LATIMER v. STUBBS

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No. 31556.

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Smith, C.J., delivered the opinion of the court.

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LATIMER v. STUBBS et al.

Ray Spivey, of Canton, and C.M. Murphy, of Belzoni, for appellant.

Stubbs is estopped to question Latimer's right to the cotton involved in this suit.

Levy v. Gray, 56 Miss. 318; Richardson v. Toliver, 71 Miss. 966, 16 So. 213; Coxwell v. Prince, 19 So. 237; Sivley v. Williamson, 112 Miss. 276, 72 So. 1008.

Even if Stubbs was mistaken as to the true identity of the cotton with reference to which Latimer was seeking information, his mistake was the result of his own culpable negligence and will not prevent an estoppel.

21 C.J. 1126.

Where a person makes a wilful, positive representation, intended to induce another to act upon it, and such other does rely and act upon it and alters his position, he will be estopped to deny the truth of such representation.

Mask v. Allen, 17 So. 82; Cocke v. Kuykendall, 41 Miss. 65.

Where one of two innocent persons must suffer, he, who by his conduct has created the circumstances out of which the injury arose, must suffer the loss. The equity will not postpone the interest of one who has omitted no duty devolving on him to the interests of another whose negligence made it possible for the injury to occur.

21 C.J. 1170; Farmers Bank, etc., Co. v. Shut, 68 So. 363; Reynolds Co. v. Reynolds, 67 So. 293; Van Derveer v. Strickland Bros. Mach. Co., 81 So. 197; National Safe Deposit S. T. Co. v. Hibbs, 57 L.Ed. 1240.

The Compress of Union as appellee and cross-appellant admitted by its pleading in the lower court and admits here its liability to Stubbs Company for the thirty bales of cotton.

The Compress of Union, as cross-appellant, seeks a decree over against Latimer for the value of this thirty bales of cotton, seven hundred twenty-three dollars and sixty-six cents, which it is directed by the lower court's decree to pay to Stubbs Company.

On the undisputed facts Latimer could not, by any possibility, be liable to the Compress of Union for these thirty bales of cotton. Whenever Latimer purchased cotton which Cook Company took off of his hands, he was merely acting as the agent of Cook Company for a commission of fifty cents per bale.

Stubbs Company are estopped to claim the forty-five bales of cotton.

T.H. Watkins, of Jackson, for appellant, S.W. Latimer.

The Compress of Union, as bailee of the cotton and warehouse receipts in question, could not be liable to Stubbs Company in this case unless the Compress of Union had been guilty of negligence and had deprived Stubbs Company of the thirty bales of cotton as a result thereof.

Batesville Gin Co. v. Whitten, 96 Miss. 210, 50 So. 695.

The Compress of Union admits liability to Stubbs Company in this case for the value of the thirty bales of cotton delivered to Cook Company. In doing this the Compress of Union admits the negligent conversion of this cotton on its part.

1 Rest. Torts, sec. 223.

It was only made possible for S.W. Latimer, the innocent purchaser of value for said receipts, to technically convert same by the negligent conversion of the receipts and of the cotton itself on the part of the Compress of Union.

We respectfully submit that under these circumstances the Compress of Union, whose negligence made it possible for an injury to be inflicted, is not entitled to recover for that injury from S.W. Latimer, appellant, who was an innocent party to the transaction.

Flexner v. Meyers, ex., 229 S.W. 99; Gardner v. Commercial Security Company of Ky., 211 S.W. 405; Railway Express Agency v. Bank of Philadelphia, 168 Miss. 279, 150 So. 525.

Stubbs Company did not have a right of action against S.W. Latimer for any amount whatsoever.

If the learned chancellor below had found, as a matter of fact, that S.W. Latimer was not an innocent purchaser for value, and that S.W. Latimer took the receipts in question with full knowledge of the fact that they were fraudulently obtained, there would have been no question but that S.W. Latimer would have been liable to the same extent that Hanna would have been liable for the disposition of the thirty bales of cotton. The court on the other hand found that S.W. Latimer was an innocent purchaser for value and held, and we think rightly, that S.W. Latimer was not liable for the cotton which the Compress of Union had turned over to Cook Company of Memphis on the receipts in question.

It is an elemental principle of law that, where one of two innocent persons must suffer, the loss must fall on him by whose fault the injury was made possible.

Star Compress Warehouse Co. v. Meridian Cotton Co., 87 Miss. 228, 39 So. 417; Hills v. Snell, 104 Mass. 175, 6 Am. Rep. 216.

May, Sanders, McLaurin Byrd, of Jackson, for appellees.

There is no contention that the title of Hanna to the receipts in question was good. His possession of the receipts was, as found by the chancellor, felonious. It follows, of course, that since Hanna's possession was felonious he could convey no title. That being true, Latimer can only justify his possession by proving that Stubbs, by act or word, misled Latimer and caused him to part with his money on the strength of some act of Stubbs.

The plea of estoppel is affirmative and the burden to establish it is on him who pleads it. We submit that the record falls far short of showing acts or words of Stubbs that would estop him.

We submit that the record shows that Latimer never did reveal to Stubbs the full facts, nor did he tell Stubbs of the receipts then in the bank or put him on notice that Hanna was dealing with the particular receipts. As far as Stubbs knew, his cotton was in the Compress at Union and the receipts were there waiting for him.

The proof does not show such notice to Stubbs as would place upon him the duty to do anything which he did not do.

Flowers, Brown Hester, of Jackson, for appellees.

The lower court found that Latimer did not take the necessary precaution to estop Stubbs from claiming the forty-five bales of cotton as against him. The court acted as jury of the facts and we submit that there is no evidence which would justify this court finding that the chancellor was wrong.

Unless Stubbs is estopped by reason of his conduct, which we submit is a question of fact and which the chancellor found to the contrary, Latimer acquired no title to the receipts or to the cotton covered thereby.

Restatement of the Law, Torts, page 586, sec. 229.

That Hanna stole these receipts from the Compress Company, or acquired them in some unlawful manner, or was not a holder for value, is uncontradicted and is the only logical conclusion that can be reached from the evidence.

67 C.J. 480, sec. 60-H.

The Supreme Court of Arkansas in the case of Weaver Cotton Co. v. Batesville Compress Co., 270 S.W. 509, 168 Ark. 387, 38 A.L.R. 1200, adopted the decision of the Supreme Court of the United States in the case of Shaw v. Railway Co., 101 U.S. 557, 25 L.Ed. 892, dealing with bills of lading as being apposite to warehouse receipts which are negotiable, which decision in part is as follows:

It is not a representative of money, used for transmission of money, or for the payment of debts or for purchases. It does not pass from hand to hand as bank notes or coin. It is a contract for the performance of a certain duty. True, it is a symbol of ownership of the goods covered by it, a representative of these goods. But if the goods themselves be lost or stolen, no sale of them, by the finder or thief, through a bona fide purchaser for value, will divest the ownership of the person who lost them, or from whom they were stolen."

Alexander Eccles Co. v. Munn, 210 S.W. 626.

We claim that as bailee we are liable as a matter of law for the thirty bales of cotton which Latimer sold to the Memphis people and which we delivered to them on the receipts stolen by Hanna, sold to Latimer and surrendered to us. The lower court held this. But being so held we submit that we are entitled to a decree against Latimer.

A warehouseman has an entire cause of action, in trover, against persons who have bought goods stolen from its warehouse, though such goods may have belonged to divers bailors.

Bode v. Lee, 102 Cal. 583, 36 P. 936; Caswell v. Howard, 33 Mass. 562; Pomeroy v. Smith, 34 Mass. 85; Hadley Warehouse Co. v. Broughton et al., 218 P. 257.

1. WAREHOUSEMEN.

In action for recovery of converted cotton, conflicting evidence, as to conversation had by buyer of receipts with owner as to whether buyer was safe in purchasing receipts from party who had wrongfully obtained receipts from compress company where cotton was stored, sustained finding that owner was not estopped to assert buyer had no right to cotton through purchase of such receipts.

2. WAREHOUSEMEN.

Defendant who purchased and sold receipts for cotton, which party selling to defendant had wrongfully secured from compress company, was guilty of conversion of receipts.

3. WAREHOUSEMEN.

Receipts for cotton stored, which were never delivered to owner thereof, were the property of compress company for conversion of which it had a right of action.

4. WAREHOUSEMEN.

Where conversion of receipts for cotton stored with compress company deprived compress company of possession of cotton, damages of compress company was the value of the cotton.

5. WAREHOUSEMEN.

Defendant purchasing receipts for cotton stored in compress and cotton itself from person wrongfully obtaining possession of receipts from compress company held liable for conversion of cotton, although it was actually received by company to which he sold it, since by selling cotton defendant became one of the links of the chain of events which deprived the compress company of possession of the cotton to which it was entitled.

ON SUGGESTION OF ERROR. (Division A. June 10, 1935.) [ 161 So. 869. No. 31556.] 1. TROVER AND CONVERSION.

Person using or otherwise intentionally dealing with chattel in possession of another is not liable to person in possession for harm to or loss of use of chattel so far as such dealing is pursuant to assent of person in possession, unless assent was obtained by duress or from one lacking capacity to consent, or was obtained, or acted upon, fraudulently.

2. WAREHOUSEMEN.

Where person bought stolen compress cotton receipts in good faith and sold cotton represented by them to another, who also acted in good faith, and compress delivered cotton to buyer, though receipts did not bear indorsement of company to which they had been issued, compress could not recover against person first buying receipts for conversion of cotton, particularly in absence of proof that cotton had been sold by one taking delivery (Code 1930, section 3481 et seq.).

3. WAREHOUSEMEN.

Where person bought stolen compress cotton receipts in good faith and sold cotton represented by them to another, who also acted in good faith, and compress delivered cotton to buyer, though receipts did not bear indorsement of company to which they had been issued, and compress was not entitled to recover from person first buying receipts for conversion of cotton, compress could not recover in contract from such person on ground that he had indorsed such receipts, particularly where it had not proceeded on that theory (Code 1930, section 3481 et seq.).

Smith, C.J., delivered the opinion of the court.

The case presented by the record is, in substance, this:

The appellees are engaged at Walnut Grove, Mississippi, in buying and selling cotton under the trade-name of the Stubbs Company; their custom being to buy cotton direct from producers and to ship it to the Compress of Union, a corporation, at Union, Mississippi, to be compressed and stored. The cotton is shipped by rail, consigned to the shipper's order; and the custom is for the railroad company to deliver the cotton to the compress for storage, which issues receipts therefor, but retains them for surrender to the shipper or his assignee on presentation of the railroad bill of lading. Included in the cotton so shipped by the appellees and dealt with by the compress company were seventy-five bales, for which the compress company made out a separate receipt for each bale, and retained them awaiting the surrender of the bills of lading therefor. These receipts acknowledge the receipt of the cotton from the "Stubbs Company," and stipulate that "upon the return of this receipt properly endorsed . . . said one bale of cotton will be delivered to the above named depositor or his order."

The appellees have not surrendered the bills of lading for the cotton, but still have them, and have not authorized any one to receive the cotton from the compress. One Hanna wrongfully, and without the knowledge of the compress company, obtained possession of the receipts for these seventy-five bales of cotton and sold the cotton to S.W. Latimer and delivered to him the receipts therefor, who then sold the cotton to Cook Co. of Memphis, Tennessee. The receipts were not indorsed by the appellees, but were indorsed by Latimer after his purchase of the cotton. The compress company delivered thirty bales of the cotton to Cook Co. on the presentation by them of the receipts therefor, and thereafter received from Cook Co. the receipts for the remaining forty-five bales, with the request that they be shipped to them. This the compress company declined to do, for the reason that it had then discovered that the receipts had been wrongfully taken from its possession. The receipts for the forty-five remaining bales were returned by Cook Co. to Latimer, who then refunded to them the money paid him therefor. The appellees then instituted this suit against the compress company, Latimer, and Cook Co., praying for the delivery to them, by the compress company, of the forty-five bales of cotton still in its possession, and for a judgment against it and the other defendants for the value of the thirty bales of cotton which the compress company had delivered to Cook Co. No process was served on Cook Co., and they did not appear. Latimer denied liability and made his answer a cross-bill, praying therein for the delivery of the forty-five bales of cotton to him. The compress company admitted liability to the appellees for the thirty bales of cotton delivered by it to Cook Co., and their right to the forty-five bales of cotton which it still had; and, by a cross-bill, prayed for a judgment against Latimer for the value of the thirty bales of cotton or for the amount of any judgment that might be rendered against it in favor of the appellees. The court awarded the forty-five bales of cotton to the appellees and gave them a judgment against the compress company for the value of the thirty bales of cotton delivered by it to Cook Co., but declined to give any judgment against Latimer. Latimer has appealed, and the compress company has cross-appealed, its complaint being only that the court below erred in not giving it a judgment against Latimer.

Latimer does not deny that Hanna's possession of the receipts was not of the character to invest him with the title thereto or the right to dispose thereof. But his contention is that the appellees are estopped from asserting that he obtained no right to the cotton by his purchase thereof from Hanna. In support of this contention he testified, in substance, that he purchased cotton from Hanna, including the seventy-five bales here in controversy, and received from Hanna receipts therefor issued by the compress company to the Stubbs Company. When Hanna offered to sell him this particular cotton, he had reason to doubt Hanna's good faith in so doing and called on B.H. Stubbs, showed him a written statement containing the numbers of the compress receipts for the seventy-five bales of cotton, and asked Stubbs if he would be safe in buying the cotton from Hanna, to which Stubbs replied, "Yes." According to Stubbs' testimony, what occurred was, in substance, this: He had sold Hanna a number of bales of cotton; that Latimer told him that Hanna had offered to sell him cotton purchased by him from the Stubbs Company, showed him a written statement of the numbers of the receipts therefor, and asked him if he would be safe in purchasing it, to which he answered, "Yes;" that this statement did not contain the numbers of the receipts for the cotton here in controversy, but only of receipts for cotton he had sold Hanna. He denied that he then knew that the receipts for these seventy-five bales of cotton had gotten out of the possession of the compress company. The evidence on this issue, therefore, was in sharp conflict, and there is nothing in the record that would enable us to say that the court below was wrong in resolving the conflict in the appellees' favor.

This brings us to the complaint of the compress company that the court below should have given it a judgment against Latimer for the value of the thirty bales of cotton delivered by it to Cook Co. That company, because of its possession of the cotton as bailee thereof, has a right of action for its value if it was deprived thereof by the assumption by Latimer of an unauthorized dominion and control over it. We are not concerned here with the effect of a judgment against Latimer for the bailor, the Stubbs Company, for the conversion of the cotton, for no such judgment has been rendered.

Appellant's counsel say that Latimer is not guilty of conversion, (1) because he did not receive the cotton, and (2) that his connection with the purchase thereof was that of agent for Cook Co. It will not be necessary for us to say what would be the effect on Latimer's liability if he bought the cotton for, and as the agent of, Cook Co.; for he testified that he bought the cotton for himself and then sold it to Cook Co. He did say that, "after I sold them, I was acting for Cook Company," referring, we presume, to the fact that after he sold the cotton to Cook Co. he directed the compress company to forward the cotton to them. The record presents two separate conversions, (1) of the receipts of the cotton, and (2) of the cotton itself; the first of which entered into and became a part of the second. By purchasing and selling these receipts Latimer was guilty of the conversion thereof. 1 Restatement, Torts, sec. 223. These receipts never having been delivered to the Stubbs Company were the property of the compress company, for the conversion of which it had a right of action; and, as this conversion resulted in depriving the compress company of the possession of the cotton, its damage therefor is the value of the cotton. 1 Restatement, Torts, sec. 242.

Latimer is also liable for the conversion of the cotton itself, although it was actually received by Cook Co. By buying the cotton from Hanna and receiving from him the compress receipts therefor, and selling the cotton to Cook Co., and delivering to them the compress receipts therefor, Latimer became one of the links of the chain of events which deprived the compress company of the possession of the cotton. He delivered the receipts to Cook Co., pursuant to his sale of the cotton to them, for the purpose of enabling them to obtain possession of the cotton, and thereby contributed proximately and materially to the withdrawing of the cotton by. Cook Co. from the possession of the compress company and its conversion by Cook Co., and therefore became jointly liable with them therefor. "A joint conversion is a single concerted act of several persons, or the result of the acts of several persons, which, although separately committed, all tend to the same end. All persons engaged in a conversion are liable as principals." 65 C.J. 65.

The decree of the court below will be affirmed except in so far as it failed to award the compress company a judgment against Latimer. To that extent it will be reversed, and a decree will be rendered here for that company against Latimer for the value of the cotton which appears, from the evidence, to be seven hundred twenty-three dollars and sixty-six cents, with six per cent interest thereon from the date of the rendition of the decree in the court below.

So ordered.

Smith, C.J., delivered the opinion of the court.

ON SUGGESTION OF ERROR.

Smith, C.J., delivered the opinion of the court on suggestion of error.

The appellant, Latimer, suggests that we erred in reversing the decree of the court below in so far as it declined to award a judgment against him to the Compress of Union for the value of thirty bales of cotton delivered by it to Cook Co.

The ground of this suggestion is that Latimer, or, rather, Cook Co., obtained possession of the cotton with the consent of the compress company. This element of the case was overlooked in our former opinion. We shall not stop to inquire whether our so doing was counsel's fault or ours. Latimer's liability to the compress was placed in our former opinion on two grounds: (1) He converted the receipts for the cotton by selling them; and (2) he thereby became a party to the receipt and conversion of the cotton by Cook Co., to whom he sold the receipts. Had the compress not delivered the cotton to Cook Co., its damages for the conversion by Latimer of the receipts therefor, if any — as to which we express no opinion — would not be measured by the value of the cotton. Daggett v. Davis, 53 Mich. 35, 18 N.W. 548, 51 Am. Rep. 91; 4 Sutherland on Damages (4 Ed.), secs. 1134, 1135. Latimer's liability for the value of the cotton depends on its conversion vel non by Cook Co. The question then is, Does the evidence disclose that Cook Co. are guilty of a conversion of the cotton?

"One who uses or otherwise intentionally deals with a chattel in the possession of another is not liable to the person in possession . . . for harm to or loss of the use thereof, in so far as such dealing is pursuant to the assent of such person, unless the assent was obtained by duress or from one lacking capacity to consent or was obtained or acted upon fraudulently." 1 Restatement, Torts, sec. 252; 65 C.J. 14.

Cook Co. obtained possession of the cotton with the assent of the Compress of Union without duress, and the compress was not lacking in capacity to assent in so far as its rights against Cook Co. and Latimer were concerned. The question then is: Was this assent obtained or acted upon fraudulently? The evidence does not disclose any lack of good faith on the part of Cook Co., and there can be no question of Latimer's good faith, for he acted upon the belief, though mistaken, that he owned the receipts and the cotton represented thereby. The compress by merely examining the receipts would have discovered that they were not indorsed by the Stubbs Company, and therefore a delivery of the cotton to Cook Co. would be at its peril. This negligence of the compress does not excuse it or invalidate its assent to the receipt of the cotton by Cook Co.; neither Latimer nor they having done anything to induce this negligence. Hills v. Snell, 104 Mass. 173, 6 Am. Rep. 216.

The compress, by delivering the cotton to Cook Co., recognized them as the owners thereof, and assented to their dealing with it as such. This assent gave Cook Co. absolute dominion over the cotton as against the compress, and no disposition made by them thereof prior to notice that the assent of the compress was mistakenly given would constitute a conversion of the cotton as against the compress. Hills v. Snell, supra. Cook Co. are not shown to have disposed of the cotton. For aught that here appears, they may still be in possession thereof. What Latimer's liability would be in that event, should they refuse to return the cotton to the compress on demand therefor, is not before us.

But the compress contends that, if it is not entitled to recover in tort for a conversion of the cotton, it is entitled to recover in contract, for the reason that Latimer's indorsement of the receipts was a warranty to it that he owned the cotton. The cross-bill does not proceed on that theory, but aside therefrom we have not been referred to any authority for so holding, and an examination of our "Warehouse Receipts" statute, chapter 71, Code 1930, discloses none.

Our former judgment will be set aside, and the decree of the court below will be affirmed in toto.

So ordered.

LATIMER v. STUBBS et al.

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