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This section undoubtedly limits the effect which many courts have given to documents of this character, but it has the effect of establishing clear and definite rules and a logical distinction between negotiable and non-negotiable documents.

Section 35. Transfer of Negotiable Document Without Indorsement. Where a negotiable document of title is transferred for value by delivery, and the indorsement of the transferror is essential for negotiation, the transferee acquires a right against the transferror to compel him to indorse the document unless a contrary intention appears. The negotiation shall take effect as of the time when the indorsement is actually made.

This section follows the analogy of the law of negotiable instru

request to deal with and hold it for him, the warehouseman becomes the agent of the buyer and holds possession for his principal. Townsend v. Hargraves, 118 Mass. 325. Citing Cushing v. Breed, 96 Mass. (14 Allen) 376; Boardman v. Spooner, 95 Mass. (13 Allen) 353; Hatch V. Bayley, 66 Mass. (12 Cush.) 27; Browne Statute of Frauds, § 318.

Where the goods are in possession of a bailee of a vendor, a bill of sale by the vendor gives an immediate and valid title to the purchaser without a formal delivery of the possession. Williams v. Gray, 39 Mo. 201; Heine v. Anderson, 2 Duer (N. Y.), 318; Wood v. Tassell, 6 Q. B. 234 (N. S.); Sigerson v. Harker, 15 Mo. 101.

"When the vendor delivers to the purchaser or to the purchaser's authorized agent an order upon the vendor's bailee to deliver the goods sold to such purchaser, or agent, there is a constructive delivery of the property and the delivery of the order vests the purchaser with the indicia of ownership and has the same effect in transferring the title to the property as the delivery of the property." Union Stock Yards Co. v. Mallory,

157 Ill. 554. Citing McCormick v. Hadden, 37 Ill. 370; Burton v. Curyea, 40 Ill. 320; Webster v. Granger, 78 Ill. 230; Tuxworth v. Moore, 26 Mass. (9 Pick.) 347; Carter v. Willard, 36 Mass. (19 Pick.) 1. See, also, Hatch v. Bayley, 66 Mass. (12 Cush.) 27; Gibson v. Stevens, 49 U. S. (8 How.) 384.

As to what constitutes notice, see Peoples Bank v. Gayley, 92 Pa. St.

518.

4. See Gibson v. Stevens, 49 U. S. (8 How.) 384.

"The delivery of the order upon the warehouseman authorized him to make the separation or appropriation necessary to complete the sale by giving to the contract its intended effect upon the specific property covered by it. If that had been accomplished, either by the actual separation, or by appropriation to the use or credit of the purchaser in the usual mode of transacting the business of the warehouse, he would have acquired title, right of possession and constructive possession of the grain so purchased.” Keeler v. Goodwin, 111 Mass. 490, 491. Citing Cushing v. Breed, 96 Mass. (14 Allen) 376.

ments. The act of indorsement, where required, and not the intention to negotiate constitutes the negotiation.1

If the negotiable instrument is not indorsed, it stands upon the same footing as a non-negotiable instrument subject to all the defenses, equities and infirmities existing between the original parties at the time of the transfer. Consequently, if it was the intention that the holder should have the benefit of negotiation, he may compel the negotiator to indorse; if such was not the intention, he cannot compel the indorsement.3

The indorsement after notice of a defense or intervening equity does not relate back to the transfer and delivery so as to cut off the intervening rights and remedies, but takes effect as of the time when the indorsement is actually made.*

1. Goshen Nat. Bank v. Bingham, 118 N. Y. 349.

2. Central Trust Co. v. Nat. Bank, 101 U. S. 68; Toner v. Citizens' State Nat. Bank, 25 Ind. App. 29; Calder v. Billington, 15 Me. 398; Savage v. King, 17 Me. 301; Haskell v. Mitchell, 53 Me. 464; Lancaster Nat. Bank v. Taylor, 100 Mass. 18; Southard v. Porter, 43 N. H. 379; Clark v. Whitaker, 50 N. H. 474; Goshen Nat. Bank v. Bingham, 118 N. Y. 349; Jenkins v. Wilkinson, 107 N. C. 707.

"It is a rule of the law merchant recognized and approved by this court in several cases, that a party who takes by indorsement negotiable paper when overdue and dishonored, takes it subject to all defenses and equities which existed and attached to the paper itself in the hands of the original holder, but not to defenses or equities arising out of collateral transactions. Robinson v. Lyman, 10 Conn. 30; Stedman, v. Jillson, 10 Conn. 55; Fairchild v. Brown, 11 Conn. 26, 39. The rule applicable to paper not negotiable is not so restricted. A party who takes by assignment that description of the paper takes it subject to all defenses, equities and infirmities which existed at the time of the assignment between the payee and the maker, whether attached to the paper or not. Negoti

able paper, assigned without indorsement of the payee or his personal representatives, stands upon the same footing as paper not negotiable, and in the hands of the assignee is subject to the same rules." Simpson v. Hall, 47 Conn. 417, 426-427.

3. Goshen Nat. Bank v. Bingham, 118 N. Y. 349.

The owner of an unindorsed warehouse receipt may recover the goods from the warehouseman though the receipt provides for the delivery of goods on the return of the receipt properly indorsed. Shingleur-Johnson Co. v. Warehouse Co., 78 Miss. 875; 3 Page on Contracts, § 1292.

4. Goshen Nat. Bank v. Bingham, 118 N. Y. 349; Jenkins v. Wilkinson, 107 N. C. 707. Contra: Beard v. Dedolph, 29 Wis. 136; Watkins v. Maule, 2 Jac. & W. 237; anon. 1 Camp. 492 n.

Equity treats the indorsement as relating back to the delivery, on the ground that what ought to have been done has been done (southard v. Porter, 43 N. H. 380; Haskell v. Mitchell, 53 Me. 468), unless there was no agreement to indorse (Lancaster Nat. Bank v. Taylor, 100 Mass. 118; Clark v. Whitaker, 50 N. H. 474); or where the transfer was the act of an unauthorized agent. Gilbert v. Sharp, 2 Lans. (N. Y.) 412.

Section 36. Warranties on Sale of Document.- A person who for value negotiates or transfers a document of title by indorsement or delivery, including one who assigns for value a claim secured by a document of title unless a contrary intention appears, warrants

(a.) That the document is genuine,

(b.) That he has a legal right to negotiate or transfer it,

(c.) That he has knowledge of no fact which would impair the validity or worth of the document, and

(d.) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer without a document of title the goods represented thereby.

The warranties referred to in this section are implied warranties, and may be excluded expressly1 or impliedly by the giving of an inconsistent express warranty. Paragraphs a, b, and c follow the analogy of the law of negotiable instruments.3

Paragraph d states the existing law which is the corollary of the principle that the negotiation or transfer of a document of title transfers the title to the goods, together with the rights, duties and liabilities arising out of the sale and delivery of goods.*

For transfer of negotiable warehouse receipt without indorsement, see Pub. Acts, 1907, ch. 220, § 43.

1. Bell v. Dagg, 60 N. Y. 528. 2. Giffert v. West, 33 Wis. 617, 37 Wis. 115. See § 12.

3. (a) Meyer v. Richards, 163 U. S. 385; Coolidge v. Brigham, 46 Mass. (5 Met.) 68; Wood v. Sheldon, 42 N. J. L. 425; Canal Bank v. Bank of Albany, 1 Hill (N. Y.), 287; Herrick v. Whitney, 15 Johns. (N. Y.) 240; Whitney v. Pottsdam, 45 N. Y. 303; Littauer v. Goldman, 72 N. Y. 506; In re Hammond, 6 DeG. M. & G. 699.

(b) Meriden Nat. Bank v. Gallaudet, 120 N. Y. 298, 303. See § 13.

(c) Meyer v. Richards, 163 U. S. 385; Wood v. Sheldon, 42 N. J. L. 425; Littauer v. Goldman, 72 N. Y. 506; Bicknall v. Waterman, 5 R. I.

43; Fenn v. Harrison, 3 T. R. 759; Daskan v. Ullman, 74 Wis. 474.

66

4. Michel v. Ware, 3 Neb. 229; Peck v. Armstrong, 38 Barb. (N. Y.) 215. See 15; also, Warranties on Sale of (Warehouse) Receipt." Pub. Acts of Conn. 1907, ch. 220, § 44.

The representations of a bailee contained in the document of title are not, in themselves, an express warranty of fitness for any particular use, quality, or condition of the goods.

"The bill of lading contains no warranty that the goods described shall answer any particular quality; on the contrary, it expressly specifies that the contents of the package are unknown. That a bill of lading in such cases does not operate as such a guaranty appears from the case of

Section 37. Indorser Not a Guarantor.-The indorsement of a document of title shall not make the indorser liable for any failure on the part of the bailee who issued the document or previous indorsers thereof to fulfil their respective obligations.

The mercantile usage as to documents of title differs from the law of negotiable instruments in the matter of the liability of the indorser as a guarantor.1 This section states the existing law even in transactions where statutes have made documents of title negotiable.2

Section 38. When Negotiation Not Impaired by Fraud, Mistake, or Duress.- The validity of the negotiation of a negotiable document of title is not impaired by the fact that the negotiation was a breach of duty on the part of the person making the negotiation, or by the fact that the owner of the document was induced by fraud, mistake, or duress to entrust the possession or custody thereof to such person, if the person to whom the document was negotiated, or a person to whom the document was subsequently negotiated, paid value therefor, without notice of the breach of duty, or the fraud, mistake, or duress.

This Section is declaratory of the common law.3

Clark v. Barnwell, 53 U. S. (12 How.) 272, where Mr. Justice Nelson, delivering the opinion of the court, p. 283, said: 'It is obvious therefore, that the acknowledgment of the master as to the condition of the goods when received on board extended only to the external condition of the cases excluding any implication as to the quantity or quality of the article, condition of it at the time received on board or whether properly packed or not in the boxes." St. Louis, Iron Mt. & So. Ry. Co. v. Knight, 122 U. S. 79.

1. The contrary view seems to be held in Kentucky. Cochran v. Ripy, 76 Ky. (13 Bush) 495; Greenbaum Bros. v. Megibben, 73 Ky. (10 Bush) 419; Ferguson v. Northern Bank of

Kentucky, 77 Ky. (14 Bush) 555.

2. Shaw v. Merchants' Bank, 101 U. S. 557; Mida v. Geissman, 17 Ill. App. 207.

The indorser of a warehouse reeeipt is not a guarantor of the performance by the bailee or prior indorsers of their respective duties and obligations. Public Acts Conn. 1907, ch. 220, § 45.

3. Allen v. Maury, 66 Ala. 10; Mather v. Gordon, 77 Conn. 341; Innerarity v. Merchants' Nat. Bank, 139 Mass. 332; Bank of Oswego v. Doyle, 91 N. Y. 32; Second Nat. Bank v. Wallbridge, 19 Ohio St. 419; Decan v. Shipper, 35 Pa. St. 239. See Pub. Acts Conn. 1907, ch. 220, § 47. 3 Page on Contracts, § 1292.

Section 39. Attachment or levy Upon Goods for Which a Negotiable Document Has Been Issued.- If goods are delivered to a bailee by the owner, or by a person whose act in conveying the title to them to a purchaser in good faith for value would bind the owner, and a negotiable document of title is issued for such goods, they cannot thereafter, while in the possession of such bailee, be attached by garnishment or otherwise or be levied upon under an execution, unless the document be first surrendered to the bailee or its negotiation enjoined. The bailee shall in no case be compelled to deliver up the actual possession of the goods until the document is surrendered to him or impounded by the court.

At common law, a carrier, warehouseman, or other bailee is not the agent of the bailor or his transferee quoad the possession, but holds the goods in his own name and right regardless of whose hands his receipts may be in. He has the right of delectus personarum, and cannot be made the agent or servant of another without his own agreement and consent. Therefore, until he is notified of the transfer of the document of title, and consents, expressly or by acquiescence, to become the agent of the transferee, there has been no change of possession, and the goods are open to attachment by the bailor's creditors.1 This principle is left unchanged by the Act,2 in the case of non-negotiable documents of title.

By the law merchant, and by the provisions of this Act, which are merely declaratory of the principles of the law merchant, the bailee in issuing a negotiable document of title consents in advance to attorn to the transferee, without notice, immediately upon the negotiation of the instrument.3

1. Mechanics' & Traders' Ins. Co. v. Kiger, 103 U. S. 352; Hallgarten v. Oldham, 135 Mass. 1, 9, 10; Clegg v. Boston Storage Warehouse Co., 149 Mass. 454; Mortimore v. Ragsdale, 62 Miss. 86; Burton v. Wilkinson, 18 Vt. 186.

Goods held under non-negotiable receipt may be taken on judicial process which will justify non-delivery by the warehouseman, and is a substantial compliance with their obligation not to deliver the goods without surrender

of the receipts. Mechanics' & Traders,
Ins. Co. v. Kiger, 103 U. S. 352.
2. Sec. 34.

3. See sec. 27.

The transferee of a bill of lading has a priority over an attaching creditor. American Nat. Bank v. Henderson, 123 Ala. 612; Shaffer Bros. v. Rhynders, 116 Ia. 472; Ayres Co. v. Dorsey & Co., 101 Ia. 141; Scharpf v. Meyer, 133 Mo. 428. 3 Page on Contracts, 1292.

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