Lilly v. Citizens Bank & Trust Co.

ON MOTION FOR REHEARING.

Bell, J.

The county warrant contained no words of negotiability, but under a specific statute the order was assignable and the payee could convey the title by delivery or indorsement. The evidence authorized the inference that the instrument was duly indorsed by the plaintiff, Mrs. Lilly, at the time she delivered it to Wester for safekeeping. Taking the jury’s verdict as the truth as to this issue, the plaintiff has done more than merely to place the instrument in the hands of another for safekeeping, but she delivered it to him with her indorsement thereon. This was to invest the holder with such external indicia of the right of disposing of the property that a sale or hypothecation to an innocent purchaser divested the true owner’s title. Civil Code (1910), § 4119. Whether the result would be the same if the payee had delivered the instrument without indorsement is not decided.

The difference between a case of this sort and 'one in which a person who, though innocent in fact, nevertheless purchases a negotiable instrument after maturity, is that in the latter case the paper, being dishonored, carries the mark of dishonor upon its face. In such a case the purchaser is charged with notice as a matter of law that the seller may not be the owner, and the principle stated in the Civil Code, § 4537, is inapplicable. Bank of Oglethorpe v. Swindle, 155 Ga. 69 (116 S. E. 604, 33 A. L. R. 695).

In the instant case the holder -was the apparent owner and became such by the positive act of the payee in delivering the paper to him with her indorsement thereon. In view of such apparent ownership, and in the absence of anything to put the bank upon notice of the plaintiff’s title, it was not required to make investigation. Either the plaintiff payee or the defendant bank must suffer a loss from the act of the third person, and both were innocent. The bank, however, was not only innocent, but it did nothing whatsoever to enable the third person to inflict the injury. On the other hand, the plaintiff invested the third person with the apparent *658ownership of the paper, and is therefore the person to bear the loss. See 21 C. J. 1176-1177.

The distinction between the present case and the case of Turner v. Williams, 29 Ga. App. 751 (2) (supra), is that in that case the stock certificate was hypothecated for a pre-existing debt of the bailee or depositary. The creditor who thus received the certificate still had his debt and his claim upon the debtor was not changed. He was not injured, and, therefore, could not invoke the equitable rule as laid down in section 4537. Matthews v. Kennedy, 113 Ga. 378 (2) (38 S. E. 854).

Counsel for the plaintiff in error question the applicability of several decisions, cited in our original opinion. We think the case of Commercial Bank v. Armsby Co., 120 Ga. 74 (supra), was entirely pertinent, and that it supports our conclusion in the present case. In Raleigh & Gaston R. Co. v. Lowe, 101 Ga. 320 (supra), the Supreme Court said “If, however, a bill of lading, duly indorsed, is stolen by reason of the negligence or carelessness of the owner or his agent, the carrier in good faith delivering upon such bill of lading is not guilty of a conversion.” It would seem that if an instrument of the same or like kind should be voluntarily delivered to another person with a proper indorsement thereon, the person so delivering would be in the same position as if he had negligently or carelessly permitted the instrument to be stolen. What can be the difference between negligently allowing an instrument so indorsed to be stolen, and in voluntarily placing it, in like condition, in the hands of another, who, after being thus invested with apparent ownership, disposes of the instrument contrary to agreement ?

The case of Tison v. Howard, 57 Ga. 410, cited by counsel for the plaintiff in error, is distinguishable from the case at bar. In that case, Howard, the owner of certain cotton, which he desired to ship to his factors, Tison & Gordon, received from the transportation company duplicate bills of lading therefor, indorsing both of the bills of lading in blank and sending the original to the factors and depositing the duplicate with Lampkin & Company, bankers, for safekeeping and for no other purpose. The bailee bankers indorsed the duplicate bill of lading and by attaching it to a draft drawn upon the factors obtained an amount of money thereon. The owner of the cotton thereafter brought suit against the factors and *659tbe bankers to recover the value of the cotton as for a conversion. While there is some language in the opinion that might tend to militate against our conclusion in the instant case, the court in that case seemed to stress the fact that the bankers did not even draw-in express terms on the cotton mentioned in the bill of lading. Their drafts paid by the factors were drawn generally — not on this particular cotton. The bankers did not make any express pledge of the cotton or of the bill of lading. The owner himself was the consignor of the cotton and this appeared on the face of the bill of lading. -In the headnote it was said that the proper person to pass a bill of lading by indorsement is the consignee, not the consignor. If the bankers had pledged the bill of lading, or had drawn upon the particular cotton covered thereby, a different question would have been presented.

If the county order was not a negotiable instrument, but was merely assignable as a chose in action, it is true that the defendant bank took it subject to the equities existing between the original parties, and would not be protected against a defense interposed by the maker, but this principle has no application here, since the issue as between the bank and the payee involves no right of the maker, the County of Thomas, to assert a defense. While the writer is of the opinion that the instrument could not be classed as a negotiable instrument, we still deem it unnecessary to decide this question.

Rehearing denied.

Jenkins,. P. J., and Stephens, J., concur.