JOHNSON v. MARTIN.

[87 Minn. 370, 92 N. W. 221.]

FACTORS-Liability for Stolen Property.-A factor who has come into the possession of the property of another through the criminal acts of a third person, and has sold the property, received the proceeds and paid them over to the criminal, cannot justify his acts by claiming that he acted in good faith, without negligence, supposing the criminal to be the true owner, in ignorance of the fact that he was the original wrongdoer, and that he has accounted to him. (p. 708.)

FACTORS-Stolen Property-Conversion.-The owner of property appropriated by the criminal acts of another may follow and reclaim it wherever found and identified, and may hold any person responsible, as for a conversion, who as an agent or factor for the criminal, has assumed the right to sell it and give possession. (p. 708.)

FACTORS-Liability for Stolen Property-Negligence of Carrier.-The owner of property appropriated by the criminal acts of another may hold any person responsible as for conversion, who as agent or factor for the criminal has assumed the right to sell it and give possession, although a common carrier was negligent in permitting it to be diverted from its true destination by means of a forged waybill and placed in the possession of the factor by means of a forged bill of lading. (pp. 708, 709.)

T. Canty, for the appellants.

Savage & Purdy, for the respondent.

372 COLLINS, J. This action was brought to recover the value of a carload of wheat, and the essential facts are undisputed. In September, 1900, plaintiff was the owner of the wheat in question, and shipped it by rail from Running Water station, in South Dakota, to Milwaukee, Wisconsin, receiving from the carrier a bill of lading, the consignees being plaintiff's agents at Milwaukee. When the car 373 reached Canton, another station on the line of road, one Wasser unlawfully obtained possession of the accompanying waybill, and substituted a forgery, which, in terms, consigned the car from one C. B. Pratt to defendants, who were grain brokers or factors in Minneapolis. Wasser also forged a bill of lading purporting to bear the signature of the carrier's authorized agent at another station, in which Pratt was named as consignor, and these defendants as consignees. Under the assumed name of C. B. Pratt, Wasser mailed this forged bill of lading from a town in Iowa to defendants at Minneapolis, directing them to sell the wheat upon his account and remit the proceeds. Pur

suant to the forged waybill, the car was diverted from its proper destination to Minneapolis, and delivered to defendants upon their payment of freight charges and surrender of the forged bill of lading. They sold the wheat, and accounted to Wasser, under the name of Pratt, for the proceeds, less the freight charges, inspection fees incurred, expenses of handling, and a commission to themselves of nine dollars and seventy-one cents. They acted in entire good faith, supposing that the bill of lading was genuine, and that their correspondent was the real owner and actual consignor of the property. They were not guilty of any negligence, according to the findings. The appeal is from a judgment in favor of plaintiff entered upon the findings of fact, and a conclusion of law that he was entitled to recover the value of the wheat.

Counsel for defendants relies mainly upon Leuthold v. Fairchild, 35 Minn. 99, 27 N. W. 503, 28 N. W. 218, and McLennan v. Minneapolis etc. Elevator Co., 57 Minn. 317, 59 N. W. 628, and practically concedes in his brief that, if the opinions in these cases sustain his contention, they are against the weight of authority in this country, as well as in England. There can be no doubt of this. But the present case is wholly unlike those referred to. The plaintiff's wheat, through no act of his own, but through the rascality of Wasser, and possibly the negligence of the common carrier, passed into the possession of these defendants. They were not mere agents for, or servants of, Wasser, disposing of paper evidences of title to the property while it was actually or constructively in the possession of the latter. Through the forgeries the grain itself 874 was delivered to defendants, and apparently they acquired a special property therein for the advances made, expenses of sale, and services rendered. They could have maintained an action of claim and delivery if this grain had been withheld from them by any one except the true owner. As factors, they could not only insure it for full value, but could sell it in their own names, such a sale being in the usual course of business. A purchaser could implicitly rely upon defendants' responsibility as factors, and had the title failed, as to such purchaser, ho would have a remedy against them for the full value of the property. A sale under such circumstances is an exercise of dominion over the property in defiance of and to the exclusion of the rights of the owner, and such exercise of dominion constitutes a conversion upon which an action may be based. The defendants acted as factors or commissionmen, and their liability to plaintiff is fixed by their acts, not by what they might

be called when performing these acts, or designated by the trial court in its findings.

On the facts, the case is controlled by Dolliff v. Robbins, 83 Minn. 498, 85 Am. St. Rep. 464, 86 N. W. 772. Although the question of the extent of the liability of a commission merchant, who merely acted as an agent in the matter of receiving and disposing of goods shipped to him, was not there passed upon, it was expressly held, upon a state of facts not distinguishable from those now before us, that Leuthold v. Fairchild, 35 Minn. 99, 27 N. W. 503, 28 N. W. 218, was not in point.

In the case last referred to, the defendant bank was merely a medium through which payment for certain grain was obtained for the consignor. There was not, nor was there in McLennan v. Minneapolis Elevator Co., 57 Minn. 317, 59 N. W. 628, that delivery of possession of the property, that independent exercise of dominion over it, and that personal interest in the proceeds of the sale, which are found here.

These defendants were not acting simply as servants in collecting money for another. They were connected with the property in a wholly distinctive character, and in their own behalf, with all the powers, duties, and rights of factors, including qualified ownership. They disposed of property which had been taken from the true owner by the criminal acts of Wasser, they received the proceeds of their sale, and cannot justify their acts by claiming 875 good faith, and ignorance of the fact that Wasser was the original wrongdoer, and that they have accounted to him. What was said in Swim v. Wilson, 90 Cal. 126, 25 Am. St. Rep. 110, 27 Pac. 33, is quite appropriate here, as follows: "It is a matter of every-day experience that one cannot always be perfectly secure from loss in his dealings with others, and the defendant here is only in the position of a person who has trusted to the honesty of another, and has been deceived. He undertook to act as agent for one who, it now appears, was a thief, and, relying on his representations, aided his principal to convert the plaintiff's property into money; and it is no greater hardship to require him to pay to the plaintiff its value than it would be to take the same away from the innocent vendee, who purchased and paid for it." The true owner of property appropriated by another person can, under such circumstances, follow and reclaim it wherever found and identified; and he can hold any person responsible, as for conversion, who has assumed the right to sell it and give possession.

This court, in disposing of this case, must be governed by the well-settled principles of law, and cannot grant immunity to defendants because of the hardship which arises from a liability; nor can it be influenced by the fact that a negligent common carrier might have been subjected to an action for the value of the wheat, or, as claimed by counsel, that the action to recover such value ought, in justice, to have been brought against the carrier instead of defendants.

Judgment affirmed.

Sales of Property by persons without title are considered in the monographic note to Velsian v. Lewis, 3 Am. St. Rep. 195-206. A broker who in good faith sells stolen property for a thief on commission, and a broker who in good faith acts on commission for the buyer of such property, are both liable for conversion to the true owner: Fort v. Wells, 14 Ind. App. 531, 56 Am. St. Rep. 316, 43 N. E. 155; Swim v. Wilson, 90 Cal. 126, 25 Am. St. Rep. 110, 27 Pac. 33.

BRASIE v. MINNEAPOLIS BREWING COMPANY.
[87 Minn. 456, 92 N. W. 340.]

FRAUDULENT CONVEYANCES-Title of Grantee.-Prima facie the legal title to property alleged to have been transferred with intent to defraud creditors is in the fraudulent grantee, the fraudulent character of the transfer not appearing on its face, and this continues, notwithstanding a sale of the property by a creditor on execution against the fraudulent grantor, until the fraud is exposed and the transfer annulled. (p. 712.)

FRAUDULENT CONVEYANCES-Remedy of Creditor-Statute of Limitations.-If property is transferred in fraud of creditors a defrauded creditor may cause the property to be sold on execution against the fraudulent grantor and then maintain ejectment to recover possession thereof, but is entitled to recover only upon establishing that the transfer was fraudulent as to him. That question must be litigated under established rules of law in the usual way, and that, too, before the title of the fraudulent grantee becomes fully vested by operation of the statute of limitations. (p. 713.)

FRAUDULENT CONVEYANCES-Statute of Limitations.The title of fraudulent grantee is protected by the statute of limitations, and if creditors do not, by proper judicial proceedings, effect the cancellation of his title within the statutory period after the discovery of the fraud, such title becomes final and conclusive. (p. 713.)

FRAUDULENT CONVEYANCES-Statute of Limitations.If property is fraudulently transferred and a defrauded creditor

causes it to be sold on execution against the fraudulent grantor, the statute of limitations begins to run in favor of the fraudulent grantee in possession from the date of such sale. (p. 714.)

J. C. Tarbox, for the appellant.

Cobb & Wheelright, for the respondent.

458 BROWN, J. Action to recover the possession of real estate, which was dismissed on the trial in the court below, and plaintiff appealed from an order denying a new trial.

The complaint alleges substantially the following facts: On December 3, 1888, one Austin Knights was the owner of the real estate in question, and was then indebted to plaintiff in the sum of one hundred and sixty dollars. That on or about January 1, 1889, he executed and caused to be recorded a deed of the property to Michael Knights, his brother. That the deed was without consideration, and was executed and recorded for the sole purpose of placing the property beyond the reach of the creditors of Austin Knights, and to hinder, delay and defraud them. Though it was claimed on the argument that the deed was never in fact delivered, the facts stated in the complaint show a delivery, beyond any serious doubt. alleged that the deed was executed and recorded pursuant to a conspiracy between the two Knights, and for the purpose of hindering and defrauding creditors. Clearly, they intended the title to pass from one to the other, and the delivery of the deed is sufficiently shown.

The complaint further alleges that on May 23, 1890, in an action brought by plaintiff in the district court of Wright county against Austin Knights, plaintiff recovered a judgment for the indebtedness 459 due him, which judgment was duly docketed as required by statute. Thereafter an execution was duly issued upon such judgment, and the property in question levied upon, and on April 15, 1893, sold by the sheriff, plaintiff being the purchaser at the sale. It further alleges that on May 31, 1897, Michael Knights, the alleged fraudulent grantee of Austin Knights, conveyed the property to one Carroll; that on February 11, 1899, Carroll conveyed it to defendant in this action; and it also alleges that Carroll and this defendant had notice prior to their purchase of the fraudulent character of the deed from Austin to Michael; that defendant is in possession of the property; and the prayer for relief is that such possession be awarded to plaintiff. Plaintiff does not, in his demand for relief, ask to have the alleged fraud