Scottish Court of Session Decisions

In 1885 Mitchell, Johnston, & Company, calico printers in Manchester and Glasgow, hired a number of copper rollers from William Mitchell, who had shortly before retired from business as a calico printer in Glasgow. By the terms of the agreement between the parties the rollers were to be used by Mitchell, Johnston, & Company in their business of calico printers, and to be engraved with such patterns as they should think proper, but for no other purpose whatever. The seventh head of the agreement provided that the whole of the rollers should be kept distinctly numbered and marked with the lessor's name, in order to identify them as his property, and in the event of the lessees parting with the custody of the rollers to any printer or other third person, that they should deliver them to such printer or other third person on the lessor's behalf under a receipt bearing expressly that they were “received from William Mitchell.”

This agreement expired in 1889, and another agreement to the like effect was then entered into between the parties. In this agreement Mitchell, Johnston, & Company further undertook to add new rollers to William Mitchell's stock when necessary, in order to provide against loss of copper in turning off old patterns and depreciation in the value of copper.

Mitchell, Johnston, & Company had no print works of their own, and in accordance with a common practice in the trade, they employed firms who had print works to print for them, and sent their rollers and cloth to these firms in order to have the cloth printed. One of the firms which Mitchell, Johnston, & Company employed in this way was Z. Heys & Sons of Barrhead, and they were in the habit of sending this firm rollers they had hired from William Mitchell in order to have their cloth printed from them.

In June 1892 Mitchell, Johnston, & Company became insolvent, and at this time there were in Heys & Sons hands 902 rollers belonging to William Mitchell, which had been hired from him by Mitchell, Johnston, & Company.

William Mitchell applied to Heys & Sons for delivery of these rollers. Heys & Sons, however, claimed a right to retain them in security of a general balance of £4529 due them by Mitchell, Johnston, & Company, and William Mitchell then brought an action against them for delivery of the rollers.

The defenders made, inter alia, the following averments—“The pursuer knew that Mitchell, Johnston, & Company had full possession and control of the said rollers, and that they dealt with them as their own property, and were in the practice of sending the said rollers to these defenders, inter alia, in order that these defenders might engrave the same and use them for printing cloth for or on the orders of Mitchell, Johnston, & Company, and he intended all along that this should be done. The pursuer knew all along that by the usage and custom of the calico printing trade in Glasgow, all rollers delivered to calico printers actually engaged in printing (as these defenders are) were delivered and received on the footing that the engravers and printers (as these

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defenders were) should have a general lien thereon for their whole account for engraving and printing. He knew that these defenders regularly advertised and intimated this on their business papers, and that all rollers sent to them by Mitchell, Johnston, & Company were sent by them and received by these defenders subject to this general lien as aforesaid. The pursuer never disclosed that the rollers in question were his private property. By the usage and custom of the calico printing trade in Glasgow, these defenders have a general lien on the said rollers for the sums due to them for engraving and printing done on the employment of Mitchell, Johnston, & Company.”

The defenders pleaded, inter alia—“(3) In respect these defenders have a lien on the said rollers as condescended on, they should be assoilzied. (4) The defenders should be assoilzied in respect—(3d) The rollers were delivered to Mitchell, Johnston, & Company by the pursuer in order that they might deal with them as their property; et separatim, that they might deliver them to these defenders to be engraved and printed from subject to said general lien.”

Proof was allowed. The result of the evidence, so far as it is necessary to refer to it, was as follows—It was admitted that by the custom of the calico printing trade in Glasgow, printers who were employed to do printing for others had a general lien over the cloth and rollers belonging to their customers, and it was also admitted that the defenders intimated to all their customers, and, inter alios, to Mitchell, Johnston, & Company by notice printed on their business papers that all rollers sent to them were subject to a general lien, and that Mitchell, Johnston, & Company dealt with them on this footing.

Evidence was led for the defenders to show that by custom of trade this general lien attached to all rollers received by a printer from his customers, whether they belonged to the customers or to third parties, and evidence to the opposite effect was led for the pursuers.

Several witnesses for the pursuers said that it was not unknown in the trade that printers, who had no works of their own, should hire rollers and mentioned instances of this practice which had come to their knowledge. Witnesses for the defenders alleged that there was no recognised custom of hiring rollers, and that the instances which had occurred were all cases of family arrangements.

The evidence as to whether the name on the receive notes sufficiently indicated the ownership of the rollers was contradictory.

It appeared that Mitchell, Johnston, & Company began to do business with the defenders in 1885. At first, when they sent William Mitchell's rollers to the defenders, they sent them on receive notes in William Mitchell's name, but on the defenders objecting to the form of the receive note they altered it, and they also made direct representations to the defenders that they were the owners of the rollers. The evidence as to their dealings with the defenders in these respects is fully examined in the Lord Ordinary's opinion. The pursuer had no knowledge that Mitchell, Johnston, & Company had altered the form of the receive notes, or were holding themselves out as owners of his rollers.

On the other hand, it appeared that the defenders all along believed that the rollers received by them from Mitchell, Johnston, & Company belonged to that firm, and that they printed for them in that belief and on that footing. Mr Z. H. Heys, a partner of the defenders' firm, deponed—“When I met the partners of Mitchell, Johnston, & Company to arrange terms and prices for printing, one of the special conditions laid down with regard to our dealing was that they were to supply us with their own copper and their own cloth. These are the only terms upon which we print for any one. … These continued to be the terms until this stoppage took place.”

Of the 902 rollers in dispute in this action, it appeared that 125 had been the property of Mitchell, Johnston, & Company at the time they were sent to the defenders, and that they had been subsequently transferred by Mitchell, Johnston, & Company to the pursuer, to make good loss and depreciation in his stock in terms of their agreement with him.

On 7th March 1893 the Lord Ordinary ( Low) pronounced an interlocutor sustaining the defences and assoilzieing the defenders.

“ Opinion.—There are some points raised upon record which are not now in dispute, and which may be disposed of at once.

It is established beyond doubt that the pursuer was not a partner of Mitchell, Johnston, & Company, and that he was not interested in that firm. It is also established that the property of the rollers which are in dispute is in the pursuer.

It is further admitted that according to the universal custom of the trade, calico printers who like the defenders are actually engaged in printing have a lien over all rollers belonging to a customer for the general balance due by that customer.

The means relied on by the pursuer in the agreements by which he hired rollers to Mitchell, Johnston, & Company, for securing that his rollers should not be subject to a lien for accounts incurred by Mitchell, Johnston, & Company were two in number. He stipulated, in the first place, that his initials should be stamped upon each roller, and in the second place, that the receive notes should be in his name.

I do not think that the stamping of initials on the rollers afforded much, if any, security that the calico printers to whom they were sent would recognise that they were the property of the pursuer. The initials are not put upon a prominent part of the rollers, and are not regarded in the trade as an index of property, because rollers may and do change hands without any alteration being made upon the

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initials. The initials may be useful for distinguishing rollers which have got mixed up with a different set in the printing works, but what the printers chiefly concern themselves with is the pattern number which is stamped prominently on the side of the roller.

The receive notes are more important. No doubt if the rollers are sent to the printers by third parties, such as engravers or calenderers, the name upon the receive note may be no indication of the ownership of the rollers. But when the person employing the printer sends his own rollers, the practice is for him to send a receive note in his own name. For an employer therefore to send his own rollers with a receive note in the name of another would be unusual, and would not unnaturally, I think, suggest to the printer, if he had observed the terms of the note, and had it in view that he might require to claim a lien over the rollers—to inquire why the ordinary practice had been departed from, and to whom the rollers belonged. I think that the suggestion of the advisability of inquiry would be all the stronger if, as happened in this case, the customer sent the cloth with a receive note in his own name, and the rollers with receive notes in the name of another.

I do not think, however, that the precautions taken by the pursuer were complete. Mitchell, Johnston, & Company were a Manchester firm, and they sent their cloth from Manchester with receive notes dated from Manchester. The receive-notes of the rollers, on the other hand, were always dated from Glasgow, even when they were sent from Manchester. In such circumstances I think that the defenders, who knew that the Glasgow branch of Mitchell, Johnston, & Company's business was conducted in the pursuer's office, might quite well have assumed that the pursuer was their custodier or receiver of rollers in Glasgow, through whom and in whose name they were sent to printers. Again, all the receive notes which were actually sent from the Glasgow office of Mitchell, Johnston, & Company were collected by one of the defenders' carters, and never came under the notice of the partners of the firm at all. Further, although a receive-note sent to a printer by a customer is presumably in the name of the owner of the rollers, the object of the receive note is not to intimate to the printer in whom is the property of the rollers, but only to show on whose account the rollers are sent so that they may be kept together and separate from the rollers of other customers. Even, therefore, in the case of a receive note sent by post, the partner of the firm receiving it would simply pass it on to the roller department and would not pay much attention to the precise terms of the receive note. Further, the defenders intimate to all their customers that they only do business upon the footing that all cloth and copper sent to them shall be subject to their lien. I think that they were entitled to assume that if the customer did not intend to be bound by that condition he would give them distinct warning, and I do not think that it would occur to them critically to examine the receive notes to guard against the contingency of a customer sending rollers not his own property, and thereby depriving them of their lien.

I am therefore of opinion that the safeuards for which the pursuers stipulated were not perfect. He knew that by the custom of the trade a lien over the customers' rollers was recognised, and if he wanted to secure that no claim of lien over his rollers should be made for a debt due by Mitchell, Johnston, & Company, I think that he should have stipulated that that firm should give unequivocal notice to the printers to whom they might send the rollers that they were not their property and were not to be subject to the printers' lien, or he should himself have sent such a notice to the printers.

I do not think, however, that it is material to consider what would have been the result as regards the respective rights of the pursuer and the defenders if Mitchell, Johnston, & Company had, during the whole course of their dealings with the defenders, sent receive notes for rollers in the pursuer's name alone, and the defenders had accepted them without remark or objection. Because, as matter of fact, the defenders did, at a comparatively early period, call attention to the form of the receive notes, and thereafter the form was to a considerable extent altered.

It is therefore necessary to see precisely what the facts are.

Mitchell, Johnston, & Company had from the first an office in Glasgow. Until 1887 they had a room in the pursuer's office and paid half the salary of one of his clerks and then they took an office of their own. They commenced to do business with the defenders in 1885, and from that date until October 1887 (after they had moved into their own office) the receive notes for rollers were sent regularly in the name of the pursuer alone. The defenders say—and I see no reason to doubt them—that so long as Mitchell, Johnston, & Company's place of business in Glasgow was the pursuer's office, they assumed that the rollers were stored with the pursuer, or that he was custodier of them. But when Mitchell, Johnston, & Company went to a separate office of their own, the defenders asked that their name should appear on the receive notes.

Mr Z. H. Heys (one of the defenders) says—‘When I learned that Mitchell, Johnston, & Company had ceased to use William Mitchell's office, I told the carter that receive notes in the old form were of no use, and he must get on account of Mitchell, Johnston, & Company” put on them. I wanted that change made because the carter was not lifting the rollers from William Mitchell's store.’

M'Kendrick was at that time Mitchell, Johnston, & Company's clerk in Glasgow, and a letter from him to that firm dated 28th October 1887 is produced in which he

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says—‘Please note that Heys will not lift any rollers unless receive note is made out as being on account of Mitchell, Johnston, & Company.’

In reply Mitchell, Johnston, & Company instructed M'Kendrick to send the receive notes as before, ‘and if they’ ( i.e. the defenders) ‘make any further remark, say that Mr W. A. Mitchell, from Manchester, will be in Glasgow very soon and see them on the subject.’

Notwithstanding these instructions, M'Kendrick took it upon himself to make out the receive notes in the terms desired by the defenders.

Mr W. A Mitchell came to Glasgow about Christmas 1887, and saw Mr Z. H. Heys in regard to the receive notes, and the latter says—‘He stated to me that they were simply using up William Mitchell's old receive notes. There was nothing further said about the matter so far as I remember. I was quite satisfied with the explanation.’

M'Kendrick says that at that time he spoke to Mr W. A. Mitchell about the receive notes, but the latter gave him no instructions on the subject and he continued to send out the receive notes in the form which he had been using since the previous October, viz., ‘On account of Mitchell, Johnston, & Company.’

That form of receive note was continued until October 1889 when the defenders' carter again took objection to the form of the receive note, and it was made to run ‘per’ or ‘p. Mitchell, Johnston, & Company.’ The person who was the defenders' carter at that time cannot be found, and it is not quite clear why the alteration in the form of the receive note was made. I think, however, that it is pretty evident that some notes had been sent in the original form, i.e., in the pursuer's name alone; that that had drawn a protest from the carter, and that the new form, ‘per Mitchell, Johnston, & Company’ was adopted by the carter and M'Kendrick without much consideration, and as being practically the same as ‘On account of Mitchell, Johnston, & Company.’

The form of note adopted in 1889 appears to have been continued down to the stoppage of Mitchell, Johnston, & Company in 1892, with a few exceptions, when receive notes in William Mitchell's name were sent. These exceptions were, I think all, or almost all, in cases in which new rollers were sent from Manchester, the receive notes also being sent from Manchester.

I do not think, however, that the pursuer can found upon these later notes in his name as indicating to the defenders that the rollers belonged to him, because there are letters from Mitchell, Johnston, & Company to the defenders in 1889 and subsequently which in my opinion amount to distinct representations that the rollers were the property of Mitchell, Johnston, & Company, and were subject to the defenders' lien.

In 1889 Mitchell, Johnston, & Company were in arrear of their payments to the defenders, and apparently continued to be so until their stoppage, and on 11th February 1889 Mr W. A. Mitchell wrote to the defenders as follows—‘I have Z. Heys & Sons’ letter to our firm this morning about payments. It is unfortunate that we have let them lately get behind, and we have no excuse to offer. We are very careful of our credit, which we think stands high here, and it is only your account that we can let stand a day overdue. This you will say is very candid and very hard on you, but you were not often very pressing, and we always knew that you had so much cloth and copper of ours that you might not consider it very risky.’

I cannot read the words which I have italicised as meaning anything else than that the copper as well as the cloth was subject to the defenders' lien.

Again, on 15th January 1891 the defenders, who were pressing for payment of their account, wrote to Mitchell, Johnston, & Company—‘We are sorry to have to push this matter, but we must insist on our terms being stuck to, as we are not disposed to give anyone credit to the extent of more than the value of the copper in our hands.’

Mr Z. H. Heys explains that cloth as well as copper should have been mentioned in this letter, and I think that that is obviously the case, but the letter was in any event notice to Mitchell, Johnston, & Company that the defenders regarded the rollers as a security for their debt.

In their reply Mitchell, Johnson, & Company say—‘We trust the question you raise’ ( i.e., as to the value of the security which they had by reason of the rollers in their possession) ‘may never be one between us, but at the same time we would mention that you have rarely less than £2500 to £3000 of our own cloth at your works.’

I am unable to read that sentence as the pursuer contended it should be read, as a repudiation of the assumption in the defenders' letter that they had a security over the copper. I think that Mitchell, Johnston, & Company mention the cloth only simply because the defenders had omitted to specify cloth as well as copper in their letter. In short, I read Mitchell, Johnston, & Company's letter as simply pointing out to the defenders that they had a much better security than they represented themselves to have in their letter of 15th January, as in addition to the copper they had from £2500 to £3000 worth of cloth.

Then on 9th January 1893 the defenders wrote to Mitchell, Johnston, & Company as follows—‘We are very much annoyed at not receiving payment of our September account this morning as promised, and shall refrain from expressing what we think about it. We have certainly lost all confidence in your promises, and are at a loss to know what to do. We notice that your Glasgow house when sending copper send a receive-note bearing the name of William Mitchell. We presume this is some old receive-notes that you are just

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using up, but to keep matters all in order you will be good enough to send us a letter by return saying you understand we hold a lien over all the copper and cloth we have, notwithstanding the fact that the copper is sent on receive-notes bearing the name of William Mitchell for M., J., & Co.’

Upon the 11th January Mitchell, Johnston, & Company sent the following reply—‘We are sorry that remittance has not been sent you yet, but we have been very much disappointed. … As to the copper, we quite understand you hold this, and it is all sent you now on our account. Three years ago we contracted for all the copper not our own for £3000, and we have added £1600 of new copper to it since.’

That appears to me to be a perfectly distinct statement on the part of Mitchell, Johnston, & Company, that all the rollers then in the hands of the defenders were their property.

On 20th February 1892 the defenders wrote to Mitchell, Johnston, & Company as follows—‘The enclosed receive-note for copper came in your letter this morning. Will you be good enough to send us a fresh one in your own name, as we do not know who William Mitchell is? We spoke or wrote about this once before. Your immediate attention will oblige.’

The answer of Mitchell, Johnston, & Company was to send to the defenders the receive-note printed in the Print of Documents, and which is in the name of Mitchell, Johnston, & Company alone.

That receive-note appears to be applicable to the last lot of rollers which was sent by Mitchell, Johnston, & Company to the defenders.

Finally, on the 23rd April 1892, Mitchell, Johnston, & Company, writing to the defenders, said—‘As you know, we have very largely reduced your account in the last year, and with the security you hold of cloth and copper, you are not in a bad position, even if you do not take into account the security of our credit and other estate.’ It appears to me that the only meaning which the defenders could attach to that sentence was that they had the security of both the cloth and the copper in their hands.

I may also mention one somewhat curious piece of evidence which goes to show that the defenders were led by Mitchell, Johnston, & Company to believe that the rollers in question were their property.

On one occasion Mitchell, Johnston, & Company sent to the defenders rollers belonging to a firm of the name of Ellinger & Company, and they then wrote to the defenders—‘We send you six rollers we got to print with; they are not ours.’

I think that the defenders would naturally assume, upon reading that letter, that all the other rollers which had been sent to them did belong to Mitchell, Johnston, & Company.

I should also notice that some 123 rollers now in the possession of the defenders were purchased by Mitchell, Johnston, & Company in 1888, and were then sent to the defenders. They were at that time unquestionably the property of the defenders, but the receive notes did not in any respect differ from those sent with the pursuers' rollers. These rollers were transferred to the pursuer in 1891, but no notice of the transfer was given to the defenders.

Upon the whole evidence I am of opinion that, as regards the great bulk of the rollers, the defenders were led by Mitchell, Johnston, & Company to believe, and did believe, that they belonged to the latter….

In these circumstances, the question of law to be determined is, whether the defenders are entitled to the lien over the rollers which they claim?

In regard to the 123 rollers which were the property of Mitchell, Johnston, & Company when they were sent to the defenders, I do not think that there is any doubt because the defenders could not be affected by a subsequent change of ownership of which they had no notice.

I am also of opinion that the defenders are entitled to retain the other rollers.

I have no doubt that the defenders were in the bona fide belief that the rollers belonged to Mitchell, Johnston, & Company, but it was contended for the pursuer that the form of receive notes was such as to put the defenders on their inquiry, and that if they had properly inquired into the matter, as, for example, by communicating with the pursuer, they would have ascertained that the rollers belonged to him. Now, as matter of fact, the defenders were put upon their inquiry, but I think that they did all in the way of inquiry that was incumbent upon them. They, in the first place, in October 1887 asked, through their head carter, that the form of the receive notes should be altered, and that was done without demur—at least no demur was made to them. Then at Christmas 1887 Mr W. A. Mitchell told Mr Z. H. Heys that they had been using up old receive notes of the pursuer. Such a statement could only have one meaning, namely, that notwithstanding the form of the receive notes the rollers belonged to Mitchell, Johnston, & Company. We have only Mr Heys' account of that interview, because Mr W. A. Mitchell disappeared when his firm stopped payment. But I saw no reason to doubt the honesty of Mr Heys' evidence, and it is corroborated to this extent, that M'Kendrick says that W. A. Mitchell told him that he had had an interview with Mr Heys, but did not instruct him to alter the form of receive notes which he had been sending since the previous October. Finally, the letters to which I have referred from 1889 onwards, seem to me to constitute quite unambiguous representations on the part of Mitchell, Johnston, & Company, that the rollers were theirs, and were subject to the defenders' lien.

I am further of opinion that Mitchell, Johnston, & Company were the proper parties for the defenders to communicate with in regard to the rollers. The defenders were employed by that firm, and came in contact with no one else, and they were entitled to assume that the partners of the

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firm were honest men whose representations could be relied upon.

The question remains, whether in these circumstances the defenders were entitled to retain the rollers as against the pursuer for the general balance due to them by Mitchell, Johnston, & Company.

Both parties referred to the judgment of the House of Lords in The London Joint-Stock Bank v. Simmons, 1892, App. Cas. 201, as laying down principles of law applicable to the present case. The question there was as to the right of the bank to retain negotiable securities for payment of a balance due by a broker who had fraudulently pledged the securities with them as against the true owner. The House held that the bank was entitled to retain and realise the securities, having taken them for value and in good faith, and there being no circumstances to create suspicion.

There were three questions in the case—1st, whether the securities belonged to the party claiming them from the bank; 2nd, whether they were negotiable instruments; and 3rd, whether the bank took them in good faith. The judgment proceeded upon an affirmative answer to all these questions. If any one of them had been answered in the negative I apprehend that the judgment would have been different.

The decision, therefore, goes no further than this, that the bona fide pledgee for value of a negotiable instrument can retain it for the debt for which it was pledged against the true owner. The same rule, I apprehend, also applies to the impledging of documents of title such as an endorsed bill of lading, or a delivery order upon a warehouseman, or of goods held under such documents of title. But the rule does not in my judgment necessarily apply where what is pledged is a corporeal moveable not the property of the pledger, and of which he has the bare possession without any document of title. In such a case it is not sufficient to prove that the pledgee took the article in good faith and in the absence of circumstances calculated to excite his suspicion.

In the London Joint Stock Bank v. Simmons, Lord Herschell thus states the law—‘The general rule of the law is that where a person has obtained the property of another from one who is dealing with it without the authority of the true owner no title is acquired against that owner, even though full value be given, and the property be taken in the belief that an unquestionable title thereto is being obtained, unless the person taking it can show that the true owner has so acted as to mislead him into the belief that the person dealing with the property had authority to do so. If this can be shown a good title is acquired by personal estoppel against the true owner.’

It therefore seems to me that the question here is whether the pursuer so acted as to mislead the defenders into the belief, or so as to make them liable to be misled into the belief that Mitchell, Johnston, & Company were owners of the rollers.

Upon this question the case of Brown v. Marr, 7 R. 427, was referred to. In that case a retail jeweller fraudulently obtained articles of jewellery from wholesale dealers upon contracts of ‘sale and return,’ and pawned them. It was held in a question between the wholesale dealers and the pawnbrokers that the latter were entitled to retain the jewellery. There was a great deal of discussion as to the true nature of a contract of ‘sale and return,’ and opinions were expressed upon the point, but I think that all the judges were of opinion that it was sufficient for the decision of the case that the retail jeweller having undoubtedly authority to sell the jewellery, could also pledge it, and that of the two innocent parties dealing with him, that party (viz., the wholesale dealers) who had put it in his power to commit the fraud must suffer.

Lord Justice-Clerk Moncreiff, when dealing with this view of the case, said—‘Lord Stair says (i. 14. 5), “Property or dominion passes not by conditions or provisions, but by tradition, or other ways prescribed in law.” From which it follows that possession or some symbol of tradition, are the only true indications of property in moveables. Thus, it is held in England, that when tradition or possession has been obtained by fraud, and has been used to induce transactions with third parties, of two innocent parties he shall suffer who has enabled the wrongdoer to commit the fraud. This is simply another way of saying that a purchaser or pledgee is not bound to look beyond the ostensible title of possession, and that if the true owner has knowingly conferred this ostensible title, although induced thereto by fraud, a bona fide purchaser cannot be required to restore what he has bought on the ground of latent stipulations between the seller and his author.’

I have already pointed out that one ground of judgment in Brown v. Marr was that the owners of the watches had put them into the hands of the retail dealer Marr with authority to sell them, which involved authority to pledge them. I think, however, that there was another important element in the case, namely, that Marr was a dealer in jewellery, and was known by the pawnbrokers to be so. Now, suppose that the pursuers, the wholesale dealers, had been right in one of their contentions, namely, that Marr did not get the watches for ‘sale or return’ but merely ‘on approbation,’ I am not sure that the result would have been affected. Because if a person puts goods into the hands of another whose business it is to sell goods of that description, I think that a third party purchasing from the possessor in good faith for value, and in the ordinary course of trade, would get an unchallengeable title.

That view is in consonance with the opinions expressed by judges of high authority in the case of Pickering v. Busk, 15 East. 38. In that case one Swallow was a broker and saleagent. Pickering purchased hemp through Swallow. The hemp was transferred at the desire of Pickering in

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the books of the wharfinger, from the name of the seller to that of Swallow, as regarded one parcel, and to the name of Pickering or Swallow as regarded another parcel. The question was whether Swallow could give a good title to a purchaser. He had contracted for the sale of hemp, and having none of his own to deliver had transferred Pickering's hemp to the purchaser. It was held that the purchaser from Swallow was entitled to the hemp in a question with Pickering. Lord Ellenborough said—‘Strangers can only look to the acts of the parties and to the external indications of property, and not to the private communications which may pass between a principal and his broker, and if a person authorises another to assume the apparent right of disposing of property in the ordinary course of trade it must be presumed that the apparent authority is the real authority. I cannot subscribe to the doctrine that a broker's engagements are necessarily and in all cases limited to his actual authority, the reality of which is to be afterwards tried by the fact. It is clear that he may bind his principal within the limits of the authority with which he has been apparently clothed by his principal in respect of the subject-matter, and there would be no safety in mercantile transactions if he could not.’ In this same case Le Blanc, J., said—‘The law is clearly laid down that the mere possession of personal property does not convey a title to dispose of it. Then, after referring to the circumstances of the case he added—‘This is distinguishable from all cases where goods are left in the custody of persons whose proper business it is not to sell.’

There are two cases, one in England and the other in Scotland, the circumstances of which are very like those in the present case. The English case is Weldon v. Gould, 3 Espinasse 268. The circumstances are thus stated in the report—‘The plaintiff had delivered calicoes to one Pearce to have them printed; he delivered them to the defendant, who was a calico printer; the defendant did not know that the goods did not belong to Pearce, and he kept the goods for the balance of a general account between Pearce and him.’

Lord Kenyon decided in favour of the defendant. I confess that I am unable to see any material distinction between the circumstances of that case and the present.

The Scotch case is Lesly v. Hunter, M. 2660, and Elchies voce Hypothec, No. 18. The defender Hunter was a bleacher, and he was employed to whiten certain cloth by George and Archibald Arnot, weavers. The Arnots' name was stamped upon the cloth. They got delivery from Hunter of a portion of the cloth, promising to pay for the bleaching of the whole cloth when they uplifted the remainder. The Arnots' became bankrupt, and Lesly, who was proved to be the owner of part of the cloth remaining in Hunter's hands, claimed delivery of that part upon paying the expense of bleaching it. Hunter, upon the other hand, claimed a lien over the cloth for the whole account due to him by the Arnots. Hunter had taken the cloth in the belief that having Arnots' name stamped upon it, it belonged to them. The Court held that Hunter was not entitled to the lien which he claimed, but Lord Elchies states that the judgment was carried only by the casting vote of the President.

If, therefore, the circumstances of that case are substantially the same as those of the present, it is plain that it is an authority directly in the pursuer's favour.

The reports of this case are somewhat meagre, and the session papers, so far as they have been preserved, do not add much to the information given in the reports. It appears that the Arnots had woven the cloth for Lesly from yarn supplied by him, and he gave evidence that he had not authorised the Arnots to put their name on the cloth. It does not, however, appear whether Lesly had authorised the Arnots to get the cloth bleached, or whether it was the custom of the trade for weavers to get cloth which they had been employed to weave, bleached for their customers. If the Arnots had no authority, express or implied, to get the cloth bleached, I can well understand that Hunter could not claim a lien for the general balance, because Lesly had in that case done nothing which was calculated to mislead him into the belief that the cloth belonged to the Arnots. Further, there is no note of the opinions of the Judges. I am thus unable to regard the decision as giving much assistance in the present case one way or the other.

It therefore appears to me that except the judgment of Lord Kenyon in Weldon v. Gould, there is no authority directly in point; but a consideration of the whole authorities, so far as I know them, and of the principles which may be deduced therefrom, leads me to the conclusion that the defenders must prevail.

The ordinary practice of the trade is for job calico printers to have their own rollers, which they send along with cloth to printers who have works, and who do the actual printing process. Further, by the admitted custom of the trade, printers have a lien over the rollers of their customers. The pursuer knew the ordinary practice of the trade, and the inveterate custom as to lien, and in that knowledge he gave his rollers to Mitchell, Johnston, & Company for the very purpose of being sent by them to printers. By so acting the pursuer put it into the power of Mitchell, Johnston, & Company, while using the rollers for no other purpose than that for which they had authority to use them, to mislead printers to whom the rollers were sent, and he also rendered the printers to whom the rollers were sent very liable to be misled. In such circumstances I am of opinion that the defenders, who held the rollers in the bona fide belief, induced by the representations of Mitchell, Johnston, & Company that they were the property of the latter, are entitled to retain them even against the pursuer. To hold otherwise would, in my judgment, not only be contrary to sound

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principle, but would be most prejudicial to the interests of those engaged in this and similar trades.”

The pursuer reclaimed, and argued—The admitted facts of the case afforded a legal ground upon which the pursuer was entitled to judgment. It was admitted that the rollers were the pursuers' property, and that Mitchell, Johnston, & Company had only right to them as a hirer. It was not said that there was mala fides on the pursuers' part, or that he knew that his lessees were holding themselves out as owners of the rollers. Now, the fact that a person who had received goods under a contract of hire or under a limited title of that kind dealt with them as his own would not give any right to persons receiving the goods from him, unless the true owner had acted so as to mislead the third party into the belief that the hirer had the right to deal with the goods as he did— London Joint-Stock Bank v. Simmons, L.R., 1892, App. Cas. 201, per Lord Herschell; Marston v. Kerr's Trustee, May 13, 1879, 6 R. 898; Murdoch v. Greig & Son, February 6, 1889, 16 R. 396; Martinez v. Gomez, January 23, 1890, 17 R. 332; Lesly v. Hunter, M. 2660; and Elchies voce Hypothec, No. 18. These cases showed that it was not incumbent on the owner of goods, who had hired them out, to take any precautions to obviate possible fraud on the part of the lessee. The Lord Ordinary was mistaken in thinking that in Lesly v. Hunter, the person to whom the cloth was entrusted by the owner had no power to send it to be bleached. The session papers showed that he had, and that case was therefore a direct authority in the pursuers' favour. Brown v. Marr was not an authority applicable to the present case, for there the contract was one of sale and return, and the vendee had power to sell, and therefore to pledge the goods delivered to him. Nor did the cases of principal and agent, such as Pickering v. Busk, apply; for an agent or factor for sale was held to have power to pledge. But even in the cases of principal and agent the law laid down favoured the pursuer's contention— Cooke & Sons v. Eshelby, 1887, L.R., 12 App. Cas. 271. Pochin & Co., Vickers, and Babcock were all cases of delivery-orders, and the ratio of these decisions was that the true owner of the goods had put an instrument into the hands of the second party which enabled him to commit the fraud. The case of Rose v. Spavens was decided on the same principle. These were also cases of principal and agent, and were distinguishable from the present on that ground. Weldon v. Gould was a case of agency; and further, that decision was at variance with the views expressed by the Court in the cases of Marston and Pickering. In no case had it been held that a lessor was barred by putting another party in possession of his goods under a contract of hire from claiming them from a third party to whom they had been fraudulently transferred by the lessee, unless the lessor was in some way to blame for the deception practised on the third party. No duty was laid on the pursuer to intimate to the printers employed by Mitchell, Johnston, & Company that the rollers used by that firm were hired from him, especially as it was proved that the practice of hiring rollers was known in the trade. If, however, the pursuer was bound to take any precautions, he had sufficiently satisfied whatever obligation lay upon him by stipulating in the agreement of hire that the rollers should be stamped with his initials, and sent on receive notes in his name. The initials on a roller might not be conclusive evidence of ownership, but there was a presumption that they were the owner's initials, and this presumption was very strong in the case of new rollers. The form of the receive notes was still stronger evidence that the pursuer was the owner of the rollers. At all events, the defenders were in the circumstances put upon their inquiry, and their obligation to make inquiry was not satisfied by applying to Mitchell, Johnston, & Company for an explanation. The evidence showed that their suspicions were aroused, and that being the case, they were bound to take the best means of ascertaining the truth, namely, by asking the pursuer. Having wilfully disregarded this obvious means of knowledge, they could not plead that they were the innocent victims of a fraud—Opinions in Raphael v. Bank of England, 17 Scott's Rep., 1855, C. B. 171, and 25 L.J., C.P. 33. The pursuer was, therefore, entitled to succeed on one or other of the following grounds—(1) When goods were delivered under an ordinary contract of hire, the lessor was not bound to take any precautions to prevent third parties being deceived, unless he knew that the lessee was dealing with the goods contrary to the contract. (2) If the pursuer was bound to take any precautions, the precautions he took were sufficient. (3) At all events, the defenders were barred from saying that a deception had been practised upon them, for their suspicions had been aroused, and they had neglected the obvious means of ascertaining the truth. They were therefore in malâ fide.

Argued for the defender—Courts were at first slow to recognise general liens, and they were only recognised when the courts were convinced of their commercial benefit—Bell's Comm. (7th ed.) ii. 101. It was admitted that in the trade in question printers had a general lien over the cloth and rollers of their customers, and the pursuer was aware of the existence of this general lien. He also knew that his rollers would be sent to third parties. He was bound in these circumstances to take precautions to prevent these third parties being deceived, especially as there appeared from the proof to be no recognised custom of hiring rollers in the trade. The precautions he took were quite insufficient, for the initials on a roller were not regarded as an index of ownership, and the receive notes only indicated the custodier of the rollers from whom they were forwarded to the printer. The position of matters accordingly was that the pursuer put

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Mitchell, Johnston, & Company in a position to deal with the rollers as their own, and failed to take proper precautions to prevent third parties being deceived by their being apparently owners of the rollers. But if a party clothed another with the ostensible ownership of moveable subjects, the latter might effectually pledge them. It lay with the owner to secure himself. The principle to be applied in the circumstances of the case was, that where two innocent third parties were injured through the fraud of a third party, the loss must fall on the one who had put the third party in a position to commit the fraud— Brown v. Marr, Barclay, &c., January 8, 1880, 7 R. 427; Babcock v. Lawson, 1879, L.R. 4 Q.B. Div. 394; Pochin & Company v. Robinson and Marjori-banks, March 11, 1869, 7 Macph. 622; Vickers v. Hertz, March 20, 1871, 9 Macph. (H. of L.) 65; Rose v. Spavens, June 15, 1880, 7 R. 925. The equitable considerations applied in the case of principal and agent were applicable here. Weldon v. Gould, 3 Espinasse 268, was a direct authority for the defenders. The English cases as to contracts of hire only gave effect to the rights of the true owner against a party claiming a recognised lien where there was a recognised custom of hiring in the trade, but no such custom was proved to exist in the printing trade— Crawcour v. Salter, 1880, L.R. 18 Ch. Div. 30. In Marston the question was between the true owner and the hirer's trustee in bankruptcy, and the doctrine of tantum et tale therefore applied. The rule applied in Brown v. Marr had been recognised as sound in the subsequent case of Macdonald v. Westren, July 19, 1888, 15 R. 988, though the judgment in the latter case differed, owing to the question being between the true owner and the trustee in bankruptcy of the party who had received the goods from the owner. If any obligation was laid on the defenders to make inquiry, they had discharged that obligation by going to their customers—Lord Chancellor Halsbury in Cook v. Eshelby, L.R., 12 App. Cas. 276; and in Earl of Sheffield v. London Joint-Stock Bank, L.R., 13 App. Cas. 338. As to Lesly v. Hunter the Lord Ordinary's view of the session papers was correct. The cloth in that case was sent to the bleachers by a party who had no authority to do so, and that case was therefore different from the present.

At advising—