Baltimore and Ohio Railroad Company v. Wilkens.

29 Eng. Law & Eq. 323; Second National Bank of Toledo v. Walbridge, 19 Ohio St. 425; S. C., 2 Am. Rep. 408; Jessel v. Bath, L. R., 2 Exch. 274; Dean v. King, 22 Ohio St. 118; Louisiana Bank of New Orleans v. Laveille, 52 Mo. 380; Smith's Mercantile Law (Ed. 1870), 297.

The plaintiffs were bound to ascertain whether the agent had exceeded his authority.

The duty of inquiry was incumbent on the plaintiff to see whether the agent had exceeded his authority. As they trusted without such inquiry, they trusted to the good faith of the agent and shipper, and not to the liability of the principal. Story on Agency, § 133, and note 2 to § 127; 1 Am. Lead. Cas. 552, 561 (4th ed.); Mussey v. Beecher,3 Cush. 511; Lowell Five Cents Savings Bank v. Inhabitants of Winchester, 8 Allen, 118; Stagg v. Elliott, 10 C. B. (N. S.) 371 (104 E. C. L. 373). In Adams Express Company v. Trego, 35 Md. 68, this court has approved Grant v. Norway, Coleman v. Riches, and Hubbersty v. Ward.

Arthur Geo. Brown and Fred. W. Brune, for appellee. The appellant was responsible for the loss the appellee had suffered from the fraud of McCluskey, its agent. Code of Pub. Gen. Laws, art. 3, §3; Tome v. Parkersburg Branch R. R. Co., 39 Md. 36, 76, 78, 79, 80, 81, 102, 103, 104; Hall v. Hinks, 21 Md. 406, 416 to 420; Lister, etc. v. Allen, 31 Md. 543; Merchants' Bank v. State Bank, 10 Wall. 605, 644-7; Dickerson v. Seelye, 12 Barb. 99, 102; Meyer v. Peck, 28 N. Y. 598, 599; McNeil v. Tenth Nat. Bank, 46 id. 325; Cartwright v. Wilmerding, 24 id. 521; Howard v. Tucker, 1 B. & Ad. 712; McNeil v. Hill, 1 Woolworth, 96; Michel v. Ware, 3 Neb. 229; 1 Abbott on Shipping, 323 (margin); The J. W. Brown, 1 Bissel, 76, 79; Bigelow on Estoppel, 47; Barwick v. English Joint-Stock Bank, L. R., 2 Exch. 259, 265, 266; Ranger v. The Great Western Railway Co., 5 H. of L. 86; Mackay T. Commercial Bank of New Brunswick, L. R., 5 Privy Coun. Appeals, 394, 402, 410.

"If one of two innocent persons must suffer by a deceit, it is more consonant to reason that he who puts confidence in the deceiver should be a loser rather than a stranger." Carpenter v. Longan, 16 Wall. 273; Hern v. Nichols, 1 Salk. 289.

MILLER, J. This case presents an important question. It was tried before the judge of the Superior Court upon an agreed state

Baltimore and Ohio Railroad Company v. Wilkens.

ment of facts, from which it appears that the appellant, with other railroad companies, formed an association under the name of the "Continental Line," for the transportation of freight to and from the west. Each company agreed to furnish a number of cars to run as through cars over the several roads, and each agreed to guarantee the bills of lading of the association for goods loaded on such cars, and destined to points on other roads, as stated on the face of the bills of lading in this case; the association had agents at various points in charge of its business, one of whom was Joseph McCluskey, who was agent of one of the western roads, and was acting as agent of the association at Owanico, Illinois, and as such was authorized to sign bills of lading for the association, and was also a merchant at Owanico, and did business with the appellees, Benninghaus & Co., commission merchants in Baltimore. By the course of this business, McCluskey consigned to Benninghaus & Co. car loads of grain, which they were to sell for him on a certain commission per bushel. As such shipments were made McCluskey forwarded the bills of lading, and drew drafts or bills of exchange attached to them, on Benninghaus & Co., which the latter honored and paid on the faith of the consignments mentioned in the bills of lading. In the course of this dealing, and between the 23d of June and the 9th of August, 1873, McCluskey fraudulently for warded ten bills of lading for corn, purporting to have been loaded on eleven cars, but which, in fact, never was so loaded or received at the depot, or on any cars of the association; the drafts accompanying these fraudulent instruments were duly paid by Benninghaus & Co., upon the faith of the supposed consignments mentioned in them, without knowledge of this fraudulent conduct of McCluskey; and the latter having failed in business, and Benninghaus & Co. having made fruitless efforts to recover from him the amount thus advanced, they have brought this action to recover it from the appellant.

The several bills of lading referred to are substantially alike, and one of them is set out in the record as a specimen. It is duly signed by McCluskey as agent of the association, and bears a heading in this form: "CONTINENTAL LINE-FAST FREIGHT. The authorized fast freight Express of the Baltimore and Ohio," and other named "railroads and their connections, by whom it is owned and managed, and its bills of lading guaranteed," followed by a list of agents. The receipting clause is as follows: "Received at the

Baltimore and Ohio Railroad Company v. Wilkens.

depot of the S. I. S. E. R. R., Owanico, August 9th, 1873, of Joseph McCluskey, the following packages (contents unknown), in apparent good order." These initials designate The Springfield, Illinois and Southeastern Railroad, one of the roads forming the association, and mentioned in the above heading. Then follows: "Marks- Baltimore. Consignee - H. Benninghaus & Co. Destination-Locust Point, Baltimore, Md.," with a description of two cars by their numbers, each stated under the head of "Articles" as "1 car, bulk corn," with weight and rate of charges for freight. After which follows this notice: "It is understood that all connections recognize this bill of lading, and will settle freight accordingly. Should overcharges occur, and difficulty arise, delaying a prompt adjustment thereof, return bill of lading to the nearest agent or general freight agent of the Continental Line, with all freight bills paid the company delivering the freight, and this bill of lading attached for settlement. Claims for loss or damage must be presented to the delivering line within thirty-six hours after the arrival of the freight." Then follow a number of conditions usual in such instruments which it is stipulated the shipper agrees to, by "accepting this bill of lading."

We have thus stated, more at large than is usual in an opinion, the purport of the agreed statement of facts, and the terms of these instruments, because in the cause of the argument counsel for the appellees attached special importance to the statement set out on their face, that the association guaranteed its bills of lading. But looking to the agreed facts and the terms of these instruments, we are of opinion this guaranty simply means that each company composing this association stipulates that it will be bound by a bill of lading issued by any one of them, for freight to be transported over each and all the roads constituting the line, in the same manner as if the transportation was only over its own road. instance, the Baltimore and Ohio Company, whose road extends from Baltimore to the Ohio river, by joining this association and making this guaranty, contracts that it will be responsible for bills of lading for freight, over any of the associated western roads, in the same manner it would be for an ordinary bill of lading over its own road from Baltimore to Wheeling. By this arrangement and guaranty the shipper, besides other benefits and conveniences, derives the advantage of the responsibility of each and all the asso ciated companies, for loss or damage to his goods occurring on any

For

Baltimore and Ohio Railroad Company v. Wilkens.

part of the entire line, and the further advantage of suing the company nearest his home for such loss. Thus a shipper of grain or other produce to Baltimore or Philadelphia may sue his home company for loss or damage, occurring in the transportation between Wheeling and Baltimore, or Baltimore and Philadelphia, and in like manner, the Philadelphia or Baltimore merchant. shipping his goods to the west, may sue the Philadelphia, Wilmington and Baltimore, or the Baltimore and Ohio Company, for like loss occurring on any of the western connections of the line. This, in our opinion, was the intention and extent of this guaranty. It imparts no other or additional force or sanctity to the bill of lading. The circumstance of such guaranty places the responsibility of the appellant upon no higher ground than if it had issued an ordinary instrument of that character, for the transportation of freight over its own road exclusively.

This being so, is there any legal principle which makes the appellant responsible to a consignee for advances on a bill of lading fraudulently issued by its agent who was also his consignor, for goods never in fact received by it, and never placed in its cars? If any doctrine of commercial law can be regarded as well settled, it is, that the master has no authority to sign a bill of lading for goods not actually put on board the vessel, and, therefore, the owner of the ship is not responsible to parties taking, or dealing with, or making advances on the faith of such an instrument which is untruthful in this particular. The consignee and every other party thus acting does so with notice of this limitation of the power of the master, and acts at his own risk both as respects the fact of shipment and the quantity of cargo purported by a bill of lading to be shipped. In the early case of Lickbarrow v. Mason, 2 Term Rep. 75, it was said by BULLER, J., that a bill of lading is negotiable, and on this an argument has been frequently made (supported to some extent by the dicta of able judges) that a third person dealing with such instruments should be protected in his reliance on them, according to their exact tenor, against charterer and owners as well as masters. But in Grant v. Norway, 10 C. B. 665; (2 Eng. Law & Eq. 337), where the question was for the first time distinctly presented for adjudication in England, the Court of Common Pleas, after full consideration, held that the master of a ship signing a bill of lading for goods which had never been put on board, is not to be considered the agent of the owner

Baltimore and Ohio Railroad Company v. Wilkens.

in that behalf so as to make the latter responsible to an indorsee of the bill for value. That decision settled the law in England. It has been followed in many cases in which, in extension of the same principle, it has been held that a bill of lading so signed is not conclusive against the owner as to the quantity of goods or cargo shipped. Among the recent cases on the subject is that of Jessel v. Bath, L. R., 2 Exch. 267, from which we learn that Parliament, in legislating in the matter, has gone no further than to enact "that every bill of lading in the hands of a consignee or indorsee for valuable consideration, representing goods to have been shipped on board a vessel, shall be conclusive evidence of such shipment, against the master or other person signing the same, notwithstanding that such goods or some part thereof may not have been so shipped." This act leaves untouched the principle and rule of law before stated, which has been thus firmly settled by the courts, and the vast maritime commerce of England has been, and is to this day, conducted subject to, and in recognition of, that rule. Brown v. The Powell Daffryn Steam Coal Co., L. R., 10 C. P. 562.

In this country the Supreme Court of the United States in Schooner Freeman v. Buckingham, 18 How. 182, adopting the case of Grant v. Norway, have decided that neither the owner nor the vessel is responsible to an innocent purchaser or holder of a bill of lading, signed by the master for goods not actually shipped and intended as an instrument of fraud. They place their decision, as respects the non-liability of the owner, upon the ground of want of authority in the master, who, they say, "has no more an apparent authority to sign bills of lading than he has to sign bills of sale of the ship. He has an apparent authority, if the ship be a general one, to sign bills of lading for cargo actually shipped; and he has also authority to sign a bill of sale of the ship, when, in case of disaster, his power of sale arises; but the authority in each case arises out of, and depends on a particular state of facts; it is not an unlimited authority in the one case more than in the other, and his act in either case does not bind the owner, even in favor of an innocent purchaser, if the facts upon which his power depended did not exist; and it is incumbent upon those who are about to change their condition, upon the faith of his authority, to ascertain the existence of all the facts upon which his authority depends." So in other courts, where the question was directly presented, the same rulings have been made. Such were the decisions in Sears v.