This is an action in claim and delivery for the possession of personal property, consisting of a ginning outfit, valued at $1,672.00.
The case was tried before his Honor, Judge Bonham, and a jury at November term, 1928, of the Court of Common Pleas of Calhoun County.
At the close of the testimony for the plaintiff, the defendant Swift Co. moved for a nonsuit upon the ground that the railway company, plaintiff, was not shown to have been subrogated to the rights of the shipper in the property sued for. The motion was granted, and, from the judgment dismissing the complaint entered thereon, the plaintiff, railway company, has appealed.
The defendants, other than Swift Co., either failed to answer, or withdraw from the case, leaving the contest between the railway company and Swift Co.
There is little or no controversy over the facts of this case, which appear to be as follows:
A man by the name of Davis was a representative of a gin company in Atlanta; another by the name of Pfuntner proposed to establish a ginnery at Ft. Motte, in Calhoun County; another by the name of Poole, owned a second-hand *Page 319 outfit within Davis' territory at Ben Hill, Ga. Pfuntner was a customer of the company represented by Davis; he notified Pfuntner of the prospect of buying the Poole outfit. Pfuntner went to Atlanta and was shown the outfit of Poole. Pfuntner and Davis agreed upon the terms of sale, which were at a certain price cash. Davis became personally responsible to Poole for the price. It was agreed between Pfuntner and Davis that the outfit should be shipped by him from Ben Hill, Ga., to Ft. Motte, S.C. consigned to the shipper, Davis, and that the shipment should be an "order notify" shipment, draft attached to bill of lading and forwarded through the bank for collection from Pfuntner. The bill of lading was issued by a railroad company, a connection of the plaintiff company, and, by some inadvertence upon the part of the railroad company or of the shipper, or perhaps of both, the bill of lading did not show that it was an "order notify" shipment, but appeared to be a "straight" shipment to Davis the shipper. The shipper, Davis, however, apparently not noticing the error, drew a draft upon Pfuntner, attached it to the "straight" bill of lading, and forwarded both through commercial channels for collection. The shipment was made on July 29, 1927, and on August 2d, reached Ft. Motte. On August 4th, Pfuntner called for the shipment, and, upon his signing a receipt therefor in the name of "Herbert Davis, per C.H. Pfuntner," the outfit was delivered to him; the agent of the plaintiff company naturally, from the terms of the waybill, assuming that the shipment was a "straight" shipment, and relying upon the statement of Pfuntner that he was an agent of Davis, the shipper and consignee. Having wrongfully obtained possession of the outfit, he declined or failed to pay the draft which was drawn upon him, as he had agreed should be done in the ordinary course of "order notify" shipments. He installed the machinery in his plant, and has never paid for it. It appears that Swift Co., interested in the products of Pfuntner's enterprise, had agreed to advance him $2,000.00 with which to *Page 320 pay for and install an outfit. Instead of using it for that purpose, Pfuntner applied it to other obligations. As soon as Davis was cheered by the return of his draft unpaid, he went to Ft. Motte, but was unable to make the collection. On August 27th, he wrote to Swift Co.:
"Upon taking it up with Mr. Pfuntner, he states it was his intention to pay the draft every day and secure the original bill of lading but that other demands came upon him first, and he, expecting to return it each day, used the $2,000.00 you let him have, and at this time he is without funds to care for this draft.
"He has assured me that this matter would have attention within the next day or two, but the writer feels you should be advised of the facts that he has not title to the goods as yet, and that you of course would want the matter arranged properly."
Thereafter, on the 10th day of September, Swift Co., who had been informed of the disposition made by Pfuntner of the $2,000.00 advanced and of the manner in which he had acquired possession of the outfit, had him to execute a mortgage to them upon the entire outfit as security for the advances which had been made by them and misapplied by Pfuntner. It was recorded on September 13th. On April 23, 1928, Pfuntner conveyed by deed the outfit to Swift Co.
About November 1, 1927, Davis brought suit against Southern Railway Company on account of the misdelivery of the outfit to Pfuntner, and on April 6, 1928, recovered a judgment for $1,672.00 against the railway company, which it paid in full.
On August 23, 1928, the railway company instituted the present action of claim and delivery against Swift Co. and others. The complaint alleged the foregoing facts in substance. The plaintiff claimed to be subrogated to the rights of Davis in the property as against Pfuntner and Swift Co. *Page 321
Swift Co. answered, denying the claim of the plaintiff and setting up a number of defenses, among which were:
(1) An alleged agreement between it and Pfuntner, in July, 1927, whereby Swift Co. advanced to Pfuntner $2,000.00 for the purpose of buying and setting up a gin outfit at Ft. Motte, the agreement being that Pfuntner should give it a first mortgage upon the outfit and a second mortgage upon certain real estate, and that pursuant thereto, on September 10, 1927, Pfuntner executed the note and mortgage referred to as security for the advance made in July. (It will be observed in passing that this agreement was made before Pfuntner purchased the particular outfit in question, and of course, could not have had direct reference to it.) It is alleged that the mortgage was given for valuable consideration, namely, "the present advancement of money," the advance of $2,000.00 referred to, and that Swift Co. was a bona fide holder for value thereof.
(2) That the outfit was delivered by the railway company to Pfuntner "as the duly authorized agent of Davis," and that the railway company is estopped from denying the title of Pfuntner and the priority of the mortgage of Swift Co.
(3) That the alleged misdelivery to Pfuntner was due to the negligence of the plaintiff, which is estopped thereby from disputing the claim of Swift Co.
The nonsuit was based upon the conclusion of the Circuit Judge that the facts did not sustain the claim of the plaintiff, under the circumstances, to be subrogated to the rights of Davis. In this conclusion, I think that his Honor was in error; for I cannot conceive of a plainer case for the application of the doctrine.
The basic ground, although not the earliest in point of time, of a cause of action in favor of Davis against anyone, was the tortious conversion of the property by Pfuntner consummated by his admitted misrepresentation that he was authorized as the agent of Davis to receive and receipt for *Page 322 the outfit, a cause of action which inured to him against Pfuntner. Up to that time, while there may have been negligence on the part of the initial carrier, the Atlanta, Birmingham Atlantic Railroad Company, at Ben Hill, Ga., in issuing an "open" bill of lading instead of an "order notify" one, and an obligation on the part of the delivering carrier, Southern Railway, to answer for the delict of the initial carrier, under the Carmack Amendment, no damage had occurred to anyone until Pfuntner had obtained the goods under a false and fraudulent pretense.
It seems clear that the first active wrong was perpetrated by Pfuntner, and against him Davis certainly had a cause of action, as complete as if a "thief in the night" had stolen the property, a situation which Pfuntner quite nearly approached. The wrong was primarily his, and of course the obligation upon him was primary.
Davis had, under the circumstances, three causes of action, any one of which he might have pursued: (1) Against Pfuntner for his tortious conversion; (2) against the Atlanta, Birmingham Atlantic Railroad Company, the initial carrier, for its error in issuing a wrong bill of lading; (3) against the Southern Railway Company, the delivering carrier, upon its obligation to respond under the Carmack Amendment.
The obligation of the Atlanta, Birmingham Atlantic Railroad Company and the Southern Railway Company were in effect to make good the delict of Pfuntner, necessarily secondary obligations.
It is not conclusive of the issue whether the Southern Railway Company was the primary or secondary obligor to say that the action against it was an action upon its contract of carriage, for in every case of secondary obligation there will be found necessarily some relation that has produced an obligation.
The Southern Railway Company had three causes of action: (1) As bailee of the property, against Pfuntner for *Page 323 his tortious conversion; (2) after paying the loss against the Atlanta, Birmingham Atlantic Railroad Company on account of its negligence in issuing a wrong bill of lading; and (3) against Swift Co. for the recovery of practically stolen property, for which the Southern Railway Company was secondarily liable to the shipper, on account of its underwriting the obligation of the initial carrier.
It seems clear that these causes of action were necessarily based upon the primary obligation of Pfuntner and the secondary obligation of the Southern Railway Company which it may have responded to.
"Subrogation is the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt." 37 Cyc., 363.
"Subrogation is an equity which enables a party secondarily liable, but who has paid the debt, to reap the benefit of any securities, remedies, or rights of the creditor as against the principal or (in jurisdictions where the equity extends so far) others primarily liable. As to the rights against the principal, the doctrine of subrogation is universal in its application. As to the rights against third persons responsible for the debt, there is a difference of opinion; but the weight of authority as well as of reason favors subrogation. It appears that this right has been so broadened as to bring within its operation the right to subrogation not only against the principal but also against `one who in equity, justice, and good conscience should pay' the debt."Rivers, Commissioner, et al. v. Liberty National Bank, 135 S.C. 107,133 S.E., 210, 213.
"Subrogation arises in favor of one who in the payment of a debt does so as a surety or is compelled to pay it to protect his own interest. It is purely a creature of equity, depending not upon principles of law, but is so administered *Page 324 as to secure essential justice, without regard to form." Dulaney v. Smith, Va., 149 S.E., 441, 443.
In Dunn v. Chapman, 149 S.C. 163, 146 S.E., 818, 820, the Court said: "In the final precipitation of the matter it has been settled by these and other cases that the essential elements of the right of subrogation are: (1) That the party claiming it has paid the debt; (2) that he was not a volunteer, but had a direct interest in the discharge of the debt or lien; (3) that he was secondarily liable for the debt or for the discharge of the lien; (4) that no injustice will be done to the other party by the allowance of the equity."
See, also, Hampton, etc., Bank v. Lightsey, 155 S.C. 222,152 S.E., 425. Enterprise Bank v. Bank, 139 S.C. 397,138 S.E., 146.
The question appears to me to be settled by the case ofRivers v. Bank, 135 S.C. 107, 133 S.E., 210. A surety company had paid the amount of a fidelity bond which it had given to the warehouse commissioner. The defalcation of the officer, the obligor of the bond, was due to the negligence of the bank. The Court held that the surety company upon payment of the bond, was subrogated to the right of the warehouse commissioner against the bank on account of loss entailed by its negligence. It would be as reasonable to deny the surety company the right of subrogation upon the ground that it was but responding to its primary obligation in paying the bond, as to deny the right to a carrier, who had paid a loss due to the rascality of a third person, upon the ground that it was but responding to its primary obligation to carry. The one is no less a secondary obligation than the other.
It appears to me that the present circumstances answer every requirement of the law as thus declared.
The plaintiff, having responded to its secondary obligation to Davis, is entitled to be subrogated to all rights which Davis had against Pfuntner or against the property in the *Page 325 possession of Pfuntner, unless some equity in favor of Swift Co. has intervened for their protection.
Swift Co. claim to be subsequent creditors or purchasers for value without notice of any defect in the title of Pfuntner from whom they claim. The evidence is overwhelming and not disputed that Davis notified Swift Co. as early as August 25th of the conduct of Pfuntner in obtaining possession of the property fraudulently, that he had applied the advance of $2,000 to other obligations, and that he had no title to the property for the reasons stated. Swift Co. do not come within the protection of either the commercial or the equity rule as explained in Dearman v.Trimmier, 26 S.C. 506, 2 S.E., 501. They do not come within the protection of the commercial rule for the reason that when they took the note and mortgage from Pfuntner, they had express notice of how he had obtained the property and that he had no title to it; they do not come within the equity rule, for the reason that they parted with nothing at the time of the mortgage was given. See, also,Marsh v. Ramsay, 57 S.C. 121, 35 S.E., 433; Bank v.Munn, 134 S.C. 297, 131 S.E., 432; Kirton v. Howard,137 S.C. 11, 134 S.E., 859.
Subrogation is essentially a creature of equity. Can there be any comparison between the equitable position of a carrier which has paid a loss due to the theft of a third person, and that of the holder of a mortgage given by such third person to such holder who had notice of the theft at the time he took the mortgage to secure a past due obligation?
But assuming that I am all wrong as to the application of the doctrine of subrogation to the facts of this case, the order of nonsuit was clearly erroneous for another reason.
The learned Judge held that as the complaint was based solely upon the claim of subrogation, which he held not sustainable, the plaintiff was necessarily confined to that, *Page 326 and that, under his construction of the complaint, conceded by counsel for the plaintiff, a nonsuit was inevitable.
It is true that, in response to the statement of the Circuit Judge, in a somewhat extended colloquy upon the motion for a nonsuit, "Yes, sir, but you have planted your case flatfootedly on the plea (claim?) of subrogation," counsel said, "That is our position." I do not think that such a statement should conclude the counsel if it should appear that the plaintiff's complaint shows a cause of action entirely independent of the right of subrogation. Admissions of fact by counsel are of course conclusive, but I do not understand that in such a colloquy as was here held an admission by counsel of a certain construction of a pleading, a matter of law should deprive his client of substantial legal right if it should exist.
"A cause of action is stated when the facts alleged show some right of plaintiff, and the invasion of that right by some delict or breach of duty by defendant." Ward v. Ford,58 S.C. 560, 36 S.E., 916.
"Pleadings, under the Code, are not required to formulate the state of facts with reference to the technical incidents of the right of action to which the plaintiff may suppose himself entitled. It is the Court that refers the facts to their appropriate form of action, for the purposes of its judgment, and not the pleader as at common law. The consequence is, that when a fact is pleaded, whatever inferences of law or conclusions of fact may properly arise from it are to be regarded as embraced in such averment."Mason v. Carter, 8 S.C. 104; Jerkowski v. Marco, 56 S.C. 402,35 S.E., 750; Greewood Cotton Mills v. Tolbert, 105 S.C. 276,89 S.E., 653, Ann. Cas., 1917-C, 338.
"Pleadings are not to be technically or rigorously construed, but with a view of substantial justice between the parties." Childers v. Verner Stribling, 12 S.C. 6; Wallacev. Lark, 12 S.C. 579, 32 Am. Rep., 516; Parks v. *Page 327 Cotton Mills, 70 S.C. 274, 49 S.E., 871; Market v. NorthAugusta Co., 107 S.C. 137, 92 S.E., 201.
If plaintiff is entitled to any relief under the allegations of his complaint and the evidence submitted in support thereof, it would be error to grant a nonsuit.
If two causes of action were set forth in the complaint without being separately stated, the defendant, it is true, had the right to make a motion that the complaint be made more definite and certain, or, if allegations were made which were unnecessary to sustain the cause of action stated in the complaint, to make a motion to strike out such allegations as irrelevant and as surplusage. Pom. R. R.R., §§ 447, 451. If the defendant waived said objections by failing to make such motions, then the plaintiff had the right to the relief to which all the allegations showed he was entitled." Cartinv. Railroad Co., 43 S.C. 224, 20 S.E., 979, 49 Am. St. Rep., 829; Saunders v. Phelps Co., 53 S.C. 176,31 S.E., 54; Marion v. City Council of Charleston, 68 S.C. 258,47 S.E., 140; Williams v. Philadelphia Life Ins. Co., 105 S.C. 309,89 S.E., 675; McKenzie v. Sou. Ry. Co., 113 S.C. 459,102 S.E., 514.
The rule in such cases is thus stated in Austin v. Mfg.Co., 67 S.C. 122, 129, 45 S.E., 135, 137: "The only instances in which the Court will sustain a nonsuit when the allegations are sustained by the testimony are in cases where the complaint is subject to a demurrer, as in Rosemand v.R.R., 66 S.C. 91, 44 S.E., 574. In Boyd v. Brent, 1 Tread. Const., 101, it was decided that, if the declaration does not contain any cause of action, the proper way of taking advantage of it is to demur; but, where a nonsuit had been ordered, the Court refused to set it aside, on grounds of convenience, as it was clear that the plaintiff could not recover. In Pettis v. Harris, 2 Brev., 388, the Court ruled that a nonsuit may be ordered, though the cause be at issue before the jury, and there is evidence offered pertinent to *Page 328 the issue, if it be clear there is no sufficient legal cause of action stated in the declaration."
"A nonsuit on the ground that the allegations of the complaint were not sufficient to constitute a cause of action for malicious prosecution was not proper, if they were sufficient to constitute any other cause of action." Forrest v. McBee,72 S.C. 192, 51 S.E., 675, 676.
"A complaint is not demurrable when its allegations show that the plaintiff is entitled to some relief, although he is not entitled to the relief for which he prays." Conner v.Ashley, 49 S.C. 480, 27 S.E., 473, 474.
"A complaint is not subject to demurrer if its allegations show that the plaintiff is entitled to any relief whatever, even though it may be different from that to which the plaintiff supposes he is entitled." Welborn v. Dixon, 70 S.C. 112,49 S.E., 232, 233, 3 Ann. Cas., 407.
If his complaint contains any allegations, which entitles the plaintiff to relief either on the law or equity side of the Court, then it is not subject to demurrer. Board ofDirectors v. Lowrance, 111 S.C. 295, 97 S.E., 830; Blassingamev. Greenville County, 134 S.C. 324,132 S.E., 616; Spigner v. Provident Life Accident Ins. Co., 148 S.C. 249,146 S.E., 8.
For a cause directly in point, see Wilkins v. Howe Grain Mercantile Co., 111 S.C. 85, 96 S.E., 678, 679, an appeal from an order of nonsuit, on the ground that the only cause of action alleged in the complaint was founded upon fraud, and that there was no testimony tending to sustain such allegations, where this Court, construing the complaint to contain allegations sufficient to constitute a cause of action arising ex contractu, used the following language: "Under such circumstances, this Court will not undertake to say what particular cause of action the plaintiffs have attempted to set forth, and to which they should be confined, in determining the sufficiency of the complaint" — and, concluding that there was evidence at least tending to *Page 329 sustain the allegations of damages arising ex contractu, held that the Circuit Court was in error in granting the nonsuit.
The right of the plaintiff to recover may be sustained upon the principle that a bailee has a certain limited proprietary right in the property bailed which entitles him to sue for its recovery.
It is a universal rule that "the bailee being entitled to the possession of the property bailed, has a special interest in it which is sufficient to entitle him to sue third persons for loss of or injury to the property, for disturbance of his possession or for breach of contract with the bailee in regard to the property." 6 C.J., 1149.
This rule has always been recognized in South Carolina.Jones v. McNeil, 2 Bailey, 466; Godfrey v. Pullman Co.,87 S.C. 361, 69 S.E., 666, 669, Ann. Cas., 1912-B, 971. In the latter case the Court said: "The rule is that a bailee has such special property or right in the thing bailed as entitles him to protect it against wrongdoers. As against third persons, he may sue for and recover damages for its injury, loss, or destruction. * * * "
Now, this general rule has been applied in many cases to such situations as that under consideration, and it has been held that a carrier which has misdelivered goods may bring an action of trover or replevin against the person to whom such delivery was made. Fordyce Swanson v. Dempsey Beasley, 72 Ark. 471, 82 S.W. 493; Johnson Co. v.Gulf C.R. Co., 82 Miss., 452, 34 So., 357; AmericanMerchants' Union Exp. Co. v. Willsie, 79 Ill., 92; NorfolkS.R. Co. v. Armfield, 189 N.C. 581, 127 S.E., 557; N.Y.C.R. Co. v. Freedman, 240 Mass. 200, 133 N.E., 101;Chicago, R.I. P.R. Co. v. N.A. Cold Storage Co., 244 Ill. App.? 522.
It has been held, very properly, that the carrier in such cases may not recover against one who has purchased from the wrongdoer without notice of his voidable title, on the *Page 330 ground that, where one of two innocent parties must suffer, he whose negligence or mistake made the loss possible must stand it. Norfolk S.R. Co. v. Barnes, 104 N.C. 25,10 S.E., 83, 5 L.R.A., 611; Sou. Pac. Co. v. Bank of America (D.C.), 23 F.2d 939; Chicago G.W.R. Co. v. Lowry,119 Kan., 336, 239 P., 758.
But these cases all recognize the rule that the carrier may recover against one who takes from the wrongdoer with notice.
It will be remembered that the trade between Davis and Pfuntner was that the shipment should be an "order notify" shipment, that Davis drew a draft upon Pfuntner for the purchase price, attached it to the bill of lading, and forwarded the draft for collection through the bank, and that before Swift Co. took the chattel mortgage upon the outfit from Pfuntner, Davis notified Swift Co. by letter of August 25th that such had been his course of dealing with the matter and that Pfuntner had secured the property without the bill of lading and consequently had no title. So far as Pfuntner is concerned, his situation is the same as if the shipment had come through as an "order notify" shipment, for that was his agreement. He had no right to secure possession of the property without paying the draft, and Swift Co., claiming through him, and itself having notice of Pfuntner's misconduct, is bound thereby.
An almost exactly parallel case is that of In re HayesMfg. Co., 239 Mich., 247, 214 N.W., 102. In that case a shipper at Toledo delivered to a railroad company a carload of steel for carriage to Detroit. The shipment was "order notify" a metal company in Detroit. A draft was attached to the bill of lading and forwarded to a bank in Detroit for collection. The party intended to be notified and who was expected to take up the draft and bill of lading was a broker and had sold the steel to a company in Detroit. By the carrier's mistake, the steel was delivered to the purchaser without surrender of the bill of lading, and the draft *Page 331 was never paid. The carrier was responsible to the shipper and paid the loss to him; it then brought suit against the purchaser from the broker. The Court held that the purchaser had notice of the fact of the misdelivery of the goods and had to pay for them. The syllabus is as follows: "Carrier mistakenly delivering shipment to purchaser, who took with notice of outstanding bill of lading with unpaid draft attached, held entitled to recover from such purchaser."
See, also, Michigan Cent. R. Co. v. State, 85 Ind. App. 557,155 N.E. 50.
For these reasons, I think that the order of nonsuit should be reversed.