Kasden v. New York, N. H. H.R. Co. , 104 Conn. 479 ( 1926 )

The reasons of appeal present the propositions that the indorsement of the bill of lading by the defendant American Company in the form above stated, rendered the same negotiable; that the defendant, by such indorsement, is estopped from denying that the bill was negotiable; and that the defendant had no right of stoppage in transitu as against the plaintiffs as purchasers in good faith. The status and effect of the bill of lading, to be determined upon the facts found, is decisive of the appeal.

The Act of Congress of August 29th, 1916, relating to bills of lading (39 U.S. Stat. at Large, 538 et seq. Fed. Stat. Anno., 1918 Supp. [2d Ed.] p. 72 et seq.; 8 U.S. Comp. Stat., § 8604 aaa-w) provides, in § 1, that "bills of lading issued by any common carrier for the transportation of goods . . . from a place in one State to a place in another State, . . . shall be governed by this Act." Since the shipment here under consideration was interstate, questions as to the construction and effect of the bill of lading are controlled by this Act, so far as it applies. In § 2 a "straight bill" is defined as one "in which it is stated that the goods are consigned or destined to a specified person," and in § 6 it is provided that "a straight bill shall have placed plainly upon its face by the carrier issuing it `nonnegotiable' or `not negotiable.'" The trial court finds that the present bill of lading was a straight bill, and plainly marked nonnegotiable. Section 29 is as follows: "A bill may be transferred by the holder by delivery, accompanied with an agreement, express or implied, to transfer the title to the bill or to the goods represented thereby. A straight bill can not be negotiated free from existing equities, and the indorsement of such a bill gives the transferee no additional right." Other relevant sections of the Act are set forth in the footnote.^*

The very evident intention and accomplishment of the Act is to make straight bills nonnegotiable, and if the form of indorsement by defendant to the Bridgeport Iron Metal Company might, standing by itself, be regarded as an attempt to convert the bill into an order bill, such would be an alteration after issue, without authority from the carrier, and void under § 13 as well as futile under § 29. It is clear, then, that the form of the indorsement worked no change in the nature or effect of the bill, that it continued to be nonnegotiable, and both as to the original and subsequent transferees, it is to be treated as subject to such limitations as are imposed by law upon such bills.

As between the defendant American Company as the seller and the Bridgeport Iron Metal Company as the original buyer and transferee, the rights and remedies of an unpaid seller, including the right of stoppagein transitu in case of the buyer's insolvency, manifestly would obtain. General Statutes, §§ 4719, 4723, 4725, 4728; Interstate Window Glass Co. v. New York,N.H. H.R. Co., 104 Conn. 342, 133 A. 102. "Where a bill of lading is outstanding for the goods, the seller is not driven to rely upon the doctrine of stoppage intransitu unless the bill is either a straight bill of lading to the buyer, or unless, if negotiable in form, it has come into the hands of the buyer, either by delivery, if it originally ran to the buyer's order, or by indorsement and delivery, if it ran to the seller's order. Where the bill is a straight or nonnegotiable bill to the buyer, there can be no doubt of the applicability of the doctrine of stoppage in transitu. This is the typical case where the doctrine should be permitted." 2 Williston on Sales (2d Ed.) § 542.

And the sale of the goods by the buyer while they are in transit does not deprive the seller of his right to stop the goods. Unless a negotiable document of title is negotiated for value, or the seller has consented to the subsale, the right of stoppage in transitu still remains. General Statutes, § 4728; 2 Williston on Sales (2d Ed.) § 538. Since the bill of lading here was not a "negotiable document of title," this established principle of the law of sales would seem to be, of itself, sufficient to sustain the defendant's right of stoppage in transitu as against these plaintiffs as well as against the original buyer. The existence of such right is, however, further confirmed by provisions of the Federal Bills of Lading Act, especially § 29, hereinbefore quoted.

In Quality Shingle Co. v. Old Oregon Lumber Shingle Co., 110 Wash. 60, 187 P. 705, the controlling facts were strikingly similar to those of the present case. The plaintiff, consignor and consignee of a carload of shingles, received, indorsed in blank, and delivered a straight bill of lading to Shepard-Traill Company, from which company the defendant purchased and paid for the shingles and took the bill of lading, so indorsed. Before the defendant obtained possession of the shingles or any right therein other than as evidenced by the bill of lading, the plaintiff, because of nonpayment of a check given it by Shepard-Traill Company in payment for the shingles, claimed ownership of the property, and so notified the defendant and the carrier. The decisive question was whether or not the assignment of the bill of lading from Shepard-Traill Company to the defendant vested in the latter a title superior to that possessed by Shepard-Traill Company as against the plaintiff. In affirming a judgment for the plaintiff, the court held that the language of the Federal Act (§§ 2 and 29) places the assignee of a straight bill of lading in all respects in the shoes of his assignor, so that "whatever right, legal or equitable, may exist in the property described in the bill of lading in favor of someone other than the assignor of the bill of lading as against him, continues to exist as against his assignees."

In Getchell v. Northern Pac. Ry. Co., 110 Wash. 66,187 P. 707, a case similar to the foregoing except that in the bill of lading a party other than the consignor was named as consignee, the same court held that "a straight bill of lading, whether naming another than the consignor as consignee or naming the same person as both consignor and consignee and thereafter assigned to another, is not evidence of superior title in anyone other than the consignor, to the property herein specified." See also Hinrichs, Inc. v.Standard Trust Savings Bank, 279 F. 382.

Under provisions of State bills of lading statutes which are similar to § 29 of the Federal Act (as is § 4642 of the General Statutes) it is held that indorsement of a nonnegotiable bill of lading is ineffectual to confer any additional right and the transferee obtains only such interest as the transferor had. Ward-LewisLumber Co. v. Mahony (Cal.) 234 P. 417; Brown v. Floersheim Mercantile Co., 206 Mass. 373, 375,92 N.E. 494; Dewberry-Hargett Co. v. Arkansas StateBank, 164 Ark. 223, 261 S.W. 301.

Again, the limited and conditional character of the title contemplated by the Federal Act as passing by the transfer of a straight bill is manifested by the provisions in § 32 as to rights of creditors of, or subsequent purchasers from, the transferor, prior to notification, to the carrier, of the transfer.

The trial court was correct in concluding that the nonnegotiable bill of lading issued to the defendant American Company, remained such notwithstanding the indorsement of it; that the plaintiffs were chargeable with knowledge of the nature of the bill and the title they obtained thereby (which conclusion eliminates any question of estoppel); and that the defendant retained the right to stop the goods in transitu and effectively exercised that right, and hence was entitled to recover their agreed value.

There is no error.

In this opinion the other judges concurred.