Dows Et Al v. National Exchange Bank of Milwaukee

• Decision Date: 01 October 1875
• Citation: 23 L.Ed. 214,91 U.S. 618
• Parties: DOWS ET AL. v. NATIONAL EXCHANGE BANK OF MILWAUKEE
• Court: U.S. Supreme Court

91 U.S. 618

23 L.Ed. 214

DOWS ET AL. v. NATIONAL EXCHANGE BANK OF MILWAUKEE.

October Term, 1875

ERROR to the Circuit Court of the United States for the Southern District of New York.

This is an action of trover, instituted by the National Exchange Bank of Milwaukee to recover damages for the alleged conversion, by the plaintiffs in error, of 22,341 bushels of wheat, which the National Exchange Bank of Milwaukee claimed as its property.

The wheat was purchased in Milwaukee, Wis., by McLaren & Co., in the month of September, 1869, upon orders received from Smith & Co. of Oswego, N.Y., who were in need of it for immediate use, and requested that the drafts on account thereof be drawn on them through the Merchants' Bank of Watertown, N.Y. McLaren & Co. paid for the wheat so purchased, and, to reimburse themselves, shipped it on three vessels, named respectively 'Kate Kelly,' 'Grenada,' and 'Corsican,' and received from the captains of said vessels triplicate bills of lading, which describe McLaren & Co. as the shippers, and by their terms make the wheat deliverable to the account of W. G. Fitch, cashier, care Merchants' Bank, Watertown, N.Y. McLaren & Co. presented drafts drawn on Smith & Co., with the original bills of lading attached thereto, to the National Exchange Bank of Milwaukee. The bank discounted them, placed the proceeds to the credit of McLaren & Co., and retained the original bills of lading. Its cashier, after discounting the drafts, wrote a special indorsement on the back of each bill of lading. The indorsement on that of the 'Grenada' reads as follows:——

'On payment of two drafts drawn by McLaren & Co. on Smith & Co., Oswego, N.Y., to my order, dated Sept. 13, 1869,—one draft at thirty days' date for $8,000, and the other at forty-five days' date for $8,000, both drafts being payable at the Merchants' Bank, Watertown, N.Y.,—you will surrender the within-mentioned wheat to Smith & Co. or order. Should drafts above mentioned not be promptly paid, hold the wheat for my account, without recourse.

'W. G. FITCH, Cashier.

'MILWAUKEE, 13th September, 1869.

'To Merchants' Bank, Watertown, N.Y.'

A similar indorsement, except as to the amounts and dates of the drafts, was made on the bills of lading of the 'Kate Kelly' and the 'Corsican.' McLaren & Co. insured the cargoes for their account from Milwaukee to Oswego, and transferred the insurance certificates to the bank. After making the indorsements on the bills of lading, the cashier enclosed the drafts, bills of lading, and certificates of insurance, to the Merchants' Bank, Watertown, N.Y. The letter enclosing those relating to the 'Kate Kelly' is as follows:——-

'SEPT. 2.

'To Cashier Merchants' Bank, Watertown, N.Y.:——

'I hand you for collection and remittance to Mercantile National Bank, New York, for my credit,——

McLaren & Co., on Smith & Co., Oswego, $4,080.81 exg.

McLaren & Oct. 5 7,500.00 exg.

McLaren & Oct. 20 7,500.00 exg.

B. L. schr. 'Kate Kelly,' 8,727 bushels Amber Mil. wheat.

B. L. schr. 'Kate Kelly,' 5,527 2/6 0/0 bushels No. 1, Amber Mil.

wheat, consigned to your bank for my account, and to be held by you subject to the payment of the above drafts.

Insured North-western Nat. Ins. Co. $5,000

Nat. Ins. Co., Boston 5,000

AEtna Ins. Co., Hartford 5,000

Republic Ins. Co. 5,000

Security Ins. Co. 4,000

'I consign this wheat to you, to be held as per indorsed bill of lading, and surrender only on payment of the drafts drawn against it, holding you responsible for the same in case of non-payment of the drafts. Will you receive consignments in this way, charging reasonably for the same?

'Yours truly,

'W. G. FITCH, Cashier.'

On the 6th of September, 1869, J. F. Moffatt, cashier of the Merchants' Bank, acknowledged the receipt of the letter and its enclosures.

On the 8th of that month Fitch addressed another letter, as follows:——

'To Merchants' Bank of Watertown, N.Y.:——

'In my letter of the 2d, I requested you to state in your letter whether you would hold all wheat I consign to you strictly for my account, holding your bank responsible for the safe keeping of the property for this bank, and holding such property subject to my orders in all cases where the drafts made against it are not paid. Your reply of the 6th instant does not answer my inquiry. Will you please write me by return mail, defining your position? We have adopted the invariable rule, to in no instance consign property only on condition that the consignee acknowledges himself responsible for it, until instructed to hand over to a third party.

'Very respectfully,

'W. G. FITCH, Cashier.'- In Moffatt's answer of the 11th, he says, 'In reply to yours of the 2d instant, I would say that we will receive, until further notice, such consignments as you choose to send us, holding us responsible for the grain in case of non-payments of drafts, and shall charge 3/8 per cent commissions for so doing.' On the 13th he acknowledged the receipt of Fitch's letter of the 8th, and said, 'I believe your inquiry was answered in mine of the 11th instant.'

Letters, in substantially the same language as that of Sept. 2, were written to the cashier of the Merchants' Bank, enclosing the drafts, bills of lading, and certificates of insurance, of the cargoes of the 'Grenada' and 'Corsican.'

The cashier of the Merchants' Bank, upon receipt of the drafts and bill of lading of the 'Kate Kelly,' wrote three letters,—one to Smith & Co., dated Watertown, N.Y., Sept. 6, 1869, as follows:——

'Please find enclosed for acceptance, and return the following; to wit:——

McLaren & Co., on your st. $4,080.81 and exg.

McLaren & Co., Oct. 5 7,500.00 and exg.

McLaren & Co., Oct. 20 7,500.00 and exg.

Also inspection certificate.'

Another, bearing the same date, as follows:——

'Proprietors of Corn Exchange Elevator, Oswego, N.Y.:——

'Please find enclosed an order for cargo schooner 'Kate Kelly' for 8,727 bushels Amber Milwaukee wheat, and 5,527 20/60 bushels No. 1 Amber Milwaukee wheat, to be delivered to you; and you will please hold the same subject to, and deliver the grain only on payment of, the following drafts; to wit:——

McLaren & Co., on Smith & Co., st. $4,080.81 and exg.

McLaren & Co., Oct. 5 7,500.00 and exg.

McLaren & Co., Oct. 20 7,500.00 and exg.

And the third, of the same date, as follows:——

'MERCHANTS' BANK, WATERTOWN, N.Y., Sept. 6, 1869.

'Robert Hayes, Esq., Master schr. 'Kate Kelly,' Oswego, N.Y.: —

'Please deliver to the Corn Exchange Elevator, Oswego, N.Y., your cargo, 8,727 bushels of Amber Milwaukee wheat, and 5,527 20/60 bushels of No. 1 Amber Milwaukee wheat, consigned to us by W. G. Fitch, Esq., cashier.'- Letters of the same purport were written in relation to the cargoes of the 'Grenada' and 'Corsican,' except that, in the case of the 'Corsican,' the letter enclosing the order to the master of that vessel to deliver her cargo was addressed to 'Smith & Co., Proprietors Corn Exchange Elevator.' Smith & Co., on the receipt of the letters, paid each of the sight drafts, and returned the time drafts, accepted, to the Merchants' Bank, without objection, and without expressing any dissent to the terms and conditions upon which the wheat was to be delivered, on its arrival, to the Corn Exchange Elevator. The sight drafts were paid, and the time drafts accepted, several days before the arrival of the cargoes at Oswego.

McLaren & Co. forwarded to Smith & Co. invoices of the purchases, with statement of account for disbursements and commissions. The invoice of the 'Kate Kelly' is headed, 'Account purchase of 14,250 20/60 bushels wheat, bought for account, and by order of Smith & Co., Oswego, N.Y., through McLaren & Co.' Those of the 'Grenada' and of the 'Corsican' respectively differ from it only in the number of bushels. No bill of lading for either cargo was sent to Smith & Co.

The 'Kate Kelly' arrived in Oswego Sept. 16, 1869. Her cargo was discharged into the Corn Exchange Elevator. Seven thousand three hundred bushels were 'spouted' direct from the vessel through the elevator into the canal-boat 'Frank Alvord,' and other quantities into the south, middle, and north team bins; the balance of the cargo went into numbered bins; and 3,047 10/60 bushels was, on the 18th September, shipped into the canal-boat 'Four Sisters,' and a bill of lading, dated Sept. 18, 1869, signed by G. A. Bennett, was delivered to Smith & Co. The canal-boat arrived in New York Oct. 9, 1869. Smith & Co. paid the time draft of $7,500, drawn at thirty days. The time draft of $7,500, drawn at forty-five days, was unpaid at the date of this shipment.

The 'Grenada' arrived with her cargo on the twenty-fourth day of September, 1860. Two thousand bushels were 'spouted' into the boat 'Caribbean;' and on the 27th September, 1869, 7,100 bushels were shipped into the canal-boat 'B. Hagaman' by Smith & Co., and a bill of lading of that date, signed by G. A. Bennett, was delivered to them. This canal-boat arrived in New York Oct. 27, 1869. The two time drafts drawn on the cargo of the 'Grenada' were unpaid at the date of this shipment.

The 'Corsican' arrived with her cargo on the 8th October, 1869; and on the same day Smith & Co. shipped 4,358 bushels of it into the canal-boat 'Anna Rebecca,' and 7,836 bushels of it into the canal-boat 'George Ames,' and received bills of lading therefor. These canal-boats arrived in New York on the 4th November, 1869. The time drafts drawn on the cargo of the 'Corsican' were not paid at the time of these shipments. The drawees of the drafts were the proprietors of the Corn Exchange Elevator.

The captains of the 'Kate Kelly,' 'Grenada,' and 'Corsican,' on their arrival at Oswego, called at the office of the Corn Exchange Elevator, and there found and received from Smith & Co., before delivering their cargoes, the orders which had been sent for them, in the letters written by the cashier of the Merchants' Bank to the 'Proprietors Corn Exchange Elevator,' and to '...