Farmer v. Gregory & Stagg

• Decision Date: 29 April 1880
• Citation: 78 Ky. 475
• Court: Kentucky Court of Appeals
• Parties: Farmer v. Gregory & Stagg.

Page 475

78 Ky. 475

Farmer v. Gregory & Stagg.

Court of Appeals of Kentucky.

April 29, 1880.

APPEAL FROM FRANKLIN CIRCUIT COURT.

J. & J. W. RODMAN FOR APPELLANT.

W. P. D. BUSH AND D. W. LINDSEY FOR APPELLEES.

JUDGE HINES DELIVERED THE OPINION OF THE COURT.

Many of the assignments of error will not be considered, because not presented to the court below in the grounds tendered on the motion for a new trial. It is only necessary to consider the instructions given, with an incidental reference to the ruling of the court upon the rejection and admission of evidence.

Instruction number five, given by the court below, requires, as a condition precedent to the liability of Gregory & Stagg, first, that the jury shall find that Gregory & Stagg authorized Taylor to sell the whisky, and second, that Gregory & Stagg authorized Taylor to issue a warehouse receipt therefor. It was error in the court to make the right of recovery depend upon the establishment of both these facts, when proof of the authority to sell carries with it, as an incident, the right to issue the warehouse receipt. The property in the whisky, where the sale is made with the consent and by authority of the holder of the first receipt passes to the purchaser, regardless of the fact of the issuing or surrender of receipts.

Section seven of the warehouse act of 1869 does not apply to a case like this. That portion of the section forbidding the issuing of a second receipt without the production of the prior receipt, accompanied by the written consent of the holder of the prior receipt, is in the interest of commerce, and of the negotiability of such receipts, and for the protection of the holder of the second receipt. It is for the prevention of fraud, and not to encourage it, as would be the case if the holder of the first receipt were permitted to repudiate the oral authority given to the original owner of the property, by which he obtains the money of an innocent purchaser for value who has been misled by the silence of the first receipt-holder, who permits the original owner to retain possession with every indicia of ownership. The holder of the first receipt, who gives the oral authority to sell, is as much estopped to deny the authority to sell and the title in the innocent purchaser, as he would be if he had stood by in person and acquiesced in the sale without asserting claim. Any other construction would sanction and encourage combinations for the perpetration of frauds that would effectually defeat the beneficial purposes designed to be accomplished by the passage of the warehouse act.

Taylor issued to appellees, Gregory & Stagg, a warehouse receipt for a certain number of barrels of whisky. Appellant, having no notice of the outstanding receipt to appellees, purchased the same whisky of Taylor, and received from him a warehouse receipt therefor. In an action by appellant to recover the possession of the whisky, he sets up a written agreement between Taylor and Gregory & Stagg, not signed by them, and executed prior to the purchase by appellant, which is as follows:

"We make advances in money, or accept drafts for a commission of 2½ per cent.; this to cover two renewals of four mons. paper, making the commission 2½ per cent. per annum. The paper we take we discount at 10 per cent. per annum. When you can do better at home we will accept your drafts. The amount per gals. or bbls. for purposes of collateral, to be agreed upon. Free goods we usually do not go beyond ¾ the cash value; we to have one dollar per bbl. on sales in bond of all goods advanced on, whether we sell or you make sale, and 2½ per cent. on all tax-paid goods advanced...