Rand v. Morse

• Decision Date: 07 May 1923
• Docket Number: 6187.
• Parties: RAND et al. v. MORSE et al. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

289 F. 339

RAND et al. v. MORSE et al. ^[1]

No. 6187.

United States Court of Appeals, Eighth Circuit.

May 7, 1923

[Copyrighted Material Omitted]

John M Goodwin, of St. Louis, Mo. (Otto F. Karbe and Jourdan Rassieur & Pierce, all of St. Louis, Mo., on the brief), for plaintiffs in error.

Frank H. Sullivan, of St. Louis, Mo. (William O. Reeder and Jones, Hocker, Sullivan & Angert, all of St. Louis, Mo., on the brief), for defendants in error.

Before STONE, LEWIS, and KENYON, Circuit Judges.

LEWIS Circuit Judge.

In this action the seller of 150 tons of rice on a c.i.f. contract got judgment against the buyer for failure to pay the purchase price. National Rice Mills, a copartnership, of San Francisco, was the seller, and Mississippi Valley Trading & Navigation Company, an unincorporated association, of St. Louis, was the buyer. Its individual members were made defendants.

The law raises a definite implication from the use of the three letters c.i.f. as to the duty of seller in executing the contract. They are used in this contract, and their use imposed on the seller the duty of procuring at his cost and delivering to the purchaser when he would pay for the rice shipped, a bill of lading properly endorsed and an insurance policy covering the risk of voyage. That duty is repeated in the contract in the clause which fixed the terms of payment, as 'Net Cash, sight draft against documents, payable upon presentation, consisting of Steamship B/L or Delivery Order on Steamship Company, Seller's option, accompanied by other necessary documents. ' The purpose of each is evident. The bill of lading passes title and enables the buyer to get the goods at destination. When turned over to him there is a constructive or symbolical delivery by the seller. It is said to be in the nature of a title deed to the things sold, so that it may be passed on by endorsement to another buyer. Having paid for the goods and acquired title thereto and right to possession, the policy protects each buyer in turn against loss. Thames & Mersey Ins. Co. v. U.S., 237 U.S. 19, 35 Sup.Ct. 496, 59 L.Ed. 821, Ann.Cas. 1915D, 1087; Harper v. Hochstim (C.C.A.) 278 F. 102, 20 A.L.R. 1232; Sanders Bros. v. MacLean & Co. (1882) 11 Q.B. 327; Biddell Bros. v. E. Clemens Horst Co., (1911) 1 K.B. 214; Orient Co., Ltd. v. Brekke & Howlid (1913) 1 K.B. 531. In C. Sharpe & Co. v. Nosawa & Co., (1917) 2 K.B., 814, it is said that the meaning of the c.i.f. contract is reasonably plain and--

'that such a contract is performed by the vendor taking reasonable steps to deliver as soon as possible after shipment the shipping documents, including the bill of lading and policy of insurance company, and the buyer paying the price against the documents unless there is some other stipulation as to payment in the contract. But performance by the seller is by delivery of the documents which represent the goods, i.e. the bill of lading which is a constructive delivery. The delivery intended by the contract is a constructive delivery. The bill of lading is, in the words of Bowen, L.J., a great master of the common law, 'a key which in the hands of a rightful owner is intended to unlock the door of the warehouse floating or fixed, in which the goods may chance to be,' and is therefore a constructive delivery of the goods to the buyer, who from the time he receives the documents has control of the goods and can deal with them relying on their receipt, or, by virtue of the insurance their value, so that there can be no doubt in his mind that he has the control of existing goods or their value.'

The original shipper's invoice and one from the immediate seller are usually turned over, but they are not counted necessary documents in performance.

In this case the contract was made on April 12th. The rice had been shipped from Hong Kong about three weeks before that destination Havana, Cuba, where it arrived on June 1st. The 150 tons were a part of a larger shipment of rice (500 tons) consigned by a Hong Kong dealer, all destined to Havana, all packed in 4,464 bags of 224 pounds each, and each bag marked with the initials of consignor and consignee (a San Francisco dealer in rice), the letters 'S.F.' and the word 'Havana,'-- all stamped across a triangle outlined on each bag. The consignor made invoice of the 1,339 bags apart from the others, which was viseed by the Cuban Consul resident at Hong Kong. The master of the ship issued to consignor bill of lading in triplicate for the 1,339 bags. The consignor procured a certificate of survey to be made by the Hong Kong Chamber of Commerce on the entire 4,464 bags, and took out marine insurance in one policy of $127,400 on the 4,464 bags. These documents after proper endorsement all went to the consignee, who in turn passed them on to another buyer of the 500 tons at San Francisco, and he in turn sold the 150 tons in controversy to defendants in error (plaintiffs below). When defendants in error bought they received two of the triplicate bills of lading on the 1,339 bags, properly endorsed, they received the original consular invoice and photo copy of the insurance policy on the 4,464 bags, and photo copy of the certificate of the chamber of commerce. They also received from their vendor, established and reputable dealers in rice at San Francisco, letters wherein they said they held the original policy of insurance for the account of whom it might concern, pending arrival of the cargo at destination, and that the proportionate interest of defendants in error in that policy on the 150 tons was $38,220. They also said that the third bill of lading would be turned over on arrival. The third bill of lading was supposed to follow, as is the practice, on a later ship for safety. With these documents in hand the defendants in error, as seller under the contract of April 12th, drew a draft on April 28th on the buyer, plaintiffs in error, doing business at St. Louis, attached to that draft the documents above noted, which they had received from their vendor, the letters of their vendor in re the insurance policy and in re the third bill of lading, and also attached their invoice for the 150 tons; and placed them all in the First National Bank of San Francisco for collection. On the same day they made out and mailed to the buyer at St. Louis their invoice on the sale of the 150 tons, noted thereon terms of payment according to the contract, and set out in detail a list of the documents which they had attached to the draft. This invoice reached the buyer at St. Louis through the mail on the morning of May 3d, and on the same morning the First National Bank of St. Louis received from the San Francisco bank the draft with documents attached for collection. The record shows that the St. Louis buyer received the invoice through the mail containing the notations above referred to before they were notified on May 3d by the St. Louis bank that it held the draft and documents for collection. On receiving that notice from the bank the general manager of the buyer requested the bank to hold the draft until he might be advised of the impending arrival of the ship at Havana. He was told that this could not be done without permission from its correspondent at San Francisco. The San Francisco bank was advised of the request of the general manager. A reply was received and communicated to the general manager that the request would be granted on condition that the buyer pay interest on the amount at 6 per cent. while the draft was being held. He declined to pay interest. Several messages were exchanged between the banks over this controversy. Finally on the morning of May 12th the general manager went to the St. Louis bank and advised them that he wanted to take up the draft that day or not at all, and that he would not pay interest. He left with them at that time a letter in which he requested the bank to present the draft with documents attached covering 1,339 bags at his office immediately, saying that the steamer is due to arrive in Havana and that the documents must go forward in to-day's mail. The bank thereupon wired its correspondent again at San Francisco. At 2 o'clock in the afternoon of that day the general manager returned to the bank and brought with him the assistant treasurer of the buyer, repeated his demand that the draft and documents be delivered to him on payment of the face amount and stated that he had brought the treasurer there to give the check. Considerable discussion was had with the employes and officers of the bank on both visits. The draft, documents and telegrams were at hand. The latter were read and discussed, but at no time did the manager take in hand or look at or examine the draft and documents attached. On this last visit the manager and treasurer were advised of the wire that had been sent in the forenoon, and that the bank could not act until a reply was received. A little before four o'clock in the afternoon a message came from the San Francisco bank to waive interest on the draft. The bank at once attempted to find the general manager, but there was no one at his office with authority to act in the matter and he could not be reached. Early the next morning (May 13th) the bank sent the draft and documents to the buyer's office, the general manager was there, the draft and documents were presented and payment without interest demanded, but the manager said it was too late, he had rescinded the contract. Thereupon this action was brought, and at the trial the material and controlling issue was, whether an original policy of insurance on the 1,339 bags only should have accompanied the draft, whether the photo copy of the policy on the entire 4,464 bags was a sufficient compliance on the part of the seller, and if not, whether the buyer...