9 Mo. App. 399 | Mo. Ct. App. | 1880
delivered the opinion of the court.
This is an action upon five negotiable promissory notes-made by respondent, payable to the order of J. H. Dowell. & Co. The notes were dated at various periods between. September, 1877, and September, 1878; were payable in periods ranging from ninety days to six months, and were-for various amounts, aggregating about $2,800. The petition alleged that these notes were each indorsed and delivered to plaintiff for value before maturity. The answer admitted
On the trial of the cause, it appeared from the evidence that defendant kept a country store in Arkansas, where he dealt to some extent in cotton. Dowell & Co., in St. Louis, were his factors, and all the cotton of defendant was shipped to them for sale. The firm of Dowell & Co. was dissolved on March 12, 1879, by the death of Dowell. Prior to that date they had been doing a large business as cotton-factors. The notes sued on were given by defendant to Dowell & Co. for moneys and supplies furnished by them to him, on the understanding that defendant would ship cotton to Dowell & Co., which they were to sell as his factors, and out of the proceeds of which sales they were to pay these notes. The notes were charged by Dowell & Co. to defendant in their running account with him, as they matured, and the net proceeds of the sales of his cotton were credited to him on the same account. From time to time statements of account were furnished by Dowell & Co. to defendant; and at the date of Dowell’s death the balance in favor of defendant, after applying the proceeds of cotton to these notes and the advances of Dowell & Co., was about $700. It was not until after Dowell’s death, at the institution of this suit, that defendant learned that the notes which he had given to Dowell & Co., and which, by the statements of account forwarded to him, appeared to be all paid, had never been cancelled, but were held by plaintiff as a claim against him.
The banking business of Dowell & Co. had been done with plaintiff for many years before Dowell’s death. It was in evidence that they had a course of dealing with plaintiff during the cotton season beginning in September, 1878, up to Dowell’s death, by which Dowell &Co. pledged to plaintiff all the cotton they received — about twenty thousand bales. The bills of lading of the customers of
The notes sued on were delivered by Dowell & Co. to plaintiff as collaterals. Two of the notes, that for $567 and that for $643, were not indorsed by Dowell & Co., but were transferred to appellant by delivery. The verdict and judgment were for defendant on the notes and for plaintiff on the counter-claim.
The court, at the instance of plaintiff, instructed the jury that plaintiff is presumed in law to be an innocent holder for
For defendant, the court instructed the jury to find for defendant as to the note of August 23d, for $543 ; also, that if the jury find from the evidence that defendant, in his dealings with J. H. Dowell & Co., paid the two notes not indorsed, before he knew that plaintiff claimed an interest in them, they will find for the defendant as to those notes.
The court also, at the instance of defendant, gave an instruction referred to as instruction No. 6, which is as follows : “.The court instructs the jury that if they find from the evidence that J. H. Dowell & Co. were cotton-factors, and that there was an understanding between them and the defendant that he should ship cotton to them for the purpose of being sold by them and the proceeds applied by them to the payment of all the notes sued on in this action, and that the defendant did, in pursuance of that understanding, ship sufficient cotton to Dowell & Co. for the purpose of paying all of said notes, and that Dowell & Co. pledged said cotton as their own property to the plaintiff, without any regard to what the defendant owed Dowell & Co. at the time, and that plaintiff knew that Dowell & Co. had received and held said cotton at the time in their capacity as cotton-factors, and that upon a sale of said cotton plaintiff received the proceeds thereof and applied the same to the payment of debts due from Dowell & Co. to plaintiff, then, without any regard whatever to whether plaintiff knew that said cotton had been shipped to Dowell & Co. by the defendant for the purpose of paying the notes sued on, the jury will find for the defendant on all the notes sued on.”
The court, of its own motion, gave the following instructions : “As to the notes dated July 6, 1878, for $650, and May 22, 1878, for $343.42, the court instructs the jury as
Instructions asked by plaintiff on the theory that there could be no valid pledge of the cotton without a written 'indorsement of the. warehouse receipts, and also other instructions based upon appellant’s theory of the case, were refused by the court. These instructions will be noticed in the course of the opinion, so far as it is deemed necessary to do so.
There can be no- question, on the testimony, that both the cotton-notes, or warehouse receipts, and the notes sued
There was no question presented of a transfer by a factor of his liento a third party,to be*held, together with the goods, until the lien has been discharged. The pledge of the cotton was such as a factor intrusted with the goods to sell had clearly no right to make. Here, the factor, to enable him to do a large business on a small capital, was pledging all consignments as fast as received, to secure loans in bank, in violation of his instructions. The bank knew that the cotton it was thus receiving was consigned to Dowell & Co. as factors, and therefore knew that this use of the cotton by Dowell & Co. was unlawful. The plaintiff, in a proper proceeding, might, we think, have been compelled to apply the proceeds of this cotton as the owner himself would have applied it; and, upon the evidence, the judgment was for the right party, and we do not see why it should be disturbed.
If the facts, properly pleaded, constituted a defence to the action, and the issue contested before the jury and made by the instructions was one decisive of plaintiff’s claim, as there is no question of surprise, there can have been no defect in the pleadings on the part of defendant which, on the doctrine of aider b}^ verdict, and under the statute of jeofails, ought to be held ground enough for disturbing this judgment in the appellate court, where thq attention of the trial court has not been called to the defect in pleadings, and no opportunity has been given to amend.
We have no doubt that the facts in evidence, and submitted to the consideration of the jury by the instructions, constituted even a legal defence. If Ross gave to Dowell & Co. his notes, to be paid by cotton to be shipped to Dowell •& Co. to sell as the factors of Ross, and Dowell & Co. pledged the cotton and «the notes to the bank, to obtain credit with the bank and to secure their general indebtedness to the bank, and the bank had notice that Dowell & Co. had no right to pledge this cotton, and the bank received the proceeds, the bank was legally bound to apply these proceeds to the credit of Ross. So applied, it paid the notes in the hands of the bank. These facts were in the answer set up in bar of the action. That they were not expressly pleaded as payment, and that the answer contains the affirmative statement that the plaintiff did not apply the money of Ross in its hands to the payment of the note, but applied it to another purpose, ought not to be fatal to the judgment. The case really was tried on the material questions at issue between the parties, and which dispose of the
It is claimed that the court erred in instructing that the note dated August 23, 1878, was paid. Mr. Burr, the chief officer of plaintiff, testifies expressly that this note was paid, and charged to Dowell’s account. We do not see, therefore, that the court erred in withdrawing this note from the consideration of the jury, as Mr. Burr was not contradicted. But, inasmuch as the finding as to the other notes is necessarily conclusive as to this, and under the facts as found, and the instruction No. 6, there could be no recovery on any of the notes, this error, if error, is immaterial.
It is contended by appellant that the testimony of Betts, ■on cross-examination, as to the accounts kept between Dowell &Co. and the defendant, and the admission of these ■accounts, and the testimony of defendant himself as to the ■understanding between Dowell & Co. and himself that the proceeds of the cotton were to be applied to the payment ■of the notes, in the absence of any proof that plaintiff had any knowledge of the transactions between the firm ■and defendant, was inadmissible; that such matters were res inter alios aeta, and irrelevant. It is true that Dowell •& Co. were not parties to this suit, and that the general rule is that the admissions of third parties, strangers to the suit, are to be excluded. But we do not think- that the present case falls within the rule. The mutual rights of Dowell & Co. and the defendant were necessarily involved
The testimony of Southworth, and of many others who-purchased cotton from Dowell & Co. from September to March, and who showed that the course of dealing of Dowell &Co. was to refer them to the bank for the delivery of the cotton-notes, after the cotton had been sold by sample, is objected to as irrelevant. Burr had said in evidence that, the bank had nothing to do with the sale of cotton. Defendant showed by these witnesses that the parties buying cotton by sample went to the bank and paid the money there. In answer to the objection of plaintiff the court said, in the presence of the jury: “Ithink the testimony is competent for the purpose of showing that the St. Louis-National Bank, when the}' took bills of lading for collateral notes of Dowell & Co., knew that the cotton so being hypothecated was cotton which the}'held as factors. Suppose they took this cotton, which they knew Dowell held as a factor, as collateral security on a demand-note which was-given by Dowell to the bank, and it afterwards transpired that this cotton was consigned for the purpose of paying these notes — is not that a defence to the notes? My judgment would be that they would be just as culpable in taking the money under such circumstances as if they actually took the cotton into their possession. I don’t think they could come into court and say that they did not get the cotton. The testimony thatisnow proposed to be offered by this witness to show what the mode of business was with respect to this cotton, I think is competent upon the issue of
We think that this evidence was competent as tending to show that Dowell & Co., dealing as cotton-factors, were pledgingffiabitually the cotton of their customers with the bank, and that the bank had notice of the fact, and had enough to put it on inquiry as to whether this particular cotton of Ross was received by Dowell & Co. under such circumstances as would warrant a pledge of it by Dowell & Co. to the bank as collateral security for their indebtedness to the bank.
The court properly refused instructions asked by appellant to the effect that there could be no pledge of the cotton by Dowell & Co. without a written indorsement of the warehouse receipts. Where the party has the right to pledge the cotton, the delivery of the warehouse receipt would be as effectual as the delivery of the cotton itself, and it could make no difference that the warehouse receipt was not indorsed by the pledgeor. There is nothing in this at variance with anything decided or said by this court in Erie and Pacific Dispatch v. St. Louis Cotton Compress Company, 6 Mo. App. 172. The transfer of a warehouse receipt not made negotiable by indorsement and delivery can convey to the transferee no greater rights than would be acquired by a transfer of the goods which the receipt represents. That we have said. But it does not follow from that, that one may not pledge cotton by delivering the unindorsed cotton-note, as effectually as by delivering to the pledgee the bales themselves.
We think the judgment should be affirmed, and it is so ordered.