Case Name: FIRST NAT. BANK v. NEW YORK CENT. & H. R. R. CO.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1895-02
Citations: 32 N.Y.S. 604
Docket Number: 
Parties: FIRST NAT. BANK v. NEW YORK CENT. & H. R. R. CO.
Judges: 
Reporter: West's New York Supplement
Volume: 32
Pages: 604–608

Head Matter:
FIRST NAT. BANK v. NEW YORK CENT. & H. R. R. CO.
(Supreme Court, General Term, Fourth Department.
February, 1895.)
1. Subrogation—Rights under Bill op Lading.
Where a bill of lading is attached to a draft as security therefor, and the draft, with the biR of lading, is afterwards transferred to another, who pays full value therefor, the transferee will be subrogated to the rights of the original holder.
2. Carriers—Bill op Lading—'Transfer.
The mere fact that a bill of lading is drawn to order does not prevent its transfer by delivery to a third person without indorsement.
3. Same—Conditions.
On the face of the bill of lading, under the word “Consignee,” was written “Order of O. E. Drake.” On the back was printed the word “Conditions,” and under it “Not negotiable,” and under this a number of conditions, one of which provided that “if the word ‘Order’ is written hereon, immediately before or after the name of the party to whose order the property is consigned,” .the surrender of. the bill of lading shall be required before the delivery of the property, and that in any other case the property may be delivered without requiring such surrender. Held, that the bill of lading on its face was transferable, and the carrier, having delivered the goods without requiring its production, was liable to third persons who had acquired rights in the property.
4. Same—Delivery op Goods.
Under Pen. Code, § 633, making it an offense for a carrier to deliver merchandise for which a bill of lading has been issued unless it bears on its face the words “Not negotiable,” or unless it is surrendered at the time of the delivery, delivery of goods without surrender of the bill of lading is unlawful where the words “Not negotiable” do not appear on its face, though such words are printed on the back.
5. Same—Laches.
Laches on the part of the owner of a bill of lading cannot be assumed merely from delay in presenting it to the carrier.
Appeal from circuit court, Onondaga county.
Action by the First National Bank of Syracuse against the New York Central & Hudson Biver Bailroad Company for conversion. From a judgment entered on the decision of the court on a. trial without a jury, defendant appeals.
Affirmed.
The facts, as found by the trial court, áre substantially as follows: On the 2d September, 1892, C. E. Drake delivered to the defendant, at its station at East Pembroke, N. Y., a car load of wheat in bulk, owned by him, to be carried by the defendant to its station at Marcellus, N. Y.; and the defendant thereupon duly delivered to Drake or his agent a bill of lading. This was dated September 2, 1892, and acknowledged the receipt of the property, and stated the agreement to carry, and also that it was agreed “that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, shown or indorsed hereon, and which are hereby agreed to by the shipper, and by him accepted for himself and his assigns as just and reasonable.” Upon the face of this bill, and under the words “Marks, consignees, and designation,” there was the following: “Order of O. E. Drake, Marcellus, N. Y. (Notify O. E. Drake, Rochester, N. Y.)” There then followed a description of the property and a statement that the freight was prepaid. Upon the back of the bill of lading there was printed the word “Conditions,” and under it the words “Not negotiable,” and under these, in smaller type, a number of conditions, two of which are claimed to be material here, and are as follows: “(5) Property not removed by the person or party entitled to receive it within twenty-four hours after its arrival at destination may be kept in the car, depot, or place of delivery of the carrier, at the sole risk of the owner of said property, or may be, at the option of the carrier, removed and otherwise stored at the owner’s risk and cost, and there held subject to lien for all freight and other charges. The delivering carrier may make a reasonable charge per day for the detention of any car, and for the use of track, after the car has been held forty-eight hours for unloading, and may .add such charge to all other charges hereunder, and holds such property subject to a lien therefor. Property destined to or taken from a station at which there is no regularly appointed agent, shall be entirely at risk of owner when unloaded from cars, or until loaded into cars, and when received from or delivered on private or other sidings, shall be at owner’s risk until the cars are attached to, and after they are detached from trains.” “(9) If the word ‘Order’ is written hereon immediately before or after the name of the party to whose order.the property is consigned, without any condition or limitation other than the name of a party to be notified of the arrival of the property, the surrender of this bill of lading properly indorsed shall be required before the delivery of the property at destination. If any other than the aforesaid form of consignment is used herein, the said property may, at the option of the carrier, be delivered without requiring the production or surrender of this bill of lading.” Other facts were found as follows: Fourth. That on the 3d day of September, 1892, said O. E. Drake, then being the holder of the said bill of lading, and the owner of said wheat, drew his draft, in writing, upon H. 0. Smith & Co., of Marcellus, N. X., of which the following is a copy:
“$465.49 Rochester, N. X., September 3d, 1892.
“At sight, pay to the order of P. R. McPhail, cashier, four hundred sixyfive and 49/100 dollars, value received, and charge to account of
“C. E. Drake, per O. E. Drake.
“To Mess. H. C. Smith & Co. [Indorsed on face.]
“Cash. Syracuse, N. X.”
—And attached the said bill of lading to the said draft, and delivered the said draft and bill of lading, the latter indorsed, “Deliver to the order of H. C. Smith & Co. [Signed] C. E. Drake,” to the Merchants’ Bank of Rochester; and said Merchants’ Bank of Rochester, on said day, discounted the said draft, and placed the avails thereof to the credit of said Drake upon the books of said bank. Fifth. That on the said 3d day of September, 1892, said Merchants’ Bank of Rochester indorsed the said draft as follows: “For collection for account of Merchants’ Bank of Rochester, N. X. P. R. McPhail, Cashier,”—and transmitted the same, with the bill of lading attached, to the plaintiff, First National Bank of Syracuse, for collection; and the same were received by said plaintiff on the 6th day of September, 1892, upon which day said plaintiff duly notified said H. C. Smith & Co. of the receipt thereof. Sixth. That on the 10th day of September, 1892, H. O. Smith, a member of the firm of H. C. Smith & Co., called at the banking office of the plaintiff at Syracuse, N. X., and requested the cashier of said bank to remit to the Merchants’ Bank of Rochester the amount of said draft, and to hold the bill of lading as security for such advancement until said draft was paid by said H. C. Smith & Co.; and that thereupon said plaintiff did remit to said Merchants’ Bank of Rochester, on said 10th day of September, 1892, the amount of said draft, by its draft upon New Xork, which said remittance was received by said Merchants’ Bank of Rochester on the 12th day of September, 1892, and said draft on New Xork was thereupon collected, and the proceeds thereof retained by said Merchants’ Bank of Rochester. Seventh. That on the 5th day of September, 1892, the firm of H. C. Smith & Co. presented to the station agent of the defendant at Marcellus, N. X., a postal card signed by said C. E. Drake, of which the following is a copy:
“Rochester, N. X., Sept. 4, ’92.
“Messrs H. C. Smith & Co.: This is your authority to unload car wheat No. 41,383, consigned from E. Pembroke 9-2 to my order Marcellus. Unload without B. L., and deliver B. L. to agent when you get it from 1st Nat. Bank of Syracuse, where we sent it on Saturday for delivery to you.
“Tours, truly, C. E. Drake.” —And that thereupon said defendant delivered to said H. 0. Smith & Co. said ear load of wheat, shipped under the bill of lading aforesaid, without requiring the surrender and cancellation of said bill of lading; and the same was wholly removed from said car on the 5th, and before 8 a. m. of the 6th day of September, 1892, by said H. C. Smith & Co., and said wheat was • converted into' flour by said H. C. Smith & Co. before September 10, 1892. Eighth. That on or about the 1st day of November, 1892, after the failure of said H. C. Smith & Co., the plaintiff duly presented the said bill of lading, and duly demanded from the defendant the possession of the said car load of wheat mentioned therein, and that the said defendant refused to deliver the same to the plaintiff. Ninth. That at the time of such shipment, and up to the time of such demand for the possession thereof, said wheat was of the value of $465.49. Tenth. That after the receipt of said bill of lading by the plaintiff, not earlier than September 10, 1892, and before the demand for the property therein mentioned from the defendant, the said H. C. Smith & Co. indorsed the said bill of lading by writing across the back thereof the words “H. C. Smith & Co.” Eleventh. That said H. C. Smith & Co. never paid the said draft; and that said bill of lading was never delivered to said H. 0. Smith & Co., but remained in the possession of the plaintiff until after the demand aforesaid. Twelfth. That Marcellus station is about 15 miles west of the city of Syracuse, plaintiff’s place of business, and there is telegraph and railroad communication between the two places. As conclusions of law, the court found that the delivery by the defendant of the grain to said H. C. Smith & Co. without the cancellation and surrender of the bill of lading, and the subsequent refusal to deliver the same to the plaintiff upon demand, constituted a conversion thereof, and that the plaintiff is entitled to judgment against the defendant for the sum of $405.49, the value of said wheat, with interest from the 10th day of September, 1892. The appeal is heard on the judgment roll alone.
Argued before HARDIN, P. J., and MARTIN and MERWIN, JJ.
Frank Hiscock, for appellant.
White & Cheney, for respondent.

Opinion:
MERWIN, J.
The plaintiff, upon its advancement to the Merchants' Bank of Rochester of the amount of the draft, at the request of H. C. Smith & Co., was subrogated to the rights of that bank to the draft and bill of lading. Gans v. Thieme, 93 N. Y. 225; Acer v. Hotchkiss, 97 N. Y. 403; 24 Am. & Eng. Enc. Law, 290, 294. In Bank v. Pfeiffer, 108 N. Y. 250, 15 N. E. 311, it is said to be settled law in this state that the discount of a draft drawn by a consignor upon his consignee, which is accompanied by the delivery of a bill of lading to the party making the advance, passes to such party not only the legal title to such property, but, in the eye of the law, the transfer of the bill of lading is regarded as an actual delivery and an actual change of possession of the property. As supporting this proposition, there are cited the cases of Bank v. Jones, 4 N. Y. 497; Bank v. Kelly, 57 N. Y. 37; City Bank v. Rome, W. & O. R. Co., 44 N. Y. 136; Merchants' Bank v. Union R. & T. Co., 69 N. Y. 379. The fact that the bill of lading is drawn to order does not prevent its transfer by delivery to a third person without any indorsement. Merchants' Bank v. Union R. & T. Co., supra. The acts of Drake after delivery of the bill of lading to and discount of the draft by the Rochester Bank did not affect the rights of that bank. It would seem, therefore, that the right of plaintiff to the property under the bill of lading was perfect, unless it is affected by the printing on the back of the bill of lading of the words "Not negotiable."
By section 633 of the Penal Code, it is provided that any person who is the master, owner, or agent of any vessel, or officer or agent of any railway, express, or transportation company, or otherwise being or representing any carrier, "who delivers to another any merchandise for which a bill of lading, receipt or voucher has been issued, unless such receipt or voucher bears upon its face the words 'Not negotiable/ plainly written or stamped, or unless such receipt is surrendered to be cancelled at the time of such delivery, or unless, in the case of a partial delivery, a memorandum thereof is indorsed upon such receipt or voucher, is punishable by imprisonment not exceeding one year, or by a fine not exceeding one thousand dollars, or by both." The bill of lading in this case did not have written or stamped on its face the words "Not negotiable," and therefore the delivery of the property by the agents of the defendant without its surrender and cancellation was unlawful. In 1 Kent, Comm. 467, it is said, if a statute inflicts a penalty for doing an act, the penalty implies a prohibition, and the thing is unlawful, though there be no prohibiting words in the statute. As the printing of the words "Not negotiable" on the back of the bill did not comply with the statute, it may be doubtful whether they in any way affected the rights of the Bochester Bank. It had a right to assume that the defendant would not deliver the property without production of the bill, and so it would be able to obtain payment of the draft. Aside from this, by reference to condition No. 9, it was apparently within the contemplation of the parties that, if the consignment was in the form which it in fact appears to be on the face of the bill, it then became the subject of transfer, and the rights of third parties might intervene, and so the property must not be delivered without surrender of the bill. I am of the opinion that the Bochester Bank had a valid claim on the property to the extent of the draft, and this inured to the benefit of the plaintiff, although the property had passed from defendant's control before the plaintiff made its advancement. Serat v. Railroad Co., 102 N. Y. 681, 6 N. E. 795. The improper delivery by defendant did not relieve it from its liability. Corsan v. Oliver, 2 Abb. N. C. 356:
It is, however, urged by the defendant that, at the time the plaintiff advanced its money, the bill of lading was "spent," and therefore the plaintiff could acquire no rights to it. This might perhaps be so if plaintiff took only the right which H. C. Smith & Co. could give. As, however, it stood in the place of the Bochester Bank, it was not affected by what had occurred between the defendant and Smith & Co. It is not found that the plaintiff knew anything about these occurrences.
The defendant also claims that the plaintiff is chargeable with laches by reason of its delay in presenting the bill of lading and making a demand of defendant. The fact of laches or consequent injury is not found. From the delay simply we cannot assume the existence of laches or injury, especially in view of the fact that the unlawful delivery by defendant's agents, which is the basis of plaintiff's claim, occurred on or before the 6th September, 1892. No facts are found showing an estoppel. Galway v. Railroad Co., 128 N. Y. 133, 28 N. E. 479. Nor can we say, without any finding on the subject, that the defendant, by reason of the delay and the failure of the consignees, has lost any remedy it might have had against them, or did not protect itself in the transaction. The defendant claims that the plaintiff ratified the delivery to Smith & Co. But that is not found. No question is made about interest.
The appeal being heard upon the judgment roll, the question is whether, in any view of the facts found, the proper judgment was ordered. Insurance Co. v. Barnard, 96 N. Y. 525. We are of the opinion that the judgment must be sustained.
Judgment affirmed, with costs. All concur.