A BILL OF LADING TO ORDER RETAINS TITLE TO THE GOODS.
Question.—If a shipper sells a carload of lumber f. o. b. shipping point with draft attached to bill of lading and bills the car to his own order, notify the purchaser, and if the car should be wrecked in transit or should never reach its proper destination, would the buyer who bought the car f. o. b. be compelled to pay the draft and take up the bill of lading and seek recourse against the carriers? Should the shipper bill a car to the order of a bank, notify the f. o. b. purchaser and sell the draft and bill of lading to the bank outright, would the purchaser be compelled to pay for same?
Reply: When a sale is made f. o. b. shipping point the seller can make a valid delivery at that point. If he delivers the goods to a carrier there, takes a bill of lading making them deliverable to the buyer and forwards it to the latter, his full duty is done and the goods are at that moment, in legal effect, delivered to the buyer; they are actually delivered to the buyer’s agent, the carrier, and that is equivalent to a delivery to the buyer himself. This is the kind of delivery the seller is at liberty to make, under the contract, but he may not do so. He might, conceivably, carry the goods in his own arms to the buyer, or he may deliver them to one who is unquestionably his own agent. In either of these cases delivery to the buyer does not occur until the goods reach their destination. If A ships goods to the place in which B resides and takes the bill of lading to his own order the goods are not in any sense delivered to B or to his agent. They are A’s goods. He can stop them where he will and take them back into his own possession. When they reach their destination he can take charge of them or have them delivered to anyone he may choose to name. Those goods could be seized by a creditor of the seller and they could not be seized by a creditor of the buyer. If they are lost in transit it is the seller’s loss. A seller must either deliver the goods or retain them. He cannot do both. He cannot deliver them so as to make the buyer liable in case of loss and still retain them so that they will be his, to do with as he will if there is no loss. The same result follows if the bill of lading is sold to a bank. A bill of lading represents goods in transit and transfer of the bill transfers the goods. The direction to the carrier to “notify” one person or another is of no importance. Goods may be consigned to B and the carrier, for one reason or another or for no reason at all, may be directed to “notify” X or Y or Z of the fact that they have arrived. Notification is not to be substituted for delivery.
Opinion No. 70.