issuing bills of lading for goods not actually delivered to the company. It is not essential, however, that the agent of the carrier, or the master of the vessel, should have actual possession of the goods, if he has potential possession of them, before executing a bill of lading. Thus he may issue a valid bill of lading upon receiving a warehouse receipt for the goods properly issued, as this places the goods within his control. § 250. Neither a general nor a local custom to use bills of lading as collateral security can constitute them negotiable instruments as against the carrier, and make him liable to the indorsee in the same way that he would be if he had drawn negotiable bills of exchange. A bill of lading is merely a receipt by the carrier for the merchandise received for transportation and evidence of a contract with the shipper to carry the merchandise to its destination. The carrier's liability would be the same if he received the goods and undertook to transport them without issuing a bill of lading. The carrier's contract is with the shipper and with no one else. If the shipper indorses his contract to any one else, the indorsee acquires only the rights of the shipper, and it is not for the interest of commerce that he should acquire any other rights. The common law makes it no part of the duty of a carrier to issue bills of lading which shall have the effect of negotiable securities as against him; though it holds him rigidly to the performance of his contract as a carrier. While merchants have from time immemorial treated bills of lading as convenient symbols or instruments of title, which they have transferred by indorsement, and have thus given them a quasi-negotiability or capacity to pass from hand to hand, this custom of merchants is one wholly for their own benefit, and is one which does not benefit the carrier or in any way concern him, unless it be to make him liable to the indorsee, instead of the shipper, for the delivery of the goods. Upon this point Judge Hammond, delivering the judgment of the circuit court of the United States in the case of a fraudulent bill of lading which an indorsee had taken as security for the discount of a draft drawn against it, said: "It seems to me, with all deference, that it is a misapprehension of the true character of this instrument, and of the true relation of the parties to it, to treat it as if the maker were engaged in the business of issuing negotiable securities, which he is bound to protect at all hazards in the hands of a bona fide purchaser for value; or, as it is expressed in argument here, to protect those who innocently and in good faith deal with it. This entails a liability dehors the contract. It makes the carrier an insurer or guarantor of strangers to the contract against loss incurred by a use of the instrument in which the carrier has no interest, and binds him to a liability for which he is not paid; for the comparatively small sum he receives as compensation for carriage will not, and is never intended to cover or insure him against loss incurred by such a liability as that. The consideration he receives is not commensurate with the liability sought to be imposed, and if it is determined to exist, carriers must necessarily add to the freight a sum sufficient to indemnify them, as insurance companies are; and this for the protection of outside parties dealing in matters not pertaining to the carriage of the goods. Moreover, it obstructs the carrier in his proper business, and entails upon him the selection of agents possessing not only the ordinary mental and moral qualifications essential to the receiving, handling, and carriage of merchandise, but those having the relatively higher qualifications required of bank cashiers or other agents entrusted with the duty of issuing, signing, and handling bank notes, negotiable bonds, or like securities. It does not seem to me in the interest of commerce to compel carriers either to so increase the rates of compensation or to confine them to the selection of agents as banks and trust companies are confined." § 251. The carrier is not estopped to deny that he has received the goods specified in the bill of lading, when this has been issued by a common agent, such as a station agent, 1 Robinson v. Memphis & Charleston R. Co., 9 Fed. Rep. 129, 133. 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." 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 1 Meyer v. Peck, 28 N. Y. 590. 2 Meyer v. Peck, 28 N. Y. 590, 598, per Denio, C. J. Co., 24 Hun (N. Y.) 607, 12 N. Y. 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.' § 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." |