First Nat. Bank v. New York Cent. & H. R. Railroad , 92 N.Y. Sup. Ct. 160 ( 1895 )

MERWIN, J.

The plaintiff, upon its advancement to the Merchants’ Bank of Rochester of the amount of the draft, at the request of H. C. Smith & Co., was subrogated to the rights of that bank to the draft and bill of lading. Gans v. Thieme, 93 N. Y. 225; Acer v. Hotchkiss, 97 N. Y. 403; 24 Am. & Eng. Enc. Law, 290, 294. In Bank v. Pfeiffer, 108 N. Y. 250, 15 N. E. 311, it is said to be settled law in this state that the discount of a draft drawn by a consignor upon his consignee, which is accompanied by the delivery of a bill of lading to the party making the advance, passes to such party not only the legal title to such property, but, in the eye of the law, the transfer of the bill of lading is regarded as an actual delivery and an actual change of possession of the property. As supporting this proposition, there are cited the cases of Bank v. Jones, 4 N. Y. 497; Bank v. Kelly, 57 N. Y. 37; City Bank v. Rome, W. & O. R. Co., 44 N. Y. 136; Merchants’ Bank v. Union R. & T. Co., 69 N. Y. 379. The fact that the bill of lading is drawn to order does not prevent its transfer by delivery to a third person without any indorsement. Merchants’ Bank v. Union R. & T. Co., supra. The acts of Drake after delivery of the bill of lading to and discount of the draft by the Rochester Bank did not affect the rights of that bank. It would seem, therefore, that the right of plaintiff to the property under the bill of lading was perfect, unless it is affected by the printing on the back of the bill of lading of the words “Not negotiable.”

By section 633 of the Penal Code, it is provided that any person who is the master, owner, or agent of any vessel, or officer or agent of any railway, express, or transportation company, or otherwise being or representing any carrier, “who delivers to another any merchandise for which a bill of lading, receipt or voucher has been issued, unless such receipt or voucher bears upon its face the words 'Not negotiable/ plainly written or stamped, or unless such receipt is surrendered to be cancelled at the time of such delivery, or unless, in the case of a partial delivery, a memorandum thereof is indorsed upon such receipt or voucher, is punishable by imprisonment not exceeding one year, or by a fine not exceeding one thousand dollars, or by both.” The bill of lading in this case did not have written or stamped on its face the words “Not negotiable,” and therefore the delivery of the property by the agents of the defendant without its surrender and cancellation was unlawful. In 1 Kent, Comm. 467, it is said, if a statute inflicts a penalty for doing an act, the penalty implies a prohibition, and the thing is unlawful, though there be no prohibiting words in the statute. As the printing of the words “Not negotiable” on the back of the bill did not comply with the statute, it may be doubtful whether they in any way affected the rights of the Bochester Bank. It had a right to assume that the defendant would not deliver the property without production of the bill, and so it would be able to obtain payment of the draft. Aside from this, by reference to condition No. 9, it was apparently within the contemplation of the parties that, if the consignment was in the form which it in fact appears to be on the face of the bill, it then became the subject of transfer, and the rights of third parties might intervene, and so the property must not be delivered without surrender of the bill. I am of the opinion that the Bochester Bank had a valid claim on the property to the extent of the draft, and this inured to the benefit of the plaintiff, although the property had passed from defendant’s control before the plaintiff made its advancement. Serat v. Railroad Co., 102 N. Y. 681, 6 N. E. 795. The improper delivery by defendant did not relieve it from its liability. Corsan v. Oliver, 2 Abb. N. C. 356:

It is, however, urged by the defendant that, at the time the plaintiff advanced its money, the bill of lading was “spent,” and therefore the plaintiff could acquire no rights to it. This might perhaps be so if plaintiff took only the right which H. C. Smith & Co. could give. As, however, it stood in the place of the Bochester Bank, it was not affected by what had occurred between the defendant and Smith & Co. It is not found that the plaintiff knew anything about these occurrences.

The defendant also claims that the plaintiff is chargeable with laches by reason of its delay in presenting the bill of lading and making a demand of defendant. The fact of laches or consequent injury is not found. From the delay simply we cannot assume the existence of laches or injury, especially in view of the fact that the unlawful delivery by defendant’s agents, which is the basis of plaintiff’s claim, occurred on or before the 6th September, 1892. No facts are found showing an estoppel. Galway v. Railroad Co., 128 N. Y. 133, 28 N. E. 479. Nor can we say, without any finding on the subject, that the defendant, by reason of the delay and the failure of the consignees, has lost any remedy it might have had against them, or did not protect itself in the transaction. The defendant claims that the plaintiff ratified the delivery to Smith & Co. But that is not found. No question is made about interest.

The appeal being heard upon the judgment roll, the question is whether, in any view of the facts found, the proper judgment was ordered. Insurance Co. v. Barnard, 96 N. Y. 525. We are of the opinion that the judgment must be sustained.

Judgment affirmed, with costs. All concur.