Morse v. The La Crosse Milling

• Decision Date: 11 October 1924
• Docket Number: 25,427
• Citation: 229 P. 366,116 Kan. 697
• Parties: J. H. MORSE, Appellant, v. THE LA CROSSE MILLING, GRAIN, AND ICE COMPANY et al., Appellees
• Court: Kansas Supreme Court

229 P. 366

116 Kan. 697

J. H. MORSE, Appellant, v. THE LA CROSSE MILLING, GRAIN, AND ICE COMPANY et al., Appellees

No. 25,427

Supreme Court of Kansas

October 11, 1924

Decided July, 1924

Appeal from Rush district court, ROSCOE H. WILSON, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. WHEAT DEPOSITED IN ELEVATOR--Sale Distinguished from a Bailment--Wheat Sold by Elevator Company--No Trust Fund Created. Placing wheat in an elevator by the grower under a stipulation that "he should have the right to sell or to withdraw the said wheat, or wheat of like grade and quality," does not constitute a bailment thereof, and the money arising from a sale of the wheat by the elevator company does not constitute a trust fund in the hands of the company.

2. SAME--Election of Remedies by Grower of Wheat. Under the circumstances described in the first paragraph of this syllabus, an action by the grower of the wheat to recover the value thereof constitutes an election of remedies if he has more than one.

3. SAME--Election of One of Two Inconsistent Remedies Bars Recovery Under the Other. After the election of remedies described in the second paragraph of this syllabus, the grower of the wheat cannot proceed against the officers of the corporation as joint tort-feasors to recover for the wrongful conversion of the wheat.

J. W McCormick, of La Crosse, and D. A. Banta, of Great Bend, for the appellant.

Henry F. Herrman, of Hays City, Frank U. Russell, of Hutchinson, and W. H. Russell, of La Crosse, for the appellees.

OPINION

MARSHALL, J.:

In this action, the plaintiff seeks to recover the market price of wheat deposited in an elevator operated by the La Crosse Milling, Grain, and Ice Company and sold by the company. The petition asked that the money received for the wheat be declared a trust fund in the hands of the company; that the claim therefor be declared a superior and paramount lien on the property and assets of the company; and that, if it be not determined the claim is a trust fund, the plaintiff be awarded a personal judgment against the members of the board of directors and the officers of the company, a corporation. Interpleas were filed by T. A. Edwards and Thomas E. Whiteman. The plaintiff filed a motion to strike the interpleas from the files. The defendants each filed a demurrer to the petition. The motion to strike the interpleas from the files was denied, and the demurrers to the petition were sustained. An amended petition was then filed, to which the defendants McClure, Kaths, Young, and Baker, the receiver for the corporation, each filed a demurrer. Those demurrers were sustained. From the order denying the motion to strike the interpleas from the files and the orders sustaining the demurrers to the petition and to the amended petition the plaintiff appeals.

The petition and the amended petition are long. The plaintiff summarizes them in the statement in his brief. That statement is as follows:

"The La Crosse Milling, Grain, and Ice Company, was incorporated under the laws of Kansas, and authorized to do business at La Crosse, Rush County, Kansas; that the appellees, J. B. McClure, A. J. Smith, J. B. Wilson, M. J. Young, Henry F. Herman, and Caleb Philips, were the duly chosen, qualified and acting board of directors thereof, and that J. B. McClure was its president, A. J. Smith, its vice president, and F. W. Kaths, was its secretary and treasurer.

"That said corporation, thru its said officers, was engaged in the manufacture and sale of flour and other mill products; the manufacture and sale of ice, and also engaged in the purchase, sale and storage of grain in and thru an elevator owned and operated by it thru said board. All of the business of said corporation was transacted thru and under the direct management and control of said board of directors, each of whom took an active part in its affairs.

"That said board held the said corporation out to the public as a solvent and going concern, and invited the confidence of the public in the transaction of business with it, when as a matter of fact the corporation was insolvent and would have been unable to conduct its affairs but for the representations of the members of said board, by means of which the public was induced to do business with it and to place large amounts of grain and other farm products in its possession under storage agreements.

"In the month of August, 1921, the appellant, believing that said corporation was a solvent and going concern, entered into an express oral agreement with the managers of its affairs--the said board of directors, by the terms of which he placed in its elevator 2,443 bushels of No. 2 hard wheat and took its receipt therefor, the agreement being that he should have the right to sell, or to withdraw said wheat, or wheat of like grade and quality; that if he withdrew the wheat he was to pay six cents per bushel for running it through the elevator, but if he sold it, he was to pay no storage.

"Said wheat was received by said corporation thru its said officers and placed in one of its bins, and at once, without the knowledge or consent of the bailor, said wheat was shipped out and sold by said officers and the proceeds converted to the uses of said corporation. The fact of this conversion was not brought to the knowledge or known to the bailor until about the month of November, 1921, when he at once made inquiry and found that his wheat had been sold and the proceeds converted, and when told of the fact he demanded the return to him of a like number of bushels of wheat or the market value thereof.

"At the time of the conversion of the wheat it was worth $ 1.38 per bushel, and of the total value of $ 3,371.44.

"At the time this wheat was received by said corporation, it was insolvent, but its insolvency was concealed from the appellee [the plaintiff], and when he demanded a return of his wheat or wheat of like grade and quality, or pay for same at the then market value, the corporation was still insolvent and unable to meet its obligations. But afterwards and on the 10th day of February, 1922, it paid him the sum of $ 500.00.

"Afterwards, for the purpose of having the value of said wheat fixed, he sued the said corporation and recovered a judgment against it for $ 2,871.34 but at said time the said corporation was still insolvent and was in the hands of a receiver and unable to pay the judgment, and the same has never been satisfied in whole or in part.

"Afterwards and in the month of April, 1922, the appellee [plaintiff], obtained leave of court to sue said corporation and its receiver, and the defendants above named, to wit, the members of the board of directors, and filed his suit against them praying judgment in the alternative, first that the amount due for said wheat be declared a trust fund and made a lien upon the property of the corporation, or second that he have judgment against the individual members of the board of directors for the fraudulent conversion of his wheat."

1. Attention is called to an allegation of the petition as set out in the statement of the plaintiff, "that he should have the right to sell, or to withdraw said wheat, or wheat of like grade and quality." In Scott v. Shultz, 67 Kan. 605, 73 P. 903, the first paragraph of the syllabus reads:

"Where personal property is delivered by the owner to another for use and the identical thing delivered is to be returned, the transaction is a bailment and there is no transfer of title; but if it is stipulated that the one to whom it is delivered may return another thing of the same kind, or an equivalent in value, or otherwise, it will ordinarily constitute a sale and effect a change of title."

We quote from Bonnett v. Shipping Association, 105 Kan. 121, 123, 181 P. 634, as follows:

"The court held, and we think properly, that the case falls within the rule declared in Barnes Bros. v. McCrea &amp Co., 75 Iowa 267. ...