LEGAL PRINCIPLE: MARITIME LAW – Bills of Lading – Indorsement – Rights of Suit – Endorsee Must Have Property Passed to Acquire Right of Action
PRINCIPLE STATEMENT
Every consignee of goods in a bill of lading and every endorsee of a bill to whom the property in the goods therein mentioned shall pass upon or by reason of such consignment or endorsement shall have transferred to and vested in them all right of suit and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with themselves; it is not every endorsee who by reason of this section is vested with right of action in respect of goods mentioned as if the contract had been made with themselves; it is only an endorsee to whom the property in goods passed upon by reason of the endorsement.
RATIO DECIDENDI (SOURCE)
"Every consignee of goods in a Bill of Lading and every endorsee of a bill to whom the property in the goods therein mentioned shall pass upon or by reason of such consignment or endorsement shall have transferred to and vested in him all right of suit and subject to the same liabilities in respect of such goods as if the contract contained in the Bill of Lading had been made with himself. It is not every endorsee who by reason of this section is vested with the right of action in respect of the goods mentioned as if the contract contained in the Bill of Lading had been made with himself. It is only an endorsee to whom the property in the goods passed upon by reason of the endorsement."
EXPLANATION / SCOPE
This applies Principles 561-562 to statutory rights of suit. Statutory provision transfers rights of suit to: consignees and endorsees to whom property passes. Critical requirement: Property must actually pass—not mere consignment/endorsement but actual property transfer. Effect when property passes: (1) Rights of suit transfer—can sue on bill of lading contract; (2) Liabilities attach—subject to contract obligations; (3) Privity established—as if contract made with them directly. Who gets rights: Only endorsees/consignees to whom property passed—not all endorsees but only those acquiring property interest. This reinforces: mere endorsement insufficient (Principles 561-562), property transfer essential, and rights follow property. “Upon or by reason of consignment/endorsement” means: property passes through that transaction, consignment/endorsement effects property transfer, not mere paper transaction. Without property passing: no rights of suit transfer, endorsee lacks standing to sue, and original consignor/consignee retains rights. This serves: aligning rights with property ownership, preventing claims by non-owners, and ensuring only those with property interest can sue. The statute grants rights to actual property acquirers, not mere paper holders. Courts must determine: did property actually pass to endorsee? was there consideration? This principle makes property transfer prerequisite for bill of lading suit rights.