Bostian v. Park National Bank

Decision Date09 November 1955
Docket NumberNo. 15341.,15341.
Citation226 F.2d 753
PartiesWilliam B. BOSTIAN, Trustee in Bankruptcy of the Estate of Raymon H. Banner, an individual, doing business as Banner Sewing Machine Company, Appellant, v. PARK NATIONAL BANK OF KANSAS CITY, Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Thomas D. Circle, Kansas City, Mo. (W. Arnold Brannock, Kansas City, Mo., was with him on the brief), for appellant.

Elmer B. Hodges, Kansas City, Mo. (M. George Russell, Kansas City, Kan., was with him on the brief), for appellee.

Before JOHNSEN, COLLET and VAN OOSTERHOUT, Circuit Judges.

COLLET, Circuit Judge.

The primary question presented on this appeal is whether a field warehousing agreement entered into between Raymon H. Banner, doing business as the Banner Sewing Machine Company, and the St. Louis Terminal Warehouse Company constituted a valid pledge of the property placed in the warehouse with the result that a creditor of Banner, the Park National Bank, acquired a valid lien on the property through warehouse receipts covering the property which was good against Banner's other creditors after he was declared a bankrupt. If there was no such valid lien in favor of the Bank, the question will then arise as to whether the Bank had reasonable cause to believe that Banner was insolvent at the time it, the Bank, subsequently took concededly valid warehouse receipts. The date of the taking of these subsequently taken warehouse receipts was only about ten days prior to the date of bankruptcy by Banner and within the period when it would have been a voidable preference at that time if the Bank had reasonable cause to believe that Banner was insolvent.

The facts are comparatively simple. Banner was operating both a wholesale and retail business. He had an established line of credit with the Bank which had been running for several years. For the purpose of financing his operations, Banner arranged with the St. Louis Terminal Warehouse Company to establish a warehouse at Banner's place of business. This was done by the enclosure of a considerable area of the premises, which was leased by the warehouse company. The enclosed area was provided with a gate secured by a lock. Large signs were conspicuously posted, giving notice that the premises and the contents thereof were in the possession of and under the control of the warehouse company. When Banner purchased merchandise it was placed in the warehouse and warehouse receipts were issued therefor. The warehouse receipts were nonnegotiable and were pledged to the Bank to secure the Bank's loans to Banner. The formal regularity and sufficiency of the steps taken to make the warehousing arrangement and the warehouse receipts valid are not open to serious question. On their face they are valid. The difficulty arises from the manner in which the formal agreement was executed.

The warehouse company employed an agent to operate the warehouse. He had other regular employment at a hotel and spent little time looking after the warehouse. He left the key to the warehouse with Banner and Banner's wife at their place of business adjoining the warehouse. Banner kept the inventory of merchandise which was placed in the warehouse and removed therefrom. At all times Banner had access to the warehouse and its contents. He could and did remove merchandise from it as it was sold. But always when merchandise was removed, Banner either got an order of release from the Bank to do so in advance, or by advance arrangement with the Bank, sales of merchandise were made on a C.O.D. basis to the purchaser with the C.O.D. payment to be made direct to the Bank. A copy of the orders of removal was sent to the warehouse company's office at St. Louis, Missouri. The inventory was continuing and perpetual. It was always accurate. There was no fraud or surreptitious removal of merchandise. The vice in the execution of the arrangement which the Trustee in Bankruptcy contends was fatal to the validity of the Bank's lien is that Banner had access to the warehouse and its contents at all times. The Trustee says that fact prevented the warehouse company from having the possession and control of the merchandise necessary and essential to a valid field warehousing arrangement. The record does not disclose that the warehouse company or the Bank knew that the agent was leaving the key to the warehouse with Banner.

About July 1, 1954, shortly before the date of Banner's bankruptcy, he terminated the warehousing arrangement with the St. Louis Terminal Warehouse and placed all but a small part of the merchandise in a bonded warehouse which issued warehouse receipts to the Bank. The remainder was placed on the floor at his place of business and a chattel mortgage given the Bank thereon. These warehouse receipts and the chattel mortgage were substituted for the old warehouse receipts as security for the Bank's loans to Banner. As heretofore stated, the validity of this latter arrangement is not questioned.

After bankruptcy, the Bank sought leave to foreclose on its security under the warehouse receipts issued by the St. Louis Terminal Warehouse Company, its subsequently...

To continue reading

Request your trial
5 cases
  • NYTCO Services, Inc. v. Hurley's Grain Elevator Co.
    • United States
    • U.S. District Court — Western District of Tennessee
    • July 28, 1976
    ...rise to a claim for possession that certainly was not merely colorable and not frivolous or a sham or fraud. See Bostian v. Park National Bank, 226 F.2d 753 (CA8, 1955). Under a "possession" test, the bankruptcy court would lack summary jurisdiction over the claims of NYTCO and/or the (3) T......
  • Ribaudo v. Citizens National Bank of Orlando
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • November 26, 1958
    ...Warehouse Co., 8 Cir., 1951, 189 F.2d 818; Barry v. Lawrence Warehouse Co., 9 Cir., 1951, 190 F.2d 433, 438; Bostian v. Park National Bank of Kansas City, 8 Cir., 1955, 226 F.2d 753; Sampsell v. Lawrence Warehouse Co., 9 Cir., 1948, 167 F.2d 885, certiorari denied 335 U.S. 820, 69 S.Ct. 42,......
  • IN RE COLONIAL DISTRIBUTING COMPANY
    • United States
    • U.S. District Court — District of South Carolina
    • December 3, 1968
    ...the warehouseman, took detailed inventories and had exclusive control over the goods and their release. In Bostain v. Park National Bank of Kansas City, 226 F.2d 753 (8th Cir. 1955), a similar field warehousing arrangement was established on the Bankrupt's premises and warehouse receipts co......
  • Matthews v. James Talcott, Inc.
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • June 15, 1965
    ...The mere fact that the bankrupt itself had access to the stored goods did not impair the warehouse receipts lien. Bostian v. Park Nat'l Bank, 226 F.2d 753 (8th Cir. 1955). The trustee argues that this rule is not applicable when there is evidence of fraud or surreptitious removal of the war......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT