assigns, he or they paying freight; and a great question has accordingly arisen, and been very elaborately discussed and litigated in the English courts, whether the bill of lading could be negotiated by the consignee like a bill of exchange, and what legal rights were vested in the assignee. In the case of Lickbarrow v. Mason, (a) it was decided by the K. B., that a bona fide indorsement, for a valuable consideration, of a bill of lading, by the consignee to an assignee, who had no notice that the goods were not paid for, was an absolute transfer of the property, so as to divest the consignor of his right of stoppage in transitu, in case of the vendee's insolvency, as against such assignee. There is no case on mercantile law which has afforded a greater display of acute investigation. The judgment of the K. B. was reversed in the exchequer chamber; and Lord Loughborough took a masterly view of the whole subject, and completely overthrew the doctrine of the negotiability of bills of lading. (b) The case then went to the house of lords, where Mr. Justice Buller most ably supported the decision of the K. B. (c) A new trial was awarded, (d) and a special verdict taken, and judgment given thereon without discussion; the judges of the K. B. declaring, that notwithstanding the decision in the exchequer chamber, they retained their former opinions. (e) The question, therefore, remains, to a certain degree, still floating and unsettled; though it seems now to be considered as the law at Westminster Hall, that if a bill of lading be assigned, bona fide, and for a valuable consideration, it is a transfer of the property; and in the case of the consignee, if it be made without notice of the

* 549

(a) 2 Term Rep. 63.

(b) Mason v. Lickbarrow, 1 H. Blacks. R. 357.

(c) 6 East's Rep. 17, in notis.

(d) 2 H. Blacks. R. 211. 5 Term Rep. 367.

(e) Lickbarrow v. Mason, 5 Term Rep. 683. In France, the debatable nature of the subject has been strikingly displayed; for the question of the negotiability of bills of lading was discussed by such masters of commercial law as Valin and Emerigon, and they came to directly opposite conclusions. The first maintained that bills of lading were negotiable instruments, and the latter denied it. Valin's Com. tom. i pp. 606, 607. Emerigon, des Ass. tom. i. 318, 319. By the Code of Commerce, (art. 281,) bills of lading may be to order, or to bearer. This settles the question in favor of their negotiability.

1

insolvency of the consignee, the property is absolutely vested in the assignee of the consignee, and the consignor has in that case lost his right to stop. (a) It is likewise considered to be the law in this country, that the delivery of the bill of lading transfers the property to the consignee; and it seems to be conceded that the assignment of it by the consignee, by way of sale or mortgage, will pass the property, though no actual delivery of the goods be made, provided they were then at sea.2 The rule is founded on sound principles of mercantile policy,

(a) Coxe v. Harding, 4 East's R. 211. Cuming v. Brown, 9 ibid. 506. Morison v. Gray, 2 Bing. Rep. 260. Walter v. Ross, 2 Wash. Cir. R. 283. Wharton's Dig. tit. Vendor, B. b. Haille v. Smith, 1 Bos. & Pull. 563. In Morison v. Gray, 9 Moore's C. B. R. 484, it was held, that the bona fide assignee of a bill of lading had a sufficient property to stop the goods while in transitu, on the insolvency of the vendee, and to sue in his own name the wharfinger who refused to deliver up the goods. But though a bill of lading be negotiable, it seems in a late case to be doubted whether a bill of lading was conclusive as between the shipowner and a bona fide indorsee for value. Berkley v. Watling, 7 Adolph. & Ellis, 29. In Birckhead v. Brown, 5 Hill N. Y. R. 634, it was declared that letters of credit and commercial guaranties were not negotiable instruments, and that no special contracts, other than bills of exchange and promissory notes, were negotiable instruments, and no one could sue in his own name but an original party to the contract. Lamourieux v. Hewit, 5 Wendell, 307. Watson v. McLaren, 19 id. 557. 26 id. 425. Miller v. Gaston, 2 Hill N. Y. R. 188.3

In Thompson v. Dominy, 14 Meeson & Welsby, 403, it was adjudged that a bill of lading was not negotiable like a bill of exchange, so as to enable the indorsee to sue in his own name. The indorsement transfers the right of property in the goods, but not the contract itself. The court said that there was no case that went so far.*

1 The effect of a consignment of goods generally is to vest the property in the consignee; but if the bill of lading is special, to deliver the goods to A., for the use of B., the property vests in B., and the action must be brought in his name. Grove v. Brien, 8 How. U. S. 429. As a general rule, a suit, founded on the express contract of the bill of lading, must be brought in the shipper's or owner's name; an indorsement of the bill will transfer the property in the goods, but not the contract in the bill of lading. Dows v. Cobb, 12 Barb. R. 310.

2 It has been decided, that where the master signed bills of lading in the usual form, but for goods which were never received on board, the shipowner was not responsible, though the bill had been transferred to a bona fide indorsee for value. Grant v. Norway, English Law Journal Rep. May, 1851, C. P. p. 93.

8 It seems that the contract with the carrier cannot be assigned so as to give the assignee a right of action on the contract, or for a breach of it. Howard v. Shepard, Law Journal Rep. Q. B. p. 249, Sept. 1850.

4 In Gurney v. Behrend, 25 Eng. L. & Eq. 128, the court of Q. B. held that a bill of lading did not pass the property to a bona fide indorsee so as to divest the right of stoppage in transitu, unless the indorsement was made with the authority of the vendor.

and is necessary to render the consignee safe in the acceptance of the drafts of his correspondent abroad, and to afford him the means of prompt reimbursement or indemnity. (a)

*But it must not be understood that the consignee can, *550 in all cases, by his indorsement of the bill of lading to a third person, even for a valuable consideration, and without collusion, defeat the right of the consignor to stop the goods. It will depend upon the nature and object of the consignment, and the character of the consignee. As a general rule, no agreement made between the consignee and his assignee, can defeat or affect this right of the consignor; and the consignor's right to stop in transitu, is prior and paramount to the carrier's right to retain as against the consignee. (b) A factor, having only authority to sell, and not to pledge the goods of his principal, cannot divest

(a) Wright v. Campbell, 4 Burr. R. 2051. Griffith v. Ingledew, 6 Serg. & Rawle, 429. Peters v. Ballistier, 3 Pick. R. 495. Walter v. Ross, supra. In Conard v. The Atlantic Insurance Company, 1 Peters's U. S. Rep. 386, it was decided that the consignee, being the authorized agent of the owner to receive the goods, his indorsement of the bill of lading to a bona fide purchaser, for a valuable consideration, without notice of any adverse interest, passed the property as against all the world. This is the result of the principle, that bills of lading are transferable by indorsement, and pass the property. Strictly speaking, no person but such consignee can, by indorsement of the bill of lading, pass the legal title to the goods; but if the shipper be the owner, and the shipment be on his account and risk, he can pass the legal title by assignment of the bill of lading, or otherwise; and it will be good against all persons, except the purchaser, for a valuable consideration, by an indorsement of the bill of lading itself. The same principle was declared in Nathan v. Giles, 5 Taunt. Rep. 558. A deposit of the bill of lading, without indorsement, will create a lien on the cargo to the amount of the money advanced on the strength of the deposit, which would be superior to the consignor's right of stoppage. That right came from the courts of equity, and is founded upon equitable considerations; and it consequently must yield to a still higher equity in a third person. In Louisiana it has been held, that goods shipped could not be attached by the creditors of the shipper, after the bill of lading had come into the hands of the consignee; but they might be attached by the creditors of the consignee. M'Neill v. Glass, 13 Martin's Louis. Rep. 261.

(b) Oppenheim v. Russell, 3 Bos. & Pull. 42. The right of stoppage is held not to be divested, though the goods be levied on by execution, at the suit of a creditor of the purchaser, provided it be exercised before the transitus is at an end. The vendor's lien has preference; it is the elder lien, and cannot be superseded by the attachment of a creditor. Smith v. Goss, 1 Campb. N. P. Rep. 282. Buckley v. Furniss, 15 Wendell, 137. Marshall, J., in Hause v. Judson, 4 Dana's Ken. R. 11.1

'Aguirre v. Parmelee, 22 Conn. 478. Wood v. Yeatman, 15 B. Mon. 270. Contra, Boyd v. Mosely, 2 Swan, 661.

the consignor of the right to stop the goods in transitu, by indorsing or delivering over the bill of lading as a pledge, any more than he could by delivery of the goods themselves by way of pledge; and it is the same thing whether the indorsee was or was not ignorant that he acted as factor. (a) If the assignee of the bill of lading has notice of such circumstances as render the bill of lading not fairly and honestly assignable, the right of stoppage as against the assignee is not gone; and any collusion or fraud between the consignee and his assignee will, of course, enable the consignor to assert his right. But the mere *551 fact that the assignee has notice that the consignor is not paid, does not seem to be of itself absolutely sufficient to render the assignment defeasible by the stopping of the cargo in its transit, if the case be otherwise clear of all circumstances of fraud; though if the assignee be aware that the consignee is unable to pay, then the assignment will be deemed fraudulent as against the rights of the consignor. (b)

The buyer, if he finds himself unable to pay for the goods, may, before delivery, rescind the contract, with the assent of the seller. But this right of the buyer of rejecting the goods, subsists only while the goods are in transitu. After actual delivery, the goods become identified with his property, and cannot, in contemplation of bankruptcy, be restored to the seller; nor can he interfere and reject the goods, though in their transit, after an act of bankruptcy committed; for this would be to give a preference among creditors. (c)

Sir William Scott observed, (d) that this privilege of stoppage

(a) Newsom v. Thornton, 6 East's Rep. 17.

(b) Cuming v. Brown, 9 East's Rep. 506. As long as the vendor of goods delivered for exportation retains the receipt given to the cartman, the shipment is not complete, and the right of stoppage not gone. Bradner v. Jones, N. Y. Legal

Observer for March, 1847.

(c) Smith v. Field, 5 Term R. 402. Barnes v. Freeland, 6 ibid. 80. Richardson r. Goss, 3 B. & Pull. 119. Bartram v. Farebrother, 1 Danson & Lloyd, 42. Independent of the question under statutes of bankruptcy, it seems to be settled, that the vendee's consent to restore goods, and the vendor's consent to receive them, revests the prop erty in the vendor, and amounts to a rescission of the sale, so as to prevent a seizure at the suit of creditors. Atkin v. Barwick, Str. 165. Salte v. Field, 5 Term, 211. Ash v. Putnam, 1 Hill's N. Y. R. 303, 310..

(d) 6 Rob. Rep. 498.

was a proprietary right, recognized by the general mercantile law of Europe, as well as by that of England. It was recognized in Scotland in 1790; and the French law has gone very far towards the admission of the right, to the full extent of the English rule. It allows the vendor to stop the goods in their transit to the consignee, in case of his non-payment or failure, provided the goods have not been in the mean time sold bona fide, according to the invoices and bills of lading, or altered in their nature or quantity, and the estate of the insolvent vendee be indemnified against all necessary expenses and advances on account of the goods; and the assignees of the vendee will be entitled to the goods on payment of the price. (a) The civil law, and the laws of those European nations which have 'adopted the civil law, contain a great impediment to the *552 absolute negotiability of bills of lading; for they do not consider the transfer of property to be complete, even by sale and delivery, without payment or security for the price, unless credit be given. In case of insolvency, the seller may reclaim the goods, as being his own property, even from the possession of the buyer, provided they remain unchanged in form, and distinguishable from his other goods. (b) This was also the law of France, until the commercial code adopted the law of stopping in transitu, and rejected the old law of revendication, as tending to litigation and fraud. (c)

XII. Of the interpretation of contracts.

The rules which have been established for the better interpretation of contracts, are the conclusions of good sense and sound logic, applied to the agreement of the parties. Their object is to ascertain with precision the mutual understanding of the contract in the given case; and, like other deductions of right reason, they have been quite uniform in every age of cultivated

(a) Code de Commerce, Nos. 576-580, 582.

(b) See Lord Abinger's sketch of the progress of the doctrine of stoppage in transitu. Gibson v. Carruthers, 8 Meeson & Welsby, 336.

(c) Dig. 18, 1, 19. Domat, b. 4, tit. 5, sec. 2, art. 3. Van Leeuwen's Com. on the Roman Dutch Law, b. 4, ch. 17, sec. 3. Case at St. Petersburg, in Russia, cited in Bohtlingk v. Inglis, 3 East's Rep. 386. Case at Amsterdam, cited in the note to 1 Bell's Com. 217, 218. See supra, 498.