The Birmingham age-herald., 1906-05-23


 contention that by discounting the draft
 with the bill of lading attached, it thereby
 assumed the contract of the shipper and
 became responsible to tho purchaser of the
 cotton for both it's quantity and quality.
 In other words for the sake of S1 or $1 5O
 per thousand exchange, amounting on a
 shipment of 100 bales of cotton to from S5
 to s7.50, the bank is supposed to know
 just what the shippers contract was;
 whether he was to deliver good ordinary
 or strict middling cotton; must guarantee
 that the grade of cotton Is delivered that has been contracted for; and must guaran-
 tee full wheights.
 Under Present Ruling.
 Why. gentlemen. under these conditions,
 for bank to continue to handle drafts
 with bills of lading attached it would be
 necessary for it to have a legal depart ment to examine all contracts between shippers and purchasers; to have experts
 in cotton, in grain, in coal and in iron to inspect all shipments to see that the quail ity was as contracted for, and to have all shipments weighed to see that the weights were correct This is obviously absurd,
 and you can all readily see that the re- suit would be that banks would be com pelled to decline to handle so expensive a
 business; business which, under the
 charters of national banks at least, Is clearly forbidden them Contracts be- | tween shippers and consignees are ire quently verbal ones, and very often they
 are in the form of telegrams sent in cipher, so that in very many cases it | would be impossible for a bank to deter mine definitely just what the terms of contract were, which they would assume when they negotiated draft with bill of ladng attached
 Disclaimer of Liability. | Many of the bankers in this state are resting easy under a feeling of false se- | curity by supposing that by affixing a rubber stamp disclaiming responsibility | as to quality and quantity of the goods | to drafts having bills of ladng attached | that they are absolutely protected on this point. The rubber stamp in common use reads as follows
 "The payer of this draft and all parties concerned are hereby notified that the en- dorsement of this bank hereon Is solely for | the purpose of making it collectible, and | that the bank does not guarantee, and will not be responsible for, the quality, | quantity or condition upon delivery, of | the goods represented by the bill of lading attached hereto, nor does it assume or guarantee in any way any contract by | the drawer or endorser of this draft, or | by the eonsiGnor."
 Yet it is very doubtful whether this l would hold it in law No test has ever | been made of 1t. You all know that on | the Western Union Telegraph blank that | we use when we send a message there IS | printed:
 "It is agreed that the company shall n ha 1iab1p mistakes 1plaVS in tho transmission or delivery, or for non-deliv- | cry of any unrepeated message, beyond | the amount received for sending the same"
 and that this condition is agreed to when | the message is sent etc. Yet the courts have repeatedly held that this is not bind ing in law, and that if the telegraph com pany makes an error in transmitting a message, whether unrepeated or not, that | 1t is liable for any damages that may have resulted by reason of the mistake. Analyze the Bill.
 If you will analyZe this bill of lading l question, you will see that the contention of the courts holding the view that the | bank becomes responsible for the quality and quantity of goods represented by bills 1 of ladng attached to drafts negotiated by 1 them is that the very act of such negoti-
 
 bank of the shippers contract. In other
 words, the bank immediately enters into contract with the purchaser who may | be- and often is, thousand miles away. | Now 1 want you gentlemen who feel so | secure in the use of your rubber stamp | disclaimers to ask yourselves this ques- | tion:
 Having entered into a contract with q
 party out of your sight and hearing, can | you, without his knowledge and consent,
 make a material alteration of this con-
 tract by affixing your stamp? In other
 words after you have knowingly assumed
 certain liabilities. can you, without con
 sent of the other party to the contract,
 destroy this liability by having your clerk affix a rubber stamp to the document? I will not attempt to discuss this ques- | tion from a legal standpoint It is only the practical bearing of the question that | I want to bring to your attention. l The preponderance of the best authori- | ties. not only in the United States, but in | foreign countries, Is overwhelmingly against the doctrine that banks in facili- | tating the exchange of commodities by handling these bills of ladng drafts incur such far-reaching liabilities as appear to l be placed upon us under the construction | of the law in, our state and 1t Is to be hoped that eminent counsel who have studied this subject are mistaken in thelr | interpretation of the views of our supreme court as expressed in the Haas case If. | however, the court really holds that dis count of a draft with bill of ladng at tached as collateral, Is a purchase by the bank of the goods represented by the bill | of lading and guarantee of the ship per's contract, then 1t would seem that the banks of Alabama will have no other recourse than to decline absolutely to han dle drafts with bills of lading attached Means Disaster.
 This would mean a revolution in the established. methods of handling our crops and manufactured products which have been in vogue for generations, for bank CTS can usually find some means to em ploy their funds, but any policy that | would impede the free passage of the | products of our farms to market would | necessarily depress the value of those products and It's evil effects would be 1 felt most keenly by the farmer and the small merchant throughout the country | When the producer of five. ten or twenty | hales of cotton hauls 1t to his county l town and sells it to a merchant the price | that he receives for it depends In meas | ure upon the ease with which this mer- | chant can convert the cotton into cash | For this reason, cotton at railroad towns | having good shipping facilities always 1 commands a higher price than 1t does | where 1t is on the plantation remote from | railroad or river and where it has to be | hauled for miles over bad roads. Under | the system that has always been in vogue | the country merchant can sell his cotton | to the buyers in Mobile. Selma. Montgom-
 cry, Birmingham, Anniston. Huntsville or