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Argument for Defendant in Error.

Story, 93; Steiger v. Third National Bank, 2 McCrary, 194; S. C. 6 Fed. Rep. 569; Shaw v. Railroad Co., 101 U. S. 557; Smith v. Sac County, 11 Wall. 139; Greenbaum v. Jegibben, 10 Bush, 419; First National Bank v. Boyce, 78 Kentucky, 42; Erie & Pacific Dispatch v. St. Louis Cotton Compress Co., 6 Missouri App. 172; Whitlock v. Hlay, 58 N. Y. 48+; Insurance Co. v. Kiger, 103 U. S. 352; Price v. Ins. Co., 43 Wis. 267; Stevens v. Wilson, 6 Hill, 512; S. C. in error, 3 Denio, 472; Covell v. Hill, 6 N. Y. 377, 380; Cartwright v. Wilmerding, 24 N. Y. 521, 534; Howland v. Woodruff, 60 N. Y. 73, 79-80.

Mr. James Ilagerman for defendant in error, (Hr. Frank Illagerman was with him on the brief,) cited: Kingston Bank v. Gay, 19 Barb. 459; Roach v. Turk, 9 lleiskell, 708; McCombie v. Davies, 6 East, 538; Lansatt v. Lippincott, 6 S. & R. 386; S. C. 9 Am. Dec. 440; Borie v. Napier, 1 McCord, 1; Foley v. IIill, 2 H. L. Cas. 28; Etna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82; Boyden v. Bank of Cape Fear, 65 No. Car. 13; Allen v. Fourth Nat. Bank, 37 N. Y. Superior (5 Jones & Spencer), 137; Buchanan Farm Oil Co. v. Woodman, 1 Hun, 639; In re Franklin Bank, 1 Paige, 249; S. C. 19 Am. Dec. 413; Phanix Bank v. Risley, 111 U. S. 125; Thompson v. Riggs, 5 Wall. 663, 678; Marine Bank v. Fulton Bank, 2 Wall. 252; Bank of Republic v. Millard, 10 Wall. 152; Clark v. Moody, 17 Mass. 145, 147; Martini v. Coles, 1 M. & S. 140; Shipley v. Kymer, 1 M. & S. 484; Evans v. Pollen, 2 Gallison, 13; Kingston v. Wilson, 1 Wash. C. C. 310; Stewart v. Aberdein, 4 M. & W.211; Catterall v. Ilindle, L. R. 2 C. P. 368; Sweeting v. Pearce, 9 C. B. N. S. 534; McNeil v. Tenth National Bank, 46 N. Y. 325; Moore v. Metropolitan Bank, 55 N. Y. 41; Weirick v. Mahoning Bank, 16 Ohio St. 296; Combes v. Chandler, 33 Ohio St. 178; Winter v. Belmont Mining Co., 53 Cal. 428; Price v. Wisconsin Marine & Fire Ins. Co., 43 Wis. 267–269; llenry v. Philalelphia Warehouse Co., 81 Penn. St. 76; Pegram v. Carson, 10 Bosworth, 505; IIowland v. Woodruf, 60 N. Y. 73; Locke v. Lewis, 124 Mass. 1; International Bank v. German Bank, 71

Opinion of the Court.

Missouri, 183; Talty v. Freedman's Savings Co., 93 U. S. 321; Goodenow v. Tyler, 7 Mass. 36; S. C. 5 Am. Dec. 22.

MR. JUSTICE Gray delivered the opinion of the court.

When a jury is waived in writing, and the case tried by the court, the court's finding of facts, whether general or special, has the same effect as the verdict of a jury; and although a bill of exceptions is the only way of presenting rulings made in the progress of the trial, the question whether the facts set forth in a special finding of the court, which is equivalent to a special verdict, are sufficient in law to support the judgment, may be reviewed on writ of error without any bill of exceptions. Act of March 3, 1865, c. 86, S 4, 13 Stat. 501; Rev. Stat. SS 649, 700; French v. Edwara's, 21 Wall. 147; Ex parte French, 91 U. S. 423. The question whether the facts found by the court in the case at bar are sufficient to support the judgment below includes the several questions of law affecting the merits of the case. That judgment is for more than $5000, which is sufficient to give this court jurisdiction in error. Act of February 16, 1875, c. 77, S 3, 18 Stat. 316. It is therefore unnecessary to consider whether those questions are duly stated in the certificate of division of opinion, within the rule affirmed in Williamsport Bank v. Knapp, 119 U. S. 357.

The leading facts of the case, as found by the Circuit Court, are as follows:

The original action was on a promissory note made by the defendants, payable to the order of J. H. Dowell & Co., and by them indorsed to the plaintiff bank. J. II. Dowell & Co. were a partnership of cotton factors at St. Louis, in which Dowell was the active and managing partner. Dowell was also a partner with the defendants, under the name of Allen & Dowell, in the working of a cotton plantation in Arkansas.

The note in suit was made and delivered by the defendants to the payees, their factors, to enable them to raise funds to furnish supplies for working that plantation, and under an agreement between the parties that the note should be taken

Opinion of the Court.

up and paid by the factors out of the proceeds of the cotton crop of the plantation for the coming season, when received and sold by them. That crop was consigned to the factors under that agreement, and its proceeds were more than sufficient to pay this note and all other charges of the factors. It is not doubted that upon these facts the makers would have a complete defence to the note in the hands of the payees.

But before the maturity of the note, the payees had it discounted by, and indorsed and delivered it to, the plaintiff bank, with which they kept their deposit account, and of which they from time to time borrowed large sums of money. As soon as they received the bills of lading of cotton consigned to them as factors by the defendants or by other persons, they delivered those bills to the bank, which thereupon gave them a credit, in their deposit account, of $10 for each bale, and took their note for the amount, payable on demand, with interest. On the arrival of the cotton, it was delivered to warehousemen, who gave receipts undertaking to deliver it to bearer, and these receipts were delivered to the bank in exchange for the bills of lading, which were surrendered and cancelled. There was no evidence that either the bills of lading or the warehouse receipts were indorsed in writing. The bank knew that the payees of the note in suit were factors, and that they held the cotton as such. It did not know and made no inquiry as to the ownership of any of the cotton, or the dealings of the factors with the owners, or the state of accounts between them.

The cotton was sold in the following manner: The factors negotiated sales by means of samples, and fixed the price and other terms of sale. The bank received the whole price from

purchasers, and delivered to them the warehouse receipts, and credited the factors with the amount received, but at the same time, and as part of the same transaction, required them to draw, and they did draw and deliver to the bank, their checks for the amount of their demand notes held by the

After all the cotton had been sold, there was a large balance of account due from the factors to the bank.

The substance of the transaction between the factors and



Opinion of the Court.

the bank in regard to the cotton was, that the factors delivered the bills of lading and warehouse receipts to the bank to secure the repayment of money lent them by the bank, and thereby made a pledge of the cotton to secure their own debt; Insurance Co. v. Kiger, 103 U.S. 352, 356; and that the bank sold, on terms negotiated by the factors, the cotton so pledged to it, and received the price from the purchasers. The notes and checks which passed between the factors and the bank were but forms to carry out the main purpose of the transaction between them, and did not change its nature or effect.

By the common law, a factor or agent for sale has no power to pledge, whether the owner has intrusted him with the possession of the goods themselves, or with the symbol of them, as by consigning them to him by a bill of lading in which he is consignee or indorsee. 2 Kent Com. 625; Kinder v. Shaw, 2 Mass. 398; Warner v. Martin, 11 How. 209, 224; Phillips v. Iluth, 6 M. & W. 572, 596; Cole v. Northwestern Bank, L. R. 10 C. P. 351, 363. And such was the law of Missouri before the passage of any statute upon the subject. Benny v. Rhodes, 18 Missouri, 147 [S. C. 59 Am. Dec. 293]; Benny v. Pegram, 18 Missouri, 191 [S. C. 59 Am. Dec. 298].

The essential difference between a power to sell and a power to pledge is well brought out in a recent case in the House of Lords by Lord Chancellor Selborne, who said: “It is manifest that when a man is dealing with other people's goods, the dif ference between an authority to sell, and an authority to mortgage or pledge, is one which may go to the root of all the motives and purposes of the transaction. The object of a person who has goods to sell is to turn them into money; but when those goods are deposited by way of security for money borrowed, it is a transaction of a totally different character. If the owner of the goods does not get the money, his object and purpose are simply defeated; and if, on the other hand, he does get the money, a different object and different purpose are substituted for the first, namely, that of borrowing money and contracting the relation of debtor with a creditor, while retaining a redeemable title to the goods, instead of exchanging the title to the goods for a title, unaccompanied by any

Opinion of the Court.

indebtedness, to their full equivalent in money.” City Bank v. Barrow, 5 App. Cas. 664, 670.

The weight and bearing of the cases, cited at the bar, upon the construction of the statutes of Missouri annexed to the finding of facts, cannot be properly appreciated without keeping in mind the provisions of the various statutes under which those cases arose.

The English Factors' Act of 6 Geo. 4, c. 94, passed in 1825, enacted in $ 2 that any person intrusted with and in possession of any bill of lading, warehouse receipt or other like document, should be deemed and taken to be the true owner of the goods described therein, so far as to give validity to any contract made by him with other persons for the sale or disposition of the goods, or for the deposit or pledge thereof as a security for advances made by them “upon the faith of such several documents or either of them;" provided such persons had no notice, by such documents or otherwise, that the person intrusted as aforesaid was not the actual and bona fide owner of the goods.

The New York Factors' Act of 1830, c. 179, based upon the act of 6 Geo. 4, provided in 3 that every factor or other agent, intrusted with the possession of any bill of lading, custom-house permit or warehouse-keeper's receipt for the delivery of merchandise, and every such factor or agent, not having the documentary evidence of title, but intrusted with the possession of any merchandise for the purpose of sale, or as a security for any advances to be made or obtained thereon, should be deemed to be the true owner thereof, so far as to give validity to any contract made by him with any other person for the sale or disposition of the merchandise, for any advances made by such other person " upon the faith thereof." It will be observed that this section did not in terms repeat the proviso of the corresponding section of the English act.

But before the enactment in Missouri of any of the statutes cited in argument, the construction of this section of the New York statute had been settled, by decisions of the highest courts of that state and of this court, to be that the words “on the faith thereof” were not to be referred to “merchandise," or to its symbols, but to the words "shall be deemed to


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