Case ID: ny-super-ct_52/html/0334-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE BANK OF MONTREAL, Appellant, v. CARL L. RECKNAGLE, et al., Respondents.
    
      Letter of credit, proposal for, telegram as to, to be const/rued together—condition precedent, construction as to—draft to be drawn against bills of lading of particular article—non-liability to reimburse if the bills of lading do not purport to be of that article.
    
    Defendants, on December 1, 1881, requested plaintiff’s agent to telegraph authority to Vogel & Co., Hong Kong, at six months, to draw for their account against consular invoice and full set of bills of lading of 2,500 bales of manila hemp, per “ Robinson.” Accordingly, plaintiff’s agent, on the same day, telegraphed Vogel & Co., at Hong Kong, “ Credit 608 six-months, issued Recknagei . . documents 2,500 bales manila hemp, per Robinson . . Bank of Montreal.” The next day, a letter of credit, dated December 1, 1881, was made out by plaintiff’s agents, authorizing Vogel & Co., of Hong Kong, to value on plaintiff at London, against goods shipped per Robinson, for a specified sum, to be used as they might direct, for invoice cost of 2,500 bales of manila hemp, at four pounds per bale, on a basis of eight shillings sterling freight filled up in the bill of lading. The letter of credit required advices of the bills to be given in original and duplicate, and accompanied by bill of lading filled up to. order of agents of Bank of Montreal, New York, with abstract of invoice indorsed thereon for the property shipped as above. A note at the foot required the invoice of shipments to be accompanied by U. S. consul’s certificate. Defendants, by letter dated December J, 1881, agreed “to provide for all bills which shall be drawn and accepted under ” the letter of credit, “by payment of the amount thereof to you in New York.” The letter of credit was sent by mail to Vogel & Co. Before receiving the letter of credit, Vogel & Co. drew their bills on plaintiff at London. Each draft stated on its face that it was drawn against bales of manila hemp, was accompanied by bills of lading for bales of merchandise, and a letter of advice describing the shipment referred to in the draft as of “bales of hemp.” On each bill of lading was indorsed what were called abstracts of invoices describing the shipment as of manila hemp. On these documents plaintiff’s agent in London honored the three drafts. The shipment represented by one of the bills of lading against which one of the drafts was drawn, was'in fact of a requisite number of bales of manila hemp. As to this draft, no question arose. The shipments represented by the other bills of lading were in fact of matting. The questions in the case arose as to the drafts drawn against these latter bills of lading. It appeared that the abstract of invoices endorsed on the bills of lading was made by Vogel & Go., after the bills had been signed and delivered to them by the captain and without his knowledge or consent. It also appeared that the size, outward appearance and packing of matting, and of manila, were entirely dissimilar, and the two were easily distinguishable.
    
      Held, that defendants’ request, the telegram, and the letter of credit must all be considered together to know the agreement. So considering them, the agreement called, among other things, for bills of lading of manila hemp, as a condition precedent to the payment of bills drawn under the agreement, and the responsibility of defendants rested solely upon whether this condition precedent had been complied with; That the nature of the relation between Vogel & Co. and the defendants, or of the interest of defendants in the hemp, is therefore immaterial; so, also, is the fact that Vogel & Co. committed the fraud of shipping matting instead of hemp, the agreement providing in substance for defendants’ protection against the acts of their agents, if Vogel & Co. were agents ; That it followed, since the bills of lading, against which the two drafts in question were drawn, were simply of “ bales of merchandise,” and since the shipments represented by such bills of lading were in fact of matting and not manila hemp, whereby a loss ensued, that plaintiff was not entitled to be reimbursed by defendants the money paid on such drafts.
    Before Sedgwick, Ch. J., and Van Vorst, J.
    
      Decided December 7, 1885.
    Appeal by plaintiff from judgment entered upon findings, &c., of judge at special term.
    The complaint demanded judgment that defendants pay to plaintiff the amount of two acceptances, made by plaintiff, under a letter of credit issued by plaintiff at request of defendants, and paid by plaintiff, the defendants having promised to indemnify the plaintiff ; and that a pledge of certain certificates of shares, as security for defendants’ performances of their promise, should be enforced by sale, &c.
    Further facts appear in the opinion.
    
      Lord, Day & Lord, attorneys, and George De Forest Lord, of counsel for appellant, argued:
    I. The telegram and the letter of credit are in no sense separate contracts. Circumstances, however, may make it necessary to consider what the respective rights and obligations of the plaintiff and defendants are with reference to each of these instruments taken by itself. 1. The plaintiff and defendants clearly intended only to make one contract between themselves. The existence and employment of these two instruments in these transactions, must therefore produce the following effects upon the mutual relations between the parties t (a) If the conditions on which Vogel’s authority to draw, as stated in the telegram, were less stringent than those stated in the letter of credit, holders of drafts so drawn would be entitled to acceptance, notwithstanding the more stringent terms of the letter of credit might not have been complied with; and the defendants would be bound for reimbursement to the plaintiff. (5) But if the terms of the letter of credit were less stringent than those of the telegram, the plaintiff would still be bound, as between itself and the defendants, to accept all drafts which should comply with these less stringent terms, even though the holders of the drafts might not have complied with the more stringent requirements of the telegram. These distinctions are not fanciful, and may become very important in considering this case. In order that the court may easily determine the effect of them, the following differences between the two instruments are pointed out. 1. The telegram gives authority to draw against “documents 2,500 bales manila hemp.” This is the only condition which it imposes. 2. The letter of credit authorizes Vogel & Oo. to draw “ against goods shipped per Robinson. . . for any sum or sums not exceeding the aggregate £10,000, to be used as they (i. e., Vogel &Co.,) may direct for invoice cost of 2,500 bales manila hemp, &c.” As the drafts in question were actually drawn and negotiated before the letter of credit reached China, the discussion should properly turn first upon the effect of the telegram.
    II. The construction of the two instruments should lean, if anything, towards protecting persons who have honestly parted with their money upon the faith of the instruments; and if anything in them is doubtful or ambiguous, parties acting in reliance upon them should have the benefit of any reasonable interpretation of which they are capable. A letter of credit bears a strong analogy to a guaranty, and in making the following citations, anything said concerning guaranties is considered as. applying a fortiori to letters of credit: Douglas v. Reynolds, 7 Pet. 123 (1833) ; Lawrence v. McCalmont, 2 How. Sup. Ct. 449 (1844); Drummond v. Prestman, 12 Wheat. 515 (1827); Gates v. McKee, 13 N. Y. 235 (1855) ;White’s Bk. v. Myles, 73 N. Y. 341 (1878); Gelpcke v. Quentell, 59 Barb. 264 (1871); Drummond v. Prestman, 12 Wheat. 515 (1827); Bell v. Bruen, 1 How. Sup. Ct. 169 (1843); Dobbin v. Bradley, 17 Wend. 422. In. applying to these two instruments the rules of construction thus laid down, the court should ask itself the following questions, viz.: 1. Considering the nature of the-transaction in hand, and also the conditions and circumstances under which it was to be carried out, what must, the parties be supposed to have intended by the language, used in these instruments ? 2-. Is the language, so interpreted, fairly capable of the meaning evidently put upon, it (a) by the persons who purchased the drafts in China, and (b) by the plaintiff when it accepted the drafts in London? If .it is, then the parties who have advanced their money on the faith of that meaning should be protected.
    III. The language of the telegram fully justified parties in China in purchasing these drafts upon the documents presented by Vogel & Co., therefore the plaintiff was bound to accept the drafts, and the defendants were bound to reimburse plaintiff. The documents so presented came fairly and reasonably within the description contained in the telegram, viz.: “ documents 2,500 bales manila hemp.” Purchasers of drafts were entitled to have them honored. The documents upon which these drafts were actually negotiated are all before the court, and do reasonably come within that description. They were as follows, viz.: bills of lading for certain “merchandise ”—the marks and numbers of bales of which are duly specified; invoices signed by Vogel & Co.; letters of advice, also signed by Vogel & Co. No other “ documents” ever accompany drafts drawn under such credits. In these Vogel & Co., in every paper emanating from them, viz.: invoices, drafts, and letters of advice, have unequivocally stated the property to be “manila hemp.” The only papers in which it is not thus specifically described are the bills of lading signed by the ship-master. The defendants’ contention here is, that because the bills of lading only acknowledged the receipt of “ merchandise,” without stating that such merchandise was manila hemp—therefore these documents were not “ documents 2,500 bales manila hemp ” within any fair and reasonable meaning of the telegram. This contention is not sound if the court considers that the parties intended or expected the drafts to be negotiated on the faith of Vogel’s statements as to the nature of the property shipped. They have again and again declared it to be manila hemp. It involves the assumption that both parties to this credit transaction—the defendants and the plaintiff—intended to rely, in the most important matter connected with it, not upon the statement of Vogel & Co., whom they both knew, and whom the defendants were entrusting with the use of the money, but only upon the statements of the master of the. ship “R Robinson,” whom they probably had neither of them heard of before. Vogel & Co. had purchased and shipped the property on Recknagle’s behalf—and they distinctly declared it to be manila hemp. The shipmaster described the property in property in general terms which in no way contradicted this statement. Why should not such statements as to the nature of the shipments be satisfactory ? Indeed, when these documents are all taken together—each filling out and explaining the other—would not any merchant or banker reasonably and fairly consider them to be “documents” for 2,020 bales manila hemp ? Everybody to whom they have been presented has so considered them —the purchasers of the drafts in China—the bank in London who accepted the drafts—and the defendants in New York, who receipted for them and entered the property as manila hemp. The improbability that the parties intended that the master’s statement as to the nature of the shipments should be alone, or even chiefly, relied on by purchasers of the drafts, is increased when it is considered (a) that it could not be certain that the master would be willing to state in a bill of lading the character of the merchandise, and (6) that whatever statement he might make would necessarily be so qualified and restricted as to furnish no real protection to either the plaintiff or defendants. It can hardly, be presumed that the plaintiff and defendants intended to insist—as a condition to the negotiation of those drafts—upon the giving of a bill of lading in a form which any prudent shipmaster would refuse to give, at least without so guarding it that no practical benefit would be obtained from it. The following citations from authorities are pertinent here : Leggett on Bills Lading, 13; 1 Parsons on Shipping, 191; Nelson v. Stephenson, 5 Duer, 549. Suppose, therefore, in the case before the court the master had refused—as in fact he may have done—to commit himself as to the nature of the property entrusted to him by any description of the contents of the bales, he would have been acting quite within his rights, as is well known to all the commercial world. Can the defendants, therefore, reasonably insist that persons dealing with Vogel on the faith of that telegram should have known that they were only to take the drafts when accompanied by bills of lading in a form which the master might refuse to sign, and that they were not to take them if the bills of lading were in the only form which Vogel & Co. could properly demand from the ship % But even if the master had described this property not as “ merchandise ” but as “manila hemp,” he would only have done so in a way which would have furnished no protection to the defendants ; for he would surely have added qualifying words such as “said to be, &c.,” or “weight and contents unknown”; the effect of which would be to deprive the previous description of all value. The latter expression appears, in fact, in these very bills of lading, And where such words "appear neither the master nor the ship are bound by such a description (Lebeau v. Gen. Steam Nav. Co., 42 L. J. (N. S.) C. P. 1; Jessell v. Bath, 36 L. J. (N. S.) Exch. 149). If the master in this case had used the expression “said to be manila hemp,” even the defendants could not have questioned the regularity of the bills of lading. Tet that would only have been a repetition by him of "Vogel’s statements to the same effect. But if intending purchasers of these drafts would be authorized to act upon such a repetition of Vogel’s statements coming through a third party, why should they not act upon Vogel’s direct statements to the same effect as contained in all the other documents ? Again, therefore, it is insisted that any interpretation of this telegram' which should make such a valueless statement a condition precedent to the negotiation of drafts drawn under it is unreasonable and absurd (Lebeau v. Gen. Steam Nav. Co., 43 L. J. N. S. C. P. 1, 1872; Clark v. Barnwell, 12 How. Sup. Ct. 272).
    IV. But the parties who purchased these drafts in China upon these “documents” would be entitled to hold the bank and Becknagle for their payment—not only because such documents might farly be considered such as the bank and Becknagle intended to have them rely upon, but also because Vogel & Go., being Becknagle’s agents for the purchase and shipment of the hemp, their statements in that regard would be blinding upon Becknagle. This" would be apparent, even to persons who might see only the telegram. But the letter of credit—by which especially the mutual relations between the plaintiffs and defendants are to be governed—is still more explicit. Assuming, therefore, that Vogel & Co. were Racknagle’s agents to purchase and ship these goods, their statements as to what they had purchased and shipped bind the defendants (Merchants’ Bk v. Griswold, 72 N. Y. 472, 1878 ; North River Bk. v. Aymar, 3 Hill, 262, 1842 ; Farmers’ & Mechs. Bk. v. Butchers’ & Dr. Bk., 16 N. Y. 125, 1857; Griswold v. Haven, 25 N. Y. 595, 1862).
    V. But assuming that the relations between the plaintiff and Recknagle & Co., except so far as they may be fixed by obligations which both may have assumed to strangers, under the telegram, are contained in the letter of credit alone, the acceptance of these drafts is fully justified. This has been sufficiently discussed. The written words in the letter of credit “for invoice cost of 2,500 bales of manila hemp ” are not attached to, and form no part of, Vogel &. Co.’s authority to draw, but only restrict their use of the money. They were authorized to draw against goods, but were charged to use the money in purchasing hemp. That is all. The defendant seeks to interpret this letter of credit as though it had read “ to draw against 2,500 bales manila hemp, etc.” The instrument itself reads otherwise.
    VI. 1. Everything which the letter of credit imposes as a condition of acceptance has been complied with. With the single exception that the property was described as “merchandise” instead of “'manila hemp” in the bills of lading, the defendants even cannot claim a deviation from the strictest regularity. It is respectfully insisted that this was no irregularity. 2. But the case of the bank under the letter of credit is quite as strong in another light. They were bound only to the exercise of proper mercantile caution in accepting these bills. If to a careful business man the documents which accompanied these drafts might fairly be considered to represent 2,020 bales manila hemp, then the bank was authorized to accept, ■ and the defendants must bear the consequences of their agent’s fraud. It appears in this case that even the defendants themselves, when they took these very bills of lading from plaintiffs’ agents in New York, receipted for them as 2,020 bales manila hemp. Why should they now complain of the plaintiff for doing the same thing ? 3. Again, the plaintiff’s position under the letter of credit was one of great responsibility, involving not only its own credit, but that of Vogel & Co., and of the defendants here. If, therefore, there was any ambiguity, either in the letter of credit or in the documents presented, and the plaintiff has acted honestly and reasonably, in view of all the circumstances, it should be protected. Who will say, on reading the letter of credit, that drafts drawn against “ merchandise ” were not regular, under an authority to draw against “goods.” So also, who would venture to say that bills of lading for “ merchandise ” accompanied by other genuine documents stating it to be manila hemp, did not represent such hemp within the legitimate meaning of the letter of credit. As matter of fact, one of those bills of lading did represent hemp. Suppose they had all represented hemp, like this one, would not the plaintiff have been hable, if it had refused acceptance ? But if it would have been liable for refusing, then it was justified in accepting.
    VII. But the following adjudicated case seems to completely cover the case at bar, and to establish the principle which is conclusive in plaintiff’s favor : Woods v. Thiedemann (Exch.) 1862, 1 Hurlst. and Cottmann, 478.
    
      Blatchford, Seward, Griswold & Da Costa, attorneys, and Charles M. Da Costa, of counsel for respondents, argued:
    I. The question is narrowed to the consideration of the telegraphic credit, because the drafts were drawn solely under the telegraphic credit, and no drafts were ever drawn under the letter of credit.
    II. The inquiry is, now, pertinent—a. What telegraphic credit did Messrs. Becknagle & Company request the Bank of Montreal to send to Vogel & Co., and, b. How did the Bank of Montreal comply with such instructions ? The evidence is uncontradicted. It is in writing. The word “documents,” used in the plaintiff’s dispatch, was a short way of expressing the words, “against consular invoices and full set bills of lading,” used in the request of the defendants. The evidence is uncontradicted, that the plaintiff did not observe all the terms upon which the credit was opened, because it accepted and paid drafts which were not accompanied by bills of lading for bales of manila hemp, but only for “bales of merchandise.” The departure from such instructions relieved the defendants from any liability, if such departure has caused the loss. There can be no dispute that such departure did have that result.
    III. The law simply utters the suggestion of common justice and common sense in declaring that: “ When one of two innocent persons must suffer from the treacherous act of a third, he who gave the aggressor the means of doing the wrong, must bear the consequences of the act.” The bank gave the aggressor the means of doing wrong, by accepting drafts, which it was not bound to accept, because not accompanied by the documents on which the acceptance was promised.
    IY. Neither the plaintiff nor the plaintiff’s New York branch ever sent a copy of the telegraphic credit to the manager of the plaintiff from or at London, or informed him of its contents. If, then, the terms and conditions of such letter of credit are at variance with the telegraphic credit, it is clear that the loss arising from the negligence of the plaintiff’s agents in New York, in not sending to London a copy of the telegraphic credit, and in themselves determining that the letter of credit was the exact equivalent of the telegraphic credit, must be visited upon it.
    Y. The rule is elementary that : “If the guaranty propose a credit, that particular credit must be granted, or the guarantor will not be bound ” (Daniel on Negotiable Instruments, § 1756 ; Walrath v. Thompson, 6 Hill, 540 : Ulster Co. Bank v. Mcfarlan, 3 Den. 553). Loeb v. Hellman, 45 N. Y. Super. Ct. 336 ; aff’d, 83 N. Y. 601, is instructive on this point. Nor are there wanting analogies in the law (Lovatt v. Hamilton, 5 Mees. & W. 639 ; Johnson v. Macdonald, 9 Id. 600 ; Welsh v. Gossler, 89 N. Y. 540, 545, 548 ; Bowers v. Shaw, L. R. 2 App. Cas. 455, 480 ; Borrowman v. Drayton, L. R. 2 Exch. Div. 15).
    VI. The defense interposed by the defendants herein is not technical, but meritorious and substantial. They knew the character and appearance of bales of manila hemp. They knew, therefore, that no shipmaster would sign a bill of lading for bales of manila hemp, when other merchandise was shipped in its stead. No master could be misled, for the evidence is uncontradicted that manila hemp is always shipped uncovered, so that it cannot pass for any other merchandise. It is true that the bills of lading contained the words “ weight and contents unknown,” but that expression would only qualify the words “bales of manila hemp” (had they been inserted in the bill of lading), if manila hemp were covered so that the master could not see for- himself whether it was manila hemp or not (Miller v. Hannibal & St. Jo. R. R. Co., 90 N. Y. 430). “Contents unknown,” when applied to a species of merchandise which can be determined by the eyes by inspection, without opening, is practically meaningless. Again, the defendants were entitled to the observance of the condition that the bills'of lading should be for manila hemp, because it afforded them protection against any wrong-doing ; for if the master issued bills of lading for manila hemp, when other merchandise was actually shipped, and money was advanced on the strength of the recitals contained in the bills of lading, both the master and the ship would be responsible (Myer v. Peck, 28 N. Y. 598, and cases cited ; Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 33 Hun, 589). Whatever doubt there may be, in view of the decisions in Schooner Freeman v. Buckingham (18 How. 182), and Pollard v. Vinton (105 U. S. 7), of the right of the defendants to proceed against the ship, on a bill of lading fraudulently issued by the master, the remedy therefor against the master and his share of the ship, if any, is undoubted in all jurisdictions.
    VII. It was intimated by the plaintiff’s counsel on the trial below, that it was not bound to greater diligence than the defendants were, and that, as the defendants executed, on the surrender to them of the bills- of lading, a trust receipt, specifying 2,020 bales of manila hemp, it showed that the plaintiff, in accepting the drafts on the same documents, had equal reason to believe that the shipments were of manila hemp. The argument is entirely fallacious, (a) - The liability of the defendants to respond to the. plaintiff’s demand cannot be determined by a subsequent act of the defendants, entirely disconnected with, and having no relation to, the incurring of their obligation to the plaintiff. However negligent the defendants may have been in giving to the plaintiff in New York such trust receipt, that would not relieve the plaintiff from the result of its negligence and improper acts, committed nearly three months before, in London, in their accepting the drafts without the proper accompanying documents. (&) Besides, the defendants had been thrice informed by the plaintiff that—■“ documents in order,” and had a right to rely on such statement, (c) Again, the defendants acted in the usual way. The trust receipt was filled in at the defendants’ office, and sent through their custom-house clerk to the plaintiff, and the bills of lading in exchange for such receipt were delivered to such clerk, and thereupon the clerk immediately took the documents to the custom-house for entry. As matter of fact, therefore, the defendants never saw the bills of lading until after the discovery of the fraud.
    VTII. The true rule applicable in this case may be thus stated, viz.: All that a banker is bound to do when he issues a credit against documents, is to see that bills of lading, professing on their face, in the ordinary form, to represent a consignment of the specific merchandise, under which he has authorized the advances, accompany the draft, and that the draft is not in excess of the proper amount. If the banker adheres to that rule, he will have discharged his duty, even if it should turn out that the bills of lading were forgeries. But if he disregards the requirements of this rule, and loss happens, the banker must bear such loss (Young v. Lehman, 63 Ala. 524; Woods v. Thiedmann, 1 Hurlst. & Colt. 478, and Ulster Bank v. Synnott, 5 Ir. Eq. 595).
    IX. Should it, however, be held that the letter of credit directed to the plaintiff’s branch in London, and not the telegraphic credit, is the instrument which is to be the controlling one in this case, then it is submitted that, even in that view, all the foregoing suggestions áre alike applicable, and equally result in supporting the decision below, for—a. The letter of credit is on one of the usual printed forms of the plaintiff. b. The printed words (which are not usually followed by written ones), are “against goods shipped.” c. In the case at bar, these printed words are followed, and are necessarily qualified and controlled, by the subsequent written words, viz., “invoice cost of 2,500 bales manila hemp at £4 per bale, on a basis of 8s. sterling freight filled up in bill of lading, or at a proportionate reduced rate of advance if freight is higher.”
   By the Court.—Sedgwick, Ch. J.

On December 1, 1831, the defendants made written application to plaintiff’s agent in New York. It was as follows : “December 1, 1881, Please telegraph authority to Vogel & Co., Hong Kong, to draw at six months, for our account, against consular invoice and full set bills of lading of 2,500 bales manila hemp, p. Eobinson, at the rate of £4 per bale, pn a basis of 8s. sterling, freight filled up in bill of lading reducing advance if freight higher.”

In the evening of that day, the plaintiff’s agent sent to Vogel. & Co., the following telegraphic dispatch: “ Vogel, Hong Kong. Credit 608, six months, issued Becknagle ten thousand pounds, documents 2500 bales manila hemp, per Robinson, at £4 per bale, if freight eight shillings or reduced advances if freight higher.”

On the next day, December 2, 1881, a letter of credit was made out and delivered to defendants. It was dated December 1, 1881, and addressed to the agents of the plaintiff in London. It authorized Messrs. Vogel & Co., of Hong Kong, “ to value on you as follows, that is to say, against goods, shipped per Robinson, via Cape of Good Hope, at six months sight; for any sum or sums not exceeding in the aggregate £10,000 sterling, to be used as they may direct, for invoice cost of 2,500 bales of manila hemp at £4 per bale, on a basis of 8s. sterling freight filled up in bill of lading, or at a proportionate reduced rate of advance if the freight is higher, to be purchased for account of Recknagle & Co., New York, or whom it may concern and to be shipped to New York. . . The bills must be drawn in Hong Kong prior to the 1st day of June, 1882, and advice thereof given to you in original and duplicate, such advice to be accompanied by bill of lading, filled up to order of agents of the Bank of Montreal, New York, with abstract of invoice indorsed thereon, for the property shipped as above. All the bills of lading issued except the one mailed to us and the one retained by the captain of the vessel carrying the cargo, are to be forwarded direct to you. The original invoice, properly certified, to be also forwarded to us. . . And we hereby agree with the drawers, indorsers and bona fide holders of bills drawn in comph'ance with the terms of this credit, that the same shall be duly honored on presentation at your office in London.” To this was added a note, “ Please sign bills as drawn under Credit No. 608, dated December 1, 1881.” On the margin was written : “This credit opened by cable direct, December 1, 1881.”

This letter of credit was delivered to the defendants, and they by letter addressed to plaintiff’s agents in New York, and dated December, 1881, agreed “to provide for all bills which shall be drawn and accepted under ” the letter of credit “ by payment of the amount thereof to you in New York.”

The letter of credit was sent to Vogel & Co., on December 13, 1881. It was not sent before, because the first China mail from New York went on that day.

Vogel & Co., in Hong Kong, drew three bills, upon plaintiff at London, at six months, to their own order—the first, on December 3, was for £2,400; the second, on December 6, for £2,000 ; the third, on December 13, for £3,680. On the face of the drafts it was respectively stated that they were drawn against six hundred, five hundred, and nine hundred and twenty bales of manila hemp.

These drafts were forwarded to plaintiff’s agents in London. The draft for £2,400 was accompanied with a bill of lading for six hundred bales of merchandise ; that for £2,000, with a bill of lading for five hundred bales of merchandise ; and that for £3,6S0, with two bills of lading for nine hundred and twenty bales of merchandise. Each draft was accompanied with a letter of advice, describing the shipment referred to in it as of “ bales of hemp.” On each bill of lading was indorsed what were called abstracts of invoicés, and which described the shipment as of “manila hemp.” These indorsements were made by Vogel & Co. after the bills of lading had been signed and delivered to them by the captain, and without his knowledge or consent.

The bills of lading acknowledged the shipment of “ bales merchandise being marked and numbered as in the margin,” “weight and contents unknown.”

The plaintiff’s agents, upon the arrival of the ship in New York, delivered the documents that had accompanied the drafts, upon acceptance in London, to the defendants in trust. They gave a receipt which termed the property, “two thousand and twenty bales hemp.” They entered the goods at the custom-house and paid the duties, before inspecting the goods. In fact, there was of hemp in the various shipments, only five hundred bales. It is agreed that this accompanied the bill of lading for the draft of December T, for £2,000. All the other packages were of matting—an article of much less value than manila hemp.

The judge found, on the evidence before him, that “a roll of matting is a round cylindrical bale or roll, weighing about forty-five or fifty pounds and covered with a grass mat. A bale of of manila hemp, weighs, within a few pounds of three hundred, is square, like a cotton bale, and of not much less size. It is not covered by any matting or other covering. It is compressed and very hard, and strings of manila hemp are laid round it, as fastenings. On each bale of manila hemp, a patch is sewed, on which to put the mark; otherwise it has absolutely no covering.”

The matting was sold by agreement, and the proceeds of sale were about $2,000.

The plaintiff claims that the defendants are liable, under their agreement, for the amounts paid upon the acceptances of £2,400 and £3,080, and the complaint asks judgment for those amounts, together with judgment that certain security given by the defendants be sold, etc.

The defendants claim that their liability under their agreement is “to provide for all bills which shall be drawn and accepted under” the letter of credit, and that the drafts upon which the plaintiff now claims were not drawn and accepted under that letter; because, first, the bills were drawn under the telegraphic despatch, and, second, the plaintiff, in accepting the bills, did not observe the conditions upon which the defendants were to become liable, under either the telegraphic dispatch or the letter.

I am of the opinion, that the various instruments, that is, the original request of the defendants, the telegraphic despatch induced by it, sent to Hong Kong, and the letter of credit, have such intrinsic or expressed reference to each other, that they must all be considered at one time, to know the agreement.

It appears from them, that defendants’ responsibility to plaintiff was not to be based upon the nature of the relation between Vogel & Co. and the defendants, or the interest of the defendants in the hemp, but upon the character of certain instruments. If the instruments had the character described in the agreement, there was liability, otherwise, none. It is immaterial that Vogel & Co. committed the fraud of shipping matting and not hemp; for, assuming that they were agents of defendants, the agreement was that the acceptance and payment of the drafts should not create responsibility on the defendants’ part, unless the documents were of a certain kind. There was provision, in substance, for a protection of defendants against the acts of their agents, if Vogel & Co. were agents.

It is clear that the document most important to the interests of both parties was to be the bill of lading. There might be a controversy as to whether the letter of credit required that a consular invoice should accompany the draft; but it and the despatch and the written request, call for a bill of lading, The request refers to “bills of lading of 2,500 bales of manila hemp.” The despatch includes bills of lading when it refers to “ documents 2,500 bales of manila hemp.” The letter of credit requires the delivery of “bill of lading . . for the property ship-. ped as above; ” that is, the 2,500 bales of manila hemp mentioned above. And in truth, all the other documents—the invoice, the consular copy of it, the letter of advice—were of inferior importance, because they were of such slight import as to the fact of hemp being shipped and not something else.

The important question is, what kind of a bill of lading was intended by the parties ? At the present point of time, the interest of the plaintiff is to make the kind of bill less stringent than the defendants now insist upon. When the contract was made, it was the interest equally of both parties, to have the bill of the utmost significance practicable, as to the assurance from it that hemp was the article shipped. They evidently, as the learned counsel for appellant claims, referred to the contingencies of actual shipment, and not to such a bill of lading as a master would have the right to refuse to sign.

The respondents do not claim that.they were not to be liable if in fact hemp was not shipped, without regard to the character of the bill of lading. They do claim that the bill should specifically refer to the shipment as one of manila hemp.

Both parties desired a bill of lading that it was possible for a shipper to procure' if he shipped hemp. And they wished it be of such a kind as from its effect as evidence, and its guaranties of certain rights in an action against the master, the owner, or the ship, would lessen the chances that the shipment might be something other than hemp. In other words, the bill of lading was to be such as a shipper of hemp, using his legal rights under the law merchant, according to the custom of merchants, could procure, and which, on its face, would show, as far as possible, as against the shipper and the master, that the shipment was of hemp. The right of the shipper would be correlative to the right of the master to limit responsibility under the bill to a lawful extent.

It was suggested that bills of lading seldom referred to the quality of the shipment. Oases reported, however, show otherwise. The old form in" Abbott on Shipping (ed. of 1856, 235), is a bill of lading for “twenty bales containing one hundred pieces of broadcloth marked and numbered per margin.” Smith Mercantile Law, 376, repeats this form. The Oolumbo (3 Blatch. 521) refers to a bill of lading of casks “ containing bristles.” The Bellona (4 Ben. 503) refers to a bill of lading that described the shipment of “ boxes of raisins.” Lebeau v. Gen. Steam Nav. Co. (8 L. R. C. P. 88), contains a bill of lading of “linen goods.” Fassett v. Ruark (3 Ann. La. 694) concerned a bill of lading for “thirty-three bales and twelve cases domestics.”

Much does not seem to be said in the books specifically of a right of a shipper to have the quality of the goods shipped described in the bill of lading, but the principles given as to the rights of the master to limit responsibility, imply much on this subject.

In Abbott on Shipping, 252 (ed. of 1856), is a statement of the law that implies that a shipper has a right to some sort of description of the quality, if that quality can be known by the master. “If there is any dispute about the quantity or condition of the goods, or if the contents of casks or bales are unknown, the words of the bill of lading should be varied accordingly.

“By the French ordinance it is required that bills of lading should contain the quality, quantity and marks of the merchandise, &c. It is obvious that the quality, and frequently also the quantity of the goods, must be unknown to the master ; and the commentator (Valin) on the ordinance informs us that by the quality, the exterior and apparent quality is only meant, and further, that it is usual for the master to insert words denoting that the quality and quantity are only according to the representation of the merchant, of which practice he' approves, &c.”

In Parsons’ Maritime Law, 143 (ed. of 1859), it is said : “ The bills of lading are evidence against the master or the owner of the ship, not only as to the reception of the merchandise, but as to any material fact stated in them, respecting the quantity or quality or any other element in the description of the goods. It is, therefore, usual to describe them only as so many boxes or bales, or parcels numbered and marked as per margin. Sometimes the words contents unknown, or said to contain, &c. are added, and if the words ‘ containing, &c.’ are added, which is also not unusual, the master and ship are held only to deliver the boxes as they were received by them.”

It is evident, that customarily the shipper and the master, at the time of forming the bill of lading, have their attention fixed upon what statement shall be made in it as to the quality of the merchandise. It seems to be a reasonable demand of the shipper, that so far as the quality is disclosed by the external appearance of the shipment, that quality shall be given in the bill of lading. The object in part of any statement as to the shipment, is that of identifying the latter, and there is no reason for refusing to do that by description of quality when it-appears.

The master, it is true, may add the words that were added in this case, “ contents unknown,” in a proper-case ; that is, when the contents do not appear. But-should there be a statement of the quality of the shipment, these added words will not neutralize the statement, but only qualify it, so that the whole will be considered to mean that the external appearance, if there be an. external appearance, was of the quality specified.

The cases cited in Lawson on Contract of Carriers,, § 207, support the statement of the law on this point: “ Value and contents unknown.’ These words exclude-the inference of any admission by the carrier as to the-quantity or quality of the contents of the package of the-time of delivery, beyond what is visible to the eye or-apparent from handling it. Nothing is implied but the-receipt of the property in good order externally, and the-carrier may show by parol that the value and contents were below the estimate placed upon them by the shipper (The California, 2 Sawy. 12 ; The Columbo, 3 Blatchf 521; Clark v. Barnwell, 12 How. [U. S.] 272).” A receipt-for boxes of raisins would imply the receipt of “boxes-filled with raisins ” (The Bellona, 4 Ben. 503 ; 2 La. Ann. 694; Lebeau v. Genl. Steam Nav. Co., L. R. 8 C. P. 88).

In the present case, the evidence is convincing that if' the shipment had been of manila hemp, it would have-had the external appearance of that article, and that a shipper, in the ordinary course of trade, might have procured a bill of lading, which, in appropriate words, would have signified that fact.

Practically, both the parties to this action would have had, in such a bill of lading, and in the circumstances which would give rise to such a bill, an important guard against the fraud that was practiced. For, on the facts, it would have been much more difficult to make a bale of something comparatively without value, that would have the external appearance of hemp, and in bales of the usual shape in trade, than to commit the fraud disclosed by this case. This, however, is not a test of the rights of the parties. The question is, was the bill of lading of the kind intended by the agreement of the parties ?

It was argued that the intention was to describe documents that, taken together, would import that the shipper had shipped hemp, and that such was the import of the documents generally, although one of them, in the bill of lading, used the word merchandise. As to this, it may be said that the documents were to be such as would be in London before the plaintiffs were to accept the bills of exchange, and that in fact there was in London, only the bills of lading, and an indorsement upon their backs of “abstracts of invoices.” These abstracts were no part of the bills of lading, were not supposed to be presented to the master, and had nothing to do with the identification of the kind of shipment that was in fact made. The security consisted of the bills of lading, and the intention was they should be of “ manila hemp.”

My opinion on the whole case is that the parties intended that the bill of lading should refer to manila hemp specifically. It is unnecessary to decide what form should have been adopted. If the form were “bales of manila hemp, contents unknown,” or “said to be,” or “having the appearance” of manila hemp, the parties would have had an assurance that is absent from the case.

Judgment affirmed, with costs.

Van Vorst, J., concurred.