Paddon v. . Taylor

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 373 Upon the statement of the complaint and the admissions of the answer, which are found by the judge to be true, the case may be thus stated: Hicks being insolvent and not intending to pay for the same, fraudulently purchased and obtained from the plaintiff one hundred and sixty-eight barrels of flour. He deposits the same in store with Spader. He takes from Spader a receipt for one hundred barrels thereof in the words "Received in storage from W.S. Hicks, for account, risk and subject to the order of Mr. S.F. Taylor, one hundred barrels of flour." Hicks delivers this certificate and receipt to the defendant, upon receiving from him therefor his (Hicks') own promissory note then held by the defendant, which, with interest, amounted to about eight hundred dollars, the full value of the flour described in the receipt. This note was then surrendered and cancelled. Mr. S.F. Taylor in the receipt named, was the agent of and acted for the defendant in the transaction, and in addition to the handing to him the certificate, executed a formal transfer to the defendant of his interest in the flour. Upon this state of facts, I am of the opinion that the defendant was a bona fide purchaser of the certificate, and of the flour therein described, and that the plaintiff's title to the same is at an end. It has been decided in this court, in several cases, that the surrender to a party of his own promissory note, and taking in lieu thereof a negotiable note made by a third party before its maturity, constitutes the party a bona fide holder of the latter note. Whether the note thus surrendered is past due or has not reached its maturity, is of no importance. (Pratt v. Coman, 37 N.Y., 440; Brown v.Leavitt, 31 N.Y.R., 113; Park Bank v. Watson,42 N.Y., 490.) The same rule applies to bills of lading, bonds of States and other corporations, and to instruments having the form of the present certificate and to sales of property generally. (Bank ofRochester v. Jones, 4 Comst., 497, 507; Parson's Mer. Law 45, and cases cited.) The possession of the receipt was the possession of the *Page 375 flour. The delivery of the receipt to the defendant was a symbolical delivery of the flour. (4 Comst. sup.) It has long been held that when the sale and delivery of personal property has been induced by fraud, the seller did not lose the title to his property, and could recapture it until it passed into the hands of a bona fide purchaser. When it did so pass, his right to reclaim was at an end. (Parson's Mer. Law 57 (61); Load v. Green, 15 M. W., 216; Brown v. Peabody, 3 Kern, 121.) The perfect title to the flour in the defendant, terminates all questions of equity that are suggested, and requires an affirmance of the judgment.