DUTIES OF ONE ENGAGED IN PUBLIC SERVICE.—Now, being engaged in public service subjects a person or corporation who is so engaged to some special duties. Such a person cannot make any bargain he pleases with anybody he pleases, and refuse to make bargains with others, as an ordinary person can. It is the duty of any one engaged in a public service to give reasonable service to all who apply, without discrimination, and for reasonable compensation. Of course, carriers are not the only public-service corporations; electric light companies or gas companies or water companies are other illustrations; but common carriers, and especially railroads, are the most prominent public-service corporations.
RAILROAD COMMISSIONS.—Not only is there this common-law duty to serve all without discrimination and at reasonable prices, but both the States and the United States have established commissions to look after railroads and other carriers to see that they properly perform their duties. The Railroad or Public Service Commission in most States has a great variety of powers for compelling railroads to give proper service. The chief function of the Federal Interstate Commerce Commission originally, was in regard to rates, but its powers have since been enlarged by legislation. The Interstate Commerce Commission has the power concerning interstate commerce to say whether rates and practices are reasonable. A carrier is obliged to file with the Interstate Commerce Commission a schedule of its rates, and regulations concerning rates, and is also required to post these rates publicly in its stations. If anybody objects to the rates they must make complaint before the Interstate Commerce Commission. That is the only form of redress, and sometimes not an easy one for a person who is merely interested in a single shipment, because the expense and delay of proceedings before the Interstate Commerce Commission are such as to be prohibitive, unless the complainant's financial interest in the matter is considerable. It is common, therefore, for shippers' associations to take that sort of question up rather than to leave it for individual shippers. Any contract made by a carrier for either more or less than the scheduled rate is illegal and void.
CARRIER'S COMMON-LAW LIABILITY FOR GOODS.—A carrier, at common law, when he receives goods for transportation, is subject to a degree of liability beyond that imposed on any other person. An ordinary person who receives goods—a bailee, as he is called in law—is merely liable for the consequences of his negligence. A carrier, however, while goods are in course of transportation is liable, at common law, as an insurer against all kinds of accidents except those caused by act of God or public enemies. For instance, if goods were struck by lightning in transit that would be an act of God, and the carrier would not be liable; but if goods caught fire from any other cause, as from neglect of an outsider or the act of an incendiary, the carrier would be liable. Carriers, of course, dislike that and try to contract away their liability. They are allowed by law to do so, except that they are not allowed to contract for exemption from the consequences of their own negligence. It is largely this desire of carriers to free themselves from the extreme liability which the common law imposes on them, that induces them to give bills of lading. Bills of lading are often required by law, but carriers are pleased to issue them, as they can in that way contract to exempt themselves from this extreme liability, which lasts while the goods are in transit and until the consignee has had a reasonable time to remove them from the carrier's possession. If the consignee fails to remove them with reasonable promptness the carrier then becomes liable, merely as a warehouseman may, for its own neglect. The extreme liability of the carrier does not extend to damage caused by delay. The carrier is liable for delays in so far as they are caused by its own neglect, but otherwise is not liable. A carrier need not deliver the goods unless freight is paid, as it has a lien for freight charges.
THREEFOLD NATURE OF BILL OF LADING.—A bill of lading issued by a carrier for goods has a threefold character. In the first place it is a receipt. The importance of a receipt is as evidence of just what was shipped. It is important to the shipper as proof that the carrier received goods, of such a quantity and of such a description, in good order. It is important to the carrier as proof of the same thing, to prevent the shipper from claiming that he has shipped different kinds or quantities of goods from those described in the bill of lading. The second aspect of a bill of lading is as a contract. It is not only a receipt but a contract between the parties, the shipper and the carrier. It is as a contract that the stipulations it contains for limitation, of liability are important. Third, it is an order, when properly indorsed and surrendered, for the delivery of the goods.
CARRIERS CAN DELIVER GOODS ONLY TO HOLDERS OF ORDER BILLS OF LADING.—The thing that makes a bill of lading valuable, to buy or lend money on, is the fact that the carrier will hold the goods behind the bill of lading until the bill is itself presented and surrendered. If the carrier were to deliver the goods upon demand to anybody other than the holder of the bill of lading, it is obvious that there would not be much use in holding the bill of lading. The carriers have made a great contest on this question in the past. They have contended that they fulfill their duty if they deliver the goods to the consignee originally named in the bill of lading, whether that consignee continues to hold the documents or not. But that has been decided against them so far as order bills are concerned (that is, bills, which state that the goods are deliverable not simply to a consignee but to the order of a consignee) and these order bills have printed on them the provision that the bill itself must be surrendered before the goods will be delivered.
CARRIERS MAY DELIVER TO CONSIGNEE OF STRAIGHT BILLS OF LADING.—In a straight or flat bill, however (that is, one without the word "order") the carrier's contention has been upheld and the carrier is allowed to deliver the goods to the consignee, even though the consignee does not present the bill of lading and for all the carrier knows is not the owner of the bill of lading or of the goods.
BILLS OF LADING USED TO ENABLE SELLER TO RETAIN HOLD ON GOODS.—The ways in which bills of lading may be used, and are used, in the mercantile world, must be understood before the legal questions which arise, concerning them, can be grasped. The primary and original purpose of using bills of lading as symbols of the goods, was doubtless to secure the seller in his hold on the goods until he received the price, and that is still a vital purpose in the use of bills of lading. We have learned, in the case of the sale of goods, that unless credit is given, the delivery of the goods and the payment of the price are concurrent conditions. Now, when the parties reside at a distance there is difficulty in working out these concurrent conditions. If the seller ships the goods directly to the buyer, he loses his hold on the goods, and if the buyer does not keep his agreement to pay promptly, the seller will be unable to do anything about it. On the other hand, of course, the buyer does not want to pay in advance. Now, by means of bills of lading, the seller is enabled to keep his hold on the goods until he receives the price, and the buyer is enabled to secure possession of the goods as soon as he pays the price.
STRAIGHT BILLS TO BUYER GIVE THE SELLER NO HOLD ON GOODS.—The bill of lading may be used in various ways. Suppose, first, the seller when he ships the goods takes a straight bill to the buyer. That will not give the seller any hold, for the carrier will be discharged if without demanding the surrender of the bill of lading, he delivers to the consignee named. So we may cross off that as a possible means of protecting the seller.
STRAIGHT BILLS TO THE SELLER.—The second possibility is for the seller to take a straight bill, naming himself as consignee as well as consigner. If that is done the buyer cannot get the goods at once. Suppose the bill of lading was sent forward, even that would not of itself enable the buyer to get the goods, if the carrier wished to be technical, since in a straight bill the goods are deliverable not to the holder of the bill, but to the consignee named therein. There would have to be attached to the bill of lading an order from the seller, who is named as consignee in the bill, directing the railroad to deliver the goods to the buyer instead of to himself, the consignee named in the bill. That would be a perfectly feasible matter, but this method is not much used, and one reason why it is not much used is because the seller frequently wants to do something else besides keep control of the goods until the buyer pays for them. He oftentimes wants to get money from a bank in the meantime.
USE OF BILLS OF LADING BY SELLER TO OBTAIN LOANS.—When the seller is desirous of borrowing money from a bank, he takes the bill of lading to the bank with a bill of exchange drawn on the buyer, and he asks the bank at his home town to discount the bill of exchange, taking as security the bill of lading. If his home bank does this, it then sends the draft, with bill of lading attached, to its correspondent bank in the buyer's city, where the draft is presented to the drawee, who is the buyer, and if the buyer honors the draft then he is given the bill of lading. Now, banks would not do this, ought not to do it (occasionally they have), with a straight bill, even if the bill is drawn naming the seller as consignee, for the bank when it discounts the bill of exchange and gets the bill of lading as security gets no real hold on the goods. The railroad may deliver the goods to the consignee—the seller—without ever seeing the bill of lading, and without the bank, which holds the bill of lading, ever knowing anything about it; or the railroad may deliver to the buyer or some third person on a written order signed by the consignee. In other words, the railroad does not have to hold the goods until the bill of lading, properly indorsed, is presented to it.