Helburn-Thompson Co. v. All Americas Mercantile Corp.

Smith, J.:

It appears that defendant sold to a firm in Buenos Aires three cases of leather. The National Park Bank bought and discounted two drafts at ninety days after sight for the amount of the sale, drawn on the Buenos Aires firm, to which drafts were attached bills of lading and certificates of marine and war risk insurance. The bank transmitted the papers to its Buenos Aires agent, who procured the acceptance of said drafts by said firm, and thereupon delivered to them the bills of lading and accompanying documents. Thereafter both said firm and the defendant failed. The firm was owing the defendant large amounts of money and, among other things, sent back to the defendant these three cases of leather, which are now in the possession of the receiver of the defendant. The bank has made a motion to obtain possession of these goods, claiming a hen thereon for the payment of the two drafts, and this claim has been upheld by the court at Special Term.

These two drafts, so far as appears, were in the ordinary form with the usual bills of lading and insurance certificates attached. When the drafts were purchased by the bank and duly indorsed by the,defendant the bank acquired a special property in' and hen upon the goods covered by the bills of lading as security for the acceptance by the drawees of the purchased drafts. It is well established that in the absence of special agreement the purchaser of a time draft with bill of lading attached acquires title to the property described in the bill of lading conditional upon the acceptance of the draft by the drawee, not upon the ultimate payment of such draft. (See Marine Bank of Chicago v. Wright, 48 N. Y. 1; National Bank v. Merchants’ Bank, 91 U. S. 92; 35 Cyc. 334.) Upon the acceptance of these drafts the bills of lading were turned over to the firm, as must have been contemplated, for otherwise the firm could not have obtained the goods from the carrier. After the acceptance by the Buenos Aires firm, therefore, the sole object of the pledge was accomplished,' and upon the surrender of the bills of lading to this firm the bank lost all interest in the specific goods pledged, and thereafter must be deemed to have been content to hold instead of a lien on specific goods, merely the personal liability of the acceptors for a liquidated amount as represented by the drafts.

Such being the situation at the time of the acceptance of the drafts by, and the delivery of the bills of lading to these vendees of the goods in question, it is not apparent how the bank could ever subsequently acquire a special property in these specific goods, whatever disposition the vendees might choose to make of them. A surrender by the pledgee of a pledge, even though upon a promise that the indebtedness will be paid from the sale of the pledge, is a surrender of the pledgee’s lien. (Black v. Bogert, 65 N. Y. 601; Hickok v. Cowperthwait, 137 App. Div. 94.) ' After the surrender by the bank of any lien that it might otherwise have had, by the surrender of the bills of lading, it cannot matter how these

specific goods afterwards came back into the possession of the defendant, the original'vendor and the drawer of the draft. The legal effect of the transaction with and by the bank, in the absence of any special arrangement shown, negatives absolutely the existence of any facts sufficient to establish an implied trust that these goods or the proceeds from the sale of these goods should be used solely to pay these drafts. Such a trust as claimed could arise only from an express or implied agreement between the bank and the acceptors as to the ultimate disposition of the goods or the proceeds thereof. The law, however, as stated, establishes, at least presumptively, the contractual relations between these parties. The bank could have protected itself by Having the acceptance made conditional upon payment of the drafts, but not having done so it must be presumed to have released absolutely its lien upon these goods after the acceptance of the drafts, and, accordingly, cannot now reasonably claim a trust in its favor.

Nor do the authorities cited in the dissenting opinion establish any different rule. The dissenting opinion quotes a sentence from section 22 of Jones on Liens (2d ed.), to the effect that as between the immediate parties a change of possession may not defeat the lien. The question there considered was whether the lienor had delivered property to the owner under circumstances indicating his intention to surrender his hen. The point of the rule is stated in the last sentence in the section: “ Thus, where the owners of a sawmill permitted boards, sawed by them at a stipulated price, to be removed from their mill-yard to the bank of a canal at the distance of half a mile from the mill, it was held that they lost their hen in respect to third persons, though not against the owner of the boards, it being expressly stipulated between the parties that the hen should continue notwithstanding the removal.” It is very clear that a surrender under such a stipulation would not divest the lien as against the owner.

In the case of Flour City Nat. Bank v. Garfield (30 Hun, 579), referred to in the dissenting opinion, a draft was drawn upon some consignees of goods, which draft was discounted by the plaintiff bank upon the specific agreement that the draft was to be accepted and paid by the consignees from the proceeds of the sale. It was there held as against the assignee of the consignor, who obtained possession of the wheat before its delivery to the consignees, that the bank had a lien upon the wheat to secure the draft discounted upon the faith thereof. There was no such agreement in the case at bar. The draft discounted was payable in ninety days, without any agreement whatsoever that the proceeds of the sale of the leather should be applied to the payment of the draft.

In the case of Means v. Bank of Randall (146 U. S. 620, 627, 628), also referred to in the dissenting opinion, there was a specific agreement “ that a draft for the amount advanced should be drawn by Lyons against the shipment on the defendants, to be accepted by them and paid out of the proceeds of the sale of the cattle.”

No case is cited, and I have been able to find none, in which where the legal lien of a pledgee has been divested by a surrender of the goods pledged, an equitable hen was held to obtain, unless under some specific agreement therefor, of which there is no pretense in the case at bar.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Dowling and Page, JJ., concurred; Clarke, P. J., and Scott, J., dissented.