GEORGE ".
NAT. BANE OF LOUISVILLE.
257,
There is Dothing in the. bill, save the .statement making him a party, . tha.t affectB in any way defendant Lyman. He is not alleged to have been a. charter member, incorporator, promoter, nor to be a stockholder, nor to have participated ill any way in doing the acts Vi' hich are the basis ofcomplainantil' bill. No relief is asked against him. It is not easy to see why, he was made a party. The demurrer should be sustained, for that there is a misjoinder of complainants, a deficiency of necessary parties defendant, and the complainants have a complete and adequate remedy at law, and. as to defendant Lyman, because the bill makes no case whatever against him. MAxEY,
J.. , concurs.
GEORGE 'D. FOURTH NAT. BANK OF LoUISVILLE.
(Circuit Court. D. Kentucky. June 4, 1888.)
L
A J,"eceipt for whisky stQ.red in a bonded warehouse is not a "document of title." 'Within the meaning of Act Ky. May 5, 1880, which provides that "every factor or other agent intrusted with possession of a document of title to merchandise $ball b.e deemed the owner, "so as to'validate a sale cr pledge oUhe property to an innocent third party, and which declares that any custom-house permit or 'warehouse receipt shall be deemed a document of title, since whisky in a bonded warehouse is snbject to the regulations of congress, and is In charge of the officers of thegov; ef1lment. II. BAME." ' . , . . ' . ' '.' '. '. · · Ali agent to whom such a receipt had' 'been given. for the purpose' of borrowing' , money on it to pay the revenue tax, paid such tax himself" and, afteratt,empting to export the whisky, stored it in Ii free warehouse. aud then pledgedtbe'.free.ware-, house receipt for his individual debt. The owner kuew tbat the whisky had not been pledged to pay the tax, and that the. agent had it "in store." Held, that ,the agent held the whisky, not as factor, 'but as creditor, and had no right, under said act, to pledge i t . , ' " '
ll'AClTORS-PLEDGE-Bol'.TJ>ED WAREHOUSE.
a.
SAME-W AREHOUBE RECEIPTS.
An ageut who receives ordiusry warehouse receipts for the purpose of uegotiating a certain loan for his principal ou their security, and who after obtaining such loan by pledge of the receipt!! pays the loan himself without the knowledge of his principal, and thusreposse5s118 himself of the receipts, bas'no authority underss:id ;sct to pledge them for anoJ;\.J;oer ,loan, sinoe, after his fit&t, pl"edge of the receiptilj :h$ was not" intrusted with" them again, within the, meaning of the .act. ' .,
At Law. This case was subJIlitted upon an agreed statement of facts.W. O. George was a citizen ofIlHhois, and the Fourth National Bank of Louisville, Ky., was a national banking <;Iorporation doing business at that place. The Newcomb-Buchanan Company was a Kentucky corporation, ' with its principal place of business, at Louisville, Ky. Its business was that of a distiller of Kentucky whiskies and a dealer therein. On the 20th of Septelnber, 1884, it made a general assignment of all of its eij'ecta for the benefit of its creditors. The qontroversy in this case cOncerns certain 50. barrels of whisky known as " Anderson," xnade in J une,,1880, v.41F.no.5-17 ','
FEDERAL REPOBTEtt,'Vol, 41.'
byseltial Nos. 28,195 0028,244. The casedividesitselC into:twdparts: Jl'irst, with respect to the 35 barrels of whisky,No. 28,210:to,No..28,244; second, as to the remaining 15 barrels,>numbered 28;195'w 28,209. In the year 1880, George purchased from the Newcom.b-Buchanan Company 50 barrels of whisky, above mentioned. At the time of the purchase they were stored in the bonded:distillery warehouseatiached to the Anderson distillery ,at Louisville, Ky., and were there held in pursuance of the requirements of the internal revenue laws of the United States, awaiting the cominp; due and payment of the excise' tax provided by law. The' Anderson Distilling Company was a Kentucky corporation engaged in making whisky. George paid the Newcomb-Buchanan Company for said whisky, and received from it 10, separate warehouse receipts of the Anderson Distillery Company, issued in the name of L. J. Haskins, and by him indorsed in blank; each warehouse receipt being for 5 barrels of These warehouse receipts were delivered by the Newcomb-Buchanan Company to the plaintiff, George. The fol. lowing is a copy-of one Qrsaid receiptsdthe others being similar except " " as to n u m b e r s : ) ' "No. 2,514. "THE ANDERSON DISTILLERY COMPANY. HAND-MADE SOUR-MASH WHISKY. " "I..oUISVILLE. 9·.1880. "Received in, the Ande1'lloD"DistilleryCompany's distillerr bonded warehouse. NQ.97, fffth district at Kentucky, for account and subject to the order ot. L J. Haskin,s.,SL · .Mo., deljverable only on return of this receipt properly tndorsed.. and·on payment of government tax,$-----.., and storage at the rate of ten cents per bbl. per month from 15th July, '81. five 'barrels A.ndersDn ,}:l ., . " . ' sour-mash, whis!,{y. entered into bond, as follows: ,. .' t··;, ', .··. " : ' ·..·
r
.... ,
NUl!lbilr; '.,210 1 8 2"
.'i'YJiJi! , Y o l "ql1Ul.
, '.'
,Ga)8. 44 44 44 44
' Taxable, Gals.
When Made.
','
44B .. 44B...222l'
0 ""fI, 441 «I ''1
%.. ;. '"
«
Stl!.mp.. Duo.
War.. hOWle,
When Tax 18
''I
44 '" '" 44 44 220
:11: :.. ::a VII
-
!: '" co i!
Q.i
June'.,l880' R af8168 I JuIy.,6, '88 "0' a .. ,
_
.. II 818168'
.. ..
220
This in deference to ,the Kentucky wareboUse law. as well utothe United States. boss or"damage by tire. the elements. shrinkage, or'na'tui-aI decay at owner's risk. " ..-' [Signed] "THE ANDERSON DISTILLERY' COMPANY. "By ANDREW BUOHANAN. President. 1" Attest:, .... ' . - ..·. ' . " . ; ,JSignll44 ,,,'J.,S. OSBORNE. U. '1At the time'George purchased this whisky from the Newcomb-Buchanan Company, that company agreed that it would arrange for George banking for'raising money'ta-paythe fax when. it. should beThis tax became due in JUhe"1883, and under the business regulations of.the internal revenue department was collectible duHngthe' next 60 days; that is, during the mdnthS6JJuly and AUgust, 1883. For the. purpose ofarranging a loan to pay the tax, George forwarded by
GEotlGE t7.t FOURTH 'NAT. BANK 'OJ!' 'LOt!ISVILLE.
259
mail from Chicago, totneNeW06mb-Buchanan Company, the'10warehonse receipts above mentioned; 'fo1",the purpose of havingithe sa,me regauged,. and thetax paid thereon.' : The Newcomb-BucbananCompany prepared and sent to George a promissory note, made negotiable, and payable at the Bank of Kentucky, in wtiisville, Ky., dated 9th August, 1883, and due six months after date, fotthe sum of$1 ,233. The note was the jointand several note of the Newcomb-Buchanan Company and George. The Company discounted the said note, and used the money Jor paying the taxon the 35 barrels of whisky. The Buchanan Company had agreed \vith the bank of Kentucky to pledge for the security of the note',the free warehouse receipts for said 35 barrels. After the whisky was taken from bond; it was placed in, a free warehouse belonging to the, Newcomb-Buchanan Company, and a house receipt issued therefor in due form to George. This warehouse receipt was sent to George, and was by him indorsed in blank, and sent to the Newcomb-Buchanan Company, for the purpose of having it delivered to the Bank of Kentucky, to be held as collaterai security for the payment of the said note. This note having become due on the 12th February, 1884, a renewal of the same was made in the same way, the Bank ()fKentncky retaining the warehouse receipts as collateral for the renewal note. This renewed note fell due on the 14th June. 1884. Before it fell due George authorized the Newcomb-Buchanan Company to sell other whiskies, which he owned. and which were in charge of the Newcomb-Buchanan Company, and apply the proceeds of such sale in payment oithe renewal note. George at no time authorized the sale of any part of the ,50 barrels of whisky. About the 7th June, 1884, in anticipation of the maturity of the renewal note, which was to become due on the 14th June, 1884, George signed a joint note for $1,233, and remitted it to the Newcomb-Buchanan Company, to be used in renewal of the said note so falling due on -the 14th June, 1884. The Newcotnb:.Buchanan Company, without any information to the plaintiff, George, sold $182.74 of other whiskies belonging to George, paid that sum intdthe Bank of Kentucky as a credit on the debt of$1,233, leaving' a balance of $1,066.26. On the 30th of June the NewcombBuchanan Company. without the knowledge of George, paid the Bank of Kentucky the residue of the said debt, and took up the said note, towit, the joint note of the Newcomb-Buchanan Company and George, and received .from the Bank of Kentucky the warehouse receipts of the Newcomb-Buchanan Compa.ny so indorsed in blank by the said George. 'l.'he Newcomb-Buchanan Company then removed the whisky from its free warehouse, and stored the same in the warehouse of Daniel E. Doherty, receiving a'warehouse receipt in the usual form, to its own order. This warehouse receipt it indorsed in blank, and pledged it with thEl Fourth National Bank of' Louisville, to secure a loan made at the time for the sum of $2,100. The Fourth National Bank was entirely ignorant of any right of the said George to the said whisky, ,and George was entirely ig" norant of the fact that the note had not been ,tenewed, and of what had been done by the Co'inpany with the whisky.
260
FEDERAL REPORTER,
vol. 41.
.'tTponthe failure of the Newcomb-Buchanan Company', George discovered the wheI:eabouts of his whisky,np.d,having so discovered the same, tendered to the Fourth National Bank the sum of $1,081.73, being the amount paid on George's note by the .Newcomb-Buchanan Company, with interest. The questions to the 35 barrels were whether or not this tender Was a sufficient lone, and whether the Fourth National Bank was bound to deliver the whisky to George upon that tender. , Astothe15 barrels of whisky: . At the same time George transmitted the warehouse receipts for the 35 barrels of whisky, asabo:ve mentioned, he sent alsothe warehouse-receipts for the other 15 barrels. The Newcomb-Buchanan Company did not forward ll.uy note for his signature with,:a view 'to its discount and .paying the tax on the 15 barrels of whisky, nor did it at any time report the payment of that tax. On August 10,1883, George, writing totbe Newcomb-Buchanan, Company, inquired as follows: "What has become of the other15 . b arrels?There were fifty barrels in all, and you seem only to bave llnbon4ed, 85 ,barrels. Please send to me papers ClOvering the whole; that is tosay,I would like one statement of the whole .tifty w.hen you shall have freed it all." . The Newcomb-Buchanan Company did not render any such statement, but on the margin of the letter to George dated 19th August, 1883, made the following statement, signed by the initials "G. C. B.,"-that is, George C.Buchanan, who was president of the Newcomb-Buchanan Company: "We will arrange forthepa,yment of tax on the other 15 barrels in a few days." On, February 12, 1884, George was informed by .the Newcomb-BuchananCompany, '\:>y letter, that it had this whisky store here/' , The Newcomb-B'uchanan Company,instead of paying the government tax on the said 15bal'rels of whisky', arranged, without the knowledge of George, to expQrtthe same to Canada, in bond. At the Canada ffli>Dtier the oustQ1U officials of the donlinion of Canada refused topel'xuitthe 15 barrels; or any' part of it, to enter the dominion, because it was contained in packages of less than 100 gl\llons. Thereupon the Newcomb.BuchananCompany brought the whisky back to Louisville, and paid the tax thereon, and stored thesarpe. in the free warehouse of Daniel E, Dohel1ty, taking a w.arehouse receipt from him in the name aBhe Newcomb·Bnchanan Company.; .This warehouse re; ceipt it indorsed in blank, and pledged the Same Fourth National Bank for a loan of $1,500. After February, 1884, George made no further inquiry in reference to this 15 barrels of whisky, and did not dig.. coverdts whereabouts until the 20th Septemberl 1884, which was after tlwifaHuxe ofthe.Newcomb-Buchana,n Company;: and then, having disit, he· tendered to. the Fourth National Bank the sum of $500.40, the amount paid by the Company to free the whisky. The Fourth National Bank was ignorant at the time it took this whisky in'pledge of George, andGeorge,up to the time of his said tend,er,was ignorant as to what had been done with the whisky. . John MCUJ(Y(/, Brown and GBO. M: Dame, for plaintiff.i ,(Walter &ana!and Alex. P. Humphrey, for defendant·. I
GEORGE". FOURTH NAT. BANK OF LOUISVILLE.
261
. JACKSON, J., (after stating the facts as above.) It is conceded by plaintiff's counsel that, under the foregoing state of facts, the defendant has a valid equitable lien upon the 50 barrels of whisky in question, to the extent of the claim which the Newcomb-Buchanan Company held against him, growing out of the advances or payments made by them for his benefit, consisting of the two sums of $500.40, with interest therepn fronl January 29, 1884, and $1,100, tendered the bank, November 12, 1884. The controverted question between the parties is whether fendant can hold the whisky, as against the plaintiff, for the full amount of its demands against the Newcomb-Buchanan Company for the ty ·of which the warehouse receipts were pledged by the latter. If this question rested upon the general rules of law relating to the right of an agent or factor to pledge the property of his principal for his own debt; it would be easily resolved against the defendant. But its correct mwation in this case depends upon the proper construction of two actl'! of the legislature of Kentucky in connection with certain provisions of the general revenue laws of the United States. The first of said Kentucky acts is that "relating to warehousemen and warehouse receipts," approved March 6, 1869, the sections of which material to this case are the following: "(1) That hereafter in this state all and every person or persons, firms, companies, or corporations, who shall receive cotton, tobacco, pork, corn, wheat, rye, oats, hemp, whisky, coal, or any kind of produce, wares, merchandise, commodity, or any other kind or description of personal property,or thing whatever, in store, or undertake to rect-ive or take care of the same, with or without compensation or reward therefor, shall be deemed and. held. to be warehousemen. (2r That every warehouseman receiving anything enumerated in section one of 'this act shall, on demand of the owner thereof, ortheperson from whom het'eceives the same, give a receipt therefor, setting the quality, quantity, kind, and description thereof, and which shall be designated by some mark, ltnd Which receipt shall be evidence in any i,ctioIi against said warehouseman. (3) All receipts issued by any warehouseman, as provided by this act, shaH be negotiable and tranSferable by indorsel)1ent inblauk, or by special indorseD;Jent, and with like liability as change now are, and with like remedy thereon." "(5) That no man or other person shall' issue any receipt or voucher upon or for' any goods; ·wares; merchandise, produce; commodity, property, or other thing, of any description or character whatever, to any person, persons. company, companies, corporation, or corporations, ,as security for any money loaned or other in. debtedness, unless such goods, wares, merchandise, produce, commodity, property, or other thing so receipted for shall be at the time of issuing such receipt or voucher the property, without incumbrance. of said warehouseman; and, if incumbered by prior lien, then the character and extent of that lien shall be fully set forth and explained in the receipt, amI shall be actually and in fact in store and under the control of said warehouseman at the time of giving such receipt or voucher'.'" "(7} That no warehouseman or o·tber person shall sell or incumber, ship, transfer, or in any manner remove beyond his control, any gOOdS, wares, merchandise, produce, comrqodity. property, or chattel, for which a receipt or voucher shallbave been given, without tlle written consent of the person or person's holding such receipt, and the production of the receipt."
,FED!lRAL'·9!JP.ORTER, VGl. ·41.:
of.sllid acts is entitled, f·' An act to declare and.amend.the principals and,factor"or agents," approved :May 5, 1880, .w:1;1i.cp .GQotfl,ins .the followh)g pJ;oyillions applicable to the present conll/-w
viz.: " ,tucky: ,. Every factor or other agent intrusted with the possession of a docnmtmt .of title to merchandise, Of possession of merchandise, shall be d!!emed be thetme owner thereof.sofar as to give validity to any contract made bl.8uiJh factor or other agent with any other person for the sale or disposition of the whole or any part 'Of such merchandise for any .money paid or advanced, or negotiable instrument'gj·ven, or existing security surrendered, by such other persun. (2) WhereaRYpel'son shall take any such merchandise or document tht'reforfrom. a!1ysu,cllagept, as a security for any antecedent debt or demand. he shall not thereoy acquire any right or interest therein other than was possessed or might have been enforced by such agent at the time of such transfer, or than the :value of any security surrendered at the time of such transfer, whichevertll'ay be greatest. (3) The sale or disposition prOVided for in the first section,of this act shall not be valid in·favor of any the time he 'shaU advance or pay said money, or give said negotiable instrument, or surrepder s,uch security, shall have notice that such .factor 01' agent fs acting in vioh\tion o( his authority. (4) NothinJ\" contained in this act shall be taken to authorIze a common carrier or warehouseman, who is not a factor or dealer in merchandise, to whom merchandise may be intrusted for transportation or stofiige only, to sell or hypothecate the same; and nothing in this act, shall be taken to authorize any person to sell or any merchandi!,ein his posspssion l1pon which he has issUl'd a ware'1ouse,receipt." "(6) Any custom-house permit, warehouse re· ceipt, or other document, used in the course of business as proof of the possessionofmerchl'mdise. or authorizing, or purporting to authorize, either by indorsement or delivery, thE' possessor of such document to transfer Or receive the merchandise thereby represented, shall be deemed a document of title, in the mE!lming of this act;. and a,factor or other agent shall be deemed the same is derived by him from such intrusted WiUl such document, owner,or optainedby him by of having had the possession of said goods, or some other document of In connection with these provisions of the Kentucky law should be noticed certain provisions of theinternal revenue laws of the United Sta,tes, in clearly the situation of the p,ropertyabout which the controversy arises·. By 3271, Rev. St., every distiller is required, at· his own expense, to provide a warehouse, to be situated on and to constitute a part of his distillery premises, to be used only for the storage of distilled spirits of his own manufacture, until the tax thereon shall have been paid; al1d such warehouse, when approved by the commissioner of internal revenue on report of the collector, is "declared to be,a bonded warehouse·of the United States, to be known as a distillery warehouse, and shall be under the direction and control of the collector of the district, and in of an internal revenue store-keeper, aSsigned thereto by thf;l commissioner." By sections 3273 and 3274, su.ch to which he is assigned, saId m the Jomt 'custody of the store-keeper and the proprietor thereof; and no articles shall be received in or delivered from "(I) 13e lt1lnacted by the general assembly of the commonwealth of Ken-
GEORGE tl. FOURTH NAT. BANJt OF LdfJISVILLE.
such warehouse, except on an order or permit addressed to the storekeeper, and signed by the collector having control of the warehouse. By se<;:tion 3288, it'is provided that no distilled s1iirits on which tho tax has been paid shall be stored or allowed to remain on any distillery premises, under the penalty of a forfeiture of all spirits so found. n is shown by the statement of facts that the 50 barrels of whisky in controversy were, in June, 1880, stored in the distillery bonded warehouse of the Anderson Distillery Company, by whom it was manufactured. That said company issued to L. J. Haskins its receipt therefor, attested by J. S. Osborne, the United States store-keeper in charge of said warehouse and" spirits, specifying that the whisky was deliverable only on the return of said receipts, and the payment of the government taxand storage on the same. This government tax was due and payable in August, 1883. Prior to that time the plaintiff had become the owner of said receipts so issued to and entitled to the whisky represented thereby, under some arrangement or agreement with the NewcombBuchanan Company that the latter should aid or assist him in raising the money, when required. to pay the government tax. Spirits so de. posited in a bonded warehl)Use of the United States are frequently sold by the distiller or other ownel'subject to tax, but while they remain in such warehouse of the United States, under the control of officers and agents of the government, they are subject to all the provisions of the internal revenue laws, and regulations made in pursuance thereof. The whisky in question, while thus stored,was liable, not merely for the specific government tax thereon, but for all lawful assessments made against the distiller or distillers in connection with the businees. Hartman v. Bean, 99 U. S. 393-397. Under the provisions of the law, it could not be delivered from this bonded warehouse of the United States, except on payment of the government tax, and "on an order or permit addressed to the store-keeper thereof, and signed by the collector having control of the warehouse." Nor could the whisky remain in such warehouse on storage, after the tax was paid ,without incurring the penalty of forfeiture. In respect to this whisky, the Anderson Distillery Company did not, and could not, unper the law, occupy the position of a free or private warehouseman. While the tax was unpaid and the whisky remained in this warehouse, it was subject to regulations prescribed by the act of congress, and its place of storage was an agency of the general government, and subject to the thoritya'nd control of officers and agents of the United States. The premises in which the whisky was stored, being a bbnded warehouse of the United States, and an agency of the government, where unbonded orfree whisky could not be received or allowed to remain on storage without liability to forfeiture, do not come within the provisions of statutes above referred to, relating to warehousemen and warehouse receipts, and the law relative to principals and factors or agents. It cannot be assumed that the legislature of Kentucky undertook to regulate the duties arid obligations of a bonded warehouse of the United States, created and established for the protection and security of their own rev-
FEDERAL nJ1l'ORTER,
ennes, and in which free whisky could not ren1ain without incurring the pehaltyofforfeiture. .,The Kentucky acts manifestly refer to warehousemen and warehouse l'eceipts, and to principals and factors, over whom the state of Kentucky possessed authority, and could exercise lawful jurisdiction. Instrumentalities andllgencies of the United StateI', such as the bonded warehouses oestabJishedand employ.ed by them for the due and proper enforcement oftheirinternal revenue laws, and subject to their exclusive regulation, <10 not Come legitimatElly within the scope of the above.quoted acts of the Kentucky legislature. The Kentucky laws apply to ordinary warehousemen· and lvarehouse rl'lceipts, and the relations bet\\'een principals and factors, over whom, and w):lOse duties and obligations to each other and to the .public, thestat.e may properly exercise her authority. In respect to the 50 barrels of whisky, in question, and while the government tax thereonrentaineq unpaid, the Anderson Distillery was not a Kentucky warehouseman, who coqld']a1Vfully receive and issue receipts for free whiskies, but was a governmental agency, for the custody of specific.pro.petty, on which the United States had a lien for,taxel3, and the tight of possession till such taxes were p!J.id, when its removal from such place of storage was required by the law of congress. Receipts issued bysueh an agency of the United States are not warehoUBe receipts, under the Kentucky actofMarch 6, 1869; noris the relation between such, a custodian and that of the beneficial owner of the whisky that of cipal and agent, within the meaning of the Kentucky act of May 5, 1880. When, therefore,the Anderson Company issued receipts for the whisky thus stored in .bonded warehouse of the UIlited States, and subject to their control and custody, such a receipt, whatever may be 5liid of the authority Qfth.is government 'agency to issuji) the same, did not constitute· warehouse receipts or: Q9cUments of title, in the sense in which those terms .are employed in the Keqtucky act. The company, in fespectto such whisky, was not a warehouseman, under or subject to the laws of Kelltucky , and the evidences as: to ownership of such whisky which it might issue; subject to the rights ofthe government, were not such receipts as are contemplated or covered by the warehouse or factors' acts of Kentucky. The plaintiff, in forwarding these original receipts to NeWComb-Buchanan Cotp pany tOanable them to arrange for the payment of the government tax, and iree whisky from the claim and possessionof the government, did not intrust his said agents with such session of the property, or of such a document of title thereto, as will bring the case within the operatio,n. of the Kentucky statutes above cited. This view of the subject is of no special importance in respect to ,the controversy over the 35 barrels of whisky. The original receipts, to the extent of said 35 barrels, were surrendered by the Newcomb-Buchanan Oompany in June, 1883, when the government tax thereon was paid, atldthe new free warehoUl:'e receipts.ofthe Newcomb-Buchanan Company were issued to George for said 3pparrels, which receipts, after beingindorsedin blank by him, to the Newcomb-Buchanan
GEORGE t1. FOURTH NAT. BANK 011' LOUISVILLE.
265
Company as' his agents, to be pledged as collateral to the defendant for the loan of $1,233 on the joint note of plaintiff, and his said agents, the Newcomb-Buchanan Company. These new receipts, so issued to George after the 35 barrels were released from bond, clearly came within the operation of said Kentucky acts; and if, after they were indorsed by him, and returned to his said agents, the Newcomb-Buchanan Company, even for a special purpose, the latter had misapplied them, and pledged or hypothecated them to innocent parties, to secure loans or advances to themselves, the plaintiff's rights would no doubt have been affected by the provisions of the Kentucky factors' act. But the Newcomb-Buchanan Company, as plaintiff's agent, did not make any wrongful or improper 'use of said receipts in the first instance. They properly executed the trust of their agency ,by delivering those new free warehouse receipts to the defendant, in pursuance of the agreement and understanding of the paJ'ties;as collateral security for the joint note of plaintiff and themselves. Their relution to the note, as between themselves, being that 6f surety for the plahitiff, when those recei pts were placed in the possession of the bank as collateral for the loan, the agency of Buchanan Company in respect to said documents of title, and the whisky represented thereby, '!IO stored with them, ceased.. The purpose: .for which the'receipts had been intrusted to the Newcomb-Buchanan Companywere accomplished, and their agency for plaintiff in respect tdthe same then terminated. When the Newcomb-Buchanan Company",· on the 30th June, 1884" paid tMbank the balance of $1,066 then due on the renewed note, and took up said without the request, knowledge, Ol'consent of George, did their voluntary act in making suchI'ayment, and thereby regaining possession of the receipts, have ,the eff(lct and operation of restoring or re-establishing their former agency relation towards the plaintiff in respect. to 'said receipts? .This is the of the defendant's counsel, but the position cannot be maintained without disregarding w811-settIed.legal principles, and extending the ,provisions ,of the Kentucky factors' act far beyond what the legislature contemplated in' its passage. Assuming that the Newcomb-Buchanan Company, in virtue of their connection with the note,and relation of surety thereon for George,aild in disregard of pis wishes, had the right to payoff the note, and. receive possession ofthe collateral from the bank, in what character or capacity did they thetea.fter hold such collateral?, Certainly not as the agents of George. The bank, from whom the Newcomb-Buchanan COfl?pany received the receipts, held them in no agency relation such as the factors' act contemplates. The holder of a collateral, as security for the payment of a debt, is hardly to. be held and treated as an agent or factor of the dehtor, within the true meaning olthe act of May 5, 1880, even ,though such collateral should be in the shape 'of a warehouse receipt. In paying off the note and taking up the receipts, the Newcomb-Buchanan Company were simply substituted or subrogated to the rights of the bank. They thereafter held the note and theeollateraIs as creditors of George, for whose benefit, a.s their principal, the payment',had>been
nDERAL aEI'01\'1'ER I
vol., 41.
'rtilade;' This payment metelycmilateiLbetween themselves and. George
relation, by operation qflaw.of creditor and debtor, and con;Jerred U.pon; them I at most, onlytberight to hold such receipts as cred',itors ;until the amount so acivanced'for GeQrge should be .refunded. In no just sense canit,be/said that the possession of .warehousereceipts is,8uedby acquired by the Newcomb.Buchanan Company, would operate to constitute them the factors or agents of Howcanitbesaid,with any show of reason or propriety, that these documents of. title, obtained under such circumstances, were intrusted ,totheDl as the factors'oriagents of GeQrge? What was the agency upon ·which·' the: Newcomb-Buchanan Company. held George'a documents of title, who8e,possessionwasiprocured without his knowledge and consent? ·As creditors, they had the right to·hold them until Uieir advances were 'returned;. but ndrelation of factor or agent was, eithe!= created or revived , when they by,their a.wn act of plaintiff's receipts. ,plaintiff's reeeipts, not 1lB. aglmts, ,but merely all self-con·stituted cl'edit6rsl tlJ,eywrongfully, andiinfraud of his. righta,cancel the .ame1st6re.:the.whiskyin the warehonseof Daniel E.;·Doherty, and take .1'eCeipts ,fheJlefor in their own 'name;;which they pledge. to. defendant for ',a debtofltheir own., : ,If j ·, I t is:not,pretended tha.t these Doherty:receipts,whiclLthebank now :holcls, and under which it claims the 85 barrels of whisky for the licurity:ofits, loan.to the Newcomb..Buchanah Company, were ever in,trWlted by IpJJ1ititiff to the Newcomb.Buchanari Go;mpany.ashis factorA or 'agents. !iBut ift is !said that the Newcotrib-BnchananOompanywas -enl\.bledto:obtain these warehouse, reociptsof Doherty ,because they were intrusted by. plaintiff with the receipts issued by the¢selves; but,as we ,.havealready,'shown,.this position is'1lotoorrect, and the case comes down I siinply to this,: that a warehouseman who has issued, his receipts for ·goods placed:in his ;possession on'storage,while 8uchreeeipts are still out·standing;'wrongfully, fraudulently:t:emoves thegoGds from his own to another wal'ehQuse, where they are stored in bisownnamej and the receipts taken therefor are pledged for his own debts. ; There is nothing in "the sIxth"section ,oithe factors' act Of May 5, 1880, to give validity to lrights acquired;:under such conduct; or divest the rights of the true of the Newcomb.Buchanan Company, 'under the ':I8ots of. this oase, not only finds: no support in the proviaions of section '6 of said act, but comes within the expresS inhibition Of the last clause ·of ofsaid act,. which provides that" nothing contained in this 'act'shaJibe:ta:ken to authorize any. person: to sell or hypothecate any , iti,his possession upon which' he bas issued a warehouse re'looipt." Neither the fact that the' defendant was innocent, and knew IIllJthing df thefntudulent acts of the Newcomb-Buchanan Oompany , nor ·tqe;fact thatlsuch receipts as wElte issued by Daniel E. Doherty for the ,35 bar:relsofwhisky are made negotiable; instruments by the act of March ',6,: 1869, oono1o,any way affect the pliJ.intitl'srights or operate to divest ; his title to confer upon the bank any right thereto beyond ·whil.t:,.the'iNew90mbo.Buchanan Company .could have lawfully asserted
GEORGE V. F00RTHNAT.' lJANK OF LOUISVILLE.
against the same. The defend'll,nt's right in respect to :the 35 barrelso! whisky ,under the facts stllted,are only such as the Newcomb-Bucbanan Company could have enforced', as against the plaintiff. The negotiability of the receipts taken by defendant, and its innocence in the transilC-' tion, in no way enlarge its rights. Insurance 00. Y. Kiger, 103 U. S. In respect to the 35 barrels of whisky, the conclusion of the court is that the plaintiff is entitled to the same upon paying to the defendant the sum of $1,100, which was tendered it November 12, 1884. In respect to the 15 barrels of whisky, as already indicated, the original receipts which plaintiff forwarded to the Neweomb-BuchananCornpany, for the purpose of having them pay the government tax thereon, were not such warehouse receipts as were contemplated by and embracAd within the Kentucky acts relied on by defendant. Not coming within the operation of those acts, defendant, under the' facts stated, acquired no rights in or to this 15 barrels beyond what the Newcomb--Buchanan Company could have claimed and asserted, which was the repayment of government tax, amounting to $500.40, with interest thereon since January 29, 1884. But aside from the consideration that the origiual receipts which plaintiff placed in the-hands of the Newcomb--Buchanan . Company for the special purpose of freeing the whisky from bond do not properly come within the provisions of the Kentucky acts, so as to be governed and controlled by their provisionll, how stands the, case as to' the 15 barrels? The Newcomb-Buchanan Company first frnudulentlYi and in'\1iolation of plaintiffls rights, asserteddwnership of those 15 barrels, and' attempted to export the same to Canada.' Failing in this· scheme of wrongful and fraudulent appropriation of· the property, it is returned to Louisville, and'in January, 1884, the governl'nent tax thereon . is paid by the Newcomb-Buchanan Company, and thereupon the whisky' is released from the custody and control of the government officials and: agency,and passes into'the possession of the Newcomb-Buchanan Company without any definite or special instructions from plaintiff as to with . whorn or how it should be stored. It is going qnite far to say thnt their special agency to pay the tax and free the whisky from bond continued after their fraudulent removal of the property, and wrongful attempt to export it. But assuming that it did, and that continued' or was revived upon the return of the whisky to Louisville, when' did· such agency terminate? ·The original receipts issued by the Anderson Distillery Compa.ny were no doubt given up when the tax 'was' paid .· This payment was not ,made at the time or in the manner directed by the plaintiff; nOr was anyplace of storage by hinifor the' whisky after it should be freed from the bonded warehouse of the United: States.: In what capacity, then, did the Newcomb-Buchanan Company hold this whisky, after execudng their special agency' of .paying the govern- ' ment taxtheroon? Their with plaintiff to arrange or provide for· the payment of this tilxhad no connection with their eharacter as' warehousemen, or as factors or dealers in'Buch , When j
352-357.
268
,IpWORTlm, vol..
41.
plaintiff asked or accepted their assistance in arranging or paying the did he thereby make them. his factors or agents to deal with and control the property itself, within the meaning of the factors' net? Such a construction would, it seems to me, extend the scope and purpose of the act far beyond what its ,language and general intent will justify or warrant. The most that can be claimed for the Newcomb-Buchanan Company in connection with' t4islot of 15 barrels is that upon paying the government tax, by way of an advance for the plaintiff, they became substituted to the lien of the gerll;lral government on the whisky for the amount so advanced, and .that they thereafter held the whisky, not as factors or agents for the plaintift\in the true sense of the Kentucky act, but as oreditors who had lien thereon, and a right to hold possesi;!ion till such lien was sq,tiefl.ed. Any claim of ownership or to deal.with the property be;Wlln,d· this was fraudulent and wrongful on thep.al't of the Compl:lny, and could l1.either conff'll'Dqrdivellprights. ,If o{theDoherty receipts Jor the 15 barrehqvrpJ;lgfully storedinAhe;r,ame of the pany cpuld ,be sustained to tha claimed for the defendant, it would fpllow· that any person in qf personal. property by way curity for deb,t,or by fraud or. the{t'i(l()uld atore the, same in: a warehouse ip nllme, take J;'eceipts:frQtn:,the then an innocetJ,t party for value, and thus divest the pledge eq.q'Q 'intere$t Qf the true owner in and to the property so wJ;Ongfl1ll)Uionverted. ':" actl'.plied on to s\lstaip. !!pcba c:lAim never was intended to cover 8;U9h ",. transaction'. It cannot affect ,the question, or prejudice the right Qfthe such receipf.$, Rf! Doherty gave to the Newcomb-Bu,are made. neg'Qtjfl,ole; for Doherty's negotiable paper, uPPQproperty stored withbim by a person having no right to pleqgetheproperty itself, canuot d,feat or impair the· rights of the true anq.)awful qWner. The,'statuteaCLouisiana· made such receipts negobut the suprern,e, court, in the case of Insurance Co. v. Kiger, 10& U. S. 352-357, held th;at the owner's rights. were not defeated. by,th,e wrongful act of an agent in pledging such receipts for his. o,wndebts,.although the pledgee an innocent holderJor value. '. The casea,cited by counsel fordefemllt1l.t.do not support their contention, as applied tQ .facts of the pr Sent.ease, which is clearly distinguishable f),'o!ll. $tcam-.!fpat OoiV. Scud,der,2 Black, 373, and other like decisions on ,by. defendant. There is nothing in the Kentllcky acts which wpuld CilrJcol1ld, :under the 'facts of this case, propJlrly defeat .the plaintifl','s reGover these. identical 15 barrels .of whisky frorn.thewarehPYilem3.Jl. P,ohe:r,ty. the judgrn,ent or the court".it, is. clear that the plaintiff is entitled to said 15 barrels of whisky upon paying to thede_ $A ,caPJIl of $500.40, with. interestth,ereon. £rQro. J anuary29, 1$a4i,aaidhlUmaD!l interest bei.og .tl;J.e only valid claim which the de8fJ' itself nndplainiiff, has or can assert ag;ainst said ·;Twlgment will accordingly be rendered.infavol',Of plaintifffor the ,''f.o qf. Sll !:lject toJAe claim althe defendant for the two'
GEORGE fl. FOURTH !!'AT. RANE: OF LOUISVILLE.
269
amounts hereinbefore indicated. vided.
The costs of the said suit will be di-
BARR, J., (disslmting in part.) It is quite clear, from the statement of facts, that the Fourth National Bank made the loans and received the pledge of the 35 barrels and the 15 barrels of whisky without knowledge or suspicion that the whisky did not belong to the Newcomb-Buchanan CompanYi and it is equally clear that, as between that company and George, the company bad no authority to make the pledges, except as to the extent of its lien for taxes advanced in unbonding the whisky. This settles the question against the Fourth National Bank, unless the Kentucky factors' act, as it is called, entitles the bank to a recovery tq tbe extentof its debts. or, rather, to the'value of the whisky, if not beyond the extent of the debts. It ,is claimed :that the Company in this transaction was not ,within the pDovisions of the tors' act, and is expressly ex.cludedby which enacts that "nothing contained in this act shap.rbe taken to authorize it commun carrier or warehouseman, who is not a factor or dealer in merchandise, towbom merchandise may be intrusted for transportation: for ,storage oulypto"ilell or hypothecate the same; and nothing 'contained in: thi.s ,act shall be:taken to authprize any person to sell or hypothecate mer. chandise in his, possession upon which ;he;has issued a w,arehouse ra" ceipt." The ,Company was not merely,awarEi+ houseman, but "i18 business was that of a maker or distiller:of ,Ken. tucky, whiskies, and a dealer therein,," and it did in fact sell whiskies for GeoIige; therefore the 'urst part of this section has nO application. Neitheds the latter part applicable,. It may be argued tha,t this part of the section applies only to merchandisein actual possession,. and not to documents of title; but, be that as it may, the language oan,. we think, only include merchandise in pos!!ession, upon which there is an outstanding warehouse receipt given by the' person.who has the'posses. sion ofthe merchandise. In this case, the 35 barrels ofwhiskyfoJ' 'which the Newcomb-Buchanan warehouse. had issued warehouse receipts. had been renlOved to Doherty's war.e.house, and the warehouse ecuted by the NewcoQlb-,Buchanan Company were ;returned and canceled. Reading the first and sixthsectiolls of this act. together, the case,turns upon the question of whether or not the warehouse receipts:,pledged were "intrusted" to the Newcomb-Buchanan Company by George, :with+ in tbe meaning of this act. The original warehouse receipts given jor the whisky in bond were $ent'to the company by George ,in July,1883, for the purpose of rajaing the moneyn6cessary. to pay the tax, land take the whillky out of bond. Thirty-five barrels of this was unbonded.and put free warehouse, and receipt's issue<,1 to George. These were pledged to, the Bank. of, Kentucky· to,secure the joint and several note of George and tbe, company for $1,233. With the proceeds of this note, the 35 of whisky were freed from the . Thull far the company acted strictly within its authority,and. the Bank ofKentucky became the custodian pledged
to it,. iBut toe riaturaliriquiry is, whatwas therelationoithe company towards these receipts at the time the note was paid the bank by it and the receipts taken in? Did the company receive these warehouse receipts flS George's agent?·It.wasentitl,edtobesubstituted in the bank's stead when it paid the note a!dhesurety of George, but this riPiht, in the absenceof any agency, ,arose/rom thecorn.pany's being George's surety, and possession thus' obtained would not be ''intrusted,'' within the meaning receipts, of the statute.. The company was intrusted with the for the purpose stated) and waS intrusted with the receipts issued for the whisky when freed from the tax, for the purpose of pledging them to the Bank of Kentucky, ,but only receipts for 35 barrels were actually pledged. In the correspondence between George and the company in July, 1883, George expresses a strong desire to sell a part of this whisky to>pay the tax, instead .of borrowing' -nioney for that purposej and requests in a letter to that "when an oppetrtunity may off.error the sale of, s:ln25bbls.; p.lease report it, and price; to mej" but Ido not find that Georgeactu811yauthorized the complllnytosell any part of this whisky without further authority from him. 'He did, at the maturity of the note in June, 1884, authorize the company to sell othenvhiskies which he owned, and-which were in the possession of the company, 'and to apply the proceeds of sale to th,e payml'lnt ofthis note. The company was' the agent of George to pledge the 'reCeipts to secure the note t\xecuted to the Bank of Kentucky, and it may be insisted that, considering the company's other Iielatiops to George as stated in the agreed facts; the company's agency continued for ,the purpose of receiving from bank these receipts.whenever the notewas paid. Undoubtedly, had the com pany sold the other whiskies as authorized, and 'applied the ·proceeds, to thepaymentbrthe note, and;thereupon received from the bank these receipts, it would have been as the agent of George, aBd George would have intrustedttle company with thereceiptsj but the mere fact that the company had b!*D the agent of Georgeto pledge these receipts; to the Bank of Kentucky, and continue the pledge by delivering the I renewal notes; did notautborize the company to receive these pledgedreceiptsaa the agent of George;' when it paid the note, without his:knmvledge or8uthority. :lcoriclude, therefore"thilt these warehouse receipts intrusted lothe company by George, within the fueaningof.thefirst section aot, and ·that the Fourth National.Bank 'is ,only et).titled to a Hen fbI' the amouht;of note,($1,233,) with interest.' . " ' · .The recei the'15 brtr-relsof whisky were sent to the Newcomh-Buchanan Company,' so might ·be unbonded. 1'hese'were sent at the same tittle as the .other receipts, and for the same pu(.pose; The' cqmpany made an attempt to export this whisky, but failed,and"up,on its return from'the'anadiah border, paid the tax, }jut/did not plit ii'into one of its own warehouses, but carted it from the CllllS 'diNlctly to 'Doherty's warehouse; 'an'dtook a wareh0nse receipt in its own name. Thisi'receipt was suhseqnentl-ypledged to the Fourth Naiional Banlt. ;iThecol.'1'espondencebetween Ge(}rge and the company
PELZER MANUlll'a CO.". ST; PAUL JrlRE &:, MARINE INS. CO.
'271
George knew this whisky had not been pledged to the Bank and that the company ,would make other arrangements to , pay the t1\'X"which wnsthen due. This was in August, 1883, and on the 12th February, 1884, George was informed by letter that the company had this whisky "in store here." There does not appear to have been any directions from or inquiry made by George after this,about the whisky, until after the com'pariy's failure, in the 'fall of 1884. >Doherty's receipt is dated February ,25,' 1884, and was pledged to thfl Fourth National Bank in June, 1884, which was long after George knew the company: held this whtskl'" in store," /tnd when he knew that, he did · not have either the allY other war\l, house receipt -in his posSiession for this whisky. After the reCllipt of the letter of 1884, George acquiesced.in the company's holding, ,l'in store" his whisky withQut giving him or anyotber warehouse receipt. The warehouse receipt of Doherty, WIj.S pledged,c.wasobtained by reason oMhe possession of thii;! whisky. which GeorgeiDtrnsted thecompallywith j and is clearly within the fl;lctQrs' act. ,I t.berefore,conclude, that the Fourth National Bank'&, lien ootbe ,15bartelsof:whisky .isvali<,l; to the e:dentof the debt of,81,500,fpr which it was pledged by the cOlllpany,andtothis !I:.()Jll the conclusions of Judge JACKSON.
proyes
PiLZERMANUF'G CO. ;J:
v. ST. PiUL :', '" ,::
FIRE
& MARINE INs. CO.''
"SAME V. ! :,' :,
FIltE&
MARINE ,;;'", ,"
Co. I
,(Oircuit " ' . " D. South O,0h'6Una. February:,. i': ;i; oourt, 4, 1890.) ; 'i. "., ',.:'· · " :,' ''1.1NSl:rUNCB''';'!l(Stl'itABLB iNTBnil:ST-W A,RBRbuSBMEN.·
,.'
Where tlle owner of· property wbich 'hi exposed to danger of fire from raihvay engines ,has released r!!Hway companytrom liability therefor,andwh/:ln suranee Wll$ effected,dld not mention tHe' release, the question whether the dUllssion:to make known ,tlie existence of lIuch release invalidates antns,urance poijcy on such, prop/:lrty, dePElnqs upon wnetber, such release was a material fact il;\tl1e contraCt of'insuranCe, whlcb'is a qnestii»{'fotthe jury; " , " ' , , '. ,.· a oip MATERIAL FACT. ' . ;" /,: c: , , It Is proper in anaQtl()JJ! tbe }Jolley: ill such Cl!\se,to charge tbe jUl'J the compallyin tbe teITltoryill questIOn made no difference in rate,wlth rigbt Qf subnor custom , rogation or without it. or'if they find that tbet'e'was neither the rigM t4eir acsbowing ceptance or,l'llfus,alof nsks, they that; the failure to mentiqn 1;he,fact of the release of''the' ratlrOan, company; where the application 'was verb81, wlLli'not a 'cDJlOOa1melit ofa lll-aterioUaot" whi,oll wpu,lA invlilida,te J?oliCl,', , j': '
'Ii 'SAM:iJ--'Tmi:
WarehoulleDien wbo have mllUred, In' tlieir own name,cotton stored in their. warehouse "on a tOrI!1 of policy,qontaining, the special clause, "cotton In bal/:ls,tbe!r own, or beld by them in or on commission,or on joint 8clJount witbotbers;oi' sold but POt delivered, "bavG an,'insurable· interest in thecottonentitUilg, tbemtosue for the Ilntirelo¥,' tho,ugh tlle cot,tOn. was,owned by another. person, and that fact was riot disclosed to the insurance company. ., ,,' BY INSURED' 01!'THtRD PERsONB'.
'.
,
,:
oli
I'EDmtAtl REPORTER,' vol. 41. ,. S.Um-AOTroN ON POLICy-EVIDENCE·
.Wh!lrll.1ihe complaint in an action on the policy alleges an ofter of subrogation to ,the fiisur!lnce company. and no motion is made to strike it out as immaterial, but a geJl.eral denial· is .llled, defendaJl.t cannot objeot to the atimission of evidence to "prove the otter.
At ,law. , , , Smythe k Lte ,and Wells&:, Orr, for N.].,Ham.rrwnd and I. R, HaY?fJood, for defendants. ('i
StM:ONTON, J., (charging Jury.) Cely & Bro., warehousemen, insured . certlLinbalesof cotton, stored with them by plaintiff in their warehouse hear track of the Greenville & Columbia Railroad. Thecottol1 Was insured in their own name,',oua form of policy intended 'for 'Warehouses, containing the special clause, "cotton in bales, their own, Or h'eldby them in trust; Of on commission,or on joint account with ;'OtHers, or s61dbutnot deli'Veted,contained in" their warehouse. Tbe C:lbttbrt was burned. Proofofloss Cely & assigned their plaintiff;' Among these policies were one of the St. Paul "JoFirtf&Marinelnsurance'Cdmpany, for $5,000, andotieof the Savannah "Fi.l'e;& Marine lnsurance· Compal1y, ,for $2,500. These two companies having refused to pay the loss, these suits were brought. Theyaresep.. arate and distinct suits; but, as they depend upon the same facts, they are tried together. The defense is: (1) That Cely & Bro. had no insurable in the cotton burned. (2) That they insured the cotton in their own name, and did not disclose the fact that the Pelzer Manufactqril)gQpplpapy owned it. respect these, I instruct y{)U that Cely & Bro., being warehousemen, had the right to insure cotton in their warehouse ill;, own under the for:ms of policy in evidence, and when tIie loss occurred'they had the right to sue for 'the entire loss in their own ,,l,1!:'\.II}ei sud I , paving .such righ,t, they could lawfully assign the policy tei plaintiff, the' owner of the cotton, who could lawfully sue as such assignee. In these .auits, plaintiff, being as&ignee of Cely & have. bomid Cely & 'Bro. .. ' Treatthe case as If hrought by Oely & ',Bro. " ,(3) The last ground of defense is this: It seems that Oely &Bro. , had erectedlheir warehouse dtfthe right ,.of way of the Greenville & Oolumthe land on which itwas built, and, bia the lease; Cely & Bro. had released the railroad comfor ltny by a fire from ,its locol)n1otives;4haHhis was amatel'ial fact, as it deprived the insurers· ,of the ofsu'brdgation, and:l1Vtlsnot knowq ordiscIosed to company when the insurance was effected, and for,this ',iBqotbindjng;enthe irisurauce,oompany. There,can be no doubt that ,wbenan. compal;iylihasj>aida loss.li.j;::e this itis eptitled. to be pel'soninsured, and is claim for damages ,the person insured had against the person causing the loss. This ,iSiealled the "right of subrogation."
PELZER MANUF'. CO.. ". ST. PAUL FmE &: MARINE INS. 00.
273
It is given by the law, arid need not be given by contract. I have also no doubt that in the present cases the covenant in the lease of Cely& Bro. would prevent them from proceeding against the railroad company; and, as' Cely & Bro. could not' do this, the insurance company, being subrogll.tedonly to their rights, could not. The questions in the case are: Is this covenant in this lease a material fact? Was, its existence concealed by Cely & Bro. when they effected irisu'rance, or did they omit to state it? Did this concealment or omissioninvalidate the policy? Was it a material fact? Not, was it deemed by theiusurancecompanya material fact? But was it known, or should it have been known, to Cely & Bro. to be a material fact entering into the contract of insurance? These are questions for you. Incoming to ,'your 'eonclusion upontheni, you should inquire, in what way did the ! insurance cOmpanies make known their estimate of this as a material fact? Did they communicate this to Cely & Bro. ? If not, did they make any difference in rates between property insured with, right of subrogation, and such property insured without this right? Was there any usage or 'custom among insurance companies in this territory making a discrimination in'this respect, showing their estimate of the materiality of the right ofsubrogatioti? ' Did they refuse risks in which subrogation was ,releaseli'?: In order tomake this a material fact entering into this contract; both' parties must have known, or should have known, that is, must:bepresumed to know, that it was so considered. If it be a ma, teria} fact, and if Cel)' & Bro. did not intentionally conceal it, or if they omitted: to state it because they did not know, and had no reason to ,kdow, and were not put on the inqniryso as to know, that it was deemed to be a material fact by the company issuing the policy, then their silence with regtirdtri it does not make the policy invalid,especially if the jury ,believe from the evidence that the policy was issued on a verbalapplication. ON MOTION FOR 'NEW TRIAL.
, : ,'.
(March 7,1890.) BOND ".
J J. PER CURIAM:. The jury having found a verdict for the plaintiff in each of these cases, the defendants now move for a new trial in each case, on exceptions to the charge of the presiding judge to the jury. The circuit judge, at the request of the trial judge, sat at the hearing, and unites in the decision upon these motions. The first exception renews a motion made at the trial to dismiss complaints, on the ground that they do not contain facts constituting a cause of action. The policies sued on were taken out in the name of Cely & Bro., warehousemen, in the usual form of warehouse policies. Plaintiff sues as assignee of Cely & Bro. They could have sued in their own names, and on proper proof could have recovered the entire amount of the loss, (Insurance Co. v. Warehouse Co., 93 U. S. 527;) and so can their assignee, especially as this assignee was the owner of the cotton burned. v.41F.no.5-18
·. i
'TEDERAL REPORTER,'voL 41.,
',it
,. The second exception is to, t.he admission in evidence of a letter by 'plaintiff.tothe defendantsoffedng to subrogate theclefcndantsto any rights mlliy,have againstth'6!Tailroad compaqYiwhose locomotiveiB8upposed ,tobitV8!ooused the· fire. It is charged that this testimony is immaterial and irrelevant. The complaint, in one ofitsallegations,stated that this ,offer bad been made. The defendants did not avail themselves of the 'Code provision authorizing them to mOve to strike it out as immaterial and hrrelevant. Code S. C. § 181. ,They filed ageneral denial to this as to ,the other allegations of the complaint. This put plaintiffon proof. Whether,the defendants intended to treat the proof as immaterial did ,not appear until it was put in. They cannot now complain that it was admitAied. , , exception is to so much of the charge as related to the'sllenceof Cely&B:rQ.rrespectingthe, covenant in their! lease with the GreenvUle & Columbia Railroad Company,releasing thatcoinpany fromlloDY, liability {or':ib:e caused by their locomotives on their right of way. "Whether,the filet tha;t Oely & :Brol. had released,the railroad company from all olaim fOl'damage<g, caused by its engines was ,a material fact" m.-tiDot,was submitted; to the jury in the instructions oLthe oourt excepted to, '.nd.the method by which the jury could ascertain 'snchmateriality was pointed out to it. The Jury wail told that if the : insurance companies .in this territory made no ditrerence, in Fate, with right of subrogation or without it, or if they found fromthe'evideIlce:therewas neither usage' nor custom. showing the materiality of the right ,of Bubrogatibn"alltOug insurance, companies in their acceptllllceor refusal ofrillks, then they might find that the non-mention of such a where the insurance Was 'on ver.bal application,was not a concealment 'or: ombsion, of ,a Oilate'rial,fnct, would invalidate the policy. If the. facLhlld",been,aa jury found it would have .made no difference in the risk; that neither party, insured or insurers, had ever treated in this sectionoftbecountry,suchmatter as'material. This being the case, it did not "or become a part of the contract of insurance. The presiding judge was not in error. Tate.v. Hys!o:p, 15, Q. B. Div. 377; Phrenix Ins. Co. v. Erie et-·W. Transp. Co;,''f17''U: S. 313, 6 Sup.'Ot· .llep'.' 750,117'6.1 :The, motions are dismisSed. ' I.' ,
",!
-1.:'
IBTERSTATE LANDe<>.
v.
MAXWELL'LAND GRANT CO.
276
INTERSTATE LAND
CO. v.
MAXWELL LAND GRANT'
CO.
MAXWEJ,L LAND GRANT
PRETECA
et al.
(Oircuit Oourt. D. Ootorado. December 20, 1889.) F'tmLIC LANnS-GRANTS TO' COLONIZERS-CONSTRUCTtON--CONDITIONS.
Act Tex. March 24,. 1825, provided for the setting apart of tracts of land for colqr nization, and stated hOW,much l!J.nd should be given to the colonizers, and how much to each settler. A Mexican laJ:\d grant i!lsued under this law assigned to certain col. onizersa large tract of' land, but declared that the state retained the right of prop. erty over all the surplus land in. the tract which should'remain after laying off the land' belonging to the coloniZllr$ and their settlers. The colonizers agreed to .establish a certain number of settlers on the tract within a given but they failed to do so. ,'Beld, that no title passed to the colonizers, the grant not being a present conveyance subject to defeasance, but a contract to convey on performance of a con· dition .'precedent, which was never fulfilled.
On demurrer to bill and demurrer to cross-bill. Jo"",n L. Jerorrut, for complainant. o. E. Gast and J. M. John, for defendants. BRRW]JR, J. The single question in these two cases arises upon what is known as the "Beales Grant,"-a grant made in the year 1832 by the governor of the state of Coahuila and Texas. The petition and grlmts are as follows: , c/petition and w-ants to Jose Manllel RoyuPla and John Charles Beales, for the year one thousand eight hundred and thirty-two and thirty-three. To His Excellency, the Governor of the State of Coahuila & The citizen Jose Manuel,Royuela,a native of Saltillo, and there, married, and, John Charles Beales, a native of England, settled in Mexico, and there mal'ried to a Mexican subject, having children, with all due respect represent to your excellency: That being very desirous of augmenting the population, wealth, and ,pGWefof tIle Mexican nation, and at the same time of affording tOil certainnurnber of virtuous and industrious families the means of acqUiring an -honorablel!ubsistence, by cultivating a tract of land in the ancient proVince of Texas, and being, moreover, acquainted in full with the law of colonization paRSed by the honorable legislature of this state on the twenty-fourth of lIltrell; one thousand eight bunured and twt'nty-five, by which · empresarios' (lr,colonizing contractors are to undeltaketo colonize und(>r the conditions and stipulations by, said law prescribed"and being anxious to form an establishmenttbat may be useful to a new colony, and at the same tillle ·benefietal ,to the state, on account of the advantages toaccl'uethereout: We·pmy or colonizing contral'tors, your excellency to accept us as snch and to permit us to introdllce into this state, within the time that. may lie stip,ulated, two hundred Catholic falllilies, of moral and industrious habits, and for the object )"our .excellency .will be pleased to grant I1S the tract of land .included Within the following limits, viz.: Beginning at a land-mark set upon a spot whereat' the degree of north latitude is crosllt'd, by the meridhm of the hundred' and second degree of longitude, west from London, said Bpotbeingat'the south-west corner of the grant, petitioned by,Col.,Reubton,Ross: from west along the parallel of the degree of latitude,'as, fal: as tile eastern boundary of ::New Mexico; from