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to notify the bailee (railroad or warehouseman) of his ac. quisition of title, while a transferee of an assignable docu. ment of title acquires no rights against the bailee except by giving notice. Other distinctions noted below.
The law of negotiable paper (bills of exchange, promissory notes and checks), became incorporated into the common law by judicial decision recognizing the customs of merchants. Such instruments, being drawn with certain requisites of form, were characterized by freedom of transferability that the non-negotiable promise or order or contract of any form did not have, and out of that central characteristic arose others, and the negotiable instrument thus became an instrument of credit and a means of payment that we can hardly imagine the commercial world doing without. Such instruments are called negotiable instruments, or negotiable paper or commercial paper; and are governed by the Uniform Negotiable Instruments Act. The law as to documents of title (bills of lading and warehouse receipts) has borrowed this feature of negotiability from the law of Negotiable Instruments; but it must always be remembered that the two classes of instruments, negotiable instruments on the one hand, and documents of title on the other, must in certain respects ever be different and be governed as they are today, by entirely different bodies of law. The negotiable instrument is a promise to pay, or an order to pay, money, generally (not any particular money), while a document of title calls for the delivery by a bailee of goods-certain, particular goods. It is well to keep this thought in mind that a bill of exchange or warehouse receipt is a document of title, not a negotiable instrument, and that there is a separate body of law governing each.
Documents of title are negotiable or non-negotiable, as explained in the previous section. But both kinds are transferable. If the negotiable bill of lading is transferred, no notice of its transfer need be given the carrier, as the carrier must assume that being negotiable, it may therefore have been negotiated and must call for its production before surrendering the goods, while the transferee of a non-negotiable bill of lading must in order to protect his acquisition give notice to the carrier. The carrier must take up the negotiable bill of lading and will be liable to any one who may purchase it in case of its failure so to do; while it would not be so liable in case of a non-negotiable bill.
Sec. 21. HOW NEGOTIATION OF DOCUMENTS ACCOMPLISHED. A negotiable document is transferable by delivery when it runs to bearer, and by indorsement when it runs to the order of a certain person. If indorsed in blank it then becomes payable to bearer.
If the document runs to bearer it may pass from hand to hand without indorsement; if to a person's order, then it must be indorsed by him to transfer title. He may indorse it in blank, that is, by simply writing his name; or specially, that is, to a certain person over his signature. If he indorses in blank, this permits its further negotiation by mere delivery; if he indorses it specially it can only be negotiated by indorsement.
Sec. 22. RESULTS OF TRANSFER OF DOCUMENT TO TRANSFER TITLE TO GOODS. When a negotiable or non-negotiable document of title is transferred in due form, it accomplishes the transfer of title to the goods. It is a symbolical delivery and title thereupon vests in the transferee.
A document of title is a symbol of the goods. When it is transferred in proper form, the title passes. The goods then become the goods of the transferee. We have seen that notice to the carrier, warehouseman or other bailee must be given in order to protect the transferee's rights and protect him against the future acts of the transferor. But in negotiable documents this is unnecessary, and in non-negotiable documents, it is unnecessary as between transferror and transferee.
Sec. 23. WARRANTIES OF TRANSFERROR. The transferror warrants to the transferee the genuineness of the bill, his title thereto, and may also by the transfer warrant the goods, as shown below.
A transferror of a bill of lading or warehouse receipt warrants :
(a) That the bill or receipt is genuine; (b) That he has a legal right to transfer it; (c) That he has knowledge of no fact that would
impair the validity or worth of the document; (d) That he has a right to transfer the title to the
goods, that the goods represented by the document are merchantable or fit for a particular purpose wherever those warranties would be made if the sale were directly to the goods
themselves without use of such document. But the transferror does not guarantee that the carrier or warehouseman or previous indorsers will perform their obligations. In that event the holder must sue the carrier or warehouseman. In this respect a transfer of a document of title is notably different from an indorsement of negotiable paper which (unless qualified) renders the indorser liahle if the party primarily liable fails to make payment.
Sec. 24. THE USE OF DOCUMENTS OF TITLE AS SECURITY. Documents of title are very widely used as security to obtain credit from banks and other lenders.
In case of credit being extended with a document of title as security it has been pointed out that the negotiable or order form is the more convenient and safer one to use. If offered by the consignor it should be to consignor's order; if by consignee, should be to his order or endorsed to him or in blank.
Sec. 25. RIGHT OF TRANSFEREE OF NEGOTIA. BLE DOCUMENT AGAINST THE ISSUER THEREOF. The negotiation of a negotiable document of title gives the transferee as against the issuer such rights as such transferee would have had against the issuer had the contract been directly with him according to the terms of the document.
The holder of a negotiable document becomes by his acquisition and without notice to the carrier or warehouseman a party to the document as though he had originally contracted with the issuer.
The carrier (or warehouseman) cannot interpose the defense that he has not received the goods where the bill of lading is issued by an official or agent having power to issue bills of lading. Neither can the carrier defend that the contents of the goods are not as described, unless it is stated that "contents unknown," or "said to contain” or “shippers load and count," etc. If the goods are visible, such phrases cannot be used to qualify the liability, unless the shipper did his own loading, and even there such provisions do not qualify if the goods were actually known to the carrier by use of its own scales,
33. See Article in 16 Mich. L. R. 402.
Sec. 26. DEFINITIONS. "A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price." "A contract to sell goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price." "A contract to sell, or a sale may be absolute or conditional.”1
The law which governs contracts to transfer the ownership of goods, and the actual transfer of such ownership, from one person to another for a consideration is called the law of “Sales of Goods,” or more briefly, “Sales." The law of sales thus concerns itself in the first place
1. Uniform Sales Act, Sec. 1. For complete text of this Act. and note as to states adopting it, see Appendix A.