The Canadian Bank of Commerce v. Mccrea

Decision Date20 November 1882
PartiesTHE CANADIAN BANK OF COMMERCEv.SAMUEL H. MCCREA et al.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District;--heard in that court on appeal from the Circuit Court of Cook county; the Hon. THOMAS A. MORAN, Judge, presiding.

On Monday, the 20th of September, 1880, appellees sold to H. C. Ranney & Co., upon the board of trade of Chicago, 1737 bushels of No. 2 spring wheat, for $1616.02, cash. Delivery of the wheat was made by means of three warehouse receipts issued to appellees, and by them indorsed, calling, respectively, for 488, 864 and 385 bushels of No. 2 spring wheat. The receipts were all in substantially the same form as that for the 488 bushels, which, together with its indorsement, was as follows:

“ARMOUR, DOLE & CO.

+-----------------------------------------+
                ¦No. B, 4230.¦CHICAGO, Sept. 16th, 1880.  ¦
                +-----------------------------------------+
                

C. B. & Q. Elevator.

Received in store from 232_____

Four hundred and eighty-eight bushels of No. 2 spring wheat, subject only to the order hereon of S. H. McCrea & Co., and the surrender of this receipt, and payment of charges.

+--------------------------------+
                ¦(¦This grain is subject to our¦)¦
                +-+----------------------------+-¦
                ¦(¦advertised rates of storage.¦)¦
                +--------------------------------+
                

It is hereby agreed by the holders of this receipt, that the grain herein mentioned may be stored with other grain of the same quality by inspection; loss by fire or heating at owner's risk.

+-----------------------------------+
                ¦(Signed,)       ¦ARMOUR, DOLE & CO.¦
                +----------------+------------------¦
                ¦(Countersigned,)¦ARMOUR.           ¦
                +-----------------------------------+
                

488 Bush.

+-------------------------+
                ¦(Indorsement.) ¦In store,¦
                +-------------------------+
                

S. H. MCCREA & CO.

Per Jennings.

Ranney & Co., at the same time, gave appellees their check of that date for the price to be paid for the wheat, drawn on the appellant, for $1616.02. Appellees deposited this check in the usual course of their business, and on Tuesday, September 21, 1880, it was presented to appellant through the clearing house, and payment was refused.

Ranney & Co. had been doing business on the board of trade in Chicago, being chiefly engaged in shipping grain, during the month of September, 1880. They kept a bank account with appellant, and the usual course of business, as claimed by appellant, was, when they were making up a cargo for shipment, that they be allowed to overdraw their account, and as soon as the cargo was shipped they should draw against it, attach the bill of lading as security, and discount the draft at the bank, and have the proceeds placed to their credit, thus paying the advances made by the bank. On Monday morning, September 20, Ranney & Co. took away from the bank warehouse receipts representing 10,000 bushels of wheat, and in the afternoon, between half-past two and three o'clock, carried back receipts for about 5800 bushels of wheat, the value of which, with a deposit made during the day, made their account good. Among the receipts thus carried back were those now in controversy. Appellees claim that appellant received these receipts under such circumstances and with knowledge of such facts as were sufficient to put it upon inquiry as to the title of Ranney & Co. In the afternoon of the day on which payment of Ranney & Co.'s check to appellees was refused, appellees went with the check to appellant, and demanded that it either pay the checks or return the warehouse receipts in controversy. Appellant refused either to pay the check or return the receipts. Other facts material to an understanding of the questions discussed are referred to in the opinion.

Thereupon appellees instituted the present action in the circuit court, which was finally tried as an action of trover, resulting in a verdict and judgment in their behalf, which judgment, on appeal to the Appellate Court for the First District, was affirmed. This appeal is from the last named court.

The circuit court gave to the jury, among others, the following instructions, to which exception was taken:

“4. The jury are instructed that if they find, from the evidence, that the defendant received the warehouse receipts in question from Ranney & Co., and that at the time it so received them it had knowledge of such facts and circumstances as would put a prudent person upon inquiry as to the title of said Ranney & Co., then the defendant will be deemed, in law, to have had notice of all such facts touching the title of Ranney & Co. to said receipts, as it might, by the exercise of ordinary and reasonable diligence, have ascertained upon inquiry and investigation.

5. If the jury believe, from the evidence, that the defendant, at the time it received the warehouse receipts in controversy from H. C. Ranney & Co., knew, or with the exercise of ordinary prudence had reason to know or believe, from facts and circumstances then within, or at that time, or any time previous to that time, brought to its knowledge, that the wheat called for in said receipts had been sold to plaintiffs for cash, and that the purchase money for said wheat had not been paid, then the defendant is not an innocent holder of said receipts.”

And the court refused to give the following instruction, asked by appellant, to which ruling also there was exception:

“The jury are instructed that it is not enough for the plaintiffs to satisfy the jury, by a preponderance of evidence, that there were connected with the taking of the grain receipts in question, or growing out of the previous dealings between the bank and H. C. Ranney & Co., circumstances which would excite the suspicion of a prudent man, or some circumstances which would make the bank guilty of gross negligence in the taking of the grain receipts, but it is necessary for the plaintiffs to go further, and to satisfy the jury, by a preponderance of evidence, that the bank had actual knowledge that the grain receipts had been sold by the plaintiffs to H. C. Ranney & Co. for cash, and had not been paid for, or such notice that the grain receipts had been sold for cash and not paid for, as would make the taking of the grain receipts by the bank an act of positive bad faith upon its part, and a fraud upon the plaintiffs.”

The errors assigned present the questions discussed in the opinion. Messrs. GRANT, SWIFT & BRADY, for the appellant:

Under the statute of this State warehouse receipts are governed by the law of promissory notes and bills of exchange, so far as the same is applicable. Hurd's Stat. 1881, chap. 114, sec. 142; Burton v. Curyea, 40 Ill. 320.

As to the contracts made negotiable the same as bills of exchange, by the statute, (chap. 98, secs. 3, 4,) counsel cited Sappington v. Pulliam, 3 Scam. 385; Bradley v. Morris, Id. 182; Bilderback v. Burlingame, 27 Ill. 338; Stewart v. Smith, 28 Id. 406; Archer v. Claflin, 31 Id. 315; Hunt v. Devine, 37 Id. 143.

The possession of a warehouse receipt by one under an assignment from the person to whom it was issued, is evidence of the holder's title to the property specified in the receipt, and one dealing for the property with such holder without notice of any defect in his title, or of facts to put a prudent person on inquiry, will be protected. Chicago Dock Co. v. Foster, 48 Ill. 507.

The rule that the purchaser of a chattel acquires no better title than his vendor, has no application to negotiable paper. Murray v. Lardner, 2 Wall. 110; Hotchkiss v. National Bank, 21 Id. 354.

The verdict and judgment were for the value of the grain, whereas the suit was for the value of the warehouse receipts.

Messrs. STILES & LEWIS, for the appellees:

As between appellees and Ranney & Co., the title never passed to the latter. Where personal property, other than commercial paper not due, is sold for cash, the title does not vest in the purchaser until payment is made, even though the property is delivered to the purchaser. 2 Schouler on Personal Prop. 292-300; Paul v. Reed, 52 N. H. 156.

The taking of a check for the price of goods sold is not a payment, but a means whereby to obtain the money, and when the check is dishonored, as between the buyer and seller the property, though delivered, will not pass. King v. Strong, 35 Ill. 9; Matthews v. Cowan, 59 Id. 341.

The transfer of warehouse receipts is governed by the same rules in respect to notice of the rights of third parties, as obtain in the transfer of chattel property. When chattels are sold and delivered under such circumstances that the title remains in the vendor until the performance of some condition, a bona fide purchaser for value from such vendee will acquire a good title thereto. But if the latter purchaser has notice of the rights and equities of the original vendor, his title will be subject to such rights and equities. Smalley v. Ellett, 36 Ill. 500; Barnard v. Campbell, 58 N. Y. 73.

The delivery of a warehouse receipt has the same, and no greater, effect than the delivery of the property itself. Burton v. Curyea, 40 Ill. 320.

The statute does not make such receipts negotiable as commercial paper, with all the incidents attending the transfer of bills of exchange. Shaw v. Railroad Co. 101 U. S. 557.

The bank, when it took the receipts from Ranney & Co., had constructive notice of Ranney & Co.'s want of title thereto, and therefore took no better title than they had.

The receipts represent the grain, which can not be obtained without a surrender of the receipts, properly indorsed. (Sec. 11 of Warehouse act.) Their conversion, therefore, is equivalent to a conversion of the grain, and the measure of damages is the value of the grain.

Mr. JUSTICE SCHOLFIELD delivered the opinion of the Court:

The question is presented by the ruling of the circuit court in the giving and refusing of instructions, whether warehouse receipts are placed on the same footing, as respects the...

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