
    Brower and Cram vs. Peabody and others.
    The plaintiffs agreed with L. to sell to his firm, L. & Co., 50 casks of potashes, for $1657.08, cash on delivery. L.' thereupon engaged freight for the potashes in the ship Pidelia, then advertised for a voyage to Liverpool. The plaintiflb sent the potashes on board the vessel by their carman, who took receipts therefor from the mate. L. then went to the office of the plaintiffs, and stole the receipts from their desk, and carried them away. On the same day he presented them to the owners of the ship, and procured a bill of lading in his own name. Drawing a bill of exchange against the shipment, he assigned the bill of lading to H., who, in good faith, advanced $1453.33 upon this security. P., the master of the ship, refused to deliver the potashes to the plaintiffs, but delivered them to the holders of the bill of lading in Liverpool. After the stealing of the receipts by L., the plaintiffs gave no notice of the theft to any one connected with the ship, until two or three days afterwards. In the meantime they treated with L., and demanded from him pay for the potashes, or their return. In an action against P., the master of the vessel, and L. and his copartners, to recover the potashes; Held, that the conduct of L., in obtaining possession of the property, was to be deemed fraudulent rather than/eZomoi(S; and that the plaintiffs, having allowgd him to assume some of the indicia of ownership, so as to justify P. in supposing him to be the lawful owner of the shipment, and having also neglected to notify P. of the fraud, promptly, they could not recover the property, or the value thereof, from P. Mitchell, P, J., dissented.
    
      Appeal by the plaintiffs from a judgment entered upon the report of a referee. The action was brought to recover possession of fifty barrels of potashes. The referee, by his report, found the facts to be substantially the same as they are stated in the opinion of the court. He also found that it is the uniform custom and usage among merchants and those engaged in the shipping business, in the city of Hew-York, to deliver bills of lading to any person who produces the ship’s receipts, without reference to the names in such receipts, and without any indorsement of the same, such receipts being regarded by such custom and usage, and in the course of trade, merely as memoranda by which to make out the bills of lading, and as acknowledgments that the goods described in them have been placed on board the ship. He further reported as conclusions of law from the facts found, that the plaintiffs must be presumed to have had knowledge of the said custom and usage, and were chargeable with unreasonable negligence in not having given immediate notice to the defendant Peabody, or to the owners or agents of the ship, that the receipts had been wrongfully taken by Lovett, and that said defendant Peabody was entitled to judgment in his favor in this action, and that he recover from the plaintiffs his costs. That the purchase of the said fifty casks of potashes by Thomas B. Lovett '& Co. was fraudulent on the part of the said Thomas B. Lovett & Co., and that the plaintiffs were entitled to judgment against the defendants, Thomas B. Lovett and James K. Bethune, for the sum of one thousand eight hundred and twenty-one dollars and forty cents, being for the value of said potashes and interest thereon to the date of the report, together with costs.
    
      J Anthon, for the appellants.
    I. A notice of exception to the “ conclusions of law ” of the referee upon the facts found by him, is sufficient to present the question to this court, whether the finding as to the law is correct; no complaint as to the finding of the facts being made. (Code of 1852, § 272. Deming v. Post, 1 C. R. 121. Morgan v. Bruce, 1 Code Rep. N. S. 364.) II. There was no delivery of the ashes to the defendants, Lovett and Bethune, under the contract, and the property and possession remained in the appellants, although on board of the vessel designated by the defendants, Lovett and Bethune. (Chitty on Contracts, 427, 428, 433. 2 Marsh. 127; S. C., 6 Taunt. 433. Holt, 100. 9 Mees. & Wels. 36. 12 Ad. & Ellis, 632. 13 John. 434. 14 Wend. 31. 20 id. 267. Jones v. Bradner and others, 10 Barb. 193.) III. The respondent had no right to give bills of lading, except to the appellants, or to a person having a lawful right to the goods and possession of the receipts. ( Thompson v. Trail, 6 B. & C. 36.) IV. The receipts having been stolen, the right of the appellants to the possession of the goods cannot be affected by the felony, the doctrine of market overt not being the law here. (1 John. 471. 14 Wend. 31. 20 id. 267. 22 id. 285. 3 Barb. Ch. R. 451. 3 Barb. S. C. R. 20.) V. The appellants never having parted with the possession of the property, or the receipts (the evidences of delivery to the ship) and never having “ intrusted” the bills of lading, (the evidences of the right to claim- the delivery from the ship) to the purchasers of the goods, and Lovett not being either factor, or agent, of the appellants, he could not, by his fraud and felony, transfer to the assignees of the bills of lading (although they advanced thereon bona fide) any title to the goods, or to the bills of lading. (14 Mees. & W. 403. 1 John. 471. 13 id. 434. 11 Wend. 80. 2 Kent's Com. 374, 376, 7th ed. 8 Cowen, 238. 1 Hill, 306. 6 id. 44. 4 Denio, 323. Laws of 1830, § 3.) VI. The respondent detained the goods, and refused to deliver them to the appellants, or to sign bills of lading. No lien was claimed, and the denial of the right of the appellants was placed on the ground that the respondent had signed bills of lading and was bound to deliver to persons other than the appellants; he is, therefore, confined in his defense to the grounds of refusal assigned at the time of demand. VII. The custom proved, in reference to the delivery of the bill of lading to the holder of the ship’s receipts, is not a lawful custom; and the appellants cannot be deprived of their property by the same. (Cro.Jac. 80.) VIII. The judgment in favor of the respondent should be reversed, and judgment rendered for the appellants against him, for the recovery of the possession of the property claimed, with damages: the facts being conceded by both parties.
    
      Wm. A. Butler, for the respondent.
    I. The defendant, Peabody, was an innocent third party, acting without notice of any fraud on the part of Lovett, and without any reason to suspect fraud; and by the plaintiff’s own acts in delivering the goods sold by them to Lovett on a ship selected by Lovett himself, (and on which he had engaged freight for the goods,) in the ordinary course of business, and without any "notice to the master or owners of the ship, that Lovett was not the real owner of the goods ; and more especially by- neglecting to give immediate notice of the theft of Lovett, and by suffering him to retain possession of the receipts, they put it in his power to commit a fraud on the defendant, Peabody, who is, therefore, not liable to the plaintiffs for the value of the goods in question. (1.) It is well settled that as between two innocent parties, he who puts it in the power of the wrongdoer to injure the other, shall suffer the loss. (Buffington v. Gerrish, 15 Mass. 156. Root v. French, 13 Wend. 570. Lupin v. Marie, 2 Paige, 172. Young v. Grote, 4 Bing. R. 253. Peabody v. Fenton, 3 Barb. Ch. R. 463.) (2.) The plaintiffs, by sending the goods to the Fidelia without intimating, in any way, to the master or owners, that Lovett was not the true owner, led them to believe that the transaction was according to the usual course of business, and that Lovett was the owner, and to treat him accordingly. This prepared the way for Lovett’s subsequent success in obtaining the bill of lading, which was given to him as the person who had engaged the freight, and who was also the holder of the ship’s receipts. (3.) The plaintiffs had ample time, after discovering the theft committed by Lovett, to give notice thereof to the defendant or to the ship’s owners, and thereby to prevent the delivery to Lovett of the bill of lading; and having neglected to give such notice, until after the bill of lading had been in good faith given by the defendant and assigned to Hasluck, the plaintiffs must themselves suffer the loss. The omission to give notice was gross negligence on the part of the plaintiffs, while on the part of the defendant there was no want of caution or prudence in his giving the bill of lading to Lovett. The delivery of the goods on the ship by the plaintiffs, in pursuance of their contract with Lovett, was a delivery to a common carrier, in the ordinary course of business. The ship’s receipts given by the mate created no other obligation on the part of Peabody than to deal with these goods as with all other goods, similarly received and receipted for. The receipts had no legal effect beyond an acknowledgment that the goods specified in them had been delivered on the ship, and that the holder of the receipts would be entitled to a bill of lading on the surrender to the master. (Beawes' Lex Merc. 144. Abbott on Ship. 321. Craven v. Ryder, 6 Taunt. 433. Ruck v. Hatfield, 5 Barn. & Ald. 632. People v. Haynes, 14 Wend. 562. Van Santvoord v. St. John, 6 Hill, 158. Jones v. Bradner, 10 Barb. 193.) The evidence as to the usage and custom in the city of New-York, in regard to ship’s receipts, was competent and relevant to show the nature of such receipts. The finding of the referee as to the fact is conclusive, and Brower must be presumed to have had a knowledge of the usage and custom, and to have acted in reference to it. (Sewall v. Gibbs, 1 Hall, 605.) See also Janes v. Bradner, (10 Barb. 201,) where the usage and custom are recognized as establishing the nature of a ship’s receipts to be nothing more than the evidence of the holder’s right to a bill of lading. The engagement of the freight for the goods by Lovett, after their sale to him by the plaintiffs, the delivery of the goods by the plaintiffs on the ship engaged by Lovett in pursuance of such sale, and the subsequent possession of the ship’s receipts by Lovett, were all circumstances in the ordinary course of business, and in the absence of any notice of fraud, excluded any suspicion on the part of Peabody, that there was fraud. He is therefore not liable. (Mowrey v. Walsh, 8 Cowen, 238. Saltus v. Everett, 20 Wend. 275. Rowley v. Bigelow, 12 Pick. 307. Johnson v. Peck, 1 Wood. & M. 334. Pringle v. Phillips, 5 Sand. S. C. R. 157, and cases cited in the opinion of Duer J. Smith v. Lynes, 1 Seld. 41. Peabody v. Fenton, 3 Barb. Ch. R. 464.) . The bill of lading having been assigned to Hasluck in good faith and without notice, Peabody was bound to carry the goods, and to deliver' them to Hasluck. Being under this responsibility, he cannot be made liable in the present action. (Abbott on Shipping, 33, 65, and cases. The Mary Ann Guest, 1 Blatchf. 358.)
    II. The cases, in which the original owner of goods feloniously taken, has recovered them from an innocent purchaser, do not apply. (1.) The liability of Peabody to the plaintiffs, does-not turn on the question of title as between the plaintiffs and Lovett & Co. (2.) The contest here is not between the original Owner and a purchaser deriving possession from, and claiming' title under, the thief, and where the owner is himself without fault, but between such owner and an innocent third party, to whom the original owner himself first delivered the goods, and in such delivery, and afterwards, so conducted as to induce such third party to believe that the- thief was the true owner. (3.) The plaintiffs having neglected, after discovering the theft, to give notice to Peabody, and having treated with Lovett for payment of the goods, affirmed the sale, and are not entitled to claim the goods in this action. ( White v. Garden, 5 Eng. Law and Eq. Rep. 379. Rowley v. Bigelow, 12 Pick. 307, 312.)
    . III. There' was no offer on the part of Brower to procure or return the bills of lading, or to pay the freight, or to indemnify the ship owners against the delay and expense of unloading. (Keyser v. Harbeck, decided in N. Y. Supreme Court, General Term, May, 1854.)
   Clerke, J.

The' plaintiffs made ah' agreement in the regular course of business with Lovett,- one of the defendants, to sell to his firm, Thos. E. LoVet't & Co., fifty casks of potashes for $1657.08. The terms were cash on delivery. After the agreement, Lovett engaged freight for the potashes, in the ship Fidelia, then advertised for a voyage'to Liverpool, and the plaintiffs, pursuant to their agreement, sent the potashes on board the vessel by their carman, who took receipts in the usual form, from the mate ; thirty-eight of the receipts stating the casks to have been received from Brower, one of the plaintiffs, the remaining twelve not stating from whom they were received. The delivery of the casks of potashes being completed, Lovett went to the office of the plaintiffs, and seeing the receipts on the desk, on which Brower was writing, stole and carried them away. In the course of the same day, he presented them to the owners of the ship, and procured a bill of lading in his own name. Drawing a bill of exchange against the shipment, he assigned the bill of lading to Richard Hasluck, who, in good faith advanced to him, upon this security, the sum of fourteen hundred and fifty-three dollars and thirty-three cents. Peabody, the master of the ship, refused to deliver the potashes to the plaintiffs, but delivered them to the holders of the bills of lading in Liverpool.

It is maintained by the plaintiffs, that the receipts having been stolen, their right to the possession of the goods cannot be affected by the felony.

A thief cannot make a title to stolen property; and the owner can reclaim it from any one, however innocently he might have obtained possession of it, and whatever may be the amount which he paid for it. If, for instance, the casks of potashes in question remained in the store of the plaintiffs, and the defendant Lovett stole them while in the store, and then deposited them on board the Fidelia, the master of the vessel would be undoubtedly under an obligation to restore them, at once, to the plaintiffs. By this rule the law secures the right of the proprietor in personal chattels from being divested, in cases where he has done nothing to induce an innocent party to suppose the property to be in any other. But, it would not be consistent with the policy of a commercial community to extend the rule beyond such cases ; and in England this rule is in many circumstances practically nullified; for, it is an old and familiar principle there that all sales and contracts of any thing vendible, in fairs or markets overt (open) shall not only be good between the parties, but also binding on all those that have any right or property therein; and, in London, every day except Sunday is a market day, and every shop, in which goods are exposed publicly for sale, is market overt, for such things only as the owner professes to trade in. Here we have no market overt; although the nature and extent of our commercial necessities render it equally desirable that innocent purchasers or bailees in a fair, open and regular manner, should not be afterwards subjected to difficulty in consequence of the knavery of the party who has transferred the goods,to them. If we are therefore to modify the rule at all, instead of being extended, it should be restricted. In the present case, it is conceded that the receipts were stolen; but it does not follow that this can be said of the property to which they relate ; and, I think the fallacy, so ingeniously presented on behalf of the plaintiffs, consists in not recognizing this distinction. The property, let it be remembered, was placed on board the Fidelia by the plaintiffs without any communication with the owners ; but, on the contrary, Lovett alone communicated with them, treating with them as the owner of it, and agreeing with them for the freight and transportation of it to Liverpool. The plaintiffs, pursuant to their agreement with Lovett, and pursuant to Lovett’s agreement with the ship-owners, sent it to the place designated by Lovett; and although they did not intend that the absolute property in the potashes should pass from them, until the latter paid for them, yet, is it consistent with the policy required by the usages and interests of trade, to consider the appropriation of it, under such circumstances, actual larceny 1 It can scarcely be affirmed that the plaintiffs had done nothing, previous to the abstraction of the receipts, to beget a belief that Lovett had become the lawful owner of the shipment; so that Peabody, the master, knowing that his owners contracted to transport the goods, without any reference to the plaintiffs, or any interposition on their part, supposed himself from the beginning to be the bailee of Lovett. Was there not at least some color of a delivery to him, not absolute of course, but sufficient to negative the idea that the method by which the shipment was transferred, was of the same felonious character, as that by which the receipts were taken 1 By this delivery on board the vessel designated by Lovett, without any communication with the owners of the Fidelia, leaving them under the probable impression that there was at least a qualified ownership in him, and that allowing him to assume some indicia of such a right, his whole conduct in obtaining possession of the property should be deemed fraudulent rather than felonious; and although where property has been actually stolen, the remissness of the owner in not taking immediate steps to notify others of the theft, cannot affect the character of the transaction itself, yet when considered in connection with the previous circumstances of the case, the omission of the plaintiffs to caution the owners, or the master of the Fidelia of the stealing of the receipts by Lovett, contributed to confer the apparent right of property on him ; and it was their duty, as it was entirely and effectually in their power, to set the plaintiff right on this point, without delay, as soon as they discovered that the receipts were stolen.

[New-York General Term,

November 6, 1854.

We arrive, therefore, at the same conclusions as the referee, although for reasons somewhat different. The judgment should be affirmed with costs.

Roosevelt, J., concurred.

Mitchell, P. J., (dissenting.)

The barrels of potashes belonged to the plaintiffs, and they never passed their title to Lovett, or any one else. If no receipt for them had been given by the captain of the vessel, that title would still have remained in the plaintiffs. Such a receipt was given, and was in the possession of the plaintiffs, and was stolen from them by Lovett. Then as no title can be acquired, even in favor of a subsequent bona fide purchaser, by theft from the true owner, the stealing of the receipt and its possession by a bona fide holder, gave no title against the true owner. Nor did the omission of the true owner to take the most judicious means to give notice of the theft, to the captain of the vessel, defeat the true owner’s title. There should be a new trial; costs to abide the event.

Judgment affirmed.

Mitchell, Roosevelt and Clerke, Justices.]  