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Section 33. Rights of Person to Whom Document Has Been Negotiated. A person to whom a negotiable document of title has been duly negotiated acquires thereby:

(a.) Such title to the goods as the person negotiating the document to him had, or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the person to whose order the goods were to be delivered by the terms of the document had, or had ability to convey to a purchaser in good faith for value; and

(b.) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him.

RIGHTS ACQUIRED BY NEGOTIATION.-Negotiability denotes a definite form and mode of assigning documents of title, together

consignee can by the indorsement of the bill of lading pass the legal title to the goods. But if the shipper be the owner and the shipment be on his own account and risk, although he may not pass the title by virtue of mere indorsement of the bill of lading, unless he be the consignee or what is the same thing, it be deliverable to his order, yet by any assignment, either on the bill of lading or by separate instrument, he can pass the legal title to the same; and it will be good against all persons except such a purchaser for a valuable consideration by an indorsement of the bill of lading itself. Such an assignment not only passes the legal title as against his agents and factors, but also against his creditors in favor of the assignee." Conard v. Atlantic Ins. Co., 26 U. S. (1 Pet.) 386, 445. Citing Nathan v. Giles, 5 Taunt. 558. Illustrations.-When the consignor has retained the jus disponendi. Emery v. Irving Nat. Bank, 25 Ohio St. 360.

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Pick.) 42; Indiana Nat. Bank v. Colgate, 4 Daly (N. Y.), 41; Saltus v. Everett, 20 Wend. (N. Y.) 267.

When the holder is apparent owner. Conard v. Atlantic Ins. Co., 26 U. S. (1 Pet.) 386; Newhall v. Cent. Pac. R. R. Co., 51 Cal. 345; Midland Nat. Bank v. Mo. Pac. R. R. Co., 132 Mo. 492; Dows v. Green, 24 N. Y. 638; Barnard v. Campbell, 55 N. Y. 456; Farmers', etc., Nat. Bank v. Hazeltine, 78 N. Y. 104; Lickbarrow v. Mason, 2 T. R. 63; Jenkyns v. Usborn, 7 M. & G. 678; Ackerman v. Humphrey, 1 C. & P. 53.

An indorsement of the bill of lading without the authority, consent or knowledge of the owner of the goods, transfers no title to an indorsee in good faith. Tison v. Howard, 57 Ga. 410; Brower v. Peabody, 13 N. Y. 121; Dows v. Perrin, 16 N. Y. 325; First Nat. Bank v. Shaw, 61 N. Y. 283; Decan v. Shipper, 35 Pa. St. 239.

Negotiation by delivery. Stollenwerck v. Thacher, 115 Mass. 224; Saltus v. Everett, 20 Wend. (N. Y.) 267; Pickering v. Busk, 15 East, 38.

As to who may negotiate a warehouse receipt, see Pub. Acts of Conn., 1907, ch. 220, § 40.

with the definite effects of such assignment. It is designed to secure valid assignments and to protect the rights of bona fide purchasers for value. Such a purchaser of a document of title duly negotiated acquires:

1. Not an absolute unconditional title to the specific goods described in the document of title, free from all adverse claims, but only such title and interest in the goods as the negotiator had or had ability to give, together with such title as the person to whose order the goods were to be delivered had or had ability to give, in the same manner and to the same effect that he would, had the goods themselves been delivered.1

The valid negotiation of a document of title is no guarantee of the validity of the document of title itself as a representative of

1. See cases to sec. 27, note 19, and Warehouse Receipts Act, Public Acts of Conn., 1907, ch. 220, § 41.

"A (warehouse) receipt is regarded as representing the goods described in it; and an assignment of the receipt by an indorsement of it is, in the eye of the law, considered as equivalent to a delivery of the property itself. These receipts transferred to the (indorsee) the legal title to the property and its constructive possession." State Bank, etc., v. Waterhouse, 70 Conn. 76, 85. Citing Gibson V. Stevens, 49 U. S. (8 How.) 384, 389; First Nat. Bank of Chicago v. Dean, 137 N. Y. 110; Cushing v. Breed, 96 Mass. (14 Allen) 376, 380; Burton v. Curyea, 40 Ill. 320; Harris v. Bradley, 2 Dill. (U. S. C. C.) 248; Young v. Lambert, L. R. 3 P. C. 142; Barber v. Meyerstein, L. R. 4 H. L. 317; 1 Smith's L. C., part 2, p. 1197.

Where a shipper of goods draws on a bank for the full amount of the purchase money, attaching to his draft the bill of lading indorsed in blank, and receives the money, whether he retains the general property, is still an open question in Massachusetts. "For while there is no doubt that transactions like the present puts an end to the right of possession of the indorser of the bill of lading, this court has been very cautious not to

commit itself unnecessarily as to the precise effect of such indorsements, and it is still open to argument that the general property does not pass." Washburn-Crosby Co. v. B. & A. R. R. Co., 180 Mass. 252. Citing Fifth Nat. Bank of Chicago v. Bayley, 115 Mass. 228, 230; Hathaway v. Haynes, 124 Mass. 311; Forbes v. B. & L. R. R. Co., 133 Mass. 154; Hallgarten v. Oldham, 135 Mass. 1, 8. See Mears v. London & S. W. R. R. Co., 11 C. B. (N. S.) 850; Sewell v. Burdick, 10 App. Cas. 74; Gibson v. Stevens, 49 U. S. (8 How.) 384, 400; The Thames, 81 U. S. (14 Wall.) 98, 108; Farmers' & Mechanics' Bank v. Logan, 74 N. Y. 568, 582, 583.

Where the thing sold is from its character or situation at the time incapable of actual delivery, the indorsement and delivery of the evidence of title is effectual to transfer

the property. First Nat. Bank of Cairo v. Crocker, 111 Mass. 163, 167. Citing Conard v. Atl. Ins. Co., 26 U. S. (1 Pet.) 386, 445; Gibson v. Stevens, 49 U. S. (8 How.) 384; Bryans v. Nix, 4 M. & W. 775, 791; Low v. DeWolfe, 25 Mass. (8 Pick.) 101; Gardner v. Howland, 19 Mass. (2 Pick.) 599; Stanton v. Small, 3 Sandf. (N. Y.) 230; Pratt v. Parkman, 41 Mass. (24 Pick.) 42.

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the goods described therein, but merely that the indorser or bearer has all the rights which the indorsee or negotiator had. If the goods described in the document of title have been stolen, or were sold on condition precedent which is not complied with, or under a contract rescinded for fraud, misrepresentation or mistake before the negotiation of the document, or if the document was issued for goods not received by the bailee," while the holder of the document of title may have a remedy against the negotiator or bailee, he would acquire no title to goods under the instrument, unless the owner had estopped himself to deny the title of the negotiator by clothing him with the indicia of title, or holding him out as having authority and right to convey title.

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If the carrier delivers the goods to a bona fide purchaser for value without a surrender of the bill, he is liable to the holder thereof, but the latter takes no title to the goods; or it may be shown that the document of title was issued by an authorized agent to a fictitious consignee and indorsed by the agent with such consignee's name; in which case the holder received no title to the goods. In short he receives the precise quantum of title which he would have received had the goods themselves instead of their representative been delivered to him." The negotiator is not liable to the holder for infirmities of the document of title growing out of a breach by the bailee or prior indorsers of their respective legal duties and obligations.10 The negotiator may be liable to the holder for a breach of the warranties provided by section 36, but such liability does not affect or strengthen the character of the title conveyed by the document itself.

2. The issue of a negotiable document of title implies on the part of the bailee a precedent assent to attorn to each successive holder, without notice, immediately upon negotiation, and the

2. See cases in sec. 27, note 35.

3. 1 Mechem on Sales, § 537 et seq. 4. See secs. 24 and 73.

5. Friedlander v. R. R. Co., 130 U. S. 416; Nat. Bank v. R. R. Co., 44 Minn. 224, 9 L. R. A. 263; Brown v. Powell, etc., Coal Co., L. R. 10 C. P. 562.

6. Wichita Savings Bank v. R. R. Co., 20 Kans. 519; Sioux City. etc., R. R. Co. v. Bank, 10 Neb. 556; Ba

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direct obligation of the bailee, enforceable by the holder of the document, to hold the goods for him."

Section 34. Rights of Person to Whom Document Has Been Transferred. A person to whom a document of title has been transferred, but not negotiated, acquires thereby, as against the transferror, the title to the goods, subject to the terms of any agreement with the transferror. If the document is non-negotiable, such person also acquires the right to notify the bailee who issued the document of the transfer thereof, and thereby to acquire the direct obligation of such bailee to hold possession of the goods for him according to the terms of the document. Prior to the notification of such bailee by the transferror or transferee of a non-negotiable document of title, the title of the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by the levy of an attachment or execution upon the goods by a creditor of the transferror, or by a notification to such bailee by the transferror or a subsequent purchaser from the transferror of a subsequent sale of the goods by the transferror.

The Act makes a clear distinction between negotiable and nonnegotiable documents of title. This distinction has not been observed by the English courts in their decisions, but it is generally observed in this country both in the usages of warehousemen, carriers, merchants and bankers, and in the decisions of the courts.1

By the provisions of this section a transfer of the document of title has the effect of the assignment of a mere chose in action at common law, which conveys the title as to the transferror, but not as to his creditors or subsequent bona fide purchaser for value

11. Cincinnati Nat. Bank v. Bates, 1 Fed. 702; Harris v. Bradley, 2 Dill. (U. S. C. C.) 284; Durr v. Hervey, 44 Ark. 301; Citizens' Nat. Bank v. Great Western Elevator Co., 13 S. D. 1; Citizens' Banking Co. v. Peacock, 103 Ga. 171; Stollenwerck v. Thacher, 115 Mass. 224; First Nat. Bank of Green Bay v. Dearborn, 115

Mass. 219; Marine Bank v. Wright, 48 N. Y. 1; Heiskell v. F. & M. Bank, 89 Pa. St. 155.

1. Forbes v. B. & L. R. R. Co., 133 Mass. 154; Hallgarten v. Oldham, 135 Mass. 1; Litchfield Bank v. Elliott, 83 Minn. 469; Gill v. Frank, 12 Ore. 507.

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without notice. The transferee, however, has the right to give notice of the transfer to the bailee who issued the document, and thereby acquires the direct obligation of the bailee to hold possession of the goods for him according to the terms of the document.3

2. Commercial Bank v. Hurt, 99 Ala. 130, 11 L. R. A. 701; Cavallaro v. R. R. Co., 110 Cal. 348; Zellner v. Mobley, 84 Ga. 746; Jennings v. Gage, 13 Ill. 611; Brundage v. Camp, 21 Ill. 330; Western Union R. R. Co. v. Wagner, 65 Ill. 197; Douglass v. Bank, 86 Ky. 176; Hallgarten v. Oldham, 135 Mass. 1; National Bank of Commerce v. R. R., 44 Minn. 224, 9 L. R. A. 263; Vogelsangs' Admr. v. Fisher, 128 Mo. 386; Anderson v. Flouring Mills Co., 37 Ore. 438, 50 L. R. A. 235; Whitney v. Tibbetts, 17 Wis. 369; Geilfuss v. Corrigan, 95 Wis. 651, 37 L. R. A. 167.

Upon mere receipted memoranda of sales, with agreement for future delivery, the buyer had indorsed a delivery order to a pledgee "or order;" the court said: "What was the legal effect of the indorsement and delivery of the warehouse documents? In the opinion of the court it transferred to him the legal title and constructive possession of the property; and the warehousemen from the time of this transfer became his bailees and held the pork and flour for him. The delivery of the evidences of title and the orders indorsed upon them was equivalent in the then situation of the property to the delivery of the property itself." Gibson v. Stevens, 49 U. S. (8 How.) 394, 399. Citing Conard v. Atl. Ins. Co., 26 U. S. (1 Pet.) 445; Ingraham v. Wheeler, 6 Conn. 277; Brown v. Heathcote, 1 Atk. 160; Greaves v. Hepke, 2 B. & Ald. 131; Atkinson v. Maling, 2 T. R. 465; Wilkes v. Ferris, 5 Johns. (N. Y.) 335; Pleasants v. Pendleton, 27 Va. (6 Rand.) 473; Ricker v. Cross, 5 N. H. 571; Gardner V. Howland, 19 Mass. (2 Pick.) 599.

"It is true there is no formal assignment indorsed on the warehouse

document, but the technical rules of common-law conveyances and transfers of property have never been applied to mercantile contracts made in the usual course and forms of business. The indorsement of the delivery order upon these evidences of his title, like the indorsement upon a bill of lading, sufficiently manifests the intention of the parties that the title and possession should pass to Gibson. And when that intention is evident from the language of the written instruments and the nature and character of the contract, it is the duty of the court to carry it into execution without embarrassing it with needless formalities. A contrary rule would most commonly defeat the object which both parties designed to accomplish, and believed they had accomplished, by the instruments they executed." Gibson v. Stevens, 49 U. S. (8 How.) 384, 400.

For rights of person to whom a warehouse receipt has been transferred, see Pub. Acts 1907, ch. 220, § 42.

The assignees of a warehouse receipt for grain can take no greater right or interest than their assignor possesses and are chargeable with the same notice and with all the equities that would apply to him. The assignees are not protected as bona fide purchasers or holders as in the case of commercial paper but take the assignment cum onere. Commercial Bank v. Colt, 15 Barb. (N. Y.) 506.

3. Spangler v. Butterfield, 6 Colo. 356; Warren v. Milliken, 57 Me. 97; Cent. Sav. Bank v. Garrison, 2 Mo. App. 58; Michel v. Ware, 3 Neb. 229.

Where a warehouseman after being notified of the sale by both parties and of the fact that the property belonged to the vendee, undertook at his

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