Russel v. Smith Grain Co.

• Decision Date: 16 June 1902
• Citation: 80 Miss. 688,32 So. 287
• Court: Mississippi Supreme Court
• Parties: SEARLES BROS. v. SMITH GRAIN COMPANY ET AL

32 So. 287

80 Miss. 688

SEARLES BROS. v. SMITH GRAIN COMPANY ET AL

Supreme Court of Mississippi

June 16, 1902

FROM the chancery court of Warren county. HON. W. C. MARTIN Chancellor.

Searles Bros., appellants, were complainants in the court below; the Smith Grain Company and others, appellees, were defendants there.

Searles Bros. filed a bill in the chancery court of Warren county, in attachment, under § 486 of the code of 1892, against the Smith Grain Company and the Exchange National Bank, both of Little Rock, Ark. and the Merchants' National Bank and the Vicksburg Bank, of Vicksburg, Miss. in which they allege that they purchased a lot of corn from the Smith Grain Company at a fixed price; that only a part of the corn was shipped; and that, in order to supply their customers, they were compelled to go into the market and buy other corn at a higher price; that the corn shipped them was defective in quality, whereby they suffered loss; that for the corn shipped them the Smith Grain Company drew on them for $ 364 in favor of the Exchange National Bank, and that they paid said draft through the Vicksburg Bank. They allege, further that on a different date they bought other corn, and suffered losses in the same way as above averred, and that the Smith Grain Company drew on them, through the Exchange National Bank, for $ 245.22, which was paid through the Merchants' National Bank of Vicksburg; that the proceeds of the two drafts were in the possession of said resident banks. The prayer was for judgment against the defendants, and that the money in the said banks, or so much as might be necessary to cover amount due them, be turned over to them, and that the Exchange National Bank be required to come into court, and show cause why said order should not be made. The Vicksburg banks answered, admitting that they held the money which was collected on the drafts attached to the bills of lading on the shipment of corn to complainants, which were payable to the Exchange National Bank of Little Rock, Ark. and offering to pay the money into court to await the determination of the matter by the court. The Smith Grain Company did not answer the bill at all. The Exchange National Bank answered, setting up that it was a purchaser of the corn in good faith, for value, without notice of any contract between complainants and the Smith Grain Company, or any failure on the part of the Smith Grain Company to carry out its contracts with complainants. It set up the further defense that it was a national bank within the meaning of sec. 5242 of the revised statutes of the United States, and that under that section this attachment suit could not be maintained against it, and that the court was without jurisdiction to determine their rights in the matter. Testimony was taken to show complainants' losses under the contracts with the Smith Grain Company as alleged in the bill. The court, on final hearing, dismissed the bill as to all the defendants. From that decree complainants appealed.

Reversed and remanded.

McLaurin Armistead & Brien, for appellants.

1. The right of the appellans to subject the proceeds of the draft in the hands of the Vicksburg banks is no longer an open question in this state. Miller v. Bank, 76 Miss. 84.

2. This proceeding was brought under §§ 486, 487, code 1892, and is in the nature of a garnishment, the claim of the Exchange National Bank having no other effect than to present a claimant's issue as to the money held by the garnishee. In this view of the case the federal statute relied upon by appellees has no application, and the court below had full jurisdiction to determine the rights of the parties.

Catchings & Catchings, for appellees.

1. It is contended by counsel for appellant that the proceeding by attachment in chancery is not an attachment within the meaning of the United States statute. They argued before the chancellor that it was rather in the nature of a garnishment proceeding.

So far as the Exchange National Bank is concerned, there is nothing in the case which even resembles garnishment. It was not summoned as garnishee holding possession of property of the Smith Grain Company. The property involved was not in its possession, but in the possession of the Vicksburg banks, and they were summoned as garnishees.

The decree was sought against the Exchange National Bank and the Smith Grain Company absolutely, and a liability against the Exchange National Bank, at least to the extent of the funds in the hands of the Vicksburg banks.

The theory was that whether the effects in the hands of the Vicksburg banks belonged to the Exchange National Bank or to the Smith Grain Company, they might be attached and subjected to the complainant's claim, and the purpose of the bill was to so subject them.

The summonses for the Vicksburg banks makes this clear beyond a doubt, and they did bind the effects in their possession.

The Exchange National Bank was restrained by this proceeding, which bound up its effects in the hands of the Vicksburg banks, from acquiring possession of them, and applying them to their own use. Pacific National Bank v. Mixter, 124 U.S. 727; Safford v. First National Bank, 61 Vt. 374.

Section 486 of the code with regard to attachments in chancery must be read as though it contained a provision in express terms that it was not to apply to suits against national banks. See, also, Cudabac v. Strong, 67 Miss. 709; First National Bank v. LaDue, 39 Minn. 416; Freeman Manufacturing Co. v. National Bank of Republic, 160 Mass. 399.

2. We insist that the property covered by a bill of lading like the one in question cannot be subjected to the claim of creditors of the shipper, and cite the following authorities: Pollard v. Venton, 105 U.S. 8; Bank of Commerce v. National Bank of Memphis, 91 U.S. 92; First National Bank v. Mt. Pleasant Milling Co., 103 Ia. 518; Neill v. Rodgers Bros. Produce Company, 41 W.Va. 37; Hathoway v. Haynes, 124 Mass. 301; Holmes v. Bayley, 92 Pa. 57; Holmes v. Bank, 96 Pa. 525; Coker v. First National Bank of Memphis, 112 Ga. 71; Ayres et al. v. Dorsey Produce Co., 101 Ia. 141; Dows v. National Exchange Bank, 91 U.S. 618; Mo. Pac. Ry. Co. v. Heidenheimer, 82 Tex. 195; Union Pac. Ry. Co., v. Johnson, 45 Neb. 57; Midland National Bank v. Mo. Pac. Ry. Co., 132 Mo. 492; Landa v. Lattin, 19 Tex. Civ. App., 246; Dickens v. Merchant's Elevator Co., 44 Mo. App., 498; Lee v. Bowen, 5 Biss. U.S. 154; Emery v. Irving National Bank, 25 Ohio St. 360; Halsey v. Warden, 25 Kan. 128; First National Bank v. Dearborn, 115 Mass. 219; Fifth National Bank v. Bayley, 115 Mass. 228; Conrad v. Allen Ins. Co., 1 Peters, 445.

OPINION

WHITFIELD, C. J.

This case falls within Miller v. Bank, 76 Miss. 84 (23 So. 439), which is in accord with and supported by Landa v. Lattin, 19 Tex. Civ. App. 246 (46 S.W. 48); Bank v. White, 65 Mo.App. 677, and Finch v. Gregg, 126 N.C. 176; 35 S.E. 251; 49 L. R. A., 679. We especially refer to the reasoning in Landa v. Lattin as thoroughly sound. There are cases to the contrary of our view, but they clearly fail to apprehend the true nature of this sort of transaction. The bank buying the draft and bill of lading is bound to comply with all the terms of the contract between seller and buyer. It is placed, as to the buyer, in the exact situation in which its assignor stood. We quote, to adopt, the following from the Texas court of civil appeals:

"The banks know that shipments of this character are seldom made without some understanding between the original assignor and the original assignee (the person to be notified). The real inquiry is as to what effect should be given to this transaction, so far as it related to the rights of appellant Landa, under the contract between him and Lattin Bros. The correct rule concerning the rights of a purchaser or an assignee by the transfer of a bill of lading, and the quasi quality of negotiability of such instruments, is thus stated in the fourth volume of the second edition of the Am. & Eng. Enc. Law (page 549), where it is said: 'While the transfer of bills of lading may pass the title to the goods, unless the common law has been modified by statute these instruments are not negotiable, in the sense in which that term is applied to bills and notes and other negotiable instruments of a like character. Although it has sometimes been said that a bill of lading is negotiable, nothing more is meant by this than that the transfer of the bill of lading passes to the transferee the title of the transferor to the goods described therein. Negotiability may be predicated of bills of exchange and promissory notes because they are representatives of money, which is itself negotiable to the extent that it cannot be reclaimed from any one who receives it in good faith, for value. On the other hand, bills of lading do not stand as representatives of money, but of the goods therein described, and as chattels are not negotiable, that quality cannot be given to the symbol; no greater effect can be given to the transfer of the symbol than to that of the thing which it represents. The transfer of a bill of lading, then, by the person in possession of the instrument, can give no higher title than would the transfer of the property itself by the same person. Hence it may be stated as a general rule that, where bills of lading are made negotiable by statute, the holder of a bill of lading, in the absence of either title to the goods or authority to transfer them in himself, cannot, by a transfer of the instrument, pass the right of property in the goods, even to a bona fide purchaser for value; he can convey no greater rights than he himself has.' The supreme court, in support of the text, in the case of Shaw v. Bank, 101 U.S. 557 at 557-564 (25...