Mairs v. Baltimore & Ohio Railroad

The evidence in this case is without practical dispute, and in all essential features the questions involved are solely questions of law.

The rights and obligations of a common carrier at common law were essentially those of an insurer of the delivery of the goods to the owner or consignee at their point of destination. The only matter which could be invoked by the carrier as an excuse for failure to deliver the goods to the consignee or owner was that loss was occasioned by the act of God or tlze public enemy. It was early recog

The legislature of this state in 1858 (chapter 326 of the Laws of that year) enacted, among other things, that warehouse receipts given for any goods, etc., might be transferred by indorsement thereof; and any person or persons to whom they should be so transferred was deemed to be, and was taken as, the owner of the goods, so far as to give validity to any pledge, lien, or transfer made or created in favor of such person or persons; and the act required that no property should be delivered except upon the surrender and cancellation of the original receipt, or the indorsement of such delivery thereon in case of partial delivery. All such receipts, which had the words “Not negotiable” plainly written or stamped on the face thereof, were made exempt from the provision of the act. The act further provided that a violation of such provision constituted a fraud punishable by indictment, and provided as punishment therefor a fine in any sum not exceeding $1,000, or imprisonment in a state’s prison for a period not exceeding five years, or by both such fine and imprisonment. In addition thereto, every person aggrieved by any violation of the provisions of the act was authorized to maintain an action at law against the person or persons violating the provisions of such act, to recover all damages, immediate or consequential, which he or they may have sustained by reason of such violation, whether the person proceeded against had been convicted of fraud or not. This section was amended in 1859 (chap

In 1886 the legislature repealed these provisions of the statute, and in part re-enacted the same in sections 629. and 633 of the Penal Code. By virtue of this act of the legislature these provisions have become a substantive part of the criminal law of the state. The right of action averred in the present complaint, and the language conferring it, contained in the Laws of 1858 and 1859, are omitted from the sections of the Penal Code to which we have directed attention. The question, therefore, which this case presents, is, has the right of action survived this repeal and revision of the law?

If it needed express statutory authority for the maintenance of a civil action for damages sustained for this breach of duty, then, clearly, such right of action has been taken away, for not a vestige of the provisions which conferred authority in this respect is found in the provisions of the Penal Code. The amendment or revision of the act of 1858 was therefore something more than a mere change of phraseology, for the reason that it omitted the language which authorized the maintenance of an action; and, if the right of its maintenance depended thereon, then the intent of the legislature is clearly manifested to take it away, and it would necessarily fall for the reason that it had not been continued. In the Colgate Case it was asserted that the right of action therein involved could be maintained as an action of conversion, quite independent of statutory provisions, but this was for the reason that the defendant in that case had been guilty of a conversion of the goods. Damages arising out of a “spent bill” were not the subject of consideration therein. They could not be, as the decision below had eliminated from the' case such question, and the court of appeals nowhere intimates that such disposition of the matter was improper; and, of course, it follows that the action of conversion for the delivery of the goods subsequent to the transfer of the bill of lading, as it was based upon conversion, pure and simple, could be maintained. The right existed to maintain such an action in conversion at common law. Section 629 of the Penal Code, which is in all substantial respects a re-enactment of the provisions of the law of 1858, so far as it assumes to cover the subject, makes the person offending against its provisions guilty of a misdemeanor and punishable by imprisonment for not exceeding one year, or by fine not exceeding $1,000, or by both. Section 633 is directed solely against the act of delivery of merchandise by a carrier without the production and surrender of the bill at the time of delivery, unless the words “Not negotiable” are plainly written or stamped upon its face; the punishment therefor being by imprisonment not exceeding one year, or by fine not exceeding $1,000, or by both. The latter section does not define the act as being a misdemeanor. It is therefore

It is clear, therefore, that the cause of action provided by the statute of 1858 for the act charged in the complaint finds no place in the present law of the state, and did not survive in the repeal and revision of such act; and as the offense, under the present provisions of the Penal Code, is a felony, no right of civil action ¡for the recovery of damages exists for the commission of the offense -therein defined. This is a sufficient answer to the claim of the plaintiff. There seems to be some basis, however, for the_ claim that the provision of section 633 of the Penal Code is authority for •the maintenance of a civil action to recover damages for its violation. Such is the statement of one authority. Burnham v. Seed Co., 142 N. Y. 169 -172, 36 N. E. 889 . The court therein, as authority for this proposition, cites the Colgate Case, supra, and Bank v. Kelly, 57 N. Y. 34 . We have already sufficiently discussed the first of these cases, and have shown, as we think, that the right of action therein sustained existed at common law. So far as it rested •upon the statute, it has been swept away by subsequent legislation, -and section 633 of the Penal Code does not furnish a basis for such an action. In the other cited case the question was not involved, as the court therein simply held that the indorsement and delivery of a bill of lading, as collateral security, to a bank, placed the bank in the position of a mortgagee in possession. There was no question of a “spent bill” in the case, or of delivery of property ■to the rightful person, having possession of the bill, without surrendering the same. The remark in the Burnham Case was not essential to its decision, and seems to have been clearly obiter. We do not understand that the court made examination of the subject, -and of the mutation which the law had undergone since the decision in the Colgate Case. It is not, therefore, an authority in the premises. The statute giving the right of action having been repealed, and there having been substituted therefor a statute making the act a felony, and omitting any provision authorizing the civil remedy, it necessarily follows that no right of action remains. At common law, we have already seen, the obligation of the carrier was fulfilled when it delivered the goods to the person entitled thereto, and no right of action survived to a third person, although he subsequently came into possession of the bill after the delivery of the goods. No such right was recognized at common law in such third person. Consequently there was no wrong committed against him by such delivery which was cognizable at the common law. Negligence cannot be predicated upon a violation of this statute, for the reason that at common law the defendant was not Pound to recognize any right that might exist in a third party either at the time of or subsequent to the delivery of the goods, if in fact at the time of such delivery it was made to the rightful owner. The right of action, therefore, was purely statutory, and had no ■other foundation. It would not be contended that, if the statute .and constitutional provision giving a right of action to the next of

If it be assumed that an action based upon negligence could have been maintained as a common-law right, it seems clear that it could only be predicated upon the negligence of the defendant as the moving cause of the injury. It would be going very far indeed to say that such an action could be maintained where the injury would and could not be inflicted except by the intervention of a criminal act by a third party. In the present case the “spent bill” could not have been negotiated, had not the holder thereof forged the words “Order of and notify.” The language of the contract contained in the bill gave notice that the carrier could deliver without the production of. the bill unless these or words of similar import appeared thereon. With the addition of these words the carrier had nothing to do. The act placing them upon the bill was a forgery, and such act alone induced the plaintiff to take the bill. The mere failure to deliver the goods without the production of the bill worked no harm to any one; nor could it so work harm, as no one would take it, or be authorized to take it, thereafter, and thereby assert a liability against the defendant. It is said that the bill was outstanding, and to so leave it was a wrongful act of the defendant, as thereby a fraud could be perpetrated. As well might it be said that the theft and negotiation of a promissory note, never delivered, gave a right of action in the holder for negligence, because the drawer of the note had filled it up, and thereby enabled a thief to become possessed of it. The negligence which will sustain such an action must rest upon the doing of a harmful act, either by omitting to do something, or by taking affirmative action. The intervening agency of a criminal act, where without it no wrong to any one would be done, cannot be urged as an element upon which to predicate liability. In the present case the plaintiff testifies that he would not have taken the bill had not the words appeared upon the bill, and, as these words were forged by the holder of it, it would seem that no action predicated upon negligence could be maintained, if otherwise it might have been.

For these and the reasons already assigned it follows that the judgment and order should be reversed, and a new trial granted, with costs to the appellant to abide the event. The order denying leave to the defendant to amend should be affirmed, and the appeal

LAUGHLIN, J., concurs. VAN BRUNT, P. J., concurs in result.

I dissent from the conclusion reached by the majority of the court, and, in view of the commercial importance of the case, deem it proper that my reasons therefor should be given.

Where goods covered by a bill of lading have been delivered,, the bill of lading, if thereafter outstanding, is denominated a “spent bill.” It has many times been held that a spent bill is not effective or operative for the transfer of title to property therein described. Accordingly, in National Commercial Bank v. Lackawanna Transp. Co., 59 App. Div. 271 , 69 N. Y. Supp. 396 , wherein recovery was sought on a spent bill based upon the theory of conversion, it was held that such an action would not lie, because the functions of the bill ceased upon the delivery of the goods, and it could not thereafter operate to vest the title of the goods in the subsequent transferee, and that “the liability, if any, of the carrier to the subsequent transferee for the farmer’s failing to take up the bill of lading when it delivered the goods, cannot be enforced in an action based solely upon the theory of conversion of the goods.” It was therein sought to raise the question which is here directly presented, as to whether the leaving of such a bill of lading outstanding after delivery of the goods, in direct violation of section 633 of the Penal Code, would create a cause of action in favor of one to whom the-bill was transferred for value, for the damages caused thereby. Although the court referred to the question as a serious one, it refused to pass upon it, for the reason that it was not properly presented by the pleadings. In the present case the complaint is not framed, nor is relief demanded, upon the theory of conversion, but it is sought to charge the defendant with the damages sustained, for its breach of duty or neglect in not complying with the provisions of law. As we shall hereafter point out, this is not a statutory action, but it is based upon a violation of the common-law duty or obligation resting upon the defendant,—and of which the statute is evidence,—of observing care to prevent fraud and imposition on third persons. The precise question presented for our determination, therefore, may be thus stated: Does a cause of action upon the theory of a breach of duty or for neglect arise in favor of one who has received a spent bill of lading for a valuable consideration, as against a person or corporation delivering the goods covered by the bill, which does not bear the words “Not negotiable,” as required by the statute, without the surrender of such bill? Or, differently formulated: Can a recovery upon the theory of negligence or breach of duty be had against a common carrier on a commercial bill of lading, as distinguishable from a mere freight receipt, for delivering goods without a surrender of the bill, in favor of the person to whom it is subsequently transferred for a. valuable consideration ?

“The bill of Jading in this case did not have written or stamped on its face the words ‘Not negotiable,’ and therefore the delivery of the property by the agents of the defendant without its surrender and cancellation was unlawful. In 1 Kent, Comm. 467, it is said, if a statute inflicts a penalty for doing an act, the penalty implies a prohibition, and the thing is unlawful, though there be no prohibiting words in the statute.”

It is to be noted that First Nat. Bank v. New York Cent. & H. R. R. Co., supra, was not an action upon a spent bill; the bill there having been transferred, and thus the title having passed before the goods were delivered. Plence the theory of the action was conversion, which, as already pointed out, could not be maintained upon a spent bill. That case, however, is authority for the proposition that the repeal of the provision as to maintaining an action which was given by the law of 1858 did not take away all right of a person injured to civil redress as against one violating the statute, and thereby guihy of a wrongful act. In that case, also, will be found a discussion of the claim there and here made of loches against the plaintiff, by reason of delay in presenting the bill of lading and making demand of defendant, which, we think sufficiently answers the argument which is again presented to us on that subject.

Although there is undoubtedly a distinction to be observed as to the status occupied by one who obtains a bill before the delivery of goods and one who obtains it after delivery, since these circumstances affect the form of action, there is no distinction in principle as to the basis of the recovery predicated upon neglect or failure to observe a

“Doubtless the last was one of the evils sought to be prevented. * * * By no other method could the existence of spent bills in a form capable of deception be prevented, for, if the carrier could deliver to the consignee without cancellation, the bill of lading would be left outsanding, as a possible basis for fraud. * * * The prevention of mischief from spent bills was, however, not the sole object * * * sought to be accomplished.”

. It will be noticed that the appellants’ argument in that case proceeded from an opposite standpoint; the insistence there being that the statute was aimed exclusively at spent bills, and not at bills which were transferred before the goods were delivered, and that with reference to the latter an action would not lie. Although a decision under the former law (chapter 326, Laws 1858), that case is authority for the following propositions: (1) That the effect of the statute is to incorporate into every bill of lading the statutory condition, and make it an element of the contract; (2) that the remedy of the transferee, where the carrier has delivered the property in violation of statute, is not confined to an action for damages given by the statute; and (3) that the intent of the statute was not to dictate the character or form of the action, but that any action appropriate to the injury was contemplated.

The Penal Code (section 633), just as the former law of 1858, was intended to provide against the possibility of what has here occurred, by requiring that the bills should be surrendered, or else that they should be marked “Not negotiable.” We think, therefore, that the change in the law which omitted the provision giving a cause of action for violation of the statute does not affect the right to maintain an action for damages. It still remains a statute for the protection of the individual, and to prevent fraud by making use of spent bills; and upon such facts the right of action existed at common law. Cooley, Torts (2d Ed.) 788, 790. Nor is the delivery of the goods before the transfer to the plaintiff of the bill any excuse or defense to the action. The violation of the statute is conceded, and damage was sustained, and we think the liability thereupon attached.

Our view that punishment under the Penal Code is not the only liability incurred is enforced by what was said in Burnham v. Seed Co., 142 N. Y. 172 , 36 N. E. 889 , where, in speaking of the consequences that would result from the wrongful delivery of goods covered by a bill of lading, the court, referring to the plaintiff there, said:

“If before the bank’s debt was paid he had wrongfully delivered it [the cargo] to the defendant, he would have been criminally liable under section 633 of the Penal Code, and the bank could have proceeded against him in a civil action for damages. Our conclusion upon the law, therefore, is that the repeal of the provision in the act of 1858 did not take away the plaintiff’s right, in an appropriate action, to recover damages sustained by the delivery of the goods without requiring the surrender of the bill of lading.”

Nor can sections 629 and 633 of the Penal Code be construed as limited to the person who makes delivery of the goods. These sections, in terms, designate a person; but the provision, as is perfectly evident from the language which follows, embraces a corporation as

Many subsidiary questions are urged by the appellant, the more important of which may be briefly considered.

It appeared that after the bill was issued-and delivered to the consignee, and before its transfer to the plaintiff, the word “order” was written before the name of the consignee; and upon this he hinged the argument that the plaintiff could not recover, because his title was established under a bill of lading which was proven to have been changed, altered, or forged; and it is urged that, under the eighth clause of the bill, this rendered it void. The answer, however, appeal's from a reading of the clause itself, which only makes the alteration or erasure void, and not the entire bill of lading. The bill, therefore, assuming the word “order” was forged, was still outstanding as a bill of lading, and is to be considered according to its terms, rejecting the forgery. The ninth clause provided that, “if the word ‘order’ is written * * * immediately before or after the name of the party to whose order the property is consigned, * * * the surrender of this bill, * * * properly indorsed, shall be required before delivery of the property”; otherwise “the property may, at the option of the carrier, be delivered without requiring the production or surrender of this bill of lading.” Although this clause permitted by its terms a delivery to the consignee without the production of the bill, it was ineffectual for that purpose, for there were necessarily incorporated in it the provisions of the statute, which commanded that the property, if the bill was not marked “Not negotiable,” should be delivered only upon the production and surrender of the bill. Colgate’s Case, 102 N. Y. 120 , 6 N. E. 114 . Of course, if knowledge of the fact that the bill had been altered after it had been issued by the carrier was brought home to the plaintiff before he took it, a different question would be presented. He testified that the words “Order of and notify” had been inserted before the name of the consignee,

With respect to the further contention as to the alleged error committed by the learned trial judge in refusing to permit an amendment of the answer setting up that section 633 of the Penal Code is unconstitutional, if we consider it as a. question in the case, it is only necessary to say that the statute in no way attempts to hinder or interfere with interstate commerce and transportation, but merely provides a wholesome rule regulating the delivery of goods within this state. It is not, therefore, in contravention of, or opposed to, the constitution and laws of the United States.

The other minor questions urged I regard as without merit. My conclusion, therefore, upon the entire case as it was presented to the learned trial judge at the close of all the evidence,—there being no disputed facts, and hence no question for the jury,—is that, on motion made, he properly directed a verdict for the plaintiff; and the judgment appealed from should accordingly be affirmed.