Spencer & Co. v. Bank of Hickory Ridge

DISSENTING OPINION.

Hart, J.

The undisputed facts in this case bring it squarely within the doctrine announced in Goetz v. Bank of Kansas City, 119 U. S. 551. There the court held:

1. ‘ ‘ The acceptor- of a bill of exchange discounted by a bank with a bill of lading attached which the aoceptor and the bank regard as genuine at the time of the acceptance, but -which turns out to be a forgery, is bound to pay the bill to the bank at maturity.

2. ‘£ The bad faith in the taker of negotiable paper which will defeat a recovery by him must be something more than a failure to inquire into the consideration upon which it was made or accepted, because of rumors or general reputation as to the bad character of the maker or drawer.”

In that case the facts were precisely similar to the facts in the case at bar and Mr. Justice Field, speaking for the court, said: ‘ ‘ Under these circumstances, it is not surprising that, when the drafts on the merchants in Milwaukee were presented for discount, the bank made no inquiry as to the genuineness of the bills of lading attached to them. A bank in discounting commercial paper does not guarantee the genuineness of a 'document attached to it as collateral security. Bills of lading attached to drafts drawn, as in the present case, are merely security for the payment of the drafts. The indorsement by the bank on the invoices accompany some of the bills, ‘for collection,’ created no responsibility on the part of the bank; it implied no guarantee that the bills of lading were genuine; it imported nothing more than that the goods, which the bills of lading stated had been shipped, were to be held for the payment of the drafts, if the drafts were not paid by the drawees, and that the bank transferred them only for that purpose. If the drafts should be paid, the drawees were to take the goods. To hold such indorsement • to be a warranty would create great embarrassment in the use of bills of lading as collateral to commercial paper against which they are drawn.” To the same effect, see Hoffman v. Bank of Milwaukee, 12 Wallace 181.

In the case of Varney v. Monroe National Bank, 119 La. 943, 13 L. R. A. (N. S.) 337, a draft was discounted with a bill of lading attached. It was genuine and was drawn on plaintiff with his authorization, and was paid by him. The bill of lading was a forgery. Plaintiff sued the defendant to return the amount on the ground that it was paid in error and that the defendant was liable for the error. The court held that what mistake there was, was plaintiff’s, for trusting the dishonest drawer of the draft, who annexed to it a forged bill of lading.

In the case of Exchange National Bank v. Coe, 94 Ark. 387, we announced the policy that the decisions of the Supreme Court of the United States should be accepted as controlling in matters relating to commercial law where there is no statutory rule or decision of this court to the contrary. This course tends to make uniformity in the decisions of such questions.

I do not think the principles decided in the case of LaFayette v. Merchants’ Bank, 73 Ark. 561, are opposed to the decisions above referred to; 'but, on the contrary, I think the principles of law there announced are recognized. The facts in the case of LaFayette v. Merchants’ Bank are essentially different from the facts in the case before us. There LaFayette & Bro., dealers in live stock, entered into an agreement with one Whitlock by which, under certain conditions, they were to advance money for the purchase of cattle. They prepared and had printed >a blank form of draft to be drawn on them for the price of 'the cattle and provided that on the back of the draft there should be a blank for a bill of sale conveying the cattle to LaFayette & Bro. Thus it will be seen that there was a printed form of draft and bill of sale on the back of it and all that Whitlock had to do was to fill in the name of the payee and the amount of money in the face of the draft and a description of the cattle in the printed bill of sale. Whitlock forged the name of the payee in the draft and also forged a bill of sale from him and forged the indorsement of the name of the vendor on the draft. The court laid stress on these facts and held that, under the circumstances, the form of the draft was notice to the bank that the drawee would not pay unless the bill of sale and the signatures thereto were genuine and held that the lower court erred in directing a verdict for the Merchants’ Bank, which had discounted the draft.

In the case before ns the draft was genuine. The drawer wrote it out in the bank at the time it was discounted. The 'bill- of lading for the corn was then attached to it. Spencer & Co. fully understood that there was no corn connected with, the bill of exchange except that supposed to be covered by the bill of lading. In the conversation over the telephone with the cashier of the bank, “they told him they would pay the drafts if the amounts were correct, and if the drafts were attached to the bill of lading. During the transaction they took down the weight of each car and the number of pounds of corn and figured it out so as to have the amount of corn correct. Their only concern was that the amount of corn in the bill of lading should be correct.

After a careful examination I do not find any fact or circumstance which indicated that the bank had any notice that the bill of lading was not genuine. The bills of lading were on the blank form used by the railroad company. It is true that a subsequent investigation showed that the place from which the corn purported to be shipped was not on the line of the railroad company, but there is no fact or circumstance in evidence that the bank knew of this fact and I do not think a jury might have inferred that the bank had any warning whatever that the bill'of lading was not genuine.-

Therefore, I think the court should have directed a verdict in favor of the bank based upon the well-settled rule that the consideration in a bill of exchange, as between the drawer and the drawee, does not affect the rights of a bona fide endorser for value. '

Kirby, J., concurs in the dissenting opinion.