New York Central Railroad v. Hayes Manufacturing Co.

Clark; J. A shipper at Toledo delivered to the New York Central Railroad Company a car load of steel for carriage to Detroit. It was billed to the shipper’s order, notify International Metal Company, Detroit. Draft attached to the bill of lading was forwarded to a bank in Detroit. The notify party was a broker. It sold the steel to the Hayes Manufacturing Company in Detroit. By carrier’s mistake the steel was delivered to the said purchaser without surrender of the bill of lading, and the draft was not paid. The purchaser forthwith used the steel in its business. The carrier paid the shipper and brought this suit against the purchaser, the Hayes Manufacturing Company, and it being in the hands of receivers at the time' of hearing, the matter was heard and disposed of in equity as a claim filed with the receivers. Recovery was denied, and the carrier appeals. Tire pivotal question is the bona fides of the Hayes Manufacturing Company. It had testimony that it purchased in good faith and without notice. An officer of the notify party and an agent-of the carrier testified to the contrary. A consideration of the circumstances in connection with this conflict of testimony persuades us that by a preponderance of evidence it is established that the Hayes Manufacturing Company was not a good-faith purchaser, and that it took the steel with knowledge of the outstanding bill of lading and unpaid draft. It may be noted, too, that it applied the price largely in satisfaction of á preexisting debt of the broker. The purchase having been made with knowledge and notice of plaintiff’s rights, and hence not in good faith, plaintiff should *249 recover. 10 C. J. p. 268; Vincent v. Hansen, 113 Mich. 173. Demand before suit was not here necessary. Crane Lumber Co. v. Bellows, 116 Mich. 304; Rodgers v. Brittain, 39 Mich. 477. The freight charges, $60.34, paid by the Hayes Manufacturing Company and pleaded by it as a set-off in the suit at law, should be applied in reduction of plaintiff’s demand, and it is held that on July 18,1920, the Hayes Manufacturing Company was indebted to plaintiff in the remaining sum of $3,722.16. Decree reversed. Plaintiff will have decree, with costs of both courts. Sharpe, C. J., and Bird, Snow, Steere, Fellows, Wiest, and McDonald, JJ., concurred.