## Facts

- G.A.C. Commercial Corp. entered an accounts-receivable financing agreement with St. Lawrence Pulp & Paper Corp., advancing funds based on assigned receivables.
- St. Lawrence submitted to G.A.C. copies of invoices and copies of bills of lading as support for the receivables; G.A.C. advanced funds upon receipt at a discount.
- G.A.C. advanced $356,883.57 total and alleged $254,173.42 was advanced in reliance on receivables that were false; St. Lawrence later became bankrupt and did not repay.
- The negligence count alleged that Norwood & St. Lawrence Railroad Co., a rail carrier in interstate commerce, issued nonnegotiable (straight) bills of lading stating it had received goods for shipment when no goods were received and no shipments occurred.
- St. Lawrence allegedly pretended to load and seal empty railcars and obtained the straight bills of lading from Norwood without inspection.
- G.A.C. alleged it relied on the bills of lading (as provided by St. Lawrence) in extending credit and that Norwood’s issuance of the false bills proximately caused its losses.

## Issues

1. Whether a rail carrier that issues nonnegotiable (straight) bills of lading for goods never received owes a duty in negligence to a third-party lender who relies on copies of those bills in extending credit to the shipper.
2. Whether federal bills-of-lading statutes create or imply a cause of action, or expand carrier liability, in favor of a lender who is not a statutory “holder” of the bill of lading.

## Decision

- The court treated Norwood’s Rule 12(c) motion as a Rule 56 summary-judgment motion because matters outside the pleadings were considered.
- The court granted summary judgment for Norwood and dismissed the negligence count against it.
- The court held Norwood owed no actionable duty to G.A.C. under the federal statutory scheme or common-law negligence principles based on the issuance of straight bills to the shipper.
- The court concluded that, even assuming negligence in issuing the straight bills, G.A.C. had no viable cause of action against Norwood on these facts.

## Legal Principles

- Federal bills-of-lading law distinguishes between negotiable (order) bills and nonnegotiable (straight) bills; statutory protections and carrier liability tied to misstatements in a bill are directed primarily to shippers and lawful holders of negotiable bills.
- A lender who receives and relies on copies of straight bills of lading, without holder status contemplated by the statute, is not within the class protected by the federal bills-of-lading regime for purposes of imposing carrier liability.
- Common-law negligent misrepresentation requires a legally recognized duty to the relying party; a carrier’s routine issuance of straight bills to a shipper, without a special relationship or direct undertaking to a remote lender, does not create such a duty.
- Foreseeable reliance by third-party financiers on shipping paperwork, without more, is insufficient to impose negligence liability on a carrier for losses arising from the shipper’s fraud.

## Conclusion

The court dismissed the lender’s negligence claim because a railroad’s issuance of false nonnegotiable bills of lading to a shipper, without a special duty or statutory basis extending protection to a remote lender relying on copies, does not support tort liability for the lender’s credit losses.


G.A.C. Commercial Corp. v. Wilson, 271 F. Supp. 242 (S.D.N.Y. 1967)