Charlotte Nat. Bank of Charlotte, N.C. v. Southern Ry. Co.

• Decision Date: 12 July 1910
• Docket Number: 919.
• Citation: 179 F. 769
• Parties: CHARLOTTE NAT. BANK OF CHARLOTTE, N.C., v. SOUTHERN RY. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

179 F. 769

CHARLOTTE NAT. BANK OF CHARLOTTE, N.C., v. SOUTHERN RY. CO.

No. 919.

United States Court of Appeals, Fourth Circuit.

July 12, 1910

C. W Tillett and E. T. Cansler, for plaintiff in error.

W. B Rodman and John K. Graves (R. G. Lucas, on the brief), for defendant in error.

Before GOFF and PRITCHARD, Circuit Judges, and CONNOR, District Judge.

GOFF Circuit Judge.

This writ of error is to a judgment of the court below, on a verdict directed by that court, in an action instituted by the plaintiff in error, against the defendant in error, to recover the value of certain bales of cotton, covered by bills of lading held by the plaintiff in error, which cotton it is alleged the defendant in error unlawfully delivered to other persons. The complaint charges that the defendant, or its connecting carriers, issued the several bills of lading for the cotton mentioned in them, which was to be carried and delivered in accordance with the contracts of carriage; that all of the cotton was actually received by the defendant either from the shippers direct or from connecting lines, and was as required by the terms of the bills of lading transported to Charlotte, where it was placed in its compress by the defendant, there to be compressed so as to facilitate its carriage to Norfolk; that said bills of lading were for value duly assigned and delivered to the plaintiff by the original owners, after the cotton had been received by the defendant at the point of shipment, and before its arrival at Charlotte, and that the plaintiff was when the suit was brought and has been since such assignments the owner of said bills of lading, and said cotton; that while the cotton was so at the compress in Charlotte, the defendant wrongfully delivered the same to persons other than the plaintiff, without having first required the production and surrender of the bills of lading, and without having required the parties to whom it was so delivered to substitute an equal number of bales of cotton therefor.

The answer of defendant admits that it issued certain bills of lading for cotton, and that it received from its connecting carriers cotton to be transported according to the terms of the bills of lading issued therefor, and demands the production of the original bills for inspection; says that if they are genuine the defendant received the cotton as described in them, but denies that plaintiff is the owner of them, and denies that the defendant delivered the cotton covered by them, without first requiring the surrender of the bills of lading; for further defense the defendant pleaded in bar of the plaintiff's right to recover, its failure to make claim for the cotton within 30 days after the expiration of the time designated for the delivery of the same; that the compress was under the control of B. D. Heath and others, and that as per the terms of the bills of lading the cotton was stopped at Charlotte for compression, the compress forming a separate link in the chain of transportation, the defendant not being responsible for its wrongdoing, and that if the cotton was wrongfully delivered it was the act of Heath and others; that said Heath was the president of the plaintiff, and also a stockholder and officer of a corporation known as the Heath-Reid Jobbing & Commission Company, and that he contracted with himself for said two corporations, that the commission company, during the year in which said bills of lading were issued, should purchase cotton, the shippers to take 'order notify' bills of lading therefor, consigned to Norfolk, but to be stopped at Charlotte for compression, which bills were to be attached to drafts drawn on the commission company for the price of the cotton, and that when the drafts were paid the bills were to be delivered to the commission company; that the drafts were paid by checks drawn by the commission company on the plaintiff, and that thereby the cotton became the property of the said commission company; that the plaintiff knew the bills of lading required that the cotton should be stopped at the Charlotte compress, operated by Heath and others, and that upon its arrival there would go into the possession of plaintiff through Heath, its president; that by the custom and the rules of the compress, as well as by the express understanding between the plaintiff and the commission company, the latter had the right to divert certain cotton from its original destination, and for that purpose to remove it from the compress; that the commission company, either as the agent or the partner of the plaintiff, had authority to receive and dispose of the cotton as it saw fit, and for that purpose to demand and receive bills of lading covering it, and to receive the proceeds of the sales of cotton so disposed of by it; that if the plaintiff had any interest in the said bills of lading, such interest was as security for any amount the commission company might owe it upon a final accounting, and that a proper accounting would show that such company was indebted but little if at all to the plaintiff; that the plaintiff is not the real party in interest, because Heath, either before or since the bringing of this action, had agreed to indemnify it against loss on account of its transactions with the commission company, and that he and the plaintiff held other securities for such indebtedness, which should be first applied thereto, part of which had been released without the consent of defendant, because whereof the defendant has been discharged of any liability for any balance due on such account; that the plaintiff authorized said commission company to sell the cotton, and has received the proceeds thereof in full; that the plaintiff authorized the commission company to gamble in cotton futures, and consented to its using the funds deposited from such proceeds for that purpose, and that said company's dealings in both spot and future contracts was as the agent of the plaintiff, having so received the entire proceeds of all the cotton covered by the said bills of lading.

As a still further defense the defendant pleaded that a great part of the cotton so handled by the commission company was transported by way of Charlotte, to be stopped for compression, substitution, or diversion, and that plaintiff, instead of acting merely as an agent for the collection of drafts drawn by the original shippers of cotton, paid the same out of its own funds, retaining the bills of lading attached thereto, and then permitted the commission company to assume control of the cotton, withdraw the same from the compress and reship it to Norfolk or elsewhere, and that when that company had withdrawn from the compress cotton equal in amount to that called for in any one bill of lading, it would issue to defendant a duebill for the delivery of an equal amount of cotton, and would from time to time strike a balance with the plaintiff, and then obtain from it such bills of lading as plaintiff might owe the commission company, plaintiff not requiring, before the surrender of the bills, the deposit of the proceeds of the sales of the cotton covered by them, relying instead upon the promise of the commission company to account with it for such sales, and that because of such dealings the plaintiff would not present bills of lading and make demand upon defendant for cotton within a reasonable time, but consented to such course of dealing under which all the cotton referred to in the complaint was withdrawn from the compress by the commission company, and that when the plaintiff discovered that such company was insolvent, it conspired with that company to defraud the defendant by retaining said bills of lading then in plaintiff's possession, though the cotton they called for had then been delivered, and the plaintiff therefore refused on demand to surrender said bills to the defendant; that such course of dealing induced the defendant to deliver the cotton to the commission company, and that the plaintiff by such conduct was guilty of such laches as estops it from now denying that the commission company was authorized to receive the cotton.

The plaintiff by replication denied that the 'thirty-day clause' was any part of the contract of carriage, or that the plaintiff had any notice thereof prior to the filing of defendant's answer, and avers that defendant waived its right to rely upon that clause by previous custom and course of dealing; that under the contracts of carriage, and the custom of defendant pertaining to cotton at the compress, defendant was in the habit upon the surrender of bills of lading to permit the owners to ship cotton to other points, thereby by such interference with the continuous carriage, and by allowing the cotton to remain in the compress for an indefinite time, plaintiff was unable to reasonably ascertain when it was wrongfully converted, or to know what was a reasonable time for its transportation, or when to make claim for the loss thereof in accordance with said 'thirty-day' clause, by reason whereof the defendant was estopped to plead such clause in defense of this action; that plaintiff did make demand upon defendant for the cotton within a reasonable time after it discovered that the same had been converted, and that then defendant again waived its right to rely upon that clause by investigating the claim made therefor, without asserting any right thereunder.

This suit was originally instituted in the superior court of Mecklenburg county, N.C., and was by due proceedings removed to the Circuit Court of the United States for the Western district of North Carolina. The plaintiff below is a corporation organized and existing under the national banking act of the United States, and the defendant is a corporation created and...