# National Bank of Commerce of Boston v. Merchants' National Bank of Memphis

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United States Supreme Court
91 U.S. 92
National Bank of Commerce of Boston v. Merchants' National Bank of Memphis
ERROR to the Circuit Court of the United States for the District of Massachusetts.
This was a suit brought by the Merchants' National Bank of Memphis against the National Bank of Commerce of Boston for alleged negligence in surrendering three bills of lading attached to three drafts,-two at thirty days, and one on sight,-which were sent by the Metropolitan National Bank of New York to the defendant, who surrendered the bills of lading to the drawees upon their acceptance of the drafts. These were drawn against the cotton mentioned in the bills of lading. The defendant had no information that the drafts had been discounted by the Bank of Memphis, and no instructions either to surrender the bills upon acceptance, or to hold them until payment of the drafts. The defendant had received through the same bank in New York drafts to a large amount on the same parties, accompanied by bills of lading, which they had always surrendered on acceptance, except in one instance, when special instructions were given to hold the latter until the accompanying draft was paid.
A verdict was rendered for the plaintiff.
Several questions were raised in the court below; but it is not deemed material to mention any thing more than two portions of the charge of the court, which were as follows:--
'In the absence of any consent of the owner of the bill of exchange, other than such as may be implied from the mere fact of sending for collection a bill of exchange, the bank so receiving the two papers for collection would not be authorized to separate the bill of lading from the bill of exchange, and surrender it before the bill of exchange was paid.'
'If the Metropolitan Bank merely sent to the defendant bank the bill of exchange with the bills of lading attached 'for collection,' with no other instructions, either express or implied from the past relations of the parties, they would not be justified in surrendering on acceptance only.'
To both of these instructions the defendant excepted.
Messrs. H. W. Paine and H. C. Hutchins for plaintiff in error.
In the absence of instructions, the plaintiff in error was authorized to infer that the bills of lading were annexed to the drafts to secure their acceptance, and were to be surrendered on acceptance. Lanfear v. Blossom, 1 La. Ann. 148; Coventry v. Gladstone, L. R. 4 Eq. 493; Gurney v. Behrend, 3 Ell. & Bl. 622; Shepherd v. Harrison et al., L. R. 4 Q. B. 196; Schuchardt et al. v. Hall et al., 36 Md. 590; Bryan v. Nix, 4 M. & W. 775; Marine Bank of Chicago v. Wright et al., 48 N. Y. 1; Shepherd v. Harrison et al., L. R. H. of L. 5, 116; Wisconsin Bank v. Bank of British N. A., 21 Upper Canada Queen's Bench, 284; Clark v. Bank of Montreal, 13 Grant's Ch. (Upper Canada) 211.
Mr. W. G. Russell, contra.
The later authorities in England and this country hold, that the holder of a draft, discounted bona fide for value, with the bill of lading attached, holds it as security for payment, and not for acceptance merely. Gilbert v. Guignon, L. R. 8 Ch. 16 (1872); Seymour v. Newton, 105 Mass. 272; Newcomb v. Boston & Lowell R.R., 115 Mass. 230; Stollenwerck et al. v. Thacher et al., 115 Mass. 224. The bank which holds the bill of exchange and the bill of lading attached 'for collection' holds them in trust for both parties, and is under obligation not to detach one from the other.
MR. JUSTICE STRONG delivered the opinion of the court.

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This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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