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upon him, delivers them back to the person from whom he received
them, is not guilty of a conversion, although he knew that they were
stolen. Loring v. Mulcahy, 3 Allen, 575.

But, in the opinion of a majority of the court, the coupons in ques-
tion do not stand upon the same ground as chattels. They were
negotiable promises for the pa3,Tnent of money, issued by the gov-
ernment, payable to bearer and transferable by mere delivery, with-
out assignment or indorsement. They are therefore not to be con-
sidered as goods, but as representatives of money, and subject to
the same rules as bank bills or other negotiable instruments paj'able
in money to bearer. Wookey v. Pole, 4 B. & Aid. 1; Gorgier v. Mie-
ville, 4 D. & R. 641; s. c. 3 B. & C. 45. Commonwealth v. Emigrant
Industrial Savings Bank, 98 Mass. 12. The rule of caveat emptor does
not apply to them. It is now well settled that the bearer of a bank
bill which has been stolen from the bank may recover the amount
from the bank, unless it is proved that he did not take it in good
faith and for valuable consideration ; and that his knowledge of sus-
picious circumstances is immaterial, unless amomiting to proof of
want of good faith. Worcester County Bank v. Dorchester & Milton
Bank, 10 Gush. 488; TT'^er v. Dorchester & Milton Bank, 11 Gush. 51;
Raphael v. Bank of England, 17 G. B. 161. And, according to the
great weight of authority, the same rule applies to bills of exchange
or promissory notes payable to bearer. Goodman v. Simonds, 20
How. 343.



3ECT. rV'.] SPOONER V. HOLMES. 405

The jury have found that the defendant took these coupons in
.-^^ood faith, without gross negligence, and as agent of his employer.
He thus acquired a lawful possession of them, which was no evidence
of a conversion. He then, before any demand or notice from the
rightful owner, transferred them by delivery, and exchanged them
for money, the amount of which he paid over to his employer. This
case does not present the question whether the defendant could have
been held liable to the rightful o\\Tier for the coupons or the proceeds
while in his own hands, nor whether he could be held to have paid
value for them. The single question is, whether he has been guilty
of a wrongful conversion; and, considering the nature of the instru-
ments, and the fact that the defendant was acting in good faith,
without gross negligence, as agent only, \\ithout himself receiving
any benefit from the transaction, a majority of the court is of opin-
ion that neither taking the coupons by delivery, transferring them
by delivery, nor pajdng over the proceeds to his employer, consti-
tuted a conversion for which he can be held liable in an action of
tort in the nature of trover. Addison on Torts (3d ed.) 317. The
instructions to the jur>' were therefore quite favorable enough to the
plaintiff.

The letter admitted against the objection of the plaintiff was com-
petent evidence of the mamier in which and the circumstances under
which the defendant received the coupons, although it did not of
itself prove that it was written by his employer.

Exceptions overruled.

Note. — In Kimball v. Billings, 55 Me. 147, the court said (p.
151): "It is no defence to an action of trover that the defendant
acted as the agent of another. If the principal is a wrongdoer, the
agent is a wrongdoer also. A person is guilty of a conversion who
sells the property of another, without authority from the owner, not-
withstanding he acts under the authority of one claiming to be the
owTier, and is ignorant of such person's want of title. Story on Agenc;, ,
§§ 311 and 312, and authorities there cited; Coles v. Clark, 3 Cush.
399. If, therefore, it be true, as the defendant says, that, in selling
the bonds sued for in this case, he acted as the agent or servant of
Mrs. Witham, and had no knowledge or suspicion that she was not
the true owner of them, these facts constitute no defence to the suit.
Mrs. Witham could not secure to him immunity for an act which
she could not lawfully do herself. Nor is it any defence that the
property sold was government bonds payable to bearer. The hona
fide purchaser of a stolen bond payable to bearer, might perhaps
defend his title against even the true owner. But there is no rule of
law that secures immunity to the agent of the thief in such cases;
nor to the agent of one not a hona fide holder. The evidence in this
case satisfies us that Mrs. Witham was not a hona fide holder; that



406 HOLLINS V. FOWLER. [CHAP. I.

she received the bonds well knowing that they had been stolen, if
she did not in fact procure the theft to be committed. The defend-
ant took the bonds into his possession, and, as her agent or servant,
sold them."



HOLLINS V. FOWLER.

L. R. 7 H. L. 757. 1875.

This was an appeal on a case stated, on which the Court of Queen's
Bench had given judgment for Fowlers, the plaintiffs in the action,
which judgment had been affirmed in the Exchequer Chamber, Law
Rep. 7 Q. B. 616.

Fowler & Co. were merchants at Liverpool. Hollins & Co. car-
ried on the business of cotton brokers there.

In December, 1869, Fowler & Co. instructed their brokers, Messrs.
Rew, to sell for them thirteen bales of cotton. A person named
Hill, a clerk to H. K. Bayley, a cotton broker at Liverpool, pro-
posed a purchase on his master's account. IMessrs. Rew refused to
sell unless the name of a responsible person was given as the pur-
chaser. Hill then said that Bayley was bu\'ing as broker for Thoma3
Seddon, of Bolton. The incjuiries as to Mr. Seddon beingquite satisfac-
tory, Messrs. Rew forwarded to Fowlers, their principals, a sold note,
in these tenns : — "Liveipool,Dec. 18, 1869. Messrs. Fowler Brothers.
We have this day sold on your account the undermentioned cotton."
Then came the description, "Thirteen bales — American — at 12c?.,
per Minnesota," and the buyer's name was given thus: "Thomas
Seddon, per H. K. Bayley." The payment was to be "cash within
ten days, less 1| per cent discount. " A counterpart of this note was
sent to Bayley himself. On the same day Bayley sent to Messrs. Rew
a sampling and delivery order, and the bales were delivered to him,
and removed to his warehouse. On the same day, also, Messrs. Rew
sent to Bayley the following note: " Mr. Thomas Seddon, per IMessrs.
H. K. Bayley & Co. Bought from Fowler Brothers, per Rew & Free-
man, brokers, 13 bales American cotton, ex Minnesota, 12c?. per lb.,
subject to the rules and regulations of the Liverpool Cotton Bro-
kers' Association. Payment in cash, within ten days, less 1| per cent
discount."

On the 23rd of December, H. K. Bajdey, being thus in possession
of the cotton, offered the same to Francis Hollins (one of the defend-
ants), who consented to purchase the thirteen bales at ll^c?. per
pound, and who purchased at the same time twenty-five other bales
of cotton from H. K. Bayley on the same terms. Messrs. Hollins,
under the usual form of order, sampled the cotton on the same day.
They had on that morning received a message from Messrs. Micholls,



SECT. rV.] HOLLINS V. FOWLER. 407

cotton spinners at Stockport (for whom they were in the habit of pur-
chasing cotton), stating that on that day Mr. INIicholls would be in
Liverpool to purchase cotton through the Messrs. Hollins, and those
gentlemen had bought the cotton from H. K. Bayley belie\ang it to
be of the sort which Alessrs. MichoUs would require. On examining
the cotton, Mr. Micholls agreed to take it. Messrs. Hollins were in
the habit of thus bming cotton in the belief that their customers
would take it. If any particular customer did not take to the cotton
thus speculatively purchased for him, Messrs. Hollins disposed of it
to some other customer. In the latter part of the 23rd of December,
Bayley received a delivery order in these temis: ''Please deliver the
bearer . . . cotton, ex Minnesota, at llf rf. per lb., bought this day for
Micholls & Co. Francis HolUns & Co." The thirteen bales were de-
livered on the following morning to Messrs. Hollins, by whom they
were at once forwarded to Micholls & Co., at Stockport. Bayley
received the price of the cotton from Hollins & Co., which was re-
paid by Micholls & Co., together vrith a sum for commission and
porterage, the defendants, Messrs. Holhns, not obtaining a profit
on the cotton, but merely recei\'ing a broker's commission on its
purchase.

IMessrs. Fowler not having received pajonent for the cotton at the
stipulated time (ten days), applied to Mr. Seddon, and then learnt
that he had never employed H. K. Bayley to purchase cotton for
him. Application was then made to Messrs. Hollins for the bales
of cotton, when the answer given was, "the cotton was bought by
one of our spinners, Messrs. Micholls & Co., for cash, and has been
made into yarn long ago, and as everything is settled up, we regret
we cannot render your client anj' assistance." The action for trover
was afterwards brought.

The cause was heard before jNIr. Justice ^YILLES, at the Livei-pool
Spring Assizes, 1870, when the facts above stated ha\'ing been proved,
the learned judge left two questions to the jury: first, whether the
thirteen bales in question had been bought by the defendants as
agents in the course of their business as brokers; and, secondly,
whether they dealt with the goods as agents for their principals.
Both questions were answered in the affirmative, and ]\Ir. Justice
WiLLES then directed the verdict to be entered for the defendants,
reserving leave to the plaintiffs to move to enter the verdict for them.

A rule was afterwards obtained for that pui-pose, and on the 25th
of November, 1870, was made absolute. On appeal to the Exchequer
Chamber, the judges were equally divided in opinion, and so the
judgment of the court below stood affirmed.

This appeal was then brought.

Mr. Justice Blackburn: My Lords, it appears from the state-
ment in the case that Fowlers, the plaintiffs, had delivered into the
actual custody of Bayley, a broker, thirteen bales of cotton, their



408 HOLLINS V. FOWLER. [CHAP. I.

property, they believing that they had sold these bales to Seddon,
through Bayley, as Seddon's broker, after they had refused to trust
Bayley himself; and beheving that Bayley was the agent of Seddon
to receive delivery; so that Fowlers thought that they were trans-
ferring the property to Seddon, but were mistaken, as in fact Bay-
ley had no authority from Seddon either to purchase or to take
delivery.

Under such circumstances the property and legal right to the pos-
session remained in Fowlers, and Ba^dey could not (except by a sale
in market overt) confer on any one, however innocent, a title supe-
rior to his own. He could not do it under the Factors Acts, because
he was not intrusted by the plaintiffs as their agents; nor could he
do it as being a person in whom the property had vested, subject to
being divested by the plaintiffs, for no property, even defeasible, ever
passed from the plaintiffs, as there never was any contract with any
one, though they erroneously thought there was one with Seddon.

These points were decided, as I think rightly, in the case of Hard-
man V. Booth, 1 H. & C. 803.

From the terms of reservation (set out in the note to the report of
the present case), it appears that the defendant had an opportunity
to have that case reviewed in a court of appeal, if so advised, for it
is said that, "The defendants be at liberty to argue, if necessary,
that the sale by Bayley under the circumstances gave a good title
to a bond fide purchaser for value without notice." The Court of
Queen's Bench, being bound by the decision of a court of co-ordi-
nate jurisdiction, could not so hold; and the defendants have not
raised the point for a court of appeal.

I proceed to state the farther facts.

Hollins, the defendants, as brokers, acting for Messrs. Micholls,
and Messrs. Micholls, as customers, acting through the defendants
as brokers, dealt with Bayley in a manner which would have been
quite right, if Bayle}^ had been an honest man or, even a dishonest
man, if intrusted by the plaintiffs with the possession of the goods,
as an agent, for sale.

And the defendants and Micholls were both innocent of any knowl-
edge of any infirmity in Bayley's title, and not only were they inno-
cent, but I think there is nothing amounting even to evidence of
negligence on the part of the defendants in dealing with Bayley with-
out farther inquiry, nor, a fortiori, in Micholls who trusted the defend-
ants to act for him, and dealt with Bayley because the defendants
selected him.

Under those circumstances, your Lordships ask the question,
whether the plaintiffs were entitled to have a verdict entered for
them for the value of the thirteen bales of cotton.

And I answer that question in the affirmative. Hov/ever hard it
may be on those who deal innocently and in the ordinary course o/



SECT. IV.] HOLLINS V. FOWLER. 409

business with a person in possession of goods, yet, as long as the law,
as laid down in Hardman v. Booth, 1 H. & C. 803, is unimpeached, I
think it is clear law, that if there has been what amounts in law to
a conversion of the plaintiffs' goods, by any one, however innocent,
that person must paj' the value of the goods to the real owners, the
plaintiffs. See Stephens v. Elwall, 4 M. & S. 259, and Garland v. Car-
lisle, 4 CI. & F. 693.

And, accordingly, I think it has not been disputed by any one,
that if the plaintiffs had sued Micholls, who has worked this cotton
up into yarn, Micholls must have had judgment against him for the
value of the cotton, and would be hable to pay the price over again,
though he honestly transmitted the price to the defendants Hollins,
who honestly handed it to Bayley.

And I take it that if the defendants have done what amounts
in law to a conversion, they also must be Hable to pay the plain-
tiffs.

It is hard on them, I agree, but I do not think it is harder than it
would have been on Micholls. Indeed, I think, that if the plaintiffs
were told that thej^ had recourse, at their option, against either the
broker or the spinner they might, without any obvious injustice,
have said: Then make the broker pay, for he went to Bayley's, so
that if there is any fault it is his.

But we cannot act on any notions of hardship.

When a loss has happened through the roguery of an insolvent,
it must always fall on some innocent party; and that must be a hard-
ship. Had the Legislature thought fit to make a sale in the cotton
market at Liverpool equivalent to a sale in market overt, the loss
would have fallen on the plaintiffs. As it is it falls on any one who
has done what the law esteems a conversion.

We must, I apprehend, in such cases look only to the question,
whether on the established principles of law the complaining party
makes out that the loss should fall on the innocent defendant rather
than on himself, the equally innocent plaintiff.

If, as is quite possible, the changes in the course of business since
the principles of law were established make them cause great hard-
ships or inconvenience, it is the province of the Legislature to alter
the law. That has been done to a very considerable extent by the
Factors Acts, and it may be expedient to extend that alteration
farther, but those Acts have not as yet been extended so far as to
embrace the case of any one, whether as broker or otherwise, deal-
ing with a person in the position of Bayley in this case. And I appre-
hend your Lordships will not, in your judicial capacity, depart from
the established principles of law to meet the hardship of a particular
case, even if you were so convinced of that hardship as to be willing
in your legislative capacity to concur in a change of the law in future.
But this leaves open what I take it is the real question in this case,



410 HOLLINS V. FOWLER. [CJIAP. I.

viz., whether what the defendants did amounts on the established
principles of law to a conversion.

I own that it is not always easy to say what does and what doef
not amount to a conversion. I agree with what is said by my Brother
Brett, in his judgment below, that in all cases where we have to
apply legal principles to facts, there are found many cases about
which there can be no doubt, some being clear for the plaintiff and
some clear for the defendant, and that the difficulties arise in doubt-
ful cases on the border line between the two.

I think many cases which at first seem^ difficult are solved if the
nature of the action is remembered.

Lord Mansfield says, in Cooper v^Chitty, 1 Burr. 20; 1 Sm. L. C.
417: "The bare defining of this kind of action and the grounds upon
which a plaintiff is entitled to recover in it, will go a great way
towards the understanding, and consequently the solution, of the
question in this particular case. In form it is a fiction, in substance,
a remedy to recover the value of personal chattels wrongfully con-
verted by another to his own use. The form supposes the defendant
may have come lawfully by the possession of the goods. This action
lies, and has been brought in many cases where in truth the defend-
ant has got the possession lawfully. When the defendant takes them
wrongfully, and by trespass, the plaintiff, if he thinks fit to bring
this action, waives the trespass, and admits the possession to have
been lawfully gotten."

It is generally laid down that any act which is an interference with
the dominion and right of property of the plaintiff is a conversion,
but this requires some qualification.

From the nature of the action, as explained by Lord Mansfield,
it follows that it must be an interference with the property which
would not, as against the true owner, be justified, or at least excused,
in one who came lawfully into the possession of the goods.

And in considering whether the act is excused against the true
owner it often becomes important to know whether the person, doing
what is charged as a conversion, had notice of the plaintiff's title.

There are some acts which from their nature are necessarily a con-
version, whether there was notice of the plaintiff's title or not. There
are others which if done in a bond fide ignorance of the plaintiff's
title are excused, though if done in disregard of a title of which there
was notice they would be a conversion. And this, I think, is borne
out by the decided cases. Thus a demand and refusal is always evi-
dence of a conversion. If the refusal is in disregard of the plaintiff's
title, and for the purpose of claiming the goods either for the defend-
ant or a third person, it is a conversion. If the refusal is by a per-
son who does not know the plaintift''s title, and having a bond fide
doubt as to the title to the goods, detains them for a reasonable time,
for clearing up that doubt, it is not a conversion: see Isaack v.



SECT. IV.] HOLLINS V. FOWLER. 411

Clarke, 1 Buls. 306, see p. 312; Vau^han v. Watt, 6 M. & W. 492.
The principle being, as I apprehend, that the detention, which is an
interference with the dominion of the true owner, is, under such
circumstances, excused, if not justified.

So the finder of goods is justified in taking steps for their protec-
tion and safe custody till he finds the true owiier. And therefore it
is no conversion if he bond fide removes them to a place of security.
And so far the general statement that an asportation is a conversion
must be qualified.

I cannot find it anj'where distinctly laid down, but I submit to
your Lordships that, on principle, one who deals with goods at the
request of the person who has the actual custody of them, in the
bond fide belief that the custodier is the true owner, or has the au-
thority of the true owner, should be excused for what he does if the
act is of such a nature as would be excused if done by the authority
of the person in possession, if he was a finder of the goods, or intrusted
with their custody.

I do not mean to say that this is the extreme limit of the excuse,
but it is a principle that will embrace most of the cases which have
been suggested as difficulties.

Thus a warehouseman with whom goods have been deposited is
guilty of no conversion by keeping them, or restoring them to the
person who deposited them with him, though that person turns out
to have had no authority from the true owner: see Heald v. Carey,
11 C. B. 977; Alexander v. Southeij, 5 B. & A. 247.

And the same principle would apply to the cases alluded to by my
Brother Hannen in his judgment in the court below, of persons
" acting in a subsidiary character, like that of a person who has
the goods of a person employing him to cany them, or a caretaker,
such as a wharfinger." It will enable us also to answer a question
put during the argument at your Lordships' Bar. It was said : " Sup
pose that the defendant had sent the delivery order to Micholls.
who had handed it to the railway company, requesting them by
means of it to procure the goods in Liverpool and carry them to
Stockport, and the railway company had done so, would the railway
company have been guilty of a conversion? "

I apprehend the company would not, for merely to transfer the
custody of goods from a warehouse at Liverpool to one at Stockport,
is prhnd facie an act justifiable in any one who has the lawful cus-
tody of the goods as a finder, or bailee, and the railway company,
in the case supposed, would be in complete ignorance that more was
done. But if the railway company, in the case supposed, could have
been fixed with knowledge that more was done then merely changing
the custody, and knew that the company's servants were transfcrrinf;
the property from one who had it in fact to another who was going
to use it up, the question would be nearly the same as that in the



412 HOLLINS V. FOWLER. [CHAP. I.

present case. It would, however, be very difficult, if not impossible,
to fix a railway company with such knowledge.

And on the same principle I take it the ruling of Lord Tenterden
in Greenway v. Fisher, 1 Car. & P. 190, may be supported; for the
packer was merely giving facilities for the transport of the goods
from one place to another, and was ignorant of the circumstances
which made it wrong against the true owner to remove the goods,
though I admit that his decision is not put by Lord Tenterden on
this ground, but on that of the packer's being a pubHc emplo^Tnent,
which I think my Brother Brett, in his judgment below, correctly
shews to be a mistaken ground ; I think the public nature of his em-
ployment was strong evidence that he was doing no more than assist
in the change of custody, which was, on the principle suggested,
excused in one ignorant of all that made the change of custody wrong-
ful, but I do not see how in itself it made any difference. A packer
is not, like a carrier or iimkeeper, bound to receive all goods brought
to him.

I think, however, it is but candid to admit that the principle I
have submitted to your Lordships, though it wiU solve a great many
difficulties, will not solve all.

In Comyns' Digest, Action on the Case — Trover, E., it is said,
"If a man deliver the oats of another to B. to be made oatmeal, and
the owner afterwards prohibits him, yet B. makes the oatmeal, this
is a conversion:" Per Berkly, 1638.

To this ever>' one would agree; but suppose the miller had honestly
ground the oats and deHvered the meal to the person who brought
the oats to him before he even heard of the true owner. How would
the law be then? Or suppose the plaintiffs in the case at your Lord-
ships' Bar had, for some reason, brought the action against Micholls'
men who assisted in turning this cotton into twist? The principle
I have suggested would hardly excuse such conversions; and yet I
feel that it would be hard on them to hold them liable. If ever such
a question comes before me, I will endeavour to answer it. I think
it is not necessary now to do so, for I think that what the defendants
are found to have done in the present case amounts to a conversion,
and is not in any way excused.

I do not rely on the ground, taken in the earlier part of my Brother
Cleasby's judgment below, that the defendants themselves were
the purchasers from Baj'ley, for though, if it were left to me to draw
inferences of fact, I should draw that inference, I doubt if it is open
to me so to do after the finding of the jury affirming that the defend-
ants were agents. But though it is to be taken in favor of the defend-
ants that they acted throughout as brokers, and only as brokers, for



Online LibraryUnknownSelect cases and other authorities on the law of property → online text (page 47 of 97)