New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-02-05
COTTON LAD|NG SUIT Up
Outcome of Liverpool Firms
Case Involves $4,500,00O.
FORGED BILLS ALLEGED
Brought Here as Test Action to
Recover 81, 800 from Guar.
anty Trust Company.

The trial of the suit brought bv A
Hannay d Co, cotton merchants Of Ily-
erpool. England against the Guaranty
Trust Company of New York for the 70.
covery OF $3.50 paid in discount for a bin
of exchange drawn by Kngnt Yancey &
Co. On the strength of forged bills Of lad.
ing. was begun yesterday before Judge
Holt and jury in the United States Dis.
trict Court.
While the amount in this action Is
small, the suit is of interest because Of
its character as a test case. and because
on its outcome depend other actions ag.
gregatng about A,5000o0.
In February, 1910 the Guaranty Trust
Company bought hill of exchange
drawn by Knight, Yancey & c., cotton
merchants of Decatur, Ala, on the Bank
of Liverpool, and accompanied by a bill
of lading for 100 bales Of cotton. The bill
of exchange was forwarded TO England
together with the bill Of ladng. and
after being accepted by the Bank Of
Liverpool. it was paid at maturity and
the amount charged 20 y. Ha1nay az Co.,
to whom the cotton was supposed to have
been sent.
The bill OF lading was found to nave
been forged. and though the discovery
of this fact was made before the draft
was due the Bank of Liverpool refused
TO withdraw it's acceptance, as the draft
had already been honored 10 the firm
that drew IL.
The essential contention Of Hannay &c
Co. in the present action is that the
Guaranty Trust Company, in accepting
the bill of exchange here, warranted that
the bill of lading accompanying the draft
was genuine, and that the cotton de-
scrlbed in II had been actually shipped.
The plaintiffs contend also Chat the draft
on its face, was drawn against the
specific bales of cotton mentioned in the
bill of lading and that the Guaranty
Trust was liable for IL.
In reply to this the defendants assert
that the bill of exchange vas one Of
hundreds OF similar kind that are pur-
chased by the Guaranty Trust Company
during the busy season in the regular
lading accompanying those drafts have
never been investigated. In this particu-
lar case the draft and the bill Of ladlng
were sent TO the Bank of Liverpool for
acceptance, having been drawn against
that institution, with the usual f0rma!
request TO advise by cable In case the
draft was refused. The Bank OF Liver
pool Informed Hannay * Co. Of the ar
rival of the draft and two representa-
lives of that firm examined the bin %.
lading and sanctioned the acceptance.
After that the London agent II the
Guaranty Trust Company held the draft
until II fell due on April q. the defence
declared A short time before that it was
discovered that knight. Yancey * co.
had. il is alleged made "A practice u
forging bills OF ladiny and discouutns
bills of exchange with the ali Of the
fraudulent documents. and the cotton
brokers in Liverpool informed their
banks TO withdraw all acceptance OF
drafts made by the Alabama hrm This
the banks refused to 40. 4 few days
later Knight, Yancey * 60. failed.
AS a further defence IT was advanced
that Hannay & Co. had fled 4 claim for
the amount at issue against the bank
rupt estate OF Knight, Yancey CO., and
that the claim had been allowed, and
further, that the plaintiffs were suing
the railroad whose bill of lading blank
had been used 10 recover a similar
amount. charging that the railroad COM
pany was responsible for ;he genuine
ness Of such documents. II is expected
that the trial will last three days.