
    Walter B. Manny, Respondent, v. Daniel T. Wilson, Appellant.
    First Department,
    March 11, 1910.
    Conversion — delivery of pledged; article to debtor for special purpose — when third person returning article to debtor not liable for conversion — demand after delivery — negotiable instruments — receipt — Penal Code, section 633, construed — manufacturer not warehouseman.
    The plaintiff having a lien upon an automobile chassis for money loaned allowed his debtor tp deliver it to the defendant for the purpose of having a body placed on the machine on the condition that the debtor should obtain a receipt from the defendant and deliver it to the plaintiff. The defendant gave the debtor the receipt stating that the chassis was to be delivered only on return of the receipt properly indorsed, and the debtor in his turn indorsed the receipt “ Deliver to the order of ” the plaintiff. Subsequently the defendant returned the machine to the debtor equipped with a body without requiring a surrender of the receipt. The plaintiff having failed to collect his claim-from .the debtor sued the defendant for converting the machine, but it was not shown that the defendant had knowledge or.notice of the transactions between the plaintiff and his debtor or knowledge that the former had any claim upon the chassis.
    
      Held, that an action for conversion did not lie, as under- the circumstances the defendant had a right tp return the machine to the persons from whom he . received it.
    A demand upon the defendant by the plaintiff made long after the delivery of the machine was no foundation for .an action for conversion. .
    The receipt given by the defendant was not equivalent to a warehouse receipt so as to become endowed with the qualities of a negotiable instrument.
    Section 633 of the former Penal Code, providing that a person mentioned in section 629 who delivers merchandise to another for which a bill of lading, receipt or voucher has been issued unless such receipt or voucher bears upon its face the words “ not negotiable” or unless the receipt is surrendered at the time of delivery, is punishable, etc., applies only to warehousemen, wharfingers or other depositaries. It has no application to a manufacturer who receives the chassis of an automobile for the purpose of equipping it with a body, and this is true although he stored other automobiles for- hire.
    Clarke, J., dissented, with opinion.
    Appeal by the defendant, Daniel T. Wilson, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Mew .York on the 27th day of November, 1909, upon the verdict of a jury rendered by direction of the court.
    
      John IT. Corwin, for the appellant.
    
      Frederic Ii. Kellogg, for the respondent.
   Miller, J.:

The facts in this case are undisputed. The plaintiff loaned to Archer & Co. $5,500, taking the latter’s promissory note therefor, dated May 9, 1907, and as security therefor a bill of sale of an automobile chassis, and giving back an agreement to resell it to the borrower for the amount of the loan at the maturity of the note. The defendant is engaged in the business of manufacturing bodies for automobiles and of storing automobiles and carriages for hire. With the consent of the plaintiff, Archer & Co. delivered the chassis to the defendant to have a body put on it. Such consent, however, was conditioned upon Archer & Co. obtaining from the defendant and delivering to the plaintiff a receipt. The defendant received the chassis on May 15, 1907, and gave the following receipt therefor :l

May 15, 1907;
“ Received from Archer &■ Company Hotchkiss Chassis Ho. 1011, to be delivered only on return of this receipt properly endorsed.
“ (Signed)
“ FLAHDRAU & COMPANY,
“ KEYES & WILSON.”
Archer & Co. indorsed said receipt as follows:
Deliver to the order of Walter .B. Manny
“ (Signed) ARCHER & CO.”

and delivered it to the plaintiff. Two days after the receipt of the chassis the defendant returned it to Archer & Co. with the body thereon, but without requiring the surrender of the receipt. On December 27, 1907, relying upon the receipt, the plaintiff extended the time of payment of his loan to Archer & Co: On February 10, 1908, the plaintiff presented the receipt to the defendant and demanded delivery of the chassis. Having exhausted his remedies against Archer & Co. the plaintiff seeks in this action to compel the defendant to make good his loss. The' complaint alleged substantially all the facts above recited, except the return of the chassis to Archer & Co. by the defendant, and that the defendant refused and failed to deliver said automobile chassis to the plaintiff, and still fails and neglects to deliver, but has wrongfully and negligently converted the same to his own use. * * * That the failure of the defendant to deliver said chassis to the plaintiff on demand, and according to the terms of the receipt set forth in paragraph Fifth hereof, and his continued failure to deliver said automobile chassis to plaintiff, and his wrongful conversion thereof, has deprived the' plaintiff of his security for the said loan, and has damaged the plaintiff in the sum of Five Thousand ($5,000) dollars.” The trial court held that the defendant was not guilty of conversion; that the receipt delivered by the defendant. to Archer & Co. was non-negotiable, but directed a verdict in favor of the plaintiff on the authority of Mairs v. Baltimore & Ohio R. R. Co. (175 N. Y. 409), on the ground that the defendant had delivered the chassis to Archer & Co. without requiring the surrender of the receipt, although it did not have the words “ not negotiable ” plainly written or stamped thereon, in violation of section 633 of the Penal Code, in force at the time. The defendant had no knowledge or notice of the transactions between the plaintiff and Archer & Co., or that the plaintiff had .any claim on the chassis.-

Unless the receipt was negotiable there can be no doubt that the defendant was not guilty of conversion. The defendant never asserted any claim or right of possession in hostility to the plaintiff. He merely received an article from the person in possession thereof for the purpose of doing work upon it, and when that was done returned it to the one from whom he received it. The demand by the plaintiff was made long after, and it seems unnecessary to cite authority upon the proposition that conversion cannot be based upon inability to comply with a demand under those circumstances. The learned trial court correctly held that the receipt was non-negotiable. Negotiable instruments are written promises or requests for the. payment of money to order, or bearer. Bills of' lading bid warehouse receipts have come to possess attributes of negotiability from the custom to transfer them in place of actually delivering the property. For convenience a symbolical delivery is made. But it has not become customary thus to deal with receipts like that involved in this suit. The respondent cites many cases dealing with negotiable instruments, bills of lading and warehouse receipts to show that the words “ to be delivered only on return of this receipt . properly endorsed ” made the receipt in this case negotiable; but obviously such cases have no application. This receipt does not purport to be a warehouse receipt. For what purpose the defendant received the chassis, or to whom he was to return it, is not stated. Presumptively, he was to return it to the one from whom he had received it; but, according to the terms of the receipt, he was only to do that upon the return of the receipt properly indorsed. The delivery of the indorsed' receipt was to constitute the defendant’s proof of delivery of the chassis. The word “endorsed” as thus used cannot be construed as it would be if used with reference to commercial paper. If the receipt be treated as an executory contract, then it was competent for the parties to the contract to varyit or to dispense with the condition of delivery. I think that no one issuing such a receipt under the circumstances disclosed in this case, would ever imagine that he had put a negotiable instrument in circulation. The usual words of negotiability “ to order or bearer ” are not found in this receijit. To be sure, in the case of negotiable or so-called quasi-negotiable instruments, any words importing an intention that the instrument shall be negotiable, suffice. But in the casé of a mere receipt, given by one who receives an article to do work upon it, there should be at least plain words of negotiability to makefile receipt negotiable, even assuming that such words would have that effect, which we by no means decide.

I think that no one, reading this complaint, would suppose that the defendant was sued for delivering merchandise, for which a receipt had been issued, without the words not negotiable ” plainly written or stamped thereon. To be sure the facts are pleaded, but there is no averment of the delivery of the chassis by the defendant. The defendant is sued for refusing to deliver on demand, not for delivering to the wrong person. The pleader characterized the action in unmistakable terms as one for conversion. In such an action the plaintiff is entitled to certain provisional remedies. After judgment he may have an execution against the person. If the rule that the judgment must be secundum allegata et probata still has any vitality, the plaintiff should not be permitted to recover upon such a complaint without proving a conversion.

Moreover, the case is not within section 633 of the Penal Code in force at the time of the transaction' in suit. That section provides : “ A person mentioned in section 629, who delivers to another any merchandise for which a bill of lading, receipt or vouchor has been issued, unless such receipt or voucher bears upon its face, the words not negotiable,’ plainly written or stamped, or unless such receipt is surrendered to be canceled at the time of such delivery, * * * is punishable by imprisonment not exceeding one yeai‘, or by a line not exceeding one thousand dollars,' or by both.” The person mentioned in said section 629, so far as applicable to this case, is one “ carrying on the business of a warehouseman, wharfinger or other depository (sic) of property, who issues any receipt, bill of Jading or other voucher,” etc. (See Laws of 1892, chap. 692.) .The trial court ruled, and the respondent contends, that the defendant was á depositary within the meaning of the statute. The fact that thé defendant engaged in the business of storing automobiles for hire is immaterial. The plaintiff knew that the chassis was not deposited witlr the defendant for storage, and there was nothing in the receipt indicating that it was. He received it for the sole purpose of putting a body upon it. He did not become a warehouseman with respect to it, and the fact that in addition to his business as a manufacturer of automobile bodies, he was also in the business of storing automobiles for hire, is immaterial. The rights and obligations of the parties with respect to' this particular transaction must be decided according to what the transaction actually "was, not what it might have been. The defendant was not the depositary of the chassis within the meaning of the statute. In the first place the statute shows upon its face that it was intended to reach a particular evil, to wit, frauds perpetrated by the holders of bills of lading, warehouse receipts, and the like. Under the 1st subdivision of section 629 particular agents or officers of specified transportation companies'are enumerated. The 2d subdivision specifies warehousemen and wharfingers, followed by the general term “other depository.” All the internal evidence tends to show that the words “ other depository ” were intended to mean “ other like depositary,” there is nothing to show'the contrary and of course the general rule of construction should be followed. The one who receives an article of merchandise for the sole purpose of doing work upon it is not a depositary like unto a warehouseman or wharfinger.

Eesearch of counsel, supplemented by our own, has failed to disclose an authority decisive of- this case. Bucher v. Commonwealth (103 Penn. St. 528), cited by the appellant, supports the conclusion we have reached. The defendant is liable, if at all, in this case for committing a crime which has resulted in injury to the plaintiff. The case cited is direct authority, for the proposition that no crime was committed; and if, instead of the judgment for damages, we had before us for review a judgment, convicting the defendant of the crime, we should have no hesitation in declaring that the penal statute alleged to have been violated could not be so construed as to embrace the defendant within its terms. In relying upon the receipt the plaintiff made a mistake of law, but he cannot hold the defendant responsible for that.

The judgment should be reversed and a new trial granted, with costs to appellant to abide the event.

Ingraham, P. J., Lattghlin and Scott, JJ., concurred; Clarke, J., dissented.

Clarke, J. (dissenting):

The plaintiff- loaned Archer & Co. $5,500 May 9, 1907. He received a note and also a paper, which is apparently a bill of sale: “ Walter B. Manny, Esq., * * * 1 Hotchkiss Chassis, Ho. 1011, Type O, six-cylinders, $5,500, Archer & Co. Paid May 9, 1907. Per Chas. Tntschulte, Cash’r. Present location, Custom House. Selling price, U. S. A. $9,000, for Morgan B. Kent, Boston, body by Flandrau.” Accompanying this was this paper: “ Agreement — Archer & Company & Walter B. Manny.— Walter B. Manny hereby agrees to sell the Hotchkiss 1 Chassis ’ Ho. 1011, Type O, with all equipments complete,, which said W. B. Manny bought from Archer & Co. on May 9,-, at $5,500.00, it being understood and agreed that said W. B. Manny will sell to Archer & Co., and that Archer & Co. agree to repurchase from said W. B. Manny the above-named car at the same price named and at and upon a date not later than three months from this date. It is further agreed by said Manny that the time of this repurchase which Archer & Co. agree to make shall not extend beyond ten days after completion of the car with its body and all equipments, and in case of undue and unavoidable delay, this repurchase shall be made as per attached note within three months.”

He received also from. Archer & Co. a- paper dated May tenth inclosing certificates covering insurance to the amount of '$13,500 on three specified Hotchkiss chassis, “ with reference to body builders’ receipts,' as soon as cars are delivered we will mail same to you.”

He also received this paper: .

May 15, 1907.
Eeceived from Archer & Company Hotchkiss chassis Ho. 1011, to be delivered only on return of this receipt properly endorsed.
“FLAHDEAU & GO.
. “KEYES & WILSOH.”'
Indorsed, “Deliver to tlie order of Walter B. Manny.
“ AKCHEB & CO.”

The plaintiff testified: “After I received this receipt I did not put. my agreement with Archer & Company on the records of the County Clerk of this county. Q. In omitting to do so did you rely upon this receipt ? * * * A. Absolutely. I did not, after receiving that receipt, make any effort before February 10th, 1908, to get physical possession of this chassis in my own hands. Q. In omitting to make any such effort did you rely ■ upon this receipt ? * * * A.-I did.” He further testified that he thereafter received a request from Archer & Co. to extend the tinie on the original note and took a new note, dated December 27, 1907, for $5,000, having received $500 on the original note with interest to that date. “Q. In taking this note and receiving part payment of the original note, did you rely upon the receipt which is in evidence in this case? * * * A. Absolutely.”. Thereafter he called at the office of Keyes & Wilson and called for this chassis and showed this receipt. “Mr. Wilson * * * had some one. look up the matter, and when he got the report on it he turned white and said, My God, Mr. Manny, I delivered that chassis last summer.’ ” Under cross-examination he said that he never saw Mr. Wilson or had any communication with him until February tenth, and that he never notified him of his relations with Archer & Co. prior to the time he demanded the chassis, which was about nine months from the time he originally got the receipt. “ It was represented to me that this chassis had been contracted to be sold to Mr. Kent of Boston, at the time I loaned money on it, and when I made my demand I was informed by Mr. Wilson that he had prior to the demand delivered the chassis.”

This judgment was based , upon section 629 of the Penal Code. “ A person who : * * * 2. Carrying on the business of a warehouseman, wharfinger or other depository of property, who issues .any receipt, bill of lading or other voucher for merchandise of any kind, which has not been actually received upon the premises of such person and is not under his actual control at the time of issuing such instrument, whether such instrument is issued to a person as being the owner of such merchandise or as security for any indebtedness, is guilty of a misdemeanor.” (See Laws of 1892, chap. 692.)

Section 632; 11A person mentioned in sections 628 and 629, who sells or pledges any merchandise for which a bill of lading, receipt or voucher has been issued by him, without the consent in writing thereto of the person holding such bill, receipt or voucher, is punishable by imprisonment, *. * Section 633. “A person mentioned in section 629, who delivers to another any merchandise for which a bill of lading, receipt or voucher has been issued, unless such receipt or voucher bears upon its face the words not negotiable,’ plainly written or stamped, or unless such receipt is surrendered to be canceled at the time of such delivery, * *. * is punishable by imprisonment, * *

The complaint alleges that the defendant is doing business under the name and style of Keyes & Wilson, and also under the name and style of Flandrau & Go., with his principal place of business at 406 Broome street in the city of Mew York, and is engaged in a general carriage business, making bodies for automobiles and storing automobiles and carriages for hire. And it is conceded that the defendant was engaged as alleged in the complaint.

It was proved that judgment was duly recovered by Manny against Archer & Co. and execution returned unsatisfied. In Burnham v. Cape Vincent Seed Co. (142 N. Y. 169) the court said: “ In the case at bar the plaintiff held the cargo of peas as security for the Ontario Bank, and if, before the bank’s debt was paid, he had wrongfully delivered it to the defendant, he would have been criminally liable under section 633 of the Penal Code, and the bank could have proceeded against him in ■ a. civil action for damages. (Colgate v. The Pennsylvania Co., 102 N. Y. 120 ; First National Bank of Cincinnati v. Kelly, 57 id. 34.) ”

In Mairs v. Baltimore & Ohio R. R. Co. (175 N. Y. 409) the court, alluding to sections 629 and 633 of the Penal Code, said: “ These provisions of the Code were taken from chapter 326 of the Laws of 1858, as amended by chapter 353- of the Laws of 1859, and chapter 440 of the Laws of 1866. ' Under the statute. all persons aggrieved by a violation of the act were given the right to maintain an action at law against .the violators thereof to recover the damages suffered; but when some of the provisions of the act were transferred to the Penal- Code, that pertaining to the civil remedy was omitted and disappeared from our statute law by a repeal of the statute. At common law the failure to take up a bill of lading, did not furnish cause for action, and it follows that the only civil liability remaining exists by reason of the provisions of the Penal Code, which makes the -omission unlawful .and criminal.” After citing the provisions of the statute, the court proceeds: “There, however, can be no recovery unless damages to the plaintiff resulted from the illegal act.- Where the Legislature prohibits or requires the doing of an act ■ and prescribes a punishment that shall be inflicted for a violation of its mandate, the punishment furnishes the exclusive remedy for the wrong, so far as the public is concerned, and the act cannot be- made the basis of a civil action by an individual for -the recovery óf damages, unless .he has been injured in'his person or property and the damages suffered are the direct and proximate result of the illegal act. In this case the defendants negligently omitted to take up the bill of lading when they delivered the goods upon the order of the consignee. The bill of lading did not have the words ‘not negotiable’ indorsed upon its face, and, therefore, the defendants may be technically guilty of a violation of the statute, but the bill of lading, in fact, was ‘ not negotiable,’ and under the law merchant the defendants would not have been required to take up the bill had it not - been for the provision of the statute. * •

I think this judgment ought to be sustained. I do not think that the fact that the defendant was to do some work on this machine avoids the liability. He issued a “ receipt ” or “ voucher for mer.chandisc.” He was a “ warehouseman * * * or other depository of property.” He gave a receipt for some purpose, and its peculiar wording, “ to be delivered only on return of this receipt properly endorsed,” must be construed to mean what is said.' Ordinarily,, as between dealer and manufacturer, no such instrument as this passes. It was to identify and secure this particular machine in specie, and this was so well understood that it was indorsed and delivered over to Manny as a muniment of title and as security for repayment of his loan. It seems to me that the transaction comes fairly within the general purport of the law to secure third persons advancing money or making payments upon the faith of warehouse receipts in their supposed collateral. The plaintiff advanced his money and upon the faith of this receipt extended time of payment, and it was by reason of the defendant’s, carelessness and disregard of the statute and of the obligations that he had himself taken when he gave the receipt that the damage has accrued. I am in favor of an affirmance.

Judgment reversed, new trial granted, costs to appellant to abide event.  