Case Name: Liberty Central Trust Co. of St. Louis, Mo., v. Senton
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1925-05-25
Citations: 139 Miss. 850
Docket Number: No. 24928½
Parties: Liberty Central Trust Co. of St. Louis, Mo., v. Senton.
Judges: 
Reporter: Mississippi Reports
Volume: 139
Pages: 850–861

Head Matter:
Liberty Central Trust Co. of St. Louis, Mo., v. Senton.
(Division B.
May 25, 1925.)
[104 So. 157.
No. 24928½]
Demowrs <& Hilbim, for appellant.
W. S. Welch and Ellis B. Cooper, for appellee.
Argued orally by Henry Hilbun, for appellant, and Ellis B. Cooper, for appellee.
Headnotes 1. Carriers, 10 C. J., section 278 (1926 Anno); 2. Carriers, 10 C. J., section 278 (1926 Anno).

Opinion:
Anderson J.,
delivered the opinion of the court.
This was a foreign attachment begun .by appellee, F. S. Sentón, in the chancery court of Jones county, against Randolph Scott Company and Randolph Scott of Memphis, Tenn., R. C. Jones Cotton Company, a corporation of Cushing Olda., the Oklahoma National Bank of Cushing, Okla., and appellant, Liberty Central Trust Com pany of St. Louis, Mo., and First National Bank of Laurel in this state, by which appellee sought to recover back from the defendants Randolph Scott Company and Randolph Scott and R. C. Jones Cotton Company the sum of three thousand three hundred and forty-seven dollars and thirty-five cents the purchase price of twenty-five bales of cotton appellee had theretofore bought from said defendants, draft for which amount had been drawn by the defendant R. C. Jones Cotton Company, on appellee, with bill of lading attached, and paid by appellee to the defendant First National Bank of Laurel; the latter bank having been made a defendant in the nature of a garnishee for the purpose of holding the proceeds of said draft to satisfy the judgment of the court. There was a trial on the pleadings and proofs, and final decree rendered in appellee's favor for the amount sued for against the defendants Randolph Scott Company and Randolph Scott and R. C. Jones Cotton Company, decreeing that the defendant the First National Bank of Laurel pay over to appellee the proceeds of said draft to satisfy the decree. The proceeds of the draft were claimed by appellant, Liberty Central Trust Company /alone. The other defendants in the cause do not appeal.
The bill of lading for the cotton was a shipper's order notify bill, and the draft in question was thereto attached. The shipment of the cotton was an interstate shipment. Appellant claims it is entitled to whatever rig'hts are given it under the federal Uniform Bills of Lading Act, chapter 415, 39 Stat. L. 538, Fed Statutes Ann. (2d Ed.), Supp. 1918, pp. 72-82 (U. S. Comp. St., sections 8604aaa-8604w). Appellant relies on the protection given by the statute to a bona-fide purchaser for value without notice of such a bill of lading.
The controlling facts out of which the question arises' are, in substance, as followsIn February, 1924, appellee purchased from Randolph Scott Company of Memphis, Tenn., one of the defendants in the court below, and a cotton brokerage concern, "twenty-five bales of first-class loose, an inch to an inch and one-sixteenth." That meant twenty-five bales of repacked cotton made up of loose cotton pulled out of bales for the purpose of samples. The grade was not to be under strict low middling. Randolph Scott Company purchased the cotton for appellee from the defendants R. C. Jones Cotton Company of Cushing, Okla. The latter shipped the cotton from Cushing, Okla., to appellee at Laurel, in this state, drawing a draft on appellee for the purchase price thereof, with bill of lading attached. The draft was payable to the Oklahoma National Bank of Cushing, Okla., one of the defendants ip the court below, which forwarded the same to its correspondent, the First National Bank of Tulsa, Okla., another defendant in the court below, and that bank in turn forwarded the draft and bill of lading to appellant, Liberty Trust Company of St. Louis, Mo. Tbe latter bank, in turn, forwarded tbe draft and bill for collection to the first National Bank of Laurel, defendant in the court below. -The latter bank duly presented them to appellee, who paid the draft and took up tbe draft and bill of lading and received tbe cotton. Upon an examination of tbe cotton, appellee found tbat it did not come up to tbe class and grade purchased by him, and thereupon notified the seller that the contract was rescinded. The proceeds of the draft were still in the First National Bank of Laurel, and thereupon appellee sued out the attachment in this cause, naming as defendants the banks and cotton concerns above named, including the appellant.
Appellant contends that when the draft was received by it, an absolute and immediate credit was thereupon given the First National Bank of Tulsa, Okla., its correspondent from whom the draft was received, for the face value of the draft, three thousand three hundred forty-seven dollars and thirty-five cents; that it became and was a bona-fide purchaser for value of the draft and bill, and therefore was protected from any infirmity in them which existed as between appellee and Bandolph Scott Company, Bandolph Scott, or B. C. Jones Cotton Company.
Appellant's cashier, Kingsbury, did testify that when the draft and bill reached his bank from its correspondent, First National Bank of Tulsa, the former purchased the same and credited the latter with the proceeds thereof. That statement, taken alone, would probably constitute appellant a bona-fide holder for value of the draft and bill, but the other evidence in the case furnished by appellant through its cashier, Kingsbury, as well as answers to interrogatories propounded by appellee to appellant under our statute authorizing that to be done, we think, shows without real conflict that appellant was not a bona-fide purchaser for value, but handled the draft and bill as one of several correspondent banks for the purpose alone of collection. Part of the evidence, furnished by appellant was the correspondence passing between appellant and First National Bank of Tulsa touching the draft and bill. This correspondence shows that the draft and bill reached appellant February 12, 1924', with forty-two other "items." The letter accompanying the draft and bill of lading was dated February 12, 1924, addressed to appellant and signed by the First National Bank of Tulsa, which, in substance, stated that the "items" were remitted for credit. Quoting from the letter further:
"Protest and return if not paid all cash items over twenty dollars, wiring nonpayment of all itemis over five hundred dollars unless otherwise instructed."
It will be seen that the forwarding bank in this letter directed appellant to return all unpaid items. Appellant duly acknowledged the receipt of the items, including the draft and bill here in question, from the forwarding bank, in which it stated: *
"Outside items are credited subject to final payment and are handled at your risk, we assuming no responsibility other than due diligence."
Appellant's cashier, Kingsbury, testified that "outside items" meant drafts drawn on points outside of the city of St. Louis, where appellant was located. The draft here, of course, was drawn on such a point — Laurel, Miss. Appellant's letter of acknowledgment contained the following notice to the forwarding bank:
"Items received for collection or credit, and not drawn on this bank, are taken at depositor's risk, and should anything be lost or should no returns be received within a reasonable time, such items may be charged back to depositor."
Appellant's cashier further ¡testified /that each day since February 13, 1924, appellant's forwarding bank, First National Bank of Tulsa, had to its credit with appellant a sum larger than the amount of the draft involved. This evidence was given in October, 1924, and the bill in this case was filed February 23, 1924.
The simple question is whether, under the facts of this case, appellant was in truth and in fact a purchaser in good faith for value of the draft and hill involved in this cause. If it was, it comes within the protection of section 31 of the Federal Uniform Bills of Lading Act. That section provides, in substance, that a person to whom a bill has been negotiated acquires such title to the goods as the person negotiating the bill to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the consignee and consign- or had or had power to convey to a purchaser in good faith for value. (Italics ours.)
All defenses for the consignee against the consignor of the cotton would be cut off as to appellant, provided appellant comes within the statute. On the other hand, of course, if appellant was not a purchaser in good faith for value, but handled the draft and bill as a mere collection agency, appellee can make any defenses against appellant which it had against the seller and consignor of the cotton.
The correspondence between appellant and the forwarding bank, the First National Bank of Tulsa, as set out above, taken alone, would demonstrate, it seems, that appellant handled the draft and bill, not as a purchaser for value in good faith, but for collection alone for one of its correspondents. It is true appellant gave its forwarding correspondent, First National Bank of Tulsa, credit for the amount of the draft. But the correspondence shows that it was not an absolute credit — it was only a provisional credit. It was a credit which was to be charged back to its forwarding correspondent if the draft was - not paid. The evidence of appellant's cashier, Kingsbury, as we view it, does not contradict these facts. It is true he says that appellant gave the First National Bank of Tulsa credit and purchased the draft and bill, but he goes on further in his evidence and shows what he meant. He refers to the correspondence between appellant and First National Bank of Tulsa as stating the facts. That correspondence is exhibited as part of the evidence upon which appellant relied to establish the fact that it had purchased the draft and bill instead of taking it for collection. As we view it, there is no real conflict in the evidence on this issue of fact. It shows beyond question that appellant in the handling of the draft and bill only acted as one of the collecting agencies by means of which the drawer of the draft undertook to collect the purchase money of the cotton.
Appellant refers with confidence, as sustaining its position, to First Nat. Bank of Ripley v. Tchula Commercial Co., 132 Miss. 58, 95 So. 742. The radical difference between that case and this is the forwarding bank in that case, as shown by the agreed facts upon which the cause was tried, was a bona-fide purchaser for value of the draft and bill.
Appellant stresses the fact that before forwarding the draft and bill of lading to the First National Bank of Laurel, where appellee paid it, there was indorsed by it on the back of the draft this statement: "This bank does not guarantee quality, quantity, or delivery of goods covered by bill of lading."
Appellant could not change the status and rights of the parties in interest by such an indorsement on the draft. Their rights were fixed by law as applied to the- then facts. Such an indorsement by appellant, who handled the draft and bill of lading, not as a purchaser in good faith for value but as a mere agency, for collection, was without authority of law. Such an indorsement was beyond the scope of its agency.
Affirmed.