Greer v. Equity Co-Operative Exchange

Holt, J. Action in trover for the conversion of a carload of wheat. At the close of the testimony each side moved for a directed verdict. Defendants’ motion was granted. Plaintiff made a motion in the alternative for judgment or a new trial. It was denied m toto and this appeal followed. The evidence presents no material dispute as to the facts so far as these were attempted to be brought out. It appears that on October 11, 1915, J. J. Wolsted and O. A. Wolsted, farmers at Brookland, North Dakota, owned 1,500 bushels of wheat which they loaded into car No. 15,251 of the Great Northern Railway Company for shipment to Mar-field Grain Company, at Duluth, Minnesota. The railroad company had no depot or station agent at Brookland, so that shipping bills or bills of lading could not be issued there. It was therefore the practice for the shipper, after a car was loaded, to make out shipping bills in triplicate and hand them to the conductor picking up the car at Brookland. These bills would be delivered to the agent at Rutland, the next station having an agent, who signed two, one of which became the bill of lading and the other the memorandum thereof, and returned them to the conductor t'o be taken back to Brookland on his return trip and handed to the shipper, or placed in a box accessible to shippers, and the other would be retained by the railway, and from it the agent makes out the way bill accompanying the shipment. In this instance, the shippers pursued the usual practice and made out in ’ triplicate the form for a straight bill of lading for this car of wheat, consignors Wolsted Bros., consignee Marfield Grain Company, destination Duluth, Minnesota. The car moved under the way bill from one division point to another, but instead of arriving at Duluth it was diverted at Will-mar and sent to St. Paul. The way bill, produced by the railway company at the trial, was received in evidence, and appears to have the signature of the first conductor out of Rutland. In this way bill the destination is St. Paul, C. H. Clark the consignor, and Equity Co-Operative Exchange the consignee. The only bill of lading in the record corresponds to this way bill. Mr. Wolsted testified that the original bill of lading received by him was sent to Marfield Grain Company, the consignee therein named, [303] at Duluth, but it was not produced at the trial. An inspection of the way bill and the bill of lading, in this record, discloses the same handwriting in both. The testimony shows that the name of the agent at Rutland is Phillips. The name of the agent purporting to have issued the bill of lading is Wapelton. There is no direct evidence that the way bill in the record is not the one under which the car moved from Rutland to St. Paul. However, Brady, the first conductor out of Rut-land, says the entries in his record made from the way bill indicate Duluth as destination, so does the conductor who took the car to Will-mar and delivered the way bill to the agent at that division point. Reading between the lines, it is manifest that someone practiced a fraud upon the carrier and falsified its records, but whether this was done by one of its agents or by C. H. Clark, the consignee in the bill of lading in evidence, is not in any manner disclosed. It is difficult to see how the fraud could have been carried through unless some servant of the carrier actively participated therein, for the way bill was always in the possession of its servants and agents. In the forenoon of October 15, 1915, a person, claiming to be C. H. Clark, appeared in St. Paul at the office of defendant the Equity CoOperative Exchange Company, the consignee named in the way bill, stating that this and another carload of wheat had by him been consigned to it for sale on commission, and desired to know if the cars had arrived. By telephone it was ascertained that this car was then in St. Paul. Later in the day the Exchange Company received notice in- the customary way, by mail, from the railroad company, of the arrival of the car. At the direction of Clark said defendant, as commission broker, sold the ear on the market to defendants Hohle Bros. Immediately after the sale, and presumably in the forenoon of the same day, the Equity Co-Operative Exchange Company, at Clark’s request, advanced him money on the car, pending the adjustment of the total purchase price by weighing and turning it over to the purchasers, and received the bill of lading in question. Thereafter the bill of lading was surrendered to the carrier, who accepted the same and issued another to the purchasers upon a reconsignment of the car of wheat. The balance of the purchase price was paid Clark some time in November. Wolsted Bros, soon thereafter learned that the wheat had not reached the intended [304] destination, and asserted a claim against tlie Great Northern Railway Company, the carrier. And in January, 1916, the company paid Wolsted Bros, in full for the wheat and procured them to assign the same and their claim to plaintiff, an employee of the Marffeld Grain Company. It is conceded that plaintiff has no personal interest in the cause of action. It belongs to the railway company and is prosecuted by it. The car of wheat belonged to Wolsted Bros. They had a cause of action against any one who, without express or implied authority from them, disposed of it. This would include both defendants, for neither attempts to derive any right to the wheat or its disposition from Wolsted Bros., the owners. Under Johnson v. Martin, 87 Minn. 370, 92 N. W. 221, the defendant Equity Exchange Company exercised enough dominion over the wheat, in making the sale as a commission broker, to hold it liable for conversion. And if plaintiff, as representing the Great Northern Railway Company, can stand in Wolsted Bros.’ shoes in respect to defendants, the verdict should have been directed for him and not for defendants. As a general proposition it is true that a claim good in the hands of an assignor is equally good and free from defenses in the hands of his assignee. Plaintiff states: “We are willing to admit that a counterclaim might be set up as against one'plaintiff whereas it could not be set up as against another in a case where the cause of action is the same; but a defense * * * must be something that can be maintained against the claim itself without regard to the person who owns it.” The proposition is plausible, but we think the theoretical distinction between counterclaim and defense must sometimes yield to what is practical in the administration of justice. In a ease of this sort, involving the liability as between parties who have unintentionally converted some third person’s property, we think a defense may be available, though not strictly a counterclaim or set-off. Suppose a servant had innocently converted this carload of wheat at the bidding of his master. Both would Have been liable -to Wolsted Bros. Could the master have paid Wolsted Bros., taken an assignment of the wheat and claim, and then sued his servant, without the servant’s being able to defend successfully by alleging the fact, viz., that [305] what he did was at the assignee’s behest? To state the proposition is sufficient demonstration of the availability of the defense. We must ascertain in what relation the railway company and these defendants stand to this conversion, and to one another therein, in order to see whether the defense asserted by defendants is good as to them. In taking this assignment the railroad company was not a voluntary purchaser. It could not escape the payment it did make to Wolsted Bros, for its conversion of their wheat. The company, by taking the assignment, could, without doubt, become subrogated to the rights of Wolsted Bros, as against Clark, or as against the one who practiced the fraud whereby its unintentional conversion of the grain was brought about. But as to these defendants, whose innocent part in the conversion occurred subsequent to the railway company’s wrongful act, and, in a measure, because thereof and in reliance upon its conduct in the premises, we think plaintiff is not in a position to claim as assignee of Wolsted Bros, and with the same rights. The defendants Hohle Bros, obtained possession of the wheat and paid for it when the railway company accepted as its genuine bill of lading the one turned over by Clark. As between Hohle Bros, and the company, the latter should be held to know whether or not the instrument was valid and issued by its agent. There is no suggestion that Hohle Bros, did not purchase and pay for the car of wheat in the utmost good faith. The same may also be said 'of what the Equity Co-Operative Exchange did in the premises. On inquiry of the railway company it learned that this wheat was consigned to it. This was confirmed by written notice later in the day or next morning. Clark tendered a bill of lading therefor, purporting to be issued by the railway company. This, as already stated, was recognized as valid by the company and accepted by it when the wheat was reconsigned by Hohle Bros. Had the railway company then repudiated the bill there would have been a chance for both defendants to have averted the loss, at least to a certain extent, for Clark was not paid the full amount until the following month. Assuming the bill of lading to be a forgery, there is no pretense that either defendant had notice thereof, or of facts arousing the slightest suspicion in that direction. The railway company in legal contemplation converted the wheat when, at "Willmar, it undertook to haul the [306] car to St. Paul Instead of to Duluth. Defendants’ connection with the wheat grew out of that wrongful act of the railway company. As between the real parties to this action, the railway company was the first in the conversion, and more at fault than defendants, or either of them. And under that situation, it cannot now claim that the transaction with Wolsted Bros, was a purchase of the wheat, so as to eliminate the equities existing as between it and defendants. At the trial plaintiff took the. position that it was no concern of defendants whether he held the assignment from Wolsted Bros, in his own right or for the benefit of the railway company, and cites: Anderson v. Reardon, 46 Minn. 185, 48 N W. 777; Longfellow v. McGregor, 61 Minn. 494, 63 N. W. 1032; Klein v. Funk, 82 Minn. 3, 84 N. W. 460; Dolliff v. Robbins, 83 Minn. 498, 86 N. W. 772, 85 Am. St. 466. We are of the opinion that it was. Had plaintiff obtained the assignment from Wolsted Bros, in behalf of C. H. Clark and sued the railway company in conversion, surely a defense would have been permitted, grounded on facts creating an estoppel against Clark. The evidence was therefore properly admitted, showing that the railway company had the transaction with Wolsted Bros., what the transaction was, and that plaintiff was merely a nominal party, having no personal interest in the suit. We have examined the other errors assigned on other rulings at the trial, and find nothing requiring a different conclusion than the one reached by the learned trial court. Order affirmed.