1. Statutes are not to be construed as altering the common law
or as making any innovation therein further than their words
import.
2. Although a statute makes bills of lading negotiable by
endorsement and delivery, it does not follow that all the
consequences incident to the endorsement of bills and notes before
maturity ensue or are intended to result from such negotiation.
3. The rule that a
bona fide purchaser of a lost or
stolen bill or note endorsed in blank or payable to bearer is not
bound to look beyond the instrument, has no application to the case
of a lost or stolen bill of lading.
4. The purchaser of a bill of lading who has reason to believe
that his vendor was not the owner thereof, or that it was held to
secure an outstanding draft, is not a
bona fide purchaser,
nor entitled to hold the merchandise covered by the bill against
its true owner.
5. Where the judgment below was entered properly, this Court
will not remand the case for a new trial because of the verbal
mistake of the clerk in using a superfluous word in entering the
verdict. As the verdict was amendable in the court below, the
amendment will be regarded as made.
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
Page 101 U. S. 558
Philadelphia, and, as collateral security for the payment
thereof endorsed 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 bill 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 endorsed 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
Page 101 U. S. 559
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.
Page 101 U. S. 561
MR. JUSTICE STRONG delivered the opinion of the Court.
The defendants below, now plaintiffs in error, bought the cotton
from Miller & Brother by sample, through a cotton broker. No
bill of lading or other written evidence of title in their vendors
was exhibited to them. Hence, they can have no other or better
title than their vendors had.
The inquiry, therefore, is, what title had Miller & Brother
as against the bank, which confessedly was the owner, and which is
still the owner, unless it has lost its ownership by the fraudulent
act of Kuhn & Brother. The cotton was represented by the bill
of lading given to Norvell & Co., at St. Louis, and by
Page 101 U. S. 562
them endorsed to the bank, to secure the payment of an
accompanying discounted time draft. That endorsement vested in the
bank the title to the cotton, as well as to the contract. While it
there continued, and during the transit of the cotton from St.
Louis to Philadelphia, the endorsed bill of lading was stolen by
one of the firm of Kuhn & Brother, and by them endorsed over to
Miller & Brother, for an advance of $8,500. The jury has found,
however, that there was no negligence of the bank, or of its
agents, in parting with possession of the bill of lading, and that
Miller & Brother knew facts from which they had reason to
believe it was held to secure the payment of an outstanding draft;
in other words, that Kuhn & Brother were not the lawful owners
of it, and had no right to dispose of it.
It is therefore to be determined whether Miller & Brother,
by taking the bill of lading from Kuhn & Brother under these
circumstances, acquired thereby a good title to the cotton as
against the bank.
In considering this question, it does not appear to us necessary
to inquire whether the effect of the bill of lading in the hands of
Miller & Brother is to be determined by the law of Missouri,
where the bill was given, or by the law of Pennsylvania, where the
cotton was delivered. The statutes of both states enact that bills
of lading shall be negotiable by endorsement and delivery. The
statute of Pennsylvania declares simply, they "shall be negotiable
and may be transferred by endorsement and delivery;" while that of
Missouri enacts that "they shall be negotiable by written
endorsement thereon and delivery,
in the same manner as
bills of exchange and promissory notes." There is no material
difference between these provisions. Both statutes prescribe the
manner of negotiation --
i.e., by endorsement and
delivery. Neither undertakes to define the effect of such a
transfer.
We must therefore look outside of the statutes to learn what
they mean by declaring such instruments negotiable. What is
negotiability? It is a technical term derived from the usage of
merchants and bankers, in transferring, primarily, bills of
exchange and, afterwards, promissory notes. At common law no
contract was assignable, so as to give to an assignee a
Page 101 U. S. 563
right to enforce it by suit in his own name. To this rule bills
of exchange and promissory notes, payable to order or bearer, have
been admitted exceptions, made such by the adoption of the law
merchant. They may be transferred by endorsement and delivery, and
such a transfer is called negotiation. It is a mercantile business
transaction, and the capability of being thus transferred, so as to
give to the endorsee a right to sue on the contract in his own
name, is what constitutes negotiability. The term "negotiable"
expresses, at least primarily, this mode and effect of a
transfer.
In regard to bills and notes, certain other consequences
generally, though not always, follow. Such as a liability of the
endorser, if demand be duly made of the acceptor or maker, and
seasonable notice of his default be given. So if the endorsement be
made for value to a bona fide holder, before the maturity of the
bill or note, in due course of business, the maker or acceptor
cannot set up against the endorsee any defense which might have
been set up against the payee, had the bill or note remained in his
hands.
So also, if a note or bill of exchange be endorsed in blank, if
payable to order, or if it be payable to bearer, and therefore
negotiable by delivery alone, and then be lost or stolen, a
bona fide purchaser for value paid acquires title to it,
even as against the true owner. This is an exception from the
ordinary rule respecting personal property. But none of these
consequences are necessary attendants or constituents of
negotiability, or negotiation. That may exist without them. A bill
or note past due is negotiable, if it be payable to order, or
bearer, but its endorsement or delivery does not cut off the
defenses of the maker or acceptor against it, nor create such a
contract as results from an endorsement before maturity, and it
does not give to the purchaser of a lost or stolen bill the rights
of the real owner.
It does not necessarily follow, therefore, that because a
statute has made bills of lading negotiable by endorsement and
delivery, all these consequences of an endorsement and delivery of
bills and notes before maturity ensue or are intended to result
from such negotiation.
Bills of exchange and promissory notes are exceptional in
Page 101 U. S. 564
their character. They are representatives of money, circulating
in the commercial world as evidence of money,
"of which any person in lawful possession may avail himself to
pay debts or make purchases or make remittances of money from one
country to another, or to remote places in the same country. Hence,
as said by Story, J., it has become a general rule of the
commercial world to hold bills of exchange, as in some sort, sacred
instrument in favor of
bona fide holders for a valuable
consideration without notice."
Without such a holding they could not perform their peculiar
functions. It is for this reason it is held that if a bill or note,
endorsed in blank or payable to bearer, be lost or stolen, and be
purchased from the finder or thief, without any knowledge of want
of ownership in the vendor, the
bona fide purchaser may
hold it against the true owner. He may hold it though he took it
negligently, and when there were suspicious circumstances attending
the transfer. Nothing short of actual or constructive notice that
the instrument is not the property of the person who offers to sell
it; that is, nothing short of
mala fides will defeat his
right. The rule is the same as that which protects the
bona
fide endorser of a bill or note purchased for value from the
true owner. The purchaser is not bound to look beyond the
instrument.
Goodman v. Harvey, 4 Ad. & E. 870;
Goodman v.
Simonds, 20 How. 343;
Murray v.
Lardner, 2 Wall. 110;
Matthews v.
Poythress, 4 Ga. 287. The rule was first applied to the case
of a lost banknote,
Miller v. Race, 1 Burr. 452, and put
upon the ground that the interests of trade, the usual course of
business, and the fact that banknotes pass from hand to hand as
coin, require it. It was subsequently held applicable to merchants'
drafts, and in
Peacock v. Rhodes, 2 Doug. 633, to bills
and notes, as coming within the same reason.
The reason can have no application to the case of a lost or
stolen bill of lading. The function of that instrument is entirely
different from that of a bill or note. It is not a representative
of money, used for transmission of money, or for the payment of
debts or for purchases. It does not pass from hand to hand as
banknotes or coin. It is a contract for the performance of a
certain duty. True, it is a symbol of ownership of the goods
covered by it -- a representative of those goods. But if the
Page 101 U. S. 565
goods themselves be lost or stolen, no sale of them by the
finder or thief, though to a
bona fide purchaser for
value, will divest the ownership of the person who lost them, or
from whom they were stolen. Why then should the sale of the symbol
or mere representative of the goods have such an effect? It may be
that the true owner by his negligence or carelessness may have put
it in the power of a finder or thief to occupy ostensibly the
position of a true owner, and his carelessness may estop him from
asserting his right against a purchaser who has been misled to his
hurt by that carelessness. But the present is no such case. It is
established by the verdict of the jury that the bank did not lose
its possession of the bill of lading negligently. There is no
estoppel, therefore, against the bank's right.
Bills of lading are regarded as so much cotton, grain, iron, or
other articles of merchandise. The merchandise is very often sold
or pledged by the transfer of the bills which cover it. They are,
in commerce, a very different thing from bills of exchange and
promissory notes, answering a different purpose and performing
different functions. It cannot be, therefore, that the statute
which made them negotiable by endorsement and delivery, or
negotiable in the same manner as bills of exchange and promissory
notes are negotiable, intended to change totally their character,
put them
in all respects on the footing of instruments
which are the representatives of money, and charge the negotiation
of them with all the consequences which usually attend or follow
the negotiation of bills and notes. Some of these consequences
would be very strange if not impossible. Such as the liability of
endorsers, the duty of demand
ad diem, notice of
nondelivery by the carrier, &c., or the loss of the owner's
property by the fraudulent assignment of a thief. If these were
intended, surely the statute would have said something more than
merely make them negotiable by endorsement. No statute is to be
construed as altering the common law, farther than its words
import. It is not to be construed as making any innovation upon the
common law which it does not fairly express. Especially is so great
an innovation as would be placing bills of lading on the same
footing in all respects with bills of exchange not to be inferred
from words that can be fully satisfied without it. The law has
Page 101 U. S. 566
most carefully protected the ownership of personal property,
other than money, against misappropriation by others than the
owner, even when it is out of his possession. This protection would
be largely withdrawn if the misappropriation of its symbol or
representative could avail to defeat the ownership, even when the
person who claims under a misappropriation had reason to believe
that the person from whom he took the property had no right to
it.
We think, therefore, that the rule asserted in
Goodman v.
Harvey, Goodman v. Simonds, Murray v. Lardner, supra, and in
Phelan v. Moss, 67 Pa.St. 59, is not applicable to a
stolen bill of lading. At least the purchaser of such a bill, with
reason to believe that his vendor was not the owner of the bill, or
that it was held to secure the payment of an outstanding draft, is
not a
bona fide purchaser, and he is not entitled to hold
the merchandise covered by the bill against its true owner. In the
present case, there was more than mere negligence on the part of
Miller & Brother, more than mere reason for suspicion. There
was reason to believe Kuhn & Brother had no right to negotiate
the bill. This falls very little, if any, short of knowledge. It
may fairly be assumed that one who has reason to believe a fact
exists, knows it exists. Certainly, if he be a reasonable
being.
This disposes of the principal objections urged against the
charge given to the jury. They are not sustained. The other
assignments of error are of little importance. We cannot say there
was no evidence in the case to justify a submission to the jury of
the question 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. It does not appear
that we have before us all the evidence that was given, but if we
have, there is enough to warrant a submission of that question.
The exceptions to the admission of testimony, and to the
cross-examination of Andrew H. Miller, are not of sufficient
importance, even if they could be sustained, to justify our
reversing the judgment. Nor are we convinced that they exhibit any
error.
There was undoubtedly a mistake in entering the verdict. It
Page 101 U. S. 567
was a mistake of the clerk in using a superfluous word. The jury
found a general verdict for the plaintiff. But they found the value
of the goods "eloigned" to have been $7,015.97. The word "eloigned"
was inadvertently used, and it might have been stricken out. It
should have been, and it may be here. The judgment was entered
properly. As the verdict was amendable in the court below, we will
regard the amendment as made. It would be quite inadmissible to
send the case back for another trial because of such a verbal
mistake.
Judgment affirmed.
