New York Cent. & H. R. R. v. Bank of Holly Springs

236 F. 562, 1911 U.S. App. LEXIS 5450
CourtU.S. Circuit Court for the District of Northern Mississippi
DecidedAugust 28, 1911
DocketNo. 457
StatusPublished

This text of 236 F. 562 (New York Cent. & H. R. R. v. Bank of Holly Springs) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Northern Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York Cent. & H. R. R. v. Bank of Holly Springs, 236 F. 562, 1911 U.S. App. LEXIS 5450 (circtndms 1911).

Opinion

NIFFS, District Judge.

Complainant’s bill filed in this cause alleges that defendant, the Bank of Holly Spring's, had heretofore sued the New York Central & Hudson River Railroad Company (hereinafter called the Railroad Company) in the circuit court of Marshall county, Miss., for the value of 200 bales of cotton, alleged to have been taken and carried by the Illinois Central Railroad Company from Holly Springs, Miss., to the point at which it was delivered to the complainant for carriage to New York City, its destination, where it was alleged complainant refused to deliver said cotton to the Bank of Hol - ly Springs (hereinafter called the bank), notwithstanding the Bank presented bills of lading covering the said cotton and demanded delivery; that the value of the said cotton was $15,000; that the Bank was the holder for value and in due course of trade of said bills of lading covering the said cotton. The bill further alleges that this said suit was removed from the said circuit court of Marshall county, on petition of the Railroad Company, upon the ground of diverse citizenship, to the United States Circuit Court for the Western Division of the Northern District of Mississippi, on the law side thereof.

[564]*564Subsequently the bill in this cause was filed as an original bill to enjoin the prosecution of the said suit at law, and to require the bank to come into this cause, and by cross-bill set up its claim to the said cotton, in order that the Railroad Company might, by answer to such cross-bill, set up its defenses, not pleadable at law. A writ of injunction was issued, restraining the Bank from any further prosecution of its suit at law, and requiring it to set up its claims by cross-bill in this cause. Whereupon the bank filed its answer and a cross-bill, and the Railroad Company answered the Bank’s cross-bill, denying liability.

From this record in this cause, it appears: That Steel, Miller & Co., of Corinth, Miss., were engaged in buying and shipping cotton on a large scale, and had been so for some years, maintaining an office at Holly Springs, Miss., and in the years 1909 and 1910 in charge of one E. E. Hughes as their agent. That the bank agreed to finance their purchases of cotton at Holly Springs and vicinity during the cotton season of 1909-10, under the following arrangement:

The agent of Steele, Miller & Co. at Holly Springs, was to buy cotton brought in by wagon and have it placed in the warehouse of the Grenada Compress Company at Holly Springs, upon which compress warehouse receipts were to be issued to the sellers. These compress receipts were to be attached to a check drawn in the name of Steele, Miller & Co., by their agent, on the Bank of Holly Springs, payable to the sellers, and when presented to the Bank, if the number of bales of cotton was covered by receipts, the Bank would pay the check so drawn and hold the receipts as collateral security for the amount of the check. The said agent of Steele, Miller & Co. was also to buy cotton in neighboring towns and have it shipped to Holly Springs and delivered tq the compress. Upon such cotton coming in by rail, bills of lading were issued at the shipping point to shipper’s order, and these were attached to drafts drawn by the sellers of such cotton on Steele, Miller & Co. at Holly Springs. T,o pay these drafts, the said agent at Holly Springs would draw his check on the Bank, attaching thereto the said bills of .lading which had accompanied the draft. The bank would then pay the checks, at the same time delivering the said bills of lading to the said agent, who would immediately take same to the compress and exchange them for warehouse compress receipts. These receipts were then turned over to the Bank, to be held by it as security for tire money paid on the checks to which the bills of lading were attached. By this system the Bank always held compress warehouse receipts covering cotton regarded by the Bank as of ample value to protect it in its advances to Steele, Miller & Co.

Pursuant to this arrangement, and never deviated from in the entire course of business relations between the parties, on April 11, 1910, the agent of Steele, Miller & Co. notified the Bank that, upon instructions from his -firm, he wished to ship out 200 bales of cotton, and requested the Bank to deliver him compress receipts covering a like number of bales, in order that he might surrender same to the compress company and obtain therefrom what is called a “clearance” for such 200 bales as he desired to ship. A clearance is understood to be a [565]*565notice in writing from the compress company to the railroad company, to the effect that the cotton therein described was in the compress warehouse in the name of Steele, Miller & Co., and would be shipped‘in accordance with statements therein as to shipper, consignee, marks, routing, destination, etc. Thereupon the Bank, in response to this request of Steele, Miller & Co.’s agent, on April 11, 1910, delivered to their said agent, for the purpose heretofore mentioned, compress receipts covering 200 bales of cotton, taking the receipt of the said agent therefor, who then surrendered the receipts to the compress company and received from it the clearance. This compress clearance was then taken to the office of the Illinois Central Railroad Company at Holly Springs, whose agent, upon the faith of the compress clearance, issued two bills of lading under date of April 11, 1910, to shipper’s order, each covering 100 hales of cotton. The-marks of the cotton in one were “A S T U” and in the other “A S O N,” branded “STEELE,” with the notation on the face of each, “Notify S. M. Weld & Co., 82 Beaver street, N. Y.”

On the same day, April 11, 1910, Steele, Miller & Co.’s agent delivered to the Bank two drafts drawn by Steele, Miller & Co. on Steele, Miller & Co., at Corinth, Miss., respectively for $7,920.63 and $7,622.18, to which were attached the two bills of lading heretofore mentioned as issued by the Illinois Central Railroad Company, under date of April 11, 1910. As stated, the said bills of lading had been obtained in exchange for the compress warehouse receipts covering 200 hales of cotton which the Bank had surrendered to Steele, Miller & Co.’s agent, at his request, and for the express purpose of enabling him to make a shipment of the said cotton. It may be stated that the Grenada Compress Company operated its business under what is known as the “block system,” under which it is impossible to know with any degree of certainty whether or not the compress receipts surrendered to obtain the said bills of lading were the identical receipts covering the cotton mentioned in the said bills of lading.

The Bank immediately credited on its books the account of Steele, Miller & Co. with these drafts and forwarded same for collection with the said hills of lading attached. On presentation of the drafts at the main otEce of Steele, Miller & Co. at Corinth, payment of same was refused, and the drafts, with the attached bills of lading, were returned to the Bank. As stated, the said bills of lading were drawn to shipper’s order — that is, to the order of Steele, Miller & Co.- — and were not indorsed by Steele, Miller & Co., nor their agent at Holly Springs, when delivered to the Bank, nor did they bear indorsement until after the dishonored drafts of Steele, Miller & Co., to which said bills of lading were attached, had been returned from Corinlh, when the said bills of lading- were indorsed: “Steele, Miller & Co., by E. E. Hughes, Agent.”

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Bluebook (online)
236 F. 562, 1911 U.S. App. LEXIS 5450, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-cent-h-r-r-v-bank-of-holly-springs-circtndms-1911.