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ABATEMENT-SLANDER OF TITLE-DEATH OF PLAINTIFF.

QUEEN'S BENCH DIVISION, APRIL 1, 1887.

HATCHARD V. MEGE.*

An action for defamation, either of private character or of a person in relation to his trade, comes to an end on the death of the plaintiff, but an action for the publication of a false and malicious statement, causing damage to the plaintiff's personal estate, survives.

Held therefore that a claim for falsely and maliciously publishing a statement calculated to injure the plaintiff's right of property in a trade-mark was put an end to by the death of the plaintiff after the commencement of the action only so far as it was a claim for libel, but that so far as the claim was in the nature of slander of title the action survived, and could be continued by his personal representative, who would be entitled to recover on proof of special damage.

APPLICATION by the plaintiff for a new trial.

The statement of claim, so far as material to the point decided, was as follows:

Paragraph 1 alleged that the plaintiff was a wine merchant and importer, and the registered proprietor of a trade-mark thereinafter described, and a dealer in a brand of champagne introduced by him, and known as "the Delmonico" champagne.

Paragraph 4 alleged that the defendants wrote and published "of and concerning the plaintiff and his said trade as a wine merchant and importer the following false and malicious libel, that is to say:

"Caution: Delmonico Champagne. Messrs. Delbeck & Co., finding that wine stated to be Delmonico Champagne is being advertised for sale in Great Britain, hereby give notice that such wine cannot be the wine it is represented to be, as no champagne shipped under that name can be genuine unless it has their names on their labels. Messrs. Delbeck & Co. further give notice that if such wine is shipped from France they will take proceedings to stop such shipments, and such other proceedings in England as they may be advised," thereby meaning that the plaintiff had no right to use his said registered trade-mark or brand for champagne imported and sold by him, and that in using such trade-mark or brand he was acting fraudulently, and endeavoring to pass off an inferior champagne as being of the manufacture of Messrs. Delbeck & Co., and that the champagne imported and sold by the plaintiff was not genuine wine, and that no person other than the defendants had the right to use the word "Delmonico" as a trade-mark or brand, or part of a trade-mark or brand, of champagne in the United Kingdom.

"5. In consequence of the publication of the libel aforesaid, the plaintiff has been greatly injured in his credit and reputation, and in his said trade and business of a wine merchant and importer and dealer in champagne.

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"(3). 1,000l. damages in respect of the publication of the said libel.

"(4) An injunction restraining the defendants, their servants or agents, from continuing the publication of the said libel or any other advertisement or notice to a similar effect."

After the close of the pleadings the original plaintiff died, and an order was made by the master under Order XVII, r. 2, that the action should be carried on in the name of his executrix.

At the trial Lord Coleridge, C. J., after hearing the *18 Q. B. Div. 771.

opening statement of counsel for the plaintiff, directed a nonsuit to be entered on the ground that the action came to an end on the death of the original plaintiff. Morton Daniel (F. E. Cole with him), for plaintiff. Kemp, Q. C., and T. J. Bullen, for defendants.

DAY, J. This is an application to set aside a nonsuit, which was directed by the Lord Chief Justice on the opening statement of counsel, and the question is whether the nonsuit was properly entered.

The statement of claim alleges two distinct grievances. The first claim was for infringement of the plaintiff's trade-mark, but that was abandoned at the trial. The second claim is contained in paragraph 4, which sets out a distinct cause of action. The publication there set out is complained of as a libel on the plaintiff in relation to his trade. It is substantially a warning not to buy Delmonico champagne because it is not genuine. The statement of claim alleges that the publication is false and malicious; that would be a question for the jury; it is not for us to consider the facts of the case; we can only look at what was opened by the plaintiff's counsel and what appears on the pleadings. The innuendo charges that the defendants intended to convey the meaning that the plaintiff had no right to use his trade-mark or brand, and that the wine he sold was not genuine, It may be that the publication bears that meaning, and that the words used import dishonesty. The plaintiff has died, and the question to be decided is how much, if any part, of the cause of action survives. The statute 4 Edw. 3, ch. 7, and the course of practice, make it clear that a civil action for libel died with the death of the person libelled. It does not come within the spirit, and certainly not within the letter of the statute. There is however a further question whether a right of action can survive because injury to the plaintiff's trademark is alleged. Injury to trade is constantly alleged in actions for libel, and therefore that does not affect the question of survivorship. In the present case the second part of the statement of claim may be subdivided into two separate and distinct claims. The first is for ordinary defamation, either independently of the plaintiff's trade, affecting his character by charging him with being a dishonest man, or defamation of him in his trade by charging him with being a dishonest wine merchant. The claim would not snrvive, for it is nothing more than a claim in respect of a libel on an individual. But this publication may be construed to mean that the plaintiff had no right to use his trade-mark. This is not properly a libel, but is rather in the nature of slander of title, which is well defined in Odgers on Libel and Slander, ch. 5, p. 137, in the following passage: "But wholly apart from these cases there is a branch of the law (generally known by the inappropriate but convenient name, slander of title, which permits an action to be brought against any one who maliciously decries the plaintiff's goods or some other thing belonging to him, and thereby produces special damage to the plaintiff. This is obviously no part of the law of defamation, for the plaintiff's reputation remains uninjured; it is really an action on the case for maliciously acting in such a way as to inflict loss upon the plaintiff. All the preceding rules dispensing with proof of malice and special damage are therefore wholly inapplicable to cases of this kind. Here as in all other actions on the case, there must be et damnum et injuria. The injuria consists in the unlawful words maliciously spoken, and the damnum is the consequent money loss to the plaintiff."

It appears therefore that the first and last parts of the innuendo in the present case suggest slander of title. As appears from the passage I have read, an ac

tion for slander of title is not an action for libel, but is rather in the nature of an action on the case for maliciously injuring a person in respect of his estate by asserting that he has no title to it. The action differs from an action for libel in this, that malice is not implied from the fact of publication, but must be proved, and that the falsehood of the statement complained of, and the existence of special damage, must also be proved in order to entitle the plaintiff to recover. The question whether the publication is false and malicious is for the jury. Here I think special damage is alleged by the statement of claim, and if the plaintiff could have shown injury to the sale of the wine which he sold under his trade-mark, he would have been entitled to recover, and that is a cause of action which survives.

For these reasons I am of opinion that the nonsuit was right so far as it related to the claim in respect of a personal libel, but was wrong as to the claim in respect of so much of the publication as impugned the plaintiff's right to sell under his trade-mark or brand. There will therefore be an order for a new trial, but it will be limited to this latter part of the claim.

WILLS, J. I am of the same opinion. The question is not free from difficulty, and it has to be decided on principle. As the case now stands, we must take it that it is alleged that the deceased plaintiff was the owner of a trade-mark, and that the defendants published a statement that whoever buys Delmonico champagne buys a spurious article. It is also alleged that this statement is false and malicious, and that it has caused special damage. It is true that special damage is not alleged so specifically as it might have been, but I think any reasonable person reading this statement of claim would see that it meant that special damage in the way of injury to trade had been suffered. It seems to me therefore that the injury complained of by this part of the statement of claim is not an injury to the deceased plaintiff personally, but an injury to his property in the trade-mark and brand of Delmonico champagne. It is clear that the right to a trade-mark is a right of property. This is apparent from the decision of the House of Lords in Wotherspoon v. Currie, L. R., 5 H. L. 508, where it was held, that in order to entitle a manufacturer to an injunction to protect his trade-mark, it was not necessary to show any wrongful intention on the part of the person against whom the injunction was asked for.

Here the defendants are alleged to have published a statement that the Delmonico champague imported and sold by the plaintiff was spurious. It seems to me that this is an allegation of a direct injury to property, which falls within the liberal construction of the act of 4 Edw. III, ch. 7, adopted by the modern decisions.

The case of Twycross v. Grant, 4 C. P. D. 40, seems to me to be a strong authority in favor of this view. Bramwell, L. J., there said: "It it clear that at common law the rule as to torts was correctly expressed by the maxim, 'Actio personalis moritur cum persona.' This rule was greatly altered at an early stage of our legal history by 4 Edw. III, ch. 7, and this statute being remedial in its nature, and also those amending it, have been construed very liberally; they have been held to extend to all torts, except those relating to the testator's freehold, and those where the injury done is of a personal nature."

Brett, L. J., in the same case, said: "Wherever a breach of contract or a tort has been committed in the life-time of a testator, his executor is entitled to maintain an action, if it is shown upon the face of the proceedings that an injury has accrued to the personal estate."

Cotton, L. J., said: "It has been argued that this is

an action to recover damages; in one sense that is true; but it is an action for a wrong done, not to the intestate himself, but to his property; therefore the right to sue upon his death was transmitted to his personal representative. For the defendant, reliance has been placed upon the judgment of Lord Chelmsford in Peck v. Gurney, L. R., 6 H. L. 377, 392, 393; it is sufficient to say, that in the opinion of his lordship, the executors of the deceased directors were not liable because his estate derived no benefit from the misrepresentation to which he was a party; here the personal estate of the intestate was injured. The difference between the two cases seems to me very great."

Twycross v. Grant, 4 C. P. D. 40, was an action for fraudulent misrepresentation, but I cannot see the distinction in principle between that case and the present, for if the statement of the law in Twycross v. Grant, to which I have referred, is correct, it follows that here the action is maintainable.

As to the rest of the action, it is clear that the claim in respect of a libel on the plaintiff in the way of his trade does not survive; but assuming that the statement was calculated to bring the plaintiff's trademark into disrepute, and so damage his property, the executrix may succeed in establishing a cause of action in respect of which she can recover; and therefore as to that part of the claim I am of opinion that there ought not to have been a nonsuit. Order for a new trial.

LIBEL AND SLANDER – PRIVILEGED COMMUNICATION-DISCHARGE LISTS

MALICE.

MICHIGAN SUPREME COURT, JUNE 9, 1887

BACON V. MICHIGAN CENT. R. Co.

The "discharge lists," which it is the custom and duty of each division agent of a railroad company to send monthly to his fellow agents, to put them on their guard against men whom he has discharged, are within the rule of qualified privilege. But where the reason given for the discharge of an employee is "stealing," and it appears in evidence that he was turned off because he had taken a good coat of a passenger from a train on which he was riding and left his own, which was much worn, in its place, and that the investigation of his explanation, that he did it by mistake, while hurriedly leaving the cars at his station, was not fairly conducted, there is evidence tending to show express malice on the part of the company, and it is error to direct a verdict in its favor.

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Clapp & Bridgman, for Bacon, plaintiff in error.

Edwards & Stewart (Ashley Pound, Otto Kirchner and Henry Russell, of counsel), for the railroad company, defendant in error.

CHAMPLIN, J. The Michigan Central Railroad Company is, and for a long time has been, engaged in operating a railroad extending from Detroit to Chicago. It employs agents at different points on its line, who have the care of divisions of itf road, and who are authorized to hire men to work for the defendant. It has adopted and carried into effect a plan by which every employee who is discharged from its service is reported to every agent authorized to employ men upon the line of its road regularly once a month. A list is made out by the assistant superintendent in charge of a division, in which are entered the names of the persons discharged the previous month, their oc

cupation, and cause; and this list is sent to each of the agents of the company authorized to employ men, and by them these lists are kept on file for their future reference and guidance in employing men. If a person who has been discharged from the service of the company applies for employment, the agent examines the list, and if it there appears that he was discharged for some offense, he refuses to employ him. The railroad company claim that the plan adopted is essential to the efficiency of the force employed by it, and to the protection of the company and the public against engaging in service incompetent or dishonest

servants.

The plaintiff is a carpenter, and had been employed by the defendant for three or four years in the bridge department. He resided at Niles, a station on the line of defendant's road. He had been at work at Michigan City under a foreman by the name of Palmer, and about the 14th of March, 1882, and on the evening of that day, he entered the fast train of defendant to ride to Niles. He sat in the smoking car, which was poorly lighted, and he threw his overcoat in a seat near by. When he reached Niles, on leaving the train in a hurry, by mistake he picked up a coat which was not his, and left his own, and carried it, with his tools, to the company's shop, and threw it across a bench. The owner of the coat, who was at the time in the dining car, on returning, discovered his loss, and reported it to the conductor. The coat which belonged to the plaintiff was found where plaintiff and other employees had been sitting. It was an old coat, much worn, and had on it a leather button attached to a string. The conductor telegraphed the chief train dispatcher at Jackson that there had been a coat taken on his train at Niles by one of Mr. Palmer's men and another left in its place. The matter was placed in the hands of a special agent or detective of the company, who sent word to Mr. Humphrey, another employee of the company, at Niles. The next morning, after he received word from the special agent, he went into the yard where Mr. Bacon was at work, and asked him if his coat had a leather button on it, and he said it had. He then told him he had such a coat in the baggage room, and that he (Bacon) had made a mistake, and got another coat. Bacon then went over to the bench where he had left the coat he had taken from the car, and handed it to Humphrey, saying that it was not his, and advised Humphrey to send it back. The coats were quite dissimilar; the plaintiff's being a much worn chinchilla, and the other a beaver cloth coat, some worn, but in good condition. The special agent made his report to the assistant superintendent, stating "that the coat had been taken from the train, and that there was a big mistake-after seeing both coats -so much so that I could not believe the man honest who had taken it, and told him that we had enough to do to watch professional thieves without watching our own men." He both wrote and had a personal interview with the assistant superintendent. He did not, before he made the report, go to Niles to make examination in reference to the case. This report was based upon the inspection of the two coats, and what he had learned from Humphrey and the conductor. He testified that he believed what he stated in his report to Mr. Brown, the assistant superintendent. A day or two later plaintiff was discharged, for which no cause was assigned at the time. Mr. George Dollivar was the defendant's agent at Niles as division roadmaster, and whose duty it was to employ men. He received one of these discharge lists in April, 1882, for the mouth of March. Plaintiff came to him, and requested to see the list. He showed it to him. It contained, among other names, the following:

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Thereupon the plaintiff brought this action of libel against defendant.

The court charged the jury that the communication was privileged, and the plaintiff could not recover without proving affirmatively not only the falsehood of its contents, but also that it was published with express malice; and upon the latter point he instructed the jury that there was no evidence to go to them, and he directed a verdict for the defendant. This charge of the court raises the only questions for our consideration, which are: First, was the communication privileged; and second, did the court err in taking the case from the jury on the ground of an entire want of evidence of express malice.

It is not claimed that the communication belongs to that class which are absolutely privileged, but counsel for defendant contends that it was a publication which related to a matter in which the defendant was interested, and concerning which the corporation and its officers, to whom it was sent, must needs be advised in order to prosecute defendant's business successfully, and therefore it was prima facie privileged; and to entitle plaintiff to recover, he must show that the publication was both false and malicious. The great underlying principle upon which the doctrine of privileged communications stands, is public policy. This is more especially the case with absolute privilege, where the interests and necessities of society require that the time and occasion of the publication or utterance, even though it be both false and malicious, shall protect the defamer from all liability to prosecution for the sake of the public good. It rests upon the same necessity that requires the individual to surrender his personal rights, and to suffer loss for the benefit of the common welfare. Happily for the citizen, this class of privilege is restricted to narrow and welldefined limits. Qualified privilege exists in a much larger number of cases. It extends to all communications made bona fide upon any subject-matter in which the party communicating has an interest, or in reference to which he has a duty to a person having a corresponding interest or duty. And the privilege embraces cases where the duty is not a legal one, but where it is of a moral or social character of imperfect obligation. Tompson v. Dashwood, 11 Q. B. Div. 45; Davies v. Snead, L. R., 5 Q. B. 611; Waller v. Lock, 45 L. T. (N. S.) 243; Somerville v. Hawkins, 10 C. B. 583; 20 L. J. C. P. 131; Toogood v. Spyring, 1 Cromp., M. & R. 181; Bank v. Henty, 7 App. Cas. 741; Delany v. Jones, 4 Esp. 193; Laughton v. Bishop, etc., L. R., 4 P. C. 504; Harrison v. Bush, 5 El. & Bl. 344; 25 L. J. Q. B. 25; Whiteley v. Adams, 15 C. B, (N. S.) 392; 33 L.J. C. P. 89; Shipley v. Todhunter (per Tindal), 7 Car. & P. 680; Harris v. Thompson,, 13 C. B. 333; Wilson v. Robinson, 7 Q. B. 68; 14 L. J. Q. B. 196; Taylor v. Hawkins, 16 Q. B. 308; 20 L. J. Q. B. 313; Manby v. Witt, 18 C. B. 544; 25 L. J. C. P. 294; Lewis v. Chapman, 16 N. Y. 372; Henwood v. Harrison, 41 L. J. C. P. 206; Edwards v. Chandler, 14 Mich. 471; Washburn v. Cook, 3 Denio, 110; Knowles v. Peck, 42 Coun. 386; Easley v. Moss, 9 Ala. 266; Van Wyck v. Aspinwall, 17 N. Y. 190; Cockayne v. Hodgkisson, 5 Car. & P. 543; McDougall v. Claridge, 1 Camp. 267; Weatherston v. Hawkins, 1T. Rep. 110; Laughton v. Bishop, etc., L. R., 4 P. C. 495.

The communication in question here is clearly within the principle of the cases above cited. It was

made by a person interested in behalf of the defendant company, and having in charge its affairs to a certain extent, to another person alike interested in behalf of the company regarding matters pertaining to his duties as an agent of the company authorized to employ men. Care was taken to restrict the communication to the proper persons, and also to prevent undue publicity. It is not only proper, but it is of the utmost importance to the company, and to the public having business transactions with it, that the servants employed by it shall be men of good character, temperate and efficient. Corporations may be liable for the negligence of their employees-not only so, but they may be held responsible for not engaging suitable servants, as well as for continuing in their employment unsuitable servants, whereby third persons suffer loss or injury through the want of care, skill, intemperate habits, or honesty of such servants. The plan adopted and pursued by the defendant was intended to protect the company against employment of persons whom it had found to be unworthy or inefficient, and is as fully privileged as a communication from one stockholder to another respecting the employment of a superintendent, or from one partner to another respecting the employment of a book-keeper, or from a person interested in a law-suit to another interested respecting the solicitor employed. But it is said that it was not necessary to state the cause of the discharge; that the communication was from a superior to a subordinate, and would have been sufficient to state the fact of the discharge without stigmatizing the plaintiff as a thief. This objection goes only to the character of the language used, and not to the occasion. The occasion determines the question of privilege. The language is only proper to be considered in connection with the question of malice. In the discharge list put in evidence there appear the names of thirty persons who were discharged in March, 1882. Of these, six were discharged for drunkenness and intemperance, who had been employed as clerks, brakemen, switchmen and laborers; others for incompetency and carelessness. It is in proof that defendant had about 5,000 men in its service, and any one can see that some system is necessary to prevent being imposed upon by persons unfit to be engaged in such important business as operating a railroad, where lives and property depend upon the trustworthiness of those filling every grade of employment down to and including the common laborer. The ruling of the court as to the privileged character of the communication was correct.

The meaning in law of a privileged communication is that it is made on such an occasion as rebuts the prima facie inference of malice arising from the publication of matter prejudicial to the character of the plaintiff, and throws upon him the onus of proving malice in fact, but not of proving it by extrinsic evidence only. He has still a right to require that the alleged libel itself shall be submitted to the jury, that they may judge whether there is any evidence of malice on the face of it. Wright v. Woodgate, 2 Cromp., M. & R. 573; 1 Gale, 329.

It was held in Somerville v. Hawkins, supra, that a communication being shown to be privileged, it lies upon the plaintiff to prove malice in fact. In order to entitle him to have the question of malice left to the jury, he need not show circumstances necessarily leading to the conclusion that malice existed, or such as are inconsistent with its non-existence, but they must be such as raise a probability of malice, and be more consistent with its existence than its non-existence; and in Cooke v. Wildes, 5 El. & Bl. 329, it was held that if the occasion creates such privilege, but there is evidence of express malice, either from extrinsic circumstances or from the language of the libel

itself, the question of express malice should be left to the jury. In actions for defamation, malice is an essential element in the plaintiff's case. But in these cases the word "malice" is understood as having two significations; one its ordinary meaning of ill will against a person, and the other its legal signification, which is a wrongful act done intentionally, without just cause or excuse. These distinctions have been denominated malice in fact and malice in law. The first implies a desire and an intention to injure; the latter is not necessarily inconsistent with an honest purpose; but if false and defamatory statements are made concerning another without sufficient cause or excuse, they are legally malicious, and in all ordinary cases malice is implied from the defamatory nature of the statements and their falsity. The effect therefore of showing that the communication was made upon privileged occasion is prima facie to rebut the quality or element of malice, and casts upon the plaintiff the necessity of showing malice in fact-that is, that the defendant was actuated by ill will in what he did and said, with a design to causelessly or wantonly injure the plaintiff-and this malice in fact, resting as it must, upon the libellous matter itself, and the surrounding circumstances tending to prove fact and motive, is a question to be determined by the jury. The question whether the occasion is such as to rebut the inference of malice if the communication be bona fide is one of law for the court; but whether bona fides exist is one of fact for the jury. 1 Am. Lead. Cas. (5th ed.) 193; Smith v. Youmans, 3 Hill (S. C.), 85; Hart v. Reed, 1 B. Mon. 166, 169; Gray v. Pentland, 4 Serg. & R. 420, 423; Flitcraft v. Jenks, 3 Whart. 158. The jury may find the existence of actual malice from the language of the communication itself, as well as from extrinsic evidence. Hastings v. Lusk, 22 Wend. 410, 421; Coward v. Wellington, 7 Car. & P. 531, 536; Wright v. Woodgate (per Parke), 2 Cromp., M. & R. 573, 578; Jackson v. Hopperton, 16 C. B. (N. S.) 829.

I agree with Erle, C. J., in the case last cited: "The plaintiff does not sustain the burden of proof which is cast upon him by merely giving evidence which is equally consistent with either view of the matter in issue. When the presumption of malice is neutralized by the circumstances attending the utterance of the slander or the publication of the libel, the plaintiff must give further evidence of actual or express malice in order to maintain his action."

Was there evidence here which would warrant the jury in inferring that defendant acted from malicious motives when charging that plaintiff was discharged from its employment for "stealing?" The case is obscured somewhat from the fact that the defendant is a corporation. and its motives must be sought for in the acts and utterances of its agents, authorized or ratified by the corporation. The communication itself charges a crime. If made wantonly; if made without any reasonable evidence of its truth, or such evidence or circumstances as would lead an ordinarily prudent person to believe its truth; if the means of investigation were at hand, and none were made; or if investigation was made, the extent of the investigation, and what transpired-in short, all the facts and circumstances which preceded and led up to the charge of stealing-were proper, together with the charge itself, to be submitted to the jury; and from the whole evidence it was their province to determine whether the charge was made through a personal illwill or a wanton disregard of the character and rights of plaintiff. To my mind there was evidence, intrinsic and extrinsic the communication itself, from which the jury would have been justified in finding that the defendant was actuated by malice in fact or express malice. The intrinsic evidence is found in the charge itself, taking for granted what was proved, that the

exchange of coats was a mistake, caused by carelessness or negligence, without any criminal intent. It was for the jury to say that the circumstances were such under which the coat was taken, the information received by the special agent, the report made to the assistant superintendent, as to repel and rebut the bona fides of the defendant's agents in stating that plaintiff was discharged for stealing. And while I think there was evidence tending to show that the agents of the defendant were acting through spite or resentment toward plaintiff because he had not exercised greater care when taking the wrong coat when leaving the car, yet I fully agree in the remarks of Baron Parke in Toogood v. Spyring, 1 Cromp., M. & R. 193, that if such communications are fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of society, and the law has not restricted the right to make them within any narrow limits. If the agents of the defendant honestly believed that the plaintiff took the coat in question under the circumstances detailed to them, with the intention of appropriating it to his own use, the defendant is protected in having listed plaintiff as having been discharged for stealing. I think the evidence in the case should have been submitted to the jury to determine whether defendant, through its agents, acted in good faith under all the circumstances of the case. Klinck v. Colby, 46 N. Y. 427; Brow v. Hathaway, 13 Allen, 239; Gassett v. Gilbert, 6 Gray, 94; Fowles v. Bowen, 30 N. Y. 25; Kelly v. Partington, 4 Baru. & Adol. 700; 24 E. C. L. 144.

The judgment must be reversed and a new trial granted.

SHERWOOD, J., concurred.

CAMPBELL, C. J. I am not satisfied the libel was privileged, and therefore concur in reversal. MORSE, J. I concur in the reversal.

NEW YORK COURT OF APPEALS ABSTRACT.

AGENCY-FACTOR'S ACT-GOOD FAITH-WAREHOUSEMAN. A warehouseman who advances money to a commission merchant, on grain that has been consigned to him for sale cannot retain possession of the grain as security for his advances, under the New York factors' act (Laws 1830, ch. 179) as against the true owner, if he knew at the time that the commission merchant was wrongfully using the property to raise money for himself, as that act only protects persons dealing in good faith with the apparent owners of property. June 7, 1887. Dorrance v. Dean. Opinion by Danforth, J.

——— LIABILITY OF PRINCIPAL-SCOPE OF AGENT'S AUTHORITY.-A local freight agent, whose duty it was to receive and forward freight over the defendant's road, giving a bill of lading therefor, but having no right to issue such bills except upon the actual receipt of the property for transportation, issued fraudulent bills of lading to one Williams, who drew a draft on the consignee mentioned in the bills of lading and procured the money upon it of the plaintiff by transferring the bills of lading to secure its ultimate payment. Held, that the plaintiff was entitled to rely upon the representation in the bills of lading that the goods were actually shipped, and that the defendant was estopped to deny the authority of the agent to issue the bills since the act was within the apparent scope of his authority. While bills of lading are not negotiable in the sense applicable to commercial paper, they are very commonly transferred as security for loans and discounts,

and carry with them the ownership, either general or special, of the property which they describe. It is the natural and necessary expectation of the carrier issuing them that they will pass freely from one to another, and advances be made upon their faith; and the carrier has no right to believe, and never does believe, that their office and effect is limited to the person to whom they are first and directly issued. On the contrary, he is bound by law to recognize the validity of transfers, and to deliver the property only upon the production and cancellation of the bill of lading. If he desires to limit his responsibility to and delivery to the named consignee alone, he must stamp his bills as "non-negotiable; and where he does not do that, he must be understood to intend a possible transfer of the bills, and to affect the action of such transferees. In such a case the facts go far beyond the instances cited, in which an estoppel has been denied because the representations were not made to the party injured. Mayenborg v. Haynes, 50 N. Y. 675; Maguire v. Selden, 103 N. Y. 642. These were cases in which the representations made were not intended, and could not be expected, to influence the persons who relied upon them, and their knowledge of them was described as purely accidental, and not anticipated. Here they were of a totally different character. The bills were made for the precise purpose, so far as the agent and Williams were concerned, of deceiving the bank by their representations, and every bill issued not stamped was issued with the expectation of the principal that it would be transferred and used in the ordinary channels of business, and be relied upon as evidence of ownership or security for advances. Those thus trusting to it and affected by it are not accidentally injured, but have done what they who issued the bill had every reason to expect. Considerations of this character provide the basis of an equitable estoppel, without reference to negotiability or directness of representation. It is obvious also upon the case as presented, that the fact or condition essential to the authority of the agent to issue the bills of lading was one unknown to the bank, and peculiarly within the knowledge of the agent and his principal. If the rule compelled the transferee to incur the peril of the existence or absence of the essential fact, it would practically end the large volume of business founded upon transfers of bills of lading. Of whom shall the lender inquire? And how ascertain the fact? Naturally he would go to the freight agent who had already falsely declared in writing that the property had been received. Is he any more authorized to make the verbal representation than the written one? Must the leuder get permission to go through the freight house or examine the books? If the property is grain it may not be so easy to identify; and the books, if disclosed, are the work of the same freight agent. It seems very clear that the vital fact of the shipment is one peculiarly within the knowledge of the carrier and his agent, and quite certain to be unknown to the transferee of the bill of lading, except as he relies upon the representation of the freight agent. The recital in the bills that the contents of the packages were unknown would have left the defendand free from responsibility for a variance in the actual contents from those described in the bill, but is no defense where nothing is shipped and the bill is wholly false. The carrier cannot defend one wrong by presuming that if it had not occurred another might have taken its place. The presumption is the other way, that if an actual shipment had been made, the property really delivered would have corresponded with the description in the bills. The facts of the case bring it therefore within the rule of estoppel as it is established in this court, and justify the decision

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