Moore v. Thomas Moore Distilling Co

• Decision Date: 02 January 1915
• Docket Number: 48,46,47
• Parties: Moore v. Thomas Moore Distilling Co
• Court: Pennsylvania Supreme Court

93 A. 347

Moore v. Thomas Moore Distilling Co

247 Pa. 312

Nos. 46, 47, 48

Supreme Court of Pennsylvania

January 2, 1915

Argued October 13, 1914

Appeals, Nos. 46, 47 and 48, Oct. T., 1914, by Fourth National Bank of Boston, Mass., and Fourth-Atlantic National Bank of Boston, Mass., its successor, from decree of C.P Allegheny Co., Fourth T., 1910, No. 91, in equity, dismissing exceptions to report of auditor and master in case of C. P Moore, W. E. Satler, K. Houserman, Raphael Jackson, Wormser Glass Company, and Robert Zugsmith v. The Thomas Moore Distilling Company. Affirmed.

Bill in equity for the appointment of a receiver.

Exceptions to the report of auditor and master. Before SWEARINGEN, J.

From the record it appeared that the case was referred to J. C. Boyer, Esq., as master and auditor. Exceptions to his report were dismissed by the court. The exceptions involved three claims to certain whiskey in the bonded warehouse of the Thomas Moore Distilling Company, now in the hands of William E. Newlin, receiver, between the appellant bank on the one side, and the three appellees on the other side respectively.

The facts in re conflicting claim of S. Rosenbloom & Company were as follows: Some time prior to February 10, 1910 (the exact date nowhere appears in the testimony), the Thomas Moore Distilling Company made application to the Fourth National Bank of Boston, since merged with the Fourth-Atlantic National Bank, appellant, for the discount of a certain promissory note for $25,000, made by Weiler Bros., for the accommodation of the distilling company, dated February 5, 1910, payable six months after date, to the order of the distilling company, and endorsed by it. The collateral security offered by the distilling company were certificates, dated February 4, 1910, for 2,100 barrels of whiskey. The note was not discounted until February 11, 1910: on that date the appellant bank sent their check dated February 10, 1910, which was eventually paid to the distilling company. The whiskey certificates, offered by the distilling company as collateral, all recited that the whiskey therein described would be delivered to "Weiler Bros., or order," and were endorsed in blank by Weiler Bros. Excepting that the name of Weiler Bros, appeared upon the face of the note as the maker thereof, and in the body of and upon the back of the whiskey certificates, there is no testimony in the case to indicate that the bank knew anything about or regarded Weiler Bros in the matter, or, in fact, that Weiler Bros. had anything to do with the transaction. On February 7, 1910, before the appellant bank had discounted the note in question, the distilling company entered into a contract with S. Rosenbloom & Co., appellee, to sell them 350 barrels of whiskey. On February 8, 1910, S. Rosenbloom & Co. paid the purchase-price to the distilling company and received from it certificates under that date for the same whiskey represented by the certificates offered to the bank. The court below awarded the whiskey to S. Rosenbloom & Co.

The facts in re conflicting claim of Herman Hoechstetter were as follows: The claim of the appellant bank is based upon an accommodation note of Weiler Brothers to the order of the Thomas Moore Distilling Company and endorsed by it, dated December 28, 1909, for $12,000, and discounted by the bank on December 31, 1909, having deposited therewith as collateral, inter alia, certificates for 250 barrels of whiskey. The certificates for 150 barrels bear dates between October 23 and October 30, 1909, and for 100 barrels the date is November 6, 1909. On November 6, 1909, the appellee made a loan of $6,000 to the distilling company upon a note of that company in the like amount, with five certificates, dated November 6, 1909, for 500 barrels of whiskey, as collateral; these certificates were for the same whiskey offered to the bank. The court below awarded the whiskey in controversy to Herman Hoechstetter.

The facts in re conflicting claim of Wm. E. Newlin, receiver, were as follows: The claim of the appellant bank is based upon an accommodation note of Weiler Brothers to the order of the Thomas Moore Distilling Company and endorsed by it, dated December 28th, 1909, for $12,000, and discounted by the bank on December 31, 1909, having deposited therewith as collateral, inter alia, certificates bearing dates, respectively, October 9, 16 and 23, 1909, for 250 barrels of whiskey. On October 25, 1909, the First National Bank of Dolgeville made a loan of $2,500 to the distilling company upon a note of that company in like amount, with which were deposited as collateral three certificates, dated October 25, 1909, for the same 250 barrels of whiskey offered to the bank. The above note, together with the collateral, was purchased by the appellee receiver, November 18, 1912. The whiskey was awarded to Wm. E. Newlin, receiver.

In all of the foregoing transactions, both the appellant and the appellees were innocent parties without any knowledge of the fraud perpetrated by the distilling company.

The master and auditor's report, which was confirmed by the court below, inter alia, states: "The object of bonded distillery warehouses is to allow the distiller to store therein whiskey manufactured by him and defer the payment of the tax thereon until the whiskey shall have attained sufficient age to be sold for consumption; this arrangement is for the benefit of the distiller. . . . In the conduct of the distilling business throughout the country it is customary for the distillers to use certificates purporting on their face to be storage warehouse receipts, and these so-called warehouse receipts are sold or pledged, as the case may be, and they are assumed to pass title . . . and to operate as a constructive or symbolic delivery of the whiskey. . . . The Thomas Moore Distilling Company issued such . . . receipts, which stated in a general way that certain barrels of whiskey, designated by the government serial numbers given, were held in storage for the account of and to be delivered to the order of the party or parties named in the receipts. Some of these certificates were issued to outright purchasers who had bought and paid for the whiskey; others were pledged as security for money borrowed by the distilling company; and others were issued to C. P Moore and to various other parties, from whom no consideration was received by the company, and were pledged for loans made either to the company or to the individuals named in the . . . receipts. It was soon discovered that more than one receipt had been issued for a great many of the barrels of whiskey on storage. . . . In some instances whiskey had been sold outright, and then at a later date certificates for the same whiskey pledged as collateral security for money borrowed; in other cases certificates for whiskey had been pledged as collateral security for money borrowed, and later the same whiskey was sold outright and certificates issued therefor to parties who in good faith bought and paid in full for such whiskey." The master and auditor states the conclusion of law that "a distiller having his whiskey stored in his own bonded warehouse is not strictly a warehouseman under our acts of assembly," saying, "Our Supreme Court has in different cases defined a warehouseman to be, 'One who receives and stores goods as a business for a compensation or profit' . . . .," and citing Bucher v. Com., 103 Pa. 528; Tradesmen's National Bank of N.Y. v. Kent Mfg. Co., 186 Pa. 556; National Union Bank of Reading v. Shearer, 225 Pa. 470. In discussing the subject, the master and auditor proceeds to say: "It is not contended by those who make claim either to own the whiskey in controversy in this case or to have a lien thereon as pledgees, that there was actual physical or manual delivery of the whiskey; the whole case rests, therefore, upon the standing to be given to these . . . whiskey receipts. This matter has been laboriously and ably argued in the cases of Taney v. Penn Nat. Bank, 187 F. 689 (s.c. 232 U.S. 174); Pattison v. Dale, 196 F. 5, and Merchants Nat. Bank of Baltimore v. Roxbury Distilling Company, 196 F. 76. The cases cited have all been heard and decided by the United States courts; but inasmuch as the learned judges of those courts decided the cases in accordance with the laws of the respective states in which the several cases arose, one of them being our own State, and inasmuch as these decisions are, to a degree at least, supported by decisions of our own State courts in the cases of Bucher v. Commonwealth, 103 Pa. 528; Tradesmen's Nat. Bank of N.Y. v. Kent Mfg. Co., 186 Pa. 556; National Union Bank of Reading v. Shearer, 225 Pa. 470; Keil v. Harris, 4 Sadler 201; Miller v. Browarsky, 130 Pa. 372; Rosenham v. Batjer, 154 Pa. 544, the master feels bound to follow these cases, and therefore, finds that the . . . receipts, are effective to pass title to the whiskey, either to purchasers or to pledgees of the same. . . . It is the receipt first bona fide delivered upon proper consideration, however, which carries the title to the whiskey; and this, regardless of the date which the different certificates may bear." The master and auditor also cites Block v. Oliver, 102 Ky. 269; and finally he says, "It seems to the master and auditor that successive sales and pledges of the same whiskey by the issuing of duplicate or successive . . . receipts therefor is analogous to the overissuing of capital stock by the officers of a corporation. In the case of an over issuing of stock it has been repeatedly held that the corporation is liable in damages to the party who may suffer by reason of coming into possession of some of the overissued stock, either as purchaser or pledgee; but nowhere has it been held that...