Court Opinion

ID: 5191730
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:37:12.615468+00
Date Added: 2024-06-11T08:26:56.142739
License: Public Domain

O’Brien, J. (dissenting):
I dissent from the conclusion reached by the majority of the court; and in view of the commercial importance of the case deem it proper that my reasons therefor should be given.
Where goods covered by a bill of lading have been delivered, the bill of lading, if thereafter outstanding, is denominated a “ spent bill.” It has many times been held that a “ spent bill ” is not effective or operative for the transfer of title to property therein described. Accordingly, in National Commercial Bank v. Lackawanna T. Co. (59 App. Div. 271), wherein recovery was sought on a “spent bill” based upon the theory of conversion, it was held that such an action would not lie because the functions of the bill ceased upon the delivery of the goods and it could not thereafter operate to vest the title of the goods in the subsequent transferee and that “ the liability, if any, of the carrier to the subsequent transferee of the bill of lading for the former’s failure to take up the bill when it delivered the goods, cannot he enforced in an action based solely upon the theory of a conversion of the goods.” It was therein sought to raise the question which is here directly presented as to whether the leaving of such a bill of lading outstanding after delivery of the goods in direct violation of section 633 of the Penal Code would create a cause of action in favor of one to whom the bill was transferred for value for the damages caused thereby. Although the court referred to the question as a serious one, it refused to pass upon it for the reason that it was not properly presented by the pleadings. In the present case the complaint is not framed, nor is relief demanded upon the theory of conversion, but it is sought to charge the defendant with *278the damages sustained for its breach of duty or neglect in not complying with the provisions of law.
As we shall hereafter point out, this is not a statutory action, but it is based upon a violation of the common-law duty or obligation resting upon the defendant, and of which the statute is evidence, of observing care to prevent fraud and imposition on third persons. The precise question presented for our determination, therefore, may be thus stated: Does a cause of action upon the theory of a breach of duty or for neglect arise in favor of one who has received a “ spent bill ” of lading for a valuable consideration as against a person or corporation delivering the goods covered by the bill which does not bear the words “ not négotiable,” as required by the statute, without the surrender of such bill ? Or, differently formulated : Can a recovery upon the theory of negligence or breach of duty be had against a common carrier on a commercial bill of lading — as distinguishable from a mere freight receipt — for delivering goods without a surrender of the bill, in favor of the person to whom it is subsequently transferred for a valuable consideration %
It is conceded that section 633 of the Renal Code was directly aimed at preventing what has in this instance happened, namely, the delivery of the goods without the surrender of the bill, the bill not containing the words “ not negotiable.” Prior to the enactment of this section of the Penal Code, the Legislature sought to avert the evils resulting from such a practice by chapter 326 of the Laws of 1858 which was, however, repealed by chapter 593 of the Laws of 1886. Under the law of 1858, in addition to the prohibition similar to that contained now in the Penal Code, section 633, there was the further provision that every person aggrieved might maintain an action at law against those violating the act to recover all damages which he or they might have caused by reason of such violation. (§§ 6, 7.) An instance of recovery under this statute will be found in the case of Colgate v. Penn. Co. (reported in 31 Hun, 297, and on appeal 102 N. Y. 120). The additional provision to which we have referred having been repealed, the statutory action fell with it; but this by no means took away the remedy which at common law a person might have against one who through negligence or violation of duty had caused damage.
*279The right to maintain such an action has been recognized since the repeal of the statute of 1858, and since section 633 of the Penal Code went into effect. Thus in First National Bank v. N. Y. C. & H. R. R. R. Co. (85 Hun, 160) a bill of lading similar to that here involved was before the court, and upon evidence that section 633 of the Code had been violated a recovery was sustained. As therein said: “ 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’s Commentaries, 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 prohibitory words in the statute.” It is to be noted that First National Bank v. N. Y. C. & H. R. R. R. Co. (supra) was not an action upon a “ spent bill,” the bill there having been transferred and thus the title having passed before the goods were delivered. Hence the theory of the action was conversion which, as already pointed out, could not be maintained upon a “ spent bill.” That case, however, is authority for the proposition that the repeal of the provision as to maintaining an action which was given by the law of 1858, did not take away all right of a person injured to civil redress as against one violating the statute and thereby guilty of a wrongful act.
In that case also will be found a discussion of the claim there and here' made of laches against the plaintiff by reason of delay in presenting the bill of lading and making demand of defendant which we think sufficiently answers the argument which is again presented to us on that subject.
Although there is, undoubtedly, a distinction to be observed as to the status occupied by one who obtains a bill before the delivery of goods and one who obtains it after delivery, since those circumstances affect the form of action, there is no distinction in principle as to the basis of the recovery predicated upon neglect or failure to observe a duty imposed by statute. That this is so appears from the Colgate Case (102 N. Y. 120) wherein, referring to the law of 1858, the court says of “ spent bills: ” “ Doubtless the last was one of the evils sought to be prevented * * *. By no other mode could the existence of ‘ spent bills ’ in a form capable of deception *280be prevented; for if the carrier could deliver to the consignee without cancellation, the bill of lading would be left outstanding as a possible basis of fraud. * * * The prevention of mischief from ‘spent bills’ was, however, not the sole * * * object sought to be accomplished.”
It will be noticed that the appellants’ argument in that case proceeded from an opposite standpoint, the insistence there being that the statute was aimed exclusively at “ spent bills ” and not at bills which were transferred before the goods were delivered; and that with reference to the latter an action would not lie: Although a decision under the former law (Laws of 1858, chap.' 326), that case is authority for the following propositions, (1) that the effect of the statute is to incorporate into every bill of lading the statutory condition and make it an element of the contract; (2) that the remedy of the transferee where the carrier has delivered the property in violation of statute is not confined to an action for damages given by the statute, and (3) that the intent of the statute was not to dictate the character or form of the action, but that any action appropriate to the injury was contemplated.
The Penal Code (§ 633), just as the former law of 1858, was intended to provide against the possibility of what has here occurred by requiring that the bills should be surrendered or else that they should be marked “not negotiable.” We think, therefore, that the change in the law which omitted the provision giving a cause of action for violation of the statute does not affect the right to maintain an action for damages. It still remains a statute for the protection of the individual and to prevent fraud by making use of “ spent bills; ” and upon such facts the right of action existed at common law. (Cooley Torts [2d ed.], 788, 790.) Nor is the delivery of the goods before the transfer to the plaintiff of the bill any excuse or defense to the action. The violation of the statute is conceded and damage was sustained and we think the liability thereupon attached.
Our view that punishment under the Penal Code is not the only liability incurred is enforced by what was said in Burnham v. C. V. S. Co. (142 N. Y. 172), where, in speaking of the consequences that would result from the wrongful delivery of goods covered by a bill of lading, the court, referring to the plaintiff there, said, “ if *281before the bank’s debt was paid, he had wrongfully delivered it (the cai’go) to the defendant, he would have been criminally liable under section 633 of the Penal Code and the bank could ha/oe proceeded against him, in a civil action for damages.” Our conclusion upon the law, therefore, is that the repeal of the provision in the act of 1858 did not take away the plaintiff’s right in an. appropriate action to recover damages sustained by the delivery of the goods without requiring the surrender of the bill of lading.
Nor can sections 629 and 633 of the Penal Code be construed as limited to the person who makes delivery of the goods. These sections in terms designate a person, but the provision, as is perfectly • evident from the language which follows, embraces a corporation as well as an individual. Formerly the Penal Code (§ 718, subd. 14) defined the term “ person ” to include a corporation or joint association, unless the language either expressly or by necessary implication limited it to a natural person. (Laws of 1881, chap. 676.) This definition does not appear in section 718 of the present Penal Code, but it has been substantially re-enacted in the Statutory Construction Law (Laws of 1892, chap. 677, § 5). This, however, is not important. It was the rule at common law that a corporation might be included in the word “ person.” (1 Bish. Cr. Law [3d ed.], § 243 ; Peoples. Utica Ins. Co., 15 Johns. 358, 381, 382.) Section 13 of the Penal Code provides for the punishment of a corporation where imprisonment could be inflicted upon a natural person for the same act. It would, moreover, be a forced and unnatural construction to limit the provisions of the Penal Code to a natural person. If so construed it would grant immunity to a corporation or association for acts which the statute aims to prevent, and which, in view of existing conditions, could scarcely be done except by a corporation. The business is in the hands of corporations which can only act by- agents; and to say that these provisions of the statute were alone directed against the person acting for the corporation would defeat the whole purpose of the statute.
Many subsidiary questions are urged by the appellant, the more important of which may be briefly considered.
It appeared that after the bill was issued and delivered to the consignee and before its transfer to the plaintiff, the word “ order ” was written before the name of the consignee; and upon this is *282hinged the argument that the plaintiff could not recover, because his title was established under a bill of lading which was proven to have been changed, altered or forged ; and it is urged that under the 8th clause of the bill this rendered it void. The answer, however, appears from a reading of the clause itself, which only makes the alteration or erasure void and not the entire bill of lading. The bill, therefore, assuming the word “order” was forged, was still outstanding as a bill of lading, and is to be considered according to its terms rejecting the forgery.
The 9th clause provided that “ if the word ' order ’ is written * * * immediately before or after the name of the party to whose order the property is consigned * * * the surrender of this bill * * * properly indorsed shall be required before the delivery of the property,” otherwise “ the said property may at the option of the carrier, be delivered without requiring the production or surrender of this bill of lading.”
Although this clause permitted by its terms a delivery to the consignee without the production of the bill, it was ineffectual for that purpose for there was necessarily incorporated in it the provisions of the statute which commanded that the property, if the bill was not marked “not negotiable,” should be delivered only upon the production and surrender of the bill. (Colgate Case, 102 N. Y. 120.)
Of course if knowledge of the fact that the bill had been altered after it had been issued by the carrier was brought home to the plaintiff before he took it, a different question would be presented. He testified that the words “ order of and notify ” had been inserted before the name of the consignee and he believed that they were so inserted by him; but neither this testimony nor any other in the case shows that knowledge of the alteration had been brought home to him, nor would it justify the inference that he knew that the bill had been altered at the time he took it. On the contrary, the evidence and the inferencés are just the other way, he stating that he did not know of the alteration until after he presented the bill to the defendant.
"With respect to the further contention of the alleged error committed by the learned trial judge in refusing to permit an amendment of the answer setting up that section 633 of the Penal Code *283is unconstitutional, if we consider it as a question in the case, it is only necessary to say that the statute in no way attempts to hinder or interfere with interstate commerce and transportation, hut merely provides a wholesome rule regulating the delivery of goods within this State. It is not, therefore, in contravention of or opposed to the Constitution and laws of the United States.
The other minor points urged, I regard as without merit. My conclusion, therefore, upon the entire case as it was presented to the learned trial judge at the close of all the evidence, there being no disputed facts, and, hence, no question for the jury, is that on motion made he properly directed a verdict for the plaintiff, and the judgment appealed from should accordingly be affirmed.
Judgment and order reversed, new trial ordered, costs to appellants to abide event. Order denying leave to amend affirmed, and appeal from order denying reargument dismissed.