113 F.2d 239 (9th Cir. 1940), 9454, Heffron v. Bank of America Nat. Trust & Sav. Ass'n

Docket Nº:9454.
Citation:113 F.2d 239
Case Date:June 29, 1940
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 239

113 F.2d 239 (9th Cir. 1940)





No. 9454.

United States Court of Appeals, Ninth Circuit.

June 29, 1940

Page 240

         Russell B. Seymour, of Los Angeles, Cal., for appellant.

         Louis Ferrari, of San Francisco, Cal., and Edmund Nelson, G. L. Berrey, and Grainger & Hunt, all of Los Angeles, Cal., for appellee Bank of America Nat. Trust & Savings Ass'n.

         William R. Wallace, Jr., of San Francisco, Cal., Zach Lamar Cobb of Los Angeles, Cal., and George M. Burditt, of Chicago, Ill. (Williamson & Wallace, of San Francisco, Cal., of counsel), for appellee Lawrence Warehouse Co.

         Before DENMAN, MATHEWS, and HEALY, Circuit Judges.

         Healy, Circuit Judge.

         The appeal presents, among others of lesser difficulty, the question whether noncompliance with the provisions of the bulk sales law, Calif. Civil Code Sec. 3440, invalidates a lien on the goods of a merchant in favor of the holder of receipts issued for the goods by a field warehouseman.

         Fred Williams was adjudged bankrupt on his voluntary petition on September 25, 1937. The Bank of America, which we shall refer to as appellee, filed its proof of secured debt, claiming as security certain steel belonging to the bankrupt for which it held warehouse receipts. After a hearing upon objections of the trustee, the referee made findings and entered an order disallowing appellee's claim as a secured claim, but allowing it as a general claim. The court reversed the referee's order and directed the allowance of the claim as a secured claim.

         The bankrupt, a wholesale and retail merchant in the city of Los Angeles, was engaged in the sale of unfabricated steel of various kinds and dimensions. He kept a portion of his inventory and maintained his office at 633 South Anderson Street, and deliveries were made from this address. A small part of the front was occupied by the bankrupt as his office and the balance of the building was used for the storage of steel, the warehouse portion being separated from the office by walls or partitions through which there was a door.

         Desiring to procure credit on the security of his stock, the bankrupt on July 20, 1937, entered into a leasing and field warehouse storage agreement with the Lawrence Warehouse Company, operating an extensive system of field warehouses, to establish a warehouse on his premises. Under this agreement the bankrupt leased to the Warehouse Company the building mentioned, with the exception of the office, for the yearly rental of one dollar. The Warehouse Company undertook to act as custodian of all goods then on the premises and of any other goods placed there, in consideration of the sum of fifty cents per ton per month for goods stored which were covered by warehouse receipts, with a minimum charge of $500 for the first year. It conspicuously marked the building, inside and out, with 'No Trespassing' placards and with large signs bearing the name of the Warehouse Company and a statement to the effect that 'all commodities in or upon these premises are in the custody of the Lawrence Warehouse Company, Lessee '. It placed in charge a man named Rennie as its bonded custodian.

         Rennie had previously been employed by the bankrupt as his warehouse clerk. The new employment was at the same salary as previously received from the bankrupt, and as part of the compensation to the Warehouse Company for its services the amount of Rennie's salary was included. Padlocks bearing the name of the Company, to which the custodian had the only keys, were placed on the entrances to the warehouse, and the custodian kept the place locked when he was not present. With Rennie's permission the bankrupt had access to the warehouse. Except that he no longer drove a truck, Rennie continued to do the same character of work he had previously performed in and about the warehouse premises.

         About July 28, 1937 the Warehouse Company issued non-negotiable warehouse receipts by the terms of which it acknowledged

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