National Bank v. Phila. & Reading R. R.

163 Pa. 467 | Pa. | 1894

Opinion by

Mr. Justice Green,

When the plaintiff received the bill of lading for the car in question, and the draft for $228 on Holloway & Co., it was entitled to demand the money from Holloway & Co., or, they failing in its payment, it could demand the car of feed from the railroad company defendant, on payment of freight and charges. While it is true that Holloway & Co. -were not the nominal consignees, they were the real consignees, as was evidenced by the draft drawn on them and the notice clause in the bill of lading, viz, “ Notify Holloway & Co.” In -point of fact Holloway & Co. were notified and they paid the draft. This would ordinarily entitle them to the bill of lading, and with it and the paid draft, they could demand and would be entitled to receive, the car of feed from the defendant railroad company. But in order to make payment of the draft Holloway & Co. borrowed the money from- the plaintiff in this way. They drew a draft of their own on Dr. J. G. Hillegas of Pennsburg, Pa., for $331.60, attached it to the original bill of lading from the Kratochwill Milling Co., who were the shippers of the car in the first instance, and the plaintiff bank discounted this new draft and passed the proceeds to the credit of Hollowajr & Co.’s account with them. ■ Then Holloway & Co. drew a check for $228 against their account and delivered it to the plaintiff who charged their account therewith. It is necessary to consider this transaction with much care in order to determine its true character and effect. As a matter of course the bank not only knew precisely what was done, but they directly participated in the arrangement and became a most active party to it. Under the original bill of-lading they were the owners of the car load of feed. Being in that position they permitted Holloway & Co. to draw their draft on Hillegas for a still larger amount than the original purchase money of the feed, and thereby to assume the position of consignor of the car and its contents to Hillegas as consignee. This was the exercise of an act of ownership over the feed by Holloway & Co., whose position towards the plaintiff now became that of a debtor upon a draft drawn by them upon a third person. It is true the original bill of lading went with the draft, but the consignee would become entitled to it by recognizing Holloway & Co. as his'consignors and paying their draft on him. That transaction was between Holloway & Co. and Hillegas, and the relation of the plaintiff was that of a bill discounter with the collateral security of a bill of lading. Granting their right to use and hold the bill of lading for their 6wn protection, it was as a negotiable instrument that they were entitled to hold it, and. the question arises, were they not bound by the ordinary rules to which the holders of that class of obligations are subject? This will be considered hereafter.

Returning to the subject of Holloway & Co.’s intervention in the control and disposition of the car load of feed, we must note the fact that on July 9, 1888, when the draft on Hillegas was drawn, the car was on the way in the course of its transhipment. It was subject to the control of the plaintiff as holders of the bill of lading, and they were at liberty to exercise that right either directly by themselves, or through the intervention of any agent whom they might select for that purpose. The car, being on the road, would naturally proceed to its destination at Lansdale, Pa. But in order to have it delivered to Hillegas, it was necessary to await its arrival at Lansdale and then re-ship it to Hillegas, or to divert it on the road by an order to that effect. In point of fact this car never went to Lansdale or to Pennsburg. The latter was the station nearest to Hillegas. It was diverted by the order of Holloway on July 24th, and consigned by him to Heiser & Lutz at Stevens’ station, Lancaster county, where it arrived on July 26th. Holloway & Co. drew a draft on Heiser & Lutz in favor of the National Bank of Lincoln, Pa., for $246.80, and sent it to the bank with a written order for the delivery of the car to Heiser & Lutz. On the arrival of the order and draft the bank notified. Heiser & Lutz, who at once paid the draft, took up the order, and then taking the order of the consignors, Holloway & Co., and the paid draft, delivered them to the railroad company and received,the car of feed. Thus the consignor of the car ordered its delivery to the consignee and sent the order tc the bank with a draft for the payment of the feed which when paid entitled the consignee to the car. In all this transaction the name of this plaintiff' did not appear in any manner. They had given no notice to the defendant that the}’- held a bill of lading for the car. They had sent the bill of lading.to another bank in another county with a draft on another person and had ' made no attempt to control the movement of the car. The defendant had no notice of the existence of such a bill of lading, and when they delivered the car to Heiser & Lutz they were acting on the written order of the party who consigned the car. It is difficult to understand how the defendant was guilty of any negligence in making such a delivery, and when we investigate the evidence it is very easy to understand how the transaction occurred.in the way it did with the knowledge, consent and concurring action of the plaintiff. The testimony that proves it is entirely undisputed and comes from the plaintiff’s witnesses. As has been already stated, when the plaintiff notified Holloway & Co. of their holding the bill of lading and the draft, from the Kratochwill Milling Co., Holloway & Co. paid the draft and drew another draft on Hillegas, which the bank discounted. The bank took no further notice of the car, or •what was done with it, but permitted Holloway to draw a draft on Hillegas and thus to assume the position of consignor. While holding this position he ordered the car to another consignee at another place, and he was able to do this as a direct result of the bank’s action in participating with him in a new consignment. They made no attempt to exercise the slightest control over the car or its movements, nor did they give any notice to the defendant that they held any bill of lading.

The witness, Horace Lloyd, cashier óf the plaintiff bank, being examined in behalf of the plaintiff, thus testified : “ Q. Was this first draft of $228 paid by check ? A. Mr; Holloway paid it by check. Q. After discounting the draft of $331.60 which is now attached to the bill of lading, what did you do with both of them ? A. The draft for $331.60 was sent to the Perkiomen National Bank of East Greenville, the nearest point to the destination. Q. Was it paid? A. No, sir, it was not. Q. When was it returned to you? A. August 31st. Q. What year? A. 1888.” ;

After testifying to the course of dealing between the bank and Holloway in regard to bills of lading and drafts paid and unpaid, which came with them, he was asked: “ Q. You just held them waiting for him to come in and take them up ? A. Yes, sir. Q. When he did come in and take them up what became of the bill of lading? A. He would take that along with him. Q. How soon after these drafts came back would he come in and take them up? A. That varied somewhat. Q. Ordinarily? A. Some of them laid there a month or probably more. Q. Some a month and some longer? A. Yes, sir. Q. And some he would take up in a week or so ? A. Yes, sir. Q. And your practice at the bank was to hold these bills of lading and drafts for him to take up ? A. Yes, sir. Q. In point of fact you continued to hold them right on down from 1887 as they occurred down to January, 1889 ? A. I think some of these earlier ones probabW he would attach to other drafts and take them up in that way. ■ Q. That is, when a draft came back unpaid the bill of lading would come back with it. A. Yes, sir. Q. He would then draw on somebody else ? A. He would take up that draft, draw on somebody else, attach the bill of lading to a new draft. Q. You discounted that, and he would take up the old draft ? A. Yes, sir. Q. That is the way it was done ? A. Yes, sir. Q. How often would he do that when they would come back? A. Not so often but Tie tvould represent that the stuff had been sold to some other person or was ordered somewhere else. . . . Q. He would come there every morning, would he not, generally ? A. Yes, sir. Q. He would see first what drafts from the west you had on him for car loads of stuff there were on the way? A. Yes, sir. Q.. What would he do then? A. He would return to his office and prepare' drafts on the consignees. Q. On customers of his? A. Yes, sir. Q. What then was done? A. He would bring them in, have them discounted, attach the bills of-lading and send them off. Q. You would discount them and the money he got to his credit from these discounts he would check over to you in payment of these very drafts on him from the west? A. Yes, sir. . . . Q. All these drafts running back through these pages that are marked “ returned” were dishonored drafts?' A. Yes, sir. Q. Running back to November, 1887, you say ? That was his course of business? A. Yes, sir. Q. You did not notify the railroad company in any ease that you held the bill of lading ? A. Not that I know of. Q. But you held them through all this period for him to come in and take them up? A. Not all of them. One of them it seems was held that length of time ; the others were much better. Q. Until January, 1889, you gave the railroad company no notice ? A. None that I know of.”

The witness then proceeds to state that the bank still held unpaid the draft from November, 1887; another one from Dec. 14, 1887; another one from Dee. 16, 1887, which was an original draft never paid; another one from January 5, 1888; another from Jan. 7,1888; two others from Jan. 31, 1888; another from Feb. 1, 1888 ; another from Feb. 15,1888; another from June 6, 1888; another from June 8, 1888; another from June 16th; another from same date; another from June 25th; another from June 27th; another from July 3d; all of them unpaid and still on hand. All of the foregoing were held from times prior to the one of July 9, 1888, involved in this suit. ■ Others followed afterwards in the same course of dealing and with the same results. All were unpaid until in January, 1889, when this most extraordinary method of doing business came suddenly to an end by the failure of Holloway, and at that time the amount of these unpaid bills of lading and drafts which accrued against this one transportation company only was $4,863.66, and there were, besides, other large claims of the same character against other railroad companies upon similar transactions. As a matter of course the car loads of goods against which these bills of lading and drafts were drawn did not remain on the railroads, but were allowed by the plaintiff to go wherever Holloway chose to send them, and the bank, trusting to him 'for payment, parted with the control which they might have exercised through their bills of lading, gave no notice to the defendant that they held or ever- had any such bills until January, 1889, and then came forward with an enormous bill of nearly • $5,000 which was the result exclusively of their own gross negligence. Such conduct on the part of the plaintiff was not merely evidence of laches, it was laches itself of the grossest character; it was conclusively proved by the plaintiff’s own witnesses called and examined’on their behalf, and was therefore an entirely undisputed fact in the case, and the jury should have been so instructed.

Further evidence was given by the plaintiff’s witness Horace Lloyd, as to the'particular bill of lading in this case, all to the same effect, as follows : “ Q. Going to the bill of lading in this case, the car was consigned to Lansdale was it not ? A. I believe so. Q. Mr. Holloway drew on a man by the name of Hillegas. What .was his first name ? A. Dr. J. G. Hillegas. Q. At Pennsburg? A. Yes, sir. Q. Pennsburg is on the Perkiotnen road ? A. Yes, sir. Q. Lansdale is over on the North Penn? A.'Yes, sir. Q. The car never went to Pennsburg at all ? A. I suppose not. Q. It went where ? A. I do not know. Q. Do you know to whom this car was delivered? A. I do not. Q. You know it had been delivered to somebody? A. Yes, I believe so. Q. Holloway drew on Hillegas and got you to discount the draft, and thus got the money to pay the Kratochwill draft, did he ? A. Yes, sir. Q. And then he sold the car away to a man at Stevens and got the money 'twice, did he ? A. I don’t know. We do not know. Q. Heiser & Lutz got the car ? A. I don’t know. . . . Q. He got the money from you for this car? A. Yes, sir. Q. And he got the money for this car after it was sold; he put that in his pocket and thus got the money twice ? A. I suppose so. . . . Q. What explanation would Mr. Holloway make when drafts such as that (a draft on one Lobb) came back with the bills of lading attached? A. As I said he would not often make any explanation to .me. Q Did you ever hear him make any explanation? A. Yes, sir. Sometimes he would say he had sold the stuff to other parties, that the car had been diverted. Q. That the railroad company had diverted the car ? A. By his orders. Q. And would he oftentimes take the same bill of lading and attach another draft to it and send elsewhere giving the same explanation? A. Yes, sir, sometimes. . Q. Have you anything upon your books or elsewhere to indicate when these bills of lading were returned ? A. No, sir. Q. You simply have the fact that they were returned ? You don’t know how long the banks to which they were sent kept them ? A. No, sir. Q. And if they were sent a second time, how long they were kept at the second bank? A. No, sir.”

No testimony could be more convincing, in truth conclusive, of the fact that the plaintiff bank allowed Holloway to assume control over the car loads of goods consigned to him, after they had received the bills of lading and drafts attached. They gave themselves no concern about the cars; They gave no notice to the defendant in any instance of the fact that they held any bills of lading. They allowed Holloway to pay the original drafts by discounting fresh drafts on other persons to whom he sold, or said he sold, the goods consigned, and then allowed him to control the movements of the cars without inquiry, or any attempt to follow them. And this even after they knew the second drafts had come back unpaid and remained on their hands for months thereafter. Necessarily they knew that he directed the subsequent consignments and thus permitted him to assume the position of consignor. They thus put it in his power to do as he pleased with the cars, and if 'they are to be regarded as continuing owners of the goods, they must also be regarded as having authorized him as their agent to direct the subsequent movement of the cars.' For it cannot be tolerated that he should be allowed by the bank to assume a control over their goods by means of which he could deceive and mislead other innocent persons to their harm, without being responsible for his acts.

Further proof from the same witness of the plaintiff is quite conclusive in this connection: “ Q. You knew he was handling the car? A. Yes, sir. Q. And that this was perishable material, that it was being sold to somebody; that it was not lying there all these years ? A. I supposed the railroad company had no right to deliver it; I -thought they might store it. Q. You knew he was handling these cars? A. Yes, sir. Q. And when a draft that you would discount came back dishonored, you knew he was handling that car in some way. You were not looking after it, were you? A. No, sir. Q. And you were not notifying the company that you held a bill of lading covering that car ? A. As I say, he would put us off by saying he had sold it, diverting it in some way.”

In the face of such testimony as this it seems grotesque to assert, or ’to argue, that the bank was at liberty to hold its original bill of lading for an indefinite time, months or years, without any presentation or even notice to the railroad company, upon the theory that the company was bound to hold the goods and store them awaiting the advent of a bill of lading of the mere existence -of which they never had the slightest knowledge. Especially is this so in view of- the fact that the great bulk of railroad transportation of freight is not accompanied by negotiable bills of lading payable on delivery, and also that it was testified by another of the witnesses for the plaintiff, A. L. Heiser, station agent at Stevens, that cars frequently came on a manifest alone without any bill of lading at all, and' that they were often required to deliver freight on orders.

The learned court below submitted the question of laches and agency to the jury with-instructions that if they found either they should render a verdict for the defendant. Of course this could only be done upon the theory that there was sufficient evidence in the case to justify such a verdict. But in our opinion there was no disputed question of fact upon either of these subjects, and there was therefore nothing to leave to the jury. The evidence was'altogether undisputed.’ It was given by the plaintiff and was. entirely uncontradicted. In fact it was simply overwhelming and there was nothing to countervail it.

At the end of the plaintiff’s téstimony the defendant’s cottnsel asked for a compulsory nonsuit, and we think a nonsuit should have been granted. The tenth point of the defendant requested a binding instruction to the jury to render a verdict for. the defendant, under all the evidence. We are clearly of opinion that this point should have been affirmed. Specifically' we sustain the third, sixth, seventh, eighth, ninth, tenth and eleventh assignments of error, and incline to sustain the fifth, but it is not necessary to discuss it.

Judgment reversed.