Vol. IV.] MEYER V. JOHNSTON. [No. 4. be satisfied or provided for before the property, or the proceeds of it after the sale, shall pass out of its control. The certificates are not debts of the company, but of the receivers, backed by the pledged faith of the court that the property, on the proceeds of which they are charged, is in its possession, subject to be, and that it will be, disposed of by it for the payment of them. This results from the fact that they are but a substitute for common methods by which money is raised for the use of a receiver in a particular cause, a mode of appropriating, in advance, a portion of the value of the property, in order to enable the court to save a greater value thereof from destruction. Hence no chancellor should permit them to be issued without the utmost circumspection; and as they are used for urgent present needs, and are to be redeemed when the litigation is ended, they should not be issued in excess of the need, nor-although made negotiable that they may be more available be sent out of the country for circulation abroad like mortgage bonds. Such a limited scope is all that is necessary for the certificates to have. By enlarging it, the character which their origin should stamp upon them would be changed, and it will become impossible to preserve the value of older securities. It may also be said, such a power will be abused. Rash or facile chancellors may be persuaded to issue more certificates than are necessary for the mere conservation of the property, and, when out, they must all be redeemed; else the whole scheme of raising money in this manner fails, and the court is brought into disrepute. All power may be abused. But in the first place, no receiver ought to be appointed, in any such case, except to "prevent fraud, save the subject of litigation from material injury, or rescue it from threatened destruction." Baker v. Backus, 32 Ill. 79; Voshell v. Hynson, 26 Md. 92. Nor should the appointment of a receiver be made except upon a bill filed praying it, and after answer thereto, "unless the necessity be of most stringent character." Leddel v. Starr, 4 C. E. Green (N. J.), 159; Voshell v. Hynson, supra; Sanford v. Sinclair, 8 Paige, 372; Gibson v. Martin, Ib. 481; Blondheim v. Moore, 11 Md. 365. The issue of negotiable certificates of indebtedness is a matter hardly less important than the appointment of receivers, and should not be authorized by the court, except after full notice to the parties interested, when this can be given, and ample opportunity allowed for them to be heard. The urgency for the issue of such certificates can rarely be so great, as is that for the appointment of a receiver. A detailed statement ought also to be made out specifying the sums needed, and for what they are needed, and proof be adduced of the correctness of such statement, and of the necessity that the money be raised. A receiver is required, in presenting his accounts to be passed, to state clearly the items. And in like manner, when he asks authority to create, in advance, a large debt against the property by which money is to be put into his hands, he ought to show the particulars constituting the sum before he is allowed to raise it as well as be held to account for its proper application. A disregard of these rules might lead to intolerable abuse. Finally, the case, in our opinion, ought to be one of great urgency, in which the court should appoint a receiver to manage and operate a railroad. 3. Upon the whole, however, it seems necessarily to result, from the Vol. IV.] 66 nature of such property, and the capacity and duty of courts of equity to adapt their decrees to all varieties of circumstances which can arise, and adjust them to all the peculiar rights of all parties in interest," that if a large railroad and its appurtenances are in the hands of a receiver to be preserved and operated, the court having charge thereof must possess the power, after notice to and hearing of the parties interested, to allow the issue, even of negotiable certificates of indebtedness creating a first lien, when this is necessary to raise money for the economical management and conservation of the property, until it shall be disposed of. The pressure upon the courts in various portions of the country to exercise such authority, and the consent or acquiescence of first mortgagees and others in its exercise, are persuasive that the power must exist. Reversed and remanded for further proceedings, in accordance with this opinion. SUPREME COURT OF THE UNITED STATES. [JANUARY, 1877.] COMMON CARRIER. BAILOR AND BAILEE. · DELIVERY OF GOODS TO CONTRARY TO BILL OF LADING. OWNER HENTZ v. THE IDAHO. A common carrier may show, as an excuse for non-delivery of goods pursuant to his bill of lading, that he has delivered the goods upon demand to the true owner. MR. JUSTICE STRONG delivered the opinion of the court. The libellants claim damages against the steamer for the non-delivery of one hundred and sixty-five bales of cotton, part of a shipment of two hundred bales for Liverpool, made by Thomas W. Mann, and consigned to the order of James Finlay & Company. After the shipment the libellants purchased the cotton from Mann, and the ship's bill of lading therefor was indorsed by him over to them. On the arrival of the steamer at Liverpool thirty-five bales were delivered to Finlay & Company, but the remaining one hundred and sixty-five were delivered to Baring Brothers & Company, in pursuance of an order from William J. Porter & Company, of New York. Such a delivery was not in accordance with the stipulations of the bill of lading, but it is attempted to be justified for the reason that Porter & Company were the true owners of the cotton, and as such had a right, superior to that of the shippers, to control its delivery. In considering the worth of this defence it is necessary to inquire whether the law permits a common carrier to show, as an excuse for non-delivery pursuant to his bill of lading, that he has delivered the goods upon demand to the true owner. Upon this subject there has been much debate in courts of law and some contrariety of decision. In Rolle's Abridgment, 606, title Detinue, it is said, "if the bailee o goods deliver them to him who has the right to them, he is, notwithstand HENTZ V. THE IDAHO. Vol. IV.] [No. 4. ing, chargeable to the bailor, who in truth has no right," and for this 9 Henry 6, 58, is cited. And so if the bailee deliver them to the bailor in such a case, he is said not to be chargeable to the true owner (Ib. 607), for which 7 Henry 6, 22, is cited. The reasons given for such a doctrine, however satisfactory they may have been when they were announced, can hardly command assent now. It is now everywhere held, that when the true owner has by legal proceedings compelled a delivery to himself of the goods bailed, such delivery is a complete justification for non-delivery according to the directions of the bailor. Bliven v. The Hudson River Railroad Čo. 36 N. Y. 403. And so when the bailee has actually delivered the property to the true owner, having a right to the possession, on his demand, it is a sufficient defence against the claim of the bailor. The decisions are numerous to this effect. King v. Richards, 6 Wharton, 418; Bates v. Stanton, 1 Duer, 79; Hardman v. Wilcock, 9 Bingham, 382; Biddle v. Bond, 6 Best & S. 225. If it be said that by accepting the bailment the bailee has estopped himself against questioning the right of his bailor, it may be remarked in answer, this is assuming what cannot be conceded. Undoubtedly the contract raises a strong presumption that the bailor is entitled, but it is not true that thereby the bailee conclusively admits the right of the principal. His contract is to do with the property committed to him what his principal has directed, to restore it or to account for it; Cheeseman v. Exall, 6 Exch. 341; and he does account for it when he has yielded it to the claim of one who has right paramount to that of his bailor. If there be any estoppel, it ceases when the bailment on which it is founded is determined by what is equivalent to an eviction by title paramount; that is, by the reclamation of possession by the true owner. Biddle v. Bond, supra. Nor can it be maintained, as has been argued in the present case, that a carrier can excuse himself for failure to deliver to the order of the shipper only when the goods have been taken from his possession by legal proceedings, or where the shipper has obtained the goods by fraud from the true owner. It is true that in some of the cases fraud of the shipper has appeared, and it has sometimes been thought it is only in such a case, or in a case where legal proceedings have interfered, that the bailee can set up the jus tertii. There is no substantial reason for the opinion. No matter whether the shipper has obtained the possession he gives to the carrier by fraud practised upon the true owner, or whether he mistakenly supposes he has rights to the property, his relation to his bailee is the same. He cannot confer rights which he does not himself possess, and if he cannot withhold the possession from the true owner, one claiming under him cannot. The modern and best considered cases treat as a matter of no importance the question how the bailor acquired the possession he has delivered to his bailee, and adjudge that if the bailee has delivered the property to one who had the right to it as the true owner, he may defend himself against any claim of his principal. In the late case of Biddle v. Bond, supra, decided in 1865, it was so decided; and Blackburn, J., in delivering the opinion of the court, said there was nothing to alter the law on the subject in the circumstance that there was no evidence to show the plaintiff, though a wrong-doer, did not honestly believe that he had the right. Said he, the position of the bailee is precisely the same, whether his bailor Vol. IV.] HENTZ V. THE IDAHO. [No. 4. was honestly mistaken as to the rights of the third person whose title is set up, or fraudulently acting in derogation of them. In Western Transportation Co. v. Barber, 56 N. Y. 544, the court of appeals of New York unanimously asserted the same doctrine, saying: "The best decided cases hold that the right of a third person to which the bailee has yielded may be interposed in all cases as a defence to an action brought by a bailor subsequently for the property. When the owner comes and demands his property he is entitled to its immediate delivery, and it is the duty of the possessor to make it. The law will not adjudge the performance of this duty tortious as against a bailor having no title." The court repudiated any distinction between a case where the bailor was honestly mistaken in believing he had the right, and one where a bailor obtained the possession feloniously or by force or fraud, and we think no such distinction can be made. We do not deny the rule that a bailee cannot avail himself of the title of a third person (though that person be the true owner) for the purpose of keeping the property for himself, nor in any case where he has not yielded to the paramount title. If he could, he might keep for himself goods deposited with him without any pretence of ownership. But if he has performed his legal duty by delivering the property to its true proprietor at his demand, he is not answerable to the bailor. And there is no difference in this particular between a common carrier and other bailees. Recurring then to the inquiry whether Porter & Co., to whose order the steamer delivered the one hundred and sixty-five bales of cotton, were the true owners of the cotton, a brief statement of the evidence on which their title rests is necessary. It originated as follows: On the 1st of April, 1869, one J. C. Forbes obtained from the master of the brig Colson, then lying at New Orleans, a bill of lading for one hundred and thirtynine bales of cotton, described by specified marks. The bill was indorsed, and forwarded by Forbes to Porter & Co., and drafts against it to a large amount were drawn upon them, which they accepted, credited, and paid on or before the 7th of the month. In fact, however, when the bill of lading was given no such cotton had been received by the brig. But on the 5th of April the agent of Forbes bought one hundred and forty bales, then at the shipper's press, and directed them to be sent to the Colson, marked substantially as described in the bill of lading. These bales were accordingly delivered from the press to the brig on the 8th of April, and the first and second mates receipted for them. They were not actually taken on board, but they were deposited on the pier at the usual and ordinary place for the receipt of freight by the Colson, and an additional bill of lading for one bale only was taken by Forbes, and by him indorsed and transmitted to Porter & Co., together with an invoice of the one hundred and forty bales corresponding with the bills of lading. The marks and numbers on the bales were the same as those mentioned in the bills of lading, excepting only that thirty-five were marked L instead of thirtysix, and sixteen marked S instead of fifteen. There was also a small difference in the aggregate weight. That the cotton thus delivered to the Colson was intended to fill the bills of lading, one of which had been previously given, is incontrover Vol. IV.] HENTZ V. THE IDAHO. [No. 4. At tible. They were so intended by the shipper. If not why were they thus marked? And why was a bill of lading taken for one bale only instead of for one hundred and forty; and why was the invoice of the whole number sent? Such also was plainly the understanding of the ship. The receipts of the mates, and the fact that the master gave a bill of lading for one bale marked S, when there were sixteen bales thus marked, leave this beyond reasonable doubt.. What then? Why, the one hundred and forty bales thus shipped became from the moment of shipment the property of Porter & Co., to whom the bills of lading were indorsed. It is not only the utterance of common honesty, but the declaration of judicial tribunals, that a delivery of goods to a ship corresponding in substance with a bill of lading given previously, if intended and received to meet the bill of lading, makes the bill operative from the time of such delivery. that instant it becomes evidence of the ownership of the goods. Thus, in Rowley v. Bigelow, 12 Pick. 307, it is said a bill of lading operates by way of estoppel against the master and also against the shipper and indorser. "The bill acknowledges the goods to be on board before the bill of lading is signed. But if through inadvertence or otherwise the bill of lading is signed before the goods are on board, upon the faith and assurance that they are at hand, as if they are received on the wharf ready to be shipped, or in the shipper's own warehouse, . . . . and afterwards they are placed on board, as and for the goods embraced in the bill of lading, as against the shipper and master, the bill will operate on those goods by way of relation and estoppel." Such is also the doctrine asserted in Halliday v. Hamilton, 11 Wall. 565, and it is in harmony with the general rules that regulate the transfer of personal property. We do not say that a title to personal property may not be created between the issue of a bill of lading therefor and its delivery to the ship, which will prevail over the master's bill, but in the absence of any such intervening right, a bill of lading does cover goods subsequently delivered and received to fill it, and will represent the ownership of the goods. The cotton delivered on the 8th of April on the pier for the Colson, and received by the mates of the brig, became, therefore, at the instant of its delivery, the property of Porter & Co., who were then the indorsers of the bills of lading. Its subsequent removal by Forbes to the Ladona, either with or without the consent of the brig's officers, could not divert that ownership. There is nothing in the statutes of Louisiana which requires a different conclusion. Those statutes prohibit the issue of bills of lading before the receipt of the goods, but they do not forbid curing an illegal bill by supplying goods, the receipt of which have been previously acknowledged. The statutes are designed to prevent fraud. They are not to be construed in aid of fraud, as they would be if held to make a delivery of goods to fill a fraudulent bill of lading inoperative for the purpose. The title of Porter & Co. to the one hundred and forty bales must, therefore, as we have said, be held to have been perfected when they were delivered to the Colson on the 8th of April. No right in any other person intervened between the issue of the bill of lading and the brig's receipt of the cotton to fill it. It was after the title of Porter & Co. had thus become complete that Forbes removed the one hundred and forty bales from the custody of the Colson and shipped it for New York on the |