Hastings v. Lincoln Trust Co.

• Citation: 115 Wash. 492,197 P. 627
• Decision Date: 20 April 1921
• Docket Number: 16208.
• Parties: HASTINGS v. LINCOLN TRUST CO.
• Court: United States State Supreme Court of Washington

197 P. 627

115 Wash. 492

HASTINGS v. LINCOLN TRUST CO.

No. 16208.

Supreme Court of Washington

April 20, 1921

Department 1.

Appeal from Superior Court, Spokane County.

Action by A. T. Hastings, as receiver of Ross & Skinner, a partnership, against the Lincoln Trust Company. Judgment for plaintiff, and defendant appeals. Affirmed.

McCarthy, Edge & Lantz, of Spokane, for appellant.

E. B Quackenbush, of Spokane, for respondent.

PARKER C.J.

The plaintiff, Hastings, as receiver of Ross & Skinner, an insolvent partnership, sought recovery in the superior court for Spokane county from the defendant trust company the value of several automobiles which he alleged it wrongfully obtained the possession of and sold and converted the proceeds thereof to its own use; the automobiles being at the time a portion of the trust property of the receivership in his hands for the benefit of the creditors of Ross & Skinner. Trial upon the merits before the court sitting with a jury resulted in verdict and judgment awarding to the plaintiff recovery against the defendant in the sum of $1,050, the value of one of the automobiles in question. From this disposition of the cause in the superior court the defendant has appealed to this court.

There is, we think, no substantial ground for controversy over the facts determinative of the rights of the parties to this cause. They may be summarized as follows: On May 21, 1918 Ross & Skinner were indebted to appellant trust company for sums then and theretofore loaned by it to them, aggregating several thousand dollars. On that day Ross &amp Skinner placed on storage in the warehouse of the McAllister Warehouse Company the automobile in question, which storage was evidenced by the warehouse company issuing and delivering to them its warehouse receipt, which, in so far as we need here notice its terms, reads as follows 'Commercial Warehouse Receipt.

'Spokane, Wash., May 21, 1918.

'This is to certify that we have received and hold on storage (1) one Elgin auto No. 175386, and will deliver the same to Ross & Skinner or order, at our warehouse, as and when directed, upon the surrender of this receipt, properly indorsed, and on payment of charges and advances. * * *

'McAllister Warehouse Co.,

'By J. H. McAllister.'

We have italicized the words of this receipt which call for particular notice. Looking to partially securing the indebtedness then owing by Ross & Skinner to appellant, they delivered this warehouse receipt to appellant, but without any indorsement or other written evidence of their assignment of it to appellant. Thereafter, on June 17, 1918, respondent was by the superior court for Spokane county duly appointed receiver of Ross & Skinner because of their insolvency, for the purpose of winding up their business and subjecting their property to the payment of their creditors. At that time the automobile in question remained on storage in the McAllister warehouse, the warehouse receipt therefor being still in the possession of appellant, and more than $1,050 of the indebtedness owing by Ross & Skinner to appellant remained unpaid. Thereafter, in September, 1918, these conditions as to the possession of the automobile remaining unchanged, and the indebtedness owing by Ross & Skinner to appellant still exceeding $1,050, appellant induced the warehouse company to deliver to it the automobile upon surrender of the warehouse receipt therefor, which receipt had not been indorsed or otherwise assigned in writing by Ross & Skinner to appellant. Thereafter appellant sold the automobile for the sum of $1,050 and applied that sum in part payment upon the indebtedness owing to it by Ross & Skinner. The evidence fully warranted the jury in concluding that the $1,050 received by appellant from the sale of the automobile was its fair value.

The principal claims of error here made in behalf of appellant, the correct disposition of which we think will become decisive of this whole case, are, in substance: That the trial court erred in refusing to withdraw from the consideration of the jury and decide as a matter of law that there was by virtue of the delivery of the warehouse receipt by Ross & Skinner to appellant a constructive or symbolic delivery of the automobile to appellant, such as would in law support a pledge of the automobile as security for the indebtedness owing by Ross & Skinner to appellant, and that the trial court erred in giving to the jury instructions which, it is claimed and may be conceded, told the jury in substance that the mere delivery of the warehouse receipt by Ross & Skinner to appellant did not in law constitute a delivery of the possession of the automobile to appellant, thus in effect deciding as a matter of law that there was no such delivery of the possession of the automobile as would support a pledge as security for the indebtedness owing by Ross & Skinner to appellant, and resulting in leaving to the jury only the question of the value of the automobile as respondent's measure of recovery from appellant.

Now it may be that the mere delivery of the warehouse receipt by Ross & Skinner to appellant, accompanied by an agreement between them that the automobile should be thereby considered as pledged to appellant as security, did have the effect of creating such an inchoate equitable lien upon the automobile in favor of appellant as could in equity be perfected and enforced as between them. But, conceding that to be the effect of such delivery of the warehouse receipt the question here to be decided would, we think, still remain unanswered. Counsel for appellant invoke at the outset what they conceive to be the general rule that a receiver, assignee, or other trustee of an insolvent concern, appointed for the purpose of winding up its affairs and subjecting its property to the payment of its creditors, stands in the shoes of such concern and possesses no rights with respect to the trust property superior to those which would be possessed by such concern were it a going concern acting for itself. This may be conceded to be a general rule of law applicable to many controversies which may arise in the settlement of such a trust, but it is, we think, not a controlling rule of law which can be successfully invoked as against the rights of creditors of an insolvent concern represented by such a receiver or trustee, when it comes to deciding the question of whether or not a mortgage, pledge, or other lien against the property of the insolvent in favor of one of its creditors has been perfected in the manner required by law before insolvency and the passing of the property and affairs of the insolvent into the hands of such a receiver or trustee. Our decision in Keyes v. Sabin, 101 Wash. 618, 172 P. 835, is, we think, a holding in substance that a lien in favor of a creditor of an insolvent, in order to become effective as against the creditors of such concern represented by a receiver or other trustee, must be a lien perfected as the law requires prior to the time of the passing of the insolvent's property and affairs into the hands of such receiver or trustee for the benefit of creditors. In that case there was involved the validity of an unrecorded...