freight receiver, or conductor of a railroad company, without actually receiving the goods, and has passed into the hands of an innocent indorsee for value. Such agent in issuing a fictitious bill of lading is not acting within the scope of his authority, or even within the apparent scope of his authority. He is authorized to receive merchandise for transportation, and to give a receipt for it and a contract for its transportation. "It was not within the apparent scope of this authority to sign and issue documents for the mere purpose of having them attached to drafts or otherwise pledged as collateral security irrespective of the actual possession of goods to be carried. It may well be doubted whether the directory itself, or the body of stockholders even, could authorize the company to issue bills of lading without the merchandise in hand to be used for any purpose. The charter does not authorize such a business, and the company is not engaged in it. Therefore it seems to me plain that the agent's authority, actual and apparent, was limited to issuing bills of lading on goods in hand, and all else was outside the agency, unless we are to treat these documents as against the carrier just as if they were as negotiable in this respect as bills and notes, which we have seen we are not authorized to do.

§ 252. In New York, however, an exceptional doctrine prevails, that the carrier is estopped to claim that the bill of lading does not cover the goods described in it. A bona fide indorsee of a bill of lading, who has advanced his money upon it, is entitled to rely upon the quantity and kind of goods acknowledged therein, and he may compel the carrier to account for that quantity, whether it was actually shipped or not. The carrier is estopped by signing the bill from settling up his own want of care at the expense of the indorsee who has thus been induced to give credit to the shipment. "There is an established distinction in favor of a bona fide indorsee, grounded

1 Robinson v. Memphis & Charleston R. Co., 9 Fed. Rep. 129, 137, per Hammond, J.

2 Armour v. Michigan Cent. R., 65 N. Y. 111, 22 Am. Rep. 603.

upon the doctrine of estoppel. By signing the bill of lading, acknowledging the receipt of a given quantity of merchandise, the master has enabled his shipper to go into the market and obtain money on the credit of the shipment, and can not be permitted, as against a person so advancing, to set up his own. or the master's want of care at the expense of the indorsee. This results from the qualified negotiability of these instruments."" A railroad company which has issued a bill of lading for a certain number of barrels of eggs, when in fact the barrels contain nothing but sawdust, is liable to an indorsee of the bill of lading who has advanced money thereon, for the injury sustained through the falsity of the bill of lading. The carrier can always protect himself either by inspecting the packages received so as to know what they contain, or else by issuing bills of lading in such form that an indorsee would not be misled in regard to the quantity or kind of goods thereby covered. If he chooses to issue receipts for barrels or packages containing specified articles, it is not enough to deliver to a bona fide indorsee who has advanced money on the faith of the bill of lading, packages containing articles altogether different and of no value.3

But the better doctrine is that the carrier is not estopped by any error or misstatement in the bill of lading unless this was within his knowledge or should have been within his knowledge.*

§ 253. A bill of lading may be operative between the pledgor and pledgee, though not binding upon the carrier. Thus, if a bill of lading is not binding upon the carrier because the goods are not in fact delivered to the carrier, it does not follow that the bill of lading may not operate as a valid transfer as between the person to whom it is issued and his pledgor, if the goods are at the time in the hands of a third person. Moreover, a bill of lading may be operative between the owner of the goods

'Meyer v. Peck, 28 N. Y. 590.

'Meyer v. Peck, 28 N. Y. 590, 598, per Denio, C. J.

Co., 24 Hun (N. Y.) 607, 12 N. Y.
Weekly Dig. 272.

See this subject in Chapter VII,

'Miller v. Hannibal & St. Joseph R. §§ 314-320.

and his pledgee before the goods are actually received by the carrier. Thus, where a master of a vessel issued a bill of lading of cotton upon receiving an order therefor upon a cotton press which was duly accepted, and the shipper obtained advances upon a draft with the bill of lading annexed, it was held that the bill of lading was effectual to pass the property to the pledgee, as against a creditor of the pledgor who levied an execution upon cotton after such pledge, but before the cotton was delivered from the press to the vessel.1

§ 254. Possession of goods obtained under a spurious bill of lading will not avail against a pledgee of the true bill of lading. The general owner of goods having obtained advances upon the security of bills of lading representing the goods, has no right to the possession, disposal, or control of the goods, and any possession obtained, or dominion exercised by him, without the pledgee's assent, is tortious and confers no title. Thus genuine bills of lading having been obtained at Chicago, of wheat shipped on board a propeller for Buffalo, and drafts having been discounted on the security of such bills of lading, the general owner afterwards obtained false bills of lading of the wheat as shipped upon certain canal boats at Buffalo, before the wheat had arrived there, although the wheat was afterwards shipped upon the canal boats named in the false bills of lading. Against the latter bills of lading the owner also drew drafts which were paid by the consignees, relying upon the security of these bills. They afterwards obtained possession of the wheat. In an action against them by the holder of the first bill of lading and a draft drawn against it, it was held that the plaintiff was entitled to recover; that not having clothed the general owner with any authority to dispose of the

1 Adoue v. Seeligson, 54 Tex. 593. In Pollard v. Vinton, 105 U. S. 7, Miller, J., after stating the general rule that a bill of lading is not a contract upon the carrier unless the goods are actually shipped, added that "in saying this we do not mean that the goods must have been actually placed

on the deck of the vessel. If they come within the control and custody of the officers of the boat for the purpose of shipment, the contract of carriage has commenced, and the evidence of it in the form of a bill of lading is binding."

wheat or to obtain new bills of lading, the latter represented no value, and the plaintiff was not estopped from reclaiming the property.'

IV. Whether Security for Acceptance or Payment.

§ 255. The assignment of a bill of lading drawn to the shipper's own order as security for the discount of a draft drawn against it may be regarded as conclusive of the shipper's intention that the property shall not pass to the drawer except upon his payment or acceptance of the draft. A bill of lad

ing so drawn shows an intent on the part of the shipper to reserve to himself the dominion over the goods shipped; and when he assigns such bill to another as security, his intention is conclusively shown that such assignee shall have a special property in the goods and the full control of them until the draft is accepted or paid; and it is immaterial whether such assignee holds the bill of lading as security for the payment or acceptance of the draft. The intention that such assignment.shall confer a special property in the goods arises even when the goods have been shipped in a vessel belonging to the person upon whom the draft is drawn. It is likewise so even if the goods be delivered to the drawer as a mere warehouseman, and not as a purchaser; and a subsequent sale by him to another would confer no title against the holder of the draft or the shipper.

§ 256. A bill of lading is regarded as security for the acceptance of a time draft drawn against it rather than as security for the payment of such draft, in the absence of any ex

1 Marine Bank v. Fiske, 71 N.Y. 353. 2 Dows v. National Exch. Bank, 91 U. S. 618; Jenkyns v. Brown, 14 Q. B. 496; Mitchell v. Ede, 11 Ad. & E. N. S. 888; Alderman v. Eastern R. Co., 115 Mass. 233; Security Bank v. Luttgen, 29 Minn. 363, 13 N. W. Rep. 151; Mason v. Great Western R. Co.,

3

31 U. C. Q. B. 73; People's Nat. Bank v. Stewart, 3 Pugs. & Bur. (N. B.) 268. Hathaway v. Haynes, 124 Mass. 311, 313; Security Bank v. Luttgen, 29 Minn. 363, 13 N. W. Rep. 151.

Turner v. Liverpool Docks, 6 Exch. 543; Schotsmans v. Railway Co., L. R. 2 Ch. App. 336; Ellershaw v. Magniac, 6 Exch. 570.

press stipulation about it. It was urged in behalf of a bank which discounted certain drafts that the bills of lading were taken as security for the principal obligation, namely, the payment of the draft. But the court replied that this is an assumption of the very thing to be proved: to wit, that the transfer of the bills of lading was made to secure the payment of the drafts.1 "The opposite of this, as we have seen, is to be inferred from the bills of lading and the time drafts drawn against the consignments unexplained by express stipulations. The bank, when discounting the drafts, was bound to know that the drawees on their acceptance were entitled to the cot. ton, and of course to the evidences of title to it. If so, they knew that the bills of lading could not be a security for the ultimate payment of the drafts. Payment of the drafts by the drawees was no part of the contract when the discounts were made. The bills of exchange were then incomplete. They needed acceptance. They were discounted in the expectation that they would be accepted, and that thus the bank would obtain additional promisors. The whole purpose of the transfers of the bills of lading to the bank may therefore well have been satisfied when the additional names were secured by acceptance, and when the drafts thereby became completed bills of exchange. We have already seen that whether the drafts and accompanying bills of lading evidenced sales on credit on requests for advancements on the cotton consigned, or bailments to be sold on the consignor's account, the drawees were entitled to the possession of the cotton before they could be required to accept; and that if they had declined to accept because possession was denied to them concurrently with their acceptance, the effect would have been to discharge the drawers and indorsers of the drafts. The demand of acceptance, coupled with a claim to retain the bills of lading, would have been an insufficient demand. Surely the purpose of putting the bills of lading into the hands of the bank was to secure the completion of the drafts by obtaining additional names

'Dows v. National Exch. Bank, 91 U. S. 618.