Farmers & Mechanics' National Bank v. Hazeltine, 78 N.Y. 104

Farmers & Mechanics' National Bank v. Hazeltine

78 N.Y. 104 | NY | 1879

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *106 The decisions of this court in the cases of this plaintiff against Logan Preston (74 N.Y., 568), and of the same plaintiff v. Atkinson (74 id., 587), are decisive of this appeal. The latter case was against the purchaser from Brown of the same cargo of wheat in question in this case, to whom the wheat had been delivered by the defendants in this case upon the order of Brown, from whom the defendants had received it in store. The judgment recovered by the plaintiff against Atkinson not having been collected or paid, this action was brought against the defendants for the conversion of the wheat. It is not claimed that the defendants stand in any better position than Atkinson or that they have any defense which would not have been equally available to him. Indeed it appears affirmatively that the defendants before they advanced upon the wheat to Atkinson or delivered *108 it to him, saw a copy of the bill of lading and the indorsement thereon and had actual notice thereby of the respective rights of the plaintiff and Brown by virtue of the bill of lading and the indorsement. In the case of Atkinson, it did not appear that the latter had actual notice of the contents of these documents at the time of purchase.

The cases mentioned were determined by this court upon the legal construction of the bill of lading and the special indorsement in connection with the extrinsic facts which in all material respects are identical with the facts in this case. The court held that the plaintiff, by virtue of the transaction with Sears Daw, and the transfer to it by them of the bill of lading, became the legal owner of the wheat, and that the delivery of the bill of lading to Brown with the special indorsement of the plaintiff thereon, did not vest in him the title to the property, or confer upon him authority to sell the wheat, but that Brown by the transaction was simply vested with the possession under a trust to hold the wheat for the plaintiff, and that the plaintiff's title could not be divested by any act of Brown until the actual payment of his acceptance.

The controversy turns upon the legal effect of the delivery of the wheat to Brown under the terms of the special indorsement of the bill of lading. If the delivery under this instrument vested the title to the property in Brown, and the trust contained in the instrument was a trust affecting the proceeds to be realized from a sale, then, upon well settled principles, a bona fide purchaser from Brown would acquire a good title which would not be divested or disturbed by a misappropriation by Brown of the proceeds of the sale in contravention of the trust. But this construction of the instrument was rejected by the court in the former cases after full consideration. The court did not question the well established doctrine that a general indorsement and delivery of a bill of lading vests in the indorsee the title to the bill, and the property thereby represented, so as to enable him to transfer to a bona fide purchaser, for value, a good title, whatever *109 secret arrangement may have existed between the original parties. But the court in the cases referred to, decided that the indorsement in question did not have the effect of a general indorsement, and that in connection with the special contract overwritten it showed that Brown's right was simply that of depositary of the grain with no authority to sell until the draft should be paid, and that when the sales in question were made, Brown had no title and could confer none.

We have attentively considered the able argument of the counsel who represented the defendants on this appeal, but after full consideration we adhere to the conclusions reached in the former cases.

The judgment should be affirmed.

All concur.

Judgment affirmed.