Shaw v. Railroad Company

ERROR to the Circuit Court of the United States for the Eastern District of Pennsylvania.

This is an action of replevin brought by the Merchants' National Bank of St. Louis, Missouri, against Shaw & Esrey, of Philadelphia, Pennsylvania, to recover possession of certain cotton, marked 'W D I.' One hundred and forty-one bales thereof having been taken possession of by the marshal were returned to the defendants upon their entering into the proper bond. On Nov. 11, 1874, Norvell & Co., of St. Louis, sold to the bank their draft for $11,947.43 on M. Kuhn & Brother, of Philadelphia, and, as collateral security for the payment thereof indorsed in blank and delivered to the bank an original bill of lading for one hundred and seventy bales of cotton that day shipped to the last-named city. The duplicate b ll of lading was on the same day forwarded to Kuhn & Brother by Norvell & Co. The Merchants' Bank forwarded the draft, with the bill of lading thereto attached, to the Bank of North America. On November 14, the last-named bank sent the draft-the original bill of lading still being attached thereto-to Kuhn & Brother by its messenger for acceptance. The messenger presented the draft and bill to one of the members of that firm, who accepted the former, but, without being detected, substituted the duplicate for the original bill of lading.

On the day upon which this transaction occurred, Kuhn & Brother indorsed the original bill of lading to Miller & Brother, and received thereon an advance of $8,500. Within a few days afterwards, the cotton, or rather that portion of it which is in controversy, was, through the agency of a broker, sold by sample with the approval of Kuhn & Brother to the defendants, who were manufacturers at Chester, Pennsylvania. The bill of lading, having been deposited on the same day with the North Pennsylvania Railroad Company, at whose depot the cotton was expected to arrive, it was on its arrival delivered to the defendants.

The fact that the Bank of North America held the duplicate instead of the original bill of lading was discovered for the first time on the 9th of December, by the president of the plaintiff, who had gone to Philadelphia in consequence of the failure of Kuhn & Brother and the protest of the draft.

The defendants below contended that the bill of lading was negotiable in the ordinary sense of that word; that Miller & Brother had purchased it for value in the usual course of business, and that they thereby had acquired a valid title to the cotton, which was not impaired by proof that Kuhn & Brother had fraudulently got possession of the bill; but the court left it to the jury to determine,--

1st, Whether there was any negligence of the plaintiff or its agents in parting with possession of the bill of lading.

2d, Whether Miller & Brother knew any fact or facts from which they had reason to believe that the bill of lading was held to secure payment of an outstanding draft.

The jury having found the first question in the negative and the second in the affirmative, further found 'the value of the goods eloigned' to be $7,015.97, assessed the plaintiff's damages at that sum with costs, for which amount the court entered a judgment. Shaw & Esrey thereupon sued out this writ of error.

The remaining facts are stated in the opinion of the court.

Mr. James E. Gowen for the plaintiffs in error.

The original bill of lading was a negotiable instrument. By its indorsement, while the cotton was in transit to Miller & Brother for a valuable consideration, and without notice of any defect in the title of Kuhn & Brother, they acquired a valid title to the goods.

When the Merchants' National Bank of St. Louis took the bill of lading, Missouri was the place in which the contract was made, the place in which the property was actually situated,-and it was the domicile of all the contracting parties. There can be no doubt, therefore, that the legal effect of the bill was, for the time being, at least determinable by the law of that State. Scudder v. Union National Bank, 91 U.S. 406; Peninsular and Oriental Steamship Co. v. Shand, 3 Moo. P. C. C. N. S. 272; McDaniels v. Chicago & Northwestern Railway Co., 24 Iowa, 412; First National Bank of Toledo v. Shaw, 61 N. Y. 283; Henry v. Philadelphia Warehouse Co., 81 Pa. St. 76; Ory v. Winter, 4 Mart. N. S. (La.) 277; Slacum v. Pomery, 6 Cranch, 221; De la Chaumette v. Bank of England, 2 Barn. & Adol. 385; Trimbey v. Vignier, 1 Bing. N. C. 151; Lebee v. Tucker, Law Rep. 3 Q. B. 77; Robertson v. Burdekin, 1 Ross, L. C. 559; Story, Confl. of Laws, sect. 263; Wharton, Confl. of Laws, sects. 452, 453, 454, 471.

The bill of lading in the hands of Miller & Brother, even if its effect were determinable by he law of Pennsylvania, would be a negotiable instrument. The statute of that State expressly enacts that warehouse receipts or bills of lading shall be negotiable. It is a familiar principle that technical words in a statute are to be taken in a technical sense, unless it appears that they were intended to be applied differently from their ordinary or legal acceptation. United States v. Jones, 3 Wash. 209; United States v. Wilson & Peters, Baldw. 78; McCool v. Smith, 1 Black, 459.

"Negotiable' and 'negotiability' signify that an instrument is capable of being transferred so as to be free from any questions between original parties, the quality of being vendible by commercial indorsement.' Abbott's Law Dictionary.

It is necessary to inquire, then, whether there is any thing in the act which denotes an intent to use the word 'negotiable' in its ordinary legal sense. An examination shows that the legislature had in view the ordinary meaning of the word. The act provides that bills of lading and warehouse receipts may be transferred by 'indorsement and delivery,' thus using a term applicable solely to the transfer of negotiable instruments. The proviso to the first section enacts that all warehouse receipts or bills of lading having the words 'not negotiable' plainly written or stamped on the face thereof shall be exempt from the provisions of the act. The proviso would be unmeaning, if the object of the act was not to make bills of lading actually negotiable instead of merely assignable, since it must be presumed that 'negotiable' is used in the same sense in the proviso as in the body of the section.

Moreover, it should not be assumed that the object in passing the act was to impart to bills of lading the quality of assignability when by the common law they already had that quality to the fullest extent.

In a number of the States, statutes were passed at an early period for the purpose of making promissory notes negotiable instruments. Many of them resembled the Missouri statute in the present case, in superadding the words 'like bills of exchange.' Thus the statute of New York provided that 'all notes in writing. . . shall be negotiable in like manner as inland bills of exchange.' But in many of the States all such words were omitted. Thus in Virginia the statute enacted that 'every promissory note or check for money payable in this State at a particular bank. . . and every inland bill of exchange payable in this State shall be deemed negotiable.' Code of Virginia (edition of 1860), p. 629. Yet certainly no one would contend that the omission of the words 'like bills of exchange' in some of these statutes rendered promissory notes negotiable in some other sense than bills of exchange were negotiable.

The fact that Miller & Brother knew any fact or facts from which they had reason to believe that the bill of lading was held to secure payment of an outstanding draft does not invalidate their title,-mala fides on their part must be shown. Goodman v. Simonds, 20 How. 343; Murray v. Lardner, 2 Wall. 110. Phelan v. Moss (67 Pa. St. 59) holds that a bona fide holder for value of a negotiable note without notice can recover upon it, notwithstanding he took it under circumstances which ought to have excited the suspicions of a prudent man, and that, in order to destroy his title, his taking the note mala fide must be shown.

The court erred in entering a judgment upon the verdict which found, not the value of the goods which had been replevied, but the value of those which were eloigned. This was a palpable error, but at the same time it is not pretended that it was any thing but the consequence of an unnoticed mistake in entering the verdict. The difficulty, however, is that the record, as it now stands, shows a judgment relating not to the property in actual controversy, but to that with which the defendants had nothing to do. They therefore have a right to complain of the insufficiency of the record, in not showing their discharge from responsibility for the cotton which really formed the subject-matter of this suit.

Mr. Robert N. Willson and Mr. George Junkin, contra.

MR. JUSTICE STRONG delivered the opinion of the court.