Franklin Trust Co. v. Philadelphia, Baltimore & Washington Railroad Co.

• Decision Date: 23 June 1908
• Docket Number: 399
• Citation: 222 Pa. 96,70 A. 949
• Parties: Franklin Trust Company v. Philadelphia, Baltimore & Washington Railroad Company, Appellant
• Court: Pennsylvania Supreme Court

70 A. 949

222 Pa. 96

Franklin Trust Company v. Philadelphia, Baltimore & Washington Railroad Company, Appellant

No. 399

Supreme Court of Pennsylvania

June 23, 1908

Argued March 23, 1908

Appeal, No. 399, Jan. T., 1907, by defendant, from judgment of C.P. No. 2, Phila. Co., March Term, 1906, No. 3,328, on verdict for plaintiff in case of Franklin Trust Company v Philadelphia, Baltimore & Washington Railroad Company. Reversed.

Trespass to recover damages for losses occasioned by relying on bills of exchange which represented no goods delivered by the carrier. Before SULZBERGER, P.J.

The court charged in part as follows:

[The plaintiff claims that it was induced to believe that the accounts were true and existent, and that the buyers had got the goods, by the certificates of the defendant, that say the defendant had the goods for shipment to those respective persons, and was going to ship them, or had shipped them. To this I do not understand that the defendant admits that it issued these receipts, but it gives no explanation of why the goods did not reach the people, except to say "we never got the goods." Not to have got the goods is an excellent reason for not shipping them, but it is not an excellent reason for issuing shipping receipts, and why the defendant issued those receipts does not to my recollection appear in the evidence. Nobody testifies why they were given. Though the man who signed them was on the stand in this court room, he does not explain why he gave the receipts. It is true another man signed two of them, but these men, after all, are only the authorized expression of the company's power. They are confessedly the agents of the company, and it is exactly as if the company itself signed the receipts, and they do not tell us why they signed the receipts. In the absence of any explanation we have here, then, the case of the company certifying that it got the goods, and that certificate being used by the person who gets it from the company to get money from the plaintiff.

There is, however, a third class of transactions, and those are the ones to which I alluded in the beginning, when the company gave its receipt and there was no alteration. On them the question of fact arises.

But the plaintiff contends that all these other things were taken out of his case before he laid it before the jury, and that he is now dealing with you only on the case of the certificates that were never altered. Respecting such certificates (if you find that this plaintiff has such certificates before you), I say to you that the defendant is liable to the plaintiff for its loss by reason of untrue certificates of shipments having been issued by it, because, as I pointed out before, there is absolutely no explanation or qualification of those certificates by the defendant. To say that it got no goods would be a splendid reason for having issued no receipt, but having issued the receipt, to say that it got no goods is nothing. It is absolutely without reason to say that. Can you impute to any defendant standing here a total absence of reason? No, they do not mean to stand in that bald position. What they mean do say is this: "We have issued this receipt. Somehow we never got the goods. We never would have issued it if we had not been somehow fooled, and there are only three people in the world that could have fooled us, Warnock, his clerk and Binz. Warnock and his clerk we trust. Binz must have done something, we do not know what, by which he perpetrated this fraud.

What we have here is their receipt, and no explanation of how it came, provided you do not find that these were originally rightfully issued papers and altered by Binz. You, therefore, stand in this position. If these papers were rightfully issued, issued by the company, as they appear to be, then the company is responsible for having placed in the hands of Binz a weapon of deceit with which to cheat any ordinary mortal, and that not because the paper is negotiable in any legal sense or has any element of negotiability, but because it is against common right to issue weapons of offense and place them in the hands of people with which to hurt others.]

[Can you impute to any defendant standing here a total absence of reason? No. They do not mean to stand in that bald position. What they mean to do is to say this: "We have issued this receipt. Somehow we never got the goods. We never would have issued it if we had not been somehow fooled, and there are only three people in the world that could have fooled us, Warnock, his clerk and Binz. Warnock and his clerk we trust. Binz must have done something, we do not know what, by which he perpetrated this fraud. What?]

[What could Binz have done? How could Binz perpetrate the criminality of signing Warnock's name which Warnock signed himself? That is what we do not know. Warnock and his clerk both signed the names. What could Binz have done? He could have done something if Warnock and his clerk had signed a batch of these things and handed them to Binz in blank, so he could fill them up. But we cannot say that because Warnock and his clerk are innocent. He might have done something else, Warnock might have had leisure time one evening, and sat down and signed a bunch of these in blank, and locked them up in his desk, and then Binz might have committed a burglary and got them and used them afterwards, but there is no such evidence. If that had happened, they would know. Where is the evidence?]

Verdict and judgment for plaintiff for $14,146.57. Defendant appealed.

E. J. Sellers, of Sellers & Rhoads, for appellant. -- The agent Warnock was called by plaintiff and the latter was bound by his testimony. He testified that the receipts were true and correct when issued, but that they were subsequently altered, and, consequently, were forgeries. This testimony rebutted any inference that he had done anything wrong or had been a party to any wrong. His testimony, the only testimony of positive character, showed honesty on his part. As the altered documents referred to fictitious shipments, of course, the merchandise was never received and, consequently, defendant never became liable for such fiction.

The following case is directly in point: Roy & Roy v. Northern Pacific Railway Company, 6 L.R.A. (N.S) 302.

Alex. Simpson, Jr., with him Alfred Aarons and Henry N. Wessel, for appellee. -- If an agent with authority to issue bills of lading for goods received for shipment, issues such bills when no goods were in fact received, the principal is not released from all liability solely by reason of that fact: Brooke v. N.Y., etc., R.R. Co., 108 Pa. 529; American Car & Foundry Co. v. Water Co., 218 Pa. 542; Story on Agency, 126, 127, 443; Tanner v. R.R. Co., 53 Pa. 411; Adams Express Co. v. Schlessinger, 75 Pa. 246; Hubbard v. Tenbrook, 23 W.N.C. 351; McNeile v. Cridland, 168 Pa. 16; Sioux City, etc., R.R. Co. v. Bank, 10 Neb. 556 (7 N.W. 311); Armour v. R.R. Co., 65 N.Y. 111; Bank of Batavia v. R.R. Co., 106 N.Y. 195; Sears v. Wingate, 85 Mass. 103; Smith v. Ry. Co., 74 Mo.App. 48; Tibbits v. Ry. Co., 49 Ill.App. 567; R.R. Co. v. Larned, 103 Ill. 293; Ry. Co. v. Adams, 4 Kan.App. 305.

If a nonnegotiable bill of lading is issued when no goods have been received, the defendant is liable to innocent third parties who have parted with their money in reliance upon the averments contained in the bill: Fifth Ave. Bank v. R.R. Co., 137 N.Y. 231 (33 N.E. Repr. 378); Dock v. Boyd, 93 Pa. 92; Atkins v. Payne & Co., 190 Pa. 5.

It has been many times decided, however, that at the common law, bills, while not negotiable in the same sense that promissory notes are, are none the less quasi-negotiable, run in favor of assigns, and will pass by assignment or indorsement, carrying thereby the title of the goods to the assignee or indorsee: Gates v. R.R. Co., 42 Neb. 379; Pollard v. Reardon, 65 Fed. Repr. 848; Schumacher v. Eby, 24 Pa. 521; Empire Transportation Co. v. Steele, 70 Pa. 188; Hieskell v. Bank, 89 Pa. 155; Bache v. Philips, 155 Pa. 103.

Indeed, it has also been repeatedly said that title thereto, and to the goods named in the bill, will pass by delivery of the bill, without assignment or indorsement, if such appears to have been the intention: Holmes v. Bailey, 92 Pa. 57; Holmes v. Bank, 77 Pa. 525; Richardson & Co. v. Nathan, 167 Pa. 513; Sloan v. Johnson, 20 Pa.Super. 643.

Before MITCHELL, C.J., BROWN, MESTREZAT, POTTER and ELKIN, JJ.

OPINION

MR. JUSTICE POTTER:

The record in this case discloses a most unusual state of affairs. It appears that the factory of the R.E.F. Binz Carpet Corporation was located at Glen Riddle, Pa., and its manufactured product was shipped on the railroad of the defendant company, from Glen Riddle station. The method of shipping was as follows: When goods were ready for delivery to the railroad, to be transported, the consignor made out a shipping order, containing a description of the articles to be shipped, the name of the consignee, and the destination. This was handed to the agent of the common carrier to be retained by him. The agent of the railroad then made out and signed and gave to the shipper a bill of lading intended to be forwarded to the consignee, and supplied also a memorandum copy of the bill of lading which was intended to be retained by the shipper. As a matter of precaution, and of easy identification, the railroad company had the shipping orders printed on blue paper, the bills of lading upon white paper, and the memorandum copies of the bills of lading upon pink paper. The bills of lading bore the words "Not Negotiable" plainly printed across the ends, and were not negotiable instruments. It appears further that the common practice is for the shipper to fill up the shipping order, and...