proof of claim "without prejudice to the right of the claimant to assert a claim for any specific property or fund in the hands of the receiver." We see no objection to this course.

Let us now reconsider the entire problem both with reference to the law governing the case of a single remitter of money for a specific purpose and the question of recovery in full and the method of procedure where a thousand or more remittances of like character have been made at different times before the failure.

Case of Single Remitter

The argument of the receiver and his attorney virtually concedes, without prejudice, that where a single remittance is made to a banker for a special purpose and the remittance is mingled with the banker's general fund in his own vaults or in bank which passes to a receiver upon its failure, the purpose not being carried out, the remittance is a trust fund the identity of which is not lost by the mere mingling, but it remains identifiable and recoverable in full if the mingled fund from the time of the receipt of the remittance to the time of the receiver taking possession equals or exceeds the amount of the remittance, or if the fund remaining is less than the remittance, then the trust attaches to what remains.

Thus in Re Jarmulowsky, 258 Fed. 231, the bankrupts were private bankers and, on the day before they suspended business, received from the petitioner $288 for which they gave a receipt stating that the money was to be forwarded to a definite person at a specified place in Europe. The bankrupts never forwarded the money and it ultimately passed to the possession of the trustee. It was held that the private bankers in receiving this money acted in a fiduciary capacity and the person intrusting such money to them may, on tracing the same into the possession of the trustee in bankruptcy, recover it in solido.

Let us briefly restate the main rules and their limitations governing the following and recovery of trust funds.

1. "The old idea that, because money has no ear. marks, it cannot be followed when mingled with the funds of a wrongdoer, has long since been exploded. The decisions in England and in this country now allow a trust fund to be followed as long as it can be traced, and its identity ascertained, whether in its original or in some substituted form." First National Bank v. Armstrong (C. C.) 36 Fed. 59, 61.

2. But "if the trustee is in bankruptcy or insolvency, it is absolutely necessary to trace the money covered by the trust into some particular property or fund. It is just as necessary to trace it as it is to prove the trust relation." Weiderman v. Newton Arms Co. 271 Fed. 304.

3. "It is indispensable that clear proof be made that the trust property or its proceeds went into a specific fund or into a specific identified piece of property which came to the hands of the receiver

it is not sufficient to prove that the trust property or its proceeds went into the general assets of the insolvent estate and increased the amount or the value thereof which came to the hands of the receiver." Empire State Surety Co. v. Carroll Co. 194 Fed. 604.

4. "Proof that a trustee mingled trust funds with his own and made payments out of the common fund, is a sufficient identification of the remainder of that fund coming to the hands of the receiver, not exceeding the smallest amount the fund contained subsequent to the commingling, as trust property, because the legal presumption is that he regarded the law and neither paid out nor invested in other property, the trust fund, but kept it sacred." Empire State Surety Co. v. Carroll Co. supra.

5. “It is, therefore, a part of the rule applicable to following misappropriated moneys into a bank account that if at any time during currency of the mingled ac

count the drawings out had left a balance less than the trust money the trust money must be regarded as dissipated except as to this balance, the sums subsequently added to the account from other sources not being attributed to the trust fund." Board of Commissioners v. Strawn, 157 Fed. 49, 15 L.R.A. (N.S.) 1100 and note.

The authorities sufficiently establish where money is remitted to a banker, as in the case of Knauth, Nachod & Kuhne, for the specific purpose of covering a draft drawn by the remitter upon a foreign country, such money is received by the banker in a fiduciary relation and where the banker has failed and the proceeds of the remittance can be traced into some particular bank account which has come to the possession of the receiver and it can be proved that continuously from the time of the deposit of such remittance until the time of the receiver's taking possession the amount in such bank acount equalled or exceeded the amount of the remittance, the same would be recoverable as a trust fund or if the balance was drawn down below the full amount, whatever is left would be impressed with the trust while the owner would have to prove as a general creditor for the remainder.

Problem of Identifying a Thousand Trusts

The above being true as to a single remittance, how is the situation changed in the case of numerous remittances of like character? The receiver and his attorney indicate that this so complicates the problem as to make extremely difficult the identifying of particular trusts and would necessitate (1) an omnibus proceeding to ascertain the total amount of priority and trust claims; (2) the making of a detailed schedule showing bank balances of the bankrupt daily for months and perhaps for years (3) a counter schedule of the amount of trust and priority claims on each coresponding date.

But it would seem that the difficulty of administering the trust would be no reason for denying justice to particular claimants if the fact could be established that certain of such claimants were entitled to preference as owners of identifiable trust funds. The governing rule where there are a number of claimants of trust money is thus stated in Empire State Surety Co. v. Carroll Co.

194 Fed. 604:

"Where a trustee has mingled in a common fund the moneys of many separate cestui que trustent and then made payments out of the common fund, the legal presumption is that the moneys were paid out in the order in which they were paid in and cestui que trustent are equitably entitled to any allowable preference in the inverse order of the times of their respective payments into the fund."

Bolognesi Case

In the recent decision of the United States Circuit Court of Appeals, Second Circuit, in re A. Bolognesi & Co. 254 Fed. 770 the above governing rule was applied and the method to be pursued in ascertaining the rights of respective trust claimants was indicated. While the rights of only a few trust claimants were involved in that case, it would seem that the same rule and method of procedure would be applicable to ascertaining and fix. ing the respective rights of trust claimants of Knauth, Nachod & Kuhne to payment in full. The facts and decision in the Bolognesi case will be given at length, because they seem to us to have an important bearing upon the present problem.

Bolognesi was a banker doing business largely with Italians who, in divers ways wished to transmit funds to Italy. He assigned Feb. 11, 1914, and subsequently became bankrupt. The moneys received by him from customers and depositors were placed in his own bank accounts in sundry chartered banks and trust companies. On the day of the assignment he had on deposit in the Central Trust Company $11,469.67, composed of his own moneys, as well as those of his customers. Certain persons who had deposited money with Bolognesi for the

specific purpose of purchasing drafts and money orders payable in Italy, succeeded in tracing the funds into Bolognesi's account with the Central Trust Company and demanded from the trustee in bankruptcy preferential payment in whole or in part. Thereupon the trustee brought a proceeding wherein all parties making any claim against the Central Trust Company fund were required to appear and make proof before a special master. Numerous claimants appeared whose claims were divisible into two classes (1) those who handed their money to Bolognesi for a special purpose with which the bankrupt never complied, i, e., never bought drafts or money orders as directed; (2) Those who did the same thing but who obtained, prior to failure, drafts or the like which however, when presented in Italy were not paid. The special master found as to both classes that Bolognesi occupied a "quasi trust relation" and, as the whole of the amount of claims proven were in excess of the Central Trust Company account, ordered the whole of that fund to be distributed pro rata among all the claimants who had traced their moneys into that fund. An order of the District Court having been made, distributing the fund among the special claimants, the trustee in bankruptcy petitioned for a revision of the order. The Circuit Court of Appeals held as to those claimants who bought and received drafts that they were general creditors, without right to participate in the fund at all, as the bargain between them and the banker was completed and they had got what they asked for, although the drafts were not paid but as to claimants who gave money to the bankrupt to be invested in a special character, to buy drafts on Italy and the like, the bankrupt assumed a fiduciary relation and in so far as such claimants traced their funds into. the Central Trust Company account, they were prima facie entitled to share in the fund because Bolognesi had not fulfilled his duty with respect to them. Speaking of the general rights of the claimants to trace and follow trust funds through a bank account, the court said:

"It is necessary, in order to identify money, to trace it into some specific fund or property a replenishing of a depleted trust account cannot be considered (per se) as restoring the trust and it follows that when it appears that moneys impressed with a trust have been mingled with the trustee's general account and a certain amount remains in the account at the end of the period, and the account has not been, in the interval, depleted below the trust amount or final amount, that final amount will be presumed to include the trust money. But where such a mingled fund comes into the hands of a receiver, trustee in bankruptcy, or the like, what is responsible for the claims of the cestui que trustent is the remainder so coming into the hands of the officer of the court, not exceeding the smallest amount the fund contained subsequent to the mingling." Referring to the situation created by a number of trust claimants the court said:

"The unusual feature of this case is that there are several claimant depositors who put in money at different times, which money has been traced into a fluctuating account. Among such claimants the rule (prima facie) is not a pro rata equality.

.

The

separate cestui que trustent are equitably entitled to any allowable preference in the inverse order of the times of their respective payments into the fund." Citing Empire, etc., Co. v. Carroll Co. 149 Fed. 605.

The court then proceeds to illustrate the operation of the above principles upon the rights of the respective claimants, although the record being imperfect in matters of detail, it states it cannot adjust the rights of the parties but simply indicate the method that should be pursued. It points out that from the time when the claimants began placing the trust deposits with the bankrupt (approximately Jan. 20, 1914) down to the date of the assignment (Feb. 11, 1914) the Central Trust Company fund fluctuated considerably and down to the date of the last deposit with Bolognesi traceable into

said fund, was never higher than about $8,000 and fell as low as about $4,400, while the amounts traceable into the fund and flowing from the claimants held entitled to share, greatly exceeded $8,000. Continuing, the court says:

"It would appear to be true that on the day when the Central Trust Company account was lowest (January 27th) there was $4,414.57 in it, and on or before that day moneys of these claimants went into the account to the extent of $4,457.85. This was the first day when the account was smaller than the trust moneys shown to have been placed there. If the transaction stopped there, the various claimants should be awarded the fund on the theory summarized in the quotation from the Empire Company's case, supra.

"But, thereafter, at dates and in amounts as to which we cannot be certain, the claimants furnished to Bolognesi other moneys, which he put into the trust company account and never applied to the purposes of his fiduciary undertaking; and this continued until February 10th, when the last of the claimants' moneys went into the fund and the fund itself was $6,519.04, or $2,104.47 more than the low tide of January 27th. In the meantime the account on February 3d was no more than $5,082.61. But we cannot ascertain from this record exactly when the various claimants' moneys went into the fund after January 27th.

"Therefore the account must be stated, and the various priorities awarded, beginning on the first day when the fund was less than the trust money, and then on the next day when the new deposits in the fund were insufficient to cover the new trust money, and so on."

Rights of Knauth, Nachod & Kuhne Trust Claimants

As

Bearing in mind that it is necessary not only to prove a trust relation, but also to trace the trust money into a particular property or fund and the further rule that where many trust claimants trace their money into a common fund they are allowed a preference in inverse order of time of their respective payments into the fund, it would appear reasonable to conclude, in the light of the above, that there are a number of banks which made remittances to Knauth, Nachod & Kuhne, for the specific purpose of covering their foreign drafts or for some other specific purpose which was not carried out, that may be able to comply with the foregoing rules and trace such remittances into bank accounts carried by Knauth, Nachod & Kuhne and, under the principles above announced, maintain claims for payment in full. suming that the bank balances would be insufficient to pay all such provable trust claims, the rule that the first trust money paid in was the first paid out would operate and it would be a matter of proof as to which remitters would lose their claims for preference because of dissipation of the trust funds and which would still be entitled to recover in full. The purpose of this article, supplemental to the original opinion heretofore published, is simply to indicate that under the law, all moneys remitted to Knauth, Nachod & Kuhne for pur poses not carried out, are trust funds and that probably in a great many of such cases the funds can be traced into a particular bank account and be recoverable in full or in part, the balance in the latter case being provable as a general debt. The detailed adjustment of particular cases, of course, rests with the individual claimants and with representatives of the bankrupt estate. If the estate goes to liquidation there will, it is understood, be an omnibus proceeding in which all of the claimants of trust funds will have an opportunity to participate. (1923.)

DISCHARGE IN BANKRUPTCY

949a. False Statement to be grounds for refusing discharge in bankruptcy must be in writing-False oral statement not sufficient.-In 1919 one S began doing business with us and orally represented that he was the

owner of an undivided one-half interest in land in North Dakota. Some time later he orally represented that he had sold the land to his brother and the brother was to pay him $8,000 for it. These oral statements were made to the officers and stockholders of the bank, and in order to get credit at the bank. On the strength of these oral representations we loaned him a large amount of money. These representations were false, and S never had any interest in land in North Dakota. S has now filed a voluntary petition in bankruptcy, and his estate will fall far short of paying his debts. Will you please give me an opinion as to whether we can prevent his discharge in bankruptcy on the ground of the false representations?

Opinion: The Bankruptcy Act makes it a ground for refusing a discharge that the bankrupt obtained money or property on credit, on a materially false statement in writing made by him. In re Troutman, 251 Fed. 930; In re Armstrong, 248 Fed. 292; In re Aldridge, 168 Fed. 193, or by his representative, to any person for the purpose of obtaining credit from such person. (Bankr. Act, § 14, subd. b., Ch. (3); In re Fackler, 246 Fed. 864; Ould Co. v. Davis, 246 Fed. 228; In re Wylly, 210 Fed. 954; In re Simon, 201 Fed. 1004). The false statements alleged to have been made by S in order to obtain credit from the bank not having been made in writing, but orally, cannot be urged against his discharge in bankruptcy under the Act. (1922.)

DEPOSITS IN INSOLVENT BANK

950a. Deposits made when bank officials knew bank insolvent, recoverable-Criminal liability for accepting. -The general rule is to the effect that acceptance of deposits by a bank which is hopelessly insolvent to the knowledge of its officers constitutes such a fraud as will entitle the unsuspecting depositor to rescind and recover back the money, or give him a preferential claim, or create a trust ex maleficio, provided other conditions sometimes held essential to a recovery, such as augmentation of assets, identification, etc., can be satisfied. See 20 A.L.R. 1206, and 25 A.L.R. 728, citing all jurisdictions.

Under the Oklahoma statutes making it a criminal offense for a bank officer to take part in the receipt of money on deposit by the bank, while he knows it to be insolvent, and rendering bank officers liable for all damages flowing from a violation of law by them, an officer who participates in such receipt is liable for the resulting damages to the depositor. In this connection, "when a depositor is in the act of drawing his funds from a bank but he is induced by false representations by an official of the bank to permit such deposits to remain in the bank and to accept time certificates of deposit therefor, it is equivalent to such bank receiving on deposit such money." Hughes v. Martin, 196 Pac. (Okla.) 951, and in the case of State v. Perry, 149 La. 1065, 90 So. 406, the cashier of a bank was criminally convicted for having received deposits at a time when he knew the bank was insolvent. (1925.)

ACTS OF INSOLVENCY

951a. Protest of a cashier's check by the issuing bank's own notary, is not an act of insolvency.-A cashier of a national bank acted as notary and protested a cashier's check of his institution and gives as the reason for non-payment-drawn against uncollected funds. Is the protest legal and might not the action be construed as insolvency on the part of the bank? The reason for the statement-drawn against uncollected funds-is not understood by us at this time, but we presume the check was issued to the agent of a company for numerous small items given to the agent in settlement of accounts and that payment was not secured on all the items.

Opinion: I do not think the refusal to pay and protest of a cashier's check of a national bank would be Paton's Digest.-83.

construed as an act of insolvency on the part of the bank. A thoroughly solvent bank might have a good reason to refuse payment of its cashier's check and unless the check was in the hands of an innocent holder, the bank would not be obliged to pay where it had a good defense against the payee.

The National Bank Act prescribes certain grounds (such as failure of a national bank to redeem its circulating notes; violation of the provisions of the Act by a bank's officers or agents; obtaining of judgment against a bank by a creditor, which remains unpaid for 30 days) for the appointment of a receiver for a national bank by the Comptroller of the Currency (19 U. S. Stat. at L. 63. And see U. S. Rev. Stat. §§ 5201, 2534) but it is nowhere declared that a refusal by a national bank to honor its own cashier's check is an act of insolvency. (1923.)

BANKRUPTCY OF BROKER HOLDING INTERIM CERTIFICATES AS BAILEE

952a. Owner of bonds represented by temporary certificates in the hands of a broker for conversion into bonds, remains owner although broker becomes bankrupt-Bank transmitting to such broker is agent only, and not liable.-A bank forwarded to brokers interim certificates of the Province of Manitoba for exchange into permanent bonds. Should the receiver of the brokers take these certificates as the assets of the brokers? As between the bank and its customer who should stand any loss?

Opinion: Apparently the interim certificates were entrusted to the brokers as agents of the bank for the sole purpose of having them exchanged for permanent bonds and the rule is well settled that a trustee in bankruptcy does not acquire title to property held by the bankrupt as a mere bailee, or agent of another. Thomas v. Field-Brundage Co. 215 Fed. 891; In re Wright-Dana Hardware Co. 211 Fed. 908; In re, Smith, 192 Fed. 574; In re Taft, 133 Fed. 511. See also Ludvigh v. American Woolen Co. 231 U. S. 522, 58 L. ed. 345, 34 Sup. Ct. Rep. 161.

It would seem also that the bank acted as agent for the customer and that the loss, if any, would fall on the customer. The well recognized rule of agency is applicable that an agent is required to exercise only ordinary care, skill, and diligence, and if he does so will not be liable for losses sustained by the principal. Stem. berry v. Moore, 56 Ill. 472; Hurley v. Packard, 182 Mass. 216; Page v. Wells, 37 Mich. 415; De Bavier v. Funke, 142 N. Y. 633; Betts v. Cralle, 1 Munf. (Va.) 238. (1921.)

DEPOSITARIES FOR ESTATES IN BANKRUPTCY 953a. National bankruptcy law does not restrict deposits to national banks and the courts of bankruptcy may designate, by order, state banks as depositaries.I would like to know if there is any law requiring a trustee for a bankrupt to deposit the money collected in a National Bank, where the trustee gives sufficient bond to cover everything, or can he deposit it in a State Bank if he chooses?

Opinion: Deposits of money of a bankrupt estate by the trustee are regulated by court order, but there is nothing in the National Bankruptcy Law which restricts the court to naming a national bank as depository and it may designate a State bank if it so chooses. This subject is governed by § 61 of the National Bankruptcy Law, which is as follows:

"a. Courts of bankruptcy shall designate, by order, banking institutions as depositories for the money of bankrupt estates, as convenient as may be to the restdences of trustees, and shall require bonds to the United States, subject to their approval, to be given by such banking institutions, and may from time to time as occasion may require, by like order increase the number of depositories or the amount of any bond or change such depositories." (1911.)

FEDERAL BILLS OF LADING ACT

(See Uniform Bills of Lading Act) 954a. History of movement to secure national legislation-Full text of act. The approval by the President on August 29 of the Pomerene bill, S. 19, relating to bills of lading, marks the culmination of eleven years of effort on the part of the American Bankers Association to secure national legislation which will give bills of lading their proper status as instruments of credit.

The American Bankers Association was the pioneer in this movement, and while other organizations have largely aided, our members should feel an especial gratification that, at last, after over a decade of persistent effort, the national Bill of Lading Law for which we have been so long working is an accomplished fact.

The initial step was taken at the convention of our Association held in Washington, D. C., in 1905, when a Committee on Bills of Lading was authorized and was appointed in November of that year. At that time not only the law governing bills of lading failed to provide the necessary security, but there was no uniformity in the document itself. A joint committee of carriers and shippers had been holding sessions for over a year at the instigation of the Interstate Commerce Commision for the purpose of formulating a new uniform bill of lading and the first efforts of our committee were devoted to participation in the joint conference and suggestion of the correction of certain weaknesses and defects common to all bill of lading documents. As a result of the effort to improve the form and contents of the bill of lading our committee, after three years of labor, reported to the annual convention held in Denver, September, 1908, that it had "achieved the purposes for which it was originally appointed, through an order of the Interstate Commerce Commission, under date of June 27, 1908, recommending two forms of bills of lading for uniform adoption by all carriers throughout the United States. The order of the Commission includes the recommendations of our committee, which in brief were as follows:

"1. Two separate forms of bills of lading on different-colored paper, one for straight and one for order shipments.

"2. The prominent printing of the words 'order of' before the.name of the consignee of order bills.

"3. The omission of the words 'not negotiable' from order bills and the printing of such words on straight bills.

"4. The amendment of the alteration clause so that a fraudulently altered bill shall be good for its original tenor and not be destroyed completely.

"5. The addition, at the end of § 3, of the conditions (which provide that the carrier, liable for loss, shall have the benefit of any insurance) of the words, 'so far as this shall not avoid the policies or contracts of insurance.'"

was

But the larger effort was in the field of legislation. A national law was needed that would provide a liability of the carrier to the bona fide holder of a bill of lading issued by a freight agent without receipt of the goods and contain other provisions essential to the security of the document. In December, 1905, our first bill of lading bill was drafted and introduced in the House and Senate of the Fifty-ninth Congress by Congressman (now Senator) Townsend and the late Senator Burrows, both of Michigan. hearing was had before the House Committee on Interstate and Foreign Commerce, but the bill was not reported.

A

In the Sixtieth Congress the measure was again introduced by Congressman Maynard of Virginia and Senator McLaurin of Mississippi, but al

was

though hearings were granted, the proponents of the measure were unable to procure a favorable report. In the Sixty-first Congress we had better success. A new and shorter draft was prepared, restricted to the provisions most vital to the bankers, and this introduced by Congressman Stevens and Senator Clapp. both of Minnesota. This bill, known as the Stevens bill, after full hearings was favorably reported by the House Committee on Interstate and Foreign Commerce, but with two dissenting votes, and on June 7, 1910, passed the House by an almost unanimous vote. It went to the Senate Committee on Interstate Commerce and three hearings were given on June 16, 20 and 21. but the close of the session was too near at hand and the bill was not reported out of the Senate Committee.

A

In the meantime the Commissioners on Uniform State Laws had perfected a codification of the law of bills of lading designed for state enactment which contained all the vital points of security for which the bankers were contending, as well as other provisions primarily of importance to the shipping interests. re-draft of this act was made, with a few modifications and changes to adapt it for Federal enactment, the bankers and shippers united in support of this measure and, in the Sixty-second Congress beginning December, 1911, it was introduced and championed by Senator Pomerene of Ohio, who had become firmly convinced of the great value of such a law in the promotion of our interstate and foreign commerce. The Pomerene bill passed the Senate in the Sixty-second and again in the Sixty-third Congress, but in each instance it was not reported by the House Committee on Interstate and Foreign Commerce to which it was referred. In the present Sixty-fourth Congress, after passing the Senate on March 9, it was reported with a few unimportant amendments by the House Committee on June 24 and was passed by the House of Representatives on August 9. The Senate on August 18 passed the bill, concurring in the House amendments, and it has now received the signature of the President. The act takes effect January 1st next.

The

The above in briefest outline is the history of national legislature on this subject. Through the efforts of our Association, in co-operation with State Associations of Bankers, the Uniform Bills of Lading Act has also been passed in sixteen states during the last seven years. A statement in detail of all the various steps taken in connection with the bill of lading movement would be impracticable here for want of space. annual reports of the Committee on Bills of Lading, dating from the year 1906, and later of the Committee on Federal Legislation, will show full details and will be found published in the Annual Proceedings. During the last ten years a campaign of education has been going on, both in and out of Congress, which has brought a realization of the importance of the bill of lading in our interstate and foreign commerce and the necessity of making it a sound and negotiable instrument of credit, both in the interest of the shipper who cannot obtain advances unless he can pledge a sound document and of the banker who requires such a document for his security. This campaign has now borne fruit. The bill of lading is no longer a mere contract of affreightment; it is also an instrument of credit upon which billions of dollars are yearly advanced by consignees who pay drafts in reliance upon the statements contained in the bill and by bankers who loan money to shippers and consignees upon faith of the instrument. The conditions and necessities of business require that such payments by consignees and such loans by bankers be made upon the bill of lading rather than upon the goods themselves. Our products are largely moved by advances made upon bills of lading.

The Pomerene bill recognizes the function of the bill of lading as an instrument of credit and provides rules which give it a legal status and value, which it has not possessed under the Federal law prevailing up to this time. Among the more important provisions of the bill are the following:

Section 22 of the bill adopts a rule, long in force in our leading commercial states but not recognized by the Federal courts, which makes the carrier liable to a bona fide consignee or banker who pays or loans money upon a bill of lading issued by an authorized agent, certifying the receipt of goods, although no goods in fact have been received. It rightly applies the rule which makes the principal responsible for the act of his authorized agent performed within the scope of his authority to one who relies thereon to his injury. This same principle applies to banks and other corporations which issue negotiable documents and there is equal necessity that it should apply to carriers; otherwise the bill of lading fails in its function as an instrument of credit.

Section 37 contains another important provision. That section gives full negotiability to bills of lading and thereby affords greater protection to the discounting banker and to the purchaser of the goods. Where they acquire a bill of lading in good faith, that bill is made enforceable and is not subject to some unknown, defect in the title of a prior holder.

The Pomerene bill makes criminally liable the person who forges a bill of lading and the agent who issues a bill that does not represent goods. This is a much needed reform. No punishment whatever was provided for such criminals under the Federal law. Bills of lading purporting to represent goods of a value of about $11,000,000 were fraudulently negotiated by Knight, Yancey and Company in 1910, and by LeMore and Company in 1914-1915, and no one connected with either of those frauds has been punished. This failure to punish admitted criminals was due to the fact that no Federal statute existed upon which an indictment could be found. While the state authorities had the power to prosecute, no prosecution under the state laws was even seriously considered. The Pomerene hill closes the door for the defrauding of our purchasers abroad.

The above features providing (1) integrity, (2) full negotiability and (3) punishment of forgery of bills of lading are the most vital parts of the law. There are many other provisions of importance which will not be here detailed. The Act is set forth below.

The Federal Bills of Lading Act.

[Public-No. 239-64th Congress, U. S. Comp. Stat. §§ 8604aaa-8604w.]

An Act Relating to bills of lading in interstate and foreign commerce.

Be it enacted by the Senate and House of Representatires of the United States of America in Congress assembled, That bills of lading issued by any common carrier for the transportation of goods in any Territory of the United States, or the District of Columbia, or from a place in a state to a place in a foreign country, or from a place in one state to a place in another state, or from a place in one state to a place in the same state through another state or foreign country, shall be governed by this Act.

Sec. 2. That a bill in which it is stated that the goods are consigned or destined to a specified person is a straight bill.

Sec. 3. That a bill in which it is stated that the goods are consigned or destined to the order of any person named in such bill is an order bill. Any provision in such a bill or in any notice, contract, rule, regulation, or tariff that it is non-negotiable shall be null and void and shall not affect its negotiability with

in the meaning of this Act unless upon its face and in writing agreed to by the shipper.

Sec. 4. That order bills issued in a state for the transportation of goods to any place in the United States on the Continent of North America, except Alaska and Panama, shall not be issued in parts or sets. If so issued, the carrier issuing them shall be liable for failure to deliver the goods described therein to anyone who purchases a part for value in good faith, even though the purchase be after the delivery of the goods by the carrier to a holder of one of the other parts: Provided, however, That nothing contained in this section shall be interpreted or construed to forbid the issuing of order bills in parts or sets for such transportation of goods to Alaska, Panama, Porto Rico, the Philippines, Hawaii, or foreign countries, or to impose the liabilities set forth in this section for so doing.

Sec. 5. That when more than one order bill is issued in a state for the same goods to be transported to any place in the United States on the Continent of North America, except Alaska and Panama, the word "duplicate," or some other word or words indicating that the document is not an original bill, shall be placed plainly upon the face of every such bill except the one first issued. A carrier shall be liable for the damage caused by his failure so to do to anyone who has purchased the bill for value in good faith as an original, even though the purchase be after the delivery of the goods by the carrier to the holder of the original bill: vided, however, That nothing contained in this section shall in such case for such transportation of goods to Alaska, Panama, Porto Rico, the Philippines, Hawaii, or foreign countries be interpreted or construed so as to require the placing of the word "duplicate" thereon, or to impose the liabilities set forth in this section for failure so to do.

Pro

Sec. 6. That a straight bill shall have placed plainly upon its face by the carrier issuing it "non-negotiable" or "not negotiable."

This section shall not apply, however, to memoranda or acknowledgments of an informal character.

Sec. 7. That the insertion in an order bill of the name of a person to be notified of the arrival of the goods shall not limit the negotiability of the bill or constitute notice to a purchaser thereof of any rights or equities of such person in the goods.

Sec. 8. That a carrier, in the absence of some lawful excuse, is bound to deliver goods upon a demand made either by the consignee named in the bill for the goods or, if the bill is an order bill, by the holder thereof, if such a demand is accompanied by

(a) An offer in good faith to satisfy the carrier's lawful lien upon the goods;

(b) Possession of the bill of lading and an offer in good faith to surrender, properly indorsed, the bill which was issued for the goods, if the bill is an order bill; and

(c) A readiness and willingness to sign, when the goods are delivered, an acknowledgment that they have been delivered, if such signature is requested by the carrier.

In case the carrier refuses or fails to deliver the goods, in compliance with a demand by the consignee or holder so accompanied, the burden shall be upon the carrier to establish the existence of a lawful excuse for such refusal or failure.

Sec. 9. That a carrier is justified, subject to the provisions of the three following sections, in delivering goods to one who is

(a) A person lawfully entitled to the possession of the goods, or

(b) The consignee named in a straight bill for the goods, or

(c) A person in possession of an order bill for the goods, by the terms of which the goods are deliverable to his order; or which has been indorsed to him, or in