Baker, Lyons & Co. v. American Agricultural Chemical Co.

SOMERVILLE, J. [1,2] The transfer by indorsement or assignment of a note and the chattel mortgage securing it, though the transfer is for collateral security only, prima facie passes to the transferee the legal title to the mortgaged chattels. Tison v. People’s, etc., Ass’n, 57 Ala. 323; Moseley v. Selma Bank, 3 Ala. App. 614, 57 South. 91; Graham v. Newman, 21 Ala. 497; 7 Cyc. 55. And upon default in payment of the mortgage debt the transferee may exercise all of the rights of the mortgagee-transferor, including, of course, the right to take and hold possession of the chattels. 7 Cyc. 58, C. [3] Even if the mortgagee or his transferee have not the legal title, but only an equity, yet a delivery of the mortgaged chattel to either of them, thus uniting the equity with the possession, gives such a title as will support trespass, trover, or detinue against a third person. Bryan v. Smith, 22 Ala. 534; Abraham v. Carter, 53 Ala. 8, 11. [4] Unquestionably plaintiff, as transferee of the notes and mortgages covering this cotton, acquired the legal title thereto, and after the law day acquired also the right to its immediate possession. And when the mortgagee, Amos, received the cotton from the several mortgagors for sale and credit on their accounts, his possession was the possession of his principal, the plaintiff company. [5] Defendants, as factors and consignees of Amos, acquired a lien, as against Amos, not only for advances made immediately upon this cotton, but also for any general balance due on accounts growing out of similar dealings. Martin v. Pope, 6 Ala. 532, 41 Am. Dec. 66; Mauldin v. Armistead, 14 Ala. 710; Swilley v. Lyon & Baker, 18 Ala. 552, 559; Barnett v. Warren, 82 Ala. 557, 2 South. 457. But it is thoroughly well settled that such a lien is subordinate either to an outstanding legal title, or to a paramount equity of .which the factor has notice before his lien attaches by virtue of his possession. “The liens which the law creates in favor of agents, and factors, and carriers, in the interest of trade and commerce, operate only on the right and title of those with whom they deal. If they have no title, or a qualified, conditional title, it is the misfortune of those who trust them. * * * There are other hard and distressing cases of advances made honestly and fairly by auctioneers and commission merchants upon a pledge of goods by persons apparently having the right to pledge, but who in fact had not any such right, and the pledgees have been subjected to the loss of them.by the claim of the rightful owner. These are hazards to which persons in business are continually exposed by the operation of this universal principle that a man’s property cannot be taken from him without his consent.” Booker v. Jones, 55 Ala. 266, 276; Barnett v. Warren, 82 Ala. 557, 2 South. 457. And in an early case it was said: “If the principal part with his title before the factor obtains possession, he cannot charge the goods with the advances made the principal, without the consent of him who is the owner of the goods.” Swilley v. Lyon & Baker, supra; 19 Cyc. 162 (V). [6] These principles are conclusive of all the questions raised upon the pleadings and upon the trial. The legal title to the cotton acquired by plaintiff prior to defendants’ possession as factors must prevail against defendants’ claim based upon their lien as against Amos; and it results that, whether upon the common counts, or upon the special counts in trover, plaintiff is entitled to recover the value of the cotton, or its proceeds in the hands of defendants. Appellants’ contentions are founded entire *331 ly upon the theory that the complaint and tho evidence show only an equitable title in plaintiff; in short, that Amos merely pledged them the cotton covered by the mortgages. On the contrary, the mortgages were transferred to plaintiff, and with them the legal title to the cotton. [7] Neither the pleadings nor the evidence show any knowledge by plaintiff that defendants had received the cotton as the property of Amos, or that they would make advances thereon in that belief after receiving the cotton as factors. Certainly, plaintiff’s knowledge that Amos would place the cotton with defendants for storage, or even for sale on plaintiff’s account, could not estop plaintiff from asserting its rights in the cotton or its proceeds; for that was the usual course of dealing. It is worthy of notice also that the very terms of defendants’ contract .with Amos, requiring him to ship to them all the cotton he “raised, handled, or controlled,” carried a sufficient warning to them that any cotton so shipped might he the property of third persons, which Amos could not deal with as his own. Nor does it appear that Amos represented to defendants that this particular cotton was his individual property, either as original owner or mortgagee, or that it was other than merely controlled by him as agent. Indeed, the fact that he did not turn any collaterals over to defendants for this cotton, in view of his agreement to turn over all collaterals he might own, would naturally lead to the conclusion that he had none or. had otherwise disposed of them. As Amos did not claim to he the owner of this cotton, and did not use the mortgages intrusted to him by plaintiff as evidence of his personal ownership of or interest in the cotton, it is difficult to see ho.w defendants can, upon any theory of the law, set up the claim of purchasers for-value without notice, to the defeat of plaintiff’s rights. [8] But in any case an estoppel not specially pleaded cannot he asserted, and no such plea was offered. We think the case was tried in accordance with the law, and that the judgment rendered is fully supported by the evidence. Let the judgment be affirmed. Affirmed.' ANDERSON, O. J., and MAYFIELD and THOMAS, JJ., concur.