The Montgomery advertiser., 1906-05-23
W. P. C. HARDING DISCUSSES
 BILLS OF LADING AS SECURITY
Able Address on Vital Subject Delivered Before Alabama Bankers Association in Annis-
 ton by Birmingham Banker.

him sound wheat, and he got judgment in his favor. Tn this case the court said in effect that the bank buying a bill of lading with draft attached. and collecting the money, had adopted the sellers contract with the purchaser as its own and is liable to the purchaser for any breach of contract. While it is possible that the contract assumed by bank in such cases would be limited to a warranty of title. and the genuine ness and soundness of the articles men guage of the court indicates that the bank takes upon itself in such cases all of the burdens of such contract that the seller has originally assumed
 lima and Mississippi have held the same doctrine, adopting practically the lan- guage. as we'll as the views, of tho Texas Court of Civil Appeals in the case of Landa vs. Latin.
 Supreme Court of Texas Repudiates
 New Doctrine.
 The Supreme Court of Texas, how ever, in the year 1902. on appeal from ths Seesonp nppsa ef the isfter S the case of Landa vs. Latin and dis tfnctly holds that the bank does not warrant to. the payer of draft the toned m the bill of lading. It repudi- ates the doctrine that the purchaser of the draft to which a bill of lading is attached becomes bound to perform the contract or the VenOOF, ana lt Siii- phasizes the fact that when bill of exchange is accepted the holder of the bill acquires an additional right against the aceptor. The Supreme Court of Texas holds that the rule of commer- : cial law is Thoroughly established, that one who has accepted or paid bill of exchange drawn upon him cannot de- feat his acceptance or recover the money paid because there was no con sideration, or tl at the consideration has failed between him and the drawer when the payee bought from the latter for value without notice Of deferse. It calls attention to the fact that the true question in cases of this kind is wheth- CT pr not money so paid upon bills of exchange can be recovered as having been paid by mistake. which is nega- lived by the rules of the law merchant, and not whether or not there has been breach of contract by the holder who never has a contract with the drawee of bill of exchange until the latter honors 1t. Massachusetts, Nebraska. Kansas and
 Iowa Dissent.
 The Supreme Court of Nebraska holds In the same manner In the case or Ger man American Savings Bank vs Craig; .y6 N. W. 1928 The Supreme Court of Kansas holds likewise in the case of Hall vs. Keller. 67 Pac. Rep. SIS. In this case the, contention was made that a bank by its acts of cashing a drait payable to it's order with bills of lad ing attached became the owner Of the property and undertook to carry out the contracts made by the shipper with the consignee. The Court said in part We are not favorably impressed with the logic of the opinions in the cases referred to (LaIda vs. Latin and the North Carolina and Mississippi cases We think their weakness lies in the fact that the banks are treated as pur- chasers of the goods. This could not De true. for the property shipped had already been sold to the consiEnees, the acceptors of the drafts, and the legal effect of the acceptance of such nego- tiable paper in the hands of an en- dorsee for value at the time seems to have been overlooked. The rule or tht law of commercial paper IS applied tc the effect that after the holder of ne gotiable draft with bill of lading at, tached has secured an acceptance oi such draft by the drawee and consigned he cannot be affected by any equities existing between such consignee anc the seller of the goods. Tho Supreme Court of Massachusetts subscribed tt this doctrine in the case of Arpin vs owens 140 Mass, IA.
 Serious Restraint of Trade and Com mercial Revolution.
 The concluding words or the opinion of the Supreme Court of Kansas Jusl referred to are as follows: ITO fix a liability upon the bank under the cir. cumstances of the present case would not only violate well settled rules ot the law governing commercial paper. but would also IGnu LO uGCESdSC hAlC iAAi mense volume of business which is car ried on by shippers of stock; grain and other commodities by restricting thai freedom with which banks advance money to the drawers of such drafts with bills of lading attached. If banks in whose favor such bills are drawn are made liable for damage on account of defective quality of the property ing. or for failure of title in the drawer of the draft, a serious impeachment would be placed in the way of shippers who need a part or all of the price oi the commodities sold before arrival III the market to which consigned. Tc hold with the plaintiff would undoubt. ediy cause a revolution in commercial circles.'
 pIes of Law.
 The Supreme Court of Iowa has nand- ed down a strong and clear-cut oe- cision along the same line in the case S4 N W. e3O. The doctrine of the Texas and North Carolina cases is shown to be unsound in principle. the Iowa Supreme Court saying; The two cases cited (referring to those above mentioned) stand alone in holding the purchaser of a draft with a bill of lad ins attached liable on warranty made by the assignor and the line Of reason ing pursued to reach this conclusion IS so at variance with elementary princi- pies of law that we decline to accept the rule they announce.
 4. The Haas Case.
 In December, 1903, the Supreme Court of Alabama in the case of J. C. Haas & Co vs the Citizens Bank of by | ersburg. Tenn. involving about S25 on division decided on demurrer that bank purchasing a draft with bill of lading attached warranted to the con signee the quantity and quality of the goods represented by the bill of lading | It seems that one Klyce, of Dyet sburg Tenn sold some cabbages to J. c. Haas & Co of Montgomery, Ala. mak- 1 ing draft on them for the amount of the invoice and attaching thereto the bill of lading for the cabbages. He negotiated this draft with the Citizens Bank of Dyersburg, who forwarded il for collection to a bark in Montgom- cry Haas & Co. paid the draft, re- ceiving the bill of lading from the Montgomery bank, who made remit tance to the bank at Dyersburg, and shortly afterwards it apearing that the cabbages were damaged, Haas X Co made claim on the Citizens Bank of by ersburg and the bank declining to pay the claim. suit was brought in the City Court of Montgomery, which was de cided in favor of the bank. On appea our Supreme Court decided on demurrel in favor of Haas. This ease is now before the Supreme Court on its merit!