In 1867, B. and S. entered into a contract which was evidenced
by the following writings, signed by them respectively. (1) B. to
S., dated September 18:
"Enclosed please find our bill of sundry arms, etc., amounting
to $39,887.60, for which amount please give us credit on
consignment account. As mutually agreed, we consign these arms to
your care, to be shipped to Mexico and to be sold there by you to
the best advantage. Should these arms not be disposed of at the
whole amount charged, we have to bear the loss. Should there be any
profit realized over the above amount of bill, such profit shall be
equally divided between yourself and us. Also, it is understood
that all these goods are shipped by you free of any expenses to us,
and that in case all or any of them should not be sold, they shall
be returned to us free of all charges. As you have insured these
goods, as well as other merchandise, we should be pleased to have
the amount of $40,000 transferred to us. Please
Page 150 U. S. 313
acknowledge the receipt of this, expressing your acquiescence in
above, and oblige."
Accompanying this was an invoice headed "S. in joint account
with B." To this S. replied the same month:
"I have the honor to acknowledge the receipt of your letter of
the 18th inst., in which you enclose bill of sundry arms, amounting
to $39,887.60, consigned to me upon certain conditions contained in
said letter. In reply I have to say that I accept the terms of said
conditions of consignment, and as soon as I obtain the policies of
insurance upon said goods will transfer them to you."
In October, B. wrote S.:
"Enclosed we beg to hand yon our bill for muskets, amounting to
$10,170, for which please give us credit on consignment account. As
mutually agreed, we consign these arms to your care, to be shipped
to Mexico, and to be sold there by you to the best advantage.
Should these arms not be disposed of at the amount charged, we Lave
to stand the loss. Should there be any profit realized over the
amount, such profit shall be equally divided between yourself and
us. It is also understood that these goods shall be shipped by you
free of any expenses to us, and that in case they should not find a
ready sale, they shall be returned to us free of all charges.
Please attend to the insurance of this lot and have the amount
transferred to us in one policy; also please acknowledge the
receipt of this, stating your acquiescence in above."
Accompanying this was an invoice headed: "S. bought of B. in
joint account." The goods were shipped for their destination in
Mexico. S. took out policies of insurance on the September
shipments in his own name "for account of whom it might concern,"
which policies were headed to B. by direction of S. The October
shipments reached their destination. A large part of the September
shipments was lost. B. collected the insurance on such of the
policies as were in his hands.
Held:
(1) That the contract was not a contract of sale of the goods by
B. to S., but a bailment upon the terms stated in the
correspondence, and as it was clearly expressed in the writings
between the parties, it could not be varied by the terms of the
printed bill-head of the invoice.
(2) That S., as bailee, was exempted by the common law from
liability for loss of the consigned goods arising from inevitable
accident
(3) That there was no undertaking in the contract on his part
which took him out of the operation of the common law rule.
(4) That the taking of the policies of insurance in his own name
by S. did not tend, under the circumstances, to establish that he
recognized his liability for the loss of the goods, as it was clear
that, under a policy running to S. "for account of whom it might
concern," B. could show and recover, in event of loss, his
interest, which was a substantial one.
(5) That certain statements made by S. did not amount to an
estoppel, the rule being that a statement of opinion upon a
question of law, where the facts are equally well known to both
parties, does not work an estoppel.
Page 150 U. S. 314
The Court stated the case as follows:
This suit, as originally instituted, was an action at law by the
appellant, in the Superior Court of Marion County, Indiana, against
the defendants to recover the sum of $238,000, with interest
thereon, for which sum the plaintiff alleged they were indebted to
him. The defendants, being citizens of New York, removed the cause
to the circuit court of the United States; and, as the claim
involved various matters of account running through a period of
several years, the court, on motion of the defendants, transferred
the cause to the equity docket and required the plaintiff to reform
his pleadings. In compliance with this order, the plaintiff filed
his bill of complaint, setting forth various transactions involving
matters of account between himself and the defendants, commencing
in September, 1867, and continuing down to September, 1876. The
answer of the defendants admitted many of the facts charged and
either denied others or set up new matter in avoidance thereof.
The several items of account presented by the pleadings need not
be specially mentioned or separately considered, not is it deemed
necessary, in the view we entertain of the case, to review the
immense volume of testimony taken in the course of the litigation
-- covering about 4,000 printed pages -- involving irreconcilable
conflicts, and including much that is wholly irrelevant. The
material facts are clearly established by the written agreement of
the parties and by the admissions made in the pleadings, and the
controlling question of law arising thereon, and upon which the
correctness of the decree dismissing the bill must be determined,
is whether the court below placed the proper construction upon the
original contract entered into between the parties, under which the
defendants consigned certain arms and munitions of war to the
complainant, to be by him shipped to, and sold in, Mexico. That
contract, after some previous verbal negotiations, was embraced in
the following correspondence:
Page 150 U. S. 315
"Office of Hermann Boker & Co., No. 50 Cliff Street"
"New York, September 18th, 1867"
"General H. Sturm, present."
"Dear Sir: Enclosed please find our bill of sundry arms, etc.,
amounting to $39,887.60, for which amount please give us credit on
consignment account."
"As mutually agreed, we consign these arms to your care, to be
shipped to Mexico, and to be sold there by you to the best
advantage. Should these arms not be disposed of at the whole amount
charged, we have to bear the loss. Should there be any profit
realized over the above amount of bill, such profit shall be
equally divided between yourself and us."
"Also, it is understood that all these goods are shipped by you
free of any expenses to us, and that, in case all or any of them
should not be sold, they shall be returned to us free of all
charges."
"As you have insured these goods, as well as other merchandise,
we should be pleased to have the amount of $40,000 transferred to
us. Please acknowledge the receipt of this, expressing your
acquiescence in above, and oblige,"
"Yours, truly,"
"Hermann Boker & Co."
Accompanying this letter was an invoice, in form as follows:
"No deduction allowed for errors or damages unless claim is made
within five days after the goods are received."
"Herman Funke Folio _____."
"R. A. Boker 50 Cliff Street, New York,"
"F. Schumacher Sept. 18th, 1867"
"Mr. H. Sturm in joint acc't with Hermann Boker & Co.:"
"Payable in gold"
"Terms, net cash"
"Forwarded for your account and risk, per _____ ________:"
1 12-pounder battery, brass, complete. . . $ 9,000
1 3-rifled battery, iron, complete . . . . 8,000
------- $17,000
Page 150 U. S. 316
73 cases of 20 ea.) 1,470 Springfield R.
1 " 10 " ) muskets, 8.00 . . . . $11,760
74 cases, 3.50. . . . . . . . . . . . . . . 259
------- 12,019
1,000 r'ds fixed ammunition, 12 p., 2.00 2,000
504 r'ds fixed ammunition, 24 pd., 2.00 1,008
209 boxes:
100,000 Enfield cartridges, 12.00 . . . . . 1,200
100 boxes:
200,000 Maynards, 20.50 . . . . . . . . . . 4,100
------- 8,308
200 boxes:
670 perc. shell, 3 Hotchkiss, 1.25. . . . . 837.50
680 time fuse, 3 " 1.25. . . . . 850.00
270 case shot, 3 " 1.55. . . . . 428.50
180 canister, 3 " 1.00. . . . . 180.00
153 boxes, painted, . . . . . 1.50. . . . . 229.50
27 " not painted. . . . 1.30. . . . . 35.10
------ 2,560.60
----------
$39,887.60
To which complainant replied:
"New York, Sept. 26th, 1867"
"Messars. Hermann Boker & Co."
"Gents: I have the honor to acknowledge the receipt of your
letter of the 18th inst., in which you enclose bill of sundry arms,
amounting to $39,887.60, consigned to me upon certain conditions
contained in said letter."
"In reply, I have to say that I accept the terms of said
conditions of consignment, and, as soon as I obtain the policies of
insurance upon said goods, will transfer them to you."
"Very respectfully, your ob't servant,"
"H. Sturm"
There was another consignment, the terms of which are contained
in the letters of October 24, 1867, as follows:
Page 150 U. S. 317
"New York, October 24th, 1867"
"General H. Sturm, present."
"Dear Sir: Enclosed we beg to hand you our bill for muskets,
amounting to $10,175, for which please give us credit on
consignment account."
"As mutually agreed, we consign these arms to your care, to be
shipped to Mexico, and to be sold there by you to the best
advantage."
"Should these arms not be disposed of at the amount charged, we
have to stand the loss. Should there be any profit realized over
the above amount, such profit shall be equally divided between
yourself and us."
"It is also understood that these goods shall be shipped by you
free of any expenses to us, and that, in case they should not find
a ready sale, they shall be returned to us free of all
charges."
"Please attend to the insurance of this lot, and have the amount
transferred to us in one policy; also, please acknowledge the
receipt of this, stating your acquiescence in above. We likewise
beg to hand you enclosed the San Francisco draft of Placido Vaga,
$63,699.60 gold, with protest and power of attorney to collect,
with legal interest, same attached. We will allow you a commission
for collecting this draft and interest for us, of ten percent off
the amount."
"Be kind enough to acknowledge the receipt of this draft."
"Wishing you a pleasant trip, and prosperous affairs, we beg to
remain,"
"Yours, truly,"
"[Signed] Hermann Boker & Co."
"New York, October 24th, 1867"
"General H. Sturm.
"Dear Sir: We beg to refer to our annexed letter, contents of
which we expressed according to our mutual agreement. We now beg to
say, in order to avoid any misunderstanding
Page 150 U. S. 318
hereafter, that with regard to the two lots of new Springfield
rifles shipped to your care, viz."
"1,470 and 74 cases and"
"1,000 ' 50 '"
"we should direct as follows:"
"Should these mentioned arms not bring the prices as charged by
us,
viz., $8.00 apiece for the first and $10.00 apiece for
the second lot, then we would respectfully request you to have them
returned to us free of expenses, as agreed."
"Please express your acquiescence in above and oblige,"
"Yours, truly,"
"[Signed] Hermann Boker & Co."
The invoice which accompanied this last consignment is as
follows:
"
Office of Herman Boker & Co."
"
No. 50 Cliff Street, New York, October 24, 1867"
"H. Sturm, Esq., N.Y.:"
Bought of Herman Boker & Co., in joint account,
50 cases containing:
1,000 new Springfield muskets at $10. . . . . $10,000
50 cases at $3.50. . . . . . . . . . . . . 175
-------
$10,175
While it is clearly established that both of these consignments
were made upon the same terms and conditions, the invoices which
accompanied them differed in some respects. The bill accompanying
the October consignment was entirely in writing, while the invoice
accompanying the September consignment was written under a printed
billhead of the defendants. The printed heading was not changed,
except by erasing the words, "bought of," and inserting in their
place the words, "Mr. H. Sturm in joint acc't with." The words,
"Payable in gold," appear to have been stamped on the bill, but
whether this was done at the time of its delivery to the
complainant or subsequently, when the defendants regained
possession of
Page 150 U. S. 319
the bill, is a question of dispute between the parties, and
under the testimony it is a matter of grave doubt whether they
formed a part of the invoice bill, as originally rendered, but it
is not deemed necessary to determine this controverted question of
fact.
The October consignment, which was insured by the defendants
themselves and was shipped by the steamer
Wilmington,
reached Mexico safely, and causes no controversy between the
parties except as to a portion of the proceeds arising from the
sale thereof, which was received by the defendants.
The September consignment, together with similar goods of the
value of $169,516, belonging to the complainant, were shipped on
the schooner
Keese and brig
Blonde. The
Blonde carried of the consigned goods, $10,560.60, and of
the complainant's goods, $17,250, while the
Keese carried
of the consigned goods, $29,327, and of complainant's goods,
$152,266.
The goods shipped on both vessels were insured in fourteen
separate policies. These policies were made out in the name of
Sturm "for account of whom it might concern." The whole amount of
insurance on the goods carried by the
Blonde was $30,000,
while the total insurance on the goods, individual and consigned,
carried by the Keese, was $163,000. This insurance was effected
through an insurance broker, who was informed that the defendants
had an interest of about $40,000 in the goods to be covered by the
policies, and who was directed to consult Mr. Funke, the member of
defendants' firm with whom the complainant had chiefly conducted
the transaction in controversy, as to how those policies should be
made. This he did, and with the consent and by the direction, of
Mr. Funke he took the whole lot of insurance together, in the name
of complainant, "for account of whom it might concern," and
appropriated for the benefit of the defendants, and handed over to
them, by the instruction of the complainant and of Funke, four
policies on the cargo of the Keese amounting to $55,000, issued,
respectively, by the Sun, the New York, the Orient, and the
Mercantile Insurance Companies, and one policy for $15,000 issued
by the United States Lloyds Insurance Company on the cargo of the
Blonde. These
Page 150 U. S. 320
four policies on the
Keese, together with the one on
the
Blonde, the insurance broker selected for the
defendants at their request, as being issued by good companies, and
they were delivered to the defendants about the date of their
issuance.
The policies thus delivered to them, as understood by the broker
who selected and turned them over to the defendants, were intended
to cover their interest in the insured cargo of the
Keese
and
Blonde. The amount of the policies so delivered to
defendants was in excess of the invoice prices of the consigned
goods for the reason, as alleged, that policies covering the exact
amount could not be selected, but with the understanding that the
excess was to be held for account of the complainant.
The vessels carrying the cargo sailed for Mexico in September,
1867, a few days after the insurance was effected. On the voyage,
the
Blonde was caught in a storm, and part of her cargo
was thrown overboard to save the vessel. The insured goods had to
contribute to the general average the sum of $1,463.84, which was
paid by the complainant, who also paid out the further sum of
$672.78 for repairing part of the consigned goods, which reached
Mexico in a damaged condition. Half of the amount paid on general
average, and the amount paid for repairs upon the consigned goods,
are the only items of account in controversy so far as concerns the
shipment made upon the
Blonde, nothing having been
recovered, either by complainant or defendants, upon the insurance
policies taken out on the cargo which she carried. That shipment,
except in respect to the items paid on general average and for
repairs, may therefore be dropped out of further consideration.
The
Keese, carrying $29,327 of the consigned goods, and
$152,266 of complainant's individual goods, and covered by twelve
policies of insurance, amounting to $163,000, was wrecked on her
voyage, without fault or negligence on the part of complainant, and
her cargo was totally lost.
The complainant had reached Havana on his way to Mexico when he
learned of the loss of the
Keese and her cargo, and
promptly notified the defendants, by telegram, of the fact. The
defendants thereupon called for and received from the
complainant's
Page 150 U. S. 321
agent in New York City the invoice which accompanied the
consignment of September 18, 1867, for the purpose of preparing and
making proof of the loss. The insurance companies refused to pay
the policies on various grounds which need not be noticed here.
The complainant returned to New York in March, 1868, and,
learning that the insurance companies contested their liability for
the loss, arranged with the defendants to institute suits against
the companies to recover on the policies held by them,
respectively. The defendants employed Mr. Da Costa to sue upon the
policies held by them, while the complainant employed Mr. Parsons
to sue upon his, and the lawyers were to cooperate and assist each
other in the prosecution of all the suits.
About the time this arrangement was made, the complainant opened
a bank account with the defendants, and thereafter made deposits
with and drew checks and drafts upon them, as his bankers, down to
the latter part of 1875.
The litigation against the insurance companies continued until
September 13, 1876, when the last collection upon the policies was
made. During the progress of the litigation, the complainant turned
over, or assigned, to the defendants such judgments as he had
obtained, and such policies standing in his name as had not been
reduced to judgment, as alleged, for the purpose of convenience in
collection and settlement, and with the view of having the amounts
collected thereon placed to his credit. The funds collected upon
all the policies, amounting to about $109,000, went into the hands
of the defendants. The complainant claims that his interest and
that of defendants in the amounts recovered is in the ratio of
$152,266 to $29,327, that being their relative proportion in the
total amount of insurance, and that the defendants ought to account
to him according to that proportion, and pay their just share of
the expenses incident to the collection thereof, as well as
compensate him for his services in connection with the suits. These
and other smaller items of account constitute the matters in
controversy.
While admitting the general facts in respect to the
transaction,
Page 150 U. S. 322
the defendants set up in their answer that by the terms of the
contract, the complainant became the insurer of the goods, and was
bound thereby to either sell them in Mexico and account for the
proceeds or to return them to New York free of all expense to the
defendants, and that, recognizing such liability, the complainant
insured all the goods, making no distinction in the manner of such
insurance between his individual goods and the consigned goods, and
that the policies transferred to the defendants by the complainant
were transferred as collateral security for the performance of the
contract, which was upon a gold valuation, and that no part of the
policies was held in trust for the complainant.
On this theory, the defendants kept their account of the
transaction in the name of the "Mexican Arms Account," in which the
goods consigned were charged at the price of $39,887.60, and to
this was added the premium upon gold at 45 percent, amounting to
$17,949.42; and, on the aggregate of these two sums, interest was
computed from September, 1867, to May 1, 1882, amounting to
$53,801.28. This account was also charged with the expenses
connected with the suits on the policies turned over to them,
amounting, with interest, to $16,710.72. These expenses consisted
of attorneys' fees and sundry outlays for witnesses in connection
with the suits. These various items were not charged or entered as
debits against Sturm until 1876, when they were transferred from
the Mexican arms account to his account.
The defendants' construction of the contract and method of
keeping the account was not communicated to the complainant until
sometime in 1876, when he promptly denied its correctness. The
court below adopted the defendants' interpretation of the contract,
holding that the consigned goods were at the risk of complainant;
that he was responsible for their loss, although arising from
inevitable accident, because he had undertaken to return them if
not sold, and that, being so responsible, the defendants had a
right to charge him with the value thereof and treat the policies
turned over to them as collateral security for this liability, and
were, furthermore, entitled to charge him with the expenses of
collecting such
Page 150 U. S. 323
policies, so that the complainant was entitled to credit only
for the net amounts collected thereon. For this and the further
reason, as the court assumed, that the complainant had given
testimony in the insurance cases and made admissions under oath
which were inconsistent with his present claim and which should
repel him from a court of equity, his bill was dismissed.
If, by the terms of the contract, as embodied in the letters of
September 18 and October 24, 1867, the title to the goods vested in
the complainant or they were to be at his risk during their transit
to Mexico, then it is conceded that upon an adjustment of the
accounts between the parties on that basis, with the allowance to
the defendants of a premium of 45 percent for gold, there is little
or nothing due to the complainant, and no substantial error in the
decree dismissing his bill. On the other hand, if the title to the
goods delivered did not vest in the complainant under the terms of
the consignment, or he was not responsible for the loss of the same
by inevitable accident, then the court below was in error in
dismissing his bill, and denying the account sought.
Page 150 U. S. 326
MR. JUSTICE JACKSON delivered the opinion of the Court.
It is too clear for discussion or the citation of authorities
that the contract was not a
sale of the goods by the
defendants to Sturm. The terms and conditions under which the goods
were delivered to him import only a consignment. The words
"consign" and "consigned," employed in the letters, were used in
their commercial sense, which meant that the property was committed
or entrusted to Sturm for care or sale, and did not, by any express
or fair implication, mean the sale by the one, or purchase by the
other. The words, "Mr. H. Sturm in joint account with Hermann Boker
& Co.," or "Bought of Hermann Boker & Co., in joint
account," in the billhead cannot be allowed to control the express
written terms contained in the contract, as set forth in the
letters. A printed billhead can have little or no influence in
changing
Page 150 U. S. 327
the clear and explicit language of the letters, and it in no way
controls, modifies, or alters the terms of the contract. The
purpose and object of the bill were to give a description and
valuation of the articles to which the contract, as embraced in the
letters, had reference, their description being important if the
articles had to be returned, and their price or valuation necessary
if they were sold, and profits were made for division. The contract
being clearly expressed in writing, the printed billhead of the
invoice can upon no well settled rule control, modify, or alter it.
That the invoice was not intended to have that effect is shown by
the fact that the invoice of the consignment of October 24 differed
in several respects from the invoice of September 18, although the
terms and conditions in respect to each consignment were the
same.
In
Schenck v. Saunders, 13 Gray, 37, there was a
written agreement in these terms:
"The said Schenck, Wood & Pond, of the first part, agree to
furnish the stock, consisting of upper and sole leather and linings
and bindings, of sufficient amount to make at least eight, and not
to exceed twenty, cases per week. And the said Charles Howe, of the
second part, is to take the stock and make it up, to the best of
his abilities, into women's boots, and further agrees to consign
all the goods he makes to the said Schenck, Wood & Pond, of the
first part, to be sold by them on commission of five percent, the
goods to be sold for cash and the returns made to the said Charles
Howe as fast as made. And the said Charles Howe, of the second
part, agrees to put up and ship to the said Schenck, Wood &
Pond at their store in New York at least eight cases of boots per
week, each case containing sixty pairs, commencing the first week
in May, 1856."
With each shipment of leather to Howe, Schenck, Wood & Pond
sent him unsigned bills, like those in the present case, in this
form:
Boot, Shoe and Leather Warehouse
Mr. Charles Howe New York, May 15, 1856
Bought of Schenck, Wood & Pond
Page 150 U. S. 328
Manufacturers and Commission Merchants, No. 25 Beekman
Street
Terms 6 months.
52 sides, sole leather B.A. 644, 26 1/2 . . . . . .$170.66
Inspection and cartage. . . . . . . . . . . . . . . .90
-------
$171.56
In a contest as to the title of these goods (boots) between
Schenck, Wood & Pond and an assignee of Howe, it was contended,
among other things, that the invoices showed that the transaction
was a sale to Howe, and the heading of the bills was relied upon to
give such construction to the contract. The Supreme Court of
Massachusetts, speaking by Bigelow, J., held that the transaction
was not a sale, and that
"the bills of parcels which were sent from time to time with the
merchandise were susceptible of explanation by parol evidence, and
did not change the terms of the written agreement under which the
property was sent to Howe. They were sent only as memoranda of the
amount and value of the merchandise transmitted.
Hazard v.
Loring, 10 Cush. 267."
"An invoice," as said by this Court in
Dows v. National
Exchange Bank, 91 U. S.
630,
"is not a bill of sale, nor is it evidence of a sale. It is a
mere detailed statement of the nature, quantity, or cost of the
goods, or price of the things invoiced, and it is as appropriate to
a bailment as a sale. Hence, standing alone, it is never regarded
as evidence of title."
Was the contract, as claimed by counsel for the defendants, a
contract of "sale or return?" We think not. The class of contracts
known as contracts of "sale or return" exist where the privilege of
purchase or return is not dependent upon the character or quality
of the property sold, but rests entirely upon the option of the
purchaser to retain or return. In this class of cases, the title
passes to the purchaser subject to his option to return the
property within a time specified, or a reasonable time, and if
before the expiration of such time, or the exercise of the option
given, the property is destroyed,
Page 150 U. S. 329
even by inevitable accident, the buyer is responsible for the
price.
The true distinction is pointed out by Wells, J., in
Hunt v.
Wyman, 100 Mass. 200, as follows:
"An option to purchase if he liked is essentially different from
an option to return a purchase if he should not like. In one case,
the title will not pass until the option is determined. In the
other, the property passes at once, subject to the right to rescind
and return."
The cases cited and relied on by the defendants,
Moss v.
Sweet, 16 Q.B. 493, 494;
Martineau v. Kitching, L.R.
7 Q.B. 436, 455;
Schlesinger v. Stratton, 9 R.I. 578, 581,
involved contracts of "sale or return" in which there was a sale
followed by a destruction of the property before the option of the
purchaser had expired or had been exercised. It was properly held
in these cases that the goods were at the risk of the purchaser
pending the exercise of the option, and that he was responsible for
the loss of the goods, or the price to be paid therefor. These
authorities are not in point in the present case.
The contract under consideration did not confer upon the
complainant the privilege of purchasing or returning the goods
within any specified or reasonable time, for the defendants
retained, by express stipulation, a right to share in the profits
made on the sale of the goods in Mexico, and, if they were not
sold, to have the specific goods returned to them without expense.
In the letter of October 24, they specially direct that the
Springfield rifles, including those covered by the consignment of
September 18 as well as those covered by the consignment of October
24, should be returned if they did not realize the prices indicated
in the invoices.
The contract, in its terms and conditions, meets all the
requirements of a bailment. The recognized distinction between
bailment and sale is that when the identical article is to be
returned in the same or in some altered form, the contract is one
of bailment, and the title to the property is not changed. On the
other hand, when there is no obligation to return the specific
article and the receiver is at liberty to return another thing of
value, he becomes a debtor to make the return, and
Page 150 U. S. 330
the title to the property is changed. The transaction is a sale.
This distinction or test of a bailment is recognized by this Court
in the case of
Powder Co. v. Burkhardt, 97 U. S.
110,
97 U. S.
116.
The agency to sell and return the proceeds, or the specific
goods if not sold, stands upon precisely the same footing, and does
not involve a change of title. An essential incident to trust
property is that the trustee or bailee can never make use of it for
his own benefit, nor can it be subjected by his creditors to the
payment of his debts.
Testing the present case by these established principles, it
admits of no question that the contract was one of bailment, and
that the title to the goods, with the corresponding risk attached
to ownership, remained with the defendants. Suppose a creditor of
Sturm had levied upon or seized these goods after they reached his
possession. It cannot be doubted that the defendants could have
recovered them as their property.
That the contract between the parties in reference to the goods
in question was a bailment upon the terms stated in the letters is
clearly established by the authorities. Among others,
see Hunt
v. Wyman, 100 Mass. 198;
Walker v. Butterick, 105
Mass. 237;
Middleton v. Stone, 111 Penn.St. 589.
The complainant's common law responsibility as bailee exempted
him from liability for loss of the consigned goods arising from
inevitable accident. A bailee may, however, enlarge his legal
responsibility by contract, express or fairly implied, and render
himself liable for the loss or destruction of the goods committed
to his care, the bailment or compensation to be received therefor
being a sufficient consideration for such an undertaking.
This brings us to the question whether, by the terms and
conditions of the contract as embraced in the letter of September
18 consigning the goods, it can be held that the complainant
assumed such a risk in the present case. He assumed the expenses of
transporting the goods to Mexico, the duty of selling them to the
best advantage after they reached there, the
Page 150 U. S. 331
obligation to account to the defendants for the price at which
they might be sold, less one-half of the profits in excess of the
invoice price, and, if not sold, he was to return the specific
articles to the defendants free of expense. This agreement to
return the goods in the event they should not be sold, it is urged,
imposes upon him the risk of their destruction before he had an
opportunity to sell or dispose of them under or in accordance with
the terms of the consignment. We cannot accede to the correctness
of this proposition. The destruction of the goods, without fault of
negligence on his part, terminated his obligation to make either a
return thereof or pay for their loss. Such a liability could only
be imposed upon him by a contract clearly expressing his assumption
of the risk of destruction or his liability for the loss.
In the case of
Hunt v. Wyman, 100 Mass.198, the bailee
was to return the property (a horse) in as good condition as he
received it by a designated time. The property was so injured,
without fault on his part, that it could not be returned within the
time agreed upon, and no attempt was made to return it. Still, it
was held that he was not responsible for the property. The court
said:
"A mere failure to return the horse within the time agreed may
be a breach of contract upon which the plaintiff is entitled to an
appropriate remedy, but has no such legal effect as to convert the
bailment into a sale. It might be an evidence of a determination by
the defendant of his option to purchase, but it would be only
evidence. In this case, the accident to the horse, before an
opportunity was had for trial in order to determine the option,
deprives it of all force, even as evidence."
In
Walker v. Butterick, 105 Mass. 237, the following
contract was presented:
"Boston, November 25th, 1868"
"Alexander & Company, of the first part, are to take goods
from Walker & Company, of the second part, and to return to
them, the said Walker & Company, every thirty days, the amount
of sales at the prices charged by the said Walker & Company,
who will furnish Alexander & Company all goods
Page 150 U. S. 332
in their line. Alexander & Company are worth, in real estate
and money, $5,000, of which they hereby certify."
"[Signed] Alexander & Co."
"We agree to the conditions of the within instrument."
"[Signed] Walker & Co."
It appears that some months after the date of this contract,
Alexander & Co. absconded, and one of their creditors levied
upon goods which had been furnished by Walker & Co. The court
held that the contract under which Walker & Co. claimed title
to the goods levied upon imported a consignment of the goods for
sale, and not a sale of them by Walker & Co. to Alexander &
Co., so that the title remained in Walker & Co.
In
Middleton v. Stone, 111 Penn.St. 589, A. delivered
to B. two colts, under a contract that B. should safely keep and
sell them, if possible, before a certain date, for A., he fixing a
minimum price to be received by him, and in addition thereto
one-half of all money obtained above that price, to the extent of
$25, and, if not sold, to return the animals in good condition.
Held, that this was not a sale, but a bailment, and it was error
therefore to overrule and offer of B. to show that the colts were
sick when they were delivered to him; that one of them died, and
that he then offered to return the other to A., who refused to
receive it. It was held that the horses were at the risk of A.
It is next urged, on behalf of the defendants, that the taking
of the insurance in the name of complainant was a recognition of
his responsibility for the loss of the goods, and that the policies
of insurance were turned over to them to secure this liability of
the complainant. This position cannot be sustained, for the reason
that defendants, through their partner, Funke, directed that all
the insurance should be taken out together in the name of Sturm,
and also instructed the insurance broker to select for them the
policies which they wished appropriated to secure their interest.
The act of taking out the insurance in the manner in which it was
done was their act as much as it was the act of Sturm, and the
insurance
Page 150 U. S. 333
having been thus effected in no way tends to establish the
contention that it was a recognition of Sturm's liability for the
loss of the goods.
It is not material to determine whether the complainant ever
endorsed and transferred these four policies to the defendants, or,
if so, whether it was done at the time of their delivery or
subsequently, for no such assignment or transfer thereof was
necessary to have enabled the defendants to recover on the policies
for the loss of cargo, to the extent of their interest in the same,
it being well settled that under a policy running to Sturm, "for
account of whom it might concern," the defendants could show and
recover their interest in the event of loss. It was so ruled by
this Court in
Hooper v. Robinson, 98 U. S.
528, where it was said
"that a policy upon a cargo in the name of A. 'on account of
whom it may concern,' or with other equivalent terms, will inure to
the interests of the party for whom it was intended by A., provided
he, at the time of effecting the insurance, had the requisite
authority from such party or the latter subsequently adopted
it."
In the present case, Sturm had the requisite authority of the
defendants to make the insurance on the consigned goods, as was
testified to by the insurance broker, and as shown in their letter
of September 18, 1867, in which they say: "As you have insured
these goods, as well as other merchandise, we should be pleased to
have the amount of $40,000 transferred to us." It is clear that the
insurance, to the extent of $40,000, was intended to cover the
interests of the defendants in the consignment of September 18,
1867, and, in the absence of any delivery or transfer of policies
representing that interest, this could have been shown by them so
as to entitle them to the benefits of such insurance.
It is next urged -- and the court below seems to have taken the
same view of the matter -- that the complainant is estopped from
denying his responsibility for the loss of the goods because of
alleged statements made by him as a witness in the suits upon the
insurance policies. It is claimed that in those suits, he testified
under oath that he was the owner of the goods, and thereby
precluded himself from asserting anything
Page 150 U. S. 334
to the contrary in this case under the wise and salutary
doctrine which binds a party to his judicial declarations, and
forbids him from subsequently contradicting his statements thus
made. We do not controvert the soundness of this general rule as
laid down in the cases cited by the defendants.
Dent v.
Ferguson, 132 U. S. 503;
Creath's Administrators v.
Sims, 5 How. 192;
Wheeler v.
Sage, 1 Wall. 518;
Selz v.
Unna, 6 Wall. 327;
Kitchen v.
Rayburn, 19 Wall. 254;
Bartle v.
Coleman, 4 Pet. 184;
Sample v.
Barnes, 14 How. 70;
Hannauer
v. Woodruff, 15 Wall. 439;
Higgins v.
McCrea, 116 U. S. 671;
Cragin v. Powell, 128 U. S. 691;
Prince Mfg. Co. v. Prince Metallic Paint Co., 135 N.Y. 24;
Stephens v. Robinson, 2 Cro. & Jer. 209;
Harmer v.
Westmacott, 6 Sim. 284;
De Metton v. De Mello, 12
East 234;
Post v. Marsh, 16 Ch.D. 395;
In re Great
Berlin Steamboat Co., 26 Ch.D. 616. But the question here is
whether the statements made by the complainant in the insurance
suits bring him within the operation of this wholesome rule. We
think not, for it would be pressing his language too far to hold
that he made any positive statement to the effect that he was the
absolute owner of the goods, or that he admitted as a matter of
fact, rather than of opinion, that he was responsible for their
loss. What he did state, when his testimony is read as a whole, was
that he was the owner
on consignment, for when the direct
question was put to him, "What do you mean by being the owner for
the time being?" his reply was:
"That they were delivered to me by Hermann Boker & Co. under
that agreement, and I was responsible for those goods until they
were returned, or until I delivered the money to them. This is what
I mean."
And, in reply to another question, he stated that "the terms on
which I was the owner were expressed in the papers I furnished,"
referring to the letters of September 18 and October 24, 1867. And
to the further question whether he understood that those contracts
made the goods his property, his answer was, "I understood so at
the time, certainly, and I believe so yet."
*
Page 150 U. S. 335
This language did not mislead or induce either the defendants or
the insurance companies to alter or change their position
Page 150 U. S. 336
in any respect whatever, nor influence their conduct in any way.
Both the defendants and the insurance companies had the written
contracts before them, and were presumed as a matter of law to know
their legal effect and operation. What the complainant said in his
testimony was a statement of opinion upon a question of law where
the facts were equally well known to both parties. Such statements
of opinion do not operate as an estoppel. If he had said in express
terms that by that contract, he was responsible for the loss, it
would have been, under the circumstances, only the expression of an
opinion as to the law of the contract, and not a declaration or
admission of a fact such as would estop him from subsequently
taking a different position as to the true interpretation of the
written instrument.
In
Brant v. Virginia Coal & Iron Co., 93 U. S.
326, it was said: "Where the condition of the title is
known to both parties, or both have the same means of ascertaining
the truth, there can be no equitable estoppel."
So in
Brewster v. Striker, 2 N.Y. 19, and
Norton v.
Coons, 6 N.Y. 33, and approved in
Chatfield v.
Simonson, 92 N.Y. 218, where it was ruled "that the assertion
of a legal conclusion, where the facts were all stated, did not
operate as an estoppel upon the party making such assertion."
In Bigelow on Estoppel (§ 2, pp. 572-573, 5th ed.), it is
properly said:
"The rule we apprehend to be this: that where the statement or
conduct is not resolvable into a statement of fact, as
distinguished from a statement of opinion or of law, and does not
amount to a contract, the party making it is not bound unless he
was guilty of clear moral fraud or unless he stood in a relation of
confidence towards him to whom it was made. If the statement, not
being contracted to be true, is understood to be opinion, or a
conclusion of law, from a comparison
Page 150 U. S. 337
of facts, propositions, or the like, and
a fortiori if
it is the declaration of a supposed rule of law, the parties may,
with the qualification stated in the last sentence, allege its
incorrectness."
And again, (§ 2, p. 571):
"A representation
in pais, in writing, when not a part
of a deed, or made the subject of a contract, though on oath, is no
more efficacious, so far as the question of estoppel is concerned,
than a verbal statement."
These authorities lay down the correct rule to be applied in the
present case, and, tested by the principle they announce, the
complainant is not estopped from claiming his rights under a proper
construction of the contract, notwithstanding what he said in the
insurance cases.
The grounds of estoppel against the complainant are not nearly
so strong as they are against the defendants. It is clearly shown
that Funke, a member of defendants' firm, in March, 1876, on the
trial of the suit against the New York Mutual Insurance Company
upon one of the policies in question, distinctly swore that the
complainant was indebted to them only to the extent of $32,000, and
that they had no security whatever for the payment of that
indebtedness. In his testimony in the present case, he fails to
explain that sworn statement. That sworn statement is inconsistent
with the claim now made -- that the complainant was at that time
indebted to the defendants to the amount of over $140,000 -- and it
is furthermore inconsistent with the position now taken that they
held all the insurance policies, amounting to $163,000, as
collateral security for complainant's indebtedness. These sworn
statements of Funke related to facts which were as well, if not
better, known to the witness at that time than in 1882, and
subsequently, when he testified in this case. Those statements are
unexplained, and if they do not operate as an estoppel upon the
defendants from now claiming a larger indebtedness than was then
stated and from claiming that all the policies were turned over to
them as collateral security, they certainly cast suspicion and
discredit upon their testimony in the present case. The question of
estoppel need not be further discussed.
Upon the written contract, and all the relevant and
competent
Page 150 U. S. 338
evidence connected therewith, we are of opinion that the
construction which the lower court placed upon the contract was
incorrect; that the complainant was not an insurer of the goods;
that he was not responsible for their loss; that the policy of
$15,000 on the cargo of the
Blonde, turned over to the
defendants, was intended to cover their interest in that
consignment, amounting to $10,560, and that the four policies on
the
Keese's cargo, delivered to them, were to protect
their interest in the consigned goods carried by that vessel, to
the extent of $29,327; that they held these policies to pay that
amount in case of loss, and that the surplus, if any, was to be
held in trust for the complainant. But if there were any doubt on
this question, Exhibits H and F, which were produced by the
complainant during the progress of the suit, place the matter
beyond all dispute. Said exhibits are as follows:
"
Exhibit H"
"
Memorandum New York, October 11th, 1867"
"We have received from Johnson & Higgins $163,000 policies
on the schooner
Keese, and $30,000 on the brig
Blonde, as per statement attached. We directed them to
insure our goods for $40,000, which covers our bill of September
18th, and premium, but no profit. To enable us to select our
policies, General Sturm has endorsed in blank five policies,
amounting to $70,000, as follows: "
Page 150 U. S. 339
"
Memorandum [Seal]"
"On
Keese, the Orient Mutual, $15,000, and New York
Mutual, $12,500; Sun Mutual, $12,500, and Mercantile Mutual,
$15,000."
"On
Blonde, the United States Lloyds policy for
$15,000, which we have taken as ours. Leaving a balance for us to
select on
Keese of $25,000, of which we have so far
selected only the Orient, and, as we cannot divide the policies to
suit us, we hereby agree this day to keep all the four policies on
the
Keese for the joint account of ourselves and General
H. Sturm, and, in case of any accident or loss, we will collect the
amount of the policies from the companies and pay over to General
Sturm his share,
viz., 30/55 of the whole amount
collected, and we also agree to pay the premium notes for our share
of the policies, and to stand all loss, if any should happen to our
goods. General Sturm is to bear the shipping expenses only, and in
no event shall he be held responsible for any accident or damage or
any act of the Mexican government, but in case he cannot sell the
arms at the price agreed upon, and has to return them, he shall
insure them for our account."
"The foregoing is hereby fully approved and agreed to."
"Hermann Boker & Co."
"
Exhibit F"
"Memorandum. We have insured our goods on the
Keese and
Blonde for a maximum of $40,000, which includes the
premium, which we have to pay. In case of accident, we select our
policies, and we stand all loss, and Gl. Sturm pays shipping
expenses, only. We hold in trust for Genl. Sturm $30,000 policies
on the
Keese, and also a package of Mexican bonds left
over from the $105,000 delivered to us Sept'br. 20th. We also now
direct Gl. Sturm to dispose of the batteries at any price."
"Steamer Wilmington, October 25, '67."
"Hermann Boker & Co."
Page 150 U. S. 340
These exhibits were vigorously attacked by the defendants, who
at first claimed that both the body and signatures of the documents
were forgeries. They afterwards admitted that the signatures were
genuine, but insisted that the writing above them was forged. A
great deal of proof was taken to establish this contention, but it
fails, in our opinion, to show that these documents were forgeries.
The signatures being genuine, the burden of proof was clearly upon
the defendants to establish that the written part above the
signatures was forged. The delay in the production of these
documents is fairly accounted for by the complainant, and they are
in harmony with what, we think, was the true nature and character
of the contract and agreement of the parties.
Some reliance is placed upon what is called a statement of his
account made to Sturm in Indianapolis in May, 1875, by Boker, one
of defendants' firm. This account was clearly a partial one. It was
made up by Rabing, the bookkeeper of defendants, not from their
books, but from memoranda furnished him by Boker, but from what
source he obtained it does not appear. The correctness of the
account -- shown by loose slips of paper and imperfect memoranda --
was disputed by Sturm, and it is now conceded by defendants that it
was not a full and accurate statement. Sturm claimed that they had
not given him credit for money collected on his insurance policies,
and that when they were all included, the defendants would be
indebted to him. The circumstances attending the presentation of
this account, made at a time when Sturm was contemplating going
into bankruptcy, tends strongly to show that the defendants were
endeavoring to induce him to admit a much larger indebtedness to
them than really existed, in order to give them an advantage in the
event of bankruptcy. But however that may be, there was no stated
account accepted or acquiesced in by Sturm such as would either
conclude or require him to surcharge and falsify the same.
We have not deemed it necessary to determine whether the
September invoice had on it the printed words "Payable in Gold"
when it was delivered. Those words form no part of
Page 150 U. S. 341
the contract, as embodied in the letter of September 18, 1867,
and complainant's acceptance thereof. They do not impose upon the
complainant the liability to account for the value of the goods in
gold in the event of loss by inevitable accident, and not being
responsible for the goods, nor liable for the loss thereof, neither
he nor the proceeds of his insurance policies can properly be
subjected to the burden of making good either the defendants' loss
or paying such losses in gold. The insurance, as defendants admit,
was not on a gold basis, but only for the invoice price of the
goods in currency. The complainant was not an insurer nor in any
way liable for even the currency value of the consigned goods, and
it would be a perversion of the contract, and inequitable, to
require either him or his policies to compensate the defendants for
their loss in gold.
We think the complainant has failed to make out a claim to
compensation for his services in attending to the suits against the
insurance companies.
In our opinion, the complainant is entitled to the account he
seeks by his bill, in which he should be credited with the amounts
received by the defendants on the insurance policies in the
proportion of $152,266 to $29,327, that being their relative
interest in the cargo of the
Keese; that the expenses of
the litigation, including counsel fees, should be divided between
the parties on the same basis; that the complainant is entitled to
one-half of the sum of $1,463.84, paid by way of general average on
the goods shipped on the
Blonde; to the further sum of
$672.68, for repairing the goods which reached Mexico in a damaged
condition, and for whatever defendants realized on life insurance
policies of the complainant, and on the notes arising from the sale
of the Indianapolis lots if the amount so realized did not have to
be repaid in taking up the notes, and with such other amounts as he
may have placed in the hands of the defendants, either in the bank
account or in the transaction connected with the insurance
policies, and the defendants will be credited with all the amounts
paid to and for the account of complainant not covered by the
foregoing rulings. The account will be stated up to the filing of
the bill, and any
Page 150 U. S. 342
balance shown in favor of either side will bear interest from
that date.
The decree is reversed, and the cause is remanded to the
court below, to be proceeded with in conformity with this
opinion.
* In the trial of the
Great Western case, Sturm's
complaint therein was placed in his hands, and he was asked whether
he knew it contained this clause, "that at the time said policy was
so effected, and all the time down to the said loss, the plaintiff
was the owner of said cargo," and he answered, "Yes, sir."
"Question. Was that true?"
"Answer. Yes, sir."
"Q. Was it true in respect to the goods consigned to you by H.B.
& Co. ?"
"A. Yes, sir."
Asked in the present case whether he so answered in the Great
Western case, he answered:
"A. Those questions were put to me, and I answered them in that
way, and at the time, by advice of counsel, I was correct."
In the same case, he was questioned and made answer as follows,
referring to the Boker goods:
"Q. When did you become the owner of them?"
"A. I had the whole responsibility."
"Q. When did you become the owner of the goods?"
"A. The moment they were delivered on board the Keese."
In the same case, he was questioned and made answer as
follows:
"Q. What do you mean by being the owner for the time being?"
"A. They were delivered to me by H.B. & Co., under that
agreement, and I was responsible for those goods until they were
returned, or until I had delivered the money to them. That is what
I mean."
Sturm, in 1876, in the trial of the case of
Funke v. The New
York Mutual, referring to the Boker goods, was questioned and
made answer as follows:
"Q. Was this entire cargo your property?"
"A. I was responsible for the whole of it -- in the event of
loss, I had to pay for it."
"Q. That is not an answer to my question."
"A. At the time I signed that paper -- (paper referred to was
his complaint against the Lloyds)."
"Q. Was it true, as you swore in those pleadings, that these
goods were all your property?"
"A. Yes, I believed that the whole of that property was mine at
that time."
"Q. Were the Boker goods yours, which were consigned to
you?"
"A. That is true. The terms on which I was the owner were
expressed in the papers I furnished."
"Q. Do you understand that that made them your property? Did you
understand that these letters made these consigned goods your
property?"
"A. I understood so at the time, certainly, and I believe so
yet."
On page 503, Sturm's attention was called to his testimony in
this same case where he testified in 1876 as follows, referring to
the September consignment from Funke:
"Q. Did you buy them from him, or were they consigned to you
under these two letters?"
"A. They were consigned to me. I could do with them just as I
liked -- either pay the money or return them."
"Q. Did you pay Funke anything for them?"
"A. I did not."
