BILLS OF LADING.

It would seem not unreasonable that the carriers' charges for transportation of freight should have some reference to the degree of risk assumed in undertaking the carriage.

The two elements of risk and cost of service are, in the estimation of many persons, those which should be mainly controlling in the establishment of traffic charges.

To those who have studied the subject in its practical bearings the fallacy of such an opinion is apparent, as it is well settled that classification, or the system of fixing relative charges on different commodities of commerce, neither is, nor consistently with the public interest can be, based upon cost of service and risk alone.

Many other elements enter into the question of the amount to be charged for the carriage of any particular commodity or class of freight. These it is not proposed here to discuss; the object in alluding to them being merely to draw attention to the fact that in determining practically upon the proper classification of an article, or the rate charged for carrying it, the mere question of the carrier's risk must not be given undue prominence. Risk, nevertheless, remains an element, and in some cases an important element, in adjusting the charge.

In the classification sheets of railroads will usually be found a number of cases where the same article is placed in a much lower class, if carried at owner's risk, than if carried at the risk of the carrier; and the lower classification implies that a lower charge for the transportation is in that case imposed.

It is generally understood that, in the absence of an agreement to the contrary between the carrier and the shipper, the risk is in most cases and in most contingencies upon the former. Nor is the risk thus imposed by the law applicable only in those cases where loss or injury to the property occurs through the negligence, default, or wrong conduct of the carrier or its agents. The carrier's risk is unusual and exceptional in its character, and applies in case of any loss or injury however occurring, with a few tolerably well defined exceptions, no matter how great the care, prudence, and skill it may have exercised, or how guiltless of any fault whatever it may have been. In other words, the carrier becomes an insurer, with the exceptions above suggested, of the safe transportation of the property intrusted to its care. Nor does this onerous risk attach during the period of actual transportation only. It is probably safe to say that it begins as soon as any article is delivered into the custody and control of the carrier for a transit to be commenced either forthwith or in the usual course of the carrier's business, without any further order or directions from the shipper.

The period when this special and extraordinary risk of insurer ends is a matter upon which the authorities are not so well agreed; but in

most cases, and in most jurisdictions, the risk remains on the carrier for a time at least, after the actual transit is terminated. It may thus often happen that the carrier will be liable for the loss or destruction of the property in its depot or warehouse by an accidental fire,robbery, or other cause not in any way due to its neglect, before the actual transit has commenced, or even before, in the usual course of business, it could be begun. It may also in some cases be liable where the property, under similar circumstances, is lost or destroyed after the actual transit is at an end and the property has been placed in the carrier's warehouse awaiting delivery. The liability in the latter case depends somewhat on the extent of the carrier's duty in connection with the delivery of the property to the consignee. This is a matter it is not proposed to discuss. It may be remarked, however, that the carrier's duty generally includes the right delivery of the property, or at least due effort to make such delivery according to the usual course of business; and that its risk usually remains until that duty is discharged. The delivery must be either to the consignee, or to a connecting carrier to be forwarded, according to the circumstances of the case or the contract between the parties.

Since by the course of modern adjudications it has been quite well settled that the carrier can be relieved of the risk which the common law thus imposes by agreement or contract with the shipper, and not otherwise, it has become the general practice of carriers to prepare their shipping contracts with that object in view.

These contracts are usually embodied in the receipts or bills of lading, which the carrier gives the shipper when the property is received by it for transportation.

The bill of lading, as the term implies, was originally but a “bili” or statement of what was loaded on the vessel or vehicle for transportation, and constituted both the carrier's receipt for the goods and the contract to carry and deliver them to consignee. The modern bill of lading, however, in addition to this, contains numerous conditions subject to which, as it is therein stated, the transportation is to be undertaken. These conditions are the means by which it is sought to limit the carrier's common-law liability.

Before entering upon any consideration of the bill of lading, with its conditions, as evidencing the rights of the parties arising out of the delivery and acceptance of property for shipment, it may be well to examine that instrument in another of its aspects, which has recently attracted much attention in commercial circles-among carriers as well as among shippers.

The character of the bill of lading to which reference is now made is that of a receipt for property, since the instrument purports on its face to be a receipt, as well as a contract for carriage.

It is a well settled rule of commercial law that the transfer and delivery of a bill of lading is a symbolic transfer and delivery of the property for which it is a receipt. And thus by means of the bill of lading the property can be, and often is, either sold, or, as is more commonly the case, pledged as security for money advanced upon the faith of it. The transferee of the bill of lading will, under these circumstances, be entitled to delivery of the property from the carrier, especially if the bill has been drawn for delivery to the order of the consignee and by him indorsed or transferred over to another.

On the other hand the carrier, being bound to make delivery to the rightful holder of the bill of lading as above stated, can not usually be compelled to deliver the property except on production of that instrument.

These qualities and features of bills of lading, and the use made of them in commercial transactions as security for advancements of money on discounts of drafts and notes, assimilate them somewhat to that class of commercial paper generally known as negotiable instruments. They are not, however, negotiable in the legal signification of that word, implying the right of any bona fide holder, for value, to the property referred to in them.

Possession even by a holder in perfect good faith of a bill of lading lost or stolen from the true owner would not, it is supposed, entitle such holder to delivery of the property receipted for therein; nor, probably, would the carrier be justified in making delivery of such a holder. This consideration sufficiently distinguished bills of lading from strictly negotiable instruments.

But in some of the States the doctrine of estoppel, as it is termed in the law, has been under certain circumstances so applied to the documents issued by shipping agents of carriers, purporting the receipt of goods for transportation, as still further to impress them with the quality of negotiability. It may happen that by carelessness, mistake, or fraudulent collusion between carrier and shipper a receipt or bill of lading may be issued for property which in point of fact has not been received by the carrier at all, or which, if received, is less in quantity or inferior in quality to that mentioned in the receipt.

This erroneous or fraudulent bill of lading may in the usual course of business come into the hands of some person who, in good faith and relying on the truthfulness and genuineness of the instrument, advances money upon the security supposed to be afforded by its possession.

Thus an innocent third party is induced by the representations of the instrument to take such action as will subject him to serious loss, if those representations may afterwards be controverted by the party against whom they purport to establish a right. Under these circumstances the latter party may sometimes be estopped from denying the truth of such representation as against the party misled by them, even though in point of fact they do not really express the truth.

Where the carrier is an individual or natural person and himself personally issues, or is cognizant of the issuance of a fraudulent bill of lading, it is conceded by all the authorities that he is estopped, as against the bona fide transferee for value of the bill, from denying the actual receipt by him of the property called for by it. And the carrier may in such case be held liable by such transferee for the value of the property mentioned in the bill, although in fact it was never received by the former at all.

In the case of railroad bills of lading, the actual and responsible carrier, being a corporation, can not in the nature of things personally participate in or be cognizant of the issuance of false or fraudulent bills.

The question of difficulty which here arises is, how far is the railroad company responsible for the acts and representations of its shipping agents in this particular?

It is admitted that the depot or station agent is the authorized agent of the railroad company for the purpose of issuing bills of lading. But it must also be conceded that it is not within the scope of his authority, either express or implied, to issue such instruments except for property actually received for shipment.

In one class of decisions it is held that this limitation of the agent's authority should not be allowed so to operate as to work detriment to parties dealing in good faith in bills of lading issued by him. The agent's authority to issue bills of lading, it is true, is limited to cases where property, has actually been delivered to him for shipment, but the very fact of issuing the bill is an assertion by him of the delivery of the property, and of the consequent existence of that state of things under which his power may lawfully be exercised. The delivery of the property, it is also said, is a fact peculiarly within the knowledge of the agent, and further inquiry concerning it from the agent would be useless, when he has already by his act affirmed that the property has been delivered.

The railway company, it is further said, in supplying its agents with blank forms of bills of lading for use in shipments, must be held charged with knowledge of that common usage of business in pursuance of which these instruments are transferred from man to man, in commercial transactions, as evidences of title to property or security for loans and advancements. The familiar principle should therefore apply, so these cases affirm, that where one of two innocent parties must suffer by the wrongful act or conduct of a third, that one who has enabled the third party to do the wrong must be the sufferer. Hence in this class of cases the railroad company is held liable to bona fide transferees for value of false and fraudulent bills of lading issued by its station agents.

In the leading commercial State of New York, where this doctrine pre

vails, it is said by the courts that if the carrier desires to avoid the liability which may thus be cast upon it by the issuance of false bills of lading, it must stamp upon them, or insert in them, the words "not negotiable," as provided by a statute of the State, to limit the effect of a transfer of such instruments. The bills of lading of many of the railway companies now contain these words.

In some of the States legislation has been enacted expressly giving to bills of lading the effect which, by the course of decisions above referred to, they have been held to possess, but which in other cases has been denied to them.

In the Federal courts the negotiability of bills of lading, to the extent of binding the carrier when fraudulently issued by its agents, has not been sustained; or, to speak more accurately, it has been uniformly held in those tribunals, under the lead of the Supreme Court, that the doctrine of estoppel is not applicable against the railroad company in such cases. The agent, it is said, has no authority, either express or implied, to issue bills of lading, except upon the receipt of property for shipment. It is not within the scope of his agency to issue them under any other circumstances, and the carrier can not be bound by the acts or representations of the agent beyond the scope of his express or implied authority. Several of the State courts agree with the Federal courts in this view, which it may probably be said is sanctioned by the weight of authority, if not of reason.

Legislation has been sought from Congress to make the recitals in railway bills of lading, as to the receipt of property for shipment, conclusive against the company, in favor of bona fide transferrees for value, where the bill of lading purports to contract for a shipment which would be subject to the regulative jurisdiction of Congress. A bill having this object in view passed the House of Representatives a few years ago, but failed of passage in the Senate. The principal objection urged against it was the imminent danger in which it would place the railway companies of loss from the unauthorized or fraudulent acts of any one of the vast number of shipping agents they are obliged to employ. Such agents must, to accommodate the public, be located at many small places where the business could not possibly justify the employment of a man of such capacity and prudence as might be relied on to save him from mistakes, or from the fraudulent artifices of shippers in issuing bills of lading. But whatever the business capacity of the agent, or the care exercised by the company in his employment, his fraudulent acts, it was said, should not be allowed to subject his employer to liability in damages, but should be punished, as are other infractions of the criminal law, in the State where they occur.

Returning now to the subject of limitation by contract of the carriers'