1975 0. C.
A partner entrusted with possession of goods of his firm for the pur pose of sale may, either as partner in the business or as factor for the firm, pledge them for advances made to him personally and the lien of the pledgee will remain as valid as if the security had been given by the absolute owner of the goods notwithstanding notice that the contract was with an agent only.
Where a consignment of goods has been sold and they remain no longer in specie, the only recourse by a person who claims an interest therein is by an ordinary action for debt and he cannot claim any lien upon the goods themselves nor on the price received for them.
The plea of res judicata is good against a party who has been in any way represented in a former suit deciding the same matter in controversy.
*PRESENT:-Sir Henry Strong C. J., and Gwynne, Sedgewick, King and Girouard JJ.
(1) 27 Can. S. C. R. 309.
Bench for Lower Canada, appeal side, affirming the judgment of the Superior Court, District of Montreal, dismissing the appellant's interventions with costs. In a former action by a firm trading under the style of Ayer & Co. against the respondent for the revendication of a quantity of cheese the plaintiffs, Ayer & Co., obtained possession of the cheese, upon the filing of a security bond, and sold it. At the trial the action for revendication was dismissed and this judgment was affirmed upon appeal.
The respondent then sued upon the bond for the value of the cheese and the appellant filed two interventions claiming, ownership of one-third of the cheese, as a partner, and also another share as assignee of another partner in a firm, alleged to be the owner thereof, and demanded a lien upon its price. The interventions set up that appellant, as a partner along with Donald McBean and one Fraser, had been proprietors of the cheese; that it was from them that Ayer & Co. had derived their title; that through the agency of Donald McBean they had placed the cheese in the hands of respondent to be stored for the partnership at Montreal; that, subsequently, McBean sold the cheese to Bell, Simpson & Co., who sold to Ayer & Co.; that the cheese had never been pledged for advances; that respondent had no right to make advances thereon, nor had Donald McBean any authority to pledge it or to receive advances thereon, and that if any advances had been made, they had been repaid in full and the security released by the dealings had therewith by the respondent.
Both interventions were dismissed by the Superior Court and, on appeal, this judgment was affirmed by the Court of Queen's Bench.
A statement of the circumstances under which the action was taken and the questions at issue upon this appeal will be found in the judgment of His Lordship the Chief Justice
Leet Q.C. for the appellant. Neither of the judgments below is based on the question of chose jugde, but what is termed practically chose jugde. This is not pretended to be law. There is no chose jugde, because the former case did not decide the rights between respondent and intervenant, but only as between the respondent and Donald McBean. Art. 1241, C. C.; Rolland de Villargues, " Chose jugde," 36; Larombibre n. 1351, p. 18; Pand. Fr. Rep. " Chosejugde," nn. 832, 446, 563, 647; Cooper v. Molsons Bank, (1); Stuart v. Mott, ; Muir v. Carter,
After the appellant notified the pledgee of the position of affairs, the relation betw een the pledgee and appellant was that of a creditor and surety.
Before notice the pledgee might presume that all the produce belonged to Donald McBean and that he could deal with it as he liked, but after notice this could no longer be done.
The moment the pledgee became aware that the goods did not belong to the factor and that he had no right to pledge them for his personal debt, he could obtain no lien thereon for any future advances.
The goods must be regarded as the property of a third party held as security, and as soon as the advances were paid or the pledgee released the principal or dealt with the principal, to the prejudice of the surety, the security would be released. The release of cheese worth $7530, held at the time of the seizure, with full knowledge of the circumstances, without payment, and without appellant's consent, was in bad faith and fraudulent, and the appellant is entitled to an account of the securities held for the same debt for which this cheese was also pledged. The whole balance was for advances and credits after seizure and after knowledge that the cheese did not .
belong to the factor and that he had no right to pledge As to imputation of payments see arts. 1161, 1742 ; Clayton's Case at page ; Hooper v. Keay ; Bank of Scotland. v. Christie ; Simson v. Ingham (4); Bodenham v. Purchas (5); Green v. Clark Cleveland v. Exchange Bank of Canada (7); Aubry & Rau, §320 p. 167; Doyle v. Gaudette (8); Field v. Carr (9); Buchanan v. Kerby (10); In re Brown As to sureties' remedies against the principal, see arts. 1958, 1959 C.; Macmaster v. Hannah ; Mdnard v. Gravel (13); De Colayar on Guarantees (2 ed.) 290; Polak v. Everett (14); Campbell v. Rothwell Molsons Bank v. Heilig ; Allison v. McDonald Greenshields Q.C. and Dickson for the respondent. The seizure of the cheese had no more effect than to make the pledgee aware that the goods did not belong to the pledger. It did not notify him that -Donald McBean had no authority to pledge, and could not, for, as a matter of fact, he had that authority. Arts. 1739 et seq. C.
Such notice could not prevent a valid lien being created upon these goods, nor invalidate the lien previously created.
No seizure could take the goods out of the running account in which they had been validly entered.
Dalloz, Rep. " Compte Courant," nos. 1, 51, 55, 56.
As there are no legal imputations of payments in respect to running accounts, the whole balance of $15,947.65 constitutes a proper lien upon all merchandise received from Donald McBean and entered in the aceount, and even if the delivery up of some of the cheese is to be considered there would still be a large balance.
Moreover, this cheese was not delivered gratuitously, but only receipt of its market value.
We also refer to Roger v. Chap/eau and .Marsolais v. Willett
CHIEF JUSTICE.-In 1885 Donald McBean, a brother of the respondent, was in partnership with Alexander Dingwall, the present appellant, and one Fraser in a cheese factory near Charlottenburg, in the County of Glengarry, Ontario.
Donald McBean, who carried on business near the same place as a factor and dealer in agricultural products was entrusted by his partners with the produce of the factory for the purpose of sale.
Donald McBean dealt with the cheese from this factory as he did with all the produce which came from time to time into his hands either as the owner of it by purchase or as the agent or factor for others, that is to say, he consigned it to his brother, George McBeau, a commission merchant in Montreal, for sale.
George McBean made large advances on the security of the goods so consigned to him for which he always claimed as security the usual onsignee's factor's lien. Some short time subsequent to the first of August, 1885, several lots of cheese, in all about 405 boxes, the product of the Glengarry factory, worth about $2,300, were included in consignments made by Donald McBean to his brother the respondent. The partners of Donald McBean in the factory having received no returns for the cheese, the present appellant, Alexander Dingwall, proceeded to Montreal and having demanded the delivery of the cheese from George McBean, the latter claimed a lien on it for his general balance for advances made on the security of various consignments 6f produce received by him. At the time the cheese was so demanded there remained due to George McBean, on account of these Juice.
advances, some $13,000 against and as security which he held the cheese in question and a quantity of other produce, grain, peas and cheese, belonging either to Donald McBean or to those for whom he acted as a factor and in which Dingwall and P raser, his partners in the cheese factory, had no interest whatever.
Upon the refusal of George McBean to deliver up the 405 boxes of cheese, the appellant sold, or assumed to sell the same to a firm of Bell, Simpson & Co. who in turn re-sold it to Ayer & Co., the defendants in the present action.
No money was paid on either of these sales and there is good ground for inferring from the intervention of the appellant and his claim in the present action that they were merely colourable, made for the purpose of apparently vesting the property in the ultimate transferees, in order that the appellant, Dingwall, might himself make the affidavit required to obtain an order for delivery in the action of revendication which he purposed to institute and did thereupon immediately institute in the name of Ayer Co. for the specific delivery up of the cheese.
The action for revendication being thus pending the defendants Ayer & Co. on giving the required bond securing the re-delivery of the goods, or the payment of their value in case of failure in the action, obtained an order of the court for the writ of saisie revendication and thus obtained delivery of the cheese to them through the sheriff. The action then proceeded and was dismissed at the hearing by Mr. Justice Cimon, whose judgment was, on appeal to the Court of Queen's Bench, affirmed by the latter court. Thereupon the respondent, George McBean, instituted the present action against Ayer & Co., upon the security given in the action for revendication, (on the faith of which the goods had been delivered up,) to recover the value of the cheese which had been sold by Ayer & Co. or by the appellant through them. Ayer & Co. pleaded to the action and the present appellant intervened filing a principal and subsequently an incidental intervention. Although issue does not seem to have ever been regularly joined on the appellant's intervention, the parties by consent, as it appears from the judgment of
Mr. Justice Gill who heard the cause, went to enqudte and hearing, whereupon the pleas of the defendants and the interventions of the present appellant were all dismissed and judgment was given in favour of the respondent for the amount realised for the cheese sold less a certain proportion thereof which had been transferred by the respondent to one Alexander McBean.
Upon appeal to the Court of Queen's Bench the judgment of Mr. Justice Gill was affirmed with costs.
From this latter judgment the present appeal has been taken to this court.
We have in the notes of Mr. Justice Hall a very full, clear and able statement of the grounds in law as well as in fact upon which the judgment now under appeal proceeded, and we entirely concur in the opinion thus expressed.
There can be no doubt that
Donald McBean, either as a partner in the business the cheese factory or as the factor of the firm or company which carried on the manufacture, had authority in law effectually to pledge the cheese in question with George McBean for advances made to him by the latter. The authority of Donald McBean to pledge the cheese as he did cannot be doubted in view of article
1740 of the Civil Code and the right of the respondent to retain the property so pledged for the general balance due to him by his principal is equally clear under the same article 1740, and article 1975 of the same code.
TheChief
There exists no law warranting any such position as that assumed by the appellant, who insists that it was the duty of the respondent so soon as he had notice from Dingwall that the cheese was the property of the firm and not of Donald McBean personally so to impute the credits for moneys received from the sales of other goods held in pledge by the respondent as to liberate this cheese from any lien or charge created by Donald McBean. Under the article 1740, which is a re-enactment of the law as embodied in the British Factors Acts, the pledgee or lien holder is, in all respects, in the same position as if the factor or agent giving the security was himself the absolute owner of the property.
Equally groundless is the 'contention of the intervenant that the respondent on receiving notice of the. rights of the intervenant and Fraser was bound so to deal with the property held in security as not to prejudice their rights and that he therefore lost all claim to a lien on the cheese when be released other property deposited with him in security by Donald Mc- Bean. The answer to this is the same as that given to the former contention, namely, that the pledge holder can deal with the property as freely as if the factor or consignor creating the pledge were the absolute owner. Further there is a complete answer to this last point on the facts, since it clearly appears in the evidence that the property released was not given up gratuitously but only on payment of $8,000 which was its then market value.
For these reasons, therefore, which are the same as those in the Court of Appeal, the judgment in first instance was properly affirmed.
There is an additional ground for holding the appellant disentitled to maintain his intervention which is pointed out in the respondent's factum.
It is proved that after the delivery up of the cheese taken TheCief under the saisie revendication, it was sold and the proceeds received by the defendants, Ayer & Co. The goods therefore no longer remained in specie and, if the sale to Ayer & Co. was genuine, the recourse of the intervenant against them, supposing him to be still unpaid, would be a pure money demand-an ordinary debt. How this can give the appellant any locus stanai to intervene in the present action, it is hard to see.
There is no allegation that the firm of Ayer & Co. was mere prdte-nom for the appellant that they in any way re-transferred the property in the cheese to the intervenant.
Therefore there is really no foundation for the claim set up by the intervention as the case is presented.
If, on the other hand, Ayer & Co. in any way represented the intervenant in the former action or, if the case really is that they have ceded their rights to the intervenant, then the defence of chose jugde maintained by the judgment of Mr. Justice Gill must be conclusive against the intervention.
The appeal is dismissed with costs.
and JJ. concurred in the judgment dismissing the appeal with costs. J.-This case presents no difficulty. The question is simply whether or not a factor has a lien upon and can retain goods consigned to him and in his possession until the advances in good faith made by him to the consignor in the ordinary course of business have been paid, notwithstanding his knowledge that the consignor was only an agent.
An affirmative