Opinion
40445.
DECIDED JANUARY 6, 1964.
Action to recover proceeds of sale of personalty. Cobb Superior Court. Before Judge Manning.
Edwards, Bentley Awtrey, Scott S. Edwards, Jr., A. Sidney Parker, for plaintiff in error.
William H. Duckworth, Jr., contra.
When the plaintiff has consigned and delivered possession of personal property to a consignee with authority to sell to specific purchasers, but has given the consignee no other indicia of title and has done no act that would reasonably mislead others and create apparent ownership in the consignee; and the consignee assigns the property to his creditor as security for money loaned to the consignee; and the consignee's creditor collects the proceeds of sale and applies it to the consignee's indebtedness, the plaintiff can recover from the consignee's creditor the value of the property which is equal to the proceeds of sale received by the creditor.
DECIDED JANUARY 6, 1964.
The defendant assigns error on the judgment of the trial court overruling its general demurrer to the plaintiff's petition. The plaintiff is an egg producer and alleges that it consigned and delivered possession of eggs to Hancock Farms, Inc. The consignee was to grade, process, package, identifying the consignor by code or flock numbers, pack, ship, sell to one of two named New York purchasers, collect the purchase price, deduct its charges for services, and remit the proceeds to the consignor. Without the plaintiff's knowledge Hancock made written assignments to the defendant of certain amounts of the plaintiff's eggs, to secure moneys loaned or advanced by the defendant to Hancock. The defendant thereupon notified the purchaser to remit the purchase price directly to it, and received the purchase price and applied it to payment of Hancock's indebtedness and continues to retain possession of the money.
The plaintiff sues for the value of the eggs which is equal to the sum received from their sale by the defendant.
Possession of personalty is not conclusive evidence of ownership, and any person dealing with the possessor as the owner will not obtain title to the property as against the true owner, unless the owner has done something to mislead or deceive such person. Harris Loan Co. v. Elliott Hatch, 110 Ga. 302 ( 34 S.E. 1003); Darby v. Parrish, 42 Ga. App. 492, 494 ( 156 S.E. 462). One specially employed to receive possession of goods from a principal and to sell them for a compensation is a "factor", "consignee", or "commission merchant." He is both a bailee and the sales agent of the bailor. 22 Am. Jur. 307, § 2; 35 CJS 496, § 1. Where the factor has made a disposition of the property in any other way than by sale, the transaction is ineffective to pass title. First Nat. Bank v. Charles Nelson Co., 38 Ga. 391, 400 ( 95 AD 400); Peoples Loan c. Corp. v. Bell, 101 Ga. App. 593, 594 ( 115 S.E.2d 218); 22 Am. Jur. 336, § 51; 8 Am. Jur. 2d 986, § 86; accord Turner v. Williams, 29 Ga. App. 751, 752 (2) ( 116 S.E. 553). If the principal has clothed his factor with apparent ownership he will be estopped, as against those who have acted bona fide on the faith of the apparent ownership, from denying the factor's authority to divest the principal of ownership. 8 Am. Jur. 2d 989, § 89; 35 CJS 580-581, § 58. But the factor's possession with authority to sell is not sufficient alone to create an estoppel on the principal. This must be accompanied by some indicia of ownership in the hands of the factor, or positive act of the principal, or of the factor with the principal's knowledge and permission, such as may reasonably be expected to mislead others, and does so mislead another, so that he acts on such belief to his prejudice; and the factor's sale must be in the usual and ordinary course of business. Code § 96-207; First Nat. Bank v. Charles Nelson Co., 38 Ga. 391, 399, supra; Peoples Bank v. Jones, 193 Ga. 720 ( 20 S.E.2d 74); 8 Am. Jur. 2d 990, § 90; 991, § 92; accord National Homes, Inc. v. City Plumbing c. Co., 108 Ga. App. 519 ( 133 S.E.2d 416). In the absence of statutes that furnish protection to persons dealing with factors, and unless estopped from doing so, the principal may follow and recover the property improperly disposed of by the factor, in its original state, or the proceeds therefrom, from any person, regardless of his good faith, into whose hands it may have come. Norris v. Boston Music Co., 129 Minn. 198 ( 151 N.W. 971); accord Turner v. Williams, 29 Ga. App. 751, supra; Broadway Apt. Co. v. Barnett, 30 Ga. App. 562, 566 ( 118 S.E. 601); Fowler v. Kragel, 93 Ga. App. 403, 404 ( 91 S.E.2d 794). The principal may have an action against an unauthorized transferee for conversion or for money had and received. 35 CJS 581, § 58; accord Payne v. American Agri. Chemical Co., 66 Ga. App. 596 ( 18 S.E.2d 635). Whether the transferee of a bailee who makes an unauthorized disposition of his bailor's property is liable for conversion depends on whether by the law of property he legally acquires the property interest intended to be conveyed to him. 1 Harper James, Law of Torts 143, § 2.17.
Any act of dominion wrongfully asserted over another's property which negatives or is inconsistent with the right of the true owner amounts in law to a conversion. Liptrot v. Holmes, 1 Ga. 381, 391; Robinson v. McDonald, 2 Ga. 116, 119; James v. Newman, 73 Ga. App. 79, 80 ( 35 S.E.2d 581).
This petition shows that the consignee had possession of the plaintiff's eggs, but does not show any other indicia of ownership in the hands of the consignee, or any deceptive act by the plaintiff or by which the plaintiff authorized the consignee to hold itself out as owner which would estop the plaintiff to assert his rights.
(The principles discussed above may be affected by the Uniform Commercial Code, applying to transactions on and after January 1, 1964. Code Ann. § 109A-10-101 as amended, Ga. L. 1963, pp. 188, 204; Code Ann. § 109A-2-403.)
The following Georgia cases, where the owner was held bound by the transfer of property by an agent, are consistent with the above rules: Savannah Trust Co. v. National Bank of Savannah, 16 Ga. App. 706 ( 86 S.E. 49) (agent possessed negotiable warehouse receipts as indicia of title); Coleman v. Savannah Bank c. Co., 26 Ga. App. 400 ( 106 S.E. 301) (factor possessed negotiable receipts in his own name); Trulock v. Carolina Portland Cement Co., 34 Ga. App. 501 ( 130 S.E. 356) (transferee acquired the property in a sales transaction from a company unknown to the transferee to be acting as the owner's sales agent); Pilcher v. Enterprise Mfg. Co., 36 Ga. App. 760 ( 138 S.E. 272) (transferee acquired property by purchase from owner's agent authorized to sell); Blount v. Bainbridge, 79 Ga. App. 104 ( 53 S.E.2d 122) (transferee purchased property in good faith from fraudulent purchaser whose bad check was accepted in payment by owner).
Judgment affirmed. Bell, P. J., and Pannell, J., concur.