Jeremiah Travis.

Commentaries on the law of sales and collateral subjects (Volume 2) online

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THE LAW OF SALES.



Volume II.



COMMENTARIES



ON



THE LAW OF SALES



AND



COLLATERAL SUBJECTS.



BY

JEREMIAH TRAVIS, LL.B., Harv. '66 ;

Recently Judge or the High Couut of Justice

OP THE

Canadian Northwest Territories ;

FiKST-PmzE Law Essayist of Hakvakd University of 1866; author of

"A Treatise on Canadian Constitutional Law;" annotator

OF "Parsons on Partnership," etc.



IN TWO VOLUMES.

Vol. n.



BOSTON:
LITTLE, BROWN, AND COMPANY.

TORONTO:

THE CARSWELL CO., (Limited).

1892.






Copyrifjltt, 1892,
Bv Jeremiah Travis.






University Press :
John Wilson and Son, Camhridok, U.S.A.



CONTENTS.



VOLUME II.



BOOK III.



RAILROADS.

Part I. Station-Agents fraudulently signing Freight
Receipts for Goods not received, — as to Lia-
bility OF Railway therefor to innocent Third

Party o

" II. Railway Contracts for through Carriage of
Goods



Pagbs

1-74
75-220



BOOK IV.



STATUTE OF FRAUDS.

Part I. What are within the Statute

" II. Fixtures

" III. Work and Labor

" rV. Exchange or Barter

" V. Earnest or Part-Payment ........

" VI. The Acceptance

" VII. The Actual Receipt

" VIII. The Note or Memorandum in Writing . . .

*' IX. The Essential Requisites of the Memorandum



221-241
242-252
253-264
265-274
275-316
317-435
436-504
50;>-583
584-674



Index 675



COMMENTARIES ON SALES.



BOOK III.
PART I.



RAILWAY STATION-AGENTS AND SHIPMASTERS FRAUDU-
LENTLY SIGNING FREIGHT RECEIPTS AND BILLS OF
LADING.

Erb V. The Great Western Railway Co. of Canada ^ is a case
where C, who was the freight-agent of the defendants at Chat-
ham, Ontario, and a partner in the firm of B. & Co., caused
printed receipts, or shipping-notes, in the form commonly used
by the railway company, to be signed by his name as the com-
pany's agent, in favor of his firm, B. & Co., for flour which had
never in fact been delivered to the railway company. The re-
ceipts acknowledged that the company had received from B. &
Co. the flour addressed to the plaintiffs, and were attached to
drafts drawn by B. & Co. ; accepted and subsequently paid by
plaintiffs. C. received the proceeds of the drafts, and absconded.
In an action brought by the plaintiffs against the railway com-
pany for the amount of the drafts, it was held, by the majority
of the court, that the act of C. in issuing a false and fraudulent
receipt for goods never delivered to the company, was not an act
done within the scope of his authority as the company's agent,
and that the defendants, therefore, were not liable.

It was very strenuously urged for the plaintiffs that the freight-
agent was acting within the scope of his authority in signing the
freight receipts ; that the rule of law applied to this case, that,
where one of two innocent persons must bear a loss, it should be
he who by care could have prevented the loss that should bear it ;
and that a distinction exists between such cases as this and those
where shipmasters sign bills of lading. There was, also, a posi-
tion taken with reference to a local statute which it is not neces-

1 5 S. C. of Can. R. 179.
VOL. n. 1



COMMENTARIES ON SALES.



[book III.



sary to consider here. Two of the members of a court of six
concurred in the views of the plaintiffs' counsel.

The judgment of Ritchie, C. J., which is that of the majority
of the court, is very lengthy, and as the question is one of much
importance, and as the conclusion reached is one with which we
agree (although not, by any means, with all the reasoning the
judgment contains, — much of which is fallacious), we quote fully
from the judgment in our note below. ^



1 After referring, at considerable length,
to the pleadings and facts in the case,
Ritchie, C. J., proceeds as follows : "We
must then consider whether the defend-
ants are to be bound by the acts of Car-
ruthers as the agent, and are to be held
responsible in like manner as if they, with
knowledge that the goods had not been
received or shipped, had issued or directly
authorized the issuing of this receipt or
bill of lading, or after its issue had acqui-
esced in the act and derived benefit and
advantage therefrom. The mere giving a
receipt for goods and issuing a bill of lad-
ing without any goods having been re-
ceived, was clearly not within the usual
scope of the employment of a freight
agent, such as Carruthers is shown to
have been. It was only when he had
actiaally received goods to be shipped that
the giving a receipt and bill of lading for
such goods was within the usual scope of
his employment. It was never within the
scope of his employment that he should
create, for his own illicit gain, as instru-
ments of fraud, ' false pretences of con-
tracts having the semblance of bills of
lading.' Such bills of lading as he issued
did not grow out of any transaction be-
tween T. Brown & Co. and defendants, or
between the plaintiffs and defendants, or
out of the use of the railway as a means of
transportation by either T. Brown & Co.,
or the plaintiffs. They were simulated
bills of lading, the result of the direct
fraud and forgery or deceit of T. Brown
& Co., by their leading partner, Car-
ruthers; and, if plaintiffs accepted and
paid bills on the faith of such documents,
their doing so was induced by the act of
T. Brown & Co., and not by any act of
the defendants, either directly or by Car-
ruthers as their agent, while acting within
the scope of the authority conferred upon
him by the defendants. I fail to see how
such a wilful fraud committed by T. Brown
& Co., through their partner Carruthers, on
plaintiffs, with whom they were dealing,
can be considered an act within Carruthers 's
agency. The authority of Carruthers was
a limited authority. His power and au-
thority to sign a bill of lading depended
on the actual receipt and shipping of the



goods. If the fact on which the author-
ity depended did not exist, the authority
could not exist. The cases of Grant v.
Norway, 10 C. B. 665 ; Hubbersty v.
Ward, 8 Exch. 330 ; and Coleman 7'.
Riches, 16 C. B. 104, appear to me in
principle directly in point. In Grant v.
Norway, 10 C. B. 665, the margi*al note
is as follows : ' The master of a ship sign-
ing a bill of lading for goods which have
never been shipped is not to be considered
as the agent of the owner in that behalf,
so as to make the latter responsible to one
who has made advances upon the faith of
bills of lading so signed.' During the
argument, Jervis, C. J., says : ' If the
master's authority is to sign bills of lading
only upon receiving the goods on board,
the owner does not hold him out as his
agent until he receives the goods.' After
pointing out the very large authority of a
master of a ship, and adopting from Smith's
Mercantile Law (p. 59) that 'the master
is a general cujent to perform all things
relating to the usual employment of his
ship ; and the authority of such an agent
to perform all things usual in the line of
business in which he is employed cannot
be limited by anj'^ private order or direc-
tion not known to the party dealing with
him,' asks, Is it then, usual, in the man-
agement of a ship carrying goods on
freight, for the master to give a bill of
lading for goods not put on board ? For all
parties concerned have a right, he says, to
assume that an agent has authority to do
all that is usual. He then points out that
' the very nature of a bill of lading shows
that it ought not to be signed until the
goods are on board ; ' for it begins by de-
scribing them as shipped. He says : ' It
is not contended that the captain had any
real authority to sign bills of lading, un-
less the goods had been shipped ; nor can
we discover any ground upon which a
party taking a \)i\\ of lading by indorse-
ment would be justified in assuming that
he had authority to sign such bills, wheth-
er the goods were on board or not.' He
then adds : ' If, then, from the usage of
trade, and the general practice of ship-
masters, it is generally known that the
master derives no such authority from his



PART I.]



RAILWAYS.



Tlie matter is settled in England on unquestionable authority.
The main point involved is as to the nature of the agency of the



position as master, the case may be con-
sidered as if the party taking the bill of
lading had notice of an express limitation
of the authority ; and, in that case, un-
doubtedly, could not claim to bind the
owner by a bill of lading signed, when the
goods therein mentioned were never ship-
ped.' This case was followed by Hub-
bersty v. "Ward (8 Exch. 330) : ' The
master of a vessel has no power to charge
his owner by signing bills of lading for a
greater quantity of goods than those on
board.' The authority of Grant v. Nor-
way was conceded, but it was attempted
to distinguish this case from Grant v.
Norway ; but Pollock, C. B., deliver-
ing the judgment of the court, says :
' We think that when a captain has signed
bills of lading for a cargo that is actu-
ally on board his vessel, his power is ex-
hausted. He has no right, or power, by
signing other bills of lading for goods whicli
are not on board, to charge his owner.'
This case was ^followed by Coleman v.
Riches (16 C. B. 104), where the same
principle was applied to the agent of a
wharfinger, who signed a receipt in the
usual form for the delivering of corn at
defendant's wharf. In the course of the
argument, Jervis, C. J., says : 'The au-
thority of the man was of a limited char-
acter. He was only authorized to give
receipts when the wheat was actually de-
livered." In delivering judgment : 'This,
however, is simply the case of a wharf-
inger's receipt note, and that being so,
the case is disposed of. Board, the de-
fendant's agent, had only authority to
give receipts for goods which .had, in fact,
been delivered at the wharf. And again,
when Board gave a receipt for wheat which
had never been delivered at the wharf, he
was not acting within the scope of his
authority. He was not acting for his
master, but contrary to his duty and
against his master's interest.'

" With how much more force does this
reasoning and the conclusions arrived at
in these cases apply to the present case !
The authority of the freight agent cannot,
in my opinion, be compared in extent
with the general authority of a master of
a ship, who is intrusted with the whole
control and management of the property,
and that for the most i)art in the absence
of the owner, and when the vessel is out
of his reach. Here the authority of the
agent was, necessarily, of a most limited
character. He was to receive an<l shi[),
and give receipts and bills of lading for
goods actually received ajid shipped.
Outside of this, he does not appear to



have possessed any authority whatever ;
nor was any other or greater authority
necessary to enable him to manage and
conduct that part of the business of de-
fendants' railway confided to him. He,
certainly, was not authorized to grant
receipts for goods unless the goods were
actually received, nor was he empowered
to contract for the company that goods
should be sent by the company, when no
goods were ever received by the company
to be sent. Nor, in like manner, had he
any authority to sign a bill of lading
declaring the property was shipped in
apparent good order, when it never was
shijiped, and declaring the propei-ty was
to be delivered in like good order, when
there was no property in the possession of
the company or of their agent to be de-
livered. It may be even questioned
whether the general manager of this rail-
way could legally issue or authorize to be
Issued bills of lading for goods never
received and never shipped, such an act
being wholly inconsistent with the object
of a railway company, which is incor-
porated to transport goods delivered to
them for transportation, not to issue
feigned and fraudulent receipts and bills
of lading for goods never received to be
forAvarded. Be this as it may, it cannot
be doubted that every person in business
who deals with a railway company knows
that, in the ordinary aTid usual course of
business, no such receipts and bills of
lading are ever given or issued unless the
goods have been actually received to be
shipped, and nobody so dealing but must
know that if a freight agent, discharging
the ordinary duties of a freight agent, did
give or issue such receipts and bills of
lading without the goods having been
delivered, he would be acting in direct
opposition to his duty and in fraud of his
principals, and no one would knowingly
act on a bill of lading so issued, when
goods had never been delivered or actually
shipped, unless indeed it could be shown
that some specific authority had been
given to the agent outside of the ordinary
course of business, authorizing the sign-
ing of siich documents without delivery
of the articles. I cannot conceive it
possible, in the usual course of business,
that any business firm would accept drafts
on their mere production, with bills ol"
lading attached, without any notice or
advice, or without anything indicating
the nature of the transaction. It is very
different from the buying or negotiating
a bill of exchange, and the position of a
holder for value of a bill of exchange



COMMENTARIES ON SALES.



[book III.



shipmaster, or freight-agent of the railroad. We think it is
clear that the powers of a freight-agent of a railway are cer-



purcliased on the market is %'ery different
from that of a person accepting a bill of
exchange drawn on him. No one, I take
it, in the usual and ordinary course of
business, draws on another in whose hands
he has no funds, but on the strength of
funds to be supplietl, without advising
that the funds against which he draws
will be forthcoming ; and, therefore, in a
case like the present, where the plaintiff
alleges that the transaction originated on
a contract with the drawers, that on
certain conditions they would accept, —
that is, on goods consigiied they would
advance by accepting drafts, — can it be
supposed that those who were to draw
drew without advising the shipping of
the goods and the drawing against them
through the bank for their value ? Can
it be doubted that the acceptance of the
bills so drawn was on the strength of
such advice rather than on that of the
bill of lading ? Bills of lading attached
are generally more for the security of the
drawer than the drawee. It is that the
goods shall not be delivered oyer until
the bills are accepted ; in other words,
that the consignees shall not receive the
goods till they have secured the payment
by accepting the bills drawn for their
price. In this case the transaction in
connection with the bills, with which the
railway had nothing to do, was an illusion
and a fraud. The consideration on which
the bills were drawn, and the consider-
ation on which the plaintiffs accepted the
bills never existed. The bills were drawn
against iiour to be shippeil and for the
price of the flour, on the sale of which the
plaintiffs were to make a commission.
The flour never was shipped. There
never was ' any property on the sale of
which the plaintiffs could make a com-
mission, and the reason was that the
parties with whom the plaintiffs dealt
deceived them, and have endeavored to
cover their deceit by transmitting to their
dupes feigned documents as purporting
to have been legitimately issued by de-
fendants' authority. I can only look on
this as a case of fraud, pure and simple.
Carruthers, in signing these receipts and
bills, was not acting within the scope
of his authority, or in the course of his
employment, or for his employers' benefit,
and the company never adopted Car-
ruthers's act or profited by his fraud.
Carruthers had no authority to make
statements or representations. He was
employed to receive goods, and, on receipt,
to give acknowledgments therefor ; to ship
the goods so received, and, on such ship-



ment, to give bills of lading ; in other
words, to sign a contract for their trans-
portation and delivery. As said by
Cress well, J., in Coleman v. Riches (16
C. B. 104): 'He was not employed to
represent that to be true which he knew
to be false.' His position was, as de-
scribed by Crowder, J., in the same case,
that 'of a servant whose only duty was
to give a receipt when the goods had been
delivered.' The case we are dealing with
is, in my opinion, much stronger against
plaintiffs than those I have referred to, be-
cause it is quite impossible in this transac-
tion to separate plaintiffs from T. Brown &
Co. ; and, equally impossible to separate T.
Brown and Co. from Carruthers, who,
unquestionably, was the leading partner ;
in fact, substantially the firm of T. Brown
& Co. ; and, therefore, so far ;is the de-
fendants are concerned, plaintiffs must
be looked upon as, if not identical with
Carruthers, as immediately connected with
him, and cannot fix on the defendants a
liability growing out of a breach of T.
Brown & Co.'s contract with them as set
out in the declaration, and out of the
fraudulent conduct of T. Brown & Co. in
drawing against goods they never shipped,
and fraudulently transmitting bills of
lading of their own fraudulent concoction.
No doubt T. Brown & Co. were, by
reason of the employment of their leading
member, enabled the more easily to per-
petrate and carry out successfully this
fraud. Still, I think this fraud of T.
Brown & Co. in their dealings with plain-
tiffs, cannot be attributed to the company.
The defendants had no knowledge of the
transaction between T. Brown & Co. and
plaintiffs. The falsehood, fraud, and
knowledge were on the part of T. Brown
& Co., with whom plaintiffs contracted,
and who, instead of shipping the flour to
plaintiffs, on the security of which the
advances were to be made, and procuring
bond fide bills of lading or shipping re-
ceipts therefor, from defendants, in ful-
filment of their contract with plaintiffs,
falsely and fraudulently, by their senior
and principal partner, made out a false
and fraudulent bill of lading or shipping
receipt, purporting to be the bill of lading
or the receipt of the defendants ; and,
thereby, falsely and fraudulently repre-
sented to plaintiffs that they had fulfilled
their contract and had shipped and assigned
to him the flour in question, and had
procured from defendants a bill of lading
and shipping receipt therefor ; when in
truth and in fact the flour never had been
consigned and shipped to plaintiffs, nor



PART I.] RAILWAYS. 5

tainly not greater to bind the railway by a false statement as to
the receipt of goods, alleged to have been received by the railway,
than are those of a shipmaster, by a similar false statement, to bind
the ship or its owners. In both cases the main ground upon which
it is sought to clothe them with such powers is, that, where one
of two innocent persons must suffer by the fraud of a third, the
loss must fall upon that one of the two who, by his placing
the thi]-d in a position of trust or confidence, enabled the
third person to commit the fraud. But there is a limitation to
this doctrine. It is a pure question of the nature of the agency.
A principal "is liable only for the fraud of the agent committed
within the scope of his employment. Thus, the mere fact that
a merchant. has clerks in his employment does not, . therefore,
necessarily clothe them with the power to bind him by their
acceptances of bills of exchange, fraudulently accepted by them
out of the scope of their employment. Nor, where a master
sends his servant to purchase goods for cash, and he fraudu-
lently buys them on credit, is the master bound by the act of his
servant, without the scope of his employment. So, as the ship-
master is only the agent of necessity for the sale of the ship, no
title to the ship passes to the purchaser unless he can affirma-
tively make out the necessity for the sale, and thereby show that
the act was done by the master as such agent of necessity, with-
in the scope of his employment. In the same way, as the mas-
ter is only the agent of the ship and owners to sign bills of lading

delivered to be shipped, and defendants Brown & Co., and to which defendants
never had given any bill of lading or ship- were no party, acting as and for the firm
ping receipt therefor. This was a roguish of T. Brown & Co., to enable that firm to
transaction on the jiart of T. Brown & Co. raise money by false and fraudulent means
through their senior and principal partner, and pretences in their dealings with plain-
whereby they sought and obtained ad- tiffs, and that defendants are in no wa}"-
vances from the bank, not on the strength responsible for a transaction of such a
of flour consigned bj' them to plaintiffs, character, concocted for the benefit of
but on the strength of a false bill of lading T. Brown & Co., and carried out by Car-
concocted by themselves ; handed to the ruthers wholly outside of, and apart from,
bank with a draft on plaintiffs, which the and contrary to his authority and duty as
bank, in ignorance of the fraud trans- freight agent of defendants."
mitted to the plaintiffs as genuine docu- There is nothing in the dissenting
ments, representing a real transaction, opinion of Heni-y, J., with whom con-
namely, an actual shipment by T. Brown curred another of the judges, that is worth
& Co., of 200 barrels of flour to plaintiffs, quoting on the subject. The jioint really
when, in fact, they never had shipped a involved in the matter, that is, as to how
baiTel ; and, upon being so transmitted, far Carruthers, as the freiglit agent of the
the plaintiffs, in like ignorance of the defendants, having authority to sign ship-
fraud, and believing such documents rep- ping receipts for goods delivered to the
resented a bond fide transaction, accepted railway for transjiortation, could bind the
and pai<l the bill. By what jjrocess of defendants, as their agent, by signing
reasoning can this be said to be a trans- receipts for goods not so received, is not
action of defendants, or with which de- discussed by him, and his judgment con-
fendants are in any way connected in tains nothing of any value in the consider-
the due course of business? 1 think, ation of the question really involved in the
therefore, that Carruthers was, in this case. The statute which he discusses does
transaction between plaintiffs and T. not affect the question in the slightest.



6 * COMMENTARIES ON SALES. [BOOK III.

for goods actually received, no express authority being given to
him to act otherwise, it is no more withiu the scope of his
employment to fraudulently sign bills of lading for goods not re-
ceived than it is within the scope of his authority to fraudu-



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