
    Henry Beken, Respondent, v. Sherman Kingsbury, Defendant, Impleaded with F. C. Linde Company, Appellant.
    Fourth Department,
    May 23, 1906.
    Bailments — evidence—burden on warehouseman making advances on goods stored to show amount thereof — owner may redeem before sale —when warehouseman liable for conversion for selling without notice.
    When-the owner of goods has been induced by the fraudulent representations of a commission merchant to ship the goods to him for sale, and the commission merchant stores them with a warehouseman who claims to have advanced moneys thereon, the burden is on the warehouseman when sued by'the owner to recover the value of the goods to show what advancements were in fact made. When a warehouseman has made advances on goods under section 3 of the Factors’ Act or has a lien thereon under section 73 of the Lien Law, the owner has a right to redeem at any time before sale, and when such warehouseman, having knowledge of facts sufficient to put him upon inquiry as to the true ownership of the goods, sells them at private sale without notice, instead of by public sale, as required by sections SO, 81 and §2 of the Lien Law, he is guilty of conversion and liable to the owner of the goods for their value, less advances actually shown to have been made.
    Appeal by the defendant, the F. O. Lindé Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the" county of Oneida on the 27th day of June, 1905, upon the report of a referee.
    
      Albert T. Wilkinson, for the appellant.
    
      M. B. Hall and J. T. Durham, for the respondent.
    Judgment affirmed, with costs, on opinion of Southworth, referee.
    All concurred.
   The following is the opinion of the referee:

Southworth, Referee:

The undisputed facts in this case are substantially as follows:

The plaintiff, Henry Belcen, was in August, 1899, a farmer living at or near Vernon, in Orieida county. For a great many years he had been a.hop grower. In August, 1899, he had two.or three crops of hops on hand. He had his 1896 and 1897 hops.

In August, 1899, the defendant, Sherman Kingsbury, was a com- ■ mission merchant, residing in the city of Hew York, and with his place 'of business at Ho. 284 Washington street, Hew York, and had been in that business for many yeárs¿.

About Hay,. 1899, Kingsbury, accompanied by one -Orville W. Knox, called upon Belcen and tried to induce him (Beken) to sliip his hops to Hew York, to Kingsbury, to sell on commission. At this interview Kingsbury made many statements and representations, to Beken, .which were unquestionably false and fraudulent and were unquestionably made to induce Beken to so ship his hops. This Beken did hot agree to do at that time. Between, that time and August, Kingsbury wrote several letters to- Belcen, which let-” térs contained statements of the samp general nature as the statements in the conversation. . '

Hr.'Belcen was induced by. this conversation and- these letters to-ship to Kingsbury eighty-seven bales of hops as sollo ws: August 8, 1899,. thirty-four bales of 1896 hops; 'August 12,. 1899, fifty-three bales of 1897 hops. ,

At tills time the defendant Linde Company were in the warehouse business in Hew Yoflc, and also made loans upon'goods stored . in its warehouse.

About the 1st .of March, 1898, defendant Kingsbury called upon the Linde Company with the view of 'storing-hops in its warehouse, and of getting advances made on hops so stored. What occurred between Kingsbury and the officers of. the Linde Company on this and subsequent interviews is sharply contradicted, but it respited in an arrangement whereby Kingsbury was to store-hops there and the Linde Company was to make some advances oil them: ■

Under this arrangement, about Hatch 10, 1898, Kingsbury delivered to the Linde Company-thirty-six bales of hops, and took from the Linde Company a negotiable warehouse receipt, Ho. 16,128. What advance by way of money was made to Kingsbury at that time does not appear. It does appear, however, that Kingsbury then and there indorsed the warehouse receipt and returned it to the Linde Company, and at the same time gave them a promissory note for $126. This note recites among other conditions as follows: “ Having deposited as collateral security for the payment of this note, and also as collateral security for all other present or future -demands of any and all kinds of the holder hereof against the undersigned,' due or not due, the following property, viz.: Thirty-six bales of hops, described in storage receipt Ho. 16128.”

At various times thereafter and prior to August, 1899, Kingsbury received several other shipments of hops, which were received by^ the defendant Linde Company, and in every case substantially the same transaction occurred as to the warehouse receipts and notes as in the first case.

When the Bélcen hops arrived in Hew York, Kingsbury notified the Linde Company, and it sent its trucks to the railroad and moved the hops to its storehouse and paid the freight, to wit, twenty dollars and forty-seven cents, on the thirty-four bales, and thirty-three dollars and thirty-three cents on the fifty-three bales, the thirty-four bales being received by the Linde Company August eleventh, and"the fifty-three bales August seventeenth.

On the eighteenth day of September the Linde Company gave Kingsbury a warehouse receipt for 100 bales of hops. On the margin of this receipt was the following indorsement: “ Store B. Dec. 23, ’98,"13 bales. Store 3, Aug. 11, ’99, 34 bales. Store 3, Aug. 17, ’99, 5^ bales.”

There was no direct evidence that the thirty-four bales and fifty-three bales mentioned in this receipt were the Beken hops, but I think it a reasonable inference that they were. This warehouse receipt, Ho. 16,843, was indorsed by Kingsbury and left with the Linde Company. At the same time Kingsbury gave the Linde ' Company a note for $213.76. This note contained the same pro- - visions above set out in the first note, but referred to one hundred bales of hops and warehouse receipt Ho. 16,843. Kingsbury had nothing to do with the hops in Hew York except to notify the Linde Company of their arrival. It does not. appear that Kingsbury had any bill of lading of these hops..

Defendant, Linde Company, kept the Beken hops and all of the bther hops until August 30, 1900, when they were all sold at private sale to one person. There was no notice of any kind given the plaintiff of the sale, or that the Linde Company intended to sell them. There was no notice given Kingsbury of the time of the sale until after-wards, nor were there any of the' notices, required by sections 81 and 82 of-the Lien Law, given by the Linde Company.

, Plaintiff having been induced by the false and fraudulent representation of Kingsbury to ship these hops, it is a question whether Kingsbury ever had such possession of the -hops as is contemplated by section 3 of the Factors Act. (Soltau v. Gerdau, 119 N. Y. 380 ; Howland v. Woodruff, 60 id. 73 ; Hentz v. Miller, 94 id. 64.)

' This, hojvever, I shall not attempt to decide., I shall assume that Kirigsbury was actually in the possession of the hops for-the purpose of sale. Assuming this, two questions arise :

First. Did the Linde Company at the time the note Was-given have any knowledge that Kingsbury was not the owner of these hops, or did they-have any knowledge or information sufficient to put them on inquiry as to that fact ?

Second. .What, if any, advances were made on the Beken hops ? As to the first • proposition, Kingsbury says that at his first conversation with the officers of the Linde Company t he told them the hops were “ commission hops.” This is denied by the ’ officers .of the Linde- Company, who say that on the' contrary he’ told them they were his hops. In each of the notes' which Kingsbury signpd are the words: “I.am.the sole and absolute owner (of the hops) and the same is now free and clear from all liens pr incumbrances whatsoever.” In view of this testimony I cannot find that the Linde'Company had knowledge that'Kingsbury was not the owner.

The only evidence in the case bearing upon the question that the defendant Linde Company had information sufficient to put them on inquiry as to who was the owner of -the hops -is the evidence ■ of Mr. Ross, corroborated by two or three other witnesses.,

. Peter Ross is a farmer living in the western part of the State:. I-U the spring of 1899 he had shipped hops to Kingsbury to be. sold upon commission.. These hops were stored with the Linde’ Company under the same conditions as the other hops. Sometime in the summer or fall of 1899 Mr. Boss went to Bew York and had an interview with the president of the Linde Company. He told him the conditions under which the hops were shipped to. Kings-bury. He also told him that his neighbors, Bor gate, Hamilton and Wilson, had hops stored there'that were shipped to Kingsbury under similar conditions. He "said that the president of the Linde Company agreed to let Ip in take his hops away; that in reliance upon that he arranged through a broker to sell his hops, but when the purchaser went to get them the Linde Company had refused .to let them go unless he paid something like $285. He went a second time to Bew York and again saw Mr. Gribson in compariy with Mr. Carr, an attorney, and Mr. Dillenbeck, a broker. At this conversation the subject of Mr. Boss’ ownership of the hops was talked over, but the Linde Company refused to release them unless the amount above stated was paid. These facts are not disputed by the officers of the Linde Company. The difficulty of this evidence, as far as the plaintiff is concerned, is that Mr. Boss did not definitely fix the . time at which he was in Bew York. He said he thought it was in August, 1899, .but was uncertain about it. - The lapse of time between the first and second visits does not appear. The other persons fixed the time of the second visit as being in September, October or Bovember. In view of the uncertainty ’of this testimony, I cannot say that, at the time the Beken hops were received by the Linde Company, or at the time the warehouse receipt and note were given, the Linde Company had received this information from Mr. Boss.

i What advancements, if any, were made upon the Beken hops ? The Linde Company undoubtedly paid the freight, which according to the freight bills amounted to fifty-three dollars and eighty cents. There is absolutely no evidence of any other- advancement being made on the' Beken hops. Kingsbury says, repeatedly, that no advancements were made on the Beken hops"; that he asked for advancements on them and the Linde Company refused to give any.

It seems to me that unquestionably the burden was on the Linde, .Company to show that advancements were made to Kingsbury on these hops after they were in Kingsbury’s possession, and the amounts of such advancements, if any.

• This feature was-brought sharply to the Linde'Company’s attention, by Kingsbury being asked the question several times, and by \ the.attorneys for the plaintiff examining George Secor, the treas-' urer of the .Linde Company,- who said he. would not swear that tire-last advancements were not made before the 1st of August, T899. If any advancements -were made the Linde Company could easily have proved the amounts and when made.

The only evidence that can-be construed as contradicting Kings-bury is that of Mr. Man Marne, secretary of the Linde Company. He says, in -speaking of the- note in question, it was given “for advances; made to (him), money advanced on his account.” He gives no information as to how much was advanced, or when advanced. His statement would be -absolutely true if not a dollar had been advanced since., the. first advancement in March, 1898', 'as the note states on the'face of it that the security given is “for all other present or-future demands of any and all kinds.”

• Can I say in face of these facts’ that because the note is given • for $213.70 th&t that amount was advanced to Kingsbury in money on that date, or at any time subsequent, to the time Kingsbury received, the hops % On the contrary, I think it -is clear -that there was included in-each of the notes something besides money advanced, certainly freight and cartage; possibly both storage and interest. • , ■

Kingsbury says that the note covering-the 100 hales of hops was a blanket note on account-of past due indebtedness.. This is not in terms disputed. The reading of the note indicates that this might be so; that is, the notes give .them the 'right to demand other - security at any time. If there had been any advancement made ■ on the Beken hops the ' Lindé- Company could have easily proven ■ what the advancement was. ■ This they did not do. Hpon the evidence I find, that the only advancement made- on- the Beken hops was the sum of fifty-three dollars paid for freight. ,

^ At- the time of the sale -of this, property, in addition to'the: amount paid for freight, the Linde Company probably had a lien upon the goods sold, under section 73 of the Lien Law, for the cartage -and , storage of these hops.

If advancements, had been made under section 3 of the Factors Act, or if the Linde Company had only, a lien under section 73 of the Lien Law, the plaintiff undoubtedly had a right to redeem this property at any time before the sale.

The plaintiff had no. knowledge or information that these hops were in the possession of the Linde Company, or that the Lindes Company had a lien upon them of any kind.

On the other hand, according to the evidence of Boss, Carr and Dillen-beck, the Linde Company had notice at least as early as November, 189.9, that Kingsbury was not the owner of all the hops stored with the Linde Company. The Linde Company had notice also by Kingsbury’s letter, dated May 23, 1900, that Kingsbury was a commission merchant, and by Kingsbury’s letter of June 12,1900, that the hops that the Linde Company held were Grower’s Hops.” It seems to me'that the facts beyond question were sufficient to put the Linde Company upon inquiry as to who were the true owners of the hops.

It also seems to me that it would not have been difficult for them to have ascertained who were the owners, but théy did absolutely nothing in this direction.

Under this condition of affairs, if the Linde Company had made advances as contemplated by section 3 of the Factors Act, whether or not the Linde Company could have sold this property without’ notice under the power given in the note I shall not attempt to decide.

Inasmuch as the only lien that the Linde Company had upon these hops is the lien contemplated by section 73 of the Lien Law, as against the plaintiff at least (with the notice that it had that Kingsbury was not the owner of the hops stored with it) it had no right to sell these hops except at public sale as provided by sections 80, 81 and 82 of the Lien Law. This it did not attempt to do; consequently the sale of the plaintiff’s hops on August 30,1900, was an illegal sale and a conversion of plaintiff’s hops.. (Robinson v. Wappams, 34 Misc. Rep. 199 ; 68 N. Y. Supp. 815 ; Sand v. Rosenagel, 40 Misc. Rep. 666 ; 83 N. Y. Supp. 255 ; Todd v. Haeger, 12 N. Y. St. Repr. 633 ; Smith v. Savin, 141 N. Y. 315.)

On the question of the market value of the hops there is quite a diversity of evidence. T think it is entirely fair to the defendants to say, from the testimony of Mr.- Lilienthal, one of the defendant’s witnesses, that the,hops were reasonably worth five cents per pound August 30, 1900.

According to the freight receipts produced by the Linde Company the total amount of plaintiff’s hops were 16,302 pounds. Thi.s was subject to tare of five pounds per bale,, or 435 pounds, leaving the net. weight of plaintiff’s hops 15,876 pounds. At five cents per pound this would amount to $793.35. The freight paid by the Linde Company was $53.80. According to the evidence of Kings-bury they were to receive eight cents per bale -for carting and eight cents per month per bale for storage. The cartage would amount to $6.96. The storage for thirteen months would be $90.48, making a total for freight, carting and storage of $151.24. This deducted from $793.35 leaves a balance of $642.11.

Plaintiff should have judgment against the defendant for $642.11, with interest on same from August 30, 1900, with costs of this action. 
      
       Laws -of 1897; chap. 418’ as amd. by Laws of 1899, chap. 369.— [Rep.
     
      
       Laws of 1830, chap. 179.— [Rep.
     
      
      
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