US SUPREME COURT DECISIONS

HOFFMAN & CO. V. BANK OF MILWAUKEE, 79 U. S. 181 (1870)

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U.S. Supreme Court

Hoffman & Co. v. Bank of Milwaukee, 79 U.S. 12 Wall. 181 181 (1870)

Hoffman & Co. v. Bank of Milwaukee

79 U.S. (12 Wall.) 181

Syllabus

A consignor who had been in the habit of drawing bills of exchange on his consignee with bills of lading attached to the drafts drawn (it being part of the agreement between the parties that such bills should always attend the drafts) drew bills on him with forged bills of lading attached to the drafts, and had the drafts with the forged bills of lading so attached discounted in the ordinary course of business by a bank ignorant of the fraud. The consignee, not knowing of the forgery of the bills of lading, paid the drafts. Held that there was no recourse by the consignee against the bank.

Chapin & Miles, a forwarding and commission firm in Milwaukee, were engaged in moving produce to Hoffman & Co., of Philadelphia, for sale there. The course of their business was thus: They first shipped the produce, obtaining a bill of lading therefor, to which they attached a draft drawn by them on their consignee for about the value of the grain and then negotiated the draft with bill of lading attached to some bank in Milwaukee and obtained the money. chanrobles.com-red

Page 79 U. S. 182

It was understood that the draft was drawn upon the credit of the property called for by the bill of lading, and would be paid by the consignee upon receipt of the bill of lading, and -- with perhaps a single exception where the bills of lading, not being obtained during bank hours, was sent otherwise than with the draft -- the drafts were accompanied by such bills. The Philadelphia firm, however, rarely knew what flour belonged to any particular bill of lading, not being obliged by the railroad clerks at Philadelphia, where they were known, to exhibit any bill of lading in order to get the flour, and their custom being, on getting notice from the railroad office that flour had arrived for them, to pay the charges, give receipts and send their drayman for it and bring it away. It was the practice of the Milwaukee firm to advise their Philadelphia correspondents by letter of shipments made and drafts drawn, which advisements were acknowledged with a promise "to honor the drafts." When flour was "slow" in going forward, they corresponded with the Milwaukee house about it, but did not on that account refuse acceptance or payment of any bill.

Having been thus dealing for about sixteen months, Chapin & Miles drew three drafts on Hoffman & Co. in the ordinary way, and, attaching to them bills of lading which they had forged, negotiated, in the ordinary course of business, the drafts, with the forged bills of lading attached, to the City Bank of Milwaukee, getting the money for them. The bank knew nothing of the forgery of the bills of lading. The ordinary correspondence between the two houses took place. That in regard to one draft will exhibit its character.

"MILWAUKEE, February 26, 1869"

"MESSRS. HOFFMAN & CO., PHILADELPHIA."

"DEAR SIRS: We ship to you today 200 bbls. 'Prairie Flour,' and draw at s't for $1,100, which please honor. Will draw for $5 only when we can, but must crowd $5 l/2 part of the time."

"Yours truly,"

"CHAPIN & MILES"

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Page 79 U. S. 183

"PHILADELPHIA, March 2, 1869"

"MESSRS. CHAPIN & MILES."

"GENTLEMEN: Yours 26th ult. here. Your draft $1,100, will be paid, but we think you should try to keep them down to $5 per barrel. We advise sale of 100 Prairie at $7 and 54 at $7.25."

"Yours, respectfully,"

"HOFFMAN & CO."

No flour was forwarded. The Milwaukee bank forwarded the drafts, however, with the forged bills of lading attached, to their correspondent, the Park Bank in New York, for collection. The Park Bank forwarded the same to its correspondent, the Commonwealth Bank of Philadelphia, for the same purpose, and the latter bank presented the draft and bill of lading to the drawees, Hoffman & Co., who, knowing the drafts to be genuine and not supposing that the bills of lading were otherwise, paid the drafts to the Philadelphia bank, which remitted the money back to the Park Bank to the credit of the Bank of Milwaukee.

No flour coming forward, Hoffman & Co. discovered that the bills of lading were forged, and Miles & Chapin being insolvent, they sued the Bank of Milwaukee to recover the amount paid, as above stated.

The declaration in the case contained the common counts in assumpsit, with a notice attached to the defendant

"that the action was brought to recover $3,100, money paid by the plaintiff under mistake of fact upon drafts and bills of lading (of which copies were annexed), the mistake being that the plaintiffs paid the money upon the belief that the said bills of lading were genuine instruments, whereas in fact they were forged, the amount of money paid being the amount called for by the drafts, which was paid upon the credit and inducement of the bills of lading."

Neither the name of the defendant, the Milwaukee bank, nor of any of its officers or agents, appeared in or upon the bills of lading in question, and lead it not been for extrinsic evidence, it could not have been told from those bills that the bank had had anything to do with them. Nor had the bank chanrobles.com-red

Page 79 U. S. 184

lead any dealings or correspondence of any kind with the Philadelphia house, relative to the shipments of flour by Chapin & Miles, or relative to the drafts drawn by them.

On this case, the court below directed the jury to find for the hank, defendant in the case, and the plaintiff's brought the case here. chanrobles.com-red

Page 79 U. S. 186



























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