Case ID: nc_175/html/0415-01.html
Source: Caselaw Access Project
Author: {"author": "IIokb, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE COMMERCIAL NATIONAL BANK OF RALEIGH v. THE SEABOARD AIR LINE RAILWAY COMPANY.
    (Filed 24 April, 1918.)
    1. Carriers of Goods — Principal and Agent — Bills of Lading — Purchasers for Value — Receipt of Goods — Defenses.
    A common carrier is not hound by a bill of lading issued by its agent unless the goods be actually received for shipment, and the principal is not estopped thereby from showing by parol that no goods were in fact received, although the bill has been transferred to a bona fide holder for value.
    2. Pleadings — Demurrer — Carrier of Goods — Bills of Lading — Receipt of Goods.
    Where a bank sues a carrier to recover on a bill of lading attached to a draft it had discounted, and the complaint alleges that the draft had been returned unpaid, that the plaintiff was informed and believed that the carrier did not receive the goods: Held, a demurrer was good.
    3. Carriers of Goods — Bills of Lading — Negotiable Instruments — Statutes.
    A bill of lading issued by the agent of the carrier is in the nature of a receipt, susceptible of explanation or contradiction, and is not negotiable in the ordinary application of the word to commercial paper; as to the effect on its negotiability by chapter 415, Laws of 1916, 39 W. S. Stat. at Large, part 1, p. 138, Qticere?
    
    Bkown, J., did not sit or take part in the decision of this case.
    Civil ACTION, heard on demurrer to complaint, before Stacy, J., at January Term, 1918, of Wake.
    The complaint alleged, in effect: “That it purchased for value, and is the owner of, certain bills of lading issued by the defendant company, through its local freight office in the city of Raleigh, which were made to the Raleigh Grain and Milling Company and endorsed to the order of plaintiff, on which bills of lading drafts were attached, drawn by said Raleigh Grain and Milling Company on the consignees, payable to plaintiff, which drafts plaintiffs discounted at their face value.”
    Then follows itemized statement of drafts and bills, giving names of consignees, etc., and aggregating $5,091.30.
    “That said drafts were returned ‘not paid/ with the information that no goods had been received by the consignees, and that plaintiff is informed and believes that the defendant, the railroad company, did not receive the goods as represented by the bills of lading and no shipments were made on account thereof, and that the Raleigh Grain and Milling-Company was totally insolvent.”
    Defendant demurs because it appears from the complaint that the goods, as represented by the bills of lading attached to the complaint, were not actually received by defendant, and defendant is not bound thereby, although they have been transferred to a bona fide holder for value, and that tbe copy of tbe form of bill annexed to complaint contains tbe notation, “Shipper’s load and count,” etc.
    There was judgment sustaining tbe demurrer, and plaintiff excepted and appealed.
    
      8. Brown Shepherd for plaintiff.
    
    
      Murray Allen for defendant.
    
   IIokb, J.

In Williams, Black & Co. v. R. R., 93 N. C., 42, it was held that “A common carrier is not bound by a bill of lading issued by its agent unless tbe goods be actually received for shipment and tbe principal is not estopped thereby from showing ‘by parol that no goods were in fact received, although the bill has been transferred to a bona fide holder for value.’ ”

This decision, fully approved in the more recent case of Peele v. R. R., 149 N. C., 390, has since been the accepted and unquestioned law of the State and to our minds the ruling is in accord with right reason and sustained by the decided weight of authority in other jurisdictions. Mo. R. R., v. McFaden, 154 U. S., 155; Pollard v. Vinton, 105 U. S., 7; Ray & Ray v. Northern Pacific R. R., 6 L. R. A. (N. S.), 302; Baltimore R. R. v. Wilkins, 44 Md., 11; National Bank of Commerce v. R. R., 44 Minn., 224.

The position and the principles upon which it may be properly made to rest are very impressively stated by Mitchell, J., in the Minnesota case, supra, as follows: “The reasoning by which this doctrine is usually supported is that a bill of lading is not negotiable in the sense in which a bill of exchange or promissory note is negotiable, where the purchaser need not look beyond the instrument itself; that so far as it is a receipt for the goods it is susceptible of explanation or contradiction, the same as any other receipt; that the whole question is one of the law of agency; that it is not within the scope of the authority of the shipping agent of a carrier to issue bills of lading where no property is in fact received for transportation; that the extent of his authority, either real or apparent, is to issue bills of lading for freight actually received; that his real and apparent authority, i. e., the power with which his principal has clothed him in the character in which he is held out to the world ... is the same, viz., to give bills of lading for goods received for transportation ; and that this limitation upon his authority is known to the commercial world, and therefore any person purchasing a bill of lading issued by the agent of a carrier acts at his own risk as respects the existence of the fact (the receipt of the goods) upon which alone the agent .has authority to issue the bill, the rule being that if the authority of an agent is known to be open for exercise only in a certain event or upon tbe happening of a certain contingency, or tbe performance of a certain condition, tbe occurrence of tbe event, or tbe happening of tbe contingency, or tbe performance of tbe condition must be ascertained by him who would avail himself of tbe results ensuing from tbe exercise of tbe authority. An examination of tbe authorities also shows that they apply tbe same principle whether tbe bill of lading was. issued fraudulently and collusively, or merely by mistake.”

And further in tbe opinion, while recognizing tbe force of tbe opposing position, going so far as to say that if tbe question was res integra, it might be allowed to prevail, tbe learned judge gives tbe practical suggestions in support of tbe court’s decision as follows:

“But, on tbe other band, it may be said that carriers are not in tbe business of issuing and dealing in bills of lading in tbe same sense in which bankers issue and deal .in bills of exchange-; that their business is transporting property; and that if tbe statements in tbe receipt part of bills of lading issued by any of their numerous station or local agents are to be held conclusive upon them, although false, it would open so wide a door for fraud and collusion that tbe disastrous consequences to tbe carrier would far outweigh tbe inconvenience resulting to tbe commercial world from tbe opposite rule. It is also to be admitted that it requires some temerity to attack either tbe policy or tbe soundness of a rule which seems to have stood tbe test of experience, which has been approved by so many eminent courts, and under which tbe most successful commercial nation in tbe world has developed and conducted her vast commerce ever since tbe inception of carriers’ bills of lading.” Suggestions that to our minds embody tbe weightier reason.

It is argued for tbe plaintiff that as a recent Federal statute, chapter 415, Laws 1916, 39 U. S. Stat. at Large, part 1, p. 538, makes these bills of lading negotiable, tbe question of public policy involved in these cases and so far as tbe Federal decisions are concerned, is no longer of weight'.

On a cursory examination of tbe statute in question, there is doubt if tbe law does or was intended to make bills of lading negotiable in tbe full sense of tbe term, that is, to tbe extent that ordinary commercial paper is so. Nat. Bank v. R. R., supra, and see an-interesting article on this subject in Michigan Law Beview for April, 1918, p. 402. But if this be conceded, tbe fact that such a law was deemed necessary to bring about a change and that Congress considered tbe subject with its attendant results of such perplexity and importance as to require a statute of 45 sections to deal with it adequately and safely, makes rather against tbe plaintiff’s position as to what tbe law now is, for ours is only tbe jus dicere and leads to tbe conclusion also that, if any change is found desirable, it should be by tbe law-making body, where all the practical suggestions that are presented in sucb a problem may be fully discussed and determined.

As now advised, we must adhere to our former decision and the judgment for defendant is affirmed.

Affirmed.