National Bank of Chester v. Atlanta & C.A.L. Ry. Co.
| Decision Date | 12 July 1886 |
| Citation | 25 S.C. 216 |
| Parties | NATIONAL BANK OF CHESTER v. ATLANTA & CHARLOTTE AIR LINE RAILWAY COMPANY. |
| Court | South Carolina Supreme Court |
1. A railroad company chartered by the State does not, by leasing its road to another corporation, release itself from liability for goods received by its line for carriage and not delivered. The lessor continues to be liable for all acts done by the lessee in operating the road, whether the cause of action be ex delicto or ex contractu .
2. A bill of lading is so far negotiable as to pass to its endorsee all the right to the possession of the goods therein mentioned. And while the goods may be delivered without the production of the bill of lading, the carrier thereby assumes the burden of showing that the delivery was to the proper person. Cases reviewed .
3. Where time drafts, accompanied by indorsed bills of lading of cotton, were cashed by a bank, any arrangement between the drawee of the drafts and the shipper, unknown to the bank that the cotton should be delivered to the drawee without the production of the bills of lading, would be a fraud on the bank, and would not excuse an improper delivery by the carrier to such drawee.
4. A bill of lading drawn to the order of the consignor with the added words, " " Notify L. M. Co.," did not require a bank receiving such bill of lading by proper indorsement for value, to notify the carrier not to deliver to the L. M. Co., nor to inquire whether the goods would be so delivered.
5. The Circuit Judge properly refused to charge the jury " that if the jury find that the L. M. Co. was entitled, by its contract, to the cotton, upon its acceptance of the drafts then the plaintiff cannot recover, even though it still holds the bills of lading" -for by so charging he would have submitted to them a question of law.
6. The judge did not err in refusing to charge that the railroad company was entitled to timely notice of the non-payment of the drafts, otherwise the bank was not entitled to recover because (1) the railroad company could fully protect itself by complying with its contract made before the drafts were drawn, and the wrongful delivery was made without any knowledge of the existence of the drafts; (2) the delivery was made before the maturity of the drafts; and (3) notice was given within reasonable time after the non-payment.
Before WALLACE, J., York, April, 1885.
The opinion fully states the case.
Mr. C. E. Spencer , for appellant.
I. Whilst the railroad has a right to demand a bill of lading before delivery, its production is not necessary. Surely, the plaintiff has in no sense been damaged here, if the R. & D. R. R. Co. delivered to the party entitled to receive. The simple point contended for here is that the bailee is not estopped by his receipt, but that delivery to the party having the right of possession is a sufficient defence against the claim of the bailor. 93 U.S. 575. The instructions to the jury upon this point were calculated to mislead. II. The plaintiff took subject to the right of the L. M. Co. to the cotton (whatsoever that was) as against McCauley & Co. 1. This is true, even if plaintiff did not know of any right. A bill of lading is neither a negotiable promissory note, nor a bill of exchange. Code , § 133. 2. At best, it is only quasi negotiable. 2 Pars. Cont. , 289; 55 Am. Dec. , 290, 370. 3. But plaintiff knew, or was put upon inquiry, so it cannot plead a transfer in good faith, even if the bill otherwise falls under the exception in section 133 of the Code. III. There was evidence that, as between McCauley & Co. and L. M. Co., the latter was to get the cotton upon acceptance of the drafts. This evidence admissible. 1 Greenl. Evid. , 225. McLure knew in June that the cotton had been delivered to L. M. Co., and proved debt against L. M. Co. afterwards. IV. The defendant was entitled to timely notice that the drafts were not paid, and that it would be held responsible. V. There was no right of action against the defendant, if the R. & D. R. R. Co. was operating defendant's road at the time. The general doctrine is conceded that a railroad corporation cannot escape the performance of any duty imposed by its charter, by a voluntary surrender of its road into the hands of lessees. 17 Wall. , 445. It is quite plain, therefore, that for all matters ex delicto , done or suffered by the lessee, the lessor is responsible. The practice is equally well settled that the lessee is liable to the same extent as the lessor would have been, while it continues to operate the road. 29 Vt. , 421(70 A. D. , 426). The question was at first left open, however, as to the right to sue the lessor, when the cause of action was bottomed upon a special contract made with the lessee. 36 Am. Rep. , 574. But it seems now that the recognized practice is to sue the lessee alone in such cases, especially where by its charter the lessor has the right to lease. Rorer R. R. , 604, 605, note 5, 606-609; 10 Gray. 104. The charter to the defendant conferred upon it the right to farm out its road. 12 Stat. , 440, § 4; 11 Stat. , 348, § 13. " To farm out" is broad enough to cover a lease. 72 N. C. , 637; 73 Id. , 528.
Messrs. J. & J. Hemphill , and Brawley & Barnwell , contra.
This was an action brought by the plaintiff against the defendant, a common carrier, for damages for the non delivery of two lots of cotton delivered to it for transportation to the town of Lowell, in the State of North Carolina. It appears that by some arrangement between McCauley & Co., merchants, doing business in the town of Chester, South Carolina, and the Lawrence Manufacturing Company, carrying on their business of manufacturing cotton goods in the town of Lowell, North Carolina, McCauley & Co. bought cotton and shipped it to the manufacturing company, drawing time drafts on said company for the price of said cotton, which drafts were discounted by the plaintiff bank as soon as they were drawn, whereby the said McCauley & Co. were placed in funds to pay for the cotton.
When the two lots of cotton in question were bought by McCauley & Co. and shipped, they received from the Chester & Lenoir Narrow Gauge Railroad Company bills of lading of the following tenor: ‘ Received of D. McCauley & Co. the following packages in apparent good order, contents and value unknown, to be transported in like good order unto order, notify Lawrence Manufacturing at Lowell," & c. The remainder of the bill of lading being immaterial to the present inquiry. When the cotton reached Gastonia, it was delivered to the Atlanta & Charlotte Air Line Railroad Company, as appears by the receipt of its agent at that point, and was by the last named company, or rather by its lessee, the Richmond & Danville Railroad Company, transported to Lowell, where it was delivered to the Lawrence Manufacturing Company without the production of the bills of lading, or any order from the said D. McCauley & Co. When the drafts drawn by McCauley & Co. against this cotton were discounted by the plaintiff bank, they had attached to them the bills of lading, endorsed in blank by McCauley & Co., and the drafts, detached from the bills of lading which were retained by the bank, were promptly forwarded for acceptance to the maufacturing company, duly accepted, and returned to the bank. When the drafts matured they were not paid, except a small part of one of them, the manufacturing company having in the meantime failed. Soon afterwards demand was made upon the railroad company by the bank for the cotton, which not being complied with, this action was commenced.
The defendant undertook to show that though the bills of lading were drawn to the order of McCauley & Co., yet that the understanding was that the cotton was to be delivered to the Lawrence Manufacturing Company so soon as the drafts drawn against it were accepted by that company; but there was no evidence showing that the bank was a party to, or even knew of, such an arrangement. Indeed, it would seem that such an arrangement, if known to and acquiesced in by the bank, would render the security afforded by the transfer to it of the bills of lading wholly worthless, and is altogether irreconcilable with the conceded fact that the bank retained the bills of lading when the drafts were sent forward for acceptance; for if the bank had understood that the Lowell Manufacturing Company was to be entitled to receive the cotton when the drafts were accepted , and not when they were paid , then, according to the usual course, the bills of lading would have been sent along with the drafts when they were forwarded for acceptance. On the other hand, it would be somewhat difficult to understand what advantage the manufacturing company would gain by purchasing the cotton on time drafts, if it could not obtain possession of the cotton until the drafts drawn against it were paid, but for the fact appearing in the testimony that the president of the manufacturing company had been the railroad agent at Lowell, and had been in the habit of delivering cotton to the company without the production of bills of lading, which practice had been continued by the new agent, and therefore it was not supposed that there would be any difficulty about it.
The jury having found a verdict for the plaintiff, and judgment being entered thereon, the defendant appeals upon the following exceptions:
" First. For that his honor erred in charging the jury-
1. That where goods are shipped, deliverable to the order of the consignor, the carrier cannot deliver them legally without the production of the bill of lading, properly endorsed.
2. That a bill of lading is both a receipt for the goods shipped, and an express written contract for their transportation and...
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