First Nat. Bank of Pullman v. Northern Pac. Ry. Co shipper, the title presumptively rests in the consignee, and a number of authorities are cited to support the view that in an ordinary shipment of commodities the duty of the carrier is to deliver to the consignee; that the consignee is presumptively the party to recover for breach of the contract of carriage. As illustrative of and supporting the view, among others the following authorities are mentioned: 2 Daniel, Neg. Inst. (4th Ed.) §§ 1743, 1744; 4 Elliott, R. R. § 1426; Pennsylvania Co. v. Poor (Ind. Sup.) 3 N. E. 253; The Sally Magee, 3 Wall. 451, 18 L. Ed. 197; Benj. Sales (6th Ed.) 332; Agricultural Co. v. Strand, 8 Wash. 647, 36 Pac. 682; Mattress Co. v. Rudebeck, 15 Wash. 336, 46 Pac. 392; Izett v. Mill Co., 22 Wash. 300, 60 Pac. 1128. Authorities are also cited which well support the contention that, where the carrier is ignorant of the fact that the consignor was the owner of the property, and the consignment is an absolute one, he has a right to assume that the consignee is the owner, and to settle a claim for loss with him. See Scammon v. Wells, Fargo & Co. (Cal.) 24 Pac. 284. But it is also urged that, where the consignor drew a sight draft on the consignee, and attached it to the bill of lading, and forwarded them to a third party for collection, and the company had no notice from the consignor to retain ownership and control of the shipment, and the company delivered it to the consignee without requiring production of the bill, the company was justified in presuming that the consignee was the owner, and that the company was discharged by the delivery to the consignee at the designation specified in the bill of lading. See Forbes v. Railroad Co., 9 Am. & Eng. R. Cas. 76. The principle stated by Cooley on Torts (page 456) that a mere bailee, whether common carrier or otherwise, is guilty of no conversion though he receive property from one not rightfully entitled to possession, and, acting as a mere carrier, delivers it in pursuance of the bailment, if this is done before notice of the rights of the real owner, is suggested as pertinent to this controversy. In the absence of statutory definition and regulation of bills of lading, the deductions made from the very numerous authorities adduced by counsel for appellant which exonerate the carrier from liability in an ordinary contract when delivery is made to the consignee may be conceded. Primarily, a bill of lading or receipt is not necessary to constitute the contract. The delivery of commodities to the common carrier, with the designation of the person and place of the shipment, is all that is requisite. Custom and the law fix the responsibility and liability of the carrier. The presumption then is that the consignee is the owner, and, without notice to the contrary, the carrier may safely make delivery to him. It seems from an examination of a large number of cases involving the nature of bills of lading made by a common carrier that the custom very generally First Nat. Bank of Pullman v. Northern Pac. Ry. Co exists of shippers selling or assigning such bills of lading and receiving payment therefor and advances upon the same. This custom enables the shipper to receive immediate payment from his local bank. The usage materially aids and stimulates trade and commercial transactions. It enables the small shipper or producer to realize upon agricultural products, such as wheat, at the most favorable market prices. In the case of Ratzer v. Railroad Co. (Minn.) 66 N. W. 988, 58 Am. St. Rep. 530, where a delivery was made without demanding the bill of lading, the court observed: "We are of the opinion that on the facts found the plaintiff is entitled to judgment. A vast portion of the produce of this country is moved from the agricultural districts to the commercial centers and the seaboards by the aid of advances made on the security of such bills of lading. A well-established custom has grown up in commercial circles by which such bills of lading are treated as the symbols of title to the property in transit, are taken as security for money advanced, and indorsed and delivered as a transfer of the property. This is well understood by the railroad companies and every one else. To allow the railroad companies to ignore this custom would be to destroy the custom itself. This would cause great hardship, revolutionize business methods, and drive all buyers and shippers of small means out of the business, as they could no longer give ready and available security on commodities in transit, and thereby turn their limited capital sufficiently quick and often to enable them to do much business. This, in turn, would destroy competition, and leave the business in the hands of a few concerns with unlimited capital. Neither have the railroad companies any right to ignore this custom. the contrary, it must be held that these companies have been doing business with reference to this custom as much as the shippers themselves and the consignees, banks, commission merchants, and others who are continually advancing money on the faith of the security of these bills of lading." And similar views are expressed in Savings Bank v. Atchison, T. & S. F. R. Co., 20 Kan. 519. In the latter case, as in many others, the discussion of the nature of bills of lading under commercial usage and custom is without reference to statutory definitions and regulations. Stock Yards Co. v. Westcott (Neb.) 66 N. W. 419; Walters v. Railroad Co. (C. C.) 63 Fed. 391; Gates v. Railroad Co. (Neb.) 60 N. W. 583; Furman v. Railroad Co., 106 N. Y. 579, 13 N. E. 587; Garden Grove Bank v. Humeston & S. Ry. Co. (Iowa) 25 N. W. 761. By virtue of the statute in New York, the carrier must demand and receive the bill of lading before delivery in order to avoid liability. Colgate v. Pennsylvania Co., 102 N. Y. 120, 6 N. E. 114. Thus the better reasoning and the weight of authority seem, by the force of general commercial usage, to require that the delivery of commodities be made upon the produc First Nat. Bank of Pullman v. Northern Pac. Ry. Co tion of the bill of lading, if one be issued by the carrier. Hutch. Carr. (2d Ed.) § 130b, observes: "The carrier, being thus bound to deliver the goods in accordance with the bill of lading, is, it is said, under obligation to ascertain whether or not a bill of lading was delivered to the shipper, and, if delivered, he must retain the property until it is demanded by one claiming under that title." 2. An examination of our statutes seems to fairly determine the controversy. Section 3598, 1 Ballinger's Ann. Codes & St., declares the effect of bills of lading and transportation receipts as follows: "All checks or receipts given by any person operating any warehouse, commission house, forwarding house, mill, wharf, or other place of storage, for any grain, flour, pork, beef, wool, or other produce or commodity, stored or deposited, and all bills of lading, and transportation receipts of every kind, are hereby declared negotiable, and may be transferred by indorsement of the party to whose order such check or receipt was given or issued, and such indorsement shall be deemed a valid transfer of the commodity represented by such receipt, and may be made either in blank or to the order of another." And section 3603 declares when the carrier may be exonerated, as follows: "A carrier or warehouse proprietor is exonerated from liability for freight by delivery thereof, in good faith, to any holder of an original bill of lading or warehouse receipt thereof, properly indorsed, or made in favor of the bearer." There is also a further pertinent provision in section 3604: "When a carrier or warehouse proprietor has given a bill of lading, warehouse receipt, or other instrument substantially equivalent thereto, he may require its surrender, or a reasonable indemnity against claims thereon, before delivering the freight." Suggestion is made by counsel that the indorsement of the bill of lading can only be made by the consignee, but it may be observed that section 3600, Ballinger's Ann.. Codes & St., specifies: "When a bill of lading or warehouse receipt is made to 'bearer' or in equivalent terms, a simple transfer thereof by delivery conveys the same title as an indorsement." The bills of lading under consideration here were delivered by the carrier to the shipper. Surely, the defendant is conclusively charged with knowledge that the bills were given to Chambers, and the knowledge of their negotiability both by custom and the statute must likewise be imputed to it. It follows that the judgment is correct, and it is affirmed. WHITE, HADLEY, FULLERTON, ANDERS, DUNBAR, and MOUNT, JJ., concur. JACK v. WILLIAMS et al. STATE ex rel. CUNNINGHAM et al. v. JACK et al. [113 Fed. Rep. 823.] Jurisdiction of Federal Courts-Citizenship of Parties-Actions Ex Relatione. A suit in the name of a state, on relation, is to be treated, for the purpose of determining the jurisdiction of a federal court, as though the relators were alone the complainants. Railroads-Duty to Operate—Nature and Extent.* In the absence of special circumstances, or an express contract embodied in a charter, the owner of a railroad, whether a corporation or individual, cannot be compelled to maintain and operate the same at an actual loss. The duty arising from the ownership of the franchise is merely to meet the public requirements, and, where the traffic on a road is not sufficient to pay its operating expenses, such duty does not require its operation, and it may be abandoned. Same Power of Court to Order Destruction of Road and Sale of Materials. A railroad company built a short piece of road, wholly with the proceeds of bonds sold, and then became insolvent. In a suit to foreclose the mortgage securing the bonds a receiver was appointed, who by leave of court issued certificates, with the proceeds of which he completed the road to a length of 12 miles, by which it connected two towns. He operated the road for a number of years in the most economical manner, and without salary himself, but its earnings barely paid operating expenses, producing nothing for creditors, or even for maintenance and repairs. After several attempts to sell the road, at which no bids were received, it was purchased for $15,000 by three holders of receiver's certificates, and the sale confirmed. At that time private persons could own and operate a railroad under the laws of the state, but by a law passed soon thereafter all natural persons owning a railroad were required to organize into a corporation within 60 days, in default of which the franchise of the road was declared forfeited. The purchasers of this road failed to incorporate, and after its franchise had thus been forfeited one of them brought a suit to obtain a sale of the property and a division of the proceeds. A receiver was appointed, and the road was inspected by an expert, who reported that $10,000 must be expended in repairs to render the road safe to operate for one year. There was no statute of the state making it obligatory upon the owner of a railroad to operate the same, nor was there any such requirement in the charter of the original company, which was permissive only, and the road had not been operated since its sale: held, that to compel the owners to repair and operate the road at a certain loss, or to keep it intact, though unused, would be to deprive them of their property without compensation, and that the court was justified, under the circumstances, in ordering the receiver to dismantle the road and sell the materials. Same. The receiver having taken up and sold the rails under an order of court entered without opposition, the court could not require the owners to purchase new materials and rebuild the road, on an offer by interveners to lease and operate the same if restored, especially in view of the fact that the franchise to operate it as a railroad had been forfeited. In Equity. On cross bill of interveners. See 102 Fed. 210, 106 Fed. 259. *The principal authorities on this subject will be found collected in the opinion. Jack v. Williams Ansel & Cothran, for complainant. B. A. Hagood, for defendants. J. W. Barnwell, B. M. Shuman, and J. H. Heyward, for cross complainants. Ansel & Cothran, B. A. Hagood, S. J. Simpson, and J. R. Lamar, for cross defendants. SIMONTON, Circuit Judge. This case now comes upon the cross bill filed by the state of South Carolina, ex relatione T. B. Cunningham, and others, the answers thereto, and the testimony taken before the special master upon the issues therein set forth. Although the name of the state is used, still the suit being ex relatione, this court has jurisdiction. Maryland v. Baldwin, 112 U. S. 490, 5 Sup. Ct. 278, 28 L. Ed. 822; Indiana v. Glover, 155 U. S. 517, 15. Sup. Ct. 186, 39 L. Ed. 243. The legislature of South Carolina, in December, 1882, granted a charter to the Greenville & Port Royal Railroad Company, permitting it to construct a railroad from Greenville, S. C., to the port of Port Royal, in the same state. It had the power to issue bonds and secure the same by the mortgage of its property and franchises, and natural persons and municipal corporations, as well as other corporations were authorized to subscribe to its capital stock. In December, 1885, its charter was amended by the general assembly of South Carolina. Its name was changed into that of the Atlantic, Greenville & Western Railway Company, and its route was so changed as to extend from Greenville to NinetySix, in said state, with the privilege of extending_eastward from Ninety-Six to some point on the Atlantic Coast, and westward from Greenville to the North Carolina line, by such route as the directors should select. By this act power was given to townships along the line of the road, or interested in its construction, to subscribe to the stock of said road, and to this end any such townships were declared to be bodies corporate. This special provision has been declared invalid. Floyd v. Perrin, 30 S. C. 1, 8 S. E. 14, 2 L. R. A. 242. By an act passed in December, 1886, the Piedmont and Pelzer Manufacturing Companies were each authorized to subscribe to the capital stock of this road. It may be mentioned in passing that there is no evidence in the record showing that any municipal or private corporation or person subscribed or paid any cash or property toward the capital of this company. In 1887, under the provisions of the general railroad act of South Carolina, this Atlantic, Greenville & Western Railway Company was consolidated with a corporation existing under the laws of the state of North Carolina and of the state of Tennessee, and thus became known as the Carolina, Knoxville & Western Railway Company. Some parts of the roadbed of this projected railway were built, but no part of it was constructed, except some 12 miles, starting from Greenville, towards the town of Marietta, in said county. The story of |