Arkansas Southern Railway Company v. German National Bank

• Decision Date: 20 January 1906
• Citation: 92 S.W. 522,77 Ark. 482
• Parties: ARKANSAS SOUTHERN RAILWAY COMPANY v. GERMAN NATIONAL BANK
• Court: Arkansas Supreme Court

92 S.W. 522

77 Ark. 482

ARKANSAS SOUTHERN RAILWAY COMPANY v. GERMAN NATIONAL BANK

Supreme Court of Arkansas

January 20, 1906

Appeal from Union Circuit Court; JAMES S. STEEL, Judge; on Exchange of Circuits; affirmed.

Judgment affirmed.

Gaughan & Sifford and Rose, Hemingway & Rose, for appellant.

1. Delivery by the railroad company to the compress company designated by the shipper in the bills of lading was a complete compliance with the contract, and released it from further liability. 29 Wis. 611; 2 Am. Rep. 577; 45 Barb. 502; 111 Mass. 163; 9 Barb. 158; 14 Wall. 98; 16 N.Y. 515; 48 Ill 425; 77 Ga. 376. If freight is not called for at destination within a reasonable time, the carrier may deliver it to a warehouse and relieve itself of further liability. 39 Ark 487; 1 Denio, 45; 43 Am. Dec. 649; 45 N.Y. 77.

2. The statute relied on by appellee is in conflict with the interstate commerce clause of the U. S. Constitution. 122 U.S. 347; 169 U.S. 314; 174 U.S. 580; 158 U.S. 98; 196 U.S 194; 24 How, 169; 8 Wall, 123; Judson, Interstate Com., § 7.

3. Lake, who had obtained the bills of lading and, subsequent to the delivery of the cotton, with his knowledge and acquiescence, to the compress company of which he was president and manager, transferred them to appellee, cannot be heard to complain that the deliveries were made without the bills of lading. 60 N.W. 583; 66 N.W. 419. Appellee acquired no greater rights than Lake (1) because the bills were spent, past due and dishonored paper (9 M. & W. 647; 69 N.Y.S. 396; 19 La.Ann. 262; 73 Mo. 669; 42 Mo.App. 284); (2) because the shipping directions in the bills were sufficient to put it on inquiry (Tiedeman, Com. Paper, § 295; 4 Cush. 456).

Smead & Powell and Ratcliffe & Fletcher, for appellee; Moore & Smith, of counsel.

1. The object of the bills of lading was not to represent the cotton merely while in transit, but until delivery. Its liability did not end with delivery to the compress company. 123 U.S. 734-755; 111 Ind. 5; 38 Vt. 402; 72 N.Y. 615; 60 Ark. 375; 124 F. 975; 29 P. 861; 16 N.Y. 518. The railroad company, by the terms of the contract, could deliver only to the order of the shipper. After storing the cotton, the liability of the railroad became that of a warehouseman, and the compress company would be treated as the agent of the railroad. 14 Wall. 98; 123 U.S. 735; 32 F. 54; 63 F. 393; 111 Ind. 5; 65 N.W. 29; 106 N.Y. 579; 13 Mo.App. 263; 71 Mo. 203; 29 P. 861. The clause in contract limiting liability to time of arrival is invalid. 57 Ark. 112; Ib. 127; 60 Ark. 104; 24 S.E. 166. If appellant could divest itself of further liability by delivery to the compress company, it was required to deliver for account of holder of the bills of lading, and failure to do so would make it liable. 33 S.W. 521; 72 N.Y. 615; 15 N.E. 782; 16 Mich. 493; 33 N.Y. 610; 124 Mass. 503; 22 Ohio St. 324; 51 Vt. 92; 71 N.E. 685; 123 U.S. 723. Bills of lading are made negotiable by written indorsement. Kirby's Digest, § 529. Property named in such bills of lading cannot be delivered except on surrender and cancellation thereof. Ib., § 530. Company is forbidden to permit the property to be shipped, transferred or removed without written consent of holder of bills of lading. Ib., § 527. See, also, 102 N.Y. 120; 23 S.W. 521; 25 S.C. 223; 64 Ark. 169; 55 Ark. 524.

2. The statute is a mere police regulation, protecting holders of bills of lading, and not in conflict with interstate law. 169 U.S. 133; 49 Ark. 291; 93 U.S. 99; 128 U.S. 96; 165 U.S. 628; 163 U.S. 299; 162 U.S. 650; 107 U.S. 38; 156 U.S. 590; 171 U.S. 1; 82 F. 839.

3. The right to the bills of lading passed from Bank of Little Rock to appellee. The latter is not required to rely upon the title of Alphin & Lake Cotton Co. 56 F. 369; 63 F. 391; 66 F. 862; 65 F. 848; Jones on Pledges and Collateral Securities, § 44 et seq.; 32 N.Y.S. 604. See, also, 33 S.W. 521. Appellee had the right to assume that the cotton was in possession of the appellant, and that it would not permit it to pass from its control without taking up the bills of lading. Appellee was not required to make prompt demand or to give notice of transfer of the bills. 102 N.Y. 120; 33 S.W. 521; 14 Wall. 98.

BATTLE, J. MCCULLOCH, J., dissenting.

OPINION

BATTLE, J.

The German National Bank brought an action against the Arkansas Southern Railway Company, to recover the value of cotton on bills of lading issued by the company for the cotton and assigned to the bank; the cotton never having been delivered.

The facts in the case are substantially as follows: Alphin & Lake Cotton Company were dealers in cotton at Little Rock, Arkansas, and were the principal owners of a compress at El Dorado. They purchased cotton at Bernice, La., and at Junction City, Ark., and at other places along the road of the railroad company. At Bernice the cotton purchased was paid for by the Bank of Bernice and shipped in its name over the railroad of the defendant to El Dorado, a terminus of the railroad, about thirty miles from Bernice. Bills of lading were issued to the shipper in which it undertook to deliver the cotton to shipper's order at its destination. They were forwarded to the Bank of Little Rock with drafts on Alphin & Lake Cotton Company attached for collection. Nine hundred and fifty-one bales of cotton were purchased by Alphin & Lake, and shipped in the name of the Bank of Bernice over defendant's road from Bernice to El Dorado. Bills of lading were issued for all of them, and forwarded to the Bank of Little Rock with drafts attached in the manner indicated.

"Cotton at Junction City was handled very much in the same way, except that the bills of lading showed Alphin & Lake Cotton Company as consignor, and the bills of lading, with drafts for price attached, were forwarded to the Bank of Little Rock.

"When the drafts and bills of lading arrived at Little Rock, Alphin & Lake Cotton Company would draw drafts for the amount on the Bank of Little Rock, which would pay the same by taking up the original drafts for the price of the cotton, and would retain the bills of lading as security for the amounts and all other indebtedness Alphin & Lake Cotton Company owed that bank.

"The bills of lading were all to shipper's order, care of compress, El Dorado, Ark., notify Alphin & Lake Cotton Company. The cotton was usually loaded on the cars before the bills of lading were signed, and usually left the shipping station the same or next day after the bills of lading were signed up, and reached El Dorado within twenty-four hours after it left Bernice, and was delivered to the compress company for account of Alphin & Lake Cotton Company.

"The railroad had no warehouse or place for delivery or storage at El Dorado. It only had a joint track with the St. Louis, Iron Mountain & Southern Railroad Company, and the two roads maintained a joint agent, Hutchinson, at that place. The Arkansas Southern Railroad Company delivered all cotton which came in over its road at the compress. It had no cotton platform, and the compress was the only place it had for the delivery of cotton. Before the cotton was delivered to the compress a memorandum was made of it in a little book by the railroad, showing the initial and number of the car, the number of bales in the car, and the place of shipment. The cotton was checked up by Mr. Wright, assistant manager of the compress company, and, if found correct, he wrote 'O. K.' and signed his name on it with the date of his O. K.

"In delivering cotton to the compress company no other directions were given to it than that contained in this little book. Nothing was said about it in any other way. It was just delivered by that little book, and that was all that passed between the parties. It was always supposed to belong to Alphin & Lake Cotton Company by the compress and railroad, and was unloaded at once All the compress company did was to count the cotton and O. K. the book as to the number of bales. Neither 'S. O.,' meaning shipper's order, nor 'Care of the compress company' was on this little book. 'S. O.' appears to be upon the book now, but was placed there after the cotton was delivered. It was not on the waybill from which the book was made up."

The cotton was treated as belonging to Alphin & Lake Cotton Compress Company, and was delivered without taking up the bills of lading.

"On December 6, 1902, Lake applied to the German National Bank, which advanced $ 17,806 on bills of lading for 558 bales of cotton, and on December 11, the bank advanced $ 19,200 on bills of lading for 441 bales, with the understanding that the bills of lading first delivered should also stand for the last advancement. At the time Lake applied for the first advancement, the bills of lading were in the hands of the Bank of Little Rock. He stated that the Bank of Little Rock had required Alphin & Lake Cotton Company to reduce its account, and a draft was drawn by the company upon the bank in favor of the Bank of Little Rock, with the bills of lading attached, which was presented by and paid to the Bank of Little Rock. At the time the advancement for $ 19,200 was made the bills of lading were the property of the Bank of Little Rock, and Lake was permitted to take them from the Bank of Little Rock to the German National Bank with the understanding that they or the money for them should be returned to the Bank of Little Rock. The German National Bank issued $ 10,000 in New York exchange in favor of the Bank of Little Rock, and paid $ 9,200 in cash, which Lake and Perrie handed to the Bank of Little Rock in lieu of the bills of lading, and the account of Alphin & Lake Cotton Company was credited with $ 19,200 by the Bank of Little Rock."

The German National Bank lost the cotton. It...