Court Opinion

ID: 7906016
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:00:31.371617+00
Date Added: 2024-06-11T16:32:25.212287
License: Public Domain

OPINION DENYING A REHEARING.
The opinion of the court was delivered by
West, J.:
The defendant bank, not satisfied with its victory, moves for a rehearing and insists that it was error to submit to the jury the facts touching Scott’s transfer of the bills of lading to the bank. We see no reason to depart from what was said on this point in the opinion.
It is further urged that the conversations on February 13 were improperly received in evidence and that unless this ruling is changed it will be the law of the case on another trial. Very well— it might properly be. Also, that we ought to have decided that the plaintiff waived any fraud when he elected to sue Scott for the' wheat. We think the case of Ireland v. Waymire, 107 Kan. 384, 191 Pac. 304, will enable the trial .court to avoid any error on this point should the case be tried again.
*618Finally, it is said we should have decided the effect of section 23 of the federal bill of lading act (8 U. S. Comp. St. 1916, §8604Z), which provides that if goods are delivered to a carrier by the owner or by a person whose act in conveying the title to them to purchaser for value in good faith would bind the owner, and “an order bill is issued for them, they cannot thereafter, while in the possession of the carrier, be attached by garnishment or otherwise . . . .unless the bill be first surrendered to the carrier, or its negotiation enjoined. The carrier shall in no such case be compelled to deliver the actual possession of the goods until the bill is surrendered to him or impounded by the court.” (39 U. S. Stat. 543.) No authority cited sheds much if any light on the question here presented. It was not necessary to a reversal that this matter be determined, and when it is presented to the trial court possibly some controlling authorities may be found.
The plaintiff also moves for a rehearing and urges that a bill of lading is not a negotiable instrument and that the authorities cited which hold that the purchaser must be shown to have acted in bad faith before his title can be impeached are not applicable. There has been much discussion of the negotiable quality of bills of lading from Savings Bank v. A. T. & Santa Fé Rld. Co., 20 Kan. 519, to Mercantile Co. v. Bank, 105 Kan. 474, 185 Pac, 287, where it was said:
“The bona fide transfer of the bill of lading for a sufficient consideration carried out the intention of the parties and vested the title and right of possession of the goods in the intervener, and when the plaintiff accepted the bill of lading and paid the draft, it was the end of the transaction.” (p. 476.)
In Bank v. Sprout, 104 Kan. 348, 179 Pac. 301, it was said of an “order bill of lading”:
“Held, negotiation of the bill of lading by the shipper vested in the bank title to the goods and right of possession.” (Syl.)
In Harold v. Railway Co., 93 Kan. 456, 144 Pac. 823, syllabus, paragraph 1 reads:
“The rule which invests the innocent holder of a bill of lading with rights not available to the shipper, declared in Savings Bank v. A. T. & Santa Fé Rld. Co., 20 Kan. 519; Railway Co. v. Hutchings, 78 Kan. 758, 99 Pac. 230, and Hutchings v. Railway Co., 84 Kan. 479, 114 Pac. 1079, is followed in a case where the plaintiff purchased corn described in a bill of lading, and paid the shipper’s draft attached to the bill in the usual course of business.”
We are told that the federal supreme court in Shaw v. Railroad *619Co., 101 U. S. 557, held that a bill of lading is not a negotiable instrument. Very true. But we have not followed that decision, as an examination of Hutchings v. Railway Co., 84 Kan. 479, 114 Pac. 1079, will show. It was there said:
“The decision of the federal supreme court in the Shaw case is largely based upon the argument that bills of lading are so little adapted to receive the attributes of full negotiability that a purpose to give them that quality is not readily to be inferred. This argument appeals to us with less force because this court is aligned with those which maintain against the numerical weight of authority, that an innocent purchaser of a bill of lading should stand upon a better footing than the original holder. . . . Treating the bills of lading as strictly negotiable, the fact that they were issued without the actual receipt of the goods constitutes no defense against an innocent purchaser.” (pp. 486, 487.)
What then is an innocent purchaser?
“An innocent purchaser is one who by an honest contract or agreement purchases property or acquires an interest therein, without knowledge or means of knowledge sufficient to charge him in law with knowledge of any infirmity in law in the title of the seller.” (4 Words and Phrases, Jud. Def. 3629.)
Ruling Case Law, after stating that some courts deny the negotiability of bills of lading and others regard them as quasi negotiable, says:
“A well established custom has grown up in commercial circles by which bills of lading as the symbols of title to the property in transit are taken as security for money advanced, and indorsed and delivered as a transfer of the property, generally in connection with, and as security for, the payment of drafts attached thereto.” (4 R. C. L. 33.)
“Notwithstanding a bill of lading is designed to pass from hand to hand, with or without indorsement, it is not a negotiable instrument or obligation in the sense that a bill of exchange or a promissory note is. Therefore, when it is said that such a bill of lading is negotiable, it is only meant that its true owner may transfer it by indorsement or assignment so as to vest the legal title in the indorsee, for if words of negotiability be contained in them, they only indicate the intention of the shipper as to the person for whose use the consignment is made. • A bill of lading does not possess the characteristics of bills of exchange or other negotiable instruments placed upon the footing of bills of exchange, for the latter represent money in commercial usage, and the innocent holder for value in the usual course of trade is protected against all equities of the antecedent parties; whereas the indorsee or assignee of a bill of lading, which is made to the order of the shipper, must trace his title back to and stand on the title of its true owner.” (p. 34.)
“A bill of lading is transferable by the custom of merchants so as to vest the transferee with the title of the assignor, and since the assignee can take no greater title than that which existed in the assignor, it follows, as a general *620rule, that a bona fide purchaser under a defective title cannot claim the property described in the bill of lading as against the true owner. . . . And, so pursuant to the rule, it has been held that a bona fide purchaser for value, 'takes the legal title to property covered by a bill of lading on assignment thereof, free from any adverse claims against the assignor of which such purchaser had no notice. . . .” (pp. 35, 36.)
Whether bills of lading be deemed negotiable or only quasi negotiable, no reason or authority appears why one who takes them in the usual course of business should not be held to have taken bona fide unless there is a showing of bad faith. Hence, to this extent it must be held that the same rule applies as to bills and notes.
A rehearing is denied.