Southern Ry. Co. v. W.A. Simpkins Co.

• Decision Date: 15 October 1919
• Docket Number: 255.
• Parties: SOUTHERN RY. CO. v. W. A. SIMPKINS CO. ET AL.
• Court: North Carolina Supreme Court

100 S.E. 418

178 N.C. 273

SOUTHERN RY. CO. v. W. A. SIMPKINS CO. ET AL.

No. 255.

Supreme Court of North Carolina

October 15, 1919

Appeal from Superior Court, Wake County; Allen, Judge.

Suit by the Southern Railway Company against the W. A. Simpkins Company and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Where a railroad marked bills of lading "freight prepaid" and gave credit solely to shipper, who represented an undisclosed principal, the principal was not liable to the railroad for the freight, where such principal without objection by the railroad settled with the shipper in good faith without notice that the freight had not been paid.

This is a suit brought by the plaintiff to recover the freight charges on seven cars of cotton seed shipped from Raleigh, N C., in interstate commerce, in the name of W. A. Simpkins Company; three cars being shipped October 18, 1912, to W. A Simpkins Company order notify J. P. Savant, New Orleans, La and three cars being shipped October 31st to the same order notify and the same consignee, and one car being shipped October 24th by W. A. Simpkins Company to itself order notify Frierson Company, Limited, Frierson, La. The complaint sets forth three causes of action, being: (1) That W. B. Drake, Jr., cashier, by virtue of a chattel mortgage not yet due, as mortgagee consenting, was liable for the shipping out and the turning into money by the mortgagor; (2) that the arrangements between the W. A. Simpkins Company and the Merchants' National Bank and W. B. Drake, Jr., cashier, were such as to constitute a partnership; and (3) that the assignment of the draft and bill of lading before these shipments left Raleigh to W. B. Drake, Jr., cashier, for the Merchants' National Bank, made them liable for the freight charges as assignee of the bill of lading.

There is no dispute as to the amount of the freight charges and the chattel mortgage on 26,000 bushels of cotton seed, the same reciting a $10,000 indebtedness due November 30, 1912 (four to seven weeks after the shipment took place), was introduced.

This mortgage was to Drake, cashier, and was executed in July, 1912, and was registered.

In October, 1912, W. A. Simpkins Company made seven shipments of cotton seed over the Southern Railroad to Southern points. The custom, which had existed between the said shipper and railroad for six or seven years, was that the railroad charged the freight, and "in ten days, two weeks or thirty days collection was made." "The Simpkins Company had a line of credit with the railroad, at the time these shipments were made." Referring to the B. L. it will be seen that the same had been marked "prepaid" before the seed left Raleigh. Plaintiff's witness states "that although the bill of lading was marked 'Freight prepaid,' it had not been prepaid, but credit had been extended to the Simpkins Company by the railroad and is still due the railroad."

Sight drafts were drawn on Savant and others, with bills of lading attached, and the defendant bank collected the drafts, in the usual course, and placed the proceeds to the credit of the Simpkins Company, and this company, by its checks on said bank, from time to time, drew out said funds, paying its debts and paying in part a mortgage debt to the bank.

The collections from the drafts amounted to about $6,000, of which $4,000 was retained by the bank on debts due by the Simpkins Company and the remainder paid out on its check.

At the conclusion of the evidence, his honor entered judgment of nonsuit, and plaintiff excepted and appealed.

A. B. Andrews and W. B. Snow, both of Raleigh, for appellant.

Robert W. Winston and J. C. Biggs, both of Raleigh, for appellees.

ALLEN J.

The plaintiff's counsel admit that there is no evidence of a partnership between the Simpkins Company and either of the defendants, and this cause of action is abandoned.

They, however, insist that the defendants are liable for the freight upon two grounds:

(1) That the Simpkins Company was the agent of Drake, cashier, in making the contract of shipment, and that Drake is liable on the contract as an undisclosed principal.

(2) That the defendant bank, having taken an assignment of drafts with bills of lading attached, and having collected the money thereon, is liable for the freight as the owner of the property.

There is no evidence of agency except such as arises from the relation of mortgagor and mortgagee, and while the mortgagor, left in possession of goods, which, in the contemplation of the parties, are to be disposed of by the mortgagor in the ordinary course of trade, is the agent of the mortgagee to the extent that he may pass the title to the goods, sold in the usual way, to a purchaser, freed of the mortgage lien ( Bynum v. Miller, 89 N.C. 393), which carries with it "the implied authority to use the necessary and proper means to that end" (Etheridge v. Hilliard, 100 N.C. 253, 6 S.E. 572), the plaintiff is not in a position to take advantage of this principle.

In the first place, if we assume that Drake is an undisclosed principal, and as such ordinarily liable on the contract of the agent, there is no evidence that either of the defendants had any notice that there was anything due for freight, and, on the contrary, the plaintiff marked the bills of lading "Freight prepaid," credit was given solely to the agent, the defendants afterwards, without objection by the plaintiff, settled with Simpkins Company, paying out on its check from the proceeds of the draft more than enough to pay the freight, and the plaintiff waited nearly three years before making any demand on the defendants, during which time the defendants had numerous opportunities to reimburse themselves, if liable for the freight.

"The qualification of the principal's liability to respond to his agent's contract, as stated in the earlier authorities mentioned, was narrowed by the interpretation adopted in Heald v. Kenworthy, 10 Exch. 739, to the effect that the principal is not discharged from full responsibility unless he has been led by the conduct of the seller to make payment to or settle with the agent; and the...