St. Louis, Iron Mountain & Southern Railway Co. v. Bankers Surety Co. , 115 Ark. 58 ( 1914 )

Coleman, Special Judge,

(after stating the facts). The S. R. Washer Grain Company shipped a carload of corn from Atchison, Kansas, to Little Rock, Arkansas, consigned to itself, and received from the carrier a ‘ ‘ shipper’s order” bill of lading. The shipment was intended for the Brook-Ranch Mill & Elevator Company, and the consignor drew a draft on that company for the purchase price of the corn, and sent it, with the bill of lading attached, to a bank at Little Rook for collection. Endorsed on the bill of lading was an order to deliver to the elevator company or to its order. The corn arrived in Little Rock before the bill of lading was received, and was delivered to the elevator company, at its request, without a surrender of the bill of lading. The elevator company had executed a bond to the carrier in the penal sum of ten thousand dollars, conditioned that it would surrender the bill of lading within a reasonable time or pay to the railway company the value of the goods. After receiving the corn, the elevator company refused to pay the draft, and the draft and bill of lading were returned to the consignor. The railway company paid the value of the corn to the consignor on its demand, and brought this action against the principal and sureties on the elevator company’s bond, alleging that the principal had failed to surrender the bill of lading and had refused to pay the value of the goods.

The act of March 15,1887, provided that bills of lading should be negotiable, und that the transfer of a bill of lading should operate as a transfer of the title to the property described therein. The same act made it a criminal offense for a common carrier to deliver g’oods transported by it without a surrender of the bill of lading therefor. Kirby’s Digest, % % 530, 531.

On the 23d of May, 1907, an act was passed which, after reciting in the preamble that “it often happens that the shipper or consignee fails to receive the bill of lading or original receipt, and the goods called for therein can not be delivered on account of the absence of the original receipts and bills of lading, thus causing delay and injury to the goods,” provides as follows:

“It shall be lawful for a shipper or consignee of goods to make, execute and deliver to, and the carrier to take and receive a good, sufficient and valid bond in a sum double the value of the goods, conditioned that the shipper or consignee shall, within a reasonable time thereafter, deliver to the carrier the original receipts and bills of lading issued for said goods, or shall pay the value of said goods to the carrier upon demand; and upon the execution and delivery of said good, sufficient and valid bond as aforesaid, it shall be lawful for the carrier to deliver up the said goods to the shipper or consignee, without requiring the immediate surrender of said original bills of lading and receipts, and for so doing the carrier shall not incur the penalty of the law as set forth in chapter 15 of Kirby’s Digest.”

The bond sued on purports to have been executed under the authority of the foregoing statute. It recites the fact that shipments of goods consigned to or intended for the elevator company frequently arrive before the original bills of lading have been received; and its condition is that if the railway company -will make deliveries of goods prior to a surrender of the bills of lading therefor, the elevator company will, within a reasonable time after such deliveries, surrender the corresponding bills of lading, or pay to the railway company the value of the goods.

It is said that the bond is not valid as a statutory bond, because the statute does not authorize the execution of such a bond by any one except a shipper or a consignee, and that the elevator company, under the circumstances of this case, was neither. The argument is based on the contention that as the corn was shipped to the shipper’s order, and the draft drawn on the elevator company for the purchase price was never paid, the. title to the corn, evidenced by the 'bill of lading attached to the drafts, never vested in the elevator company so as to make it the consignee within the purview of the act.

(1) It is true that the statute employs the words “shipper” and “consignee,” but it is manifest from the preamble and context of the act that those terms were not used in a qualifying or restrictive sense. On the contrary, the very association of the words is suggestive of their complementary meaning, and indicates a generalization of the persons who are authorized to take advantage of the act. To the ordinary layman, the words shipper and consignee would seem to encircle all the parties to a transportation contract with whom a carrier has to reckon, and to include some one who would be entitled to a delivery of each particular shipment. This is the popular meaning of the words, and this is apparently the legislative meaning. The Legislature was dealing with a broad commercial subject, and it evinced an intention to handle it in a broad and liberal manner. And the language of the act, interpreted according to its common .acceptation, and construed in the light of the manifest purpose of the statute, clearly indicates that the Legislature meant to make no exceptions, but intended to authorize delivery bonds in all transportation cases.

In the case at bar, the elevator company was really the consignee. It had ordered the corn from the grain como any, and the shipment was intended for it. The essential character of the transaction was the purchase and sale of the corn. The grain company could have consummated the sale by shipping directly to the elevator company, under a bill of lading requiring delivery to it, but in that event the seller would have had no security for the purchase price. The commercial method of accomplishing the same result, but without extending credit to the purchaser, was to take a bill of lading to the shipper’s order, endorse an assignment on it, attach it to a draft on the buyer for the price of the corn, and send it to a bank with directions to deliver it to the buyer on the payment of the draft. The buyer would be as truly the con-' signee in the latter case as in the former. The question of title, or of the ownership of the goods, is not involved. It may be important to the parties to the contract of sale, but it is not material to the carrier except as it may aid in identifying the person to whom delivery is to be made.

In Nebraska Meal Mills v. St. Louis S. W. Ry. Co., 64 Ark. 169, it was held that a carrier was protected by a delivery to the consignee named in the bill of lading, even though the consignor, without the knowledge of the carrier, had forwarded a draft, with the bill of lading attached, to a bank for collection, and the buyer had failed to pay the draft. The person designated in the bill of lading was still the consignee, so far a's the carrier was concerned, though he had not acquired the ownership of the goods, and was not entitled to a delivery of them as against the consignor. The legal effect is not different if the consignor, instead of having the bill of lading made directly to the person to whom delivery is to be made, has it made to itself, and then endorses it to such person. Chicago Packing & Provision Co. v. Savannah, Florida & Western Ry. Co., 40 L. R. A. 367. And the endorsee, in that case, would be no less the consignee because he had not piaid the draft, than the consignee named in the bill of lading in the Nebraska Mills case, who likewise had not paid the draft. The liability of the railway company for the delivery might be different in the two cases, for it would depend on different questions. But a bond given to induce the delivery would be as liable in the one case as in the other. It would be liable in the first case because the delivery was to the consignee named in the bill of lading. It would be liable in the latter case, because the delivery was to the party to whom the bill of lading had been endorsed, and who represented that it was the consignee. The fact that the draft had not been paid, and that the party was not entitled to a delivery as against the consignor, would not defeat the liability of the bond in either case. In both cases, the party eonld obtain the bill of lading by paying the draft, and could then comply with the condition of the bond by surrendering the bill of lading to the railway company. It was to require this very thing that the bond was given. And the maker of the bond, after obtaining the'corn, ought not to be permitted to thus reason with himself:- “If I pay the draft and become -entitled to the bill of lading, I will constitute myself the consignee, and the bond will be valid; but if I refuse to pay the draft, and convert the corn, I will prevent my-sélf from becoming the consignee,' and the bond will be void.” The validity of the bond, as a statutory bond, ought not to depend on the determination of the obligor. It would not depend on it, unless it should be held that the word consignee, as used in the statute, means what the appellees contend it means.

(2) The word “consignee” is not -synonymous with the w;ord ‘ ‘ owner. ’ ’ It does not even imply ownership or title. Sturm v. Boker, 150 U. S. 326; Lyon v. Alvord, 18 Conn. 66-80; Gillespie v. Winterg, 4 Daly (N. Y.) 318-320. In its commercial -sense it means a person to whom goods are shipped, and to whom they are to be delivered. As used in the statute, the term consignee means a person who, under circumstances in which he might be entitled to the delivery of goods transported by a carrier, represents that he is so entitled, and tenders a bond in the statutory form and requests a delivery.

(3) When a demand is made for the delivery of goods, the carrier can not know, in the absence of the bi'll of lading, whether the. person making the demand is entitled to a delivery or not. Under the act of March 15, 1887, it is the duty of the carrier to refuse to deliver until the bill of lading is produced and surrendered. If, however, the claimant executes the bond prescribed by the act of May 23, 1907, the carrier may deliver the goods to him, and the bond will be liable if it -subsequently develops that he was not entitled to the delivery. The very form of the bond is that the maker will surrender the bill of lading or pay for the goods. In prescribing this form, the statute clearly recognizes the possibility of a delivery to a person not entitled to it, and its evident purpose is to enable rightful claimants to obtain their goods without delay, and to prevent wrongful claimants from obtaining goods which should go to others without being required to pay the value of them. Any other interpretation would render-the statute a useless enactment, and convert the bond into the shadow of an obligation. For, under any other interpretation, if the delivery was made to the right person, the carrier would need no protection, and if it was made to the wrong person, the carrier would have no protection, since a wrongful claimant would not be authorized to make such a bond, and a bond, if executed, would hiave no validity.

On the face of the bill of lading in this case, the consignor was also the consignee, and a delivery to it would have protected the railway company in the absence of knowledge of a transfer of the bill. On the other hand, the bill of lading might well have been assigned to the elevator company in such a wiay as to make it the consignee of the com. It represented to the railway company that it was entitled to have the corn delivered to it, and obtained such a delivery by giving a bond in the statutory form. The condition of the bond was that it would deliver the bill of lading or pay the value of the corn. It has not done either, and, on the face of the complaint, the bond is liable.

It is said that there should be a strict construction in favor of the sureties. The rale would undoubtedly apply to the bond, but it conceded that its terms are broad enough to include the present transaction. The rule, however, would not apply to the act of May 23, 1907, for the purpose of that statute was to restore innocence to an act which was only an offense because it was malum prohibitum.

The judgment is reversed, and the cause is remanded to the circuit court with directions to overrule the demurrer to the complaint.