Opinion
Argued April 19, 1876
Decided April 25, 1876
Wm. A. Beach for the appellants. Joseph H. Choate for the respondents.
The New York Warehouse and Security Company acquired no title to the cotton as against the plaintiffs upon the occasion of the loan to Biddle Company. The company did not part with its money upon the apparent ownership of the property by Biddle Company, but relied solely upon the engagement of the latter firm, and their order upon the warehousemen for the ordinary warehouse receipt. At the time of the delivery of the warehouse receipt to the company no money was advanced or value parted with upon the faith of such receipt, and therefore no title was then acquired to the cotton and the company as pledgees can only hold the cotton on the ground that the plaintiffs are estopped from claiming title to it by some act on which the company has relied and been induced to vary its position. The plaintiffs voluntarily consented that the warehouseman should give the usual storage and warehouse receipt to Biddle Company as owners, and thus invested them with the possession of the property and the usual documentary evidence of title, so that they are estopped, as against those dealing with Biddle Company, upon the faith of such apparent ownership, from reclaiming the property or asserting title to it. So far as innocent third persons are concerned, who have been influenced in their actions by the apparent ownership of Biddle Company, the plaintiffs must be deemed to have waived the payment of the purchase-price of the cotton, as a condition precedent to the actual vesting of the title. The rule prevails in such a case, that where one of two innocent persons must suffer by the fraud or wrongful act of another, the loss shall fall upon him by whose act or neglect the fraud or wrongful act has become possible. The plaintiffs gave credit to Biddle Company and enabled them to deal with the cotton as their own, by investing them with the possession and the indicia of ownership. The security company risked their money upon the faith of the promise of Biddle Company to procure and deliver the warehouse receipt for the property; but upon the receipt of that they had a right to repose upon it as evidence of Biddle Company's title and a ratification of the prior pledge of the cotton for the loan; and the plaintiffs, having consented to the issuance of the receipt by the warehouse, must be held to have assented to the transfer or other use of it by Biddle Company and that faith should be given to it as to like instruments. Had the company not obtained the warehouse receipt, they might have resorted to some process for the recovery of their loan or other indemnity against loss. The receipt was delivered on Saturday, and probably in the morning; but whether earlier or later in the day is not material, as Biddle Company did not fail in business until Tuesday, giving ample time to the company to take measures to protect itself. The case cannot be distinguished from Knights v. Wiffin (L.R., 5 Q.B., 660). There M., having purchased a quantity of barley from the defendant without having paid for the same, sold it to the plaintiff and received the pay therefor, giving an order for the delivery to the plaintiff. Upon being shown the delivery order, the defendant said it was all right, and that when a note for forwarding was received he would ship the barley. M. became bankrupt and the defendant, as unpaid vendor, refused to deliver the barley. The court held him estopped by his statement from denying that the goods had passed to the plaintiff; for the reason that by making such statement he induced the plaintiff to rest satisfied under the belief that the property had passed and so to alter his position by abstaining from demanding back the money which he had paid to M. Here, as in that case, the position of the security company was altered through the plaintiff's conduct. The plaintiffs knew, when they assented to the delivery of the warehouse receipt, that it would be regarded as evidence of title in Biddle Company and that any party to whom it was transferred would, according to the well known usage of the trade, rest satisfied. The company did rest satisfied in the belief that the property had by the negotiation of the receipt been passed to it. BLACKBURN, J., in the case cited uses this language: "If the plaintiff had been met by a refusal on the part of the defendant he could have gone to Moris and have demanded back his money. Very likely he might not have derived much benefit if he had done so, but he had a right to do it." It was not necessary in the present instance for the pledgee of the property to show that a demand of the money loaned would certainly have resulted in its recovery. It is enough that its position was altered by relying on the evidence of title furnished to Biddle Company by the plaintiffs and abstaining from action. The same principles were applied in The Continental National Bank v. The National Bank of the Commonwealth ( 50 N Y, 575); and Knights v. Wiffin is cited with approval. Barnard v. Campbell is entirely consistent with both cases, and also cites Knights v. Wiffin as authority ( 55 N.Y., 456). There was no evidence to show any want of good faith on the part of the security company, in the transaction or any connection between the loan of this money to Biddle Company and the payment of other loans by the latter to it, or that any part of the money loaned upon this cotton was repaid to the company.
The case was well disposed of in the court below. Judgment must be affirmed.
All concur.
Judgment affirmed.