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goods unless he can show some valid excuse. It does not matter that the carrier is ignorant of the fact that the bill of lading is not held by the consignee. One who has discounted a draft drawn against a bill of lading is entitled to rely upon the fact that he holds the bill of lading through the consignor's indorsement, and that, according to the ordinary course of business, the goods can not be obtained from the carrier except upon the surrender of the bill of lading. If the carrier delivers them to the consignee without requiring him to produce it, relying upon his representation that he is the holder of it, he takes upon himself the risk of the truthfulness of this representation, and if deceived is liable to the indorsee of the bill of lading for the value of the goods.'
If a bank discounts a draft attached to a bill of lading, but does not notify the carrier of its possession of the bill of lading, and the carrier, without knowledge of its existence, by the direction of the consignee, delivers the goods to another, the carrier is not liable for the goods to the bank."
§ 274. Where goods have been transferred from one carrier to another the last carrier is bound to deliver the goods to the holder of the bill of lading issued by the first carrier. This point is illustrated in a recent case in Massachusetts. The indorsee of a bill of lading who had taken it as security for advances upon a bill of exchange attached thereto, brought suit against a railroad company for a conversion of a quantity of grain through a delivery of it to the consignee without requiring him to produce the bill of lading. "By the bill of lading in this case the grain was shipped by a vessel at Chi
1 Forbes v. Boston & Lowell R. Co., 133 Mass. 154; Newcomb v. Boston & Lowell R. Co., 115 Mass. 230; Alderman v. Eastern R. Co., 115 Mass. 233; First Nat. Bank v. Northern R., 58 N. H. 203; Winslow v. Vermont & Mass. R. Co., 42 Vt. 700; Merchants' Bank v. Union R. & Trans. Co., 69 N. Y. 373; People's Nat. Bank v. Stewart, 3 Pugs. & Bur. (N. B.) 268; The
Thames, 14 Wall. 98; Pollard v. Vin-
2 National Bank v. Philadelphia & Read. R. Co., 163 Pa. St. 467, 30 Atl. Rep. 228.
Forbes v. Fitchburg R. Co., 133 Mass. 154, 159.
cago, deliverable to the order of the consignor at Buffalo. The defendant contends that, upon the arrival of the vessel at Buffalo the bill of lading became functus officio. If this were so, it would not affect the result, because the bill of lading was transferred before the vessel arrived at Buffalo. But it is clear that upon the facts agreed the bill of lading remained as the representative of the property, at least until the transit was completed by the arrival at Boston. By the usual course of business in forwarding grain from Chicago to Boston, where the shipment is partly by water and partly by rail, a bill of lading is issued by the vessel at Chicago; the grain is transferred from the vessel to the cars at some intermediate point, usually at Buffalo, and the railroad company issues a receipt similar in form to those issued in this case. This receipt contains a memorandum like the one in this case, 'Ex. Sch. Gallatin,' which indicates that the grain was received from a vessel arriving at Buffalo from Chicago, and that a bill of lading has been issued by that vessel, and is outstanding. The vessel's bill of lading is regarded as transferring the property, and that alone is used in procuring the goods from the carrier. It is clear that in such cases the parties contemplate a continuous transit from Chicago to Boston, and that the bill of lading is regarded as the representative of the grain during the whole of the transit. So far as any question in this case is concerned, the bill of lading has the same effect as if it had been a bill from Chicago to Boston." The railroad was accordingly held liable for the value of the grain, less the freight, storage and other expenses.
In a later case in the same state, the question of freight under similar circumstances was considered, and in an action by a pledgee holding bills of lading issued by a railroad company, for the conversion of the goods by an unauthorized delivery of them to the pledgor, who paid the freight upon them, it was held that the measure of damages is the market value of the goods, less the freight, with interest from the date of the conversion. In both cases it was the duty of the consignee, by virtue of his agreement with the pledgee of the
bills of lading, to pay the freight charges; but it was held that the only interest which the pledgee had in the goods was in their market value, less the freight; that this was not increased by his agreement with the consignee; and that such payment by the consignee, for the purpose of fraudulently obtaining the goods, could not be considered as a payment by the pledgee, so as to entitle him to recover the amount thereof, as a part of the value of the goods wrongfully delivered.'
§ 275. But if the bill of lading makes the goods deliverable to the consignee and not to the consignor's order, the carrier may be justified in delivering the goods to the consignee without requiring him to produce the bill of lading. The supreme court of Massachusetts so decided in a recent case where it was found that it was the custom of the railroads terminating in Boston to deliver to the consignee goods "billed straight," as it is termed, that is, billed to a particular person, not to order, when they were satisfied of the identity of the consignee, without requiring the production of the bills of lading, and to rely upon the way-bills to determine the consignee and the form of the consignment. It was declared that the holder of the bill of lading who discounted a bill of exchange attached to it, either knew or ought to have known of this custom. Although it does not affect the question of the pledgee's title as against the consignee, it qualifies the carrier's duties as to the delivery of the goods. It justified him in delivering the goods to the consignee, at least at any time before notice that the property had been transferred. Under it there was no laches in not calling for the bill of lading, and in thus delivering there was no violation of any of the terms of its contract, express or implied. Such delivery, therefore, was not a misdelivery which would amount to a conversion, and render the carrier liable to the pledgee for the value of the goods."
1 Massachusetts Loan & Trust Co. v. Fitchburg R. Co., 143 Mass. 318, 324, 9 N. E. Rep. 669.
2 Lawrence v. Minturn, 17 How. 100; Sweet v. Barney, 23 N. Y. 335; JONES PLEDGES-19
O'Dougherty v. Railroad Co., 1
3 Forbes v. Boston & Lowell R. Co., 133 Mass. 154, per Morton, C. J.
A debtor shipped goods to his creditor on account of advances upon them, and sent an invoice of the shipment with a letter stating that the shipment was made on his indebtedness. He took a bill of lading in his own name which was not forwarded to the consignee. It was held under these circumstances that the delivery to the carrier was equivalent to a delivery to the consignee, and although the consignor retained the bill of lading he had no such interest in the goods as could be subjected to attachment at the suit of a creditor of his.'
§ 276. A complete and valid delivery of goods under a bill of
§ 277. The lien of a pledgee of a bill of lading covers freight paid by him on the goods pledged.*
But as against a carrier who has delivered the goods wrongfully to the consignee upon his paying the freight, and falsely representing that he held the bill of lading, the pledgee is not entitled to recover the amount paid for freight in addition to the value of the goods. At the time of the conversion, the goods were subject to a lien for the freight. The only interest which the pledgee had in them was their market value less the freight. The interest was not increased by the fact that the
1 Straus v. Wessel, 30 Ohio St. 211.
Meyerstein v. Barber, L. R. 2 C.
Clark v. Dearborn, 103 Mass. 335.
pledgee and the consignee had agreed, as between themselves, that the latter should pay the freight. The payment by the consignee can not be considered as a payment by the pledgee. It was a payment by the consignee as a part of his scheme of fraud. If the pledgee can recover the full value of the goods and the freight, he is a positive gainer by the fraud, and will receive more than the value of his interest at the time the fraud was committed. Under the circumstances of such a case it has been held that it is just and equitable that the reclamation by the carrier from the consignee, of a part of the proceeds of the fraud, should inure to the benefit of the carrier; and that the plaintiff is entitled to recover a sum equal to the market value of the goods less the freight, with interest thereon from the time of the conversion.'
But one who has made advances upon goods pledged to him by indorsement of the bill of lading, in demanding them of one who had contracted to purchase them and had obtained possession of them upon paying the freight and storage, but not in good faith, need not tender the amount of such freight and storage as a condition precedent to receiving the goods. In a suit by such pledgee for a conversion of the goods, the amount so paid would be deducted from the value of the goods in the assessment of damages, only because the payment inured to his benefit, by discharging the goods from a lien to which they were subject, and without the payment of which he could not have obtained possession of the property.
IX. Rights of Pledgees of Different Parts of the Same Bill of Lading.
§ 278. If the several parts of a bill of lading be delivered to different persons, the property passes by the bill of lading first delivered for a valuable consideration, unless another
1 Forbes v. Boston & Lowell R. Co., 133 Mass. 154. The text follows in part the language of Morton, C. J., who delivered the decision.
2 Adams v. O'Connor, 100 Mass. 515, 1 Am. Rep. 137.