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55 N.Y. 3252
The evidence of ownership required in dealing in negotiable paper, in the ordinary course of business, is the possession thereof, properly indorsed so as to pass the title to the holder, and he who purchases from one claiming to have the right of disposal, but who has not these evidences of title, cannot claim as a bona fide holder for value; he only acquires such rights and equities as existed in his vendor, and subject to all equities as against him.4
A party is only estopped by a declaration or representation, inconsistent with the facts asserted and attempted to be proved, when it is made with intent, or is calculated and may be reasonably expected to influence the conduct of another, and when it has had such influence and has induced action from which injury will accrue if a retraction is allowed.5
Where one has given credit upon the faith of the solvency of another who has failed, while yet the fruits of that credit are in the actual or constructive possession or within the reach of the party giving the credit,  and who will be the loser unless he can retain or reclaim such fruits, he has the right so to do; and the particular relation of the parties to each other, or the nature of the transaction in which credit is given, is not material. The right is not confined to the sale of goods on credit, and there is no distinction affecting such right between personal chattels of merchandise in transitu, and money or negotiable bills. This right continues so long as the avails of the credit can be traced and identified, until there has been a change in the possession and title.6
If an agent has advanced money or incurred a liability upon the faith of the solvency of his principal, and the latter becomes insolvent while the proceeds and fruit of such advances or liability are in the possession of the agent or within his reach, and before they have come to the actual possession of the principal, the agent has a lien upon the same for his protection and indemnity.7
Plaintiff, at the request of S. & Co., of New York, drew bills of exchange on London and sold the same in Havana, investing the proceeds in currency bills on New York, payable to the order of S., a clerk of S. & Co. These bills, in a package directed to S. & Co., were delivered to the purser of the steamer C. to be carried to and deposited in the post-office in New York city. Plaintiff telegraphed to S. & Co., stating in substance the sale and purchase, and that the bills purchased had been forwarded by steamer C. S. & Co. applied to defendant P. for a loan, exhibiting to him the telegram; and upon delivery of the telegram, with a letter of S. & Co. agreeing to hand over the bills on arrival, P., relying upon the same in good faith, made the loan desired. Upon the next day S. & Co. failed, owing P. the loan so made. Plaintiff, having learned of the failure before the arrival and delivery of the bills, commenced this action to recover them, and obtained an order therein restraining the postmaster of New York and S. & Co. from transferring or disposing of the same. Held, that P. could not claim as bona fide holder, but only acquired the rights and equities of S. & Co. in the bills; that plaintiff had the right to reclaim the bills, and was not estopped from asserting such right by the telegram.8
(Argued December 11, 1873; decided December 23, 1873.)9
APPEAL from order of General Term of the Supreme Court in the first judicial department, reversing a judgment in favor of the defendant Pondir, entered upon the decision of the court at Special Terra, and granting a new trial. (Reported below, 6 Lans., 472.)10
This action was brought to recover possession of certain bills of exchange. Defendant Pondir only appealed and answered, claiming the bills as a bona fide purchaser.11
On the 12th of May, 1869, Schepeler & Co., merchants in  New York, sent to the plaintiff, a banker doing business in Havana, under the firm name of Muller & Co., an order, which the plaintiff received, directing him to draw bills of exchange, for £20,000, on J. Henry Schroder & Co., of London, to sell the bills so drawn in Havana, and invest the proceeds in bills of exchange on New York, payable in currency, and to send these last mentioned bills to Schepeler & Co. Upon receiving this order, the plaintiff proceeded to execute it by drawing bills of exchange, as therein directed, for Schepeler & Co., upon J. Henry Schroder & Co., London correspondents of Schepeler & Co., payable sixty days after eight, and selling the same in the city of Havana; among these bills were bills amounting in the aggregate to £9,000, and the proceeds of these £9,000 constitute the fund in controversy in this action. The bills so purchased by the direction of Schepeler & Co. were all made payable to the order of Richard Smith, a clerk in the employment of Schepeler & Co. The bills were inclosed by the plaintiff with a letter of advice in an envelope addressed to Schepeler & Co., and on the 13th day of May, 1869, after the mail-bag for the steamer Cleopatra, plying between the said city of Havana and the city of New York, had been closed and taken on board the vessel, was handed by a clerk of the plaintiff to the purser of the steamer.12
On the said 13th day of May, 1869, after the purchase and shipment of the bills in question, the plaintiff at Havana sent to Schepeler & Co., at New York, the following telegram.13
"HAVANA, May thirteenth (13th), 1869.
"SCHEPELER & Co.:
Drew nine (9) twelve (12) and eleven three-quarters (11¾), remit Cleopatra sixty thousand (60,000) twenty-six half (26½).
This telegram was intended to and did give Schepeler & Co. to understand that the plaintiff had drawn £9,000 aa directed, had sold a portion of the bills at 112 and a portion  at 111¾, and against the bills so drawn would remit by the steamer Cleopatra, $60,000 in bills drawn on New York, which they had purchased at 26½ per cent discount. At the time the plaintiff sent this telegram he had no notice that Schepeler & Co. were in failing circumstances. This dispatch was received by Schepeler & Co. late in the afternoon on the same day it was sent, or the next morning.15
For several years prior to the 15th day of May, 1869, Schepeler & Co. and the said Pondir had had transactions with each other, including borrowing and lending money. For a year prior to the 15th day of May, 1869, these transactions had been of almost daily occurrence; the loans of money made by Pondir to Schepeler & Co. were in large part made by him as a broker for account of other persons, and in part on his own account. These loans were sometimes made upon security, and sometimes without security, depending upon the state of accounts between the parties.16
On the afternoon of the 13th of May, 1869, John F. Schepeler informed the defendant Pondir that lie would want a good deal of currency the next day; Pondir inquired what securities he had to offer; Schepeler answered, that he did not know yet, but would see in the morning.17
On the morning of the 14th of May, 1869, the defendant John F. Schepeler called upon the defendant Pondir, and exhibited to him the telegram of Midler & Co., and applied to him for a loan of $70,000. The defendant Pondir thereupon agreed to make a loan to Schepeler & Co. of $70,000 upon the security, and of the currency bills in question, with the understanding that Schepeler & Co. should surrender to him the dispatch, accompanied by a letter expressing their understanding.18
Schepeler & Co. then addressed to Pondir a letter, of the following tenor:19
"NEW YORK, 14th May, 1869.
"JOHN PONDIR, Esq.:
"DEAR SIR.—Being in want of some funds, and not having any available securities at hand, we inclose the cable tele  gram from Havana, advising remittances of about $60,000 currency, which, in case you can furnish us the money, we shall hand over to you on their arrival.
"SCHEPELER & CO."
Upon the receipt of this letter, with the cable telegram in question, the defendant Pondir on the same day loaned to Sehepeler & Co. the sum of $70,000, which money has not been repaid. This loan was made by Pondir in good faith, he relying upon the telegram of the plaintiff and the security of the bills in question. At the time of making this loan the defendant Pondir had no knowledge that Sehepeler & Co. were in failing circumstances, and no reason to suppose that their pecuniary condition was not as good as at any time theretofore. In the afternoon of the 15th of May, 1869, the firm of Sehepeler & Co. failed, owing the defendant Pondir the loan in question. The aforesaid sterling bills of exchange, drawn by Muller & Co. on J. Henry Schroder & Co., of London, were not accepted, but were protested for nonacceptance, and thereupon Muller & Co. provided J. Henry Schroder & Co. with funds with which to pay them at maturity, and they were so paid.21
On the 17th of May, 1869, the day before the arrival of the steamer Cleopatra at the port of New York, the agent of the plaintiff applied to Sehepeler & Co. to permit him to receive, on behalf of the plaintiff, the letter inclosing the currency bills in question, on the ground that Sehepeler & Co. had failed, and the plaintiff would be obliged to provide for the sterling bills. This permission not being given, the present action was commenced.22
The purser, after the arrival of the steamer at New York, handed said package to the postmaster at the city of New York; such delivery was not made until after the letters in the mail bag brought by said steamer had been delivered and distributed, and not until after the bills inclosed in said letter had been demanded of the firm of Sehepeler & Co. and of  the postmaster, and not until after this action had been commenced, and in injunction obtained and served on Schepeler & Co. and Smith, restraining them from interfering with, or indorsing, said bills.23
The court found as a conclusion of law that the plaintiff did not sustain such a relation to the currency bills of exchange purchased in Havana, the proceeds of which are in controversy in this action, as to entitle him to exercise the right of stoppage in transitu in respect thereof, and directed judgment awarding the bills to defendant Pondir.24
W. W. MacFarland for the appellant. Plaintiff had no right to stop the currency in transitu, and, if he ever had any, it was destroyed by the assignment of it to defendant, Pondir. (Gilson v. Caruthers, 8 M. & W., 340; 1 Smith's L.C., 432 a; Smith's Merc. L., 552; Wiseman v. Vanderpot, 2 Vern., 203; Luce v. Prescott, 1 Atk., 246; D'Aquilla v. Lambert, 2 Eden, 75; Feise v. Wray, 3 East, 93; Newson v. Fountain 6 id., 17; Sifkin v. Wray, id., 371; Bell's Com. on Laws of Scotland, 7th ed., 223, 224, 245.) Wherever the right of stoppage in transitu exists, it may be defeated by a sale of the goods in transitu. It is not necessary to a valid sale of the goods that they should be in the actual possession of the vendor. (2 Kent [marg. page], 578; Wilson v. Little, 2 Comst., 443; Dykers v. Allen, 7 Hill, 448; Houser v. Kemp, 3 Barr., 208; Story on Bail., § 290; Davies' D.C.R., 199; 1 Hare, 549; McComber v. Parker, 13 Pick., 175; Calkins v. Lockwood, 16 Conn., 276.) Plaintiff is estopped from asserting a claim to these bills against Pondir. (Cont. Nat. Bk. v. Nat. Bk. of Commonwealth, 50 N.Y., 575; Young v. Grate, 13 E.C.L., 253; Leckbaum v. Mason, T.T.R., 70; Fatman v. Loback, 1 Duer, 354; Bk. of Buffalo v. Kortright, 22 Wend., 348; Putman v. Sullivan, 4 Mass., 45; McDonal v. Muscatine Bk., 37 Iowa.) Pondir was entitled to have the bills indorsed; and the indorsement would have relation to the day of his purchase. (Story's Eq. Jur., § 64; Smith v. Pickering, Peak's Case, 50; Anon  1 Camp., 492; Rollston v. Herbert, 3 T.R., 411; Ex parte Gruning,13 Ves., 206; Ex parte Rhodes, 3 M. & D., 217; Watkins v. Marsh, 2 J. & W.; Pilans v. Van Microps, 3 Ben., 1663; Clarke v. Locke, 4 Ea., 57; Barney v. Worthington, 37 N.Y., 112.) If neither party had a legal title to the bills, equity would give it to the one who had the strongest equity. (Willoughby v. Willoughby, 1 T.E., 763; Blake v. Hungerford, Pr. in Ch. 158; Charlton v. Low, 3 P.Wins., 328; Ex parte Knott, 11 Ves., 609; Shine v. Gough, 1 Ball & B., 436; Bowen v. Evans, 1 J. & L., 264.) The equitable assignee of a chose in action is not liable to the latent equities of third persons of which he was ignorant when he took the assignment. (Livingston v. Dean, 2 J. Ch., 479; Murray v. Lylburn, id., 443; Murray v. Ballow, 1 id., 366; Davis v. Barr, 9 S. & E., 137; Taylor v. Sett, 10 Ban., 431; Mott v. Clark, 9 id., 403; McConnell v. Warwick, 4 liar., 365; Moore v. Holcomb, 3 Leigh, 597; McBlair v. Gibbs 17 How. [U.S.], 232; Ohio Life Ins. Co. v. Ross, 2 Mary. Ch. 225; Judson v. Corcoran, 17 How. [U.S.], 615.)25
E. W. Stoughton for the respondent. Poudir was not a bona fide holder of the bills. (Hedges v. Seaty, 9 Barb., 215.) He took the assignment of the bills, subject to all the equities of the original parties. (Bush v. Lathrop, 22 N.Y., 535). Plaintiff was the vendor of the bills, and was entitled to stop the bills in transitu the same as if they had been merchandise. (Smith v. Bowles, 2 Esp., 578; Houston's Law of Stoppage in Transitu, 28; 1 Pars. Ship. & Ad. L., 481, note, 1; 1 Grif. & Hol. on Bankruptcy, 371-375; Feise v. Wray, 3 East, 93; Siffken v. Wray, 6 id., 371; Haws v. Pratt, 17 N.Y., 263.) A vendor's right of stoppage in transitu can only be defeated by a transfer of the bill of lading to one who, Bona fide and without notice that the goods have not been paid for, advances money on the faith thereof. (Newson v. Thornton, 6 East, 41; Holbrook v. Vose, 6 Bosw., 107-111; Stanton v. Eager, 16 Pick., 473; Gardner v. Howland, 2 id., 599; Craven v. Ryder, 6 Taunt., 433; Small v. Moates, 9  Bing., 574; Dixon v. Yates, 5 B. & A., 313; Jenkyns v.Usbome, 7 M. & G., 679, 699; Akerman v. Humphrey, 1 Carr. & P., 53.) Pondir had only such title to the bills as Schepeler & Co. had, which was subject to the right of plaintiff to stop in transitu. (Bush v. Lathrop, 22 N.Y., 538, Davis v. Austin, 1 Ves., 247; Straights v. Hawley, 39 N.Y., 446; Lickborrow v. Mason, 1 S.L.C., 2 W. & T. Eq. Cas., 75; Covell v. Tradesmen's Bk., 1 Paige, 131; Mangles v. Dixon, 3 H. of L. Cas., 712, 714, 718, 731.) To defeat plaintiff's right to stop in transitu the bills should have been actually indorsed and delivered to Pondir. (Roger v. Comptoir, 2 Priv. Coun. Ap., 39; Hedges v. Sealy, 9 Barb., 215.)26
ALLEN, J. Pondir who claims title to the bills in controversy, under Schepeler & Co., alone defends this action. As between him and Schepeler & Co., it may be conceded that by the loan of money to the latter firm, under the circumstances established at the trial, and upon their promise to transfer the bills when they should arrive in New York, he acquired an equitable title, and could have enforced a specific performance of the promise, and an indorsement and delivery of the bills to him.27
But this equitable right comes far short of conferring upon him the rights of a bona fide holder for value of negotiable paper when transferred in the usual method and in the ordinary course of business. A transferree of commercial paper for value, in the ordinary course of business, without notice of any defects in the title, is protected by the law-merchant against all latent equities, whether of third persons or of parties to the instrument. His title is perfect, and his light to enforce the obligation absolute. But if any of the circumstances are wanting which go to make up this perfect title, a purchaser or transferree of commercial paper takes it subject to the same rules which control in the case of a transfer or assignment of non-negotiable instruments.28
The defendant Pondir never became the holder of the bills in dispute; they were not transferred to him by indorsement  in the usual way or in any other manner, and were not at any time in his possession, either actual or constructive; they were never within his control or in the possession or within the control of Schepeler & Co., from and under whom ho claims title. He only acquired such rights and equities as existed in Schepeler & Co., subject to all equities as against them. He occupies precisely the position of that firm; and whatever rights or remedies the plaintiffs or others had against them, in respect to the bills, can be asserted against Pondir as their equitable assignee. (Gilbert v. Sharp, 2 Lansing, 412; Hedges v. Sealy, 9 Barb., 214; Story on Prom. Notes, § 120, note 1; id., § 120, a; Savage v. King, 17 Maine, 301; Calder v. Billington, 15 id., 398; Southard v. Porter, 43 N.H.R., 379.)29
Neither was there anything in the history of the transaction or the acts of the parties which will give Pondir a better or other title as against the plaintiff than the mere equitable title, valid as against Schepeler & Co. only. The plaintiff is not estopped from asserting the same equities and the same legal rights against Pondir which would have availed against Schepeler & Co. The only act of the plaintiff upon which stress is laid and upon which an estoppel is sought to be based, is his dispatch to Schepeler & Co.; elliptical and obscure in its terms, but which was understood by the parties to whom it was addressed, and which indicated that the sender had drawn and sold bills on London to the amount of £9,000, at the prices stated, and against the bills so drawn would remit, by the steamer Cleopatra, $60,000 in bills on New York, which had been purchased at the discount stated. The telegram was true in all its parts; and the plaintiff does not seek now to controvert the truth of any of the statements there made. There was nothing in it to indicate the relation of the plaintiff or his correspondents, Schepeler & Co., to the bills, or the title of either to them. There was no statement inconsistent with the absolute ownership, by the plaintiff, of the bills to arrive by the Cleopatra, or with any claim the plaintiff might make to or in respect  of them as against Schepeler & Co., or any other person. The title of the bills was not the subject of or referred to in the dispatch; and if Pondir acted at all on the faith of Schepeler & Co.'s ownership or right to dispose of the bills, it was upon their statement of such ownership and right, and not upon any statement of the plaintiff; and the case shows, as the court has found, that Pondir did part with his money solely on the credit of Schepeler & Co., on the faith of their representations and promise to hand the bills over on their arrival. The only practical use of the telegram was to identify in a manner the bills which Schepeler & Co. claimed to own, and promised to transfer. The court below has found that the loan was made by Pondir in good faith; he relying upon the telegram of the plaintiff and the security of the bills in question. He could only rely on the telegram so far as it assumed to state facts; and the only security by means of or upon the bills he acquired was by the written promise of Schepeler & Co. to transfer them; and their representations de hors their dispatch.30
But an insuperable difficulty in predicating an estoppel in pais against the plaintiff upon the dispatch is, that it was designed solely for the information of the persons to whom it was addressed, and not to influence the action of any other person; and the communication was not of a character calculated to or which could, in the usual course of business, influence the action of third persons; and least of all was it calculated to induce any one to part with money upon the credit of the bills referred to, and faith in the title of Schepeler & Co. to them. The plaintiff could not have foreseen that the dispatch would be used as the basis of a credit, or that money could be borrowed on the faith of it. Every element of an estoppel was wanting. A party is only concluded, that is, estopped from alleging the truth by a declaration or representation, inconsistent with the facts asserted and attempted to be proved, when it is made with intent, or is calculated, or may be reasonably expected to influence the conduct of another in a manner in which he will be preju  diced if the party making the statement is allowed to retract, and when it has influenced and induced action, from which injury and loss will accrue of a retraction as allowed. (Finnegan v. Carraher, 47 N.Y., 493; Dezell v. Odell, 3 Hill, 215; Copeland v. Copeland, 28 Maine, 525; Brown v. Bowen, 30 N.Y., 519; Frost v. Saratoga Mutual Ins. Co., 5 Den., 154, and cases cited by BRONSON, J.; Brown v. Wheeler, 17 Conn., 345; Continental Nat. Bank v. Nat Bank of Commonwealth, 50 N.Y., 575.) There is no statement in the cable dispatch which is inconsistent with the rights now asserted by the plaintiff; and the assertion of such rights is not against good conscience in any view of the dispatch or the use designed or expected to be made of it, or which was actually made of it. The plaintiff is not therefore estopped from asserting any right he may have to the bills in controversy.31
Neither does the rule invoked by Pondir, that when one of two innocent persons must suffer from the wrongful or fraudulent act of another, the loss should devolve upon him by whose act or omission the wrong-doer has been enabled to perpetrate the fraud, avail him. That applies only when the wrong-doer is invested by the party sought to be charged, with the ordinary indicia of ownership, and jus disponendi of property, or an apparent authority to do the act from which loss must accrue to one of two innocent parties. (Commercial Bank of Buffalo v. Kortright, 22 Wend., 348; Young v. Grote, 4 Bing., 253.) The evidence of ownership of negotiable bills is their possession, properly indorsed, so as to pass the title to the holder. There is no such thing as a symbolical delivery of negotiable instruments; and the law does not recognize, for commercial purposes, a right of possession as distinct from the actual possession. Had Schepeler & Co. had actual possession, themselves, of the bills, and then indorsed and transferred them to Pondir, the plaintiff would have been remediless. This is not only the legal evidence of ownership, but it is that required in dealing in commercial paper in the ordinary  course of business; and he who acts with less evidence of title in one claiming to have the right of disposal, does so at his peril. As owners, Schepeler & Co. had no apparent title upon which the plaintiff could or did rely.32
Neither can an authority be spelled out or inferred from the dispatch to Schepeler & Co. to deal with the bills, either as their own or as the agents of the plaintiff or other owner. The apparent authority which will charge the plaintiff rather than the defendant with loss, under the rule invoked against him, must be found in the terms of the dispatch and not in the declarations and representations of Schepeler & Co. The court has found that the dispatch gave to Schepeler & Co.; and it could give no other or different idea to any other person, the information that he had drawn on London, and sold the bills, "and against the bills so drawn would remit, by the steamer Cleopatra, $60,000 on bills drawn on New York." For what purpose or for whose use the bills on New York were to be remitted, was not stated and cannot be implied, except that they were remitted against the London bills. The meaning and purpose of the dispatch, beyond the meager and barren advice of a proposed remittance for some purpose, must be gathered from the course of business of the parties, or from facts not stated in or to be implied from its terms. But, as remarked in considering the question of estoppel, the communication was legitimate, and in the ordinary course of business not calculated to mislead any one as to the relation of the parties to each other or the bills in controversy; and certainly no person, familiar with commercial usage and the law relating to bills of exchange, could anticipate that such a dispatch could avail to enable any one to negotiate the bills as owner, or otherwise, before their arrival, or that money would be advanced upon any supposed title or agency of the receiver of the dispatch to, or in respect to, the bills.33
The only remaining inquiry is, as to the right of the plaintiff as against Schepeler & Co., as Pondir occupies precisely their position, and has succeeded to their rights.  The doctrine of stoppage in transitu was largely discussed at the bar in the argument of the case.34
It has no direct application; and as the transaction is in its nature entirely distinguishable from the sale of goods upon credit to one who becomes insolvent before they come to his actual possession, or other persons have acquired rights as purchasers for value, and the rules which control in respect to the evidence of title and the modes of transmitting or transferring the title of negotiable instruments, and merchandise or other personal chattels are so entirely dissimilar, that but little advance will be made in arriving at a correct result in this case by reviewing the reported decisions referred to by counsel, elucidating the right and declaring its limits and the cases in which it may be exercised. This is not a case of stoppage in transitu. But the principle which lies at the foundation of the right of stoppage in transitu is very directly involved in this action, and upon it the rights of the plaintiff to the bills in controversy, in a great measure, depend. The right of a vendor to follow and reclaim merchandise sold upon credit, upon the happening of the insolvency of the purchaser, is an equitable right and is favored in the law. (Harris v. Pratt, 17 N.Y., 249; Smith v. Bowles, 2 Esp. R., 578.) It had its origin in a court of equity, but has become thoroughly engrafted upon the common law, and is now well established as a legal right; and the same reasons which give to a seller of goods to a distant purchaser who becomes insolvent, the right to stop them if he can do so before they come into the possession of the purchaser, will give to the plaintiff here the right to retain the bills in suit. Difficulties exist in the way of the seller of merchandise pursuing and retaking his goods, after sale, by which the title had passed to the buyer, which do not exist in respect to these bills; and this right to stop goods in transitu may be lost under circumstances which would not and could not, in the nature of things, apply to dealings in or in respect to commercial paper.35
The equities upon which the right of stoppage in transitu  rests are stated in Wiseman v. Vandeputt (2 Vern., 203) The plaintiffs, as assignees in bankruptcy of Bonnells, merchants in London, brought their bill for a discovery and relief touching certain silks consigned to the Bonnells by an Italian firm; but before the ship sailed from Leghorn, news came that the Bonnells had failed, and thereupon the Italians altered the consignment, and consigned the silks to the defendants. The court ordered a trial at law in an action of trover, to determine whether by the first consignment the property of the silks vested in the Bonnells, and upon the trial the plaintiffs had a verdict. Upon the cause coming on to be heard upon the equity reserved, the court declared that the plaintiffs ought not to have had so much as a discovery, much less any relief, in regard that the silks were the proper goods of the Italians, and not of the Bonnells, nor the produce of their effects; and therefore, they having paid no money for the goods, if the Italians could, by any means, get their goods again into their hands, or prevent their coming into the hands of the bankrupts, it was but lawful for them so to do, and very allowable in equity. The precise equity of the Italians and their English consignees, the defendants in that case, grew out of and rested upon the fact that, in the course of commercial dealings, the Italians had given credit to the Bonnells, relying upon their solvency and their ability to meet their obligations, and that firm having failed, the consideration which induced the Italians to engage in the transaction and part with their goods had failed, and unless they could repudiate the consignment, and retake their goods, they would be the losers, and that equity did not require that the transaction should be consummated, and the goods of the Italians go to swell the assets of the bankrupts, or go to some favored creditor, and they left to come in as creditors under the statute of bankrupts.36
The fact that the credit and the danger of loss arose from a sale of merchandise, rather than in any other commercial dealings, had no peculiar force, and added no charm to the equity. All that is necessary to bring a case within the pre  cise principle, and the reasons assigned in that case, and which have never been repudiated, but have come to lie favored both at law and in equity, is that faith and credit shall have been given to the solvency of another who has failed, while yet the fruits of that credit are in the actual or constructive possession, or within the reach of the party giving the credit, and who will be the loser unless he can retain or reclaim such fruits; and the particular relation of the parties to each other, or the nature of the transaction in which credit is given, is not material, neither is the right confined to goods or personal chattels, or to a sale of goods on credit. There is no distinction between personal chattels in transitu, or merchandise or money, or negotiable bills, which affects the rights of parties. (Smith v. Bowles, 2 Esp., 578.)37
It may be remarked that fraud is not a necessary ingredient of the equitable right involved in this action, and asserted by the plaintiff. Had the court below found as a fact that Schepeler & Co. fraudulently induced the plaintiff to engage in this transaction, we should have regarded it as abundantly sustained by the evidence. Indeed, it is difficult to see how they could, with honest intent, upon the eve and within three days of an avowed insolvency, so complete and absolute that it is doubtful whether their assets will pay ten per cent of their liabilities, induce an innocent foreign correspondent to assume liabilities for them to an amount exceeding $100,000, under the circumstances and in the form detailed in the case; but it is not necessary to establish actual fraud to enable the plaintiff to assert his right to retain the bills. The plaintiff became the purchaser of the bills in controversy and undertook to remit them to Schepeler & Co. upon the credit of that firm, and relying upon their solvency and ability to provide for their payment in London, and to indemnify him against them. They were not bought with the funds and were not the produce of the effects of Schepeler & Co., or bought upon their credit, except as the plaintiff gave them credit. They were bought with the  avails of the credit of the plaintiff, and his credit only. The bills on London, from the sale of which the funds were obtained for the purchase of these bills, were drawn by the plaintiff, who was the only person liable upon them. It is true they were drawn by direction of and against the account of Schepeler & Co. with the London bankers, but they were not accepted, and upon the non-acceptance the plaintiff was the only party liable to the holders upon the bills, and against this liability he only had the undertaking express or implied of Schepeler & Co. In truth, Schepeler & Co. had no credit with the London bankers, the drawees, but their account was largely overdrawn. Before the bills could be accepted, and probably before they left Havana, news was received of the failure of Schepeler & Co., upon whose credit and solvency the plaintiff had relied in drawing and selling the bills. In brief, the plaintiff had, before receiving intelligence of the insolvency of Schepeler & Co., by the negotiation and sale of bills drawn by himself, and upon which he alone was responsible, obtained the money with which the bills in controversy were purchased. It was in one sense a borrowing of money by the plaintiff upon his credit for the use of Schepeler & Co. If while the money, the proceeds of the sale of the London bills, had been in the actual possession of the plaintiff, he had learned of the insolvency of Schepeler & Co., the latter could not either in law or equity have compelled him to pay it over to them or their assignee in bankruptcy, or any favored creditor. He could have retained it to indemnify himself against the liability incurred. An agent may have a lien on the property or funds of his principal for moneys advanced or liabilities incurred in his behalf; and if moneys have been advanced or liabilities incurred upon the faith of the solvency of the principal, and he becomes insolvent while the proceeds and fruit of such advances or liability are in the possession of the agent, or within his reach, and before they have come to the actual possession of the principal, within every principle of equity the agent has a lien  upon the same for his protection and indemnity. If necessary to his protection, the plaintiff would have been permitted to repudiate the agency and assume that position which would best protect himself from loss by reason of the insolvency of his principal. An action by Schepeler & Co. for money had and received to their use, and which ex aequo et bono belonged to them, would have met with no favor. The case is not changed or the rights of the parties varied by a conversion of the money into negotiable paper. The rights and equities of the parties continue so long as the money can be traced and identified, until there has been a change in the possession and title. Had the plaintiff purchased bills payable or indorsed to Schepeler and had them upon his desk ready for transmission at the time of the receipt of news of the insolvency of that firm, no action could have been sustained by them for recovery of the bills in their possession without indemnity to the plaintiff.
Whether the proceeds of the London bills were invested in negotiable bills or merchandise cannot affect the rights of the plaintiff. The lien would be as sound and stand upon the same principle in the one case as the other. If the purchase had been of goods instead of bills, a lien would have existed in favor of the plaintiff, which would have given him the rights of a vendor, within the principle decided in Feise v. Wray (3 East., 93). The substance, rather than the form of a transaction, determines the rights and obligations of the parties, and, within the reason of the rule giving a vendor a lien for the price of goods sold, and a right to stop them in transituto the purchaser on the happening of his insolvency, he, upon whose credit or with whose means the goods are purchased and by whom they are consigned to the purchasers, is the seller of the goods. The lien does not depend upon the character of the property, and is equally valid in respect to negotiable bills in actual possession, or capable of being reached as to chattels. The bills in controversy were at all times, up to the time of the commencement of this action, in the actual or constructive possession of the plaintiffs. The  purser of the steamer to whom he delivered the package in which they were inclosed was the agent of the plaintiff. He received the package from the plaintiff with special directions to deposit the same in the Post-office in New York city, and those directions were revocable by the plaintiff at any time. He could have recalled the package before the steamer sailed, and could he have overtaken the steamer in mid-passage to New York the same right would have continued, and had he met the purser as he stepped on shore on his arrival in New York he would have been subject to the direction of the plaintiff in respect to the package. The bills were not committed to the post addressed to Schepeler & Co., neither were they intrusted to a common carrier consigned to that firm, but were placed in the possession of a servant and agent of the plaintiff for a special purpose, and were, for all purposes connected with his lien and right to retain them, as if they had been during all that time locked up in his safe in Havana. The fact that the bills were payable, either in the body or by indorsement, to Smith, a clerk of Schepeler & Co., and with intent to transfer the title to them, does not invalidate the lien or affect the equitable rights of the plaintiff. The transfer was incomplete until delivery, and a transaction begun relying upon the solvency of the parties concerned need not necessarily be consummated, if insolvency occurs. The fact might embarrass the plaintiff in enforcing the collection of the bills, but cannot destroy or invalidate his equitable lien.39
I am of the opinion that the plaintiff had and has the legal and equitable title to the bills as against Schepeler & Co., and Pondir claiming under them, and that the order granting a new trial should be affirmed and judgment absolute for the plaintiff.40
Order affirmed, and judgment accordingly.42
 Barnard v. Campbell, 55 N.Y. 461; Spinning v. Sullivan, 48 Mich. 9.43
 County of Randolph v. Post, 93 U. S. 514.44
 Fairbanks v. Sargent, 104 N.Y. 115.
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