Do You Know What They Are?
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Explanation of Three Commonplace Documents, a Clear Understanding of Which May Save Considerable Inconvenience, if. Not Litigation HOW many hauliers could answer the question, what is a " Delivery " Order, a " Transfer " Glider, or a "Warrant "? Although of much importance to hauliers and traders alike, I cannot recollect ever having seen an article dealing with these commonplace, although important documents, despite the responsibilities of all users who should have a clear understanding of the respective imports and titles of each. It is probable that, at least to begin with, the average haulier, or small C-licensed operator, would prefer descriptions and comments as set out by one who has had many years of practical experience—in various spheres of transport and industry—in dealing with these three classes of document, coupling reliable information from other but related sources. Basing my remarks on extensive usage, I will, therefore, deal with each type in rotation. A Delivery Order is an instruction to deliver, but is not a document of title. In the event of bankruptcy, for • instance, or inability to pay, such an Order may, under the terms of sale or contract, be rescinded in whole orin part if the particular lot of goods has not been paid for specifically in. fell. This stoppage may. be made effective, although subsequent buyers have issued Delivery Orders (actually sub-delivery orders) and paid :for their purchases in full. It is customary for a party issuing a Delivery Order to insure goods, Pr see that they are insured, until such tine
as delivery is actually. effected. .
A buyer may almost entirely have paid for goods " on account," but subsequent charges or debits may be charged against such party as to justifycancellation of a Delivery Order. So that this may be made clearer, let us take an example. Trader `,. X" purchases and pays for 100 bales, and asks haulier " A " to collect. • This is done, and the goods are thentaken en route to a warehouse owned by the haulier. "X" then issues a Delivery Order on the haulier for 100 bales, instructing delivery to "Y," but does not get
payment. . . .
The Procedure When a Party
' Goes Into Bankruptcy
" Y " issues a sub-delivery order on the haulier, instructing delivery to be made to," Z," who pays "Y " for the goods. Both orders are lodged With the haulier. "X" then learns that " Y " has gone into bankruptcy, and at once" X". inquires from haulier "A " if the 100 bales have actually
been delivered. Upon, receiving the reply "No," "X" immediately. gives " A " instructions not to deliver, confirms this stoppage in writing at once, and rescinds his Delivery • Order.
If " Z " had received 10 bales, then "X" would stop delivery of the remaining 90 bales. Of course, this assumes that the total debts, owing at the timeof and with bankruptcy, equal or exceed the value of the goods, the delivery of which has been stopped. In either case, the haulier would at once notify both ." Y " and ." Z." It may be that "Y," immediately before the bankruptcy, has been paying " X " heavily on account, and owes very little at the moment prior to the Adt of Bankruptcy being' declared, but upon filing, " Y" owes." X" various moneys under defaulted contracts which justify stoppage of delivery of the whole 90 or 100 bales. The value of 90 or 100 bales would, in this case, go largely to offset the debts incurred . by bankruptcy defaults. " Z " would rank as creditor to the extent of the value of . his undelivered goods. The haulier would, no dOubt, find Z" very difficult to pacify, but if any serious problem presented itself, the haulier would do well to see a commercial solicitor. He would, I think, advise the haulier to enter an," interpIeader summons" so that any dispute as to actual ownership could be examined by a Court, when one of the contending parties would, no doubt, be declared plaintiff, and the other defendant.
The haulier should, of course, be careful to secure his lawful charges before parting with such consignments. If the goods be liable to perish, perhaps the haulier may even receive directions from 'the Court as to their disposal by sate, and to bank the proceeds as directed for "Account whom it may concern" for disposal in accordance with ultimate Court findings.
Should a haulier at any time be involved in a dispute about a Delivery Order being a document of title, a solicitor or counsel would, I believe, turn up as classic cases the High Court decisions in Laurie and Morewood v. John Dudin (1925) (Justice Sankey), and Micks Lambert and Co. v. Spillers Grain Co., Ltd. (1926) (Justice Wright).
In both these cases it was held that a Delivery Order is nota document of title. Both cases referred to maize in warehouse, but, so far as I can see, the position would be just the same if the goods had been on a lorry, or in a barge the whole time in transit by carriers.
The Need for Urgency in
Collection on Delivery Orders Some hauliers have at times, perhaps, ridiculed the question of urgency in collecting certain goods on Delivery Orders; the trader, however, would, in such cases, probably be thinking of possessory title. All hauliers should, therefore, When giving an undertaking to collect merchandize, see that they give such service as. will not leave their customers dissatisfied on this count, as possession, sometimes, is of far more importance than normal trade requirements. It is, of course, trade depression which causes such conditions to be most prevalent. From these remarks hauliers will, no doubt, deduce a warning to the effect that, if instructions be received to cancela Delivery Order in whole or in part, to act upon such Order unless, and until, it is known that the carrier will not be held liable for non-compliance. A Transfer Order is a document of title subject, of course, to the issuing party having the requisite tide to the goods in order to pass on, and the bailee, or other holder of. the goods, being prepared to a,ccept such transfer. No transfer can be made unless the goods, the subject of a Transfer Order, be in a lot separate and distinct from all -others. Before the seller of the goods hands over a Transfer Order to a buyer, the seller should—and usually does in his own interest—ask for full payment in cash against that particular purchase, and at the time of handing over the Order, call for a letter from the buyer, stating dearly, that, on and from that day, the buyer holds the goods covered by insurance and accepts all risks. if the seller accepted a cheque, that is his risk. Before the transaction is carried through, however, the buyer, after inspecting the goods, may ask the seller for written evidence that the goods in question are in a separate lot and can be transferred upon presentation of the Order. A Transfer Order may cover a lot of goods in a warehouse, or even in a large barge, such goods being recorded in the bailee's or wharfinger's book. When a Transfer Order is lodged with the holder of goods, the "storage " books are ruled up, and a new storage trans
action begun—accounts the new owner. Sellers usually reserve any contract rights such as weighing over (to safeguard against evaporation), by endorsing Transfer Orders. Without this, the bailee, or other holder of the goods, would not know the seller in the matter once the Transfer Order was lodged.
Bailees usually ask for payment of all charges to date, against the particular parcel concerned, before honouring a Transfer. A Transfer Order would rarely, if ever, be accepted by a dock company wharfinger, or /hay having goods in a transit shed, or on a quay, not properly counted and housed or stored. The reason for this will be explained later.
The Case of a Transfer that Would be Refused Here is an example of a Transfer which would be refused. If a warehouse keeper had 1,000 packages in an uneven pile, and Could not mark off any quantity for certain, the owner of such goods could not have a Transfer for any part. The bailee would say, "I must make delivery of such quantity, under 1,000, as you wish to transfer." No doubt the storekeeper would rehouse any portion for a buyer after delivery had been effected, the goods not actually leaving the premises. Most probably the bailee would be willing to transfer the remaining quantity. whatever might be in the pile.
In this connection, I suggest that hauliers should keep in mind what they themselves require, before they hand over a registration book and transfer a vehicle; they want the cash for the vehicle, and a proper interchange of documents. A merchant is in the same position when he is asked to transfer his goods—cash for possessory title document is what he requires.
A Warrant is a negotiable document of title bearing a 3d. stamp. Such a symbol of ownership is issued by port authorities, clock companies, warehouse-keepers, wharfingers, etc., in order to facilitate trade. Buyers of goods, on contracts which call for payment within a given number of days, will frequently pay only against Warrant (or transfer if such can be issued without undue expense) so as to secure the possessory title in exchange for payment.
There may be several Warrants each for part of a larger hulk. When goods lose weight in storage, the last party to call for delivery may find that weight losses on all the Warrants has to be borne by himself atone. On the other hand, there may be weight increases due to absorption of moisture by very dry goods. In such cases, purchase contracts have then to be referred to in order to secure, if possible, pro-rata settlements. Due to price fluctuations, rush for possession is not unknown in these cases.
Why the Ranks Prefer Warrants to Tranfers Warrants can be called for by those storing goods or lodging approved Transfer Orders. Although I should regard Warrants ai being documents junior to Transfers, Warrants are favoured by bankers despite the fact that they may refer only to part of a larger bulk. The reason for this, to some extent. is the word " negotiable " written on them, and, partly, that Warrants can be held by banks as security for overdrafts.
Subsequently, as portions or lots of goods are sold, the Warrants can he lodged with the storekeepers and reduced, time after time, by endorsement on the back, the Warrant being returned each time by the storekeeper to the bank. The cotton trade, for instance; used to make extensive use of Warrants. Although hauliers will rarely see these documents, it is important that they should know of them as they never know how they may be involved.
For instance, if a trader be very short of capital for the trade he is doing, or in a period of acute trade depression, the inerchant may be so heavily in debt to the bank that before the bank will reduce a Warrant, it will call upon the trader to sign a "Letter of Hypothecation," which means that all monies from that particular sale are the property of the bank, and must not be used for any purpose other than the reduction of the particular overdraft.
I believe it has been known for traders to mis-apply such monies, being tempted by hoped-for market recovery with possible solvency as against more certain bankruptcy. In such cases, carriers or common carriers have found a third party, viz., a bank claiming goods in transit for which consignee or purchaser shows receipt for payment in full. In such cases, happily remote, hauliers must remember that no one can pass on a better -title than they themselves possess, and payment receipt will probably have little, if any, real worth towards proving title, especially where a bank has previously been taking all legal precautions in its own interests.
Where the Issue of a Warrant Would be Refused
Frequent delays in goods being released from warehouses can be attributed to Warrants passing between various hands. From these remarks it will at once be seen why a dock company, or storage company would refuse to issue Warrants or accept Transfers on goods piled on a quay, held in a transit shed, etc. The owners of the premises have no certain knowledge of the actual contents of, or responsibility for, such a pile of goods, and certainly could not certify holding specific quantities which a Transfer Order or Warrant would imply (despite precautionary wordings whieh appear on Warrants such as "more or less," etc.).
Here again, a trader parts with a Warrant only in exchange for cash, together with a letter from buyer stating that, on and from the date of handing over the Warrant, buyer undertakes all insurance, and risks, just as in the case of a Transfer Order. The risks include damage by storm, flood, overloading or collapse of warehouses, smells, vermin,
theft, etc. Before Warrants are handed over by issuing parties all charges for storage, etc., are usually demanded.
Hauliers Should Safeguard their Own Interests
After reading the foregoing I can visualize various " A " hauliers, merchants, and certain " B" operators saying,
"What nonsense! All my life I have been handing-in orders to railway goods agents which read both Deliver and 'Transfer,' and there has never been any quibble." Quite so, but one must not overlook the unusual position of a common carrier who, from this point of view, 'owns goods in transit and would sue in case of theft of goods while in their possession in transit. A railWay company gives possessory title at the time of delivery and usually separates to meet specific orders if such be necessary. As to goods in a railway station warehouse, the writer would prefer to refrain from passing comments.
In the light of these remarks I strongly urge upon everyone never to use the word " Transfer " unless he be sure of his ground.
One other matter, as a precautionary measure. If ever a haulier has goods in his warehouse, or premises, and undue fire or risks .arise due to the arrival of highly inflammable or dangerous goods, or those that smell, the haulier should notify the owners of the goods subject to greater risk, so that increased insurance cover can be taken out, or the threatened goods removed.
Let there be no question of negligence and liability on the part of hauliers; also get rid of the dangerous, inflammable, or smell-infecting goods as quickly as you can, whether cotton, onions, oranges, soap, etc., according to other products held.
Let it "be said that it is probable that the writer has rushed in where legal counsel would fear to tread, there being so many, pitfalls. Nevertheless, I do feel that this article should clarify the position and be beneficial to many in the industry.