Commercial Nat. Bank v. Bemis

• Decision Date: 19 October 1900
• Citation: 177 Mass. 95,58 N.E. 476
• Parties: COMMERCIAL NAT. BANK v. Bemis
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

177 Mass. 95

58 N.E. 476

COMMERCIAL NAT. BANK v. Bemis

Supreme Judicial Court of Massachusetts, Suffolk.

October 19, 1900

COUNSEL

Richard

Stone, for plaintiff.

W. B French, for defendants.

OPINION

HAMMOND J.

This case was heard by the present Chief Justice of this court and is before us upon a report made by him. At the hearing he ruled that upon the facts 'the warehouse receipt had no greater effect than the possession of the tobacco would have had, that Bemis was not estopped from asserting his title to the tobacco, and that the plaintiff took no greater title than Bixby & Co. had'; and the question presented by the report is whether these rulings were correct. The material facts upon which these rulings were made may be stated as follows: At the request and for the accommodation of the defendant Bemis, then a tobacco merchant doing business alone under the name of Emery Bemis & Co., Bixby & Co., on the 8th day of September, 1893, made two negotiable promissory notes and on the 27th of the following November three other similar notes. On the last-mentioned day, Bemis, having in a government warehouse a large quantity of tobacco which had been imported by him, and upon which the duty had not been paid, in compliance with the request of Bixby & Co. for security, directed the wharfinger of the warehouse to hold 123 bales of this tobacco subject to the order of Bixby & Co., and sent to him a receipt for the same; and on the same day Bemis delivered to Bixby & Co. a new warehouse receipt, wherein it was stated that the tobacco had been received on storage 'for account' of Bixby & Co. As between them and Bemis, this transaction was only a pledge to secure them for their accommodation notes. Bixby & Co. paid the notes of September at their maturity. Shortly before the maturity of the first of the November notes, and on or about the 20th day of February, 1894, they notified Bemis that they would be unable to pay the remaining notes and proposed to him that the plaintiff bank should take their place, to which proposition Bemis assented. Shortly after this, Bixby & Co. obtained a loan from the plaintiff for $3,500 on the security of the tobacco, exhibiting and indorsing to it the warehouse receipt, and, at the plaintiff's request, taking out a new receipt in its name. This receipt stated that the tobacco was received on storage 'for account of' the plaintiff. The note given by Bixby & Co. for this loan was an ordinary negotiable note, payable on demand to the order of the plaintiff; and it contained a statement that the 'warehouse receipt' for the tobacco had been deposited with the plaintiff 'as collateral security for payment of this or any other liability or liabilities of ours to said bank, due or to become due, or that may be hereafter contracted.' Each of the warehouse receipts contained a statement that 'negotiable receipts must accompany orders; that deliveries be indorsed thereon, and, when goods are transferred, surrender of the original receipt is required'; and written across the face of each were the words 'Not negotiable.' At the time this loan was made, Bixby & Co. were indebted to the plaintiff in the sum of $7,156.28, upon notes previously given, and during the following months of March and April the plaintiff made to them three other loans, of $1,500 each. The plaintiff acted in good faith and without notice. On March 10, 1894, Bemis, wishing to remove some of the tobacco, applied to Bixby for an order on the warehouse; and Bixby & Co. then, for the first time, informed him that plaintiff had taken their place, and gave Bemis an order in the following form: 'Boston, Mrs. 10, 1894. Commercial Nat. Bank: Please deliver to Emery Bemis, trustee, two bales leaf tobacco, #336 & #337, stored at Long Wharf, upon payment of one hundred dollars ($100), and oblige. Thos. E. Bixby & Co., per C. L. De Veer, Atty.' This was the first intimation Bemis had that Bixby & Co., had made any arrangement with the bank, and he never knew until shortly before the bringing of the plaintiff's bill, in March, 1895, that Bixby & Co. had pledged the tobacco to the bank as security for their debt. Bemis presented this order to the bank. Immediately that the plaintiff bank received said order of March 10, 1894, they released two bales of the tobacco, and received from Bemis $100, which was credited by the bank on Bixby's note. Similar orders were given by Bixby & Co. to Bemis from time to time, on which payments were made, and tobacco released, as requested in the orders, to wit: On March 12th, a payment of $200; on March 17th, a payment of $75; on March 19th, a payment of $75; and on April 16th, a payment of $150. ...