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DOWS V. NATIONAL EXCHANGE BANK OF MILWAUKEE, 91 U. S. 618 (1875)
U.S. Supreme Court
Dows v. National Exchange Bank of Milwaukee, 91 U.S. 618 (1875)
Dows v. National Exchange Bank of Milwaukee
91 U.S. 618
1. An invoice is neither a bill of sale nor evidence of a sale, and, standing alone, furnishes no proof of title.
2. A party discounting a draft, and receiving therewith, deliverable to his order, a bill of lading of the goods against which the draft was drawn, acquires a special property in them and has a complete right to hold them as security for the acceptance and payment of the draft.
3. Where such party forwarded the draft, with the bill of lading thereto attached, to an agent with instructions by special endorsement on the bill and by letter to hold the wheat in the bill mentioned, against which the draft had been drawn, until payment of the draft should be made, the agent had no power, prior to such payment, to make a delivery which would divest the ownership of his principal.
4. Where the agent directed the carrying vessels, on which the wheat was shipped, to deliver it to the Corn Exchange Elevator, the proprietor whereof accepted the wheat in bailment under express instructions that it was to "be held subject to and delivered only on the payment of the draft," held that such proprietor, although the drawee of the draft, acknowledged, by the act of receiving the wheat, that it was not placed in his hands as the owner thereof, and that the title of the bailors was not transferred.
5. The drawee having, under such circumstances, possession of the wheat as a mere warehouseman, and not as a vendee, his subsequent sale and delivery thereof conferred no title thereto on the purchaser.
6. Where neither the evidence received nor offered tended to rebut the intent exhibited in the bills of lading, and confirmed throughout by the endorsement thereon and the written instructions, to retain the ownership of the wheat until the payment of the draft, held that there was no necessity of submitting to the jury the question whether there had been a change of ownership.
7. The court below properly charged the jury that on the refusal of the party in possession of the wheat to deliver it to the owner when thereunto requested, the latter was entitled to recover the value thereof, with interest from the date of such refusal.
This is an action of trover, instituted by the National Exchange Bank of Milwaukee to recover damages for the alleged conversion, by the plaintiffs in error, of 22,341 bushels of wheat, which the National Exchange Bank of Milwaukee claimed as its property.
The wheat was purchased in Milwaukee, Wis., by McLaren & Co., in the month of September, 1869, upon orders received
from Smith & Co. of Oswego, N.Y., who were in need of it for immediate use and requested that the drafts on account thereof be drawn on them through the Merchants' Bank of Watertown, N.Y. McLaren & Co. paid for the wheat so purchased, and, to reimburse themselves, shipped it on three vessels, named respectively Kate Kelly, Grenada, and Corsican, and received from the captains of said vessels triplicate bills of lading which describe McLaren & Co. as the shippers and by their terms make the wheat deliverable to the account of W. G. Fitch, cashier, care Merchants' Bank, Watertown, N.Y. McLaren & Co. presented drafts drawn on Smith & Co., with the original bills of lading attached thereto, to the National Exchange Bank of Milwaukee. The bank discounted them, placed the proceeds to the credit of McLaren & Co., and retained the original bills of lading. Its cashier, after discounting the drafts, wrote a special endorsement on the back of each bill of lading. The endorsement on that of the Grenada reads as follows:
"On payment of two drafts drawn by McLaren & Co. on Smith & Co., Oswego, N.Y., to my order, dated Sept. 13, 1869 -- one draft at thirty days' date for $8,000, and the other at forty-five days' date for $8,000, both drafts being payable at the Merchants' Bank, Watertown, N.Y. -- you will surrender the within-mentioned wheat to Smith & Co. or order. Should drafts above mentioned not be promptly paid, hold the wheat for my account, without recourse."
"W. G. FITCH, Cashier"
"MILWAUKEE, 13th September, 1869"
"To Merchants' Bank, Watertown, N.Y."
A similar endorsement, except as to the amounts and dates of the drafts, was made on the bills of lading of the Kate Kelly and the Corsican. McLaren & Co. insured the cargoes for their account from Milwaukee to Oswego, and transferred the insurance certificates to the bank. After making the endorsements on the bills of lading, the cashier enclosed the drafts, bills of lading, and certificates of insurance, to the Merchants' Bank, Watertown, N.Y. The letter enclosing those relating to the Kate Kelly is as follows:
"To Cashier Merchants' Bank, Watertown, N.Y.:"
"I hand you for collection and remittance to Mercantile National Bank, New York, for my credit:"
McLaren & Co., on Smith & Co., Oswego . . . $4,080.81 exg.
" ' Oct. 5 . . . . . . . . . . . 7,500.00 "
" ' Oct. 20. . . . . . . . . . . 7,500.00 "
B. L. schr. Kate Kelly, 8,727 bushels Amber Mil. wheat.
B. L. schr. Kate Kelly, 5,527 2/6 0/0 bushels No. 1, Amber Mil.
wheat, consigned to your bank for my account, and to be held by
you subject to the payment of the above drafts.
Insured North-western Nat. Ins. Co. . . . . $5,000
Nat. Ins. Co., Boston . . . . . . . . . 5,000
AEtna Ins. Co., Hartford. . . . . . . . 5,000
Republic Ins. Co. . . . . . . . . . . . 5,000
Security Ins. Co. . . . . . . . . . . . 4,000
"I consign this wheat to you, to be held as per endorsed bill of lading, and surrender only on payment of the drafts drawn against it, holding you responsible for the same in case of nonpayment of the drafts. Will you receive consignments in this way, charging reasonably for the same?"
"W. G. FITCH, Cashier"
On the 6th of September, 1869, J. F. Moffatt, cashier of the Merchants' Bank, acknowledged the receipt of the letter and its enclosures.
On the 8th of that month Fitch addressed another letter, as follows:
"To Merchants' Bank of Watertown, N.Y.:"
"In my letter of the 2d, I requested you to state in your letter whether you would hold all wheat I consign to you strictly for my account, holding your bank responsible for the safekeeping of the property for this bank and holding such property subject to my orders in all cases where the drafts made against it are not paid. Your reply of the 6th instant does not answer my inquiry. Will you please write me by return mail defining your position? We have adopted the invariable rule to in no instance consign property only on condition that the consignee acknowledges himself responsible for it until instructed to hand over to a third party."
"W. G. FITCH, Cashier"
In Moffatt's answer of the 11th, he says,
"In reply to yours of the 2d instant, I would say that we will receive, until further notice, such consignments as you choose to send us, holding us responsible for the grain in case of nonpayments of drafts, and shall charge 3/8 percent commissions for so doing."
On the 13th he acknowledged the receipt of Fitch's letter of the 8th and said, "I believe your inquiry was answered in mine of the 11th instant."
Letters, in substantially the same language as that of Sept. 2, were written to the cashier of the Merchants' Bank, enclosing the drafts, bills of lading, and certificates of insurance, of the cargoes of the Grenada and Corsican.
The cashier of the Merchants' Bank, upon receipt of the drafts and bill of lading of the Kate Kelly, wrote three letters -- one to Smith & Co., dated Watertown, N.Y., Sept. 6, 1869, as follows:
"Please find enclosed for acceptance, and return the following, to-wit:"
McLaren & Co., on your st. . . . . . $4,080.81 and exg.
" ' Oct. 5. . . . . . . . 7,500.00 "
" ' Oct. 20 . . . . . . . 7,500.00 "
"Also inspection certificate."
Another, bearing the same date, as follows:
"Proprietors of Corn Exchange Elevator, Oswego, N.Y.:"
"Please find enclosed an order for cargo schooner Kate Kelly for 8,727 bushels Amber Milwaukee wheat, and 5,527 20/60 bushels No. 1 Amber Milwaukee wheat, to be delivered to you; and you will please hold the same subject to, and deliver the grain only on payment of, the following drafts; to-wit:"
McLaren & Co., on Smith & Co., st. . . . $4,080.81 and exg.
" ' Oct. 5 . . . . . . . . . . 7,500.00 "
" ' Oct. 20. . . . . . . . . . 7,500.00 "
And the third, of the same date, as follows:
"MERCHANTS' BANK, WATERTOWN, N.Y., Sept. 6, 1869"
"Robert Hayes, Esq., Master schr. Kate Kelly, Oswego, N.Y.:"
"Please deliver to the Corn Exchange Elevator, Oswego, N.Y., your cargo, 8,727 bushels of Amber Milwaukee wheat, and 5,527 20/60 bushels of No. 1 Amber Milwaukee wheat, consigned to us by W. G. Fitch, Esq., cashier. "
Letters of the same purport were written in relation to the cargoes of the Grenada and Corsican, except that, in the case of the Corsican, the letter enclosing the order to the master of that vessel to deliver her cargo was addressed to "Smith & Co., Proprietors Corn Exchange Elevator." Smith & Co., on the receipt of the letters, paid each of the sight drafts, and returned the time drafts, accepted, to the Merchants' Bank, without objection and without expressing any dissent to the terms and conditions upon which the wheat was to be delivered, on its arrival, to the Corn Exchange Elevator. The sight drafts were paid and the time drafts accepted several days before the arrival of the cargoes at Oswego.
McLaren & Co. forwarded to Smith & Co. invoices of the purchases, with statement of account for disbursements and commissions. The invoice of the Kate Kelly is headed, "Account purchase of 14,250 20/60 bushels wheat, bought for account, and by order of Smith & Co., Oswego, N.Y., through McLaren & Co." Those of the Grenada and of the Corsican respectively differ from it only in the number of bushels. No bill of lading for either cargo was sent to Smith & Co.
The Kate Kelly arrived in Oswego Sept. 16, 1869. Her cargo was discharged into the Corn Exchange Elevator. Seven thousand three hundred bushels were "spouted" direct from the vessel through the elevator into the canal boat Frank Alvord, and other quantities into the south, middle, and north team bins; the balance of the cargo went into numbered bins; and 3,047 10/60 bushels was, on the 18th September, shipped into the canal boat Four Sisters, and a bill of lading, dated Sept. 18, 1869, signed by G. A. Bennett, was delivered to Smith & Co. The canal boat arrived in New York Oct. 9, 1869. Smith & Co. paid the time draft of $7,500, drawn at thirty days. The time draft of $7,500, drawn at forty-five days, was unpaid at the date of this shipment.
The Grenada arrived with her cargo on the twenty-fourth day of September, 1860. Two thousand bushels were "spouted" into the boat Caribbean, and on the 27th September, 1869, 7,100 bushels were shipped into the canal boat B. Hagaman by Smith & Co., and a bill of lading of that date, signed by G. A. Bennett, was delivered to them. This
canal boat arrived in New York Oct. 27, 1869. The two time drafts drawn on the cargo of the Grenada were unpaid at the date of this shipment.
The Corsican arrived with her cargo on the 8th October, 1869, and on the same day Smith & Co. shipped 4,358 bushels of it into the canal boat Anna Rebecca, and 7,836 bushels of it into the canal boat George Ames, and received bills of lading therefor. These canal boats arrived in New York on the 4th November, 1869. The time drafts drawn on the cargo of the Corsican were not paid at the time of these shipments. The drawees of the drafts were the proprietors of the Corn Exchange Elevator.
The captains of the Kate Kelly, Grenada, and Corsican, on their arrival at Oswego, called at the office of the Corn Exchange Elevator, and there found and received from Smith & Co., before delivering their cargoes, the orders which had been sent for them, in the letters written by the cashier of the Merchants' Bank to the "Proprietors Corn Exchange Elevator," and to "Smith & Co., Proprietors Corn Exchange Elevator." The latter paid the freight on the cargoes, and receipted therefor on the back of the bills of lading retained by the captains.
The shipments by Smith & Co. were made without the knowledge or consent of the officers of the Merchants' Bank.
There was no mixture in the elevator of the cargoes of the Kate Kelly, Grenada, or Corsican.
Smith & Co., on receiving the canal boat bills of lading, sent the same, with drafts attached, through banks in New York City, to Dows & Co., the plaintiffs in error. They paid the drafts, and received the bills of lading.
All of the time drafts drawn by McLaren & Co. on Smith & Co. (except the thirty-day draft on the cargo of the Kate Kelly), being unpaid, were, with the original bills of lading and certificates of insurance, returned by the Merchants' Bank to the Milwaukee bank. The latter having been advised in October that the wheat had been shipped by Smith & Co., William P. McLaren, a member of the firm of McLaren & Co., went to Oswego to look after it. He was there from about the 20th to the 25th of that month, and on examination found no wheat in the elevator. Having ascertained
on the 22d that portions of the cargoes had been shipped to Dows & Co., a telegram was sent to and received by them on that day, notifying them that the wheat shipped on the canal boats Four Sisters, B. Hagaman, George Ames, and Anna Rebecca, was the property of the National Exchange Bank of Milwaukee. The following day, parties interested in the wheat called on Dows & Co., who agreed, that, if no attempt was made to stop the wheat on the canal, it should, on its arrival in New York, be kept separate; that the Milwaukee bank should be notified of its arrival, and that they (Dows & Co.) would identify it as the wheat coming out of the said canal boats, and would only require proof of the identity of the wheat in the canal boats at Oswego.
On the arrival of the wheat, a formal demand in writing therefor was made on Dows & Co. by the Milwaukee bank. They refused to deliver it unless they were reimbursed the amount of their advances to Smith & Co., and freight and charges, and unless the Milwaukee bank would take care of an order given by Smith & Co. to Norris Winslow on them for any margins in their hands due Smith & Co.
The jury found a verdict in favor of the plaintiff for $31,111.51.
Judgment was rendered therefor: whereupon the defendants sued out this writ of error.
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