If a railroad company, for its own convenience and the
convenience of its customers, is in the habit of issuing bills of
lading for cotton delivered to a compress company, to be compressed
before actual delivery to the railroad company, with no intention
on the part of the shipper or of the carrier that the liability of
the carrier shall attach before delivery on its cars, and the
cotton is destroyed by fire while in the hands of the compress
company, the railroad company is not liable for the value of the
cotton so destroyed to an assignee of the bill of lading without
notice of the agreement and course of dealing between the shipper
and the carrier.
The defendants in error (plaintiffs below) sued in the Circuit
Court of Hunt County, Texas, to recover the value of 200 bales of
cotton, alleged to have been shipped from Greenville, Texas, to
Liverpool, England, the shipments having been evidenced by two
bills of lading, each for one hundred bales of cotton.
On application of the defendant below, the case was removed to
the Circuit Court of the United States for the Northern District of
Texas. After filing the record in that court, the pleadings were
amended. The amended answer set up the following, among other,
special defenses on behalf of the company:
"First. That while it is true that it had issued certain
bills
Page 154 U. S. 156
of lading for said cotton, said cotton had not yet, indeed and
in truth, been delivered to it. It was the habit and the custom of
defendant, and well known to plaintiffs to be such, after cottons
were placed on the platforms at the compress in Greenville, before
the same was compressed, it would issue bills of lading therefor to
consignors desiring to ship. Said cottons would be delivered to the
compress for the purpose of compressing, and that at the time they
were so delivered to it, the superintendent of the compress, or the
agent of the compress, would check out such cottons intended, and
the shipper would make out a bill of lading, which would be O.K.'d
by the superintendent of the compress or its agent, and afterwards
it would be brought to the agent of the defendant, and by him
signed up, and defendant would actually receive said cotton only
after it was compressed and delivered upon its cars. This course
was pursued as a matter of convenience by the compress company and
the shipper, but it was not intended by either the shipper or the
defendant that the liability of the defendant should attach until
the cotton was actually delivered upon its cars. This custom was
well known to the plaintiffs, George H. McFadden & Bro., and to
A. Fulton & Co., and the bills of lading were made out,
according to this custom, by A. Fulton & Co., as herein shown,
and accepted by A. Fulton & Co. according to such custom. At
the time said bills of lading were made, the cotton was in the
hands of the compress, according to the custom aforesaid, and had
never been delivered to defendant, the defendant's liability as a
common carrier had never attached, nor had any liability attached,
but said cotton, while it was in the hands of the compress company,
was wholly destroyed by fire, and never came to the hands of
defendant. Defendant says said cotton was placed on said platform
at said compress for the purpose of being compressed by A. Fulton
& Co.; that they well knew, intended, and expected said cotton
should be compressed before it was shipped. Said cotton, while at
the compress, was under the control of A. Fulton & Co. or their
agent, the compress company."
The answer thereupon proceeded to set out other matters, to
which it is unnecessary to refer.
Page 154 U. S. 157
The plaintiff replied to the amended answer and excepted to the
first count as follows:
"And they specially except to the first count in defendant's
special answer insofar as the same attempts to set up a custom of
the manner of receiving cotton and issuing bills of lading, because
the same does not show that the custom was such as is recognized
and binding in law, but attempts to set up a custom which is
contrary to law, and because the same does not show that it was
such a custom as would relieve the defendant from liability on a
contract in writing."
The reply then proceeded to except to other parts of the
defendant's answer.
The court sustained the plaintiffs' exception to the first count
of the amended answer, to which ruling exception was reserved.
Thereupon the facts were stated to be, 1st, that the bills of
lading had been issued to Fulton & Co.; 2d, that they were
assigned to the plaintiffs; 3d, that the value of the cotton was
$8,647.83 at the time it was destroyed, and that the defendant had
never paid therefor.
Upon this evidence, the case was submitted to the court without
a jury, and the court found for the plaintiffs and gave judgment
for the value of the cotton. The case is brought here by writ of
error.
Page 154 U. S. 159
MR. JUSTICE WHITE, after stating the case, delivered the opinion
of the Court.
Page 154 U. S. 160
Many questions were discussed at bar which we deem it
unnecessary to notice, as we consider that the whole case depends
upon the correctness of the judgment of the court below in
sustaining the exception to the first defense in the amended
answer. That defense averred that the cotton for which the bills of
lading were issued was never delivered to the carrier; that, by a
custom or course of dealing between the carrier and the shipper, it
was understood by both parties that the cotton was not to be
delivered at the time the bills of lading were issued, but was then
in the hands of a compress company, which compress company was the
agent of the shipper, and that it was the intention of the parties
at the time the bills of lading were issued that the cotton should
remain in the hands of the compress company, the agent of the
shipper, for the purpose of being compressed, and that this custom
was known to the plaintiffs and transferees of the bills of lading,
and that, while the cotton was so in the hands of the compress
company, the agent of the shipper, and before delivery to the
carrier, it was destroyed by fire.
All of these allegations in the answer were, of course, admitted
by the exception, and therefore the case presents the simple
question of whether a carrier is liable on a bill of lading for
property which, at the time of the signing of the bill, remained in
the hands of the shipper for the purpose of being compressed for
the shipper's account, and was destroyed by fire before the
delivery to the carrier had been consummated. The elementary rule
is that the liability of a common carrier depends upon the delivery
to him of the goods which he is to carry. This rule is thus stated
in the textbooks: "The liability of a carrier begins when the goods
are delivered to him or his proper servant authorized to receive
them for carriage." Redfield on Carriers 80.
"The duties and the obligations of the common carrier with
respect to the goods commence with their delivery to him, and this
delivery must be complete, so as to put upon him the exclusive duty
of seeing to their safety. The law will not divide the duty or the
obligation between the carrier and the owner of the goods; it must
rest entirely upon the one or the other, and until it
Page 154 U. S. 161
has become imposed upon the carrier by a delivery and
acceptance, he cannot be held responsible for them."
Hutchinson on Carriers 82.
This doctrine is sanctioned by a unanimous course of English and
American decisions.
Schooner Freeman v.
Buckingham, 18 How. 182;
The Lady
Franklin, 8 Wall. 325;
The
Delaware, 14 Wall. 579;
Pollard v. Vinton,
105 U. S. 7;
Iron Mountain Railway v. Knight, 122 U. S.
79;
Friedlander v. Texas & Pacific Railway,
130 U. S. 423;
St. Louis, Iron Mountain &c. Railway v. Commercial Union
Ins. Co., 139 U. S. 239;
Barron v. Eldredge, 100 Mass. 455;
Moses v. Boston
& Maine Railroad, 4 Foster (N.H.) 71;
Brind v.
Dale, 8 Car. & P. 207;
Selway v. Holloway, 1
Ld.Raym. 46;
Buckman v. Levi, 3 Camp. 414;
Leigh v.
Smith, 1 Car. & P. 638;
Grant v. Norway, 10 C.B.
665;
Hubbersty v. Ward, 8 Exch. 331;
Coleman v.
Riches, 29 C.B. 323. Indeed, the citations might be multiplied
indefinitely.
While the authorities may differ upon the point of what
constitutes delivery to a carrier, the rule is nowhere questioned
that when delivery has not been made to the carrier, but, on the
contrary, the evidence shows that the goods remained in the
possession of the shipper or his agent after the signing and
passing of the bill of lading, the carrier is not liable as carrier
under the bill.
Of course, then, the carrier's liability as such will not attach
on issuing the bill in a case where not only is there a failure to
deliver, but there is also an understanding between the parties
that delivery shall not be made till a future day, and that the
goods, until then, shall remain in the custody of the shipper. Does
the fact that the plaintiffs claim to be assignees of the bill of
lading without notice of the agreement and course of dealing
between the shipper and the carrier confer upon them greater
rights, as against the carrier, than those which attach under the
bill of lading in the hands of the parties to whom it was
originally issued, and who made the agreement?
It is to be remarked in considering this question that the
averment of the answer, which was admitted by the exception,
charged that the course of dealing between the parties,
Page 154 U. S. 162
in accordance with which the goods were not delivered at the
time of the issuance of the bills of lading, but remained in the
hands of the compress company, which was the agent of the shipper,
was known to the plaintiffs, the holders of the bills of lading. It
is clear that whatever may be the effect of custom and course of
dealing upon the question of legal liability, proof of such custom
and course of dealing would have been admissible not in order to
change the law, but for the purpose of charging the plaintiffs, as
holders of the bills of lading, with knowledge of the relations
between the parties.
That a bill of lading does not partake of the character of
negotiable paper so as to transfer to the assignees thereof the
rights of the holder of such paper is well settled. Said this Court
in
Pollard v. Vinton, supra:
"A bill of lading is an instrument well known in commercial
transactions, and its character and effect have been defined by
judicial decision. In the hands of the holder, it is evidence of
ownership, special or general, of the property mentioned in it, and
of the right to receive said property at the place of delivery.
Notwithstanding it is designed to pass from hand to hand, with or
without endorsement, and it is efficacious for its ordinary
purposes in the hands of the holder, it is not a negotiable
instrument or obligation in the sense that a bill of exchange or a
promissory note is. Its transfer does not preclude, as in those
cases, all inquiry into the transaction in which it originated
because it has come into the hands of persons who have innocently
paid value for it. The doctrine of
bona fide purchasers
only applies to it in a limited sense."
"It is an instrument of a two-fold character. It is at once a
receipt and a contract. In the former character, it is an
acknowledgment of the receipt of property on board his vessel by
the owner of the vessel. In the latter, it is a contract to carry
safely and deliver. The receipt of the goods lies at the foundation
of the contract to carry and deliver. If no goods are actually
received, there can be no valid contract to carry or to
deliver."
See also The Lady
Franklin, 8 Wall. 325.
Page 154 U. S. 163
The rule thus stated is the elementary commercial rule. Indeed,
in the case last cited, this Court expressed surprise that the
question should be raised. These views coincide with the rulings of
the English courts. The cases of
Grant v. Norway, 10 C.B.
665, and
Hubbersty v. Ward, 8 Exch. 330, 331, were both
cases where bills of lading were issued and held by third parties.
The rule was uniform in England until the passage of the Bills of
Lading Act, 18 & 19 Vict. c. 111, ยง 3, making bills of lading
in the hands of consignees or endorsees for value conclusive as to
shipment.
Under these elementary principles, we think there was manifest
error below in maintaining the exception to the first count in the
amended answer. Of course, in so concluding, we proceed solely upon
the admission which the exception to the answer necessarily
imported, and express no opinion as to what would be the rule of
law if the compress company had not been the agent of the shipper,
or if the goods had been constructively delivered to the carrier
through the compress company, who held them in the carrier's
behalf.
The judgment is
Reversed, and the case remanded for further proceedings in
accordance with this opinion.
MR. JUSTICE JACKSON, not having heard the argument, took no part
in the decision of this cause.
