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VII. A Pledgee's Rights as Against the Consignee.
§ 268. A shipper of goods does not lose his title to them by inserting the name of the consignee in a bill of lading of them.' If a time draft be drawn against the bill of lading the consignee acquires the title to the goods only in case he accepts the draft. In the meantime if the draft be discounted on security of the bill of lading the title to the goods vests in the holder of the draft. The assignee of the bill of lading obtains a title to the goods not only as against the consignor but as against the consignee, although the former is indebted to the latter in a sum greater than the value of the goods. Thus the owner of a quantity of flour having consigned it to his factor in another city drew upon the factor against the flour and obtained a discount of the draft upon a delivery of the bill of lading as security. The consignor being already indebted to the factor for previous consignments, the latter refused to accept the draft; but detached and retained the bill of lading, and thereby obtained possession of the flour. In a suit against him by the holder of the draft, he was held liable for a conversion of the flour. He could acquire title to the flour only upon the condition of accepting the draft, and he became a wrong-doer by taking possession of the flour without such acceptance.
Upon the delivery of the bill of lading to the consignee, the title passes to him from the consignor, so that he has no control of the property and his creditors can not seize or attach it.'
§ 269. If a consignee obtains the goods from the carrier without accepting drafts secured by the bills of lading, and
1 Bank of Rochester v. Jones, 4 N. Y. 497; Michigan Cent. R. Co. v. Phillips, 60 Ill. 190; Taylor v. Turner, 87 Ill. 296; First Nat. Bank v. Crocker, 111 Mass. 163; Pratt v. Parkman, 24 Pick. (Mass.) 42; Vallé v. Cerré, 36 Mo. 575; Jenkyns v. Brown, 14 Q. B. 496.
Bank of Rochester v. Jones, 4 N.
Y. 497; People's Nat. Bank v. Stewart, 3 Pugs. & Bur. (N. B.) 268.
3 Bank of Rochester v. Jones, 4 N. Y. 497, 55 Am. Dec. 290; Gibson v. Stevens, 8 How. (U. S.) 384; Conard v. Atlantic Ins. Co., 1 Pet. 386; Means v. Bank of Randall, 146 U. S. 620, 627, 13 S. C. Rep. 186.
+ Flash v.
Schwabacker, 32 La. Ann.
sells the goods, he is liable to the holder of the drafts for the proceeds of the sale. He obtains no title or authority under a bill of lading if he refuses to comply with the terms upon which he is made consignee, namely, the acceptance of payment of the drafts drawn against it. The title to the property and the right of possession are both in the holder of the drafts.'
Even if a bill of lading be sent directly to the consignee with a draft upon him attached, or inclosed in the same letter,' the consignee can not retain the bill of lading and under it take possession of the goods without accepting the draft. the consignee retains the bill of lading without accepting the draft he acquires no right of property.*
§ 270. A pledgee may even deliver possession of the goods to the consignee upon whom the draft secured is drawn without losing his security, if such delivery be made by a special indorsement to the effect that the goods are pledged for the payment of the draft, and are placed in the consignee's custody "in trust for this purpose, and is not to be diverted to any other use until the draft is paid." In such a case the property pledged and delivered was a boat-load of wheat, which on arrival the consignee placed in a warehouse, and afterwards sold and delivered to the purchaser by an order on the warehouseman. The purchaser obtained advances upon the wheat from the warehouseman, who had seen a copy of the bill of lading and of the indorsement thereon. In an action by the pledgee against the warehouseman for a conversion of the wheat it was held that such delivery of the bill of lading did not vest in the consignee a title to the wheat or confer upon him authority to sell it; but simply vested him with the possession to hold in trust for the pledgee, whose title could not be divested by any act of the consignee until he had paid his acceptance.
1 Allen v. Williams, 12 Pick. (Mass.) 297.
Shepherd v. Harrison, L. R. 5 H. L. 116, 123.
Shepherd v. Harrison, L. R. 5 H. L. 116, 123; Banco de Lima v. Anglo
Peruvian Bank, 8 Ch. D. 160, 171, per
Shepherd v. Harrison, L. R. 5 H. L. 116, 123.
5 Farmers' & Mechanics' Nat. Bank v. Hazeltine, 78 N. Y. 104, 34 Am.Rep.
§ 271. When a bill of lading has been taken by the consignor, making the goods deliverable to his order, or to some person designated by him, the inference is that it was not intended that the property should pass to the consignee, except by subsequent order of the person holding the bill. Such intention is almost conclusive, although when there are circumstances indicating an intent to pass the ownership immediately, notwithstanding the bill of lading, or, in other words, where there is anything to rebut the effect of the bill, it is a question for the jury whether the property passed.' If, however, there are no circumstances to rebut the intent to retain the ownership exhibited in the bills of lading, and confirmed by the indorsements on the bills, there is no occasion to submit the question to a jury whether there was a change of ownership. A bank discounted a draft drawn upon the consignee of a quantity of turpentine and rosin, bills of lading of which were delivered to the bank as security. The bank forwarded the draft to their agent, with instructions not to deliver the bill of lading until the draft was paid. The consignee accepted the draft, but did not pay it, and it was retained by the agents of the bank. The master of the vessel, however, delivered the goods to the consignee, without his producing the bill of lading. Subsequently the consignee delivered part of the goods to an auctioneer, who made advances upon them without notice that the consignee had not possession of the bill of lading. The auctioneer sold these goods at public auction, and, after deducting their advances and charges, paid the balance to the consignee. After this the bank demanded the goods of the auctioneer, and brought an action of trover for their conversion. It was held that the bank was entitled to recover.2
518; following Farmers' & Mechanics' Nat. Bank v. Logan, 74 N. Y. 568; and Farmers' & Mechanics' Nat. Bank v. Atkinson, 74 N. Y. 587; and see Munroe v. Bonanno, 31 Abb. N. C. 1, 28 N. Y. Supp. 375; Carter v. Arguim
bau, 31 Abb. N. C. 3; English Bank v. Barr, 31 Abb. N. C. 7.
1 Dows v. Nat. Exchange Bank, 91 U. S. 618, per Strong, J.; Ogg v. Shuter, L. R. 10 C. P. 159.
2 People's Nat. Bank v. Stewart, 3 Pugs. & Bur. (N. B.) 268.
A ship which has issued a bill of lading to the consignor's order is bound to deliver the goods to such order, and may be libelled for a misdelivery. Thus, a member of a New York firm having purchased certain cotton, put it on board a steamer for New York, and received a bill of lading which he indorsed to a bank as collateral security for drafts drawn upon the firm and discounted by the bank. Upon the arrival of
the vessel in New York the firm demanded the cotton, and obtained it without producing the bill of lading, which was still held by the bank. The drafts not being paid at maturity, the bank, through its cashier, libelled the steamer in admiralty, and obtained a decree, which was affirmed by the supreme court. Mr. Justice Strong said: "By issuing bills of lading for the cotton, stipulating for a delivery to order, the ship became bound to deliver it to no one who had not the order of the shipper, and this obligation was disregarded instantly on the arrival of the ship. And it is no excuse for a delivery to the wrong persons that the indorsee of the bills of lading was unknown, if indeed, he was, and that notice of the arrival of the cotton could not be given. Diligent inquiry for the consignee, at least, was a duty, and no inquiry was made. Want of notice is excused when a consignee is unknown, or is absent, or can not be found, after diligent search. And if, after inquiry, the consignee or the indorsees of a bill of lading for delivery to order can not be found, the duty of the carrier is to retain the goods until they are claimed, or to store them prudently for, and on account of, the owner. He may thus relieve himself of a carrier's responsibility. He has no right, under any circumstances, to deliver to a stranger." It was claimed that the pledgee delayed in presenting the bills of lading for some weeks until the drafts had fallen due, and had been dishonored. But the court said that this delay could not justify the ship's delivery of the cotton, on the day after its arrival, to persons who had no bill of lading, and no authority whatever to receive it. Had the delay been instru
'The Thames, 14 Wall. 98, 107.
mental in causing the wrongful delivery, a different case
might possibly have been presented. of the pledgee was mere inaction, and in no degree due to it.
But, at most, the laches the wrong delivery was
§ 272. An agreement between a consignor and consignee that the proceeds of all shipments shall be applied to the payment of previous advances made by the latter, has no effect as against one who has in good faith taken a bill of lading from the consignor, as security for the purchase-money of the goods consigned, or for advances obtained by the consignor upon such goods. Thus, where a purchaser of grain agrees with the seller that the latter shall ship the grain in the purchaser's name to his commission merchant for sale, and the purchaser draws drafts upon the commission merchant for part of the price, and delivers the same with the bills of lading of the grain to the seller, the commission merchant acquires no greater interest in it than his consignor had, although the latter is indebted to him, and has agreed that the proceeds of all consignments should be applied to the consignor's credit on account.' In such case, the neglect of the original seller of the grain and holder of the bills of lading to notify the consignee of his rights until the latter, having obtained possession of the grain without producing the bills of lading, has sold the grain and applied the proceeds to the consignor's credit on such indebtedness, does not interfere with the seller's right to recover of the consignee in an action for money had and received, the proceeds of the sale of the grain to the extent of the seller's interest in it."
VIII. A Pledgee's Rights as Against the Carrier.
§ 273. If the carrier deliver the goods to any other person than the indorsee and holder of such bill of lading, he becomes liable to such indorsee and holder for a conversion of the
2 Taylor v. Turner, 87 Ill. 296.
'Taylor v. Turner, 87 Ill. 296.