Delfosse v. Metropolitan National Bank

Mr. Presiding Justice Windes delivered ,the opinion of the court. It is claimed for appellant that the warrant in question is not negotiable paper. This is the law, and it needs no citation of authority to establish it. Taking this law as a basis, it is contended that no title to the warrant passed by the sale of it by Baillargeon through Ferris to the bank, for the reason, as it is said, that Delfosse only indorsed and delivered the warrant to Baillargeon for a specific purpose, not parting with or intending to part with his title thereto nor intending to sell nor to authorize a sale of the warrant by Baillargeon. A number of cases, among others, Jennings v. Gage, 13 Ill. 610, Faucett v. Osborne, 32 Ill. 411, and Burton v. Curyea, 40 Ill. 320, are cited in support of the contention. We think none of these cases are applicable, and that they do not support a right of recovery by appellant herein. The first two cases referred to contain elements which clearly distinguish them from the case at bar, and the last case seems to be specially predicated upon the fact that the true owner, who was in that case permitted to recover, was not chargeable with any negligence by means of which the wrong-doers were enabled to impose upon innocent parties. The same is in a general way true of each of the other cases cited, and relied upon by appellant’s counsel. We can not undertake to refer to and discuss each of them in detail; suffice it to say, we are of opinion, from a careful consideration of the facts of this case, that it should be decided upon the principle announced in the cases of Williams v. Fletcher, 129 Ill. 357-66; Springer v. Kroeschell, 161 Ill. 358-63; R. R. Co. v. Phillips, 60 Ill. 190-5; Anderson v. Armstead, 69 Ill. 452-4, and Marshall v. Ender, 20 Ill. App. 312-18, which is that “ when one of two innocent persons must suffer by the fraud of a third, it must be the one who places it in the power of such third person to commit the fraud.” The warrant in question is payable to bearer, and is besides indorsed by the payee as well as by the ap'pellant, who claims to be the true owner. If it be true, as claimed by Delfosse, that he only permitted the warrant to go into Baillargeon’s hands for a specific purpose, viz., to be by him used as security to Graham, and for no other purpose, still, by the indorsement and placing it in Baillargeon’s hands, he put it within the power of the latter to assume the ownership of the warrant. He thus gave to Baillargeon the possession of the property, with every outward indication of ownership, making his possession equally rightful as if he had made an outright sale of the. warrant to him. There is no claim, nor is there any evidence to support it, that Ferris knew or that any one representing the bank knew that Baillargeon had not a perfect right to sell the warrant. In fact, it is in evidence, and not denied, that on a previous occasion Delfosse told Ferris that whatever Baillargeon would do in the way of offering paper for discount would be all right. Delfosse should now, the bank having bought the warrant in good faith for value, be estopped to deny that the bank took title to the warrant. In the Williams case, sv.jrra, the court say: “Asa general rule, applicable to property other than negotiable securities, the vendor or pledgor can convey no greater right or title than he has. * * * But when the true owner holds him out or allows him to appear as owner of or as having full power of disposition over the property, and innocent third parties are thus led into dealing with such apparent owner, they will be protected. Their rights in such cases do not depend upon the actual title or authority of the party with whom they deal, but are derived from the act of the real owner, which precludes him from disputing, as against them, the existence of the title or owners, which, through negligence or mistaken confidence, he caused or allowed to appear to be vested in the party making the conveyance.” In the Springer case, supra, though the question under consideration was not personal property, the court states the general proposition as follows : “ Where the owner of property allows another to appear as the owner thereof, and innocent persons are thus led into dealing with such apparent owner, they will be protected. By such act a real owner is precluded from disputing, as against them, the existence of the title which he suffered to be vested in the party dealing with them.” We see no reason why the principle should not be applied in the case at bar. In the Phillips case, swpra, where the question was as to personal property — high wines, the court applied the same rule, and in substance held that where a seller delivers property to the purchaser, and thus vests him with indicia of ownership, and the purchaser sells or pledges it to a bona ' fide purchaser without notice, the latter acquires rights which will be protected. Where the property is thus placed in the hands of the purchaser, as to third persons who become bona fide purchasers, it does not matter as to the intent with which it was delivered. In the Marshall case, sujpra, the court applied this rule to the case of a note and trust deed placed in'the hands of one Schmidt by the owner, which were wrongfully sold to an innocent purchaser. The court say : “ Marshall having thus placed these securities in the hands of Schmidt, and clothed him, or permitted him to be clothed, with the indieia of ownership, is bound by what Schmidt did as the apparent owner;" and held that the title of the innocent purchaser from Schmidt would be protected. The facts of this case, carefully considered, show that there was more than a mere bailment as between appellant and Baillargeon — that not only was Baillargeon clothed with every indicia, of ownership, but Delfosse in substance told Ferris,who purchased the warrant for the bank, in effect that Baillargeon was empowered to dispose of the paper. This last feature of the case, we think, clearly distinguishes it from the facts of each case relied upon by appellant, and the judgment.is therefore affirmed.