Central States Corp. v. Trinity Universal Ins. Co.

• Decision Date: 06 October 1956
• Docket Number: No. 5403.,5403.
• Citation: 237 F.2d 875
• Parties: CENTRAL STATES CORPORATION, Appellant, v. TRINITY UNIVERSAL INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

237 F.2d 875 (1956)

CENTRAL STATES CORPORATION, Appellant, v. TRINITY UNIVERSAL INSURANCE COMPANY, Appellee.

No. 5403.

United States Court of Appeals Tenth Circuit.

October 6, 1956.

Samuel Morgan, Chicago, Ill. (Kahrs & Nelson, Wichita, Kan., on the brief), for appellant.

Gerrit H. Wormhoudt, Wichita, Kan. (Howard T. Fleeson, Homer V. Gooing, Wayne Coulson, Paul R. Kitch, Dale M. Stucky and Donald R. Newkirk, Wichita, Kan., on the brief), for appellee.

Before BRATTON, Chief Judge, and PHILLIPS and LEWIS, Circuit Judges.

PHILLIPS, Circuit Judge.

On August 4, 1951, Trinity Universal Insurance Company¹ issued a State of Kansas Grain Public Warehouse Bond in the principal amount of $130,000, covering the operation by the Garden Grain and Seed Company² of grain elevators as public warehouses at Garden City, Kansas Air Base and Pierceville, Kansas. On October 30, 1951, the Insurance Company issued a like bond in the principal amount of $5,000, covering the operation by the Seed Company of an elevator as a public warehouse, at Ingalls, Kansas.

The Insurance Company brought an action of interpleader against Central States Corporation³ and others who asserted claims against it under its bonds, asking a determination of its liabilities under the bonds to such claimants.

Central filed an answer in which it sought recovery on the $130,000 bond, on account of certain unregistered warehouse receipts issued to it by the Seed Company. In its answer Central alleged that on November 29, 1951, it purchased from the Seed Company 50,000 bushels of No. 2 milo at $2.35 cwt. and paid therefor the sum of $65,800 and that as a part of the same transaction the Seed Company on the same day issued to it ten unregistered public warehouse receipts, numbered 164 to 173, inclusive, in the form prescribed and authorized by the law of Kansas. Central further alleged that on December 15, 1951, it purchased from the Seed Company 50,000 bushels of No. 2 yellow milo at $2.46 cwt. and paid therefor the sum of $68,800, and that as a part of such transaction the Seed Company on the same day issued to Central ten unregistered public warehouse receipts, numbered 179 to 188, inclusive, in the form provided by the law of Kansas.

Such unregistered receipts recited that the Grain Company had received in storage from Central a designated number of bushels of milo, subject to the order of Central. Each of the receipts also contained the following recital:

"The undersigned warehouseman is not the owner of the grain covered by this receipt, either solely, jointly or in common with others: * * *."

Central further alleged that the amount paid by it to the Seed Company for milo represented by such receipts, after giving full credit for milo delivered to it by the Seed Company, is $220,875.71 and sought recovery on the $130,000 bond for the full amount thereof.

The trial court granted a summary judgment in favor of the Insurance Company. Central has appealed.

At the hearing on the motion for summary judgment Central filed an affidavit of defense. It attached to such affidavit a transcript of the testimony of A. P. Emrie, Chief Grain Inspector of the State of Kansas, given in the examination of the Seed Company, Bankrupt, in the bankruptcy proceedings, which showed that the Grain Inspector had authorized the Seed Company to issue unregistered receipts and furnished the forms for such receipts in triplicate, one copy to be delivered to the person taking the receipt, one copy to be retained by the Seed Company and one copy to be forwarded to the Grain Inspection Department for the State of Kansas. The receipts were sent to Central with sight draft attached and Central received the receipts when it honored the sight draft.

In its affidavit of defense Central averred:

"D. That in each of the transactions between Central * * * and * * * Seed Company * * * the latter used the moneys paid by Central * * * to purchase milo; that in each instance the said milo so purchased was deposited in the warehouses of * * * Seed Company * * *; that in each instance the said deposit was purported to be made for and on behalf of Central * * *; that in each instance warehouse receipts were issued reciting that the grain so deposited had been `received in store\' `from Central States Corp.\'; that each of the warehouse receipts so issued to Central * * * was on an official form prescribed and printed by the State of Kansas, each purported to be negotiable, and each bore the caption, `Uniform Unregistered Bailment Local Public Warehouse Receipt;\' that as Central * * * required grain for its distilling operations, it would draw upon the deposits of milo evidenced by its said warehouse receipts; that storage charges were paid by Central * * * on all grain not so withdrawn by it; that at no time was Central * * * aware that milo had not been deposited for and on its behalf by * * * Seed Company, in the amounts specified in the said warehouse receipts; that in all its transactions with * * * Seed Company, Central * * * acted in good faith and without knowledge of any dereliction on the part of * * * Seed Company."

Thus, it will be seen that in its answer Central alleged that it purchased milo from the Seed Company and received unregistered receipts therefor, while in its affidavit of defense Central averred that it furnished money to the Seed Company, with which the Seed Company was thereafter to purchase milo, while the receipts were issued at the time the money was furnished.

The Seed Company did not have milo in storage for which it issued receipts to Central and after it received the money from Central it did not thereafter purchase milo and place it in the warehouse to the credit of Central.

...