
    AMERICAN EXCHANGE IN EUROPE (Limited), Appellant, v. WILLIAM H. ROBERTSON, Respondent.
    
      Conversion.—Bill of lading attached to draft—property of discounter of draft in goods consigned, where consignee refuses to accept draft or goods. ■— Collector of port—duty as to freight lien of common carrier on such goods.
    
    Where a bill of lading is delivered as collateral security, by the consignor to the discounter of a draft on the consignee, and the consignee refuses to accept the draft or the goods, or to pay the duties or freight, the holder of the draft and of the bill of lading as collateral, has no absolute legal right to the possession of the goods.
    The collector of the port, the goods not being entered in the custom-liouso, but remaining in his custody subject to the duties, charges and carrier’s lien for freight, and he having no notice of any claim by the holder of the draft and bill of lading, is justified in regarding himself as bailee of the carriers, and as holding the goods as their agent and in their behalf and subject to their lien for unpaid freight.
    The collector’s permitting, upon the carriers filing bills of lading of the goods together with the other papers required by the custom-house regulations, the goods to be withdrawn from the custom-house and re-shipped to the place whence they came, without any notice of any claim on the part'of a holder of a draft with a bill of lading as collateral, will not render him liable to such a holder as for a conversion of the goods.
    The principle of Strickland ®. Barrett (20 Fide. 465), which is, that where the negligence or laches of the true owner causes or seems to justify one, whose possession was not tortious in the beginning but rightful, in dealing with the goods as his own, an action for conversion will not be sustained, might, with justice, be applied to the case at bar.
    Corson ®. Oliver (2 Abb. If. O. 852), and Pease ®. Smith (61 If. T. 477), are not applicable to the case at bar.
    Before O’Gorman and Ingraham, JJ.
    
      Decided April 6, 1885.
    Appeal from a judgment against the plaintiff, dismissing the complaint, entered on the decision of a judge, before whom the case was tried, without a jury.
    Action for conversion.
    The facts appear in the opinion.
    
      Sullivan & Cromwell, attorneys, and Alexander S. Bacon, of counsel for appellant, on the questions considered in the opinion, argued:
    I. In April, 1883, the title to, and right of possession of the goods, was in plaintiff, for it is undisputed that 0. & Co. owned the goods and transferred the bill of lading therefor to plaintiff as collateral security for a draft drawn against the goods and never accepted nor paid (City Bank v. R., W. & O. R. R. Co., 44 N. Y. 136 ; Indiana Nat. Bank v. Colgate, 4 Daly, 41; First Nat. Bank v. Kelly, 57 N. Y. 34 ; Mechanics & Tra. Bk. v. Farmers’ & M. Nat. Bank, 60 Ib. 40 ; Colgate v. The Penna. Co., 31 Hun, 297 ; Natl. Bank v. Dearborn, 115 Mass. 219; Ryberg v. Snell, 2 Wash. 294 : Merchants’ Bank v. U. R. R. & T. Co., 69 N. Y. 373 ; Conrad v. Atlantic Ins. Co., 1 Pet. 386). The principle in the case of Lee v. Bowlen, 5 Biss. 154; Cayuga Co. R. R. v. Daniels, 47 N. Y. 635 ; Bank of Rochester v. Iowa, 4 Ib. 497 ; Schimmelpennick v. Bayard, 1 Pet. 264, also applied.
    II. The act that defendant had parted with the possession of plaintiff’s goods before demand—innocently or otherwise—and with or without notice of plaintiff’s ownership—instead Of relieving him from liability, made the plaintiff’s cause of action complete at once, and relieved plaintiff of the necessity of demand. The moment v plaintiff delivered the goods to the White Star line, and thus parted with the possession, he became liable in conversion at once, and without demand, to the owner or whoever might become the owner thereafter (Pease v. Smith, 61 N. Y. 477; Ross v. Cassidy, 27 How. 416 ; Collins v. Rolli, 20 Hun, 246 ; Corson v. Oliver, 2 Abb. N. C. 352 ; Spence v. Blackman, 9 Wend. 167). If it should be found that plaintiff’s title was not complete until April, 1884 (when Thurber & Co. indorsed the bill of lading to plaintiff), defendant is still hable to this plaintiff ; for “ an action brought by an assignee of goods, for their conversion, is not defeated by the fact that defendant parted with possession before the plaintiff became assignee, and before he made demand on defendant ” (Corson v. Oliver, 2 Abb. N. C. 352 ; Ross v. Cassidy, 27 How. 420 ; Nichols v. Michael, 23 N. Y. 263; Latimer v. Wheeler, 3 Abb. Ct. App. Dec. 35).
    III. The White Star line had no lien upon the goods and claims no title thereto. They had surrendered possession of the goods six months before, and had lost any lien for freight by such surrender. At any rate the defendant had no right to deliver the goods to a common carrier for the freight. Section 2981, U. S. R. S., provides for the payment of unpaid freight by a sale of the goods, after one year (§ 2973). In short, there is not a scintilla of evidence that the collector delivered the champagne to any one who had—not claimed—title or right of possession to said goods. So far as this plaintiff is concerned, the collector might just as well have given the champagne to some friend as a Christmas gift, or have consumed it in his own family. The fact remains that this plaintiff is the owner, and the defendant, having had the possession of the goods, refused to deliver them on demand. This is conversion, and the plaintiff is entitled to the full value of the goods (Commercial Bank v. Pfeiffer, 22 Hun, 327).
    
      Nash & Kingsford, attorneys, and of counsel for respondent, argued:
    I. The consignees named in the bill of lading were presumptively the owners (Sweet v. Barney, 23 N. Y. 335 ; Angell on Carriers, § 497 ; Everett v. Saltus, 15 Wend. 474; Fitzhugh v. Wyman, 9 N. Y. 562 ; Thompson v. Fargo, 49 Ib. 188). And the rules of the custom house require a bill of lading indorsed by the consignees to enter goods (as plaintiff conceded) and pay the duties. The consignees having refused to enter the goods, the collector, after waiting six months, allowed the carrier, the only other person he knew in the transaction, and from whom he had received them, to withdraw them for re-shipment in bond. The defendant and the carriers both had the right, at this time, to consider the shippers the owners.
    II. Defendant cannot be held responsible as for a conversion, because he did not deliver the goods on demand, he having no notice of plaintiff’s claim of title until long after the goods had left his control, and he was entitled to show that compliance with the demand was impossible (Hill v. Covell, 1 Comst. 522, Whitney v. Slauson, 30 Barb. 276 ; Gillett v. Roberts, 57 N. Y. 28 ; Carroll v. Mix, 61 Barb. 212 ; Hoyt v. Baker, 15 Abb. N. S. 495 ; Hazard v. Abel, Ib. 413). When the rule is stated the other way the obtaining possession must have been tortious (Nichols v. Michael, 23 N. Y. 269).
    III. Plaintiffs must also establish title in themselves and a tortious conversion by defendant (Hill v. Covell, 1 Comst. 522 ; Gillett v. Roberts, 57 N. Y. 33 ; Schroeppel v. Corning, 5 Den. 240).
    IY. Thurber, the consignee, really acquired no title to the goods until he accepted the drafts (Bank of Rochester v. Jones, 4 N. Y. 497 ; Cayuga Bank v. Daniels, 47 Ib. 632). Amd his indorsement of the bill of lading to the plaintiff, five months after the goods had left defendant’s possession, on receiving an indemnity from the plaintiff, • in no way improved plaintiff’s position.
    V. The carriers, the White Star line, having a lien on the goods for unpaid freight, were entitled to resume possession of them, and never parted with them so as to lose their lien. They were obliged, by law, to put the goods in care of the collector on their arrival here, and no owner claiming them for six months, to withdraw them again. Whatever may be the position as between the White Star line and the real owners, the collector could know no one but them, when no consignee appeared, and he allowed them to withdraw the goods. The defendant is entitled to show title in a third party (Davis v. Hoppock, 6 Duer, 254).
   By the Court.—O’Gorman, J.

This action was brought for the alleged conversion, by the defendant, of 55 cases of wine, valued at $lj350, which were placed in his custody in May, 1883, as appears by manifest of cargo of steamship “Republic,” one of the steamships of the “White Star” line, filed on May 5, 1883.

Defendant was then collector of the port of New York. This wine was shipped in Liverpool, by a firm, named Campbell & Co., and by them consigned to Thurber & Co., of New York. Campbell & Co. drew a draft for £150 on Thurber & Co., the consignees, and the plaintiffs advanced that sum to Campbell & Co., on the draft, receiving two of the bills of lading attached to the draft, as collateral. When the goods arrived in New York, Thurber & Co., the consignees, refused to take them, or to accept the draft, or to pay the duties or freight. The goods were not entered in the custom-house, but remained there in the custody of the defendant, subject to duties, charges, and the carrier’s lien for freight. In November, 1883, the agents of the “ White Star ” line of steamships, the carriers of the goods, acting under instructions from the managers of the line in Liverpool, caused to be filed, bills of lading of the goods, together with such other papers as were required by custom-house regulations, and withdrew the goods from the custom-house, and they were re-shipped to Liverpool, the shippers being indemnified by parties in Liverpool, supposed to have been the owners. In March, 1884, about five months after the goods had been thus withdrawn from the custody of the defendant, the plaintiffs caused Thurber & Co. to indorse the third part of the bill of lading to “A. T. Downey & Co.,” the firm of Thurber & Co. being indemnified therefor by the plaintiffs. Finding that the goods had been previously re-shipped to Liverpool, demand was made on defendant, and this action was begun.

From the time of the arrival of this wine in Hew York until March, 1884, no notice was given to the defendant, of any claim on the part of the plaintiffs of any lien upon, or any right or claim to the possession of this property, or of any connection whatever on their part with it.

The manifest of the steamship “Republic,” showing that the wine was consigned to Thurber & Co., did not convey any notice to defendant that the plaintiffs had or claimed any lien upon it, and the plaintiffs took no steps to make any lien which they claimed to have, effectual; nor had they, during all the time during which the wine remained in the custody of the defendant, any absolute legal right to the possession of it.

It is held that an action for conversion cannot be sustained, unless at the time of the alleged conversion, the plaintiff had the legal right to the property converted (Clement v. Yturria, 81 N. Y. 285). ,

Under these circumstances, the defendant was justified in regarding himself as bailee of the carriers, during all the time the wine was in his custody, and as holding possession of it as their agent, and on their behalf, and subject to their hen for unpaid freight (Western Transportation Co. v. Barber, 56 N. Y. 544; Rogers v. Weir, 34 Ib. 463).

It is, no doubt, held that an action in favor of the true owner will not be defeated, merely because the defendant has parted with the property before commencement of the action. This is on the theory, that the act of the defendant in .parting with the possession, without the consent of the true owner, is unlawful (Corsan v. Oliver, 2 Abb. N. C. 352). In cases, also, where the defendant never-acquired any legal title to the goods in his possession, as where goods were stolen from the true owner and came into the defendant’s possession innocently, as purchaser, and without knowledge or suspicion of the theft, there it is held that he is nevertheless liable for conversion (Pease v. Smith, 61 N. Y. 477). But these decisions do not apply to the case at bar.

The defendant here came into possession of this property lawfully, and plaintiffs had not, at the time of the withdrawal of the goods from the custody of the defendants, any absolute legal right to the possession thereof. It seems, also, that where the defendant’s possession of the property, as in the case at bar, is not tortious in its beginning, but rightful; and the negligence or laches of the true owner causes or seems to justify defendant in dealing with the goods as his own, an action for conversion will not be sustained (Strickland v. Barrett, 20 Pick. 465). This principle might, with justice, be applied to the case at bar, where the plaintiffs left the defendant in ignorance of any hen they claimed to have on the property, until long after he had parted with its possession.

But the defendant, during all the time in which he had custody of this property, was under no obligation to the plaintiffs and owed them no duty, and plaintiffs had no right to demand the possession of the property, nor had they, during all that time, any cause of action against him.

The findings of the learned trial judge are sustained by sufficient evidence, and the judgment below should be affirmed, with costs.

Ingraham, J., concurred in the result.  