in the following extract from a valuable judgment of Senator Vanderplanck: "The honest purchaser who buys for a valuable consideration in the course of trade without notice of any adverse claim or any circumstances which might lead a prudent man to suspect such adverse claim will be protected in his title against the original owner in those cases, and in those only, where such owner has by his own direct voluntary act conferred upon the person from whom the bona fide vendee derives title the apparent right of property as owner or of disposal as an agent."1 Mr. Justice Bayley's dictum, it will be remembered,2 is not so explicit. The test there proposed is whether "the owner has lent himself to accredit the title of another person"-nothing as to the act being voluntary. One of the clauses of the Factors Acts, too, is outside the Senator's rule; for by it if a vendor of goods "continues or is in possession of the documents of title" whether with or without the knowledge or assent of the purchaser is immateriala resale by the same vendor to an innocent purchaser will cut out the first buyer.3 In the Supreme Court of the United States it has been cautiously remarked that "it may be that the true owner by his negligence or carelessness may have put it in the power of a finder or thief to occupy ostensibly the position of a true owner, and his carelessness may estop him from asserting his right against a purchaser who has been misled to his hurt by that carelessness; "4 and the point has been distinctly decided in accordance with this view in the state of Georgia.5 In England, too, it must be said that even where by statute an owner of goods is to be estopped by the possession by another person of the documents of title, the consent of the owner (which is sometimes made a prerequisite) may be of very qualified character, namely, one obtained by fraud. And where it is sought to estop a company by its certificate of shares, it is not sufficient answer that the certificate was obtained by the 1 Saltus v. Everett (1838), 20 Wend. 279. See also Gurney v. Behrend (1854), 3 E. & B. 634; 23 L. J. Q. B. 265; Pease v. Gloahec (1866), L. R. 1 P. C. 219; 35 L. J. P. C. 66; Commercial Bank v. Colt (1853), 15 Barb. (N. Y.) 506. 2 Ante, p. 312. 3 52 & 53 Vic. (Imp.), ch. 45, § 8. And see the Sale of Goods Act, 56 & 57 Vic. (Imp.), ch. 71, § 25 (1): 59 Vic. (Man.), ch. 25, § 24 (1). 4 Shaw v. Railroad Co. (1879), 101 U. S. 565. 5 Lowe v. Raleigh (1897), 101 Ga. 320; 28 S. E. R. 867. 6 Sheppard v. Union Bank (1862), 31 L. J. Ex. 154. And see Baines v. Swainson (1863), 32 L J. Q. B. 281, and ante, ch. VIII. grossest fraud, or even by means of a forged transfer from the true owner.1 Upon the other hand, where a stock certificate indorsed in blank was taken from a safe by a person who usually had access to it, it was held that the thief could give no title;2 although it would be otherwise were the certificate, with the assent of the true owner, made out in the name of the thief.3 Upon what principle ought we to proceed? In treating of ambulatory contracts we shall see reason for reaching the conclusion that 'the ratio decidendi in all cases of lost or stolen securities must be the same. The documents are transferable; they carry with them (by being redeemable to the holder) ostensible ownership of them, or (in the case of brokers) ostensible agency; the true owner has assisted in this appearance (by careless custody or by lack of restriction upon the transferability of the documents); and he is, therefore, as against an innocent purchaser for value, estopped from asserting his title."4 The same principle is applicable in the case of lost or stolen documents of title. I may keep the documentary title to my goods in my own name, in which case I am safe; or I may put it in the name of another, in which case I ought to be estopped as against any person deceived by the appearance of ownership given to that other; or I may have my documents in such form that any person having possession of them shall appear to be the owner of the goods, in which case also I ought to be estopped. One of the reasons given in our now familiar Lickbarrow v. Mason case for depriving the consignor of the right to stop in transitu was that "if the consignor had intended to restrain the negotiability of it (the bill of lading), he should have confined the delivery of the goods to the vendee only, but he has made it an indorsable instrument." 5 The language of Best, C. J., with reference to misappropriated exchequer bills is apposite: "It is the plaintiff's own negligence in not filling up the blank" with his own name "that has rendered it impossible for the defendant to ascertain that he (the plaintiff) had any right to it."6 1 Re Ottos (1893), 1 Ch. 618; 62 L. J. Swan v. North British (1862), 7 H. & Ch. 166. 2 Bangor v. Robinson (1892), 52 Fed. R. 520; Young v. Brewster (1895), 62 Mo. App. 628. 3 Winter v. Belmont (1879), 53 Cal. 428. Compare Re Swan (1859), 7 C. B. N. S. 400; 30 L. J. C. P. 113; and N. 603; 31 L. J. Ex. 425; 2 H. & C. 5(1787) 2 T. R. 71. See the same reasoning applied to notes in Grant v. Vaughan (1726), 3 Burr. 1526. 6 Wokey v. Pole (1820), 4 B. & Ald. 1. The contrary view is put by Fuller, C. J., of the United States Supreme Court, in this form: "They (bills of lading) are regarded as so much cotton, grain, iron or other articles of merchandise, in that they are symbols of ownership of the goods they cover; and as no sale of goods lost or stolen, though to a bona fide purchaser for value, can divest the ownership of the person who lost them or from whom they were stolen, so the sale of the symbol or mere representative of the goods can have no such effect."1 Possession But the answer to this argument is not difficult. of goods is, usually, no representation of ownership of them. I may lend a friend my horse without any danger of misleading anybody by the change of possession. Were I to give my friend a bill of sale of the horse, to be used only after the happening of some contingency, the situation would be entirely different. I ought in such case to be estopped, although unauthorized use was made of the document. And so also if my title to certain goods is evidenced by a bill of lading to me or my order, and I indorse it to my friend with a view to certain application of it, and my confidence is abused, again I ought to be estopped. The distinction, therefore, between possession of goods and possession of a document of title to the goods is the distinction between goods and evidence of title to goods between no appearance of title to the goods and ostensible ownership of them. The law as to mere possession is the same as to real estate. I am in possession of certain land- that is not a representation by anybody that I am the owner of it; and if some one were to purchase from me, depending upon my possession as proof of my title, he would merely disclose very unusual ignorance of our system. If, however, the documentary title stands in my name, there is a representation by the true owner that the land is mine, or at all events such strong assistance rendered to my representation of ownership that he ought to be estopped as against an innocent purchaser." It is quite apparent, then, that the thief or finder of a document of title deliverable to bearer is in a very different position, so far as the public is concerned, from the thief or finder of goods. In the one case he is the ostensible owner, and in 1 Friedlander v. Texas (1888), 130 U.S. 423. See also Shaw v. Railroad (1879), 101 U. S. 557; Raleigh v. Lowe (1897), 101 Ga. 329; 28 S. E. R. 867. 2 Davis v. Bradley (1851), 24 Vt. 55; Nixon v. Brown (1876), 57 N. H. 34. Clarke v. Palmer (1882), 21 Ch. D. 124; 51 L. J. Ch. 634. the other he is not. In other words, he is in a position to mislead people in the one case, while in the other he is not. And if it be urged that at all events the true owner is not responsible for the situation, the reply is that he is that he might have kept his documents more securely, and at all events might have rendered them, by special or restrictive indorsement, unavailable to fraudulent people, of whom, as he knew, there is no lack.1 Further light upon the subject in hand may be had by reference to the discussion of the reasons which underlie the law as to title to bills and notes when such instruments are passed by a thief or finder. The same reasons are equally applicable to documents of title. Reference is also asked to other chapters in which the necessity for fraud or even voluntary action on the part of the estoppel-denier is discussed and denied, and in which the duty which one member of society owes to another in the commercial as in the physical world is insisted upon. Much will be found in these chapters to lead the mind to the conclusion that for estoppel neither fraud nor voluntary action is essential; that Mr. Justice Ashhurst's dictum "We may lay it down as a broad, general principle that whenever one of two innocent parties must suffer by the acts of a third, he who enables such third person to occasion the loss must sustain it "5. ought to be taken as a "broad and general principle;" that the word "enables" should receive no narrow signification; and that the principles of the law of torts "The whole modern law of negligence, with its many developments, enforces the duty of fellow-citizens to observe, in varying circumstances, an appropriate measure of prudence to avoid causing harm to others."6 "He who enters on the doing of anything attended with risk to the persons or property of others is held answerable for the use of a certain measure of caution to guard against the risk "7 are not limited to physical relations, but have equal application to commercial intercourse. 1 Ex parte Banner (1875), L. R. 2 Ch. 278. 2 Ch. XXIV. 3 Ch. VIII. 5 Ante, p. 327. 6 Pollock on Torts, p. 22. 7 Dean v. McCarty (1846), 2 U. C. Q. B. 448. 4 Ch. V. CHAPTER XXIII. OSTENSIBLE OWNERSHIP AND AGENCY-GOODS- LEGISLATION. Development of the law has been due in very large measure to the courts rather than to the legislatures; and the names of Mansfield and Marshall remind the student that there are large departments of our jurisprudence which are luckily open to the charge of having been "judge-made." We have now in hand, however, a subject which has for many years been a battlefield upon which legislatures, struggling against the courts, have made many endeavors (although not of the happiest sort) to conform the law to the necessities of mercantile usage. The Questions and the Rules for Them.- Shortly stated the questions at issue relate to the position of persons in whose favor factors and others have made unauthorized disposition of goods. In the preceding chapters we have seen that the courts, without the aid of statutes, worked out principles of estoppel which seemed to be of sufficiently general import to include factors and everybody else. Recalling them, sufficiently for present purposes, we may say that they are as follows: 1. Nemo dat quod non habet. 2. But that rule "will certainly not apply where the owner of goods has lent himself to accredit the title to another person." 3. "Where a principal has by his voluntary act placed an agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform a particular act and therefore deals with the agent, the principal is estopped, as against such third person, from denying the agent's authority." Rules Wide Enough for Factor Cases.-These rules, embracing as will be observed the two principles of ostensible ownership and ostensible agency, plainly enough cover the case of factors; for factors when they deal with the goods of other people must either (1) be the ostensible owners of them, or (2) the ostensible agents of the persons who do own them; and they are therefore within the principles provided for all such |