Frontier Milling & Elevator Co. v. Roy White Co-operative Mercantile Co.

• Decision Date: 31 January 1914
• Citation: 25 Idaho 478,138 P. 825
• Parties: FRONTIER MILLING & ELEVATOR COMPANY, a Corporation, Appellant, v. THE ROY WHITE CO-OPERATIVE MERCANTILE COMPANY, a Corporation, et al., Respondents
• Court: Idaho Supreme Court

138 P. 825

25 Idaho 478

FRONTIER MILLING & ELEVATOR COMPANY, a Corporation, Appellant, v. THE ROY WHITE CO-OPERATIVE MERCANTILE COMPANY, a Corporation, et al., Respondents

Supreme Court of Idaho

January 31, 1914

STATUTORY CONSTRUCTION-WAREHOUSE RECEIPTS-TRANSFER OF-SECS. 1491, 1493 and 3488, REV. CODES, CONSTRUED-SUFFICIENCY OF COMPLAINT-PUBLIC WAREHOUSE CORPORATION-LIABILITY FOR GOODS-PERSONAL LIABILITY OF DIRECTORS-GENERAL MANAGER-EFFECT OF 1911 AMENDMENT OF SEC. 1493.

1. Clerical errors or misprints in a statute which would render the statute unmeaning or absurd, or which would defeat or impair its intended operation, will not be permitted to go uncorrected when the true reading is obvious and the real meaning of the legislature is apparent on the face of the enactment taken as a whole.

2. Held, that in sec. 1493, Rev. Codes, as amended by Sess. Laws of 1911, p. 111, sec. 6, the clause, "Any person, firm or corporation, superintendent or trustees of any board of directors of any firm or corporation, who shall violate any of the provisions of this chapter shall be guilty of a felony," should be corrected by reading the word "or" instead of the word "of," where the latter word first occurs in said clause, in order to carry out the obvious intent of the legislature as apparent from the act as a whole.

3 Secs. 1491 and 3488, Rev. Codes, as applied to the transfer of warehouse receipts by indorsement, do not prevent a valid transfer of such receipts by any method which was effectual before the enactment of said statutes.

4. The allegation in a complaint that certain warehouse receipts were "sold, assigned and delivered" is a sufficient allegation with reference to the question of the valid transfer of such receipts under the provisions of secs. 1491 and 3488, Rev. Codes.

5. Where the owner of warehouse receipts caused the warehouse corporation to keep the property represented by said receipts, consisting of grain, seeds and potatoes, in a separate part of its warehouse, apart from all other grain and produce stored in such warehouse, and caused the warehouseman to mark the sacks containing such property plainly with the name of the owner, such acts on the part of the warehouseman are an acknowledgment of the validity of the transfer of the receipts from owner's assignor, as well as of the property represented thereby, and estop the warehouseman from denying the same.

6. Under our statutes warehouse receipts are assignable by indorsement and negotiable, and indorsement thereof indicates a valid transfer of the commodity represented by such receipts. Indorsement may be made either in blank or to the order of another. No particular form of indorsement or assignment is necessary, provided there is manifest an intention to transfer the property in the goods represented by such receipts.

7. The transfer of a warehouse receipt in good faith, and in the ordinary course of business, operates to transfer to the holder the title to the goods covered by the receipt.

8. A complaint in an action against a board of directors of a public warehouse corporation, wherein it is alleged that the general manager of said corporation, with the full knowledge of said board and with their consent and acquiescence wrongfully embezzled and converted to the use and benefit of such corporation, grain and other produce stored in said warehouse by the owner thereof, contrary to law and in violation of an express contract with said ware- house corporation, states a cause of action under sec 1493, Rev. Codes, as amended by Sess. Laws of 1911, p. 111 sec. 6.

9. The directors of a corporation are its agents and occupy a fiduciary relation to it. They are held to the exercise of good faith in all dealings with the public concerning corporation business, and are personally liable in damages to the party injured by their mismanagement, misconduct or ordinary negligence in connection with their duties as such directors.

10. What constitutes a proper performance of the duties of a director of a corporation is a question of fact, which must be determined in each case in view of all the circumstances.

11. The relation of a public warehouse corporation to the owner of goods intrusted to such corporation is that of bailee and bailor for hire. Under the statutes of this state the title to such goods remains in the bailor thereof.

12. Boards of directors are responsible for the employment of general managers and are presumed to exercise reasonable care in their selection, so that property intrusted to the care of their corporation will be protected from dishonest practices or the violation of the corporation's contracts concerning it while under the supervision of such general manager.

13. It was the intention of the legislature, when enlarging by amendment the provisions of sec. 1493, Rev. Codes, to further safeguard and protect the produce of the farmer or member stored with public warehousemen.

APPEAL from the District Court of the Seventh Judicial District for Washington County. Hon. Ed. L. Bryan, Judge.

Action against a warehouse corporation to recover damages for nondelivery of property on presentation of warehouse receipts. Judgment for defendants. Reversed.

Reversed and remanded, with instructions. Costs awarded to appellant.

Ed. R. Coulter, for Appellant.

Statutes will be construed within the view of ascertaining the intent of the law-making power and to give force and meaning to the language used. (Idaho Mut. Co-operative Ins. Co. v. Myer, 10 Idaho 294, 77 P. 628; Greathouse v. Heed, 1 Idaho 494; Empire Copper Co. v. Henderson, 15 Idaho 635, 99 P. 127; In re Bossner, 18 Idaho 519, 110 P. 502; Black, Interpretation of Laws, pp. 35, 73.)

Clerical errors or misprints, which, if uncorrected, would render the statute unmeaning or nonsensical, or would defeat or impair its intended operation, will be corrected by the court and the statute read as amended, provided the true reading is obvious and the real meaning of the legislature is apparent on the face of the whole enactment. (Black, Interpretation of Laws, p. 153; United States v. Wiltberger, 5 Wheat. (U. S.) 76, 5 L.Ed. 37.)

Directors certainly are bound under the law to exercise such diligence as a reasonably prudent and skillful man exercises in the conduct of his own affairs. (10 Cyc. 830.)

And whatever liability the corporation may have, the individuals who, under cover of their offices, commit fraud, are accountable for their conduct in a civil action in the suit of the injured parties. (Salmon v. Richardson, 30 Conn. 360, 79 Am. Dec. 255; Peck v. Cooper, 112 Ill. 192, 54 Am. Rep. 231; Horn Silver Min. Co. v. Ryan, 42 Minn. 196, 44 N.W. 56; Stone v. Chisolm, 113 U.S. 302, 5 S.Ct. 497, 28 L.Ed. 991; Nix v. Miller, 26 Colo. 203, 57 P. 1084.)

Section 1493, as amended, certainly gives the right to the creditor to bring action against the directors or any other person made liable. It invokes the law of public policy. Other states have from time to time, in various forms, applied this same principle. (10 Cyc. 852; Fairbanks etc. Co. v. Macleod, 8 Colo. App. 190, 45 P. 282; 40 Cyc. 450; Rice v. Madelia Farmers' Warehouse Co., 78 Minn. 124, 80 N.W. 853.)

Varian & Norris, for Respondents.

The allegations of paragraph 8 of the amended complaint are not sufficient, as not covering the requirements of the statute requiring indorsement and delivery. (14 Ency. Pl. & Pr. 518; People's Bank v. Etting, 12 Phila. 230; Jemison v. Birmingham & A. R. Co., 125 Ala. 378, 28 So. 51; Baker v. Malone, 126 Ala. 510, 28 So. 631.)

A warehouseman is not authorized to deliver goods stored with him to a stranger who presents a bill of lading not indorsed and who is not identified in any way as consignee or as having any right to the bill of lading or goods which it covers. (Cavallaro v. Texas & P. R. Co., 110 Cal. 348, 52 Am. St. 94, 42 P. 918.)

Courts are not at liberty to construe a statute contrary to its ordinary and grammatical meaning, merely because such a construction is necessary to render it effective. (Remington v. State, 1 Ore. 281.)

"There can be no constructive offenses, and, before a man can be punished, his case must be plainly and unmistakably within the statute." (United States v. Lacher, 134 U.S. 624, 10 S.Ct. 625, 33 L.Ed. 1080; State v. Lovell, 23 Iowa 304; United States v. Wiltberger, 5 Wheat. (U. S.) 76, 5 L.Ed. 37; 2 Lewis' Sutherland, Stat. Const., 2d ed., p. 521, and cases cited.)

The cause of action here is primarily against the corporation and cannot be shifted to its agents and directors unless it be first shown that the plaintiff (appellant) has exhausted its remedy against the principal, the corporation. (2 Purdy's Beach on Private Corporations, secs. 750, 753, and cases cited; Penney v. Bryant, 70 Neb. 127, 96 N.W. 1033.)

The directors of a corporation are under no positive obligation to creditors, except in the event of the company's insolvency. (1 Morawetz on Private Corporations, 569, 795.)

BUDGE, District Judge. Ailshie, C. J., and Sullivan, J., concur.

OPINION

BUDGE, District Judge.

This action was brought by the Frontier Milling and Elevator Company, a corporation, against the Roy White Co-operative Mercantile Company, Limited, a corporation, Roy White, E. J. Patch, John Bechtel, C. S. Applegate, J. T. Stephens and David Donnan, to recover damages for the failure and refusal of said corporation to deliver certain grain, potatoes, etc., upon the presentation of warehouse receipts therefor, issued by the respondent corporation herein to the Pioneer Grain and Elevator Company, and by it sold, assigned and delivered to the appellant herein.

Roy White was the president and manager of the Roy White Co-operative Mercantile Company, Limited, and Roy...