Case ID: sw_248/html/0663-01.html
Source: Caselaw Access Project
Author: {"author": "GERMAN, J. OURETON, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HINES, Director General of Railroads, v. SCOTT.
    (No. 394-3628.)
    (Commission of Appeals of Texas, Section “A.”
    Feb. 28, 1923.)
    1. Carriers <3=52(1) — “Bill of lading” is a receipt coupled, with an agreement for carriage according to terms expressed therein.
    A “bill of lading” does not stand for, or represent, the contract between the buyer and the seller but is a receipt given by the carrier for the goods, coupled with an agreement for their carriage according to the terms expressed in the bill.
    (Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Bill of Lading.]
    2. Sales <3=468(5) — On sale by sample, purchaser’s right of inspection not breached by seller shipping in own name with draft attached to bill of lading.
    In contracts of sale by sample, the purchaser has the right of inspection of the goods before consummating the contract, which right is not breached by the seller’s shipping the goods in his own name with draft attached to the bill of lading.
    3. Carriers <3=86 — Provision in bill of lading held not to limit purchaser’s right of inspection.
    Where a purchaser of apples, sold by sample, had the right of inspection before consummating the contract, a bill of lading provided that inspection should not be permitted “unless provided by law, or unless permission is indorsed on this original bill of lading, or given in writing by the shipper,” did not limit the purchaser’s right of inspection; the Car-mack Amendment (U. S. Comp. St. §§ 8604a, 8604aa), to comply with which the provision was adopted, containing no prohibition of inspection at destination.
    4. Carriers <3=86 — Provision in bill' of lading as to inspection held subject to waiver by carrier.
    A stipulation in a bill of lading that inspection would not be permitted unless provided by law, or unless permission was indorsed or given in writing by the shipper, being inserted for the protection of the carrier, may be waived by it.
    5. Carriers <3=88, 93 — Permission by carrier of inspection by purchaser of goods shipped' held not delivery nor conversion.
    Where apples sold by sample were shipped under an order bill of lading with draft attached, together with directions to notify the purchaser, that the carrier permitted the purchaser to enter the car and inspect the contents without taking up the draft and presenting the bill of lading, held not a delivery of the shipment, nor a conversion of the property, inspection without presenting bill having been made by the purchaser according to custom and the bill of lading impliedly authorizing inspection.
    6.Carriers <3=83 — Carrier not liable for inspection of shipment by purchaser without presenting bill of lading, where not resulting in loss or injury.
    Where apples were shipped under an order bill of lading with draft attached, which impliedly allowed inspection and the purchaser inspected the apples without presenting the bill of lading but refused to accept the shipment, whereupon it was sold by the seller’s agent, the carrier was not liable for the loss, it not appearing that the inspection by the purchaser resulted in loss, damage, or injury to the shipment; the Carmack Amendment (U. S. Comp. St. § 8604a) expressly limiting the liability of the carrier in interstate shipments in cases not amounting to conversion to loss, damage or injury caused by it.
    Certified Questions from Court of Civil Appeals of Third Supreme Judicial District.
    Action by Sam R. Scott against Walker D. Hines, Director General of Railroads, as agent. Judgment for plaintiff was reversed and rendered by the Court of Civil Appeals, and judgment rendered for defendant. Cause certified to the Supreme Court on motion for rehearing.
    Questions answered.
    Terry, Cavin & Mills, of Galveston, and Sanford & Harris, of Waco, for appellant.
    Alva Bryan and Witt, Terrell & Witt, all of Waco, for appellee.
   GERMAN, J.

Appellee, Sam R. Scott, filed this suit in the county court of Mc-Lennan county, Tex., against Walkar D. Hines, Director General of Railroads, Agent, for damages for wrongful delivery of a carload of apples shipped by him from Roswell, N. M., to Waco, Tex., about August 22, 1919. Judgment was rendered in his favor for $185, with 6 per cent, interest from August 27, 1919, making a total judgment of $191.78. Appeal was taken to the Court of Civil Appeals for the Third Supreme Judicial District, and that court reversed and rendered the judgment in favor of appellant Walker D. Hines, Agent; hut dissenting opinion was filed by Associate Justice Jenkins. On motion for rehearing, the cause was certified to the Supreme Court upon the questions hereinafter set out.

The findings of fact made by the trial court and the Court of Civil Appeals show that in August, 1919, the appellee contracted with Tumer-Coffield Company of Waco, Tex., to sell them a carload of merchantable apples f. o. b. Roswell, N. M., at $2 per box. No shipping instructions were given, but seller was directed by purchaser to indorse the bill of lading, draw a draft for the amount of purchase, attach same to the bill of lading, and send same to some bank in Waco. The sale of the apples was made by Walter Reese of Waco, Tex., acting for the seller, and the sale was made by sample. August 22, 1919, the carload of apples was delivered by ap-pellee to Walker D. Hines, Agent, at Roswell, N. M., the car comtaining 628 boxes of apples. A regular order form bill of lading was issued and delivered to appellee, showing that the shipment was consigned to the order of Sam R. Scotf, Waco, Tex., notify Turner-Coffield Company at Waco. The bill of lading contained the following provision:

“The surrender of this bill of lading properly indorsed shall be required before the delivery of the property. Inspection of property covered by this bill of lading will not be permitted unless provided by law or unless, permission is indorsed on this original bill of lading or given in writing by the shipper.”

The bill of lading was indorsed by appel-lee, who drew a draft for the sum of $1,256 on Turner-Coffield Company, which was attached to the bill of lading, and the same was sent in due course of business to the Eirst State Bank & Trust Company of Waco, Tex., and the hank was advised to notify Turner-Coffield Company.

About August 27, 1919, the carload' of apples arrived at Waco and was by the railway company placed on a private siding, which was used by Turner-Coffield Company for loading and unloading shipments. On the morning of August 28th, Turner-Coffield Company, having been advised of the arrival of the car, broke the seals and opened the car, removing several boxes of the apples, which were examined and inspected by them, and the boxes were replaced in the car, the door closed, and the shipment was refused by them. At the time of breaking the seals and inspecting the apples, Turner-Coffield Company had not paid the draft, and had not obtained the bill of lading, and did not present same to the appellant.

At the time of the transaction referred to, and for many years prior thereto, Turner-Coffield Company was and had been engaged in the wholesale business, receiving and sending out shipments of merchandise in carload lots. For a long time it had been their uniform custom on the arrival of merchandise in carload lots to open the cars and inspect the contents before presenting bill of lading, and before paying draft; and, if same was found satisfactory, to then pay the draft, obtain bill of lading, and deliver same to the carrier; and if the contents were not satisfactory, they would decline the shipment, refuse to pay the draft, and turn the shipment back into the hands of the shipper or the transportation company. This custom and practice of the Turner-Coffield Company was known to appellant, its agents, and representatives, at the time, and had been acquiesced in for some time prior to this particular transaction. However, the appellant and its agents and servants had no knowledge of the action of the Turner-Coffield Company in entering the car and inspecting the contents in this particular instance until after same had been accomplished. The original bill of lading was not presented to the appellant, and there was no indorsement on the bill of lading nor written permission given Turner-Coffield Company or any one else to enter the car and inspect the apples before producing the bill of lading. At the time of the transaction the hill of lading was in the possession of the First State Bank & Trust Company of Waco, where it could have been obtained by paying the draft attached. The Turaer-Oof-field Company, in opening said car and inspecting the contents, acted in accordance with the custom previously adopted, which custom was known to and acquiesced in by appellant.

The reasonable market value of the carload of, apples at Roswell, N. M., on August 27, 1919, was $1,256, and the reasonable market value of same at Waco at that date was $1,256, plus the cost of transportation.

After the refusal of the shipment by Turner-Coffield Company, upon order from the ap-pellee,1 the appellant delivered the car of apples to Walter' Reese, who handled and disposed of them at the request of the appellee; such instructions being given by appellee without prejudice to any cause of action he may have had against the appellant for wrongful delivery, or conversion, of the shipment. Reese realized from the sale of the apples the sum of $1,167.25, and paid therefrom the following items of expense: Freight, $185; storage, $52; demurrage, $8.24; commission on sales, $92; and the sum of $830.01 was paid to appellee. Reese could have sold the apples In the car at the time at $2 per box, but he put them in storage and sold them out in lots.

The damages claimed by appellee in his petition was the difference between $1,256, the value of the apples at Roswell, N. M., and the sum of $830.01 which he actually received. The trial court, it seems, allowed him judgment only for the item of $185 paid as freight, with 6 per cent, interest on same to the date of judgment.

The questions certified by the Honorable Court of Civil Appeals are as follows: (1) Was the conduct of the carrier, in permitting inspection by the buyer at the destination, either wrongful or unauthorized? (2) Did the bill of lading, by its terms, authorize the carrier to permit inspection? (3) If the inspection was unauthorized, did the facts pleaded and proved by appellee show damages which were the proximate result of the acts of the carrier, and recoverable by ap-pellee? (4) Was such a. breach of contract shown in permitting the inspection as would authorize the recovery of at least nominal damages?

We will consider questions 1 and 2 together, as they are in effect the-same. A bill of lading does not stand for or represent the contract between the buyer and the seller, but is a receipt given by the carrier for the goods, coupled with an agreement for tbeir carriage according to the terms expressed in the bill. As between the purchaser and the seller, the right of inspection is ordinarily dependent upon or governed by the terms of their contract, and not by the provisions of the bill of lading, unless the bill has special provisions relating thereto. The Court of Civil Appeals finds that “it is undisputed that the sale in this ease was by sample, the agent negotiating the sale having exhibited apples as a sample and as the basis for the sale.” It is well settled that in contracts of sale of this hind the purchaser has the right of inspection of the goods before consummating the contract, and this right is not abridged by the seller shipping the goods in his own name, with draft attached to the bill of lading. Pontiac Shoe Mfg. Co. v. Hamilton, 18 Tex. Civ. App. 283, 44 S. W. 405; Keeler v. Paulus Mfg. Co., 43 Tex. Civ. App. 555, 96 S. W. 1097; Mueller v. Simon (Tex. Civ. App.) 183 S. W. 63; McLane v. Swernemann & Schkade (Tex. Civ. App.) 189 S. W. 282; Pope v. Allis, 115 U. S. 363, 6 Sup. Ct. 69, 29 L. 33d. 393, and note. In such eases, if the seller refuses to give the buyer a reasonable opportunity for inspection, or the carrier refuses such opportunity, the purchaser has a right to reject the shipment. Pore v. Plant Seed Co. (Mo. App.) 232 S. W. 169, and cases there cited.

But it is urged that the following provision in the bill of lading was a limitation upon the right of'the purchaser to inspect the shipment, of apples about which thp controversy herein arose:

“The surrender of this bill of lading properly indorsed shall be required before the delivery of the property. Inspection of property covered by this bill of lading will not be permitted unless provided by law or unless permission is indorsed on this original bill of lading on given in writing by the shipper.”

As above stated, the right of TurnerCoffield Company to inspect the apples was incidental to, and a part of, their contract with the appellee, and it is our opinion that the stipulation above referred to placed no limitation thereon. The provision above quoted is a part of the uniform order bill of lading promulgated by the Interstate Commerce Commission June 22, 1908. It was adopted under an agreement between the shippers and transportation companies, having for its purpose a compliance with the provisions of the Carmack Act (U. S. Comp. St. §§ 8604a, 8604aa). The Carmack Act contained no provision prohibiting inspection of property at the point of destination. Where the rights of a shipper and purchaser are not regulated by their contract, the right of the buyer to inspect exists. Hutchinson on Carriers (3d Ed.) § 733; Elliott on. Railroads (3d Ed.) § The uniform order bill of lading was not intended to extend liability beyond the scope of the Carmack Amendment; consequently it has been held that the provision referred to in bills of lading placed no restriction on the right of the parties to contract with reference to inspection, and the right of the purchaser, in cases of sale by sample, to inspect at destination was left unimpaired. Earnest v. Railway Co., 149 App. Div. 330, 134 N. Y. Supp. 333. Besides such stipulations in a bill of lading will be considered as having been inserted for the protection of the carrier and may be waived by it. Famous Mfg. Co. v. Railway Co., 166 Iowa, 361, 147 N. W. 756; Nelson Crain Co. v. Railway Co., 174 Mich. 80, 140 N. W. 486. Both of these cases have received the approval of the Supreme Court of the United States in Pere Marquette Ry. Co. v. French, 254 U. S. 538, 41 Sup. Ct. 195, 65 L. Ed. 391. 2299.

The effect, then, of such provision in a bill of lading is this: The right of .the purchaser to an inspection under his contract with the seller is the same as it would be without‘such provision in the bill of lading. It is, however, a part of the contract of carriage. The carrier does not become liable by reason of such stipulation - for conversion, if it permits the shipment to be inspected by the purchaser. If such inspection results in loss, damage, or injury to the property, th’e carrier may be made to pay for such loss, damage, or injury.

Turner-Coffield Company having a right under their contract of purchase to inspect the apples when they arrived at Waco and to determine whether or not their contract of purchase had been complied with, it follows as between them and the appellee the conduct of the carrier in permitting the inspection was neither wrongful nor unauthorized. The carrier had a right to waive the stipulations, subject to liability, as above set out, and, if it did so, the bill of lading contained no restriction against an inspection, and therefore impliedly authorized same to be made.

We .therefore answer the first question, “No,” and the second question, “Yes.”

The third and fourth questions will be considered together, as they are closely related. This being an interstate shipment the rights and liabilities of the parties depend upon acts of Congress, the bill of lading, and common-law rules, as accepted and applied in the federal tribunals. Railway v. Rankin, 241 U. S. 319, 36 Sup. Ct. 555, 60 L. Ed. 1022, L. R. A. 1917A, 265. Appellee’s cause of action is based solely upon the theory that the appellant, in permitting an inspection of the apples, was guilty of conversion, as having made delivery of the shipment to a party not authorized to receive the same, contrary to the terms of the bill of lading. The federal courts have not directly passed upon the question as to whether or not the act of the carrier in permitting an inspection of the goods, as was done in this instance, amounts to an unauthorized delivery or conversion; hut the courts of various states have passed directly upon this question, and, so far as we are able to find, the decisions are unanimous. In addition, the Court of Civil Appeals at Texarkana has passed upon the question, in a case, however, where inspection was expressly allowed by the bill of lading. As we have concluded that the bill of lading in the present case impliedly authorized the inspection, and same was provided for in the contract between the buyer and seller, the opinion in the case by the Texar-kana court becomes applicable to this case. We have reference to the case of Pittman-Harrison Co. v. Fox Bros. (Tex. Civ. App.) 228 S. W. 579.

The decisions are in accord in holding that the conduct of the carrier in permitting the consignee- or the party who is to be notified under an order hill of lading to enter a car and inspect the contents does not constitute a delivery of the shipment or a conversion of the property. Bernie Mill & Gin Co. v. Railway Co. (Mo. App.) 228 S. W. 847; Model Mill Co. v. Railway Co., 136 Tenn. 211, 1S8 S. W. 936; Dudley v. Railway Co., 58 W. Va. 604, 52 S. E. 718, 3 L. R. A. (N. S.) 1335, 112 Am. St. Rep. 1027; Sloan v. Railway Co., 126 N. C. 487, 36 S. E. 21; Earnest v. Railway Co., supra; Yuille-Miller Co. v. Railway Co., 164 Mich. 58, 128 N. W. 1099; Berger-Crittenden Co. v. Railway Co., 159 Wis. 256, 150 N. W. 501; Elliott on Railroads (3d Ed.) § 2299.

A brief reference to some of these cases will be justified. In Earnest v. Railway Co., supra, plaintiff delivered to the carrier a carload of apples at Bath, N. Y., consigned to the order of the First National Bank of Wayland, N. Y., and destined for Chicago. Bill of lading containing the provision above quoted was delivered to plaintiff, and he attached same to a draft drawn by him on Train. Detterman & Ford of Chicago, and this draft was sent to a hank for collection. When the car arrived at Chicago, Train, Det-terman & Ford sent their employees to the yard, and with the consent of the carrier inspected about 16 barrels of the apples. After the inspection the apples were placed back into the car, the same was resealed, and the shipment refused. The plaintiff sued the railway company for conversion. After discussing the provisions of the bill of lading, considered in connection with the Carmack Act, the court used this language:

“In the present case the evidence undisput-ably establishes that the carrier at the point of destination permitted an inspection of the apples, and hence the defendant, in pursuance of the Carmack Act, must respond for whatever Joss resulted to the plaintiff by the breaking of the agreement. The extent, of the loss or injury the plaintiff must prove. There is no claim that the apples were injured by the-inspection, or that the refusal of the Chicago, firm to accept the apples, which they were not legally bound to purchase, was by reason of this inspection. There is not the slightest proof of any loss or damage or injury to the fruit. On the contrary, the proof shows that they were not injured at all by the inspection.The railroad company retained the actual possession of the property. Its dominion over it was not surrendered, and the plaintiff was promptly notified by Train, Letterman & Ford that they did not wish the apples, and plaintiff refused to receive them from the railroad company. It knew that possession of the apples was not to be given to the Chicago firm until it had honored the draft upon it. The railroad company did violate its agreement, and the measure of its liability for that breach was the loss or injury, to the apples.”

The case of Dudley v. Railroad Co., supra, also involved a shipment of apples. They were in barrels, consigned to the shipper, and were taken from the car and placed on the wagon of one Sharp, who had been notified of their arrival in compliance with instructions of the shipper. After being inspected, they were replaced in the car from which they had been taken, and Sharp refused to, accept the shipment. Sharp did not produce the bill of lading, or show any right to the the possession of them. The railroad company permitting the inspection was sued in . conversion. The Court of Appeals of West Virginia in commenting on the inspection and the effect of it, used this language:

“Sharp’s agent was simply permitted to enter the cars, set barrels out in his wagon, open them, and examine the apples. Then they were put back in the ear and it was resealed by the agent. It may be true that he had no right to do so, and that the defendant did wrong in permitting the inspection, no evidence of title or right to possession having been shown, but, it is a non sequitur, -to say, upon these facts, there was a delivery. It may have been hn unauthorized act of dominion over the property, but whose act was it? Clearly that of the railroad company, for the property was still in its actual and legal custody. It never parted with the possession. Not every wrongful act on the part of a common carrier, authorizes an action against it for a conversion. Where goods, intrusted to a common carrier, are injured only, the owner’s remedy is for damages for the injury, not their value. * * * What is the nature of the plaintiff’s injury here? Inspection did not injure the property, so far as disclosed. It prevented the consummation of a sale to Sharp. Can that constitute the basis of an action for the value of the property? That it could not is so obvious that no such claim is made,- and this branch of the contention is founded upon the extremely fanciful theory -of a technical delivery, for which no authority has been found.”

In Sloan v. Railway Co., supra, plaintiff had a contract with certain mills for the purchase of cotton, and took a bill of lading therefpr from the railway company “to or-de.r, notify S. B. Tanner, treasurer,” who was treasurer of the mills. Draft was drawn on the treasurer and attached to bill of lading. The railway company permitted the mills to examine the cotton without production of the bill of lading, in consequence whereof they refused to accept the cotton and pay the draft. Suit was for conversion of the cotton. The petition was held demur-rable, the court holding that the request to “notify” conferred on the mills as full right to inspect the cotton as if it had been the consignee; and further held that, if the cotton was wrongfully rejected, plaintiff’s cause of action was against the mills and not the railway company.

The other cases mahe similar holdings, and, as the recent case of Bernie Mill & Gin Co. v. Railway Co., cited above, gives a full review of other decisions, we deem it necessary to only make reference thereto. As to what damages are recoverable in cases where the carrier breaches some provision of the contract of carriage, and same does not constitute a wrongful delivery, the authorities are definite and certain. Being an interstate shipment the acts of Congress and decisions of the federal courts control. Section 8604a, U. S. Compiled Statutes, expressly limits liability of the carrier in cases not amounting to conversion to loss, damage, or injury caused by it. No provision of the Interstate Commerce Act (U. S. Comp. St. § 8563 et seq.) makes the carrier liable for merely permitting inspection contrary to the terms of the bill of lading, unless loss, damage, or injury results to the property therefrom. The statute thus having limited liability to loss, damage, or injury caused by the carrier, it excludes other liability. See Adams Express Co. v. Croninger, 226 U. S. 505, 33 Sup. Ct. 148, 57 L. Ed. 314, 44 L. R. A. (N. S.) 257; and Clemons Produce Co. v. R. R. Co., 203 Mo. App. 100, 219 S. W. 660.

The same principle is announced in the recent ease of Pere Marquette Ry. Co. v. French by the Supreme Court of the United States, 254 U. S. 538, 41 Sup. Ct. 195, 65 L. Ed. 391, where it is held that a failure of the railroad company to require a surrender of the bill of lading, even in case of wrongful delivery and conversion, will not subject the carrier to liability, unless loss to the property is suffered as a result of the failure to take up the bill.

Under the authorities cited it is not sufficient, to show a cause of action against the carrier, merely to show that the purchaser declined the shipment as a consequence of the inspection. In the present case there is no allegation or proof that the apples would have been accepted if the inspection had been refused. To constitute a cause of action against the carrier, it was necessary for appellee to show that there was loss, damage, or injury to the apples, which was the result of the inspection made by Turner-Coffield Company. The proof shows nothing of the kind. If the shipment was wrongfully rejected, appellee had a cause of action against Turner-Coffield Company. If it was rightfully rejected, there was no cause of action. The act of appellant had nothing to do with 'making the rejection either justified or wrongful.

We answer the third and fourth questions, “No.”

OURETON, C. J.

The opinion of the Commission of Appeals answering certified questions adopted, and ordered certified to the Court of Civil Appeals. 
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