NOTES 561 when the documents have been detached, a bill which professes to be a "produce" bill founded on a commercial transaction gets a better market than a bill which shows nothing on its face and may be a "kite" or accommodation bill. It is very common, therefore, to find on the face of the bill a statement "pay . . . and charge same to the account of" certain specified commodities. A witness from the Guar- anty Trust Company recently testified that in 23,000 bills in a period of five years, 93 per cent bore on their face these or similar words re- ferring to the commercial transaction giving rise to the bill.^ The weak point in this system is evidently the bill of lading. Such documents get their validity merely from the signature of the carrier's agent at the shipping point, whose handwriting is not likely to be well known in the world of ^high finance. The shipper usually writes out the rest of the bill of lading himself on one of the blanks kept in his posses- sion, and if he adds the name of a freight agent at the bottom, the fraud is not likely to be detected until the time arrives for the non- existent goods to reach their stated destination. A few years ago, the firm of Knight, Yancey and Company of Decatur, Alabama, fell into the habit of accelerating the time for receiving payment for cotton sold by discounting a draft with a forged bill of lading for nonexistent cotton attached, and afterwards shipping actual cotton to correspond with the false document. The cotton arrived before the draft was due, so that the fraud was undiscovered. But one day there was no cotton to ship, innumerable forged bills of lading were outstanding, and Knight, Yancey and Company closed their business career by insolvency. Like the jaunty testatrix who writes her own will, the perpetrator of colossal frauds furnishes plenty of employment for lawyers. Many of the drafts secured by forged documents had been accepted or paid be- fore the absence of cotton was discovered. Who should bear the loss, the bankers who had discounted the drafts in reliance on the forged collateral, or the buyers who had authorized acceptance and payment in order to obtain the cotton which never existed ? ' It is settled law in cases where the draft makes no reference to the collateral that the loss falls on the drawee (or his principal), if the draft has been accepted or paid. Money paid can not be recovered back, and the acceptor can get no rehef on account of the mistake. The holder who presented the instrmnent is not liable as a warrantor of its genuine- ness or on any other groimd.* There clearly is no warranty, for he does
- Scrutton, L. J., in Guaranty v. Hannay, [1918] 2 K. B. 660.
' Knight, Yancey and Company, besides issixing forged bills of lading, persuaded a railroad freight-agent to sign bills of lading without receiving cotton, and used these also to obtain money. It was held that the bank discounting such bills could not recover from the railroad. Louisville & N. R. R. Co. v. National Park Bank, 188 Ala. 109, 65 So. 1003 (1914). The carrier would now be liable under § 22 of the Federal Bills of Lading Act (Pomerene Act), August 29, 1916, c. 415; 39 U. S. Stat. 542; 8 U. S. CoMP. Stat. 1916, § 8604 ^/fe.
- WiLLiSTON ON Sales, § 435 (1909), collects the authorities. Hawkins v. Alfalfa
Co., 152 Ky. 152, 153 S. W. 201 (1913); Central Mercantile Co. v. Oklahoma State Bank, 83 Kan. 504, 112 Pac. 332 (1910); Seattle National Bank v. Powles, 33 Wash. 21, 73 Pac. 887 (1903); First National Bank v. Mineral, etc. R. R., 133 S. W. 1099 (Tex. Civ. App. 191 1); Burrton State Bank v. Pease-Moore Co., 163 Mo. App. 135, 145 S. W. 508 (1912) semble; Tapee v. Varley, Wolter Co., 184 Mo. App. 470, 171
