J. C. 1866 PEASE V. GLOAHEC. THE "MARIE First, that the firm of S. & T. acquired no new title to the goods by the fraud of T., as it merely invested them with the temporary power of trans-ferring their property in the goods; and Secondly, that the right of M. & D., the vendors, to stop in transitu wasgone, as the transfer to P. & Co. was bonâ fide, and for a valuable consideration, in ignorance of T.'s fraud. An ownership which was at the time perfect in law, though voidable as topart, namely, the possession, cannot in principle be treated differently from an ownership voidable as to the whole, but is in the interim protected by the interposition of a bonâ fide purchaser for valuable consideration. IN this appeal the suit was instituted by the Appellants, the assignees of a Bill of lading of a cargo of linseed meal, against the ship, Marie Joseph, and also against the Respondent, the Master and owner of that vessel. The facts were these:— Messrs. Maxwell & Dreossi, of Bordeaux, in France, Merchants, by Stericker, their agent at Hull, in the month of February, 1864, agreed with Messrs. Scarborough & Tadman, of Kingston-uponHull, for the sale to them of sixty tons of linseed cake, Scarborough & Tadman to pay for the same by their acceptance at three months' date. The cake was shipped on board the MarieJoseph, at Bordeaux, on the 11th of February, 1864, by Maxwell & Dreossi; and a Bill of lading, promising to deliver the same at Hull unto order of Maxwell & Dreossi, or to assigns, he or they paying freight for the same, was signed by the Respondent, and given by him to Maxwell & Dreossi. The Bill of lading was indorsed by Maxwell & Dreossi, and a Bill of Exchange for the purchase-money was drawn by them on Scarborough & Tadman, and Maxwell & Dreossi forwarded such Bill of lading and Bill of Exchange to Stericker. On the 16th of February, 1864, Stericker, as agent of Messrs. Maxwell & Dreossi, took the Bill of Exchange, together with the Bill of lading and Policy of Insurance of the linseed cake, to the office of Scarborough & Tadman at Hull, and the Bill of Exchange was then accepted by Scarborough, on behalf of his firm, and handed by him to Stericker in payment for the linseed cake, and Stericker thereupon delivered the Bill of lading, indorsed by ·Messrs. Maxwell & Dreossi, and the Policy of Insurance to Scarborough. J. C. 1866 PEASE V. GLOAHEC. THE "MARIE After this had been done, it appeared that a conversation took place between Stericker and Scarborough respecting the affairs of a Mr. Moore with whom the firm of Scarborough & Tadman had dealings, and whose affairs were considered to be in a doubtful position, and the result of that conversation was that Stericker requested Scarborough to let him (Stericker) have the the Bill of lading, JOSEPH." which Scarborough did, and the following memorandum was given and signed by Stericker for the same:-" Hull, 16th February, 1864. Memorandum that I have received of Messrs Scarborough & Tadman, of Hull, a Bill of lading and Policy of Insurance for about sixty tons linseed cake, shipped ex Marie Joseph, dated at Bordeaux the 11th of February, 1864, and which I hold as security against their acceptance of Messrs. Maxwell & Dreossi's draft for 4277. 1s. 4d., due on the 14th of May, 1864, until the cakes are sold, or the vessel arrives." On the 18th of February, 1864, Tadman went to Stericker and. stated to him that his firm had sold the linseed cake to a Mr. Croysdale, who would accept a Bill of Exchange against the Bill of lading which Tadman asked for, and which Stericker handed to him. The representation made by Tadman was untrue, as his firm had not sold the linseed cake at the time when the Bill of lading was so returned to him. On the same day that Tadman obtained the Bill of lading, but subsequently thereto, the Appellants, who were Bankers at Hull, to whom Scarborough & Tadman were largely indebted, applied to them to reduce their debt. Tadman then offered the Appellants, as security for their debt, the Bill of lading of the linseed cake, the Policy of Insurance effected thereon, and some warrants for some sacks of rib grass. The Appellant, Pease, on behalf of his firm, accepted the same, and Tadman then, on behalf of his firm, indorsed the Bill of lading to them, and delivered such Bill of lading, and also warrants for some sacks of rib grass, as security for advances then made, or which might thereafter be made, by the Appellants to Scarborough & Tadman, with power to sell the linseed cake. Scarborough & Tadman were at this time indebted to the Appellants in an amount exceeding the value of the linseed cake, but the Appellants were not aware that Scarborough & Tadman were then in insolvent circumstances. The Appellants, who had J. C. 1866 PEASE V. GLOAHEC. THE "MARIE JOSEPH." no notice or knowledge of the Bill of lading having been handed to Stericker, nor of the means by which it had been obtained back from him, retained possession of the Bill of lading, and advanced further moneys to Messrs. Scarborough & Tadman. On the 4th of March, Moore stopped payment, and on the 7th of that month Scarborough & Tadman also stopped payment. The Bill of Exchange for the price of the linseed cake was in circulation at this time, but in consequence of the stoppage of Scarborough & Tadman it was not paid. On the 5th of April following, the Marie Joseph arrived at Hull, with the linseed cake on board. The Appellants claimed delivery of the linseed cake from the Master of the Marie Joseph, and Stericker, who had in the interim received from Maxwell & Dreossi a Bill of lading indorsed to himself, claimed on their behalf the right to stop the same in transitu. Ultimately the linseed cake was delivered by the Master of the Marie Joseph to Stericker. The Appellants then instituted this suit against the Marie Joseph, her tackle, apparel, and furniture, and the Respondent, her Master and owner, under the provisions of the 24 Vict. c. 10, s. 6, for the recovery of damages in respect of the breaches of duty and of contract on the part of the Respondent in not having delivered the linseed cake to them. The case was heard on the 1st and 2nd of August, 1864, and on the 10th of November, 1864, the learned Judge, the Right Hon. Dr. Lushington, pronounced against the claim of the Appellants, on the ground that the Bill of lading having been obtained back from Stericker by Tadman, upon false representations and by fraud, it was negotiated without Stericker's consent, or the consent of the vendors of the linseed cake, and contrary to the understanding between Scarborough and Stericker; and that the fraudulent conduct of Tadman invalidated the indorsement of the Bill of lading to the Appellants, though they became holders for valuable consideration, in ignorance of the fraudulent act of Tadman. The learned Judge, in support of this view, referred to the observation of Lord Campbell in Gurney v. Behrend (1), that it is not enough that the Plaintiffs shew they became bonâ fide holders of the indorsed Bill of lading for valuable consideration. (1) 3 El. & B. 633. Mr. Mellish, Q.C., and Mr. E. C. Clarkson, for the Appellants: J. C. 1866 PEASE V. JOSEPH." There being no dispute as to the facts, the question is narrowed to a single point of law, whether Maxwell & Co., the shippers, had, under the circumstances, a right to stop in transitu the goods GLOAHEC. shipped by them to Scarborough & Tadman. The Court below THE "MARIE was mistaken in thinking that this case was governed by Gurney v. Behrend (1). The facts are essentially different. There it was laid down by Lord Campbell that, primâ facie, the Defendants had a right to stop certain wheat, the subject of the action, as it was still in transitu, the vendors being unpaid, and that G., with whom the Bill of lading had been pledged by a third party for valuable consideration, was not entitled to the cargo, unless the party pledging the Bill had not merely possession of the Bill, but the right to transfer it. Here the facts are widely different. The Bill of lading, indorsed by the vendors, was, by their authority, and with the intention of transferring the property therein to a purchaser, delivered by Stericker, their agent. It is true the Bill of lading was subsequently returned to Stericker, yet, when handed back by Scarborough & Co. to Stericker, he was acting within the authority originally conferred upon him by his principals, and, from the first, intended to deal with their right in the Bill of lading. The Appellants were bonâ fide holders of the Bill of lading for valuable consideration, without notice of fraud. The transfer to them was valid, and the Appellants, therefore, entitled to the goods. The learned Judge, in the Court below, did not distinguish between obtaining goods by fraud, or obtaining them without authority; or that a transfer of property obtained by fraud is voidable only and not void. If a contract of sale be obtained by fraud on the part of the purchaser, it may be voidable at law upon the authority of Gurney v. Behrend (2), but it is not absolutely void as against a purchaser for value. It is void only at the election of the vendor, and it is too late to declare such election after the goods have passed into the hands of a bona fide purchaser without notice: White v. Garden (3); Parker v. Patrick (4); Stevenson v. Newman (6), where all Kingsford v. Merry (5); (1) 3 El. & B. 622. (3) 10 C. B. 919. (4) 5 T. R. 175. (5) 11 Ex. 577; S. C. 1 H. & N. 503. J. C. 1866 PEASE V. THE "MARIE the cases are collected. Barrow v. Coles (1); Patten v. Thompson (2); In the matter of Westzinthus (3); Dyer v. Pearson (4). [LORD CHELMSFORD:-Messrs. Scarborough & Tadman having GLOAHEC. parted with the Bill of lading, could not recover it in trover.] No. Although there may not be any direct decision to be found which is on all fours with the present case, yet the principle which we rely upon is to be deduced from those authorities. Our proposition is, that, admitting the right to stop in transitu, in case of the vendee's insolvency, yet that that right may be defeated by indorsing and delivering the Bill of lading to a bona fide indorsee for a valuable consideration without notice of fraud: Lickbarrow v. Mason (5). Again, the Appellants are entitled by Statute, 5 & 6 Vict. c. 39, s. 1, to the Bill of lading. Dr. Deane, Q.C., and Dr. Swabey, for the Respondent: Possession of the Bill of lading having been obtained from the vendors' agent, by the fraudulent representations of Tadman, the transfer by him to the Appellants by indorsement and delivery of the Bill of lading, conveyed no title to the goods, as the transfer was tainted with fraud. There is a great distinction between Kingsford v. Merry (6), White v. Garden (7), and other cases of that class cited by the Appellants, and the present case. It makes no difference that Tadman once had, with his partner Scarborough, a property in the Bill of lading, for it was handed back by them to the vendors' agent, from whom it was obtained by fraud. Newsom v. Thornton (8) is a strong case in support of this position. There it was held that a Factor could not pledge the goods of his principal by indorsement and delivery of the Bill of lading any more than by the delivery of the goods themselves, though an indorsee knew not that he was Factor; and though the goods were consigned on the joint account of the consignors and consignee and a Bill of lading was sent to deliver the goods to the consignee or his assigns, who afterwards indorsed and delivered it to the Defendants, upon condition of their making an advance to him on it, which they failed to do, but claimed to regain it as (1) 3 Camp. 92. (4) 3 B. & C. 38. (5) 2 T. R. 63, and see Smith's Leading Cases, note 431. [Ed. 1841.] (6) 11 Ex. 577; S. C. 1 H. & N. 503. (7) 10 C. B. 919. (8) 6 East, 17. |