Pearce v. Roberts

Richardson, Judge delivered the opinion of the court. Though the warehouse receipt executed by Burns & Bro. to Houseman, Lowry & Co. gave to the latter the right to the possession of the property until their advances were refunded, it evidently was only intended as a security, and Burns & Bro., by paying the debt, could have extinguished the lien, or they could have transferred their equity to another person who, on succeeding to their rights, would have held the property, by paying Houseman, Lowry & Co., free from the claims of the creditors at large of Burns & Bro. If Houseman, Lowry & Co. had received the property under a stipulation to sell it and apply the proceeds to the payment of their debt, and the residue to other named debts, a trust would have attached upon it in their hands, from which they could not have been relieved merely by obtaining satisfaction of their own debt; but the trust would have continued and have followed the property into the hands of every other person who received it with notice. But the receipt on its face conferred no rights and imposed no duties except as between the parties to it, and, from any thing that appears in the record, there was no lien or claim on the property as against Burns & Bro. in favor of any person except Houseman, Lowry & Co., and Burns & Bro. had the power of transferring it, subject only to one claim, to any bona fide creditor or purchaser; and their promise to pay other creditors the surplus created no lien upon it. A factor must know whose property he is selling, and must respect at his peril any valid liens on it; but he has the right to pay the proceeds to the owner, or to his order, although he may know that the owner has promised them to his creditors. So, if the consignment had been received directly from Burns & Bro. the defendants would have had no reason, before they were garnished, to withhold the proceeds of the sale after paying Houseman, Lowry & Co. for the benefit of the general creditors of Burns & Bro.; and, conceding that the transfer to Martin & Cook was made with a fraudulent purpose, it was good against Burns & Bro., and was sufficient, as [183] far as tliey were concerned, to authorize Martin <fc Cook to direct the disposition of the proceeds of the consignment. It appears that the property came to the defendants under a consignment from Martin & Cook; that it was sold and the debt paid to Houseman, Lowry & Co., and, though Mr. Houseman says, “ I think I told them that there were some drafts to be paid,” there is not a word in the record to show that a draft had been drawn in favor of the plaintiff, or that he had a lien on the property of any kind, or that the defendants over knew he was a creditor. An ordinary draft in favor of the plaintiff on Houseman, Lowry & Co. would not have operated as an assignment of any interest in the property; (Kimball v. Donald, 20 Mo. 577;) and notice to the defendants that the creditors of Burns & Bro. had been promised payment out of the proceeds of the sale of the property would not have prevented them from paying the proceeds to the owners, their agents or their vendees. There is no evidence that any of the creditors of Burns & Bro., except Houseman, Lowry & Co., had claims against the property, and the instruction therefore given by the court, at the plaintiff’s request, was erroneous in assuming that there was evidence that “ other creditors of Burns & Brother had claims against it.” If the property really belonged to Burns & Bro. the defendants are liable for whatever was in their hands at the time they were garnished; but they are not liable for any thing they had paid, or for the amount taken in goods by Martin & Cook, unless they were guilty of fraud, and participated with Martin & Cook and Burns & Bro. in a scheme to cheat the creditors of the latter. The case was not put on trial on the ground of fraud, neither in the proof nor in the instructions asked or given. The other judges concurring, the judgment will be reversed and the cause remanded.