McGee v. Carver

• Decision Date: 18 January 1926
• Docket Number: 25330
• Citation: 106 So. 760,141 Miss. 463
• Court: Mississippi Supreme Court
• Parties: MCGEE et al. v. CARVER. [*]

106 So. 760

141 Miss. 463

MCGEE et al. v. CARVER. ^[*]

No. 25330

Supreme Court of Mississippi

January 18, 1926

Division A

WAREHOUSEMEN. Bona-fide purchaser of warehouse receipts held to acquire stored cotton free from landlord's lien.

If a landlord permits his tenant or sharecropper to store cotton raised on the leased premises, and on which the landlord has a lien for rent in a warehouse and receive negotiable receipts therefor running to the order of the tenant, a purchaser of the receipts indorsed in blank by the tenant for value, without notice of the landlord's lien on the cotton, acquires the cotton free from the lien.

HON. C L. LOMAX, Chancellor.

APPEAL from chancery court of Bolivar county, second district, HON C. L. LOMAX, Chancellor.

Controversy between B. O. McGee and others, copartners doing business under the firm name of McGee, Dean & Co., and Carl Carver instituted on a bill of interpleader filed by the Bolivar Compress Company. From a decree awarding to each party to the controversy a one-half interest in certain cotton, B. O McGee and others appeal. Reversed, and decree rendered for appellants.

Reversed, and decree here.

Shands, Elmore & Causey, for appellants.

The appellants contend that they purchased from Mr. Somerville not only Norwood's half interest in the bale but the entire bale; that they are purchasers in good faith for value; and that the appellee is estopped from claiming any part of the cotton. The receipt in question is a negotiable receipt.

It will be observed that the receipt contains a form ill which a statement of the names of all parties who own an interest in the cotton or who hold encumbrances against it may be inserted, so that purchasers may be put on notice of the interest owned or encumbrances held by such parties. By referring to section 5, chapter 218, Laws of 1920, we find a negotiable warehouse receipt is defined as follows: "A receipt in which it is stated that the goods received will be delivered to the bearer, or to the order of any persons named in the receipt, is a negotiable receipt." Section 37 defines how receipts may be negotiated. See, also sections 40, 41, 47.

It is conceded that the appellee and Mr. Norwood each owned a one-half undivided interest in the cotton produced during the year 1923, which includes this bale; that Norwood hauled this cotton off of the plantation to the gin. Norwood had it ginned; he had the cotton hauled to the compress and placed there in his name; that is, as if he owned the cotton. He had the receipts issued to himself in his name, and he procured the receipts from the gin office at the gin. He held the receipts until a sale was made and negotiated for such sales, all of which was done with the knowledge, consent and permission of the appellee.

This is not a case where Norwood stole the cotton, deposited it in the warehouse, and had the receipt issued to himself. But it is a case where both owners of the cotton consented to the warehousing and consented to one of the owners procuring a negotiable receipt which showed that the possessor of the receipt was the owner. It is a case where the appellee, a co-owner, departed for the "hills" and permitted the apparent owner of the cotton to use the receipt as he saw fit. So we are compelled to view this case from the standpoint of a purchaser in good faith for value. If from the receipt itself and all that it purports Somerville was able to convey the title to an innocent purchaser, then such purchaser is protected under this act. The very purpose for enacting the above statutes was to protect a bona-fide purchaser of cotton.

The proof shows that Somerville had the ability to convey the title to the cotton. The receipt was delivered to him for that purpose. The delivery of the receipt to Mr. Somerville by Norwood was satisfied and approved by appellee as soon as he returned from the "hills." The testimony shows that Somerville had authority to sell the cotton and do whatever was necessary to make the sale; that is, to endorse the receipt; because appellee knew that the receipt was not issued to him but to Norwood.

What title is a holder of a negotiable receipt able to convey to a purchaser in good faith for value? We answer not a title which is dependent upon secret agreements between the holder of a receipt and some other person who secretly holds a lien or a title to a part of the goods, especially where such agreements have reference to the price to be obtained at a sale, and the distribution of such sum after the sale. And, moreover, such secret agreements should not defeat the title of an innocent purchaser for value when we find that the complaining party was satisfied with the sale and demanded the very price for which the goods were sold, and upon a failure to obtain such settlement, then manifests a dissatisfaction. We must look to the instrument to determine the title, and such title as shown by the instrument in this record shows a full right in Mr. Norwood to transfer the instrument and the title to the cotton. The appellants are purchasers in good faith until the appellees show that the receipt in some instance was irregular or incomplete. We direct the attention of the court to Commercial Nat'l Bank v. Canal-Louisiana Bank & Trust Co., 239 U.S. 520, 60 L.Ed. 417, Ann. Cas. 1917 E. 25; and the Arbuthnot case (La.), 72 So. 251. The question presented in this case has not been previously presented to this court for decision, but see Marine Bank & Trust Co. v. Greenville Savings Bank & Trust Co., 133 Miss. 91, 97 So. 526; also Campbell v. Farmers' Bank of Boyle, 127 Miss. 668, 90 So. 436. In Phillips v. Thomas, 128 Miss. 729, 91 So. 420, the rights of an innocent purchaser of the actual bale of cotton were involved. See, also, Seavey v. Godbold, 99 Miss. 113, 54 So. 838; Judd v. Cotton Co., 133 Miss. 866, 98 So. 243.

The Phillips, Godbold and Judd cases are cases where the landlord permitted the tenant to retain possession of the landlord's interest in the cotton, and knowing that the tenant was selling the cotton, made no effort to prevent the sales. In those cases the landlord permitted the tenant by his conduct and acquiescence to dispose of the actual cotton, a species of property which has no negotiable attribute. The case at bar is one where the plea of an innocent purchaser should most certainly obtain the car of the court, because the landlord has permitted his tenant to gin the cotton; place it in a warehouse; obtain negotiable receipts; permitted the negotiable receipts to be issued as if the entire cotton was owned by his tenant; permitted a sale of the cotton; and permitted the tenant to make a division of the proceeds in which transaction the proof shows that the tenant was acting for the landlord; and in this instance the landlord knew that the tenant had negotiated the receipt to Mr. Somerville; and demanded of Somerville his one-half of the proceeds after the sale.

Simmons & Jackson, for appellees.

The relation of landlord, and tenant fully existed between Norwood and Carver; and the landlord had a lien upon the whole bale of cotton for his one-half interest, which lien was paramount and superior to all others; and this lien can be enforced as to innocent purchasers without notice and for value. Robinson Co. v. Weathersby, 101 Miss. 724, 57 So. 983; Campbell v. Farmers Bank of Boyle, 127 Miss. 668, 90 So. 436. It is a familiar rule laid down in Commercial Nat'l Bank v. La. Bank & Trust Co., Ann. Cas. 1947 E. 25, cited by appellant, that one who has no title to chattels cannot transfer title unless he has the owner's authority or the owner is estopped; and the general rule is there stated in Commercial Nat'l Bank, supra, and all other cases, so far as we have been able to find in states adopting the Uniform Warehouse Receipts Act, as interpreting section 41 of said act, which provides that a person to whom a negotiable warehouse receipt is duly negotiated acquires thereby "such title to the goods as the person negotiating the receipt to him had ability to convey to a purchaser in good faith for value."

It is strenuously argued by counsel that because Carver permitted his tenant, Norwood to gin and store the cotton in the compress, and take the receipts in his name, that these acts on the part of the landlord estopped him from asserting his lien, but it will be observed from the record that the said Norwood not only had no authority to sell any of the other cotton without the consent of Carver and the said Carver fixing the price, but as to the specific bale in question, no one was ever authorized to make the sale, because Norwood had never obtained the consent of the landlord to dispose of this bale; the price had never been fixed or agreed upon, consequently Norwood was without authority and power to make the sale, as will be seen from the record.

The receipt was not negotiated by Norwood to Somerville, but only transferred, and whatever agreement Somerville had with Norwood and Carver were binding upon the appellants, as the act of Somerville in undertaking to negotiate unlawfully the said cotton receipt did not convey any title to the good other than what Somerville had himself, as specified in section 41 of the Uniform Warehouse Act. Norwood never authorized Somerville to sell this bale of cotton; indeed, he was without authority to do so.

We contend that appellants are not bona-fide purchasers, for the reason that the mere fact that the receipt was made out in the name of Norwood and with the further fact that there was a deed of trust on record to the Greenville Motor Co., as heretofore referred to in the brief of appellants, and which was sufficient to place the appellants upon notice of the infirmities of the receipt, then...