PI. D- Bandy, in 1904 and prior thereto, was engaged at Monroe, Da., in buying and selling cotton. On August 15, 1904, Bandy discounted at the Monroe National Bank a draft for $9,000, drawn by him on Hubbard Bros. & Co., of New York. The body of the draft was in this form:
“Pay to the order of T. E. Flournoy, cashier, nine thousand dollars, value received, and charge the same to account of against 214 B/O.”
To the draft were attached, indorsed in blank, documents, after-wards ascertained to be forgeries, in the form of bills of lading for 214 bales of cotton, issued to Bandy by the Vicksburg, Shreveport & Pacific Railway Company, at Monroe, for shipment to New York via issuing company and Southern Pacific Railroad and steamship lines, consigned “to shipper’s order, notify Hubbard Bros.,” purporting to be signed by W. G. Wallace, then the agent of issuing company at Monroe. The draft was paid upon presentation. .
In September Bandy purchased at New Orleans 214 bales of cotton, which, under his instructions, were shipped, via the Southern Pacific Company steamship line, from New Orleans to New York; a bill of lading being issued “to shipper’s order, notify Hubbard Bros.,” the cotton having the same identifying marks as in the forged bills of lading for 214 bales. To cover the purchase price of the cotton, the seller drew a draft on Bandy, through the Ouachita National Bank, attaching bills of lading covering the 214 bales of cotton. Bandy gave his check on the bank for the amount; the check being charged to him, and the bills of lading being retained as security. The Southern Pacific Company, upon surrender of the forged bills of lading, delivered to Plubbard Bros. & Co., the 214 hales of cotton shipped from New Orleans.
About August 29, 1904, Bandy forwarded to Hubbard Bros, by registered mail, indorsed in blank, another forged bill of lading of the same character as the other forged instruments, for 100 bales of cotton. Bandy wrote Hubbard Bros. & Co. that he would draw against this bill of lading when he arranged for the shipment of other cotton.
Hubbard Bros. & Co. instituted in the Western district of Louisiana a suit against the Southern Pacific Company, and the two national banks involved, setting up the facts stated, together with other facts to be referred to, and sought an adjudication of the rights of all parties. The several claims may be thus stated:
(1) The Ouachita National Bank, through its liquidators, asked for a judgment against the Southern Pacific Company for the value of the 314 bales of cotton for which it held bills of lading, with interest from the date of its delivery to Hubbard Bros. & Co.
(2) The Southern Pacific Company sought judgment against Hubbard Bros. & Co. for the value of all of the cotton delivered to them on the forged bills of lading. Hubbard Bros. & Co. denied their liability for the cotton so delivered.
(3) Hubbard Bros. & Co. also -claimed that, in the event they were to be held liable to the Southern Pacific Company, they should have a judgment against the Monroe National Bank for the amount of the draft for $9,000 which they paid to that bank, with interest.
Judgment was rendered: In favor of the liquidators of the Ouachi-ta National Bank against the Southern Pacific Company for $17,232.-42, with interest at 5 per cent, from the respective dates of delivery of the cotton to Hubbard Bros. & Co. until paid; and in favor of the Southern Pacific Company against Hubbard Bros. & Co. for the same amount, with like interest; and against Hubbard Bros. & Co. on their claim against the Monroe National Bank.
[1] The judgment of the Ouachita National Bank against the Southern Pacific Company is not attacked, except that it is contended that interest should be from judicial demand, instead of from the date of the delivery of the cotton by the Southern Pacific Company to Hubbard Bros. & Co. That which the Ouachita National Bank is entitled to recover is its damages; and if interest be calculated from the date the cotton was delivered to Hubbard Bros. & Co., it would
[2, 3] The amount which the Southern Pacific Company must pay to the Ouachita Bank is the measure of the liability of Hubbard Bros. & Co. to the Southern Pacific Company. The Ouachita Bank, holding the bills of lading as collateral, may recover the entire value of the cotton, with interest. Hubbard Bros. & Co., as equitable assignee of Bandy, would be entitled to any balance after the payment of the secured debt; but it appears that the debt, with interest, exceeds the recovery.
Hubbard Bros. & Co. contend that, nothwithstanding the cotton was delivered to them on forged bills of lading, the Southern Pacific Company should not recover. Propositions are made: (1) That a concern issuing a bill of lading must be held to know its own signature, and must take the consequences of a mistake; (2) that the prior course of business, by which several shipments of cotton were delivered to Hubbard Bros. & Co. on forged bills of lading, constitutes negligence upon the part of the Southern Pacific Company, estopping them from recovery; (3) that the Southern Pacific Company is es-topped by the delay in presenting the claim against Hubbard Bros. & Co.
[4, 5] 1. It is contended that the same rules should be applied to bills of lading as to bills of exchange: Ordinarily the drawee of a bill of exchange must determine at his peril the genuineness of the signature of the drawer. If the ostensible maker of a forged note pays the note, he cannot recover the amount. United States v. Bank of Georgia, 10 Wheat. 333, 6 L. Ed. 334; Gloucester Bank v. Salem Bank, 17 Mass. 33; Cook v. United States, 91 U. S. 389, 23 L. Ed. 237. The reasoning by analogy cannot be made to control, in the face of definite decisions holding that a common carrier can recover against a person who receives goods upon a forged bill of lading. Among the cases may be cited N. Y. Central Railroad v. Bank of Holly Springs, 195 Fed. 456, 115 C. C. A. 358; L. & N. R. R. Co. v. McKay & Morgan, 133 Tenn. 503, 182 S. W. 585. The reasoning to which appellant appeals, based on the suggestion that .a corporation is better able to know its signature than any one dealing with it, cannot be made to apply to the bills of lading in question. The forged bills of lading appear on their face to have been issued by an agent of the Vicksburg & Shreveport Railroad Company. Under the law this agent had a right to' give a bill of lading binding upon its direct and its mediate connections. To bind a connecting carrier, it is not neces--sary that the agent of the issuing company should be an agent of the connecting company. The law fixes the liability resulting from
[6] 2. The evidence discloses that, in addition to the bills of lading for 214 bales of cotton, and the bill of lading for 100 bales of cotton, hereinbefore mentioned; forged bills of lading for some hundreds of other bales had been presented by Hubbard Bros. & Co. to the Southern Pacific Company, and cotton delivered on them. It appears, also, that genuine bills of lading were, as to all of this cotton, issued by the Southern Pacific Company or a connecting line, but that these genuine bills have never been presented. These facts' suggest the possibility of looseness in the conduct of the business of -the Southern Pacific Company, and in that of Hubbard Bros. & Co.; but they do not indicate that Hubbard Bros. & Co. have suffered, or have been misled, by the negligence of the Southern Pacific Company. The fact that Hubbard Bros. & Co. have received several hundred bales of cotton upon forged' bills of lading, and have never been made to account for the cotton thus received, is hardly a sufficient basis for demanding that all subsequent forged bills of lading should have the effect of genuine bills.
3. Discovery of' the forgery and institution of suit were within a reasonable time, and there is nothing to indicate that Hubbard Bros. & Co.- were damaged by delay.
The Claim against Monroe Bank.
[7] The claim of Hubbard Bros. & Co. against the Monroe National Bank is based upon the propositions': (1) That the draft, as drawn, is not a negotiable instrument; (2) that the figures and letters “214 B/C,” in the body of ;the draft, make the attached forged bills of lading for 214 bales of cotton parts of the draft; (3) that the indorsement of the draft by the Monroe'Bank made the bank a guarantor in every respect, except as to the signature of the drawer. The indorsement of an ordinary draft for collection does not make the indorser a guarantor to the drawee of the genuineness of the bills of lading attached, .nor of the quantity or quality of the commodity shipped.
[8, 9] Whatever question may have existed with reference to the rule, recent decisions, have placed the matter heyond doubt. In Springs v. Hanover National Bank, 209 N. Y. 224, 103 N. E. 156, 52 L. R. A. (N. S.) 241, the cases are reviewed and this conclusion reached. The opinion refers to the fact that there are decisions in Texas, North Carolina, Mississippi-, and Alabama to the contrary. The decisions in conflict in at least three of the states have been overruled. Blaisdell v. Bank, 96 Tex. 629, 75 S. W. 292, 62 L. R. A. 968, 97 Am. St. Rep. 944; Mason v. Nelson, 148 N. C. 492, 62 S. E. 625, 18 L. R.
At the time of the transaction, the Uniform Negotiable Instruments Raw was in force both in New York and Louisiana. Therein a bill of exchange is defined:
“A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed and determinable future time, a sum certain of money to order or to bearer.” Consol. Laws N. Y. c. 38, § 210; Acts La. 1904, No. 64, § 126.
The act further provides :
“An unqualified order or promise to pay Is unconditional within the meaning of this chapter, though coupled with: (1) An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or (2) a statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.” Consol. Laws N. Y. c. 38, § 22; Laws La. 1904, No. 64, § 3.
Appellants agree that, under the English cases, the draft in question would he held a negotiable instrument. See Guaranty Trust Co. v. Hannay, 210 Fed. 810, 127 C. C. A. 360. But they insist that the law as developed in the United States is different. Appellants cite Hoffman v. Bank, 12 Wall. 181, 20 L. Ed. 366; Goetz v. Bank, 119 U. S. 551, 7 Sup. Ct. 318, 30 L. Ed. 515; Varney v. Bank, 119 La. 943, 44 South. 753, 13 L R. A. (N. S.) 337; and Springs v. Bank, 209 N. Y. 224, 103 N. E. 156, 52 L. R. A. (N. S.) 241. _ In each of these cases the drawee was held liable. In the opinion in each case was a suggestion that there was no reference in the face of the draft to the bills of lading. The expressions may properly be used in argument, but in neither case was the point now discussed under consideration, and no great weight can be accorded them. Other cases cited by appellant may be differentiated, or, if not, they are against the weight of recent authority.
The following cases apparently put the matter beyond doubt: Whitney v. Eliot Bank, 137 Mass. 351, 50 Am. Rep. 316; Redman v. Adams, 51 Me. 433; First Nat. Bank v. Lightner, 74 Kan. 736, 88 Pac. 59. In the last-named case the authorities are reviewed.
If the mere insertion of the words “against 214 B/C” in the body of the draft, without grammatical connection with the balance of the instrument, could, under any circumstances, render an otherwise ordinary draft a conditional order on a particular fund, that effect could not follow, in view of the facts developed in this case. The evidence discloses that, for a considerable time prior to the transaction here reviewed, there was a running account between Hubbard Bros. & Co. and Bandy, and at the date of the draft Bandy had a credit with Hub
The judgment is so modified that interest on the amount adjudged against the Southern Pacific Company in favor of the Ouachita National Bank, and against Hubbard Bros. & Co. in favor of the Southern Pacific Company, shall run from November 30, 1004, and, as so modified, it is affirmed.
Modified and affirmed.