ing of these apples, this car was billed out as though Neumann & Co. were the shippers. They were named in the bill of lading as consignors. As between these two concerns, at least, this manner of shipment was not intended to evidence any change of title to the property, but was merely adopted for convenience. The actual title to the apples still remained in the Produce Company.

In the bill of lading, the consignees were named as follows: "Order John W. Neumann & Co. Notify Dan Case." *

After initiating this shipment and receiving this bill of lading, the Manchester Produce Company attached to the bill of lading a draft, drawn upon Neumann & Co. for the cost price of these apples, and then sold the draft and bill of lading to the plaintiff. The draft and bill of lading were in the due course of business presented for payment to Neumann & Co., and such payment was refused, upon the claim made that the Produce Company was then largely indebted to Neumann & Co.

Upon the arrival of this car at destination, the defendant, upon the written order of Neumann & Co., delivered same to "Dan Case," who was named therein to be notified of its arrival without requiring the production, indorsement, or surrender of the bill of lading. Upon this state of fact plaintiff brings this action for conversion. It must be conceded that the defendant breached the contract of carriage by not complying with its provisions, and, further, that conversion is the proper remedy, if any exists in plaintiff. The sole question presented, of consequence, is whether plaintiff is in a position to assert the contract obligation of the bill of lading as against the defendant.

This manner of shipping property has the sanction of usage, and, based upon the carrier's agreement to require the surrender of the original bill of lading, a commercial practice has become established, whereby the shipper is enabled, through banking institutions, to secure the value of the property consigned, in advance of its delivery at destination by the sale or pledge of the bill of lading. Such sale or pledge, in effect, secures the value advanced by pledging the property represented thereby. Such a course of commercial dealing has long had the sanction of our courts. It has been uniformly held that the transfer of the bill of lading transfers the title to the property represented thereby, and that such transfer of the bill of lading may be by mere delivery thereof when such is the intention. * * * It is also well settled that the bill of lading is valid and enforceable in the hands of a bona fide transferee in all its terms and provisions. * **

The only question remaining is whether the sale by the Manchester Produce Company to plaintiff transferred any title. We can discover no reason why it did not. The Produce Company was concededly the owner of the apples. It had bought and paid for them. It had not transferred the title to any other person, and its right to effect a sale thereof was unlimited except that such sale was required to be subject to its contract for the transfer of such title to Neumann & Company, upon payment of the draft. The title of the Produce Company being complete, there was no restriction upon its right to sell the same, and that object was accomplished by the transfer of the bill of lading. The bank was then in a position to insist upon all the carrier's obligations, as expressed in the bill of lading.

Nor does the fact that the Produce Company named Neumann & Co. as consignors have any effect upon the status of the parties. Such

*

fact did not work to the detriment of the carrier in any manner, and hence no estoppel could arise. The bill of lading makes no restriction upon the shipment in the name of the consignee instead of the consignor. Under its plain provisions, even if Neumann & Co. had actually initiated the shipment, its obligation to require the surrender of the bill of lading remained unchanged. Under such circumstances, the rights of third parties were just as likely to intervene shipment and delivery. In fact, it is not an infrequent practice for the consignor of goods to ship them to his own order, with an accompanying direction to notify third parties, and then to dispose of the bill of lading to banking institutions, as was done in this case, thus securing his money for the shipment in advance of its delivery. ** It will thus be seen that the naming of Neumann & Co. as consignors did not affect the contract obligation of the carrier. The only safe course for the carrier was to observe its contract. By so doing it could sustain no loss, while by its violation it would necessarily defeat the intervening property rights of third persons, who might deal with the bill of lading, upon the faith of the agreement of the carrier to require its production before making delivery. This is equally true, whether the railroad supposed Neumann & Co. to be the consignors or not. It cannot be said that the delivery in this instance was induced, in any way, by the manner in which this shipment was made. The carrier chose to violate the plain obligation it had assumed and with entire disregard to the rights of the plaintiff. Because of such delivery the defendant was unable to surrender the property to the plaintiff and a conversion thereby arose, for which the defendant should be held liable.

The judgment appealed from should be affirmed.

In the above case, such delivery was wrongful. The holder of the bill of lading could have recovered possession of the goods from the person to whom the carrier made delivery. If the goods are delivered to a person, who at the time was lawfully in possession of the bill of lading and entitled to delivery, but without requiring surrender of the bill of lading, such person would thereby obtain power to transfer title to the goods; that is, if the goods were sold to one person and the bill of lading subsequently negotiated to another person, in this case, the indorsee of the bill would get no title to the goods, but such holder could hold the carrier liable for making delivery without requiring surrender of the bill of lading. This rule is recognized in section 14 of the Uniform Bills of Lading Act.

One additional class of rights against a carrier should here be mentioned. The contractual obligations of the carrier, as provided for in the bill of lading, are due to the holder of the bill of lading. The indorsement of the document also operates as an assignment of all the contract rights which the bailor had against the bailee. Generally, perhaps, the holder of the bill, being the owner, possesses all the remedies necessary, solely because he is owner of the goods; but sometimes it will be to his advantage to sue, not as

owner of the goods, but as assignee of the rights which the bailor had against the bailee. The converse is not true. The carrier cannot sue the holder of the bill of lading for freight charge. The contractual obligations of the bailor do not pass by the assignment of the bill. The carrier, however, cannot be compelled to surrender the goods until the freight is paid; hence the carrier is in just about as safe a position as though it were allowed to sue the holder for the freight. The carrier would not have this right against the owner of goods wrongfully shipped.

SECTION 5.-RIGHTS OF THE INDORSEE AGAINST INDORSERS

Sales Act, Section 36. A person who for value negotiates or transfers a document of title by indorsement or delivery, including one who assigns for value a claim secured by a document of title, unless a contrary intention appears warrants:

(a) That the document is genuine.

(b) That he has a legal right to negotiate or transfer it.

(c) That he has knowledge of no fact which would impair the validity or worth of the document, and

(d) That he has a right to transfer title to the goods and that the goods are merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer without a document of title the goods represented thereby.

Sales Act, Section 37. The indorsement of a document of title shall not make the indorser liable for any failure on the part of the bailee who issued the document or previous indorsers thereof to fulfill their respective obligations.

Sales Act, Section 35. Where a negotiable document of title is transferred for value by delivery, and the indorsement of the transferor is essential for negotiation, the transferee acquires a right against the transferor to compel him to indorse the document unless a contrary intention appears. The negotiation shall take effect as of the time when the indorsement is actually made.

The liability of an indorser of a document of title is very different from the liability of the unqualified indorser of a negotiable instrument payable in money, but is very much like the liability of the indorser without recourse. The unqualified indorser of a negotiable instrument enters into two kinds of obligations: (1) A series of warranties; and (2) a special engagement to pay the amount called for by the instrument, if it be not paid at maturity, conditioned upon there having been a due presentment for payment upon the person primarily liable and due notices of dishonor, and, in case of a foreign bill, due notice of protest sent out to the indorser. It is clear from sections 36 and 37 that the indorser or transferor of a negotiable document of title does not enter into

any such "special engagement." Therefore, with respect to negotiable documents of title, there is no corresponding practice or necessity for making any due presentment upon the bailee and for the giving of notices of dishonor to indorsers. The indorsers of the negotiable document of title does enter into the same warranties which attach to the indorser "without recourse." It is true that the act does not mention that such indorser warrants that prior parties had capacity to contract, but the probabilities are that such an obligation would be construed to be involved in the general warranty that he has a legal right to negotiate it. The special warranty expressed in 36 (d) has no analogy in the law of bills and notes. From a practical standpoint the warranties pertaining to the kind and quality of the goods are the most important. It is to be noticed that, if certain warranties would have been implied, had the parties been dealing with the goods directly, instead of by means of a document of title, such warranties are still regarded as attaching to the sale. All sellers of goods impliedly warrant certain things. A seller of a negotiable document of title is a seller of goods; therefore he incurs the liability which arises out of the several implied warranties. There are six implied warranties: (1) Of title; (2) in sale by description, that the goods shall correspond to the description; (3) of merchantability, in certain cases; (4) in sales by sample, that the goods shall correspond to the sample; (5) of reasonable fitness for a particular purpose, in certain cases; and (6) any additional warranty arising out of established usage. The Sales Act mentions but three of these warranties, though it is not likely that section 36 (d) would be construed as confining the liability of indorsers of negotiable documents of title to these three types of implied warranties.

Do these warranties run to all successive holders, or do they run only to the immediate indorsee? The Sales Act makes no provision, and the point seems not to have been decided. In negotiable instruments we found that the indorser without recourse warranted to all successive holders, but that the transferor by delivery warranted only to his immediate indorsee. In sales of personal property, not involving negotiable documents of title, the warranty extends only to the immediate buyer, except, perhaps, in sales of food. Logically, we should say, therefore, that the warranties specified in 36 (a), (b), and (c) would run to successive holders, but not where the negotiation was by delivery, thus following out the analogy in negotiable instruments. But as regards the warranties in 36 (d) the analogy in sales of personal property generally should be followed, and these warranties, therefore, would not as a rule extend beyond the immediate indorsee.

What is the position of a bank which has taken for purpose of collection a bill of exchange drawn by the seller upon the buyer for the amount of the purchase price, which bill was attached to a negotiable document of title? The negotiable document of title will nearly always be indorsed, either specially to the bank or in

blank, so that the bank has apparent ownership. If the bank has already discounted the bill of exchange, then the bank has an actual interest in the bill of lading and in the goods, but the bank's interest is essentially a pledgee's or mortgagee's interest. When the bank indorses or delivers the bill to a sub-agent bank, does the bank incur liability on the bill of lading? Generally not, because this transaction is not a sale. The bill of exchange will usually be indorsed restrictively to the sub-agent bank, and such an indorsement carries no liabilities upon the indorser, for it is merely a transfer of title to the bill for the purpose of making a collection. There has been no sale of the bill. The same would be true as regards the transfer by the bank of the negotiable document of title. The transaction is not a sale; therefore no liability would attach to the bank. If the bills should get out of banking circles and be sold to innocent parties, there is reason to think that the bank would be liable.

Does the transfer of the bill of lading to the buyer, at the time of the buyer's payment or acceptance of the bill of exchange, impose upon the bank making such delivery any liability to the buyer because of the seller's breach of contract? This question is raised in the following case. The liability of the transferor by delivery merely of a negotiable document of title, which is in such form as to require indorsement to pass title, by section 35 is made the same as that imposed upon the transferor of unindorsed negotiable instruments payable in money, and the rights of such a transferee are likewise the same.

TOLERTON & STETSON CO. v. ANGLO-CALIFORNIA BANK, Limited. (Supreme Court of Iowa, 1901. 112 Iowa, 706, 84 N. W. 930, 50 L. R. A. 777.)

The petition originally filed in this case asked, briefly, for damages on account of a breach of warranty in the sale of merchandise. Plaintiff is a corporation engaged in the wholesale grocery business at Sioux City, Iowa. Defendant is a banking corporation. During the summer of 1897 plaintiff purchased a car of canned goods from the California Canneries Company, of San Francisco, under a warranty that the goods should be equal in quality to certain samples shown. The Canneries Company delivered said goods to a railway company at San Francisco, taking a bill of lading therefor, in which defendant bank was named as consignee at Sioux City. This bill of lading was by defendant bank attached to a draft in its favor drawn by the Canneries Company on plaintiff for the price of said goods. The car of goods came in the course of transit into possession of the Sioux City & Pacific Railroad Company, and was by it delivered to plaintiff, who paid to said railroad company the price of said merchandise, which sum was paid over by the latter to defendant bank. Plaintiff relied on the warranty in receiving the goods, and thereafter found such goods inferior in quality to the samples. Plaintiff notified the Canneries Company of the breach of warranty, but nothing was done by the latter to rectify matters. It is further alleged that defendant is the assignee of the order for the purchase of said goods, and as such is bound by