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for alleged conversion of certain yarn, which resulted in a verdict for plaintiff. Sustained.

The facts are stated in the opinion of the court.

Messrs. Abbott, Nay, Dane, & Buffum and Telesphore Leboeuf, for defendant:

Under the common law a consignee, factor, or agent cannot pledge the owner's property for his own debt.

Michigan State Bank v. Gardner, 15 Gray, 362; Nowell v. Pratt, 5 Cush. 111; 25 C. J. 350.

In England and a few of the states, particularly in New York and Massachusetts, factors' acts have been passed under which a lender to such person, who acts in good faith and without notice, is protected.

25 C. J. 420; Freudenheim v. Selig Gütter, 201 N. Y. 94, 94 N. E. 640; Oppenheimer v. Attenborough [1907] 1 K. B. 510, affirmed in [1908] 1 K. B. 221-C. A.; H. A. Prentice Co. v. Page, 164 Mass. 276, 41 N. E. 279; Michigan State Bank v. Gardner, 15 Gray, 374.

The Webster National Bank was a consignee to whom Graves consigned merchandise for money advanced.

Ryttenberg v. Schefer (D. C.) 131 Fed. 313; F. F. Ide Mfg. Co. v. Sager Mfg. Co. 82 Ill. App. 685; Block v. Columbian Ins. Co. 42 N. Y. 393; 12 C. J. 525; Wright v. Dressel, 140 Mass. 147, 3 N. E. 6; Cairns v. Page, 165 Mass. 552, 43 N. E. 503.

In selling the merchandise under the trust receipt Graves was acting as agent for the plaintiff.

Thacher v. Moors, 134 Mass. 163. Graves had implied authority to make a pledge to the defendant, who was not a party to the instrument. The authority of Graves was not necessarily limited by the instrument itself. It is immaterial whether his right depended upon an actual authority to make the pledge, or upon facts which estopped the plaintiff from denying the validity of the pledge.

Spooner v. Cummings, 151 Mass. 313, 23 N. E. 839; Guaranty Secur. Corp. v. Eastern S. S. Co. 241 Mass., 120, 134 N. E. 364; Forgeron v. Corey Hill Garage, 249 Mass. 163, 144 N. E. 383; Danforth v. Chandler, 237 Mass. 518, 130 N. E. 105.

Plaintiff, having held the wool to secure its loan, released it to Graves for sale and for other purposes. The plaintiff never had actual possession, and thereafter never asserted its right to take possession. Considered as a

pledge, the plaintiff had lost its right as against the defendant.

People's Nat. Bank v. Mulholland, 224 Mass. 448, 113 N. E. 365; Moors v. Reading, 167 Mass. 322, 57 Am. St. Rep. 460, 45 N. E. 760; Copeland v. Barnes, 147 Mass. 388, 18 N. E. 65; Thompson v. Dolliver, 132 Mass. 103.

Plaintiff clothed Graves with the indicia of ownership so as to justify the defendant in regarding Graves as the rightful owner of the property. Therefore, it cannot recover in this suit.

Herman v. Connecticut Mut. L. Ins. Co. 218 Mass. 181, 105 N. E. 450, Ann. Cas. 1916A, 822; Baker v. Davie, 211 Mass. 429, 97 N. E. 1094; Marcotte v. Massachusetts Secur. Corp. 250 Mass. 246, 145 N. E. 464; Forgeron v. Corey Hill Garage, 249 Mass. 163, 144 N. E. 383; Commercial Nat. Bank v. CanalLouisiana Bank & T. Co. 239 U. S. 520, 60 L. ed. 417, 36 Sup. Ct. Rep. 194, Ann. Cas. 1917E, 25; Glass v. Continental Guaranty Corp. 81 Fla. 687, 25 A.L.R. 312, 88 So. 876; Lyon & Healy v. Walldren, 201 Ill. App. 609.

Messrs. Edgar S. Hill and Charles W. Lavers, for plaintiff:

Defendant had a much greater concern in the title to its collateral, the loan to Graves being a considerable one for defendant, and although it had gone into its overdue obligations from the time of its due date, and defendant knew, or is to be charged with the knowledge, that plaintiff claimed it to be held by the Webster Mills on plaintiff's account, and before the sale that plaintiff held title to it and it could not be pledged.

Cregg v. Merchants Trust Co. 248 Mass. 524, 143 N. E. 339; Loring v. Brodie, 134 Mass. 453; Putnam v. Handy, 247 Mass. 406, 142 N. E. 77; Thacher v. Moors, 134 Mass. 156.

The contractual relations of Graves with the plaintiff are governed substantially by the trust receipt executed in consideration of the plaintiff indorsing to Graves the bill of lading covering the wool described in it for the special purposes set forth.

Nowell v. Equitable Trust Co. 249 Mass. 585, 144 N. E. 749.

So thoroughly and finally have trust receipts been interpreted by the court that financial institutions have accepted them without question as protecting their ownership when parting

(Mass., 154 N. E. 330.)

with possession of the subject-matter Bank of Boston for a letter of credit

of the trust.

T. D. Downing Co. v. Shawmut Corp. 245 Mass. 107, 27 A.L.R. 1522, 139 N. E. 525; Brown v. Green & H. Leather Co. 244 Mass. 168, 138 N. E. 714; People's Nat. Bank v. Mulholland, 228 Mass. 152, 117 N. E. 46.

Allegations by Graves not within the scope of his contract authority were not binding upon the plaintiff and are not material to the issues.

Thacher v. Moors, 134 Mass. 156; Robinson v. Bird, 158 Mass. 357, 35 Am. St. Rep. 495, 33 N. E. 391; National Wholesale Grocery Co. v. Mann, 251 Mass. 238, 146 N. E. 791.

Authority to pledge securities cannot be inferred from authority to sell, even though the proceeds are used for benefit of trust.

Loring v. Brodie, 134 Mass. 453; Tuttle v. First Nat. Bank, 187 Mass. 533, 105 Am. St. Rep. 420, 73 N. E. 560.

Crosby, J., delivered the opinion of the court:

This is an action of tort brought to recover for the alleged conversion of twenty-five thousand pounds of woolen yarn. The plaintiff and the defendant are banking institutions doing business in this commonwealth. After the bringing of this action the plaintiff, a trust company organized under the laws of Massachusetts, was converted into a national bank under the name of the International National Bank of Boston, and conveyed to said bank all its assets; thereafter the International National Bank of Boston was consolidated with the First National Bank of Boston, a corporation organized under the National Bank Act and having its principal place of business in Boston in this commonwealth, and the assets of the plaintiff became vested in the First National Bank of Boston.

The material facts respecting which the controversy in the present

case arises are in substance as follows: On August 7, 1919, one F. N. Graves, who was engaged in the wool business in Boston under the name of F. N. Graves Company, through the plaintiff (with whom he had done business for many years) applied to the First National

in the sum of $83,000 for the purchase of 203 bales of unscoured wool, known as "greasy wool," to be shipped from Buenos Ayres, South America. The performance of the obligations of Graves to the First National Bank of Boston resulting from the issuance of the letter of credit was guaranteed in writing by the plaintiff as a part of the transaction. See Nowell v. Equitable Trust Co. 249 Mass. 585, 144 N. E. 749. The letter of credit was issued and an endorsed bill of lading covering the wool was delivered to the plaintiff.

On or about September 19, 1919, Graves signed and delivered to the plaintiff a trust receipt covering the wool from which the yarn was afterwards manufactured. The receipt recited that the wool was the property of the plaintiff; that Graves agreed to hold it in trust for the plaintiff “and as its property, with liberty to manufacture and remanufacture the same without cost or expense to it, and to sell the same for its account . to keep said goods, the manufactured product, and the proceeds thereof, whether in the form of moneys or accounts and bills receivable, separate and capable of identification as the property of International Trust Company, of Boston, and . . . in case of sale, to hand the proceeds to said International Trust Co., of Boston, to be applied by it against the acceptances of, on my (our) account, under the terms of letter of credit No. issued for our account, and to the payment of any other indebtedness of mine (ours) to International Trust Company, of Boston, whether then due or not." "The re

ceipt also recited that the plaintiff might cancel the trust at any time

and repossess itself of its said property in whatever condition it might then be, or of the proceeds thereof if sold, wherever the same might be found; that Graves should keep the goods fully insured against loss by fire while in his possession; that the insurance money recovered for any

loss should be subject to the trust in the same manner as the goods themselves; and it contained other provisions which need not be referred to.

When the trust receipt was delivered to the plaintiff, it endorsed and delivered the bill of lading to Graves, who in turn delivered it to Hartmann Brothers to enable them to obtain the wool for scouring. A draft for $78,200 was issued by the First National Bank of Boston under the letter of credit; when it became due on December 15, 1919, it was paid by the plaintiff, the latter receiving from Graves an acceptance for $78,800 endorsed by F. N. Graves Company. At no time did the plaintiff have actual physical possession of the wool or the yarn manufactured therefrom. The trust receipt was not recorded.

Graves entered into an agreement with the Webster Dye & Yarn Mills, Incorporated (hereinafter referred to as Webster Mills), to manufacture the wool into yarn, which would be of much greater value than wool, and to pay the Webster Mills for such conversion. This expense - was charged by the Webster Mills to Graves or to F. N. Graves Company.

When the acceptance for the $78,800 given by Graves to the plaintiff became due, it was canceled, Graves giving the plaintiff in lieu thereof a promissory note, unsecured in form, for the same amount payable on demand. The dealings between the plaintiff bank and Graves had extended over many years and covered many transactions.

On March 30, 1920, as Graves then owed a substantial amount to the Webster Mills for the manufacture of the yarn, he applied to the defendant bank for a loan of $12,500, and at the same time delivered to it the following writings:

"Mr. Prentis Howard, Pres. Webster Nat'l Bank, Webster, Mass. Dear Sir: We will give you delivery of 25,000 # yarn all spun at Clinton as collateral against $25,

000 loan in your Bank as a drawing account. F. N. Graves & Co."

"Webster Dye & Yarn Mill, Webster, Mass. Dear Sir: Deliver. to Webster Nat'l Bank 25,000 = Twenty-five thousand pounds yarn. F. N. Graves & Co."

At the time of the application for this loan Howard (now deceased) was also president of the Webster Mills, and its principal owner. On April 14, 1920, a loan for $12,500 was granted to Graves, who gave to the defendant his collateral promissory note for that amount, which stated that it was secured by 25,000 pounds of woolen yarn. This note was renewed from time to time, the last renewal bearing date of May 12, 1921, It also appeared that on May 26, 1920, Graves gave a mortgage for $10,864 on the 25,000 pounds of yarn to the Webster Mills.

On July 14, 1920, the plaintiff wrote to the Webster Mills as follows: "Gentlemen:-In order that we may make certain verifications of collateral held for account of F. N. Graves Company, will you kindly send us detailed statement of wool or yarn held by you, also kindly advise us of any storage or other charges that there may be against same. Thanking you very much for your prompt attention to this matter, we are Very truly yours, Howard Norton, Assistant Secretary."

By letter dated July 15, 1920, the Webster Mills replied in substance that the defendant bank had a $12,500 loan on 25,000 pounds of yarn made by the mills for F. N. Graves, and that the mills had a second. mortgage of $10,864 on the same collateral; the letter also stated, "Mr. Graves has in addition approximately 5,000 pounds of yarn here unencumbered." On July 20, 1920, Graves paid $30,000 on account of the plaintiff's note of $78,800; the balance of this note is still unpaid.

On November 8, 1921, the plaintiff wrote the Webster Mills as follows: "Dear Sirs:-A little over a year ago you advised us that you were holding certain wool and yarn

(Mass., 154 N. E. 330.)

which had been delivered to you by F. N. Graves Company and which had been held for our account. Will you kindly confirm your holdings for this account at the present time and if you have any charges against this wool, please advise. Yours very truly, Howard Norton, Asst. Sec." It does not appear what reply if any was made to this letter. After repeated demands by the defendant on Graves for payment of the $12,500 note, the defendant sold the yarn in different lots between April 1, 1922, and June 1, 1922, for about $12,500, which was its fair market value at the time it was sold.

On

March 9, 1923, the plaintiff made a written demand on the defendant for the yarn and afterwards brought this action.

The case was tried before a judge of the superior court, sitting without a jury, who made certain findings and rulings and found for the plaintiff in the sum of $18,750 as damages, with interest thereon from April 14, 1920, the date of the conversion. All the material evidence is reported.

The defendant contends that, under the trust receipt which authorized Graves to sell the goods for the plaintiff's account, the relation of principal and agent was established; that Graves was a "consignee" or "factor" within the meaning of those words in Gen. Laws, chap. 104, §§ 3 and 4, as he had possession of the merchandise with authority to sell it for the plaintiff and was therefore its agent for that purpose; and that the defendant had a prior lien on the goods as security for its loan to Graves.

At common law a consignee, factor, or agent could not pledge the owner's property for his own debt. Michigan State Bank v. Gardner, 15 Gray, 362. The consignee of goods for sale does not have authority

Factors-pledge by-validity against owner.

to pledge them for his own debt. The pledge is void as against the owner. Nowell v. Pratt,

to consider the rights of a holder of a trust receipt as against one who in good faith and without notice subsequently has loaned money to an importer or other person, yet the character of such a receipt and the rights of the holder thereof generally have been considered and defined.

Gen. Laws, chap. 104, is entitled "Agents, Consignees, and Factors." It was originally enacted in substantially its present form by Stat. 1849, chap. 216. A pertinent section is as follows: "Sec. 3. If a person intrusted with merchandise has authority to sell or consign the same, a consignee to whom he consigns it shall have a lien thereon for any money or merchandise advanced or for any negotiable security given by him on the faith of such consignment, to or for the use of the person in whose name the consignment or delivery was made, and for any money, negotiable security or merchandise received for the use of such consignee by the person in whose. name the consignment or delivery was made, if such consignee had, at the time of such advance or receipt, probable cause to believe that the person in whose name the merchandise was shipped, transmitted or delivered was the actual owner thereof or had a legal interest therein to the amount of said lien."

The purpose of the act as stated in H. A. Prentice Co. v. Page, 164 Mass. 276, at page 281, 41 N. E. 279, 280, was "to protect parties dealing in good faith with factors. or agents who have been intrusted with goods or merchandise for sale or consignment."

At the outset the question arises. whether the defendant was a "con

signee" to whom Graves consigned the merchandise for money advanced. We construe the word "consignee" as meaning one to

whom merchandise has been delivered. A "consignee" is defined as a person to whom goods or other property sent by a carrier are con

5 Cush. 111. Although this court signed or addressed; specifically, one

has not heretofore been called upon

who has the care or disposal of goods

received on consignment; a factor. See Block v. Columbian Ins. Co. 42 N. Y. 393, 403; Ryttenberg v. Schefer (D. C.) 131 Fed. 313, 321. It cannot be doubted that under § 3 Graves was a person intrusted with the merchandise with authority to sell the same, and that he delivered it to the defendant who advanced money "on faith of such consignment." The record shows that at the time of the delivery the defendant made the loan to Graves in good faith without knowledge of the trust receipt or of the plaintiff's claim. It was said by Chief Justice Field in Cairns v. Page, 165 Mass. 552, at page 554, 43 N. E. 503, 504, that "the language of the Pub. Stat. chap. 71, § 3, is very broad, and includes any person intrusted with merchandise, and having authority to sell or consign the same."

The language of this section, while somewhat different from the statute in its present form (Gen. Laws, chap. 104, § 3), was not changed in meaning or effect by the present statute. Main v. Plymouth County, 223 Mass. 66, 69, 111 N. E. 694.

Graves was expressly authorized by the plaintiff to sell the wool or manufactured yarn for the plaintiff's account. The right to manufacture the wool and convert it into yarn did not render the statute inapplicable.

The express and general authority given him to sell distinguishes the case from Thacher v. Moors, 134 Mass. 156; H. A. Prentice Co. v. Page, supra; Boston Supply Co. v. Rubin, 214 Mass. 217, 220, 101 N. E. 133, and other cases relied on by the plaintiff where there was no such authority to sell.

The conclusion reached by us is in harmony with cases which have arisen under the Factors' Act in force in the state of New York. Laws of New York 1830, chap. 179. The New York statute is similar to ours although passed at an earlier date, both acts being modeled somewhat upon the English acts of 1823 and 1825 (4 Geo. IV. chap. 83, chap.

94), but different from them in essential particulars. The third section of the New York act provides in part that "every factor or other agent, intrusted with the possession of any bill of lading . . . for the delivery of any such merchandise

for the purpose of sale, or

as a security for any advances to be
made or obtained thereon, shall be
deemed to be the true owner thereof,
so far as to give validity to any con-
tract made by such agent with any
other person
. . for any money

advanced, or negotiable instrument
or other obligation in writing given
by such other person upon the faith
thereof."

It was held in Blydenstein v. New York Secur. & T. Co. 15 C. C. A. 14, 35 U. S. App. 175, 67 Fed. 469, that the Factors' Act of New York applied to the relationship created by a trust receipt, and that a bona fide pledgee from one intrusted with the possession of merchandise with a power of sale was protected against the owner of the title under a trust receipt. This decision was followed by the court of appeals of New York in a case where the language of the trust receipt was subat bar. New York Secur. & T. Co. stantially the same as in the case v. Lipman, 157 N. Y. 551, 52 N. E. 595.

In Freudenheim v. Selig Gütter, 640, 642, where the effect of the 201 N. Y. 94, at page 100, 94 N. E. sidered, it was said: "It [the act] Factors' Act of the state was con

made possession, under certain circumstances, conclusive evinecessary to protect a purchaser or dence of ownership to the extent a lender who acted in good faith and without notice. It thus shifted the loss caused by the fraudulent act of the agent from the innocent purchaser to the principal who selected the agent, intrusted him with possession of the property and placed him in a position where he could perpetrate the fraud. . . The

real theory of the act is that the intrusting him with the property is selection of the faithless agent and

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