Court Opinion

ID: 6231101
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:22:10.974061+00
Date Added: 2024-06-11T08:57:52.318334
License: Public Domain

The opinion of the court was delivered by
Thompson, J.
It has been long well settled, that a bill of lading, “ regularly, fairly, and for value endorsed to another, will pass the title” to the goods to the endorsee: Schumacher v. Eby, 12 Harris 521, and the cases there cited.
The question here, however, is not this, but, whether a fraudulent consignee or holder of a bill of lading can pass a title to the goods in such bill, to a purchaser for value without notice of the fraud ? or, in other words, whether he can give title by endorsement of the instrument, when he has none himself? That is the aspect in which we may certainly consider this case, although there might, perhaps, be another in which the bona fides of the endorsee is questionable. The holder of the bill of lading procured the grain from the plaintiffs, on the fraudulent representation that he was purchasing it for Alburtis, the endorsee, and that it was to be paid for in cash. Under this false pretence, he procured the delivery to be made, and had it shipped to his own order, and then, by endorsement of the bill, procured an advancement to be made to him by Alburtis. The plaintiffs never sold or parted with their title to him as purchaser — and it was fully shown, that he was not authorized to purchase for Alburtis. So that the possession was clearly fraudulent. As soon as the plaintiffs discovered this, and before the vessel sailed, they demanded the redelivery of the grain from the master, and on refusal, brought this action of trover to recover the value. The master defends on the title of Alburtis, under the endorsement of the bill of lading. Can he successfully do so ?
We think not. The point thus involved has been elaborately investigated in recent English cases, and it has been held, that by the assignments of a fraudulent holder, of delivery orders for goods in store (instruments of the same commercial nature as bills of lading), where the possession of the goods was never intended to be passed by the vendor to such holder, no title passed to a party making advancements on the faith of the assignments, although they were taken in good faith: Kingsford v. Merry, 1 Hurl. & Norm. 503, in Exchequer Chamber. So, as to a bill of lading: Gurney v. Behrend & Ellis & Bl. 622. The same principle was ruled in Brower v. Peabody, 3 Kern. 121, and in Dows v. Perrin, *2442 Smith (Court of Appeals, N. Y.) 325. Such, too, is the elaborate note of the American editors to the case of Lickbarrow v. Mason, 1 Smith’s Leading Cases 751. The reasoning in these cases is so satisfactory, that we think the court were right in following them as precedents, and in deciding that the defendant below was not protected by the endorsement of the bill of lading by Bunker to Alburtis.
Indeed, I think, upon the terms of our Factor Act of 1834, Alburtis could not claim to be a bond fide holder; for on the face of the bill it appears that the grain was delivered to Bunker as agent, and it was endorsed in the same character. Our statute only provides for the passage of the title, if the agent or factor had “ authority to sell the same,” or “to deposit or pledge it.” That he purported to be an agent, and in such capacity shipped the grain and endorsed the bill, is apparent by the bill. This was enough to have put the endorsee on inquiry at least, as to his right to deal with the grain, and would undoubtedly have led to notice of the true state of the title. If Alburtis chose to run the risk of the title, he must abide the consequences. As we perceive no error in the record, the judgment is affirmed.