Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1875-12-01
Am IMPORTANT BANK CASE.
The nuty OF Collecting RanKs Z
Surrender Billie OF Ladlne.

NltEcc VI OutNluu OF INT
Supreme Court Of the United States
delivered by Mr.. Justice Strong, q
Washington, wherein the National Banl
of Commerce of Boston was the plain
tiff in error and the Merchants Nationa'
Bank of Memphis was the defendant il
error, from the District Of Massachu,
sets, is summarized below.
The court below Judge Shepley)
ruled that the collecting bank (the Ma
tional Bank Of Commerce) was liable
for surrendering-bills OF iading attached
to time drafts upon acceptance, even
without instructions TO hold.
The decision Of the court below has
been overruled by the SHpreme Court,
and the law settled that it is the duty OF
the collecting bank to surrender bills Of
lading upon acceptance of time drafts,
unless orders are given to hold.
Strong, 1.-The fundamental question
10 this case is whether q sill Of ladiug OF
merchandise deliverable to order, when
attached to a time draft, and forwarded
with the draft 70 an agent for collection,
without any special instructions, may be
surrendered to the drawee OF his accept
snce of the draft, or whether the agents
duty is to hold the bill of lading after
the acceptance for the payment. The
bills Of exchange we're drawn by cotton
brokers residing in Memphis, Tenn, on
Green Il Travis, merchants residing in
Boston. They we're drawn on account
of cotton shipped by the brokers to Bos-
ton, invoices OF which we're seat to Green
& Travis, and bills of lading we're taken
by the shippers, marked 10 case of two
shipments to order" and in case of
the third shipment marked for Green
& Travis, Boston, Mass" There was an
agreement between the shippers and the
drawees that the bill Of lading should be
surrendered on acceptance of the bills
Of exchange, but the existence Of this
agreement was not known by the Bank
of Memphis when that bank discounted
the drafts aud took with them the bills
of lading indorsed by the shippers.
Coneeding that bills of lading are
negotiable, and that their indorse-
ment and delivery pass the title
of the shippers to the property
specified in them, and, therefore, that
the plaintiffs when they discounted the
drafts ard took the Endorsed railroad re-
eeipts or bills of lading became the Own
ers of the cotton, it is still true they sent
the bills with the drafts to their CORE
spondents in New York, the Metropolitan
Bank, with no instructions to hold them
after acceptance. And the Metropolitan
Bank transmitted them to the defendants
in Boston, with no other instruction than
that the bills we're sent FOR collection.
What, then, wa the duty Of the defend
ants2 Obviously il was FIRST to obtain
the acceptance Of the bills of exchange.
But Green & Travis were not bound =
accept, aver though they had ordel
the cotton, unless the bills of ladiug VIC
delivered to them contemporaneously
with their acceptance. Their agreement
with their vendors, the shippers, secured
them against such an obligation. More
over, independent Of this agreement. the
drafts upon their face showed that they
had been drawn upon the cotton covered
BY the bills Of ladiHg. Both the plain
tifs and their agents, the defendants,
we're thus informed hat the bills were
not drawn upon any funds of the draw
ers in the hands of Green q Travis, and
hat they were expected to be paid out
of the proceeds of the cotton if the bills
of lading we're withhold Withholding
them, therefore, would defeat alike the
expectation and the intent of the draw
ers Of the bill.
Hence, was there nothing more, it
would seem that a drawers agent to col
leet atime bill, without further instruc-
tons, would not bejustiied in refusing
TO surrender the property against which
the bill was drawn, after its acceptance,
and thus disable the acceptor from max
ing payment out Of the property desig-
mated for that purpose. But it seems 70
be a natural inference, indeed q neces-
sary implication, for a time draft &C
companied by a bill of lading Endorsed
in blank, that the merchandise (which in
this case was cotton specified in the bill
was sold o. credit, to be paid for by the
accepted draft, or that the draft is q de-
mand for an advance on the shipment,
or that the transaction is a consignment
to be sold by the drawee on'aecount Of
the shipper. It is difficult to conceive Of
any other meaning the instruments can
have. II so, in the absence Of any ex-
press argument to the contrary, the &C
ceptor, if a purchaser, is clearly entitled
to the possession Of the goods on his
accepting the bill and thus giving the
vender a complete contract for pay
ment. Therefore, in a case where the
drawing Of q time draft against q con-
Segment raises the implication that the
goods consigned have been sold on credit,
the agent 10 whom the draft to be accept.
ed and the bill Of lading to be delivered
have been i~ntrusted, cannot reasonably
be required to know, without instruction,
that the transaction is not what il pur-
ports to be. And, If the inference to be
drawn from a time draft accompanied by
q bill Of lading is not that it evidences a
credit sale, but q request for advances
on the credit Of the consignment, the
consequence is the same. II plainly is
that the acceptance is not asked on the
credit Of the drawer Of the draft, but on
the faith Of the consignment. An agent
for collection having the draft and at
tached bill Of ladiDg cannot be permitted,
by declining TO surrender the bill Of
lading on the acceptance Of the bill, to
disappoint the obvious intentions Of the
parties, and deny TO the acceptor a sub
stantial right which by his contract is
assured TO him.
Nor can it make any difference that
the draft with the bill Of lading has been
sent to an agent las in this case) FOR
collection" The opinions we have sug-
gested are supported BY other very rat
ional considerations. That the holder Of
a bill Of lading, whe has become suchby
Endorsement, and by discouuting the
draft drawn against the consigned prop.
herty, succeeds to the situation OF the
shipper, is not TO be doubted. We do
not, therefore, perceive any force IN the
argument pressed upon us that the Bank
/ II M.-Al. -. IT. .-.L- - Al.