New York Court of Appeals.

MOORS v. KIDDER ET AL.

S., a dealer in drugs in Boston, obtained, through K., P. & Co., agents for B. Bros. & Co., London, a letter of credit directed to C. C. B. & Co., Calcutta, S.'s agent for the purchase of drugs, authorizing him to draw upon B. Bros. & Co. to the extent of £3,000 for goods purchased on account of S., B. Bros. & Co.'s agency to have bills of exchange to that amount, if accompanied by bills of lading of the goods, filled up to the order of B. Bros. & Co. In his acceptance of this letter of credit, S. agreed that" all property which shall bo purchased by means of the within credit ✶ ✶✶✶ together with the bills of lading for the same, are hereby pledged and hypothecated to B. Bros. & Co. as collateral security" for the payment of the bills drawn against the credit, “and shall be held subject to their order on demand, with authority to take possession and dispose of the same at discretion for their security or reimburse ment: Held, that the title to goods purchased by C. C. B. & Co. on the strength of the credit and shipped, the bill of lading being filled up to the order of B. Bros. & Co. in accordance with the terms of the letter of credit, was in B. Bros. & Co., and that they were not mere pledgees of the goods.

One intrusted with the bills of lading for the purpose of warehousing the goods in the name of the owner, is not intrusted with documents of title for the purpose of sale or procuring advances within the meaning of the New York factors' act.

APPEAL from general term, Supreme Court, First Depart

ment.

Action brought by Joseph B. Moors against Kidder, Peabody & Co., Baring Bros. & Co., and John B. Hobby, Sons & Co., to recover the possession of a quantity of shellac.

One Swain, a dealer in drugs, etc., in Boston, for some years had been in the habit of purchasing merchandise through his agents, Bancroft & Co., of Calcutta, who bought the merchandise on Swain's account, and paid for it, when purchased, by drafts drawn on Baring Bros. & Co. against the merchandise under letters of credit issued to Swain by Baring Bros. & Co. through Kidder, Peabody & Co., their American agents. The letter under which the goods here in dispute were purchased was as follows:

"KIDDER, PEABODY & Co., 40 STATE STREET,

BOSTON, August 3, 1881. "Messrs. C. C. Bancroft & Co., Calcutta-DEAR SIRS: You are hereby authorized to value on Messrs. Baring Bros. & Co.,

London, for account of Paul M. Swain, Esq., Boston, Mass. by bills at three (3) months' sight for the cost of any shipment, of goods via San Francisco and thence overland, or at three (3) to six (6) months' sight for the cost of goods by any other route, direct, or under through bills of lading to Boston or New York, to the extent of three thousand pounds sterling (say £3,000 stg.), and we hereby agree with the drawers, indorsers, and bona fide holders, respectively, of the bills drawn by virtue of this credit, that the same shall be duly honored by Messrs. Baring Bros. & Co., upon presentation at their banking-house in London, if drawn and negotiated within six (6) months from this date, and if accompanied by bills of lading for such goods filled up to the order of Messrs. Baring Bros. & Co., and by invoice of the same to their order for the account of whom it may concern.

"A duplicate of such invoices, with consular certificate attached, together with one bill of lading, to be sent direct to us either by vessel or mail.

*

"Very respectfully, your obedient servants,

[Signed]

"KIDDER, PEABODY & CO."

In his acceptance of the letters Swain agrees that “all property which shall be purchased by means of the within credit, together with the bills of lading for the same, are hereby pledged and hypothecated to Messrs. Buring Bros. & Co. as collateral security" for the payment of the bills drawn against the credit, "and shall be held subject to their order on demand, with authority to take possession and dispose of the same at discretion for their security or reimbursement."

After the arrival of the goods at New York, Swain called at the office of Kidder, Peabody & Co., who had possession of the shipping papers, and from whom Swain had before obtained the shipping papers of other goods, and asked for the papers. When asked what he was going to do with them, he said he wanted to enter them at the custom-house and warehouse them for account of Baring Bros. & Co. Oa getting the papers, he gave them a receipt, stating that "such invoice and bill of lading are delivered to me for the purpose of enabling me to enter the goods referred to in them at the custom-house, and I hereby agree to place the goods in storage for Messrs. Baring Bros. & Co."

Swain entered the goods at the custom-house in the name of his broker, who warehoused them and gave the warehouse receipt to Swain, who then pledged it, with other receipts, etc., to the plaintiff for a loan. Kidder, Peabody & Co. and Baring Bros. & Co. took possession of the property and stored it with Hobby, Sons & Co., and the plaintiff thereupon brought

this action.

E. R. Robinson, for appellant.

Chas. B. Alexander, for respondents.

FINCH, J.-The entire argument of the appellant turns upon the proposition that Swain was the general owner of the shellac and the Barings merely pledgees. Upon that assumption the argument runs smoothly to its conclusion, and encounters no serious obstacle. But the grave trouble is in the assumption itself and the authorities which clash with it. The general subject was very thoroughly discussed in Farmers' & Mechanics' Nat. Bank v. Logan, 74 N. Y. 573, and whether the doctrine there declared covers the facts now presented, and whether they have or do not have vital distinguishing features, are the real subjects for our consideration. The doctrine stated was, in substance, that where a commercial correspondent, however set in motion by a principal for whom he acts, advances his own money or credit for the purchase of property, and takes the bill of lading in his own name, looking to such property as the reliable and safe means of reimbursement up to the moment when the original principal shall pay the purchase price, he becomes the owner of the property instead of its pledgee, and his relation to the original mover in the transaction is that of an owner under a contract to sell and deliver when the purchase price is paid. The authorities which sustain, and the reasons which justify, the doctrine need not be repeated, and it is required only that we determine whether it applies to and settles the case in hand.

There are some facts in the cited case which are not in this, and there are some in this which were not present in that, and to these and their effect attention must be directed. In that case the purchase was made by the brokers or agents of him who, as the ultimate vendee, may be termed conveniently, if somewhat