text:
    Boyd, Plaintiff and Respondent, v. Foot & Cole, Appellants and Defendants.
    1. In the taking and stating of an account between partners, in an action brought for that purpose, the mere fact that certain items were charged, after the dissolution of the firm, upon its books, to profit and loss, by some of the partners, is not of itself prirrta fade evidence against the other partners that they are items of loss properly chargeable to the firm.
    2. Where, on such a stating of an account, it appears that all of the partners, ' except one who withdrew, continued the same business in the name of the old firm, and, subsequently to the. dissolution, took a judgment from a dealer with the old firm as security for the whole sum then owing to the firm, and after that, settled with him and gave him a receipt in full, Such facts are prima fade evidence that they were paid in full the balance owing to the old firm at the time it was dissolved.
    3. Where the capital contributed by the retiring partner consisted in part of a note made by a third person, and the continuing partners subsequently recovered a judgment on such note, and issued an execution which was returned satisfied, the presumption is that the continuing partners collected such judgment.
    4. In an action by an assignee of one of three co-partners against the other two for an accounting, the defendants cannot set up as a counterclaim that in a transaction between them, and the retiring partner disconnected from the partnership business, they sold him goods and took therefor the notes of a third person, which, on a compromise and settlement with the latter, after discovering his insolvency, they surrendered to him; and that they were induced by the fraudulent representations of the plaintiff’s assignor as to the solvency and credit of such third person to take the notes, whereby they were damaged. Such a cause of action is not one against the plain- ■ tiff, and for that reason is not a counterclaim as defined by the Code.
    5. Where, on an accounting between partners in 'a suit brought for that purpose, two of the defendants claim that a note of a third person for $500 was contributed by the other partner, and was credited to him as so much capital, and that only $200 of it was paid, and that $300 of its amount should be charged by the Referee to such other partner, and it is so charged, the judgment will not be reversed merely because the Referee received incompetent evidence tending to prove that it had been paid in full, as it is clear that receiving such evidence was not prejudicial to the defendants.
    6. On such an accounting between partners, the defendants have the right to have each partnership transaction investigated, and its results embraced in the account to be stated, though there be no specification of it, or of the facts in respect to it, contained in the pleadings.

      7. Where, on such an accounting, a referee erroneously refuses to allow to the defendants the proper credit in respect to a particular item, the judgment will not necessarily be reversed. If the plaintiff chooses to stipulate to deduct the whole amount of the defendants claim in respect to such item, the Court will order the deduction made, and affirm the judgment as to the residue. t
    (Before Bosworth, Ch. J., and Woodruff and Moncrief, J. J.)
    Heard, June 7th;
    decided, July 9th, 1859.
    This is an appeal by Joel W. Foot and Charles Cole, (the defendants,) from a judgment in favor of George. Boyd, (the plaintiff,) entered on the 14th of September, 1858, for $1,415.79, and costs, on the report of Willis Hall, Esq., as Referee.
    The action was brought in August, 1856, to recover a balance alleged to be due to the plaintiff’s assignor, Henry 0. Goodwin, as a member of the firm of Foot & Cole, alleged to have consisted of the defendants and of said Goodwin, and to have continued from October 1, 1855, to April 1, 1856, and to have been then dissolved by mutual consent.
    The complaint states the formation of the partnership; the nature of its business; its duration; its dissolution; the stating of an account then between the partners; the finding of a balance of $2,319.84 due to Goodwin, and a promise by the defendants to pay it; an assignment on the 26th of June, 1856, by Goodwin, of such claim to the plaintiff, and prays judgment for that sum, with interest from the 1st of April, 1856.
    The answer takes issue upon all the averments in the complaint, and counterclaims for three items, viz.: First, $700 damages for Goodwin’s failure to furnish the amount of capital which he agreed to contribute. Second, $835.04 for goods, &c., delivered at Painsville Mill, of which Goodwin was lessee; and, third, $1,303.50 for inducing them, by false representations, to take notes made by John S. Dye for that amount, which were worthless. It also prays “ that an account may be had between the said Goodwin and them, of and concerning all his rights as such co-partner, if, in fact, he be adjudged to have been such partner.”
    The plaintiff, by a replication, denied all the allegations of new matter, or by way of counterclaim. The Referee found that there was a partnership; that Goodwin was to have one-fourth of the profits, and bear the like part of the losses, and adjusted the accounts on that basis, and found the balance due to Goodwin, April 1, 1856, to be $1,204.93, which, with interest to August 15, 1858, the date of the Referee’s report, was $1,415.79.
    The defendants insist, (assuming it to have been correctly-found that there was a partnership,) that they were entitled to various credits in the alleged partnership accounts which the Referee rejected; and also to two counterclaims; and for those causes they appealed. The items omitted and claimed by the defendants, are the Pittstown Mill account, and $249.94, $318.73, $139.50, $91.23, $176.06, $1,303.50, $835.04. None of these were allowed by the Referee, except $38.25 out of the $249.94.
    The Referee’s finding, in respect to the matter of the second and third counterclaim, is as follows:
    “ Item Secowd—$835.04 for goods,' wares and merchandise delivered at Painsville Mills.
    “ Goodwin was the nominal lessee of these mills, but had no actual interest in them, or in running them, or in their management. They were paper mills, and Goodwin, before entering into the partnership of Foot & Cole, did their business in the city; that is, sent them rags, and received their paper for sale on commission. On forming that partnership, he closed his accounts, in his individual name, with the mills, up to the 1st of October, 1855, and the business of the mills, which was considered valuable, and was an inducement to forming the partnership, was conducted after that date by the concern of Foot & Cole, in the firm name. The party who was in possession, running the mills, received the goods from the concern of Foot & Cole, and was called upon by them to pay the account against the mills.
    “ The Referee is of opinion that the transactions of the Pains-ville Mills were on account of the partnership, and that Goodwin is not chargeable, except for one-fourth of the loss, $208.76.
    “Item Third—$1,303.50. Notes of John S. Dye.
    “ Without entering into the question whether Goodwin was ever liable for these notes, it is sufficient that on the 10th of September, 1857, Foot & Cole, for valuable consideration, gave up these notes to the said Dye, and gave him a receipt in full of all demands to that date.
    “ This item cannot be allowed.”

      The facts in respect to the other items, which the defendants claim were erroneously rejected, sufficiently appear in the opinion of the Court, as does also the matter in respect to two exceptions taken by the defendants during the trial.

      David Dudley Field, for appellants.
    I. There were two exceptions, both of which were well taken. (These are noticed in the opinion of the Court.)
    II. Assuming that the defendants and Goodwin were partners for a time, and that the accounts between them are tobe adjusted on that basis, there are various credits to them, as charges to Goodwin, which should have been made, and which are specified in the following subdivisions:
    1. Goodwin should have been charged with one-fourth of the loss on the Pittstown Mill. This mill was purchased while Goodwin was with Foot & Cole, and at his suggestion, for $1,500, the whole of which has been lost. The Eeferee rejected this item, because not specified in the answer as a counterclaim. Clearly, that was not necessary. The transaction entered into the accounts between the alleged partners, and the loss in it, should be charged one-fourth to plaintiff.
    2. Goodwin should have been charged one-fourth of the items in the profits and loss account on page 56, amounting to $999.76, one-fourth being $249.44.
    3. Goodwin should also have been charged with one-fourth of the loss on J. S. Dye’s account, accrued while Goodwin was with Foot & Cole, $394.95; in the Catskill Mill account, $558.35; in Eeuwee’s account, $1,274.93.
    The account, with the foregoing corrections, would show a balance of only $81.94 in the plaintiff’s favor.
    III. Against the foregoing balance there should have been charged two independent items, by way of counterclaim, as follows :
    1. The plaintiff should have been charged with the notes of Dye, amounting to $1,303.50. The defendants sold to the plaintiff, on the 12th of September, 1855, goods to the amount of these notes; and the plaintiff induced the defendant to receive Dye’s notes for the goods they sold, representing them as good, when they were, in fact, worthless. The goods were charged to Goodwin in the books of Foot & Cole, and so stood on the books while Goodwin was there. ' The only questions then are, 1st, whether Dye’s notes were received as absolute payment; and 2d, if they were, whether Goodwin, by misrepresentation, induced Foot & Cole to take them. His own account of the transaction is clearly disproved. There is no evidence that the notes were received under an agreement that they should be taken as pay- . ment. There is, besides, abundant evidence of Goodwin’s misrepresentations.
    2. The debt against the Painsville Mill should have been charged to Goodwin. He had a lease of that mill, and was Tuning it oh his own account, and represented to Foot & Cole that it would be a great advantage to their concern. Foot & Cole sold goods to that mill, and charged them to “ Painsville Mill, H. 0. Goodwin. D. P. Squires, Agent.” The loss was charged to Goodwin in the books while he was there. Goodwin’s statement is disproved by the other witnesses. Charging these two items, there would be a large balance in the defendants’ favor.
    IV. If the testimony, in respect to the purchase of the Pitts-town Mill, should bethought imperfect, the reason is, the Referee’s ruling that it was impertinent. The defendants excepted to that ruling, and for that cause, if there was no other, the report should be set aside, and a new trial ordered. The item insisted on was not a counterclaim, but an item in the partnership account as much as any other.

      Chauncey Shaffer, for respondent.
    This is an action to recover a balance of $2,319.84, found due to the plaintiff’s assignor, Henry C. Goodwin, on the occasion of his selling out his interest in and retiring from the firm of “ Foot & Cole.” From the agreement proved, it appears that Foot & Cole were to receive three-fourths of the profits, (if any,) and Goodwin one-fourth part thereof; that in the same proportion the losses (if any) were to be borne.
    The answer sets up several matters of defense, by way of counterclaim; but as the issues are all noticed in the Referee’s report, no further notice of them is required here. The whole case seems to resolve itself into questions of fact, upon which the Referee has already passed.

      The defendants have taken .only two exceptions.
    I. The first exception appears to have been taken unnecessarily, as
    1. The evidence sought for by the defendants was-not admissible, but
    2. It was received by the Referee as evidence for the defendants, and after it was so received, the defendants excepted.
    II. The second exception is not well taken, because it was not hearsay evidence—it is merely a history of the note of $500, marked exhibit J. The only material point was established by the testimony of the witness before he produced the note; and, moreover, no objection was made in time. After evidence is received without objection, the only means of getting it out of the case is by a motion to strike it out.
    III. The conclusions of fact found by the Referee are sustained by the evidence; and the principles of law applied to those conclusions are elementary. Every doubt has most scrupulously enured to the benefit of the defendants.
    IY. If the Court shall be of the opinion that any error has been committed by the Referee, and that such error can be corrected by deductions, we request that the proper deductions should be made, and the judgment affirmed as to the residue, instead of granting a new trial.
   By the Court—Bosworth, Ch. J.

The Referee has found that Henry C. Goodwin, the plaintiff’s assignor, and the defendants, were partners, under the name of Foot & Cole, from the 1st of October, 1855, to the 1st of April, 1856. The Referee has also found that the sum of $1,415.79 was due, at the date of his report, from the defendants to the plaintiff, upon a just statement of the accounts between the partners. The defendants do not seek'to disturb the decision that Goodwin and Foot and Cole were partners. o

They complain that two counterclaims which they set up were rejected, and that they were not allowed certain credits; and to obtain a correction of the errors alleged in these respects, they have appealed from the judgment entered on the report of the Referee.

As to the items of credit claimed by the appellants; and,

First. The item of $249.94.

Of the items composing this aggregate, three, viz., $61.22, $68.80, and $28, were allowed: the total is $158.02, and one-quarter is $38.25. Proof of these items was furnished beyond the fact that they were charged to profit and loss after the firm was dissolved. Of the remaining items composing such aggregate, no evidence, beyond that fact, was furnished. The making of such entries, after the firm was dissolved, is not, of itself, and without further proof, prima facie evidence that they are items of loss properly chargeable to the firm.

Second. The item of $318.73, being one-quarter of balance due from Z. Reuwee, December 24, 1856. The balance then due was $1,274.93. There is nothing in the evidence tending to show that this balance arose from, or is affected by, sales made between the 1st of October, 1855, and the 1st of April, 1856, unless the facts, that the balance due from Reuwee October 1, 1855, (when Goodwin became a partner,) was $8,536.47, and the balance due when Goodwin left was $1,274.93, tend to show it. This is not enough to demonstrate that the Referee erred.

Third. The item of $139.59, being one-quarter of an account against the Oatskill Mill for $558.35.

This account commenced in June, 1855, and ended January 1, 1857. While Goodwin was in the concern, the firm sold to the amount of $1,526.92, and received $1,969.48. The amount of debits, or of credits, subsequent té the 1st of April, 1856, and prior to January 1, 1857, does ntitl appear. Without the dates of the several items of debt and credit, subsequent to the 1st of October, 1855, we cannot see clearly that the Referee erred in rejecting this item.

Fourth. The item of $91.23, one-quarter of balance of $364. 92, alleged to be due from John S. Dye. It appears that, on the 29th of December, 1855, Dye confessed a judgment for $1,619, as security for what he then owed Foot & Cole. It does not appear that the $364.92 was not included in it. And it does appear that, on the 10th of September, 1857, the defendants settled with Dye all demands to that date, in full, and gave a receipt to that effect. This is sufficient to justify the disallowance of this claim.

Fifth. The item of $176.06, amount of Porter’s note, forming part of the capital contributed by Goodwin.

It was proved that an execution, issued on a judgment recovered by Foot & Cole on this note, was returned satisfied. The presumption is that the judgment was recovered, and that the money collected on the execution was received by Foot & Cole. The claim to be allowed this item was properly rejected.

Sixth. The item, “ Bills recv. Dye’s notes, $1,303.50.”

The ground on which the Referee placed his rejection of this claim is tenable, and is alone sufficient to uphold his decision. If he believed the testimony of Goodwin as to the origin of the notes and the circumstances under which they were made, the claim might also have been rejected on other grounds.

The Referee has not found whether Goodwin induced Foot & Cole, by false and fraudulent representations, to take these notes. If he might have found that they made a sale to Goodwin, as purchaser and principal, and took these notes by reason of his fraudulent representations, it may be true that the mere fact that they canceled and surrendered the notes for a valuable consideration would not be a bar to this claim, although they were canceled for less than their face, if all was obtained for them that they were worth.

But, if we assume that, on such a state of facts, they might retain the notes and sue Goodwin for the damages sustained by the fraud, yet, as against his assignee of the balance due on an accounting between the partners, it is not obvious on what ground they could set up, as a counterclaim, a cause of action against Goodwin growing out of his fraudulent representations in a transaction disconnected from the partnership business. It is not a cause of action against "the present plaintiff. That objection is insuperable, and makes it impossible for the defendants to recover on that counterclaim—assuming the fact to be correctly found, that they have canceled and surrendered the notes to Dye for a valuable consideration.

With that fact existing, however the other facts might properly be found, their only remedy (if any) is an action against Goodwin for the damages caused by his fraud; and that cannot be made a counterclaim against Boyd, the present plaintiff.

Seventh. “ The debt against the Painsville Mill, $835.04.”

The finding of the Referee, that this debt was a debt owing to the firm by the person running the mills, and not by Goodwin personally, is, in our opinion, warranted by the evidence. , We are not justified in holding that it is contrary to the evidence. The Referee has charged Goodwin, and Boyd as his assignee, with one-fourth of this claim. This is conceded to be correct, provided it be assumed, or must be held, that Goodwin is not liable for the debt as principal.

These views dispose of all questions made by the appellants on the appeal, except those connected with two exceptions taken during the progress of the trial,, and which two are the only exceptions taken during the trial to which our attention was directed on the argument, or which are noticed in the points of the appellants.

The exception taken to certain evidence of Goodwin, as being “ hearsay,” may be dismissed with the remark that the evidence objected to could not possibly have prejudiced the defendants. It related to the question whether a note dated October 8, 1855, for $500, made by McGee and Mitchell, had been paid. This note had been contributed by and credited to Goodwin as capital.

The witness on behalf of the defendants testified that $200 only of its amount had been paid; that it was compromised for forty cents on the dollar, the makers having failed. This was the fact, as the defendants sought to prove it. The Referee charged against Goodwin the $300, by reason of the failure of McGee and Mitchell, and the acceptance of $200 from them as a compromise of the $500.

Hence, it is evident that the defendants had all the allowance made to them which, by any possibility, could have been made, if no testimony had been given by Goodwin in respect to this item.

The only remaining exception was taken to the decision, that testimony in relation to the purchase of the Pittstown Mill was impertinent as the matter is not specified as a counterclaim in the pleadings.”

The defendants were apparently attempting to prove that this purchase was a partnership transaction. If it was, it was a proper item to be established, and the defendants were entitled to be allowed such sum as would be just with reference to its actual results.

The direct examination of Cole tended to show that the purchase was on account of the firm of Foot & Cole, while Goodwin ■was a member of it. His cross-examination had weakened somewhat the force of his evidence on the direct examination, when the Referee (apparently) arrested the examination and excluded the evidence in relation to this claim, on the ground that it was impertinent; and impertinent because the claim had not been set up in the pleadings as a counterclaim.

If the appellants were precluded, on this ground, from giving evidence to establish the fact that this mill was purchased for the firm with the assent of all of its members, the decision was erroneous.

In the view which we take of the decision made, the Referee interposed while Cole was under examination in respect to this item, and expressed the opinion and decided that all testimony on this point was impertinent, because the matter was not pleaded as a counterclaim. To this decision the defendants excepted.

It is indeed true that a full investigation of the matter may result in proof that the purchase was not made for and on account of the firm.

But that consideration does not meet the difficulty created by the Referee’s decision. That decision precluded the defendants from proving (however satisfactory the evidence which they were prepared and desired to give in that behalf) that it was a co-partnership purchase, and that they were entitled to a deduction by reason of it. It precluded them from proving these facts on the ground that the matter was not pleaded as a counterclaim.

It is not a counterclaim, but is one of the several partnership transactions, if the supposed facts do in truth exist.

But we think it unnecessary to grant a new trial, if the plaintiff will consent to a deduction of the whole allowance claimed by reason of this matter.

The direct examination of Charles Cole on this point presents the precise claim which the defendants make in this behalf, and its nature and extent. His testimony is that “ there are debts unpaid contracted when Goodwin was with us ; we bought for $1,500 a mill at Pittstown, FT. Y., on which was a mortgage of $3,000, on which we paid 10 per cent, the balance” ($1,350) “is still due and the parties claim payment of us; we have been unable to sell this property, although we have made great efforts; it is now in the hands of a Receiver and I have been notified that it will be sold on our account.”

This is the whole evidence given in relation to the nature and extent of the claim. It is the only statement respecting it found in the printed Case.

The appellants’ printed points state that “ Goodwin should have been charged with one-fourth of the loss on the Pittstown Mill. This mill was purchased while Goodwin was with Foot & Cole, and at his suggestion, for $1,500, the whole of which has been lost.” * * “ The transaction entered into the accounts between the alleged partners, and the loss on it should be charged one-fourth to the plaintiff.”

The claim, as here made, in the broadest construction which can be given to the language in which it is stated, is one-fourth of $1,500 and interest from the time of the purchase. The purchase could not have been made earlier than the 1st of October, 1855, the day the partnership was formed. If, therefore, $375 with interest from that date be deducted, the defendants will be allowed the utmost they can pretend to have claimed.

Allowing this will allow more than a fair construction of the language used may be thought to claim. The 10 per cent paid down, (viz.: $150,) if the matter was deemed and treated as a partnership transaction at the time, would naturally be charged to the firm when it was paid. If that was done, they have been allowed already one-quarter of that in the accounts as kept by the partners.

So too, if the property shall sell for any sum over and above the mortgage upon it, the loss will be only the difference between that excess and $1,500.

Hence if the plaintiff, rather than submit to the delay and expenses incident to a new trial, will stipulate to deduct from the balance found by the Referee $375 and interest thereon from October 1, 1855, to the date of the report, the judgment as a judgment entered on a report for the true balance arising on such a correction, may be affirmed. In that event it will be affirmed without costs of the appeal to either pprty, as it will, in substance, be affirmed in part and reversed in part.

The decision in Moffet v. Sackett, (18 N. Y. R., 522,) in our view of it, does not prevent our making this disposition of the appeal; we do not undertake to decide, upon conflicting or uncertain evidence, how much was lost by this transaction, but allow to the defendants the whole amount of their claim in this behalf.

If the plaintiff does not choose to make such a deduction, the judgment must be reversed and a new trial granted, with costs to abide the event.

Ordered accordingly.

       See Chouteau v. Suydam, (21 N. Y. R., 1T9,185,) affirming the like order of this Court.
      Reporter.


source: Caselaw Access Project

author: By the Court—Woodruff, J.

license: Public Domain

text:
    Robert D. Anderson and Frederick E. Houghton, Plaintiffs and Respondents, v. Anastasius Nicholas, Defendant and Appellant.
    1. One who has either tortiously or feloniously, without the knowledge or consent of the owner, obtained the possession of a certificate of stock having a power of attorney in blank annexed thereto, cannot confer title on a third person by selling and delivering the same for a valuable consideration, although the purchaser acts in good faith, believing he is dealing with one who owns or has due authority to sell the stock.
    2. One who receives such a certificate and power, and sells the same or causes the same to be sold, by direction of one whom he supposes to be the owner or to have due authority, is liable to the actual owner for a conversion of the stock, notwithstanding he has paid over the proceeds to the person employing him.
    3. One who deals with or disposes of the personal property of another (the same not being negotiable paper) must see to it that he acts by the authority of some one who has power sufficient to warrant such dealing or disposition.
    (Before Bosworth, Oh. J., and Woodruff and Moncribf, J. J.)
    Heard, June 9th;
    decided, July 9 th, 1859.
    This is an appeal by the defendant from a judgment entered on the report of M. B. Maclay, Esq., as Referee.

      The action was. brought to recover the value of twenty shares of stock of the American Guano Company, which had been wrongfully taken from the plaintiffs’ possession by the son of one of the plaintiffs, and delivered, disposed of, or pretended to be sold to the defendant; a demand of the stock by the plaintiff, and refusal to deliver was alleged, and a conversion thereof by the defendant to his own use.
    The defendant’s answer put in issue all the allegations in the complaint.
    The Eeferee found, first, “ That the plaintiffs were possessed of and owned, as partners, twenty shares of the capital stock of the American Guano Company; and that on or about the 25th day of October, 1858, one Alexander H. Anderson, a son of the plaintiff, Eobert D, Anderson, and a minor of the age of about sixteen years, without the leave, permission, authority or knowledge of plaintiffs, or either of them, wrongfully took said twenty shares of stock out of the possession of the plaintiffs.
    “ Second. That the said twenty shares so taken were in one certificate, and were in all respects, except as to the number of shares and the number of the certificate, like the following:
    “ Ho. 782. One Share.
    “Americas Guaso .Oompasy.
    “ This is to certify that A. G. Benson, President, of New York, is entitled to one share in the capital stock of the American Guano Company, standing in his name, and transferable on the books of said Company only upon surrender of this certificate by the said A. G. Benson, President, or his attorney.
    “New York, 7th January, 1856.
    “ A. G. Bessom, President.

    “ Jos. L. Wyckoff, Treasurer.

    “ (Indorsed.)
    “ Know all men by these presents, that...................
    .................for value received, do hereby constitute and
    appoint................................to be.......'. true
    and lawful attorney for.............and in
    and stead to sell, assign and transfer unto...
    name

      .................shares in the capital stock of the American
    Guano Company, standing in...........name on the books of
    said Company.
    “In witness whereof........have hereunto set........hand
    and seal this......day of........one thousand eight hundred
    and..................
    “A. G. Benson President, [l. s.]
    “ Witness present, Arthur Benson.
    “ Third. That the said stock was not spld and disposed of to the defendant; but that said Alexander, on or about the said 25th of October, 1858, offered to dispose of said twenty shares of stock to the defendant; that the defendant offered said Alexander $3 per share for the same, which amount said Alexander at first refused to take, but almost immediately afterwards agreed to accept, and so stated to the defendant, and that, thereupon, defendant took said stock from said Alexander, went out to inquire about the same; and, upon returning to his office, finding several persons waiting in the back room to do business with him, he stated to his clerk, George M. Bowen, that it was all right, and that he might do as he pleased about buying it, and thereupon handed said certificate of twenty shares to his said clerk, and thereupon the said clerk closed the transaction with the said Alexander, by paying him $3 per share, and retaining the said twenty shares of stock.
    “ Fourth. That at no time prior to the commencement of this suit was any intimation made to either of the plaintiffs that said clerk had ever had any interest in said stock; and that no part of said $60, received by said Alexander, was received by or went to the benefit of said plaintiffs, or either of them.
    “ Fifth. That shortly thereafter the said Bowen delivered said stock to the defendant to sell for him.
    “ Sixth. That the defendant thereupon caused said stock to be sold in his own name, by H. T. Morgan & Co., brokers, at the stock board, on the next day after same was obtained as aforesaid, of said Alexander, for $7 per share; received the proceeds of the sale, and accounted to said Bowen for such proceeds, less his commission for such sale.

      “ Seventh. That at the time of such sale by defendant, the said stock was of the value of $10 per share, amounting in the aggregate to the sum of $200.
    “ Eighth. That a day or two after such sale, and before the commencement of this suit, the plaintiffs demanded of defendant the return of said stock, or the value thereof, stating to defendant that the plaintiffs owned the stock, and that the said Alexander had taken it without the leave or knowledge of plaintiffs, or either of them, and offering, if defendant would pay the difference between the $60 given for the stock and the $140 received by defendant on its sale, to take that in full satisfaction. Defendant admitted, at this time, in the presence of his said clerk, that he, the defendant, had purchased the said shares of said Alexander, for $3 a share, and had sold the same for $7 a share, and received the avails thereof; but that the said defendant refused to return or deliver the same, or to pay the value thereof, or any part thereof.
    “ Ninth. That thereupon, as matter of law, I do find and report that the defendant wrongfully converted said stock to his, said defendant’s, use, and that plaintiffs are entitled to judgment in their favor against the said defendant for the sum of $200, being the value of said s'tock, with interest from the 10th day of November, 1858, to the date of this, my report, amounting to $205.83, and costs.
    “ Dated, New York, April 11th, 1859.”
    Judgment for the plaintiffs was accordingly entered, and the defendant appealed.
    The only exceptions taken on the trial were to the final decision.

      F. H. Upton, for the defendant, (appellant.)
    I. The conclusion of law is wholly unsupported by, and at variance with, the Referee’s several findings of the issues of fact.
    1. The Referee having found that the defendant did not purchase the stock in question, and that he did not sell the same as his own, but as the agent of another, 'with whom he accounted, and to whom he paid over the proceeds, before any demand upon, or notice to him, that the stock had been wrongfully taken from the plaintiffs, has found against the plaintiffs the very facts upon which alone they rest their claim for a recovery.
    2. Having thus found these facts upon which alone the plaintiffs allege a wrongful conversion by the defendant, such conversion is completely and necessarily excluded by the findings.
    8. A wrongful conversion, as matter of law, can only be predicated upon the findings of the issues of fact as made by the pleadings.
    4. A wrongful conversion, as matter of law, cannot be predicated upon the admissions of the defendant at the time of the demand and refusal, if the issues of fact are from the other evidence found against such admissions. The Referee might have been justified in finding, as matter of fact, from those admissions, that the defendant was the principal in the transaction, and not the agent; but having found otherwise, a conclusion of law cannot be based upon the truth of admissions which he has found to be untrue.
    In the cases where the admissions of the defendant have been held sufficient evidence of conversion, those admissions have stood alone, uncontroverted by other evidence, and a portion of the conceded facts of the cases. (Laplace v. Aupoix, 1 Johns. Ca., 406; Everett v. Coffin, 6 Wend., 603; Dezell v. Odell, 3 Hill, 215.)
    II. If any wrongful conversion of the stock in question has been made by any one, the. findings of fact by the Referee clearly point to Bowen, and not to the defendant, as the party who has made, and who in law is alone liable for such conversion.
    The facts found are:
    1. That the defendant did not purchase the stock from the plaintiff’s son.
    2. That in selling the stock he merely acted as Bowen’s agent.
    3. That he accounted with Bowen for its proceeds.
    4. That he did this before any demand upon or notice to him of the plaintiff’s claim.
    Upon these facts, the action, if at all maintainable, can only be maintained against Bowen.
    If, while the stock was in the hands of the defendant, as Bowen's agent, the plaintiffs had given him the notice, and made the demand, then his exercise of dominion, or his assertion of claim, whether as principal or agent, might have been sufficient to render him liable in trover. But all the authorities agree in this, that the claim, or interference or exercise of authority, as the basis of an alleged conversion, must be in opposition to the real owner at the time of the demand, and while the person so claiming has the property in his actual control or power. (Connah v. Hale, 23 Wend., 462; Farrar v. Chauffete, 5 Denio. 527; Cobb v. Dows, 9 Barb. S. C. R., 230; Frye v. Lockwood, 4 Cow., 454; LaFarge v. Kneeland, 7 Cow., 456; Mowatt v. McClelan, 1 Wend., 173.)
    HI. The complaint of the plaintiff does not state those facts, nor does the Referee find those facts which are, in law, essential to be averred and proved, in order to justify the conclusion of a conversion of the property in question, either by the defendant or by Bowen. Those essential facts, neither averred nor found, are these:
    1. That the son of. the plaintiff acquired his possession feloniously.
    2. That the defendant obtained it from him in bad faith and with notice of the felony—or,
    3. With notice or knowledge of facts or circumstances which ought to have put him, as a man of ordinary prudence, on his guard.

      (a.) The fact averred and found, that the plaintiff’s son, “without the permission or knowledge of the plaintiffs,” wrongfully took the stock from their possession, is not an averment inconsistent with an averment of a simple breach of trust, or fraudulent conversion on the part of the young man. And it being in evidence that he was or had been in the employment of the plaintiffs; that he was entrusted with the key of the safe, where their securities were deposited; and that he took the certificate in question from the safe in mid-day—are facts which negative the idea of a felony, and tend to show a violation of the confidence reposed in him, by allowing him to have access to and the control of the plaintiffs’ securities.
    If the complaint not only does not aver, and the Referee does not find the possession of young Anderson to have been a felonious one; but, on the contrary, the facts tend to show that such possession was the result of the position which he qccupied, and the confidence had in him by the plaintiffs, then the authorities are uniform, that a purchaser for value, without actual notice, is protected against the claims of the rightful owner. (Parker v. Patrick, 5 D. & E., 175; Mowrey v. Walsh, 8 Cow., 238; Saltus v. Everett, 20 Wend., 275; Lloyd v. Brewster, 4 Paige, 540; Andrew v. Dieterich, 14 Wend., 31; Hoffman v. Carow, 22 id., 285.)
    (5.) There is neither averment nor proof, nor any pretense of any bad faith on the part of the defendant, assuming him to have been the purchaser from the plaintiff’s son.
    (c.) Bad faith in the defendant not being averred, it was essential, to entitle the plaintiffs to a recovery, that the Referee should expressly find, as a matter of fact, that the defendant had notice or knowledge of facts or circumstances which ought to have put him, as a man of ordinary prudence, on his guard. This the Referee does not find, and there is therefore no basis for his legal conclusion. (Pringle v. Phillips, 5 Sand., 161, and cases cited.)
    IY. This notice or knowledge on the part of the defendant, of such facts or circumstances as shall put a man of ordinary prudence on his guard, is essential, as the basis of his liability, because the character of" the property alleged to have been, converted was such as to bring it clearly within the exceptions to the rule—that he who has himself no title to a personal chattel can pass no title to another.
    1. The exceptions to this' rule, as important as the rule itself, are established in favor of trade and commerce, and apply to all instruments and securities which are negotiable, and pass from hand to hand by mere delivery. (Miller v. Race, 1 Burr., 452; Grant v. Vaughan, 3 id., 1516; Gill v. Cubit, 3 B. & C., 466; Snow v. Peacock, 3 Bing., 406; Baynes v. Foster, 4 Tyrw., 65; Beckwith v. Corral, 3 Bing., 444; Snow v. Saddler, 3 id., 610; Strange v. Wigney, 6 id., 677; Easly v. Crockford, 10 id., 243.)
    All these cases (cited with approbation in Pringle v. Phillips, before cited,) establish the doctrine, that the actual good faith of the purchaser or bailee for value of such a character of property, is not questioned, there must be proof in order to deprive him of his protection in the purchase, of a want of reasonable caution or prudence on his part in omitting to make any inquiry when just grounds of suspicion exist, of which he has knowledge.

      2. Property of the character of that claimed to have been converted in this case has been included within the exception to the rule, ever since the great leading case of Lickbarrow v. Mason, (2 T. R., 63,) in which it was decided that the consignor, who had indorsed in blank the bill of lading, lost his right to stop the goods in transitu, when the consignee holding it had fraudulently delivered it to a third party, who had advanced his money upon it in good faith.
    3. The doctrine has been expressly applied to certificates of stock, in The Commercial Bank v. Kortright, (22 Wend., 348;) Sargent v. Franklin Insurance Company, (8 Pick., 90,) and in this Court, in the case of Fatman v. Lobach. (1 Duer, 354.)
    In this last case it was expressly held that a certificate of stock, with a power of attorney executed thereon, in blank, (exactly as was the case here,) was a negotiable instrument, the property in which passed by delivery and protected the purchaser or him who advanced his money upon it.
    6. But inquiry was made, and that, too, as the testimony shows, from the best sources within reach, for the purpose of ascertaining if the young man might safely be dealt with.
    V. The facts found by the Referee are wholly insufficient to sustain his conclusion of law, that the property in question was wrongfully converted by the defendant; and neither the facts averred, proved nor found by the Referee, are sufficient in law to sustain a claim on behalf of the plaintiffs for an unlawful conversion of the property against any one other than the son of the plaintiff.

      Charles W. Prentiss, for the plaintiffs, (respondents.)
    I. Any exercise of dominion over property, in opposition to the rights of the owner, is a conversion, and even a mere claiming may be. (Connah v. Hale, 23 Wend., 462; Farrur v. Chauffetete, 5 Denio, 527; Cobb v. Dows, 9 Barb. S. C. R., 230; 2 Greenl. Ev., § 642; Harris v. Saunders, 2 Strob. Eq. R., 370; Parker v. Goddard, 39 Maine R., 144; Freeman v. Scurlock, 27 Ala. R., 407.)
    II. Stock is not negotiable like bills or promissory notes. (Covill v. Hill, 4 Denio, 323, aff’d, 2 Seld., 374; Brower v. Peabody, 11 How. Pr. R., 492; Mechanics’ Bank v. N. Y. & N. H.

      R. R. Co., 3 Kern., 599; Biddle v. Bayard, 13 Penn. S. R., 150; McCready v. Rumsey, 6 Duer, 574.)
    III. Therefore, the stock having been stolen, the defendant, whether he acted as principal or agent, acquired no better title to the stock than the boy had; and having sold it, is liable to the owners. (Williams v. Merle, 11 Wend., 80; Andrew v. Dieterich, 14 Wend., 31; Hoffman v. Carow, 20 Wend., 21, aff’d, 22 Wend., 285; Covill v. Hill, 4 Denio, 323, aff’d, 2 Seld., 374.)
    IY. The Referee’s report shows that the defendant admitted to the plaintiffs, before this action was commenced, that he had bought and sold the stock. This is of itself sufficient evidence of conversion. (La Place v. Aupoix, 1 Johns. Cas., 406; Everett v. Coffin, 6 Wend., 603; Dezell v. Odell, 3 Hill, 215.)
    Y. Even admitting that the defendant in this transaction acted only as the agent or broker of Bowen, he is still- liable for the conversion; and equitably so, as he knew all the circumstances of the' pretended sale, and received part of the proceeds of the stock. (Bristol v. Burt, 7 Johns. R., 254; Thorp v. Burling, 11 id., 285; Murray v. Burling, 10 id., 175; Reynolds v. Shuler, 5 Cow., 323; Hoffman v. Carew, 20 Wend., 21, aff’d, 22 id., 285; Farrar v. Chauffetete, 5 Denio, 527; Pringle v. Phillips, 5 Sandf. S. C. R., 157; Calkins v. Allerton, 3 Barb. S. C. R., 171; 2 Greenl. Ev., § 645; Perminter v. Kelly, 18 Ala. R., 716; Dunlap’s Paley’s Agency, 4th Am. ed., 399, and n. b.)

   By the Court—Woodruff, J.

The defendant in this case is liable for the value of the stock. The lad, Anderson, had no title to the stock, and no authority to dispose of it. He had not been intrusted with the certificate by the plaintiffs, the true owners, but had taken it wrongfully without their consent. He could, therefore, by no act of his, confer title upon the defendant or upon Bowen; nor could he give to either of them a right to dispose of the stock.

Bowen having neither title to the stock nor authority to sell it, (assuming, for the purposes of the question, that the defendant had nothing to do with the purchase from the boy, and is in that respect in the same situation as if he had never seen the boy at all,) could not authorize the defendant to dispose of the stock, nor could he confer upon him any authority which the defendant can interpose as a protection against the plaintiffs’ claim.

The defendant has in fact received the certificate of the plaintiffs’ stock; he has employed third persons to sell it for him ; it has been sold in obedience to his instructions; he received the proceeds of sale; and he is not protected by any legal authority to do the acts so performed. This makes him liable to the owners of the stock. He has dealt with their property without their consent, and received its proceeds on a sale made by his direction.

Assuming that he acted in good faith in the belief that the stock, when he caused it to be sold, belonged to Bowen, is not sufficient to protect him. One who deals with or disposes of the .property of another, (the same not being negotiable paper,) must see to it that he acts by authority of one who has title, or who has an authority to confer, sufficient to warrant such dealing or disposition. (Everett v. Coffin, 6 Wend., 603; Williams v. Merle, 11 id., 80; Saltus v. Everett, 20 id., 267; Hoffman v. Carow, 20 id., 21; 22 id., 285; Connah v. Hale, 23 id., 462; Covill v. Hill, 4 Denio, 323; 2 Seld., 374; Cobb v. Dows, 9 Barb., 230.)

The judgment should be affirmed with costs.

Ordered accordingly.


author: By the Court—Bosworth, Ch. J.

text:
    Durbrow et al., Plaintiffs and Respondents, v. McDonald et al., Defendants and Appellants.
    1. Where a valid contract is made for the sale and delivery of the wheat in a specified boat for cash; and the buyer designates a vessel into which the wheat is to be delivered and the seller accordingly has it measured as is -customary in such cases and placed on board of such vessel, and sends to the buyer a duplicate measurer’s return or certificate of the quantity, and a bill for the wheat at the contract price, and the seller thereupon requests payment from the buyer, who answers that he will pay on Saturday, (the second day thereafter,) and the seller makes no objection thereto; and where there is no fraud in mating such contract or obtaining such delivery, a person in good faith advancing money on the same day to such buyer on the security of such wheat and on the faith of his being the owner thereof, will obtain a valid title thereto as against the seller to the extent of such advance; although such buyer fails after obtaining such advance and thus becomes unable to pay to the seller any part of the contract price. '
    2. Such a delivery being all the delivery which the parties contemplated or the contract required; it was subject to no condition unless it be an implied one, that payment be made if demanded, when all the wheat was delivered.
    3. Where, in such a case, an advance is made to such buyer upon the understanding at the time of both parties to it, that it is made on the security of such wheat; and that the person advancing should thenceforth have the control of it and that a bill of lading should be issued to him as the shipper of it, making the wheat deliverable to his order at the port of destination, and such bill of lading is immediately thereafter so issued and delivered; the person so advancing from the time thereof has the right of possession and of control, as against the seller.
    4. Evidence of other cotemporaneous purchases by such buyer and of his failure to pay therefor on the day he agreed to pay, there being no evidence that they were fraudulent or that any representations were made in negotiating the contract for the wheat in question, is inadmissible.
    (Before Bosworth, Oh. J., and Woodruff and Moncrief, J. J.)
    Heard, June 15th;
    decided, July 9th, 1859.
    This is an appeal by John Child, Francis McDonald, Peter McLeod, Hodgson Bigland and John Athya, (the defendants, who, exclusive of John Child, compose three several firms, via.: the firm of Francis McDonald & Co., of N. Y.; Bigland, Athya & Co., of Liverpool; and John Athya & Co., of Glasgow;) from a judgment in favor of John B. Durbrow, John C. Winne and William R. Sheldon, (the plaintiffs, who compose the firm of Durbrow, Winne & Sheldon,) entered on a verdict rendered on a trial had before Mr. Justice Pierrepoht and a jury on the 19th of November, 1858; and from an order denying a motion made by the defendants for a new trial.
    The action was commenced about the 25th of October, 1856, to recover the possession of 8,4-991 bushels of wheat, then on board of the ship Compromise, then in the port of New York, and of which the defendant, John Child, was master.
    The complaint states, that on or about the 22d of October, 1856, the plaintiffs placed this wheat on board of the Compromise then bound for Glasgow; that it was their property; that on the 24th of October Francis McDonald & Co. wrongfully asserted a right of property in the wheat and notified Child thereof, who assented to the same, acknowledged them as the shippers and agreed to carry it for them to Glasgow; a demand of the wheat of the defendants; their refusal to deliver and wrotfgful detention of it; and prays judgment for a recovery of the property and damages for the detention.
    The defendants by their answer deny these allegations, except the demand of and refusal to deliver the wheat; and as a separate defense aver that Theodore Perry was, on the 23d of October, 1856, the owner of the wheat, that it was then on board of the Compromise, which was then in the port of New York bound for Glasgow; that Child was then master of said vessel, and that Francis McDonald & Co., being factors and commission merchants, on that day, at the request of Theodore Perry, advanced to him $5,000 on the wheat, on an agreement to sell the same at Glasgow and account for the proceeds; that Perry then duly transferred the wheat to them and ordered Child to hold it for them, and that Child, in pursuance of such order, on the 24th, issued and delivered to them a bill of lading by which the wheat was made deliverable at Glasgow to their order or assigns; whereby they became lawful owners of the wheat and entitled to the possession thereof.

      A. F. Be Laze, a broker, testified that on the 21st of October, 1856, he made a contract in writing between the plaintiffs and Theodore Perry, (which was produced and reads thus,) viz.:
    ' “ New York, October 21st, 1856.
    “ Sold to Messrs. Theo. Perry & Co., per J. W. Spencer, broker, account Messrs. Durbrow, Winne & Sheldon, 3,921 bushels western red wheat, per bt. D. Hibbard, 3,500 ditto, per bt. Ural, at $1.54 per 60 lbs., delivered to vessel in good shipping condition. Quality, as per sample. Payment, cash.
    “Alfd. F. De Luze, Broker.”
    That he made the sale through a broker, J. W. Spencer, who acted on behalf of Perry; that Spencer told him the wheat was to be sent on board the Compromise, at Pier 14, East River, and he requested the plaintiffs to send it there; that he sent the bought note to the plaintiffs and the sold note to Perry.

      William R. Sheldon, one of the plaintiffs, testified that he recollected the request to send the barges containing the wheat alongside the Compromise; that a measurer was employed as usual to measure the wheat; he measured the wheat from the Ural and made duplicate returns, one for vendor and one for vendee; and on the morning of the 23d, witness sent the duplicate, and a bill for it, to Perry. The measurer’s return, omitting unimportant particulars, reads thus, viz.:
    “ Old Board of Measurers’ Office, 21 Ooenties Slip. Paul Grout, President.

    Jesse Marvin, James M. Hedges, Benj. L. Guión,
    Edward G. Burgess, William Beach,
    T. J. Grout,
    John Wright.
    “New York, Oct. 22,1856.
    “ Returns of thirty-five hundred and thirty-four bushels of Red Wheat, delivered from bt. Ural to' ship Compromise, after Bin. Order of Theo. Perry, acc. of Durbrow, Winne & Sheldon.
    “ Half measuring,.........................$8 84
    “ Screening,.............................. 2 20
    “ 3,534 bushels measure. , “ 3,499 30 12 weight.
    “Ex. R. O. M.”
    $11 04
    “ C. H. Dougherty.
    The bill for the wheat (sent with the measurer’s returns) reads thus, viz.:
    “New York, October 21st, 1856.
    “ Messrs. Theo. Perry,
    “Bought of Durbrow, Winne & Sheldon,
    “ 51 New street.
    “ Terms cash.
    “ 3,499 30 12 bush. Red Wheat, as per returns, at
    $1.54 per bush...........................$5,389 25
    “ One-half measuring and screening, ............ 11 04
    “$5,400 29
    “Ex. R. O. M.”
    He further testified thus: “ On the 23d of October I met Perry on the Corn Exchange, and requested a check for the amount of this bill; Perry said he would pay on Saturday ; * * the return for the other boat-load .* * I got * * on Friday, October 24, and sent it that morning, with a bill of. parcels attached, with a note from one of our firm requesting a check; he retained the bill, and sent back the measurer’s return for the wheat with a message that he would like to see one of our firm; * * I went to see him; Perry said he had stopped payment the day before, and was not able to return the measurer’s return for the previous boat-load; * * I then went to see the broker, and, in company with him, went to Perry and demanded the wheat and documents of him; he refused them; -we then went to the owner of the ship, to demand the wheat of him f we found that the bill of lading for the wheat had just then been delivered, and then went to the defendants’ office and demanded the wheat of them; they said they had advanced to Perry, and the wheat was their own.” He was asked this question:

      Q. “In October, 1856, in case of sales of.wheat in bulk like this from a canal boat or barge to a vessel, what was your practice, and what was the course of'trade after the property had been sold ?

      Á. “ The measurer sends the seller his return in duplicate; the one is called a whole return, the other a half return; the only difference between them is, that in the half return, which is intended for the purchaser, one-half of the amount of the measurer’s fee is stated, the seller paying the whole in the first instance to the measurer; I send the half return, with a bill of parcels, to the purchaser; then send for the money; do nothing more.”
    ■ It was admitted that Perry’s notes were protested on the 23d of October; and the plaintiffs, against the objection and exception of the defendants, were permitted to give evidence that Perry purchased grain of other houses in October, 1856, viz., on the 12th, 17th and 22d of October, to large amounts, for which he failed to pay on the 23d; that up to that day his credit was good.

      James Hutchinson, a confidential clerk of the defendants, testified that, on the 17th of October, Perry told them “he was going to ship about 7,000 bushels by the Compromise;” that, on the morning of the 23d, before 12 o’clock, Perry applied for $5,000; “ at that time I refused to give it to him; he told me he wanted it on account of the Compromise; that there was one boat-load of wheat on board; I then gave it to him;” * * “I obtained from Perry the measurer’s return of the wheat on the morning of the 24th of October; that was the first time I had ever seen it;” that he got the bill of lading for the wheat that morning; the bill of lading was dated the 22d of October; it stated Francis McDonald & Co. to be the shippers, and the wheat to be deliverable at the port of Glasgow unto the shippers’ order or assigns; and it was read in evidence.
    Evidence was given tending to show that, in October, 1856, it was the usage in Mew York, in regard to wheat shipped in bulk, to sign and deliver bills of lading upon production of the measurer’s return.
    The Case states that
    “ The defendants’ counsel offered to prove that by usage in the city of Mew York, measurer’s returns of grain in bulk like that in evidence in this cause, were considered equivalent to ship’s receipts, entitling the bearer to bills of lading for the property.
    (The plaintiffs’ counsel objected to the evidence as incompetent, and the evidence hereinafter contained on that subject was received subject to the objection and without prejudice to the plaintiffs’ objection as to its legal effect.” )
    Evidence, of the character so offered, was then given.
    The charge of the Judge, although it did not in terms direct a verdict for the plaintiffs was, in substance, that they were entitled to recover, and the defendants excepted to it, as “being in effect a direction to the jury to bring in a verdict for the plaintiffs.”
    He charged '{inter alia) that “ there is not, it seems to me, sufficient evidence that the purchase of the wheat by Perry was fraudulent.”
    The defendants made various requests of the Judge to charge, with which he refused to comply, and the defendants excepted.
    The jury found for the plaintiffs, and the value of the wheat to be $6,183.63, and the damages for detention to be six cents.
    The defendants moved, on a case and exceptions, for a new trial, which motion was denied. From the order denying it and from the judgment entered on the verdict, they appealed to the General Term.

      Henry Nicoll, for appellants.
    I. Upon the sale of the wheat in question an actual delivery was not in the contemplation of either party: the wheat was purchased for the express purpose of being shipped to Europe, and this purpose was communicated to the sellers at the time of the making of the contract of sale; hence there could be none other than a symbolical or constructive delivery of the property.
    II. The plaintiffs, by the delivery of the wheat on board of the Compromise and by the delivery of the measurer’s return and bill of parcels to the buyer Perry, had fully performed their duty as sellers. Nothing further remained to be done on their part or could be done by them to vest him with the title of- the property. There was, therefore, a valid delivery and the-title must have thereby necessarily become vested in Perry. (Smith v. Lynes, 1 Seld., 41; Caldwell v. Bartlett, 3 Duer, 341; Keyser v. Harbeck, id., 373; McCready v. Wright, 5 id., 571; Wilmshurst v. Bowker, 7 Man. & Grang., 882; Tansley v. Turner, 2 Bing. N. C., 151; Key v. Cotesworth, 14 Law & Eq., 435.)
    III. The testimony in the case establishes, that upon sales of grain similar to the one in question, there was, by the usages of the trade, a valid delivery of the wheat to Perry, and the evidence of such usage was entirely competent and proper. (Keyser v. Suse, 1 N. Gow., 58; McCready v. Wright, 5 Duer, 571; Haggerty v. Palmer, 6 Johns. Ch., 437; Gilson v. Stevens, 8 How. U. S., 384.)
    IV. The wheat having been delivered and the title of Perry to the same thereby vested in him by the voluntary acts of the plaintiffs, the latter are precluded from reclaiming the property in the absence of any fraudulent intent on the part of Perry in making the purchase, and that no such fraudulent intent existed was conceded by the presiding Judge in his charge to the jury. (See cases cited to Point H.)
    V. Perry, at the time of procuring the advance upon this wheat from the defendants, on the 23d day of October, 1856, was in the possession of the same as owner. The defendants advanced their money upon the wheat on the faith of such ownership, and are therefore entitled to the protection due to Iona fide purchasers, and this would be so even though it should be admitted that as between Perry and the plaintiffs, the latter, upon the insolvency of the former, would have been entitled to reclaim the property had the same remained in his possession.
    VI. Although no muniment of title passed from Perry to the defendants directly upon the making of the advance, yet it is apparent that the defendants parted with their money relying upon Perry’s promise to put them in possession of the property in the manner in which he had been accustomed to do in previous similar transactions; this promise might have been enforced by the defendants. In performance of this obligation, the defendants were, on the morning after making the advance, invested with the title to the property; this was done before any attempt was made on the part of the plaintiffs to reclaim the same. (Fenby v. Pritchard, 2 Sand. S. C., 151; Beavers v. Lane, 6 Duer, 232.)
    VIL The evidence fully establishes the usage -by which the bill of lading of the wheat in question was properly delivered by the master of the vessel to the defendants as the lawful holders of the measurer’s return, delivered to them by Perry, in pursuance of his agreement, and for the express purpose of enabling the defendants to procure the bill of lading.
    VIII. The evidence relating to sales of wheat made to Perry in the month of October, 1856, was improperly admitted. No foundation was laid for such evidence, there being no proof that the sales in question were made upon any representations, or upon any fraudulent intent' whatever. (Hall v. Naylor, 6 Duer, 71.)
    IX. The evidence offered by the defendants to show the practice between their house and Perry as to getting measurer’s returns for wheat shipped in bulk, should have been admitted. The dealings between the parties in similar transactions were shown to have been large, and a practice had grown up in regard to getting these measurer’s returns from Perry, which would have applied to the particular case, without any express reference being made to it in the transaction. The order denying the motion for a new trial should be reversed.

      Jeremiah Larocque, for respondents.
    I. The contract for the two boat-loads of wheat was one entire contract. The plaintiffs had no right to demand payment until both boat-loads were on board the Compromise, and on handing to the purchaser the measurer’s return for the last boat-load. This was done on the 24th October, and the cash demanded, and on its non-payment this action brought on the same day. There was, therefore, in judgment of law, no delivery of the wheat, waiving the condition of cash payment. (Russell v. Minor, 22 Wend., 659; Smith v. Lynes, 1 Seld., 41; Van Neste v. Conover, 20 Barb. S. C. R., 554; Ives v. Humphreys, 1 E. D. Smith, 199; Nichols v. The People, 17 N. Y., 114.)
    II. The plaintiffs did not part with their title to the wheat by placing it onboard the Compromise, or by sending the measurer’s return to Theodore Perry & Co. The measurer’s return has none of the' attributes of a shipping receipt, and the usage attempted to be proved by the defendants’ witnesses, to deliver the bill of lading to the party presenting the measurer’s return, without further inquiry, would be invalid, if established, for unreasonableness.
    1.. It does not in any sense purport to be a muniment of title, but a mere return of quantity made by an officer employed for that special purpose, and not connected with the ship in any way whatever, or with the seller.
    2. On its face, in this instance, it shows the work to have been done on account of Durbrow, Winne & Sheldon, the plaintiffs.
    3. It thus conveyed notice to whomever it was presented to, that the property was theirs.
    4. It had not their indorsement or signature in any form, to indicate a transfer of their title.
    5. If such a rule could prevail, it would open the door to intolerable fraud and abuse. (Brower v. Peabody, 3 Kern., 121.)
    III. But if such a usage was established, it would not afford the slightest aid to the defendants here. Their advance to Perry was not accompanied by the delivery to them of any measurer’s return or other document whatever. No bill of lading was signed until the next day, the very day of the replevin. The only information they had was that there was “one boat-load on board the Compromise.” Whether it was wheat or what it was, they were not even informed. Nor had they the slightest in formation of the quantity. Boat-loads vary from 2,000 to 10,000 bushels. The $5,000 was loaned Perry before noon on the 23d, the very morning that that measurer’s return was sent by the plaintiffs to Perry & Co.
    IY. If the above positions are correct, the charge of the learned Judge to the jury was unexceptionable, on all the points as to which it was excepted to by the appellants.
    Y. For the same reasons, the appellants had no right to have any of the instructions given to the jury, which were contained in their several requests to charge.
    The judgment below was therefore correct, and should be affirmed, with costs.
   By the Court—Bosworth, Ch. J.

There are some facts established by testimony in no way conflicting. On the 21st of October, 1856, the plaintiffs and Theo. Perry & Co. entered into a valid contract, by which the former agreed to sell and the latter to purchase 3,921 bushels of wheat per boat D. Hibbard, and 3,500 per boat Ural, at $1.54 per 60 pounds, to be “ delivered to vessel in good shipping condition,” to be paid for in cash on delivery.

The vessel Compromise was designated as the one into which delivery of the wheat was to be made. On the 22d, the wheat was measured from the Ural into the Compromise, and on the morning of the 23d the measurer’s return, with a bill of the wheat dated the 21st, stating the quantity sold, “ as per returns,” to be 3,499 bushels, 30 pounds and 12 ounces weight, and the price at $1.54 per bushel, to be $5,389.25, and the charges for one-half measuring and screening to be $11.04, was sent to the purchasers.

Subsequently, and on the same day, one of the plaintiffs (Wm. R. Sheldon) met Perry on the Corn Exchange, and requested a check for the amount of this bill. Perry said he would pay on Saturday. The 23d was Thursday.

Sheldon does not state that he made any objection to this, or suggested that it would not be satisfactory.

On these few uncontroverted facts, it cannot be doubted, as we think, that Theo. Perry & Co. then had all the actual possession it was ever contemplated they would have, nor that they then had the full possession, and in the precise manner, that the contract between them and the plaintiffs contemplated that full performance by the plaintiffs would give. There was a perfect delivery of the wheat which had been measured into the Compromise in pursuance of the contract between the parties, in such sense, that its subsequent loss by perils of the seas, or other casualty,, would have been the loss of Theo. Perry & Co. Notwithstanding a subsequent loss of it, without the fault of either party, a tender of the balance would have enabled the plaintiffs, as a matter of right, to recover of Theo. Perry & Co. the contract price of the whole.

The most the plaintiffs can claim is, that although there was such a delivery made as satisfied the contract and fully performed it on their part, yet the delivery was conditional in such sense, that, if on delivering the balance, Theo. Perry & Co. refused or became unable to pay for the whole, the plaintiffs, as between themselves and Theo. Perry & Co., could have repossessed themselves of the wheat.

If this be so, the next important question is, did the transactions between Perry and Francis McDonald & Co. confer upon the latter a lien or title superior to the title of the plaintiffs.

We think it must be conceded that the purchase and possession by Perry were such as to enable him to confer upon a bona fide purchaser or pledgee for value, a title valid as against the plaintiffs. (Smith v. Lynes, 1 Seld., 41.)

The Judge instructed the jury that there was “not sufficient evidence that the purchase of the wheat by Perry was fraudulent.” It is the right of the defendants to have that instruction treated, for all the purposes of the present appeal, as correct.

The advance of the $5,000 made to Perry by Francis McDonald & Co., was made on the 23d, before 12 o’clock. It is not an unreasonable inference, from the testimony, that this advance was sought and made after the measurer’s return and the bill annexed to it had been delivered by the plaintiffs to Theodore Perry & Co.

Nor is it an unreasonable inference that this advance was sought and made on the understanding, (at the time it was made,) between Theodore Perry & Co. and Francis McDonald & Co., that it was made on the security of the wheat in question; and that the wheat was at the time of the advance pledged as security for the repayment of the money, so far as that result could be effected, by a clear understanding that Francis McDonald & Co. should have the control of it thenceforth, and a delivery to them of the measurer’s return, and a bill of lading issued by the master stating Francis McDonald & Co. to be the shippérs of the wheat, and that it was to be delivered at Glasgow to their order, to the end that it might be sold by their house there to reim-. burse them for this and other advances, and by the execution of that understanding on the following morning, by the actual delivery of the measurer’s return and the contemplated bill of lading.

If Perry had paid the plaintiffs on the morning of the 23d for this wheat in full, at the time he was requested so to do, at the Corn Exchange, nothing more could have been done according to the usual course of business, so far as the evidence discloses what that was, than was done, to vest in Francis McDonald & Co. the legal title to the wheat, or to confer upon them the actual and legal control over it.

If the transaction was understood at the time of the advance, and was then intended to be such as is above suggested, then Francis McDonald & Co.’s right of possession and to control the wheat was perfect, as between them and Perry, had he been the absolute owner.

A transaction which would, had he been the absolute owner, have divested him of all right of possession and to control it, must have the same effect as against the plaintiffs, if the advance was made bond fide and in the actual belief that Perry was the owner, followed as it was, almost cotemporaneously, with the execution and delivery of all the muniments and evidences of title that were adapted to the subject matter of the contract, situated as the wheat in question was, at the time the advance was made.

The charge of the Judge submitted no question of fact to the jury and was, in substance, an instruction to find for the plaintiffs, and was excepted to by the defendants on that ground.

We think there was sufficient evidence to justify the submission of the question whether the advance was made in good faith and upon the security of the wheat in question, and upon the understanding at the time that it should be thenceforward subject to the control and direction of Francis McDonald & Co., and that a bill of lading should be procured and delivered to them as the shippers, which by its terms should make the wheat deliverable at Glasgow to their order.

And they were entitled to the instruction, that if the jury found the affirmative of that proposition, the defendants were entitled to a verdict.

Evidence was admitted “ subject to the objection ” of the plaintiffs, “ and without prejudice to the plaintiffs’ objection as to its legal effect,” that it was the usage in the city of Eew York, in October, 1856, to issue bills of lading to the person producing the measurer’s return of grain shipped in bulk.

With what view it was admitted, the case does not clearly disclose. It is quite clear .that no evidence was given which could have the effect to make the measurer’s return operate to transfer the legal title to the wheat, to every holder of it by reason and force of his mere possession of it.

The only plausible ground, if any, for admitting evidence of the practice,, is its bearing upon the question of the good faith of Francis McDonald & Co., so far as any light could be thrown upon that question, by proving that their transactions were according to the ordinary and usual course of business. ' But the case presented no such question, and the evidence seems to be irrelevant. As, however, the plaintiff obtained a verdict, this question does not properly arise on the defendants’ appeal.

Evidence of other purchases made by Perry in October, 1856, was admitted against the objection and exception of the defendants. The evidence must have been offered and received as competent evidence, upon the question whether the wheat in question was purchased with a preconceived intent not to pay for it.

Eeither the evidence of Van Syckel, Averill, or Whittlesey, tended to prove any fraudulent intent in making the purchases of which they testified, or making the purchase of the wheat in question. (Hall v. Naylor, 6 Duer, 71; S. C., in the Court of Appeals, 18 N. Y. R., 588.)

The judgment and order appealed from, must be reversed and a new trial granted, with costs to abide the event.

Ordered accordingly.


text:
    John F. Butterworth, Receiver, &c., Plaintiff and Respondent, v. John Kennedy, Defendant and Appellant.
    1. Where a moneyed corporation discounts the note of a third person on the security of shares of its own capital stock, owned by him and pledged therefor, and such note is not paid at maturity, and the directors of such corporation do not sell such stock, neither their omission to sell it, nor their omission to charge such shares at the amount actually paid thereon as a reduction of the capital stock of the Company, affects the liability of such third person to the Company.
    2. Such facts do not, by force of 1 R S., 590, § 6, either extinguish the stock or the liability of the pledgor for the amount of Ms note secured thereby.
    3. The effect of the charge which that section requires to be made is, that no dividends shall thereafter be made, “until the deficit so created be made good from the subsequently accruing profits of the Company.”
    (Before Bosworth, Ch. J., and Woodruff and Moncrief, J. J.)
    Heard, June 17;
    decided, July 9, 1859.
    This is an appeal by the defendant from a judgment entered against him on the verdict of a jury. The action was tried before Mr. Justice Woodruff and a jury, in March, 1859.
    The plaintiff was duly appointed a Receiver of the property and effects of the Island City Bank, on the 25th of September, 1857, (it being then an insolvent moneyed corporation.) The suit is brought on a note alleged to be parcel of the assets of said bank, of which note the following is a copy:
    “ $400. New York, Aug’st 24th, 1856.
    “ Six months after date, I promise to pay to Wm. Stebbins, Cash’r, or order, four hundred dollars, for value received, having deposited with him as collateral security, with authority to sell the same at the Brokers’ Board, or at public or private sale or otherwise, at his option, on the non-performance of this promise, and without notice. Payable at Island City Bank.
    “John Kennedy.
    “ Twenty shares of the)
    Island City Bank. J “Feb. 27.”

      The answer, so far as it is material, is as follows :
    “ And this defendant, for a further and distinct defense to the alleged cause of action set forth in said complaint, saith, that on or about the 3d day of October, 1853, he subscribed for twenty shares of the capital stock of said Island City Bank, and paid five hundred dollars, the par value of the same, therefor; that afterwards, and on or about the 8th day of May, 1854, the said . Island City Bank discounted for this defendant his certain promissory note for the sum of four hundred dollars, payable at a time subsequent thereto, and as security for the payment of said sum of four hundred dollars this defendant assigned to the President of said Island City Bank, (for the benefit of said Bank,) said twenty shares of said capital stock, with a power to sell the same in case of non-payment of said sum of four hundred dollars, according to the terms of said note; that said stock so assigned was entered and transferred on the books of said bank on the twenty-seventh day of December, 1854, and was never after-wards reassigned to this defendant. That said note was not paid at maturity, but was renewed from time to time, until the said note mentioned in said complaint was given, (which was a renewal of á note given in said succession of renewals for said original amount of four hundred dollars,) and that when said note became due this defendant abandoned said stock to the said Island City Bank in satisfaction of said amount payable by said last mentioned note; and said Island City Bank possessed itself of said stock and converted the same to its use.
    “ Wherefore this defendant prays that said complaint may be dismissed, with costs.”
    A reply was interposed, denying all the material allegations contained in the answer.
    At the trial, the note was produced and read in evidence. The due appointment of the plaintiff as Receiver was admitted, and the plaintiff then rested.
    The defendant then produced a paper writing, dated May 8, 1854, signed by himself, by the terms of which he assigned twenty shares of the stock of the Island City Bank, standing in his name on the books of said Bank, to “ James O’Brien, President,” and by the terms of which he appointed “ William Stebbins ” his attorney to sell and transfer the stock.

      He also proved that a transfer was made on the stock transfer book of the Island City Bank, on the 27th of December, 1854, of the said twenty shares of stock, to “ James O’Brien, President,” by “ John Kennedy, per William Stebbins, attorney,” by virtue of said power of attorney.
    It was admitted that the said twenty shares are the same shares mentioned in the note in suit.
    The defendant, as a witness in his own behalf, then testified, that on the 3d of October, 1853, he subscribed for twenty shares of the stock of this Bank, at $25 per share, and paid $500 therefor.
    That on the 8th of May, 1854, his note of that date for $400 was discounted by that Bank, on his pledging (by the assignment and power of attorney of that date above mentioned) the twenty shares of stock as security for its payment, with power to sell it if the note was not paid at maturity. The note was not paid, but was renewed from time to time, and the note in suit is the last of the renewals. That he never received but one dividend on the stock, and never got the stock back.
    As evidence of the value of the stock, he proved that in 1855 and 1857, and as late as February, 1857, stock of the Island City Bank was sold at $75 and $80 on the $100, and rested.
    James O’Brien, for the plaintiff, testified that he was President of the Bank from the time it was organized until after the note was given; that the stock was transferred on the books of the Bank, to be held as security only; that it had never been sold or disposed of by the Bank, but was still held as security; and that if the defendant had paid his note, the stock would have been reissued to him at any time.
    It was admitted that the shares so transferred on the books of the Bank to the name of the President, had never been reissued to the defendant or sold by the Bank, but stood in the name of the President as security for the Bank until its failure.
    The parties having rested the case upon this evidence, the defendant moved to dismiss the complaint, on grounds substantially covered by the points made by him on the present appeal. The Judge directed a verdict in favor of the plaintiff, for $457.47, to which direction the defendant excepted. From the judgment entered on the verdict, the defendant appealed to the General Term.

      Francis Byrne, for appellant.
    I. The Bank had power to receive shares of its stock in payment or satisfaction of any debt due to it. (1 R. S., p. 590, old paging, § 1, subd. 6.)
    And the shares having been transferred on the books of the Bank, the stock as stock became extinguished,. and the money paid by the defendant therefor should, from the date of transfer, be considered as having been separated from the capital paid in, and as actually held by the Bank. (Dykers v. Allen, 7 Hill, 497; Wilson v. Little, 2 Comst., 443.)
    II. The debt so secured not having been paid when due, and for sixty days thereafter, and the Bank having converted the stock, the debt, (because of such conversion, and of the debt being less than the amount paid on such stock,) became extinguished, and the note not available to the Bank or the plaintiff. (1 R. S., 591, § 6; Peake’s N. P., 30.)
    The duty imposed by the statute to sell, and the omission so to do, and conversion of the stock by the Bank to its use, and the defendant’s adoption of (by not dissenting from) their acts, sufficiently make an agreement to accept the stock in satisfaction. The stock represented $500 in the possession of the Bank. The transfer of the stock amounted to an appropriation of the money to its own use. The conversion of the stock was equivalent to a conversion of the money. (Zachrisson v. Ahman, 2 Sandf. S. C. R., 68.)
    III. His honor, the Justice, should have dismissed 'the complaint on the grounds specified by the defendant’s counsel, and the judgment should be reversed and a new trial granted, with costs, &c.

      O. A.'Peabody, for respondent.
   By the Court—Bosworth, Ch. J.

The note in suit was discounted by the Island City Bank, for the defendant, on the security of a pledge of twenty shares of its own capital stock.

The note has not been paid, and the pledgee, or its legal representative, still holds the stock and owns the note.

There is no rule of law or equity which declares these facts to be a defense, either total or partial.

The 6th section of 1 Revised Statutes, 591, did not make it the absolute duty of the directors of the Island City Bank to sell this stock, even though the note was not paid within sixty days after its maturity.

The charge that is to be made, to satisfy the last clause of that section, is a charge which is to preclude the making of any dividends thereafter by the Company, until the deficit so created be made good from the subsequently accruing profits of the Company.”

The stock is not thereby actually extinguished, nor the debt of its pledgor satisfied.

It does not affect the rights of the pledgor or pledgee, though the pledgee be a moneyed corporation, and the pledge be shares of its own capital stock.

The judgment must be affirmed.

Judgment affirmed.