Ratzer v. Burlington, Cedar Rapids & Northern Ry. Co.

• Decision Date: 24 April 1896
• Docket Number: Nos. 9934 - (253).,s. 9934 - (253).
• Citation: 64 Minn. 245
• Parties: JOHN RATZER v. BURLINGTON, CEDAR RAPIDS & NORTHERN RAILWAY COMPANY.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

Page 245

64 Minn. 245

JOHN RATZER v. BURLINGTON, CEDAR RAPIDS & NORTHERN RAILWAY COMPANY.¹

Nos. 9934 - (253).

Supreme Court of Minnesota.

April 24, 1896.

Appeal by plaintiff from a judgment of the district court for Hennepin county, in favor of defendant, entered in pursuance of the findings and order of Russell, J. Reversed.

J. F. McGee, for appellant.

Albert E. Clarke and Wilbur F. Booth, for respondent.

CANTY, J.

The Morrison Grain & Lumber Company shipped three car loads of oats, two from Britt, and one from Forest City, Iowa, to New York City. One of these cars was shipped on January 5, and the other two on January 7, 1895. A bill of lading was issued for each car by the initial carrier. In each bill the shipper is named as consignee, with the addition, "Notify John Ratzer," and the destination named is New York City. The initial carrier transported the cars to Livermore, Iowa, and there delivered them (with proper waybills, showing New York to be the destination) to the defendant, the next connecting carrier, with which and a subsequent carrier it had through traffic arrangements. The defendant carried the cars on its line towards their destination until they reached Morrison, Iowa, on January 8 or 9, and there delivered all of the oats (of the value of $1,336) to the shipper, on its demand, without requiring a surrender or cancellation of the bills of lading. The shipper at this point converted the oats to its own use. Within a day or two after the oats were so delivered at Morrison, the shipper indorsed each of the bills of lading, "Deliver to the order of John Ratzer," and signed them. The shipper also drew drafts on said Ratzer, this plaintiff, in favor of the Bank of Reinbeck, for the amount of the purchase price of the oats, attached the drafts to the bills of lading, and delivered all of the same to the bank, which cashed the drafts in good faith, in the regular course of business, relying on the attached bills of lading. The bills of lading were, in the regular course of business, forwarded by the bank to New York, and presented to Ratzer, a commission merchant there, dealing in grain, who on January 14 and 16, 1895, in the regular course of business, paid the drafts in good faith, relying on the attached bills of lading, which he then and there received. If the three cars of oats had continued to New York, their destination, in the usual course of transportation, they would have arrived there between January 23 and 30. The shipper, the Morrison Company, is wholly insolvent.

Plaintiff brought this action to recover $804.94, the amount so advanced by him on the faith of the bills of lading. The case was tried by the court below, without a jury. The court found all of the foregoing facts, and thereon ordered judgment for defendant. From the judgment entered thereon plaintiff appeals, and urges, as a ground for reversal, that the judgment is not sustained by the findings of fact.

We are of the opinion that, on the facts found, the plaintiff is entitled to judgment. A vast portion of the produce of this country is moved from the agricultural districts to the commercial centers and the seaboards by the aid of advances made on the security of such bills of lading. A well-established custom has grown up in commercial circles by which such bills of lading are treated as the symbols of title to the property in transit, are taken as security for money advanced, and indorsed and delivered as a transfer of the property. This is well understood by the railroad companies and every one else. To allow the railroad companies to ignore this custom would be to destroy the custom itself. This would cause great hardship, revolutionize business methods, and drive all buyers and shippers of small means out of the business, as they could no longer give ready and available security on commodities in transit, and thereby turn their limited capital sufficiently quickly and often to enable them to do much business. This, in turn, would destroy competition, and leave the business in the hands of a few concerns with unlimited capital. Neither have the railroad companies any right to ignore this custom. On the contrary, it must be held that these companies have been doing business with reference to this custom as much as the shippers themselves and the consignees, banks, commission merchants, and others who are continually advancing money on the faith of the security of these bills of lading. The effect of this custom, independent of G. S. 1894, § 7649, is to make bills of lading to some extent and for some purposes negotiable, and to give superior rights to innocent transferees for value in the usual course of business.

It is hardly necessary to cite authorities to the general proposition that, when a bill of lading is outstanding, the railway company delivers the goods at its peril, without a production of the bill of lading; and, if it so delivers them to some one other than the bona fide holder for value of the bill of lading, it is liable to him for conversion of the goods. What limitations or exceptions there may be to this rule we need not now consider. The following authorities show the universality of the rule as applied to transportation both on land and by water. See The Thames, 14 Wall. 98; North v. Merchants' Transp. Co., 146 Mass. 315, 15 N. E. 779; Forbes v. Boston & L. R. Co., 133 Mass. 154; Furman v. Union Pac. R. Co., 106 N. Y. 579, 13 N. E. 587; City Bank v. Rome, W. & O. R. Co., 44 N. Y. 136; Pennsylvania R. Co. v. Stern, 119 Pa. St. 24, 12 N. E. 756; Boatmen's Sav. Bank v. Western & A. R. Co., 81 Ga. 221, 7 S. E. 125; National Bank of Chester v. Atlanta & C. A. L. R. Co., 25 S. C. 216; Midland Nat....