The transaction constituted Montgomery a factor of Dodge & Cole. Factors have no power to pledge the goods of their principals. (2 Kent's Com. 625, 4th ed., and the authorities there cited; Story on Agency, pp. 127, 128, 129, and notes; Id. pp. 271, 272 and notes; Story on Contracts, p. 282; Wadsworth & Meisegaes v. R. S. Lent, Sup. Court Cal., Oct. T., 1855.) He cannot pledge, either by the delivery of the goods themselves, or by the delivery of a bill of lading, or, as in this instance, by passing a receipt. (Story on Contracts, p. 282.) And if he does, the principal may, after demand and refusal, maintain trover for them against the pawnee. (Vol. 1st Dig. of Cases in Federal Courts, p. 735, Sec. 53; 1 Mason, C. C. Rep. p. 440; 3 Mason, p. 232.) And no custom to sell can be pleaded. (4 Rawle R. 195.)
The defendants are chargeable with notice of the title of the principal, as well when the pledge was made as when the property was delivered in satisfaction of the debt. (Story Ag. p. 272; Wadsworth & M. v. Lent, Sup. Court Cal., et passim; Story on Contracts, Sec. 363 and cases cited in the notes.)
And although the relation existing between Dodge & Cole and Montgomery & Co. could be held to clothe the latter with the power to pledge, yet the possession acquired by the defendant, by means of Montgomery's receipt to them, was not such " an actual and continued change of possession" as against the plaintiff, who was a subsequent purchaser in good faith. (See secs. 15 and 17, ch. I, Act concerning Fraudulent Conveyances and Contracts.)
JUDGES: The opinion of the Court was delivered by Mr. Justice Heydenfeldt. Mr. Chief Justice Murray concurred.
OPINION
HEYDENFELDT, Judge
The District Court erred in refusing to give the fifth instruction asked for by the defendant to the effect " that if Montgomery & Co. were in possession of the property and clothed with the external evidences of ownership, and that it was part of their usual business to buy and sell goods on their own account, that such apparent ownership gave them power to sell or pledge."
The rule as to the lack of power in factors to pledge goods of their principals was referred to by this Court in the case of Leet v. Wadsworth , 5 Cal. 404. This rule is only applicable where the party pledging is technically a factor, where his only business is to sell goods consigned to him for that purpose, wherefore, on account of his notorious employment, all the world is charged with notice that the goods in his possession are the property of others, and that he has power only to sell them, and no power to pledge them.
In this case Montgomery & Co. were not technical factors. From all the proof, besides the business of commission merchants, they were regularly engaged in trade as general merchants, buying and selling on their own account, and especially so in reference to the very article which is the subject of this controversy. With but a little difference in the facts, the case is similar to the one cited from 5 Cal. 404.
The judgment is reversed and the cause remanded.