4. A delivery by a carrier in good faith to a person in possession of an order bill of lading properly indorsed, thus satisfying the provision of the Uniform Bills of Lading Act of August 29, 1916, § 9, does not exonerate the carrier from liability to the shipper as for a conversion where it failed to require the surrender of the bill of lading, as provided in that instrument, if loss to the shipper or a subsequent purchaser of the bill results from such failure, but where the loss suffered is not the result of the failure to take up the bill, the mere failure to take it up does not defeat the exonera tion. [For other cases, see Carriers, II. b, 4, in Digest Sup. Ct. 1908.] Bills of lading bona fide purchaser. N WRIT of Certiorari to the Supreme Court of the State of Michigan to review a judgment which affirmed a judgment of the Circuit Court of Kent County, in that state, in favor of the shippers in a suit against a carrier, based upon an alleged conversion of a ship ment. Reversed. 5. Shippers who took back a draft and attached bill of lading, with full knowledge that the terminal carrier had made delivery See same case below, 204 Mich. 578, to another carrier without requiring a sur-171 N. W. 491. render of the bill of lading, as provided in The facts are stated in the opinion. vanced, who suffers loss thereby, | by, where such delivery is in violation although the shipment was, to the knowledge of the carrier, meant for such purchaser. Alderman v. Eastern R. Co. 115 Mass. 233. And under such a shipment, delivery to one on whose account the goods were shipped, and to whom the bill of lading was indorsed by the shipper on payment of draft attached, is conversion as to a subsequent holder to whom the draft and bill of lading were indorsed as collateral security for money advanced, who is damaged thereby, where such delivery is without the production of the bill of lading. Forbes v. Boston & L. R. Co. 133 Mass. 154. It amounts to conversion as to a shipper who suffers loss thereby for a carrier to deliver goods to another, though the purchaser, without production of the bill of lading and payment of draft, when the shipper shipped the goods to himself, with draft attached to bill of lading. International & G. N. R. Co. v. Kansas City Produce Co. Tex. Civ. App., 200 S. W. 254. And although the purchaser has been named as consignee, the carrier would be liable if the loss occurred by delivery without payment of the draft and production of the bill of lading. Ibid. Under a shipment wherein the consignor is also the consignee, delivery on order of consignor without production of the bill of lading, to one not named therein, is conversion as to the assignee of one to whom the bill of lading had been transferred prior to the delivery of the goods, and who was damaged there of a provision in the bill of lading that the surrender of the bill of lading, properly indorsed, shall be required before delivery of the property at its destination. Sheldon v. New York C. & H. R. R. Co. 61 Misc. 274, 113 N. Y. Supp. 676. So, too, under such a shipment a delivery to another without production of the bill of lading, although to the actual purchaser of the goods and to whom they are billed by the carrier, is, although not shipped "to order," conversion as to one to whom such purchaser had indorsed the bill of lading as collateral security, and who had possession thereof, since the proximate cause of loss was the carrier's mistake in billing goods contrary to the terms of the bill of lading, and not failure to ship "to order." Chicago & S. E. R. Co. v. Fifth Nat. Bank, 26 Ind. App. 600, 59 N. E. 43. Under a shipment to order of the consignee, who was not the shipper, delivery to a third person on order of the consignee without production of the bill of lading is conversion as to the shipper, where the bill of lading expressly provides that "the surrender of this original order bill of lading, properly indorsed, shall be required before delivery of the property." Judson v. Minneapolis & St. L. R. Co. 131 Minn. 5, 154 N. W. 506. Delivery to the consignee mentioned in the bill of lading at a station intermediate the point of shipping and point of destination, without requiring the surrender of the bill of lading, is conversion. Union P. R. Co. v. Johnson, 45 Neb. 57, 50 Am. St. Rep. 540, 63 N. W. 144. The Mr. Oscar E. Waer argued the cause, and, with Mr. John C. Shields, filed a brief for petitioner: The terminal carrier delivered the car to Bindner by turning it over to the Southern Railroad at his request. North Pennsylvania R. Co. v. Commercial Nat. Bank, 123 U. S. 727, 31 L. ed. 287, 8 Sup. Ct. Rep. 266. Failure to take up and cancel the bill could make the carrier liable only to one who, for value and in good faith, purchased the bill. court said that the railway company, having received the freight and undertaken its transportation, by delivering it while in transit to the consignee in the bill of lading, without surrender of the bill of lading at the time of delivery, put it in the power of the consignee to defraud third parties by selling the freight and indorsing the bill of lading. The court added that so long as the bill of lading was outstanding, it was a representation by the railway company to the commercial world that it had in its possession and under its control and in transit to place of named destination, the goods for which the bill of lading called. Under a shipment "to order notify," delivery to parties to be notified, al though the ones for whom the goods are ultimately intended, without production of the bill of lading or order of consignee, is conversion as to a shipper or bona fide holder of the bill of lading, as to whom such delivery is the proximate cause of loss. Georgia, F. & A. R. Co. v. Blish Mill. Co. 15 Ga. App. 142, 82 S. E. 784, affirmed in 241 U. S. 190, 60 L. ed. 948, 36 Sup. Ct. Rep. 541; Merchants' & M. Transp. Co. v. Moore & Co. 124 Ga. 482, 52 S. E. 802, 19 Am. Neg. Rep. 138; Brown v. Cleveland, C. C. & St. L. R. Co. 155 Ill. App. 187; Lake Shore & M. S. R. Co. v. W. H. McIntyre Co. 60 Ind. App. 191, 108 S. E. 978; Seaboard Air Line R. Co. v. Phillips, 108 Md. 285, 70 Atl. 232; Woolston v. Southern R. Co. 177 Mo. App. 611, 160 S. W. 1023; Barton v. Louisville & N. R. Co. Mo. App. -, 196 S. W. 379; Marshall & M. G. Co. v. Kansas City, Ft. S. & M. R. Co. 176 Mo. 480, 98 Am. St. Rep. 508, 75 S. W. 638; First Nat. Bank v. Northern R. Co. 58 N. H. 203; Furman v. Union P. R. Co. 106 N. Y. 579, 13 N. E. 587; Louisville & N. R. Co. v. United States Fidelity & G. Co. 125 Tenn. 658, 148 S. W. 671. In Furman v. Union P. R. Co. 106 N. Y. 579, 13 N. E. 587, supra, it was held that the fact that fictitious consignees are Famous Mfg. Co. v. Chicago & N. W. R. Co. 166 Iowa, 361, 147 N. W. 754. Mr. Clare J. Hall argued the cause, and, with Messrs. Joseph R. Gillard and Myron McLaren, filed a brief for respondent: The first question to be decided is, Was there a delivery at Louisville? If there was not, that ends the case. Salmon Falls Mfg. Co. v. Tangier, 3 Ware, 110, Fed. Cas. No. 12,267; North Pennsylvania R. v. Commercial Nat. Bank, supra; Georgia, F. & A. R. Co. v. designated in a bill of lading does not warrant the carrier in treating the persons to be notified as real consignees, so as to excuse delivery to them without production of the bill of lading. And in Merchants' & M. Transp. Co. v. Moore & Co. 124 Ga. 482, 52 S. Ē. 802, 19 Am. Neg. Rep. 138, supra, it was held to be conversion although, in good faith, delivery, through an error was made upon a waybill, directing such delivery. So also, it is conversion, although delivery was merely for inspection, where the bill of lading denies the right of inspection. Lake Shore & M. S. R. Co. v. W. H. McIntyre Co. 60 Ind. App. 191, 108 S. E. 978, supra. Under a shipment "to order notify," delivery to one other than the one to be notified, and for whom the goods were not intended, without production of the bill of lading, is conversion as to the indorsee thereof, who was the party to he notified. Southern R. Co. v. Harris, 202 Ala. 263, 80 So. 101. And under such a shipment delivery to another without production of the bill of lading, although to one for whom the goods were ultimately intended, is conversion as to the shipper or his indorsee. Raleigh & G. R. Co. v. Lowe, 101 Ga. 320, 28 S. E. 867. And the fact that the one to whom the goods were delivered afterwards, upon payment of draft attached to the bill of lading, received the bill of lading from the party named therein as the one to be notified, whereupon the carrier delivered back an indemnity bond that was given when the goods were delivered, will not defeat the carrier's liability where the bill of lading and draft were stolen from the lawful holder; and especially where, as in this case, the goods were not delivered on faith of the bill of lading. Where, by arrangement with the vendor, the vendee was named consignor-consignee in an "order notify" shipment, delivery to the party to be notified, on order of such consignee, without produe 393 Blish Co. 241 U. S. 190, 60 L. ed. 948, 36 Sup. Ct. Rep. 541. The case was correctly decided by the Michigan supreme court on common-law principles. Doran & Co. v. Nashville, C. & St. L. R. Co. 33 Inters. Com. Rep. 523; Georgia, F. & A. R. Co. v. Blish Mill. Co. supra; Arkansas Southern R. Co. v. German Nat. Bank, 207 U. S. 270, 52 L. ed. 201, 28 Sup. Ct. Rep. 78; Perkett v. Manistee & N. E. R. Co. 175 Mich. 253, 141 N. W. 607. If there was a delivery there, the next question is, Was Bindner a party in possession of the bill? If he was not, the judgment must be affirmed. If Bindner was a party in possession, and delivery was made to him, did Smith know that he was a person not lawfully entitled to the possession of the goods? If so, the judgment is correct. tion of the bill of lading, is conversion as to the vendor's assignee of the bill of lading, who suffers loss thereby. Canandaigua Nat. Bank v. Cleveland, C. C. & St. L. R. Co. 155 App. Div. 53, 139 N. E. 561, affirmed in 214 N. Y. 694, 108 N. E. 1091. The court stated that the fact that the vendor named his vendee as consignor had no effect upon the status of the parties, since such fact did not work to the detriment of the carrier, inasmuch as the bill of lading makes no restriction upon a shipment in the name of the consignee instead of the consignor. If all these questions be decided against French & Company, the next question is, On and after December 7th, 1917, was French & Company a purchaser of the bill for value and in good faith? If so, the judgment must be affirmed. While a decision in favor of French & Company on any one of the propositions stated would compel an affirmance of the judgment, we believe that it should receive a favorable decision on each one, if the court finds it necessary to go that far. Blakiston v. Dudley, 5 Duer, 377; Gloversville Nat. Bank v. Wells, 15 Hun, 63; 29 Cyc. 661; Foster v. Bowes, 2 Ont. Pr. 258; Re Bills of Lading, 14 Inters. Com. Rep. 348; 38 Cyc. 939, 940; Shaw v. North Pennsylvania R. Co. (Shaw v. Merchants' Nat. Bank) 101 U. S. 557, 25 L. ed. 892. Under a bill of lading to order of consignor, which is indorsed and delivered to a bank with directions to notify a third person, delivery of freight by a carrier to such third person on order of the holder of the bill of lading is not conversion as to the consignor, even though surrender of the bill of lading, as provided therein, is not required. Famous Mfg. Co. v. Chicago & N. W. R. Co. 166 Iowa, 361, 147 N. W. 754. The court said that the delivery to the bank of the bill of lading, duly indorsed, clothed it with apparent legal title to the property and with undoubted right to obtain delivery of the property from the railroad com But where the delivery is to the true owner of the goods shipped, it is not conversion as to a shipper who is not dam-pany or to direct its delivery to another. aged thereby. Banik v. Chicago, M. & St. P. R. Co. Minn. -, 179 N. W. 899. So, too, delivery of the freight to the lawful holder of the bill of lading without taking the same up is not conversion as to a subsequent transferee of the bill of lading. National Commercial Bank v. Lackawanna Transp. Co. 59 App. Div. 270, 69 N. Y. Supp. 396, affirmed in 172 N. Y. 596, 64 N. E. 1123. And under a shipment "to order notify," delivery to a party to be notified without production of the bill of lading will not make the carrier liable as for a conversion where the delivery is to the actual purchaser, who subsequently pays the draft attached to the bill of lading at the bank to which the shipper had sent it, and the loss is solely due to the failure of bank to remit and its subsequent insolvency. Writt v. East Tennessee & W. N. C. R. Co. 99 Tenn. 442, 41 S. W. 1064. As to the provision requiring surrender of the bill of lading, the court said: "Such provision was for the benefit of the railway company, and gave to it the right to protect itself by demanding presentation and actual surrender of the bill of lading before making delivery even to a proper party. The fact that it waived such provision in this case cast upon it the burden of proving that the person to whom or upon whose direction it delivered the property was in fact the holder of the bill of lading at such time." And when goods are shipped under a bill of lading stipulating for their delivery to the order of the consignor, an indorsement by him upon the bill of lading, directing delivery to a third person or to his order for collection, in effect makes such person the consignee; and though such bill of lading may further stipulate that its surrender shall be required before the delivery of the goods at destina Mr. Justice Brandeis delivered the road as connecting and terminal carrier. opinion of the court: The shipment was made on a "consign The Federal Uniform Bills of Lading or's order" bill of [540] lading in Act of August 29, 1916, chap. 415, 39 the standard form, by which the car Stat. at L. 538, Comp. Stat. § 8604e, Fed. was consigned to the shipper's order Stat. Anno. Supp. 1918, p. 74, provides at Louisville; and there was a noby 9 that a carrier is, subject to the provisions of §§ 10, 11, and 12, "justified in delivering goods to one who is" "(e) A person in possession of an order bill for the goods, by the terms of which the goods are deliverable to his order; or which has been indorsed to him, or in blank by the consignee, or by the mediate or immediate indorsee of the consignee." tation: "Notify Marshall & Kelsey, e/o Capt. Bernard, Commissary, Camp Taylor." The shipper attached the bill of lading to a draft on Marshall & Kelsey for the purchase price of the potatoes, and sold and delivered both, duly indorsed in blank, to a bank at Grand Rapids. This bank transmitted for collection the draft, with bill of lading attached, to an Indianapolis bank. The latter, without obtaining payment of the draft, detached the bill of lading from it and wrongfully delivered the bill of lading to Marshall & Kelsey. The car having reached Louisville, its destination named in the bill of lading, it was physically delivered by the Big Four, upon request of one Bindner, to the Southern In 1917 J. F. French & Company Railroad, to be forwarded to Dumesnil, shipped a carload of potatoes from under the circumstances hereinafter set Bailey, Michigan, to Louisville, Ken- forth, without requiring surrender of the tucky, by the Pere Marquette Railroad bill of lading. Later, upon the refusal as initial carrier and the Big Four Rail- of Marshall & Kelsey to accept the pota The main questions presented for our decision in this case are, whether, upon the facts hereinafter stated, there was a delivery to one in possession of the bill, and, if so, whether the delivery exonerated the carrier, it having been made without requiring surrender of the bill of lading. tion, delivery by the carrier without re- | quiring such surrender, if made to such consignee or upon his order, or by his authority, involves no breach of duty to the consignor. Chicago Packing & Provision Co. v. Savannah, F. & W. R. Co. 103 Ga. 140, 40 L.R.A. 367, 29 S. E. 698. So, too, in Nelson Grain Co. v. Ann Arbor R. Co. 174 Mich. 80, 140 N. W. 486, it was held that a consignor-consignee who has control of the goods shipped, and upon whose orders they are to be shipped, waives his right to protection under the surrender provision of the bill of lading when he orders delivery to another, and is estopped to assert it against the carrier, which makes delivery as ordered. However in Winget v. Grand Trunk Western R. Co. 210 Mich. 100, 177 N. W. 273, it was held that, in view of the decisions in King v. Barbarin, 161 C. C. A. 311, 249 Fed. 303, the Nelson Case, supra, can no longer be accepted as a binding precedent upon the question of liability for delivery without requiring surrender of order bill of lading, issued under the Interstate Commerce Law. fendant, which was affirmed on appeal, it appears that a carload of hay was shipped to the consignor's broker, and a bill of lading with draft attached was sent to the local bank for collection. The broker, because of the unsatisfactory quality of the hay, refused to pay the draft, and, upon being so informed, the consignor telegraphed his broker "Do the best you can; whatever you do will be satisfactory." The railroad company, regarding this telegram as authority from the consignor to deliver the hay did so without production of the bill of lading. The court took the position that the telegram was intended to and had the effect of a waiver of payment of the draft and procurement of the bill of lading as a condition precedent to delivery of the hay. A carrier which subsequently obtains the bill of lading is not guilty of conversion merely because it made delivery before it obtained the bill of lading. Midland Linseed Co. v. American Liquid Fireproofing Co. 183 Iowa, 1046, 166 N. W. 572. There is a large number of other cases In Mitchell v. Chesapeake & O. R. Co. in which it may be possible to read into 17 Ill. App. 231, an action on the case, the decision an implied ruling of the alleging negligence and wrongful con- courts upon the question involved in the version in delivering freight without pro- title to this annotation, but only such duction and surrender of the bill of lad-cases as more directly pass upon the ing, wherein there was judgment for de- question have been considered. toes and honor the draft, possession of the car and bill of lading was returned to the shippers, who accepted them under protest, and, without waiving any rights which they might have, proceeded to dispose of the potatoes elsewhere in order to make the damage as light as possible for all concerned. The shippers then brought this suit in a state court of Michigan against the Pere Marquette to recover compensation, contending that the carrier had, by delivering the car upon request, without requiring surrender of the bill of lading, become liable for conversion of the potatoes. The court directed a verdict for plaintiffs; and the judgment entered thereon was affirmed by the supreme court of Michigan. 204 Mich. 578, 171 N. W. 491. The case comes here on writ of certiorari. 250 U. S. 637, 63 L. ed. 1183, 39 Sup. Ct. Rep. 494. ceipt of the car at Dumesnil. The Big Four had no information that the draft covering the car had not been paid, or of the circumstances under which Bindner obtained possession of the bill of lading. The car arrived at Dumesnil, but the government did not accept it. Thereupon Bindner returned the bill of lading to Marshall & Kelsey upon their request; they returned it to the Indianapolis bank; this bank returned it and the draft to the Grand Rapids bank; which in turn surrendered both to J. F. French & Company, upon being [542] repaid the sum originally credited to their account. The shippers then took possession of the car; disposed of the potatoes elsewhere, but at a lower price; and brought this suit to recover the amount of their loss. The evidence is in conflict concerning the reason for the failure of the government to accept the potatoes, their condition, and the cause of deterioration in them, if any; and no finding of fact was made by the supreme court of Michigan on this issue. But, in an action for conversion, the matter could affect only the question of damages, and not that of liability; and it is not material in the view which we take of the case. There is no controversy over the amount of the loss. Nor is it denied that suit was properly brought against the Pere Marquette as initial carrier. The shipment was interstate. The shippers sue the initial carrier under § 20 of the Act to Regulate Commerce, as amended, contending that there was a conversion of the goods by a misdelivery of them at Dumesnil instead of a delivery at Louisville; or, if it be held that there was a delivery at Louisville, that it was an unjustifiable delivery, in violation of the contract of carriage, since a clause in the bill of lading declared: "The surrender of this original bill of lading, properly indorsed, shall be required before delivery of the property." The carrier defends on the ground that there was a delivery at Louisville which exonerated it under § 9 of the Federal Uniform Bills of Lading Act. Is the carrier liable for misdelivery because the car was sent from Louisville to Dumesnil upon Bindner's request, without requiring surrender of the bill of lading? The following additional facts are material: Camp Zachary Taylor was located about 6 miles from Louisville, on the Southern Railroad, near Dumesnil station. [541] Marshall & Kelsey had contracted with the government to supply a large quantity of potatoes at this camp, and had made a contract of purchase with J. F. French & Company. The car in question was shipped to Louisville, to be applied on these contracts. The indorsed bill of lading for this, as for other cars shipped under like circumstances, had been left by Marshall & Kelsey at Dumesnil with one Bindner, an employee of the Southern Railroad, for safe-keeping. He, having the bill of lading in his possession at Dumesnil, telephoned from there, at Marshall & Kelsey's request, to the Big Four Railroad, to ascertain whether the car had arrived at Louisville. Finding that it had, Bindner, knowing the government's need of potatoes, told the Big Four trackage clerk that "he had the bill of lading, and to let the car go out to the camp." Bindner had no specific instructions from Marshall & Kelsey to do this; but his action was later ratified by them. Upon receiving Bindner's further assurance that a small demurrage charge which had accrued would be paid, the trackage clerk, without requiring surrender of the bill of lading, released the car, changed the waybill so as to provide for delivery of the car at Dumesnil, First. The supreme court of Michigan and turned it over to the Southern. A held that the Big Four, in sending the charge of 6 cents per hundred pounds car over the Southern to Dumesnil, at the thereby became payable to the Southern request of Bindner, made not a delivery, Railroad for the local carriage from but an irregular reconsignment. WhatLouisville to Dumesnil; and it was left ever name he used in referring to the act by the waybill payable by the consignee of forwarding the car, the Big Four. when with the other freight charges upon re-it surrounded possession of the car to the |