samuels January 26,1886; January 15,1886, 3 bales cotton sold, net proceeds, $85,24, credited to Samuels January, 25, 1886; March 6, 1886, 1 bale cotton sold, net proceeds, $26.60, credited to Samuels March 6, 1886. The plaintiffs, under date of January 13, 1886, wrote the defendants as follows:
“Messrs. Hill, Fontaine <& Co. Memphis, Tenn. — Dear Sirs: We learn that 34 bales of cotton shipped to us on tlio steam-boat Myra, and which were damaged by fire and water, have been sent to you, and are now in your possession. We beg that you will take notice that we hold B. L. for this 34 bales, and that the cotton was wrongfully diverted without onr consent or knowledge; and that we shall hold you accountable for the same.”
This letter, as stated by one of the defendants, Mr. Fontaine, was received on the 14th of January, 1886. The defendants failed to reply thereto, and it was followed, early in February, 1886, by a formal demand upon them for the cotton or its proceeds. The defendants declined to recognize the plaintiffs’ right to the cotton or its proceeds, on the ground that they had made advances to Samuels in the bonafide^ belief that he was the owner of the cotton, and on the credit of the bills of lading which he indorsed to them, and of the cotton which he consigned to them; that these advances to Samuels having been made by them upon the security of the cotton so placed in their hands, and before they had any notice or knowdedge of plaintiffs’ rights in or to the cotton, they had the right to retain it as against the plaintiffs, and apply the proceeds thereof to reimburse themselves for the advances so made said Samuels. It appears from the foregoing statement that up to January 14, 1886, when defendants received plaintiffs’ letter notifying them of their claim to the cotton, only $121.22 (being proceeds of 4 bales cotton sold December 31, 1885) had been actually credited by defendants to said Samuels. The other credits were given said Samuels on and after the 14th of January, 1886. It admits of no question, under the evidence, that plaintiffs’ 34 bales of damaged cotton went into the defendants’hands in the mingled lot of 52 bales shipped to them by Samuels, which, upon the repacking, made the 48 fíales, which defendants sold, and applied the proceeds thereof as above stated; and the plaintiffs therefore claim of the defendants such proportion of the entire proceeds as the quantity of cotton belonging to them bore to the whole. In other -words, they claim 34-52 of the whole proceeds, being $951.35, with interest.
Under the foregoing statement of facts and claims of the respective parties, the single legal question presented for consideration and decision is whether plaintiffs are entitled to recover from defendants the amount of said proceeds arising from the sale of their share or proportion of said cotton. The plaintiffs’ right to recover is resisted on two distinct grounds: First, it is insisted on behalf of defendants that, inasmuch as no particular 34 hales could be selected out of the damaged lot of cotton on its arrival at Chattanooga, and be forwarded to plaintiffs as their own cotton, *334Samuels, the master of the Mjwa, under the maritime law had the right, and it was his duty, to sell the injured cargo; that, having the right to sell as master under the circumstances surrounding the cotton, Samuels had the right to select the defendants as cotton factors to make the sale; that he had also authority to receive or collect the proceeds, and distribute the same among the several owners of the cotton; and that, having exercised these rights, and collected the money for the cotton sold, his failure to pay the same over to the rightful owners is a mere breach of his authorized agency, and a matter with which defendants are not concerned, and in no way responsible. This position is rested upon the authority of Jordan v. Insurance Co., 1 Story, 342. The Velona, 3 Ware, 139, and Miston v. Lord, 1 Blatchf. 354, which hold that in cases of calamity or unforeseen and unprovided necessity during the voyage the law' clothes the master with the authority of a supercargo, and authorizes him to make such disposition of the cargo as will be most for the interest of the owners, upon whom his acts done under such circumstances, and in the exercise of a sound discretion, are binding. But the rule laid down in those cases has no application to the present. The Myra, in respect to plaintiffs’ cotton, had completed her voyage when she reached Chattanooga, and the cotton-was at its place of destination so far as concerned the boat and her master. No case has been found going to the extent of holding that the master may sell his cargo damaged during the voyage after the vessel and cargo have reached their destination and the voyage is completed, and the owner or owners of the damaged cargo can be readily reached, or easily communicated with for instructions. The rule announced in the cases relied on by defendants’ counsel rests upon a principle of necessity, growing out of accidents or calamities occurring during the voyage in positions or places where the master cannot communicate with or receive instructions from the owner of the cargo. It is doubtful whether it can or should be applied to our inland navigation, where the means of communication with owners or consignees of cargoes are easy and readily accessible. But the master’s authority to sell either vessel or cargo is subject to well-defined restrictions. His sale is only valid when made in good faith from necessity, which must arise from an impending peril; and he should not sell in any case without first giving notice to the owner, if the circumstances admit of the necessary delay. “The true criterion for determining the occurrence of the master’s authority to sell is the inquiry whether the owners or insurers, when they are not distant from the .scene of stranding, can, by the earliest use of the ordinary means to convey intelligence, be informed of the situation of the vessel in time to direct the master before she will probably be lost. ” Insurance Co. v. The Sarah Ann, 13 Pet. 401. In this case it is also held that the burden of proving the necessity for the sale by the master, and his good faith in making it, rest upon the person claiming under such sale. To maintain the .purchaser’s ownership under sale by. the master against the claim of the- original owner he must show “that the necessity for a sale had arisen; and that it wras made in the good faith and sound discretion of the master.” In Pike v. Balch, 38 Me. 302, it was held that *335the master was bound to notify the owners, if possible, before selling the cargo; and in the case of The Joshua Barker, Abb. Adm. 215, the same rule was announced. In this last case, a vessel having on board a cargo of flour for transportation, capsized at her wharf before sailing, and the cargo was much damaged. The carriers might easily have sought instructions from the owners of the cargo by telegraph, or by sending a special messenger, who could have returned within 24 hours; but they neglected to do so, and sold the cargo upon their own authority, at auction. It was held that the sale of the flour, under those circumstances, was an unlawful conversion by the carrier.
Now, testing the authority of the master in the present case by these qualifications or restrictions upon the general rule relied on by counsel for defendants, it is very clear that Samuels, the master of the Myra, had no right, and was under no duty, to sell the plaintiffs’ damaged cotton. No peril was impending over that cotton after its arrival at Chattanooga, and after it was there stored in the warehouse. The master could readily” have communicated with, and received instructions from, the plaintiffs at Cincinnati. There was no probability of the cotton being lost or rendered worthless by the delay that might ensue from the master’s communicating with and receiving instructions from the plaintiffs by the ordi- ' nary means of conveying intelligence. There was no difficulty or danger of loss in storing the damaged cotton for account of the several owners, and notifying them of its situation and condition; and lastly, the master’s conduct in the transaction was clearly wanting in that good faith which is essential to the exercise of his authority to sell in.order to divest the title of the rightful or original owner. The facts of the case do not sustain the proposition that Samuels, by virtue of his position as master, had authority to sell plaintiffs’ cotton. On the contrary, they establish that his shipment of the cotton to defendants for sale was without necessity, and that in so dealing with it he was acting tortiously and •wrongfully, with the fraudulent intent and purpose of converting the proceeds to bis own use. But, aside from this, it clearly appears that he did not undertake to sell the cotton in the exercise of any agency authority; nor did defendants deal with him as master, or in any other capacity than as owner of the cotton. They received the shipment from Sam-uels as owner, advanced him money on the cotton in his own name and right, and opened an account with him individually as the owner of the consignment, and undertook to account to him, and him alone, for the proceeds arising from the sale of the cotton. It is not claimed or pretended that defendants were deceived or misled by any representations made by Samuels touching his exercise of an express or implied authority to sell the cotton by virtue of his position as master, and from the necessity of the case. On the contrary, it is distinctly stated by Mr. Fontaine that the defendants had no knowledge, notice, or information when they received the cotton, and made Samuels advances on it by paying his drafts drawn on them, that said Samuels had or bore any agency relation to or connection with the cotton; that the defendants supposed he was the real owner, and dealt with him as such. Under these cir*336cumstances the question of Samuels’ apparent or abused powers and authority as master cuts no figure in the case, .and furnishes no ground of defense to the plaintiffs’ right to follow their cotton or its proceeds into the hands of the defendants. Again, it is well settled that a factor or agent who has power or authority to sell the property of his principal has no power to affect the property by tortiously pledging it as a security for a debt of ;his own, and it is of no consequence that the pledgee is ignorant of the agents or factors not being the owner. When goods are so pledged or disposed of, the principal may recover them back by an action of trover against the pawnee, without tendering him the sum for which the goods were pledged. Warner v. Martin, 11 How. 224, and cases cited, and Bank v. Trenholm, 12 Heisk. 520, and cases cited. It has not been, nor could it be properly, claimed that Samuels’ position as a common carrier of the cotton, constituting him an ordinary bailee for hire, (assuming that he was the owner of the Myra,) gave him any authority to sell or pledge the plaintiffs’ property. In his capacity as carrier his duty was to cany the cotton to and deliver it at Chattanooga. “Such possession by a carrier of goods is not even prima facie evidence of any ownership, or of any general authority over the goods, except such as is strictly incident to, and limited by, his duties as carrier; and third persons dealing with him in reference to the goods do so at their peril.” The T. A. Goddard, 12 Fed. Rep. 182, and cases cited. After the cotton arrived at Chattanooga, Samuels had no power or authority, either under .the maritime or common law7, to reship it to defendants, and procure advances upon it for his own account. It follows, therefore, that in no view which can be taken of Samuels’ connection wdth or relation to the cotton in question can his action in consigning the same to defendants, and obtaining advances thereon for his own use and benefit, confer upon the defendants any right to the cotton or its proceeds as against the true owners. In thus dealing with the cotton, Samuels was in no sense, and under no law, acting as plaintiffs’ agent, so as to require them to look to him, rather than to defendants, for the proceeds of their property.
The next ground of defense assumed, and the one most earnestly insisted upon by counsel for defendants, is that defendants acted in the transaction merely as cotton factors or agents to sell; that the money, which they paid to or for Samuels on his drafts before receiving the cotton should be regarded as merely turning over to him, in advance, the proceeds of its future sale; and that in thus dealing with Samuels and the cotton they acted in good faith, under the belief that he was the real owner of the' property, and in ignorance of the plaintiffs’ rights. It is urged that, under such circumstances and conditions, however wrongful and unauthorized, the conduct of Samuels may have, been, they are brought within the principle, and are entitled to the protection of, the rule laid .down in the case of Roach v. Turk, 9 Heisk. 708-719, where it was held that “the mere act of selling goods obtained from an unauthorized;agent, with, no knowledge of the principal’s title, will,not render a.factor liable for a conversion,’’. That “to make the factor liable, a de*337mand must be made while the goods ot their proceeds are in his hands; or notice of the owner’s title, or want of title in the party from whom they are received, must be brought home to him, and thus fix upon him a wrongful assertion of dominion over them in defiance of the owner’s right.” This decision overruled the previous case of Taylor v. Pope, 5 Cold. 413, which had announced a directly contrary doctrine. In Roach v. Turk the facts were briefly these: Turk & Hawkins sent three bales of cotton to one Moseby, a shipping agent at Commerce Landing on the Mississippi river, to be shipped to A. J. Roach & Co., commission merchants at Memphis. Moseby was absent when the cotton arrived at said landing, and it was delivered to his clerk, J.'W. Ware, with the owner’s directions as to its shipment. Instead of shipping the cotton as directed for account of Turk & Hawkins, Ware forwarded the cotton to Roach & Co., in his own name, and as his own property, with directions to hold it until further orders. A few days after the cotton was received by Roach & Co., Ware came to Memphis, and directed them to sell the cotton, which they did; and Ware having identified himself as the party who had made the shipment to them, Roach & Co. paid over to him the proceeds of the cotton. Ware soon after absconded. A short time aft-erwards, Turk, one of the owmers, came to Memphis, called upon Roach & Co., inquired about the cotton, and ascertained that it had been sold as aforesaid, and that the proceeds had been paid over to Ware. Turk thereupon demanded the proceeds of the cotton from Roach & Co. They refused to comply with the demand, and Turk & Hawkins then brought suit against them for the same, and it was held that they were not entitled to recover; the ground of this holding being that Roach & Co., in receiving and selling the cotton, and in paying over the proceeds to Ware, from whom they received the cotton, acted merely as sale agents; that, having so acted in good faith, and paid over the proceeds before any demand was made upon them by the true owners, or any notice of their rights, the factors were not guilty of a conversion of the cotton, and could not therefore be held liable to the owners for its proceeds. It is a matter of grave doubt whether this case can be reconciled with the great current of authority on the point involved and decided; but, without pausing to consider that question, we are clearly of the opinion that the rule laid down in Roach v. Turk, if recognized and a’dhered to at all, should, in its application, be limited and confined strictly to the precise point decided therein, which was simply this: That a factor who in good faith executed for one who is not the owner a mere agency to sell goods, and who turns over the proceeds of such sales to the wrong-doer before any demand is made upon him by the true owner, or before receiving notice of the owner’s rights, is not liable for a conversion of the goods. In thus limiting that decision it does not cover or control the present case, which, in several material respects, is clearly distinguishable from it. The defendants in this case were not simply factors executing a mere agency in selling the cotton and paying over the proceeds before notice of plaintiffs’ rights. In the transaction they occupied and sustained towards Samuels the dual character of- creditors and /actors. *338They loaned or advanced their own funds to Samuels, thereby becoming his creditors. It is true, they did this upon the faith of the cotton which he consigned them; but in making these advances they acquired no valid title to, or lien upon, the cotton as against the plaintiffs. This' is conceded in Roach v. Turk, and admits of no question. Having made such advances, and constituted themselves creditors of Samuels, they receive the cotton, and assume the right to sell it as his factors for their own reimbursement. While the proceeds of the cotton are still in their own hands they receive notice of plaintiffs’ rights. They receive this notice before Samuels is actually credited with the proceeds, except to the extent of $121.22. But whether the entire proceeds were actually credited to Samuels before or after receiving notice of plaintiffs’ rights is not material. The fact remains in either case that the proceeds of the cotton were in defendants’ hands as creditors or factors, or in both capacities, Avhen they were notified of plaintiffs’ title to the cotton, and their right to the proceeds. The defendants claimed the right to hold these proceeds, and apply them towards the repayment of their advances previously made to Samuels. They were entitled to do this if, when they made such advances, they acquired any title to or lien upon the cotton as against the plaintiffs, But it is too clear for argument or the citation of authorities in its support that they acquired no title to or lien upon the cotton as against the real owners, and that they could not have held the cotton against the demand of the plaintiffs if such demand had been made before the same was sold. Upon what principle can defendants assert or maintain a right to the proceeds superior to what they could have lawfully claimed over or against the cotton itself? Did their sale of the cotton, which was a wrongful act só far as plaintiffs’ rights were concerned, whether it amounted to a conversion or not, enlarge their rights, or put them in any better position in respect to the proceeds of such sale than they occupied while holding the cotton itself?
We are called upon to hold that defendants’ creditor relation to Sam-uels entitled them, as factors, to retain the proceeds of cotton belonging to plaintiffs, and apply such proceeds to their own reimbursement for advances previously made to the fraudulent wrong-doer. In other words, the proposition comes to this: that because defendants became creditors of Samuels on the'faith of his being the owner of the cotton, they should now, after notice that plaintiffs are and were then the rightful owners, be allowed to apply the proceeds, which justly and equitably belong to plaintiffs, to the payment of Samuels’ debt. If Roach v. Turk was ever meant to assert or lay down such doctrine, its authority would neither be recognized nor followed by this court. When notice of plaintiffs’ rights reached defendants they had then and thereafter received into their hands the proceeds arising from the sale of plaintiffs’ property. They cannot hold these proceeds against the rightful claim and demand of the plaintiffs, no matter what their transactions with or relations to Samuels may have been. Samuels, as a tortious wrong-doer, could confer upon defendants no right to the cotton or its proceeds as against the real owners, and when the plaintiffs’ notice found the proceeds of the cotton in the hands of de-*339fondants, they then fixed against defendants a liability to account to them for the same. The present case is not, in principle, distinguishable from that of Bank v. Trenholm, 12 Heisk. 520-525, in which the factors in possession, with authority to sell, effected a loan from the bank for their own account, and pledged the goods as security for its repayment. The bank supposed the factors were the owners of the goods, took possession of them, and subsequently sold the same, and applied the proceeds towards the payment of the amount due it by the factors. The real owners sued the bank for such proceeds, and recovered; the court holding that the act of the factors in thus dealing with the goods was a conversion on their part; that the bank was likewise guilty of a conversion' when it took possession and assumed control of the goods, although ignorant of the true owners’ rights; and that the bank could not retain the proceeds of the goods as against the owners. In that case it was urged that no action for a conversion could be maintained against the •bank without a demand being made for the goods, but the court said: “The property having been sold by the bank before the action, no demand-was necessary. The authorities, we think, will show that a demand of possession, and a refusal, as evidence of a conversion, are required only in those cases -where the possession -was rightfully acquired, and not where the act of taking possession was itself a conversion;” citing several Tennessee authorities. If the act of the bank in taking possession of the goods in that case was of itself a conversion as against the true owners, how can it be said that the act of the defendants in taking 'possession of the cotton in question and asserting the right to sell it for the purpose of reimbursing themselves, was not likewise a conversion as against the plaintiffs? In this case, as in that, the possession of the goods was not rightfully acquired, and the control which -was assumed of and over the property was inconsistent with the rights of the owner, and constituted a conversion. Can we properly apply one rule of law to banks in such cases, and a different rule to cotton factors and commission merchants? If so, upon what principle? It was also argued in that case that, as the factors were empowered to sell, and the bank sold by their direction, and paid the proceeds on their debt, the result of the transaction was the same thing-as if the factors had themselves sold and received the money; but the court'declined to recognize the correctness of this position, which is practically the same as that argued in behalf of defendants in the present case, when it is suggested that the funds which they loaned Samuels before the cotton was received, should be regarded as the proceeds of the cotton turned over to him in advance, so as to bring the case within the rule laid down in Roach v. Turk; but this suggestion is not well founded. The defendants advanced their own funds, on which they charged Samuels interest. After selling- the cotton, they seek to retain the proceeds as against the owner, and apply the same towards what they had so loaned Samuels. The case of Roach v. Turk does not sustain their claims, nor is it supported by either principle or authority. On the contrary, the principle announced in Bank v. Trenholm, 12 Heisk. 520, and Warner v. Martin, 11 How. 224-227, *340and numerous other authorities that could be cited if necessary, clearly establish plaintiffs’ right to recover the proceeds of their cotton in the hands of the defendants.
It is proper to state in*conclusion that neither the facts of the case, nor the law applicable thereto, (and which must control the rights of the parties,) in any way either involves or implies any want of personal or commercial integrity on the part of the defendants. They have simply labored under a misapprehension of the legal principles which govern the rights of themselves and the plaintiffs; but there is nothing in their conduct which in the least impairs or reflects upon their high mercantile character. The plaintiffs are entitled to recover of the defendants the sum of $951.35, with interest since February 1, 1886, together with the costs of this suit; for which judgment is accordingly awarded,