First Nat. Bank of Cincinnati v. Felker

ROGERS, District Judge (after stating the facts as above). At the time plaintiff purchased the several drafts and bills of lading, it was undeniably true that the drafts and the cans covered by the bills of lading were the absolute property of the United States Can Company. That company could have shipped them anywhere and sold them on any terms and to anybody it saw’ fit, and neither the Rogers Canning Company, nor any one else, had any legal right to complain. When the plaintiff purchased from the United States Can Company the drafts and bills of lading, it is undeniably, true that it acquired all the title, coupled with all the powers of jus disponendi which its assignor, the United States Can Company possessed before the latter parted with its title. The plaintiff, therefore, might have diverted and sold the cans to w’hom it pleased, and the Rogers Canning Com,pany in that event would have had no legal right to complain. Dows [681] et al. v. National Exchange Bank, 91 U. S. 618, 23 L. Ed. 214, where the whole subject of the effect of assigning the drafts with hills of lading attached is fully and ably discussed. The plaintiff, however, forwarded to defendant the drafts and bills of lading for collection. In doing so it forbade him delivering the drafts and bills of lading, which in law is the equivalent of forbidding him to deliver the cans covered thereby, until the drafts were paid. The instructions clearly reserved in the plaintiff the title and the jus disponendi of the cans covered by the bills of lading. 2 Daniel on Negotiable Instruments, par. 1731b. The defendant bank was the agent of plaintiff for a specific purpose, and that only. That agency was to hold the cans until the drafts were paid, then deliyer the cans to the Rogers Canning Company, and remit the proceeds to plaintiff. If at this juncture on presentation by the defendant the Rogers Canning Company had declined to pay the drafts, the plaintiff had the right to do what it pleased with its cans. Indeed, it had that right with or without ever presenting the drafts for payment at all. 2 Daniel on Negotiable Instruments, par. 1734b; 91 U. S., 23 L. Ed., supra. There was therefore no contractual relation between plaintiff and the Rogers Canning Company, or, if any, it gave the Rogers Canning Company no right to the title or possession of the cans without first paj'ing the drafts, and no right to, in any way, control their disposition. Id. par. 1734c. Up to this juncture plaintiff had in no way given any warranty of the character of the goods in question to the Rogers Canning Company, because the Rogers Canning Company had not purchased the cans. They were not its property. Id. Whatever warranty as to the character of the goods may have been entered into by the United States Can Company with the Rogers Canning Company, that warranty could have no effect whatever as to the United States Can Company until the Rogers Canning Company has acquired title to the goods; a fortiori, it could have no effect as to die plaintiff. Plaintiff had incurred no new obligations to the Rogers Canning Company by simply purchasing the drafts and the bills of lading. Such was the status of the parties when the defendant in violation of the positive instructions of his principal, the plaintiff, delivered the cans to the Rogers Canning Company, and kept the plaintiff in igno-. ranee of its illegal and unauthorized act until the Rogers Canning Company had used the cans in its business, and the plaintiff was thereby deprived of the power to sue and recover the cans. This was clearly an act of conversion by both the defendant and the Rogers Canning Company. Dows et al. v. National Bank of Exchange, 91 U. S. 637, 23 L. Ed. 214. In Hobbs et al. v. Chicago Packing & Provision Co., 98 Ga. 576, 25 S. E. 584, 58 Am. St. Rep. 320, Lumpkin, J., said: “A wrong delivery of goods either negligently or willfully made by one intrusted with the custody of them is in law a conversion.” Gregg v. Bank of Columbia, 72 S. C. 458, 52 S. E. 195, 110 Am. St. Rep. 633. It requires no authority to support the principle that plaintiff might have ratified the tortious act of its agent in delivering the cans without first having received payment of the drafts and sued the Rogers [682] Canning Company for the purchase price of the cans, or it might have sued it in trover for their conversion, or, if the goods could have been found, maintained replevin therefor. What the measure of damages is in such cases is of no importance, as the plaintiff elected to pursue neither remedy. What defense the Rogers Canning Company in either of such events might have urged is unimportant also, for the question is not presented. On the contrary, plaintiff elected to treat the action of its faithless agent as a conversion of its can's, and look to him for redress for its injury. It needs no authority to sustain plaintiff’s right to recover in this action. 91 U. S. 637, 23 L. Ed. 214, supra. Indeed, I do not understand the right of recovery as against the defendant is in dispute. Eelker had no interest in the goods, and neither plaintiff nor the United States Can- Company owed him anything. He sets up no such defense. His relation to the plaintiff was solely that of an agent. After he had converted the cans to his own use by delivering them in violation of the positive instruction of his principal, and subsequently by concealing that fact deprived the plaintiff of the right to pursue and recover the cans, and still later collected from the Rogers Canning Company the full face value of the drafts drawn for the purchase price of the cans, he now seeks -to defend plaintiff’s right of recovery against him for his tortious act by alleging that plaintiff is indebted to the Rogers Canning Company for damages for a breach of warranty by the United States Can Company as to the character and quality of the very cans of the plaintiff, which both the defendant and the Rogers Canning Company had tortiously converted to their own use, which cans were never, in fact, sold to the Rogers Canning Companjr by either the plaintiff or the United ■ States Can Company. True, the United States Can Company agreed to sell the Rogers Canning Company the cans,-but they were not to be delivered, or the title passed, until paid for. Until paid for there was no sale. Until a sale, the cans remained the property of the plaintiff. 91 U. S. 637, 23 L. Ed. 214. The cans were tortiously converted before the sale was completed. No warranty can arise out of a tort. A tort is not an agreement. A warranty is a contract, or arises out of a contract. Just how the Rogers Canning Company can recover from the United States Can Company, or its assignee, the plaintiff, for-a breach of warranty for the sale of defective cans which neither the United States Can Company or the plaintiff, ever sold to the Rogers Canning Company, but which the Rogers Canning Company tortiously converted to its own use, is not sustained by any known authority, or very readily perceived. If plaintiff had waived the tort of its faithless agent, the defendant, and sued the Rogers Canning Company for the purchase price of the cans wrongfully delivered to the Rogers Canning Company, thereby ratifying the delivery, the sale being complete, a defense of that character could with some degree of reason and perhaps some show of authority be urged; but such a defense is wholly inadmissible in this character of case, for the obvious reason there can be no breach of warranty for the sale of defective goods if there is no sale. What has already been said sufficiently distinguishes this case from the following cases: Searles v. Smith Grain Co. et al., 80 Miss. 688, [683] 32 South. 287; Lauda v. Lattin, 19 Tex. Civ. App. 246, 46 S. W. 48; Finch et al. v. Gregg, 126 N. C. 176, 35 S. E. 251, 49 L. R. A. 679; People's National Bank v. Brogden & Bryan, 98 Tex. 360, 83 S. W. 1098, which were cited in support of the contrary doctrine. In those cases (except the last) there was a sale and delivery and payment of i he drafts to which the bills of lading were attached by the consignee, and the suits were afterwards brought for breaches of warranty as to the quality of the goods against the bank which collected the drafts, aiid in some cases against the consignors as well. There was no tortious conversion as in this case. The last case cited was more closely akin to the case at bar. There the goods shipped were apples, perishable, and rotting when received by the hank. The consignee was insolvent, and could neither pay for the apples nor sell them. To save something for the consignors, the bank delivered the apples to consignee. who shipped them to another merchant in a neighboring town, and accepted the consignee’s draft on that merchant for the purchase price. The merchant refused to accept the apples and the draft because of the condition of the apples, and the railroad company sold the apples for t(ie freight. The hank got nothing, neither did the consignee. The bank accepted the draft of the consignee on the merchant of the neighboring town as a means of collecting consignor’s draft which it held for collection. This was unauthorized, it is true, but the result would have been the same, had he held the apples. The consignor, therefore, lost nothing, and the hank gained nothing by the course pursued, and there was no bad faith. The emergency for some action by the bank was manifest, but there is no such case as •that here. The cans were not perishable; the Rogers Canning Company was not'insolvent; the defendant collected the full purchase price of the goods from the Rogers Canning Company. The difference in the facts distinguish that case from the one at bar. Only one question remains. What is the measure of damages in a case like this. It does not seem that a faithless agent ought to be allowed to profit by his own wrong. Defendant converted the cans to his own use, and afterwards collected the purchase price. Shall he be allowed to keep any part of it? He has no claim on the fund. The Rogers Canning Company has none, because it did not purchase the cans from the plaintiff. The only evidence is that the drafts were .drawn for the full purchase price of the cans. Defendant knew the price when he converted them to his own use. Lie also knew that, if the drafts were not paid, plaintiff had the right to sell them, and that lie did not. In such a case I think the measure of damages is the face of the drafts, with 6 per cent, interest from the date of the conversion. As throwing light on this subject, see 3 Am. & Eng. Enc. Law (2d Ed.) p. 814, and cases cited in the last paragraph of note 4. The evidence does not show the precise date on which the conversion occurred, hut the defendant admits in his deposition the delivery of the cans as early as October 10, 1910, and interest should therefore he allowed from that date. The court finds the issues for the plaintiff, and assesses its damages in the sum of $1,313.98.