TMI Blog1938 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted. Cls. 3 and 4 of the terms and conditions are material : 3. Payments to be made in cash in exchange for Delivery order on sellers or for Railway receipts or for Dock receipts or Mates' receipts (which Dock's receipts or Mates' receipts are to be handed by a Dock or ship's officer to the seller's representatives.) 4. The buyers hereby acknowledge that so long as such Railway receipts or Mates' receipts (whether in sellers' or buyers' name) are in possession of the sellers, the lien of the sellers as unpaid vendors subsists both on such Railway receipts or Dock's or Mates' receipts and the goods they represent until payment in full. The contracts stipulated for delivery free alongside export vessel in the port of Calcutta. The Export Company in due course had engaged freight from the appellants. The terms of the engagement are taken as evidenced by a document called a shipping order from the appellants' Calcutta branch to the ship's commanding officer. It was there stipulated that the goods should be sent alongside on notice, that freight was payable in Calcutta and that the receipt of cargo issued by the ship (that is the Mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These bills of exchange they had discounted with a bank (sometimes referred to in the proceedings as the Taiwan Bank, but in fact the International Banking Corporation, a subsidiary of the National City Bank of New York), and had endorsed to them by way of security the bills of lading. On 12 June 1926, the respondents as they could get no satisfaction from the Export Company and as the appellants replied that they had passed bills of lading on the shipper's (that is, the Export Company's) own letter of guarantee and referred the respondents to the shippers, issued their writ, claiming payment of the price from the Export Company and damages from the appellants. In due course the vessels, the Moji Maru, having sailed on 19 and the Hokata Maru on 4 June 1926, proceeded to their destination, and the goods were delivered at Kobe on presentation of the bills of lading. An application which had been made by the respondents for an injunction and interim receivership of the goods while the ships were still at sea had been ordered to stand over till the trial. At the trial, which took place in July 1929, the Export Company did not appear and judgment went against them. But the Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that would raise any presumption whatever that the Bank was acting improperly. This finding came before the Court of Appeal which reversed the finding of the Judge, and held that judgment should be entered for the respondents against the appellants for a sum to be agreed or ascertained. Derbyshire C. J., with whom the other members of the Court agreed, held that the onus was on a party seeking to rely on S. 178, to establish affirmatively that he acted in good faith and under circumstances which were not such as to raise a reasonable presumption that he acted improperly, and that the appellants had failed to discharge that onus. The present appeal is from the judgment so entered against the appellants. ( 6. ) The matters to be decided in the appeal are, first, whether the appellants in issuing bills of lading without having the Mate's receipts committed a wrong as against the respondents, and secondly, whether by delivering to the bill of lading holders they converted the respondents' goods that is goods in which the respondents had an immediate right of possession as against the indorsees of the bill of lading which was infringed by the delivery from the ships at Kobe. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as that discussed in Howes V/s. Ball, (1827) 7 B and C 481. The result is that the sellers had, after delivery alongside, nothing left except the equitable charge which is only enforceable by equitable remedies against the buyers or person taking with notice of the equity or a license to resume possession which is personal or contractual as between the sellers and buyers. In neither case was there left to the sellers a Common law or possessory lien, which if it existed would have been a right in the nature of property and would have supported an action in conversion or trespass. The importance of this conclusion in the present case will appear later. ( 8. ) A different state of things would have resulted if the sellers had delivered the goods to the ship in their own name as shippers, so that the ship would have held the goods on their behalf. But they did not. They delivered the goods as being shipped by the Export Company and took a Mate's receipt which expressly stated the name of the Export Company as shippers. In this way the ship received the goods on behalf of the Export Company who had booked the freight from the shipowners. All that the sellers had was possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in 1873 and has been treated as good law ever since, as for instance in the late Judge Carver's Carriage of Goods by Sea, S. 60. Indeed it is difficult to see what other course a shipowner in a case like this could, in the absence of notice, adopt. He is bound to deliver bills of lading for the goods to the shipper; the shipper here is beyond question the Export Co. who engaged the freight, who are owners of the goods, who are described in the document presented by the mills as the persons in whose name shipping documents have been taken out, and whose names appeared in the Mate's receipts as the persons from whom the goods were received. The mills, who at the respective dates of the Mate's receipts had not been paid by the respondents, might have given notice of lien on their own or the respondents' behalf, or they might have inserted the names of themselves or the respondents as persons shipping the goods and persons to whom the Mate's receipts were to be given. If that were done, the appellants could not properly have issued bills of lading to the Export Co. But if the mills or the respondents had taken the bills of lading in their own name as shippers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bills of lading were to be given in exchange for Mate's receipts, waived that provision, and without notice issued bills of lading to the named shippers and owners of the cargo. It would impose an unprecedented burden on shipowners if under such circumstances they were held responsible. Their Lordships agree with the conclusion of Sir George Rankin C. J. on this issue. Issue 2 is alternative. It proceeds on the footing that bills of lading were delivered to the Export Co., but none the less, it is contended, the bills of lading in the Export Co.'s hands did not dispossess the respondents of their unpaid vendor's lien, or the lien for which they stipulated, because they continued to hold the Mate's receipt, and thus they had a right to immediate possession as against the appellants, so that they were entitled to sue in conversion when their notice of 27 May 1926, and their subsequent demands for the goods were refused by the appellants. The primary question thus is whether the respondents still possessed a right to possession, sufficient to found a claim in conversion. The appellants in reply not merely contest the contention that by the possession of the Mate' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That case however also illustrates the distinction between legal and equitable rights. The documents of title in that case had been obtained by fraud from the lawful possessor, who had not the general property which belonged to those guilty of the fraud. It was held that an indorsee from those latter persons in good faith for value got a good title, and not a merely defeasible title and in that sense got a better title than his transferors whose possession was defeasible. This is the general rule where the transferor has a title defeasible for fraud, but the transferee takes in good faith and for value. Another illustration of an equitable right which is defeated by the transfer of a bill of lading to a bona fide indorsee for value is the right of stoppage in transitu. It follows from the same general rule that the equitable lien or personal license which in their Lordships' judgment was all that remained with the respondents when the goods were delivered to the ship, did not affect the transferee of the bill of lading so as to found a claim for conversion, though it might indeed found a claim for breach of contract against the Export Company, or a claim for equitable relief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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