Jacob E. Decker & Sons v. Milwaukee Cold Storage Co. , 173 Wis. 87 ( 1920 )

Eschwjeiler, J.

The trial court directed judgment for the defendant upon the theory that although Cochrane, as plaintiff’s factor, could not lawfully pledge the meat itself with defendant as security for his personal indebtedness of $2,600, still he might pledge its substitute, that is, the negotiable warehouse certificate,. and that the defendant, taking back unto itself in good faith the same certificate, thereby secured a valid existing lien on the meat. This is challenged by the plaintiff.

Respondent contends, first, that the trial court was right in that contention; and second, that, even though the trial court’s view as to the pledge of the certificate be incorrect, the judgment in its favor can be supported on the ground that, by the assertion in the counterclaim in the action subsequently brought by Cochrane against plaintiff herein and the entry of a judgment in such other action in its favor for an amount which included this identical item of $2,600, the plaintiff exercised such an option in its choice of several remedies that it thereby waived itk right to assert a claim for the identical property, as is done in this replevin suit. This contention was not passed upon by the trial court, it being deemed .unnecessary in view of his holding on the first point.

Cochrane was, under his contract with plaintiff and as held by the trial court, a factor. As such, in the absence of a statute giving him authority so lo do, he had no power to pledge for his own indebtedness, the personal property of. his principal. Allen v. St. Louis Bank, 120 U. S, 20, 32, 7 Sup. Ct. 460; Warner v. Martin, 52 U. S. 209, 224; In re Dreuil, 205 Fed. 568; Holton, & Winn v. John A. Hubbard & Co. 49 La. Ann. 715, 22 South. 338; 19 Cyc. 123; 11 Ruling Case Law, 761. At the time of this.transaction there was no statute so empowering him, as was the situation when the decisions in Price v. Wis. M. & F. Ins. Co. 43 Wis. 267, and Hale v. Milwaukee Dock Co. 29 Wis. 482, 500, were written.

This doctrine is based upon the established rule at common law that (except in market overt) none can give a better title to. personal property by sale or pledge than he.has himself. Commercial Nat. Bank v. Canal-Louisiana B. & T. Co. 239 U. S. 520, 524, 36 Sup. Ct. 194; Murray v. Lardner, 69 U. S. 110, 118; Nickerson v Darrow, 3 Allen (87 Mass.) 419; 3 Ruling. Case Law, 838; 31 Cyc. 795. See, also, Pelosi v. Bugbee, 217 Mass. 579, 105 N. E. 222.

The loan from defendant to Cochrane was prior to the taking effect, of ch. 179, Laws 1917, whereby the uniform bills of lading act was adopted. The parts deemed material of the statutes in force at the time of this transaction are as follows:

Sec. 1675 — 1, Stats. 1915: “Warehouse receipts, bills of lading, and railroad receipts upon the face of which the words ‘not negotiable’ shall not be plainly written, printed, or stamped, shall be negotiable as provided in section 1676 of Wisconsin Statutes of 1878, and in sections 4194 and 4425 of these statutes, as the same have been construed by the supreme court.”

Sec. 1676, R. S. 1878: “Every warehouse receipt on which the words ‘not negotiable’ shall not be written or stamped upon the face thereof, shall be deemed negotiable as aforesaid (referring to sec. 1675).

Sec. 1675, R. S. 1878: “. . . shall have the same effect and shall be negotiable in like manner as inland bills of exchange, according to the custom of merchants. . . .”

While this warehouse receipt was in the hands of the defendant which had issued it, although ostensibly and- according to the intention of Cochrane and defendant pledged, ■such receipt had not as yet reached the.stage in its existence in which, under the law merchant, the exceptional qualities over the ordinary chose in action are impressed upon instruments of such form and nature.

It is the essence of a bill of exchange that there be three original parties to the transaction: the drawer, the drawee, and the payee, and it is only when a promissory note with but two original parties, maker and payee, has been transferred to a third party that the similarity arises, under the law merchant, between an inland bill of exchange and a promissory note. 1 Daniel, N eg. Inst. (6th ed.) § 29; Penniman v. Alexander, 111 N. C. 427, 16 S. E. 408. The same must be equally true of a two-party instrument such as the warehouse certificate here, which, by the statute above cited, is made negotiable only to the extent to which- an inland bill of exchange is under the law merchant.

As between the original parties to any of such instruments, the only superiority they have over the ordinary chose in action is that by the law merchant they prima facie import consideration. 1 Daniel, Neg. Inst. (6th ed.) § 769.

As appears from facts therein recited, this court was evidently referring to a negotiable warehouse receipt between others than the original parties thereto when it said in Wall v. Schneider, 59 Wis. 352, 356, 18 N. W. 443, that “they are negotiable, with like effect as to title as negotiable paper for the payment of money.”

As between the pledgor and the pledgee here, such warehouse certificate was in effect no more than a chose in action and could give no greater rights to the pledgee taking its own warehouse certificate than it could have received by an attempted pledge by Cochrane of the same goods. In the absence of some element of estoppel, and none such appears here, the expedient adopted by Cochrane gave no greater or better title to the pledgee, the defendant, than could have been given by Cochrane by the pledge of the property itself. Regardless of the unquestioned good faith on the part of the defendant in this transaction, the true owner’s rights were not cut off or diminished by the form that the transaction took in this particular instance. Commercial Nat. Bank v. Canal-Louisiana B. & T. Co. 239 U. S. 520, 524, 36 Sup. Ct. 194; Soltau v. Gerdau, 119 N. Y. 380, 23 N. E. 864; First Nat. Bank v. Boyce, 78 Ky. 42, 55; Elliott, Bailments, p. 102.

The distinction is substantial between where the principal, as here, intrusts personal property to his factor and the situation where a negotiable instrument itself is given to the factor that it, as such negotiable instrument itself, may be sold in the market. The judgment, therefore, cannot be upheld on the grounds upon which it was determined by the trial court.

Neither can the judgment in defendant’s favor be supported upon any theory of alleged waiver by plaintiff of its right to maintain this action or by the alleged exercise of its option to choose one of two inconsistent legal remedies.

As we have indicated, plaintiff’s ownership and title to the property was not affected by Cochrane’s storing it in defendant’s warehouse or by his taking a warehouse certificate therefor, although negotiable in form, or by his attempted pledge of such instrument with defendant. Plaintiff had a cause of action in tort against Cochrane when he did so treat the property stored as his own by taking and attempting to pledge the warehouse certificates to secure his own indebtedness. Thereafter, and when the plaintiff learned of the position that this property was in through Cochrane’s fraud, and as the lawful owner, demanded it from defendant in whose possession it was, the defendant by its refusal to surrender possession then and there committed a tort as against the plaintiff, however devoid of actual fraud or intentional wrongdoing its former transaction with Cochrane may have been. It owed a duty to plaintiff to restore to it the property of which plaintiff was the lawful owner, and defendant’s failure to do so was a breach of such duty and consequently a tort. Plaintiff, still treating the property as its own, might lawfully and properly commence this action for replevin • for the return of the property to it as lawful owner.

Upon Cochrane commencing his action for an accounting and damages against the plaintiff arising from their former transactions, the plaintiff here specifically set forth in its answer the situation in which Cochrane’s actions had placed the property, alleged that there was a conversion thereof, and prayed for damages for such tort. The judgment as finally entered in such action was for the unlawful conversion of plaintiff’s property by Cochrane.

All the way through these two separate actions, therefore, the plaintiff was consistently maintaining that it was the lawful owner of the property and that first Cochrane and then the defendant had by their separate and independent torts deprived the plaintiff of the possession of its property. The question was raised and determined in Cochrane v. Jacob E. Decker & Sons, 172 Wis. 38, 177 N. W. 856, and cannot certainly now be raised in this case, that the counterclaim for fraud and the seeking of damages for conversion could be properly asserted in the action brought by Cochrane against plaintiff based upon contract.

The mere obtaining of a judgment in one or both of two separate tort actions against separate tortfeasors who have each, as in this case, the one at one time and the other at another, deprived the true owner of the possession of .his property, cannot be held to divest the true owner of his title • to the property. Not until one or the other of such judgments has been satisfied, so that the owner of the property has received payment and compensatipn for the value of the property, can any tortfeasor assert title has passed from the owner.

While the English courts- for a time, and some of the authorities in this country at earlier dates and occasionally one at the present time, upheld and uphold the doctrine that the, entry of a judgment was a sufficient renunciation of title, the great weight of authority, and that which we prefer to follow, is that it is satisfaction of the judgment and not the mere obtaining thereof that by law divests the original owner of his title. Atwater v. Tapper, 45 Conn. 144; Miller v. Hyde, 161 Mass. 472, 37 N. E. 760; John A. Tolman Co. v. Waite, 119 Mich. 341, 78 N. W. 124; Russell v. McCall, 141 N. Y. 437, 450, 36 N. E. 498; Kendall v. Stokes, 44 U. S. 87, 100; Vandiver & Co. v. Pollak, 107 Ala. 547, 558, 19 South. 180; 2 Cooley, Torts (3d ed.) p. 881; 26 Ruling Case Law, 1157; 38 Cyc. 2112.

The plaintiff having taken no steps nor assumed any position which indicated that there had been a waiver of the tort committed either by Cochrane or the defendant as to plaintiff’s ownership of the property, and nothing having been done by plaintiff indicating that it elected to waive the tort and rely upon an implied contract to pay for the value of the goods, the cases relied upon by defendant, such as Crook v. First Nat. Bank, 83 Wis. 31, 52 N. W. 1131; Smeesters v. Schroeder, 123 Wis. 116, 101 N. W. 363; McDonald v. Markesan C. Co. 142 Wis. 251, 125 N. W. 444; Fox v. Wilkinson, 133 Wis. 337, 113 N. W. 669; Hargadine-McKittrick D. G. Co. v. Warden, 151 Mo. 578, 52 S. W. 593; Shonkweiler v. Harrington, 102 Neb. 710, 169 N. W. 258; or such cases as Russell v. Martin, 232 Mass. 379, 122 N. E. 447, are not in point here.

Plaintiff has the right to declare that the amount admitted due Cochrane from the plaintiff here in the suit against it by Cochrane should be treated as applied to the other obligations of Cochrane to plaintiff and included in the amount of damages determined by the judgment in that action rather than on this $2,600, no other application having been made by the court in that action and Cochrane having failed to assert his right to make such application, if any such right he had. Nelson v. Davison, 152 Wis. 567, 570, 140 N. W. 334; W. H. Pipkorn Co. v. Evangelical L. St. Jacobi Soc. 144 Wis. 501, 129 N. W. 516; Coxe Bros. & Co. v. Milbrath, 110 Wis. 499, 502, 86 N. W. 174; Zinns Mfg. Co. v. Mendelson, 89 Wis. 133, 135, 61 N. W. 302; Grace Harbor L. Co. v. Ortman, 190 Mich. 429, 157 N. W. 96; 30 Cyc. 1233; 21 Ruling Case Law, 90.

It follows from what has been said that the plaintiff rather than the defendant was entitled to judgment.

By the Court. — Judgment reversed, with directions to enter judgment for plaintiff.