Adams v. Merchants' Nat. Bank of Indianapolis
| Decision Date | 01 April 1880 |
| Citation | 2 F. 174 |
| Parties | ADAMS, Assignee, etc., v. MERCHANTS' NATIONAL BANK OF INDIANAPOLIS. |
| Court | United States Circuit Court, District of Indiana |
McMaster & Boice and Judah & Caldwell, for assignee.
R. O Hawkins and Dailey & Pickerill, for defendants.
Petition in review of order of the district court.
In the fall of 1877, Van Camp & Son were engaged in business at Indianapolis, in buying and selling apples and other produce and in the manufacture and putting up of meats, fruits, etc. They had a storehouse at Indianapolis, where they kept articles which they wished to hold for better prices. At that time they applied to the bank for a loan of $2,000. The bank agreed to make the loan upon the execution of a note by the bankrupts, with certain sureties, and on the condition that they would convert their storehouse into a public warehouse of class 'B,' by taking out a permit therefor under the statute, and would place the 800 barrels of apples, for the purchase of which they made the loan, in the warehouse issuing warehouse receipts therefor to a certain person, by name, the son of one of the firm, to be by him indorsed, and left with the bank as collateral security. This arrangement was carried out, the note executed, with sureties, the apples purchased and placed in the warehouse, for which a permit was taken out, the store being made a warehouse of class 'B,' and the receipts issued and indorsed to the bank, as provided in the agreement. The son, to whom the receipts were given, had no interest in the property, and had no business connection with the firm in any way. During the time that these transactions occurred the bankrupts kept their general account with the bank, and deposited and drew out money as they received or needed the same; and the note, discounted by the bank, was placed as a credit to their general account.
In January, 1878, Van Camp & Son were adjudged bankrupts by the district court for this district, and the apples, covered by the receipts referred to, together with the other property, came into the hands of the assignee, and were sold by the order of the district court, the proceeds being permitted to remain in the hands of the assignee, subject to the same rights which existed against the property itself. Upon application by the bank to the district court, requesting that a lien might be declared in its favor on the fund arising from the sale of the apples, the assignee was ordered to pay the amount of the note out of the fund in his hands, on the ground that the bank had an absolute lien upon the property for which it held the warehouse receipts. That order the assignee asks to have reviewed by this court, and the question before the court is whether the bank had a priority of lien over the general creditors, as the district court adjudged.
There is nothing in the statement of the case to indicate that the bankrupts used their warehouse, as a warehouse under the statute, in any other way than for the purpose specially intended by the bank. It does not appear that the property of any other person than that of the bankrupts was stored in the warehouse. The case, then, was one where the bankrupts having purchased and taken possession of property stored it in their warehouse, for which a permit had been obtained, as class 'B,' and issued receipts for the same, and transferred them, through a third person to whom they were issued, to the bank as collateral security for the loan made.
By the act of March 9, 1875, (1 Davis, 1876, p. 927,) public warehouses are divided into two classes, 'A' and 'B.' Any person or incorporation may keep a public warehouse by obtaining a permit from the auditor of the county in which the warehouse is situated. The warehouse shall continue subject to the provisions of the law until the owners shall file a notice in the auditor's office, renouncing the character of public warehousemen.
Class 'A' embraces warehouses in which grain is stored in bulk, and that of different owners mixed together. Class 'B' embraces warehouses where property of any kind is stored for a consideration.
Most of the sections following the first and second, to which reference has been particularly made above, refer to the storing of grain in warehouses of class 'A.' The fourteenth section of the act declares that receipts for property stored in any class of warehouses shall be negotiable and transferable by the indorsement of the warehouse receipts which are to be given for the property stored, and the indorsement of the party to whom the receipt is given shall constitute a valid transfer of the property. The indorsement is to be deemed a warranty that the indorsee has a good title and lawful authority to sell the property named in the receipt.
All warehouse receipts for property stored in warehouses of class 'B' are to distinctly state on their face the brand or distinguishing mark of the property.
The fourth section of the act provides specifically for the issue of a receipt for property stored in warehouses of class 'A.' There seems to be no such provision in relation to property stored in warehouses of class 'B;' but the fourteenth section of the act speaks of warehouse receipts for property stored in any class of public warehouses, and includes, of course, class 'B' as well as 'A.' There is nothing to show that the money advanced by the bank to the bankrupts was specifically appropriated in the purchase of the apples covered by the receipts; but they seem to have been paid for as other purchases were, by checks on the bank, drawn on the general account of the bankrupts. Independent of the fact that there is no evidence to show any other receipt issued by the bankrupts, as warehousemen, for property deposited in their warehouse, and of the fact claimed, that these were receipts, given by them, of their own property in the warehouse, substantially to themselves, (the son of one of the bankrupts being merely a nominal party, in whose name the receipts were issued, and who indorsed them to the bank,) the receipts can hardly be considered as valid under the statute. They are as follows: 'Received of Cortland Van Camp, subject to his order, and deliverable on return of this receipt, 150 barrels of apples, for storage in fruit house. ' Signed by the bankrupts, and indorsed by Cortland Van Camp. The other receipts are similar.
Now the statute of the state in relation to warehouses of class 'B,' provides for property stored therein 'for a...
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