Pollard v. Reardon

• Decision Date: 18 January 1895
• Docket Number: 80.,79
• Citation: 65 F. 848
• Parties: POLLARD et al. v. REARDON. REARDON v. POLLARD et al.
• Court: U.S. Court of Appeals — First Circuit

65 F. 848

POLLARD et al. v. REARDON.

REARDON v. POLLARD et al.

Nos. 79, 80.

United States Court of Appeals, First Circuit.

January 18, 1895

Charles K. Cobb, for Pollard and others.

Lewis S. Dabney, for Reardon.

Before PUTNAM, Circuit Judge, and NELSON and WEBB, District Judges.

PUTNAM Circuit Judge.

The effect to be given to the negotiation of the bill of lading in this case does not seem to have been brought to the attention of the circuit court as it has been to ours. Bills of lading are not negotiable instruments in the full sense that promissory notes are, yet they are justly styled negotiable. Among the reasons for this are that they are well-recognized commercial instruments, that when indorsed in blank they carry title by mere delivery from hand to hand and that the community give credit in reliance on what appears on the face of them. Pollard v. Vinton, 105 U.S. 7, 8; Friedlander v. Railway Co., 130 U.S. 416 424, 9 Sup.Ct. 570; Pease v. Gloahec, L.R.1P.C. 219 227; 4 Daniel,Neg.Inst.(4th (4th Ed.) § 1727. They have become by custom and necessity peculiarly subject to the rules stated by Lord Herschell in Bank v. Simmons (1892) App. Cas. 201, 215, as follows:

'The general rule of the law is that, where a person has obtained the property of another from one who is dealing with it without the authority of the true owner, no title is acquired as against that owner, even though full value be given, and the property be taken in the belief that an unquestionable title thereto is being obtained, unless the person taking it can show that the true owner has so acted as to mislead him into the belief that the person dealing with the property had authority to do so. If this can be shown, a good title is acquired by personal estoppel against the true owner.'

The peculiar form and phraseology of ordinary bills of lading, and the generally known reliance placed upon them and credit given them in commercial communities, render the principles of these expressions especially applicable to them; and common honesty, in the light of modern business and financial methods, throws a special burden on those who put them out. It is true, as said by the supreme court in the cases cited, that they are as so much cotton, grain, or corn, and that, as no sale of such articles, when lost or stolen, can divest ownership, the same is true as to sales of their lost or stolen symbols. In mere cases of theft or loss this is a clear rule; yet when there is no theft or loss, but a voluntary intrusting to an agent or other person, though for a special purpose, with no notice on the fact of a limited right, the fact is then to be considered that there is an ostensible authorization found in the word 'assigns,' appearing in the usual bill of lading, and in the one at bar, which is neither found nor implied in a mere change or delivery of possession of the articles of which bills of lading are the symbols. The same may be said of a bill of lading which has been indorsed in blank; as, by analogy to other commercial instruments of a negotiable character, such an indorsement apparently authorizes the holder to fill up the blank at his option. The application of the rules of estoppel to bills of lading like this at bar, appearing on their faces to be transferable in the light of the views and expressions which we have cited, would seem to be in harmony with legal principles. Nevertheless, the state of the authorities on this topic is not satisfactory. It must be admitted that the ordinary deposit of title papers does not enable the person holding them to make a title to personal property beyond what he himself possesses. The cases on this point are numerous. A marked one is Johnson v. Credit Lyonnais Co. (decided in 1877) 3 C.P.Div. 32, which touched the negotiability of certain dock warrants. Chief Justice Cockburn delivered the opinion, and said (page 40) that, at common law, the leaving in the vendor the possession of goods bought, or of the documents of title, would not estop the vendee in case of a fraudulent sale or pledge by the party with whom the goods or documents were left. It is evident, however, that, as the chief justice concurred in Rumball v. Bank, 2 Q.B.Div. 194, he had in view only the ordinary principle touching such matters, which may be distinguished from cases involving bills of lading negotiable in form.

Numerous cases may be found where it has been held that a factor who holds a bill of lading for sale cannot pledge; but in such cases either it appeared that there were grounds for charging the pledgee with knowledge of the factorship, or the decisions were made before the modern development of the doctrine of estoppel, or without giving it full consideration. The later English textbooks, while laying down in general terms the proposition that a bill of lading is not negotiable in the full sense in which promissory notes are, do not seem to have come to the precise question upon which we must pass. Carv. Carr. by Sea (2d Ed.; published in 1892) p. 490, lays down the ordinary rule that possession of the bill of lading is only equivalent to that of the goods themselves; but the precise proposition in question here is not considered. The same may be said as to Benj. Sales (6th Ed.; published in 1892) p. 845. Scrutt. Charter Parties (3d Ed.; published in 1893) is no more definite; although on page 157 the author says that 'the lawful holder of a bill of lading, in whom the property in the goods is vested, may, by indorsement, transfer a right greater than he himself has, for he transfers his position under the contract evidenced in the bill of lading. ' Bank v. Henderson, L.R.5P.C. 501, is directly in point in favor of Reardon, if the transaction did in fact raise a trust attaching to the bill of lading, as the court assumed it did. Sir Barnes Peacock cites with apparent approval (page 512) from the judgment in Rodger v. The Comptoir d'Escompte de Paris, L.R.2P.C. 393, the following:

'The general rule, so clearly stated and explained by Lord St. Leonards, is that the assignee of any security stands in the same position as the assignor as to the equities arising upon it. This, as a general rule, was not disputed; but it was contended that the case of a bill of lading is exceptional, and must be dealt with on special grounds. Doubtless the holder of an indorsed bill of lading may, in the course of commercial dealing, transfer a greater right than he himself has. The exception is founded on the negotiable quality of the

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