Supreme Court of Canada
Canadian Pacific Ry. Co. v. Hickman Grain Co. Ltd., [1928] S.C.R. 170
Date: 1928-02-07
Canadian Pacific Railway Company (Defendant) Appellant;
and
Hickman Grain Company Limited (Plaintiff) Respondent.
1927: October 13; 1928: February 7.
Present: Duff, Newcombe, Rinfret, Lamont and Smith JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA
Carrier—Railway—Bill of lading—Shipments of bulk grain consigned to order—Delivery of grain by carrier without surrender of bills of lading—Transfer of bills as security for advances—Liability of carrier to transferee—Estoppel.
Eight cars of bulk grain, shipped, consigned to order, on defendant’s railway, were purchased by M. Co., which acquired the bills of lading and endorsed them to plaintiff as security for advances. As to seven of the cars, defendant delivered the grain to M. Co. while M. Co. held the bills of lading and before its endorsement of them to plaintiff. As to one car, defendant delivered the grain to M. Co. after its endorsement of the bill of lading to plaintiff. Each of the bills was in the standard form approved by the Board of Railway Commissioners for Canada, and provided that it was “not negotiable unless property is consigned ‘to order’”; that “it is mutually agreed, as to each carrier * * * and as to each party at any time interested in all or any of said bulk grain, that every service to be performed hereunder shall be subject to all the conditions * * * herein contained * * * and which are agreed to by the shipper, and accepted for himself and his assigns;” and that “the surrender of this original bill of lading, properly endorsed, shall be required before delivery of the bulk grain when consigned ‘to order’ * * * *.” Plaintiff, who had taken the bills without knowing of any defect in M. Co.’s title, sued defendant for the value of the grain, claiming that defendant should not have delivered the grain to M. Co. without requiring surrender of the bills. From the evidence it appeared that frequently a consignee is not able, on delivery of the grain, to deliver the bill of lading, and the practice is for the carrier to deliver the goods upon receiving from the consignee a bond of indemnity; of which practice plaintiff was aware.
Held: As to the seven cars, defendant was not liable. Estoppel was not established. The bills were not negotiable except in the limited sense that they could be transferred by endorsement, and that when the effect of the transfer was to pass the property in the goods the benefit of the contract passed also; in that view the transfer of the bills to plaintiff as pledgee did not in itself constitute it the assignee of contractual rights under the bill (Brandt v. Liverpool, etc., Nav. Co. Ltd., [1924] 1 K.B. 575, at pp. 594 et seq.); and delivery of the goods to the person entitled, under the bill, to the possession of them at the time of delivery, was a complete answer to any claim based upon an allegation of wrongful delivery (London Joint Stock Bank v. British Amsterdam Maritime Agency, 16 Com. Cas. 102, at p. 107). The phrase in the bill, “each party at any time interested in all or any of said
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bulk grain” could not be reasonably extended to apply to persons acquiring an interest in the grain after delivery of it pursuant to the terms of the bill. It could not be said that the form and terms of the bill, or its approval in such form and terms by the Board of Railway Commissioners, manifested an intention to place upon the carrier the burden of protecting transferees by insisting in all cases upon observance of the condition requiring its surrender on delivery of the goods.
Held, further: As to the bill endorsed to plaintiff before delivery of the grain, the defendant was liable. Plaintiff, as pledgee of the bill, acquired, while the goods were still in transit, a special property in the grain. The fact that the car, originally consigned to Fort William, had been diverted to Winnipeg c/o M. Co. before transfer of the bill to plaintiff, did not amount to constructive delivery for any relevant purpose.
Judgment of the Court of Appeal for Manitoba (36 Man. R. 322) affirming, on equal division of the court, judgment of Macdonald J. (ibid), reversed in part.
APPEAL by the defendant from the judgment of the Court of Appeal for Manitoba which, by an equal division of the court, affirmed the judgment of Macdonald J. holding the plaintiff entitled to recover from the defendant the sum of $14,774.89, being the value of eight carloads of grain which the plaintiff claimed the defendant had wrongfully failed to deliver to it.
Each of the cars of grain had been shipped on defendant’s railway, in bulk, consigned to order, and a bill of lading was delivered to each shipper by the defendant’s agent at point of shipment, the form being the same in each case, and being the standard form approved by the Board of Railway Commissioners for Canada by order no. 14591 of 18th August, 1911, and providing, inter alia, that it was
not negotiable unless property is consigned “to order”;
that
it is mutually agreed, as to each carrier of all or any of said bulk grain over all or any portion of said route to destination, and as to each party at any time interested in all or any of said bulk grain, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained (including conditions on back hereof) and which are agreed to by the shipper, and accepted for himself and his assigns;
and that
the surrender of this original bill of lading, properly endorsed, shall be required before delivery of the bulk grain when consigned “to order” or upon application by the owner or consignee for terminal elevator delivery or warehouse receipt.
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Some of the cars were, by the terms of the bills of lading, consigned to Winnipeg, and the others to Fort William, but the latter, while in transit, were, by arrangement, diverted to Winnipeg.
The McMillan Grain Co., Ltd., of Winnipeg, became the purchaser of the grain, and acquired the bills of lading. It endorsed these to the plaintiff as security for advances.
The defendant delivered all the grain to the McMillan Grain Co., Ltd., without the surrender of the bills of lading. As to seven of the cars, this delivery took place before the endorsement of the bills of lading to the plaintiff, and while the bills of lading were in the hands of the McMillan Grain Co., Ltd., which was at the time the holder of them and entitled under them to receive, and give a valid acquittance to the defendant for, the grain they affected. As to the other car, the bill of lading had been transferred to the plaintiff before the delivery of the grain by the defendant. This bill of lading, covering a car originally consigned to Fort William, had been acquired by the McMillan Grain Co., Ltd., and the diversion to Winnipeg had been noted on the face of the bill by the words “Diverted to Winnipeg, c/o McMillan Grain Co.,” before the transfer of the bill to the plaintiff.
The plaintiff took the bills of lading, as security for advances, without actual knowledge of any defect in the title of the McMillan Grain Co., Ltd., to the bills or to the grain which they purported to cover. The McMillan Grain Co., Ltd., subsequently went into forced liquidation.
As found by this Court, on the evidence, the practice is that the term, above quoted, of the bill of lading, requiring its surrender before delivery of the grain, is not, as a rule, strictly enforced; frequently the consignee is not in a position to deliver the bill of lading, and the practice of the carrier is to deliver the goods shipped upon receiving from the consignee a bond of indemnity; the plaintiff was fully aware of this practice.
The plaintiff, alleging its presentment of the bills of lading and demand for delivery of the grain and defendant’s failure to deliver to it, and wrongful delivery, sued defendant for the amount of the value of the grain. Macdonald
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J. gave judgment for the plaintiff, which was affirmed, on equal division, by the Court of Appeal (Dennistoun and Prendergast JJA. being for the dismissal of the appeal, and Fullerton and Trueman JJA. being for its allowance). The defendant appealed to this Court.
W. N. Tilley K.C. and R. D. Guy K.C. for the appellant.
H. J. Symington K.C. and H. V. Hudson K.C. for the respondent.
The judgment of the court was delivered by
Duff J.—This appeal arises out of an action against the appellant company to recover the value of eight carloads of grain shipped on its railway. The respondent company sued as the holder of eight bills of lading relating severally to these cars. The grain was delivered by the appellant company to a firm, the McMillan Grain Co., who the respondent company says were not entitled to possession of it, and without obtaining in return therefor surrender of the bills of lading pursuant to the terms of the bills. The bills of lading are all in the form prescribed by the Board of Railway Commissioners. Four of the cars in question were, by the terms of the bills, consigned to Winnipeg, and the others to Fort William. These last mentioned cars, while in transit, were, by arrangement, diverted to Winnipeg.
As to one of the last mentioned cars (no. 209554), the bill of lading had been transferred to the respondent company before the delivery of the grain to the McMillans. This bill of lading had been acquired by the McMillans, and the diversion to Winnipeg had been noted on the face of the bill by the words “Diverted to Winnipeg, c/o McMillan Grain Co.” before the transfer of the bill to the respondent company. As to the remaining seven cars, the bills of lading were at the time of delivery in the hands of the McMillans, who were the holders of them, and entitled under them to receive and give a valid acquittance to the railway company for the grain they affected. As already mentioned, the railway company did not insist upon the
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bills of lading being given up by the McMillans, and, after delivery to them, the McMillans transferred, by indorsement, all of these seven bills of lading to the respondent company, who took them, as security for advances, without actual knowledge of any defect in the title of the McMillans to the bills, or to the grain they purported to cover. As already intimated, one term of each of the bills is expressed in these words “The surrender of this original bill of lading, properly endorsed, shall be required before delivery of the bulk grain when consigned ‘to order.’”
The learned trial judge held that, by leaving the bills of lading in the hands of the McMillans after delivering the grain to that firm, the appellant company had put it in the power of the McMillans to represent that the bills of lading were valid and subsisting bills affecting grain then in transit, and that, having in that way assisted the McMillans in their wrongful conduct in pledging them as security for advances, the appellant company was estopped from denying that the grain was still in its hands, at the time the advances were made. In the Court of Appeal, two members of the court agreed and two disagreed with the learned trial judge.
I agree with Fullerton and Trueman JJA., that the evidence fails to establish the existence of the elements essential to the existence of the estoppel relied upon. The practice as shown by the evidence is that the term of the bill of lading above quoted is not as a rule strictly enforced. Frequently the consignee is not in a position to deliver the bill of lading, and the practice of the carriers (both the C.P.R. Co. and the C.N.R. Co.) is to deliver the goods shipped upon receiving from the consignee a bond of indemnity. The respondent company was fully aware of this practice.
It may be that the respondent company was acting under some vague idea that the bond of indemnity would be available for its benefit if it should prove that the transit was at an end when the bill of lading was transferred to it. But it is difficult to understand how that can affect the question of estoppel. The fact of a bill of lading being outstanding would not—this is really undisputed—to a person familiar with the practice, in itself indicate that the grain
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affected by it was still undelivered. A lender taking such a bill as pledgee would rely not upon the fact of the bill being outstanding, but upon the honesty of his borrower, or possibly might be influenced by the vague idea adverted to, above, that in some way the railway company’s right of indemnity would be available for his benefit, if difficulties arose. On neither of these hypotheses could the estoppel contended for be maintained.
It is also argued that by the terms of the bill of lading the respondent company was a party to the contract, and entitled, as a party, to insist upon the term above quoted. There are several objections to that; and on the whole I think the preferable view of the bill of lading is that taken by Trueman JA., and that negotiability as contemplated by the bill means negotiability in the limited sense in which bills of lading are sometimes spoken of as negotiable, that is to say that the bill can be transferred by endorsement, and when the effect of the transfer is to pass the property in the goods, the benefit of the contract passes also.
In that view, the transfer of the bills to the respondent company as pledgee did not in itself constitute that company the assignee of contractual rights under the bill: Brandt v. Liverpool, Brazil and River Plate Steam Nav. Co., Ltd.; and delivery of the goods to the person entitled, under the bill of lading, to the possession of them, is a complete answer to any claim based upon an allegation of wrongful delivery. London Joint Stock Bank v. British Amsterdam Maritime Agency.
Even if it could be contended that, on the principle of the Asiatic Banking Corporation’s Case, the bill constituted an offer by the railway company to any person into whose possession it might come by way of transfer,— an offer which might be accepted by an endorsee in taking the bill for value,—yet this must be subject to the qualification that such an offer would remain open only so long as the contract remained unperformed. Once the contract had been performed by the railway company by delivery
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of the goods, at the place of destination, and to the person then entitled to receive the goods under the bill, such an offer would become meaningless.
The phrase emphasized by Mr. Symington, “each party at any time interested in all or any of said bulk grain,” could not be reasonably extended to apply to persons acquiring an interest in the grain after delivery of it by the carrier, pursuant to the terms of the bill of lading.
Mr. Symington, in his able argument, urged that the financing of the grain trade rests upon the credit given to outstanding bills of lading as symbols of property in goods in the possession of the carrier; and he contended that the form and terms of the instrument as settled by the Board of Railway Commissioners manifest (when interpreted from the commercial point of view) an intention to place upon the carrier the burden of protecting transferees of such instruments, by insisting in all cases upon observance of the condition requiring delivery of the bill of lading in exchange for delivery of the goods covered by it. The interests of persons advancing money on the faith of such instruments no doubt deserve proper protection; but the evidence suggests that there may be other interests which might be prejudiced by the establishment of the rule suggested. However that may be, if such were the intention, it has not been very happily expressed. There is nothing, I am convinced, in the form or the terms of the instruments, or in the circumstances of their origin, which furnishes a sound reason for giving to them the effect contended for.
As regards the bill no. 209554, the respondent company, as pledgee of the bill, acquired, while the goods were still in transit, a special property in the grain as pledgee. I am unable to perceive the force of the argument presented on behalf of the appellant company based upon its practice, known to the respondent company, of making delivery upon receipt of an indemnity without production of the bill of lading. There is not the slightest ground for a suggestion that any act or omission, on the part of the respondent company, affected the proceedings of the appellant company. That company merely followed its practice.
Nor can I agree that the diversion of the grain from Fort William to Winnipeg, to be delivered to the “care of McMillan
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Grain Co.,” amounted to a constructive delivery for any relevant purpose. A different question might have arisen, if there had been a direction to deliver to a third party. The appeal should therefore be dismissed as to the bill of lading no. 209554; and allowed as to the remaining seven bills of lading, and the judgment against the appellant company should be reduced accordingly. If the parties cannot agree upon the amount, the point may be spoken to. The appellant company is entitled to the costs of both appeals. As to the costs of the action, the respondent company is entitled to the general costs of the action, except such costs as are exclusively attributable to that part of its claim upon which it fails; the appellant company’s costs, in so far as so exclusively attributable, will be paid by the respondent company.
Appeal allowed in part, with costs.
Solicitor for the appellant: L. J. Reycraft.
Solicitors for the respondent: Hudson, Ormond, Spice & Symington.
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