Roy & Roy v. Northern P. Ry. Co.

• Decision Date: 19 April 1906
• Citation: 85 P. 53,42 Wash. 572
• Court: Washington Supreme Court
• Parties: ROY & ROY v. NORTHERN PAC. RY. CO.

85 P. 53

42 Wash. 572

ROY & ROY v. NORTHERN PAC. RY. CO.

Supreme Court of Washington

April 19, 1906

Appeal from Superior Court, King County; Geo. E. Morris, Judge.

Action by Roy & Roy, a corporation, against the Northern Pacific Railway Company. From a judgment in favor of defendant plaintiff appeals. Affirmed.

Wright & Kelleher, for appellant.

Carroll B. Graves, for respondent.

CROW J.

This action was instituted by the appellant, Roy & Roy, a corporation, against respondent, Northern Pacific Railway Company, a corporation, upon two certain bills of lading claimed to have been issued by said respondent for two car loads of shingles. The complaint contains two causes of action; but, as the questions raised thereby are identical we will state the first cause only. The complaint, for the first cause of action, alleges that on November 23, 1903, the respondent, through its agent at Ravensdale, Wash., issued and delivered to one W. J. Doucett a certain bill of lading acknowledging the receipt of 231 1/4 M. 16 5X2 clear shingles, shipped from Covington, Wash., on said date, to Eaton Prairie, Minn., billed from the Allen Shingle Company to Roy & Roy, the appellant; that in truth said respondent had not received from said Allen Shingle Company, or said Doucett, or any other person, said shingles, or any shingles at the time of the issuance of said bill of lading, and that there were no shingles loaded on the car named therein; that said Doucett was not the agent of the said Allen Shingle Company, had no authority to bill or ship any shingles for said company, and was not the owner or in control of any shingles for said company, all of which facts were at the time well known to respondent, or could have been learned by the most casual inquiry; that on November 21, 1903, said Doucett presented said bill of lading to the appellant, Roy & Roy, who, relying upon the representations therein contained, and believing respondent had said shingles in its possession, paid to said Doucett the sum of $326.34, the value of said shingles; that by reason of the negligence of the respondent in issuing said bill of lading to said Doucett he was enabled to defraud appellant out of said sum of $326.34; that said Doucett is wholly insolvent; and that prior to the commencement of this action appellant demanded that respondent repay the said sum of $326.34, or deliver said shingles to it, which the said respondent refused to do. To each cause of action of the complaint the respondent interposed a general demurrer, which being sustained, the appellant refused to plead further. Thereupon judgment was entered dismissing the action, and this appeal has been taken.

The principal question to be determined on this appeal is whether the respondent railway company is liable to appellant for the value of said shingles. The appellant has affirmatively pleaded that no shingles were ever received by respondent, thus showing the false and fraudulent character of the recitals contained in the bill of lading. But, as it was issued by one H. S. McIntyre, respondent's agent at Ravensdale, who was authorized to issue bills of lading for merchandise actually received for shipment, appellant contends that the respondent is estopped from relying upon the defense that it received no shingles, not only because it held out McIntyre, its agent, as having full authority to issue such bill of lading, but for the further reason that said bill of lading as executed is negotiable and transferable by indorsement and delivery, under the laws of this state and the usages and customs of merchants and shippers generally, and that appellant, relying upon said bill of lading and on the truth of its recitals and believing the shingles had been actually delivered to respondent, paid to said Doucett the value of said shingles, and thereby became an innocent purchaser for value. Appellant, in support of its contention, has cited numerous authorities, including Sioux City & P. R. Co. v. First Nat. Bank, 10 Neb. 556, 7 N.W. 311, 35 Am. Rep. 488; Brooke v. New York, etc., R. Co., 108 Pa. 529, 1 A. 206, 56 Am. Rep. 235; Armour v. Mich. Cent. Ry. Co., 65 N.Y. 111, 22 Am. Rep. 603; Dickerson v. Seelye, 12 Barb. (N. Y.) 99; Wichita Savings Bank v. Atchison, etc., R. Co., 20 Kan. 519; Watson v. M. & C. R. Co., 56 Tenn. 255; Bank of Batavia v. N. Y., L. E. & N. R. Co., 106 N.Y. 195, 12 N.E. 433, 60 Am. Rep. 440; St. Louis & Iron Mountain R. R. Co. v. Larned, 103 Ill. 293; Smith v. Missouri R. R. Co., 74 Mo.App. 48. These cases are cited here upon the theory that, as the agent, McIntyre, was employed by respondent to receive goods for shipment and to issue bills of lading therefor, and as he as such agent actually issued the bill of lading in question, containing a recital of the receipt of the shingles, as between respondent and appellant, an innocent third party, who has acted in good faith while relying upon said recital, the respondent should be estopped from denying the truth of its statements, and from making the defense that the shingles had not been actually received. It is true that the authorities above cited sustain appellant's position. Still we find that the English courts, the Supreme Court of the United States, the federal courts generally, and many of the state courts have in numerous well-considered cases announced an entirely opposite doctrine, which we will now announce as the law of this state. Where a transportation company shows that merchandise was not actually received by it, and that a bill of lading has been issued by its agent, either through fraud or mistake, the Supreme Court of the United States, since followed by other courts, has held that, as the receipt of the goods lies at the foundation of the contract to carry and deliver, there can be no such contract, unless the goods have actually been received, and that an agent of the carrier has no authority to issue a bill of lading without actual receipt of the goods, and cannot bind the carrier, even as to an innocent transferee or pledgee of the bill of lading. 6 Cyc. 419; Grant v. Norway, 10 C. B. 664; Uessel v. Bath, 2 Exch. 267; Meyer v. Dresser, 16 C. B. (N. S.) 646; Brown v. Powell Coal Co., L. R. 10 C. P. 562; Cox v. Bruce, 18 Q. B. Div. 147; Pollard v. Vinton, 105 U.S. 7, 26 L.Ed. 998; Friedlander v. Texas, etc., Ry. Co., 130 U.S. 416, 9 S.Ct. 570, 32 L.Ed. 991; Lazard v. Merchants', etc., Trans. Co., 78 Md. 1, 26 A. 897; The Loon, 7 Blatchford, 244, F. Cas. No. 8,499; Robinson v. Memphis & C. K. Co. (C. C.) 9 Fed. 129; Id., 16 F. 57; Martin v. Railway Co., 55 Ark. 524, 19 S.W. 314; Sears v. Wingate, 3 Allen (Mass.) 103; Hunt v. Miss. Cent. Co., 29 La. Ann. 446; Louisiana Ntl. Bank v. Laveille, 52 Mo. 380; Ntl. Bank of Commerce v. R. R. Co., 44 Minn. 224, 46 N.W. 342, 560, 9 L. R. A. 263, 20 Am. St. Rep. 566; Black v. Wilmington, etc., R. Co., 92 N.C. 42, 53 Am. Rep. 450; Hazard v. Ill. Cent. R. R. Co., 67 Miss. 32, 7 So. 280; Dean v. King, 22 Ohio St. 118.

The appellant, however, not only relies upon the doctrine of estoppel, but also contends that the bill of lading was negotiable, and that it, as an innocent purchaser for value should be protected, citing First Ntl. Bank of Pullman v. N. P. Ry. Co., 28 Wash. 439, 68 P. 965. While our statute (Ballinger's Ann. Codes & St. § 3598) makes a bill of lading negotiable by indorsement for certain purposes, it is not negotiable in the same sense as promissory notes, bills of exchange, or other commercial paper. In First Ntl. Bank v. N. P. Ry. Co., supra, we only held that a carrier issuing a bill of lading is bound to make delivery of the goods represented thereby to the holder thereof; in other words, that the assignment of the bill of lading confers upon the assignee such title to the goods as may have been held by the party to whom the bill of lading was originally issued. In Yarwood v. Happy, 18 Wash. 246, 51 P. 461, we in substance held that our statute was only declaratory of the previous common-law rule concerning bills of lading, and should not be construed as making an indorsement effective for any purpose other than to transfer the property represented, citing with approval Shaw v. Merchants' Nat. Bank of St. Louis, 101 U.S. 557, 25 L.Ed. 892, in which the Supreme Court of the United States said: 'Bills of lading are regarded as so much cotton, grain, iron, or other articles of merchandise. The merchandise is very often sold or pledged by the transfer of the bills which cover it. They are, in commerce, a very different thing from bills of exchange and promissory notes, answering a different purpose and performing different functions. It cannot be, therefore, that the statute which made them negotiable by indorsement and delivery, or negotiable in the same manner as bills of exchange and promissory notes are negotiable, intended to change totally their character, put them in all respects on the footing of instruments which are the representatives of money, and charge the negotiation of them with all the consequences which usually attend or follow the negotiation of bills and notes.' The negotiablecharacter of a bill of lading is discussed in Pollard v. Vinton, 105 U.S. 7, 26 L.Ed. 998, where Justice Miller says: 'A bill of lading is an instrument well known in commercial transactions, and its character and effect have been defined by judicial decisions. In the hands of the holder it is evidence of ownership, special or general, of the property mentioned in it, and of the right to receive said property at the place of delivery. Notwithstanding it is designed to pass from hand to hand, with or without indorsement, and it is efficacious for its ordinary purposes in the hands of the holder, it is not a negotiable instrument or obligation in the sense that...