SHEPPARD v. NEWHALL et al., 54 F. 306

BOSS, District Judge, (after stating the case as above.) It is now well settled both in this country and in England that the true nature and effect of the right to stoppage in transitu is simply to restore the goods to the possession of the vendor, so as to enable him to exercise his rights as an unpaid vendor, not to rescind the sale. 2 Benj. Sales, (3d Ed.) pp. 1112-1115, and cases there cited. In California it is, in effect, so provided by statute. Civil Code Cal. § 3080.

To enforce his rights, the vendor must be, and is, entitled to retake the possession of the property, and must hold it until the expiration of the credit, so as to be able to deliver it upon the payment of the price; for up to that time the vendee has the right to pay the price, and take the property. Babcock v. Bonnell, 80 N. Y. 244. If not paid at the time stipulated, in what way the vendor should proceed to enforce his lien it is not here necessary to decide. Courts of equity entertain jurisdiction for the enforcement of such liens, and there are also statutory provisions bearing on the subject. 2 Benj.

Hales, (3d Ed.) pp. 1113, 1114, and cases there cited; Civil Code Cal. §§ 3076-3079. and cases cited in notes thereto. The right to retake possession of the property, where the right to stop it in transit exists, necessarily implies a right to maintain an action for its recovery, where resort to suit is necessary. In California the right to “resume possession” is given by statute.

Section 3076 of the Civil Code reads: “A seller or consignor of property, whose claim for its price or proceeds lias not been extinguished, may, upon the insolvency of the buyer or consignee becoming known to him after palling with the property, stop it while on its transit 1o the buyer or consignee, and resume possession thereof.” In the present case it became accessary for the plaintiff to sue to regain possession of the property; and, in doing so, he alleged in Ms complaint, as amended, as the basis of Ms right to recover its possession, that he was the owner of the property on the 8th day of November, 1890, and that, the property having theretofore come into the possession of the defendants, plaintiff, on the day named, demanded its possession, which demand was refused by the defendants, who continued to withhold its possession from the plaintiff.

The amended complaint contains no other allegation of the plaintiffs light to its possession than the allegation of ownership imports; and as the facts show that the plaintiff was not the owner of the property at the time stated in the complaint, or at the time of the institution of the suit, it is here urged for the defendants in error that the complaint, as amended, is insufficient to support a recovery by the plaintiff, even if a lien upon the goods in his favor exists.

But this objection was not made in the court below, and it is not permissible to hold in ambush a point of variance that does not go to the merits of the controversy between the parties, and raise it for the first time in the appellate court. A presumption of the right to the immediate possession of property flows from its ownership, and therefore the allegation contained in the amended complaint in the present case of ownership in the plaintiff of the property in question was attended with that presumption.

If the proof showed only a special interest in the plaintiff, inconsistent with its ownership, the objection should have been taken in the trial court, where the plaintiff would have had an opportunity to amend his pleading to conform to the proof, and thus have attained the end to be desired in all judicial proceedings, — an adjudication upon the merits of the controversy. The objection comes too late when made for the first time here.

When the goods included in cases numbered, respectively, 99 to 106, both inclusive, arrived in San Francisco, Gordon, the purchaser of them, went in person to the customhouse to enter them. There was at the time a regulation in force that the entry should not be made without producing or accounting for the original bill of lading. Gordon accordingly took with him to the customhouse Newhall, the holder of the original bills of lading, covering cases 99 to 106, who there produced them, and thereupon the goods were entered in the name of Gordon.

A bond was then given for the payment of the duties, and the goods placed in a bonded warehouse, and a warehouse receipt therefor issued to Newhall. All of this was prior to the attempt on the part of the plaintiff in error to exercise the right of stoppage in transitu. In respect to these goods, we have no difficulty in holding that the transit had ended before the attempt was made to stop them. The goods were sold to and intended for Gordon, doing business in San'Francisco. They had left the hands of the carrier, and the place of their deposit was in no way connected with their transmission to the purchaser.

They had reached their destination, and the purchaser had, by his personal and affirmative act, disposed of the goods, and his assignee had given bond for the payment of the duties upon them, and deposited them in his own name in a bonded warehouse, for which he held the warehouse receipt.

But in respect to the goods contained in cases numbered, respectively, 107 to 110, inclusive, the case is different, These were still in the hands of the carrier when the plaintiff in error gave notice of and asserted his right of stoppage in transitu, and it becomes necessary, therefore, to consider the objections presented by the fifth assignment of error to the introduction in evidence of the bill of lading covering those cases. The bill of lading was drawn, as has been said, to “E. Hawley, or assigns.” It was not indorsed by Haw-ley.

Consequently, it is urged by plaintiff in error, no title passed to defendants. It is provided by

section 2127 of the Civil Code of California as follows: “All to title to the freight which the first holder of a bill of lading had when he received it passes to every subsequent indorsee thereof, in good faith, and for value, in the ordinary course of business, with lihe effect and in like manner as in the case of a bill of exchange.” And by

section 2128 it is declared: “When a bill of lading is made ‘to bearer,’ or in equivalent terms, a simple tr&nsier thereof by delivery conveys the same title as an indorsement.” These sections, read together, as they mast be, plainly declare that the title to goods described in bills of lading drawn to order passes by indorsement, drawn to bearer by delivery.

There are many cases which hold that the delivery of a negotiable or quasi negotiable instrument, like a bill of lading drawn to order, will vest title without indorsement, as against the person who made delivery without such indorsement; for he is justly held estopped from setting up his own mistake, omission, or fraud to defeat the effect of his own action. The case of St. Paul Roller-Mill Co. v. Great Western Despatch Co., 27 Fed. Rep. 434, referred to in the opinion of the court below, was a case of that character.

There the bill of lading was drawn to the order of the shipper, which drew its draft at 15 days’ sight, against the flour mentioned in the bill of lading, upon one Whitcomb, of Boston, and forwarded the draft, with the bill of lading attached, unindorsed, to the Tremont National Bank of Boston, for acceptance and collection. Upon Whitcomb’s acceptance of the draft, the bank delivered to him the bill of lading, without in-dorsement, and he afterwards indorsed and transferred the bill of lading to the National Bank of Redemption, for an antecedent debt due from him to that bank.

Afterwards, and before the flour arrived in Boston, the shipper, being informed of the insolvency of Whit-comb, notified the carrier not to deliver the flour to him or his assigns; but upon its arrival it was delivered to Whitcomb’s assignee, and the shipper thereupon sued the carrier for its conversion.

It was urged for the plaintiff that the bill of lading, running to the order of the shipper, and delivered to Whitcomb, without indorsement, carried on its face notice that lie held it subject to equities between prior parties; but the court said that it was of no importance that it was delivered unindorsed; that it was the intention of the shipper that its agent (the Tremont Bank) should deliver the hill of lading on acceptance of the draft.

It would have heen manifestly unjust to have permitted the shipper to take advantage of his own failure to indorse the hill of lading which he delivered, with the intention of carrying the right to the property covered by it. But that is by no means the present case. Here the bill of lading was not drawn to the order of tbe shipper, the plaintiff in error, but, in effect, to the order of E.

Hawley, by whom it was delivered without indorsement, and the omission of which the plaintiff seeks to avail himself, in protection of his Hen for the unpaid purchase price of the goods, is not his own omission, but that of Hawley. The right of the plaintiff in error to stop the goods in transitu upon discovering the insolvency of the vendee was perfect, not only as against the vendee, but as against all others, except a purchaser for value, taking by indorsement of the bill of lading, in the usual course of business, and without notice. Civil Code Cal. § 2127, supra; Stanton v. Eager, 16 Pick. 476; Akerman v.

Humphrey, 1 Car. & P. 56. At least one of these conditions is wanting in the present case, namely, the indorsement by the party in whose favor the bill was drawn. We are therefore of the opinion that the right of the plaintiff in error to retake possession of cases numbered 107 to 110, inclusive, for the protection and enforcement of his vendor’s lien, was unaffected by the transfer of the bill of lading covering them to the defendants. From these views it becomes unnecessary to consider the remaining assignments of error.

Judgment reversed, and cause remanded for further proceedings in accordance with this opinion.