National Dairy Products Corp. v. Lawrence Am. Field Warehousing Corp.
| Decision Date | 26 January 1965 |
| Citation | 22 A.D.2d 420,255 N.Y.S.2d 788 |
| Parties | , 2 UCC Rep.Serv. 464 NATIONAL DAIRY PRODUCTS CORPORATION, Plaintiff-Respondent, Continental Grain Company, Plaintiff-Respondent, v. LAWRENCE AMERICAN FIELD WAREHOUSING CORP. (formerly known as American Express Field Warehousing Corporation), Defendant-Appellant. LAWRENCE AMERICAN FIELD WAREHOUSING CORP., Defendant and Third-Party Plaintiff in actions brought by A. J. Armstrong Co., Inc., The Procter & Gamble Distributing Company, National Dairy Products Corporation, Garnac Grain Co., Inc. and Continental Grain Company, v. Brooks BANKER, as Treasurer of American Express Company, Third-Party Defendant- Appellant. J. R. WILLISTON & BEANE, INCORPORATED an Continental Illinois National Bank and Trust Company of Chicago, Plaintiffs-Respondents, v. LAWRENCE AMERICAN FIELD WAREHOUSING CORP., Defendant-Appellant. LAWRENCE AMERICAN FIELD WAREHOUSING CORP., Defendant and Third-Party Plaintiff, v. Brooks BANKER, as Treasurer of American Express Company, Third-Party Defendant- Appellant (four cases). GARNAC GRAIN CO., Inc., Plaintiff-Respondent, v. LAWRENCE AMERICAN FIELD WAREHOUSING CORP., (formerly known as American Express Field Warehousing Corporation), Defendant-Appellant. A. J. ARMSTRONG CO., Inc., Plaintiff-Respondent, v. LAWRENCE AMERICAN FIELD WAREHOUSING CORP. (formerly known as American Express Field Warehousing Corporation), Defendant-Appellant. The PROCTER & GAMBLE DISTRIBUTING COMPANY, Plaintiff-Respondent, v. LAWRENCE AMERICAN FIELD WAREHOUSING CORP., (formerly known as American Express Field Warehousing Corporation), Defendant-Appellant. |
| Court | New York Supreme Court — Appellate Division |
William W. Owens, New York City, of counsel (Peter J. O'Shea, Jr., New York City, on the brief; Royall, Koegel & Rogers, New York City, attorneys) for plaintiff-respondent Procter & Gamble Distributing Co.
James M. FitzSimons, New York City, of counsel (James B. Donovan, New York City, on the brief; Watters & Donovan, New York City, attorneys) for defendant-appellant Lawrence American Field Warehousing Corp.
Allen T. Klots, New York City, of counsel (Peter H. Kaminer, New York City, on the brief; Winthrop, Stimson, Putnam & Roberts, New York City, attorneys) for third-party defendant-appellant Brooks Banker.
Sheldon Oliensis, New York City, of counsel (Ivan Serchuk, New York City, on the brief; Kaye, Scholer, Fierman, Hays & Handler, New York City, attorneys) for plaintiff-respondent-appellant A. J. Armstrong Co., Inc.
Henry E. Otto, New York City, of counsel (Samuel C. Otto, New York City, on the brief; Otto & Easterday, New York City, attorneys) for plaintiff-cross-appellant Garnac Grain Co., Inc.
Robert MacCrate, New York City, of counsel (David A. Donohoe, New York City, on the brief; Sullivan & Cromwell, New York City, attorneys) for plaintiff-respondent National Dairy Products Corporation.
Lloyd K. Garrison, New York City, of counsel (Arthur L. Liman, New York City, on the brief; Paul, Weiss, Rifkind, Wharton & Garrison, New York City, attorneys), for plaintiff-respondent Continental Grain Co.
Donald Marks, New York City, of counsel (Stephen F. Selig, New York City, on the brief; Baer, Marks, Friedman & Berliner, New York City, attorneys) for plaintiffs-respondents-appellants J. R. Williston & Beane Incorporated and Continental Illinois National Bank and Trust Co. of Chicago.
Before BREITEL, J. P., and VALENTE, McNALLY, STEVENS and STEUER, JJ.
BREITEL, Justice Presiding.
These are appeals arising in six actions brought to recover damages on the dishonor of non-negotiable warehouse receipts. The receipts had been issued in connection with the deposit by the several plaintiffs or their predecessors in interest of quantities of soybean oil. There are common issues arising from the unexplained disappearance of the oil from the warehouse tanks in which they had been stored.
Appeals were taken from six orders rendered by two different justices at Special Term. All but one of the orders granted summary judgment to the plaintiff under CPLR 3212. With respect to all but one of the orders granting summary judgment there are cross-appeals from the denial of full summary judgment for the stated value of the receipts. The sixth order, not involving the merits, concerns the consolidation and severance of the actions under CPLR 602, 603, 1010, 3212(e). The propriety of that order is dependent upon the outcome of the appeals involving the merits in which summary judgments were rendered. A separate opinion, per curiam, rendered simultaneously with this is dispositive of that appeal (A. J. Armstrong Co., Inc. v. Lawrence American, etc., Corp., 22 A.D.2d 436, 255 N.Y.S.2d 785). This opinion is concerned with the five remaining orders, involving the substantive claims in the six cases.
There is no dispute that the soybean oil disappeared under circumstances which have never been explained. It is not even known when the oil disappeared, or for that matter, whether all the oil ever existed or was actually delivered into the possession of the issuer of the receipts. It is concluded that plaintiffs as owners of interests in or holders of the receipts are entitled to summary judgment, it being immaterial whether the warehouse receipts were improperly issued because the deposits never took place or the bailees are unable to explain the disappearance of the oil for which it had properly issued receipts.
It is also concluded that the first bailee, Lawrence American Field Warehousing Corp., is not discharged of its primary responsibility under the warehouse receipts by reason of the transferred custody of the oil to the second bailee, American Express Warehousing, Ltd. On any view, even if the transferred custody to the second bailee, Limited, was authorized or subsequently ratified by the receipt holders or their successors in interest there is no evidence of an actual novation by which the first bailee, Field, would be discharged of its primary responsibilities. At best there was only the addition of another obligor, the second bailee, to which the first bailee delegated its responsibilities.
On the other hand, it is also concluded, for reasons to be discussed, that assessments for damages are required in each of the cases. This is because in the present state of the proof on summary judgment motion plaintiffs may recover only their actual losses at the time of Field's failure to comply with their several demands, rather than the stated value of the warehouse receipts or the market value of the quantities of oil stipulated in such receipts, so long as they are unable to show that the oil was actually delivered in bailment and was thereafter removed unlawfully.
Plaintiffs are holders of interests in the dishonored warehouse receipts. Their interests were acquired either as original depositors or as holders of divers security and property interests in the oil, whether by assignment, the issuance of delivery orders, or otherwise, Defendant Field is the original issuer of the receipts. Subsequent to issuance of the receipts, it transferred all its oil warehousing business, and the purported deposits of oil in suit, to the second bailee, Limited. The dishonoring of the receipts occurred subsequent to such transfer.
American Express Company was brought in under CPLR 1007 as the third-party defendant in each of the six actions. Prior to May, 1963 Field had been a wholly-owned subsidiary of Express under the name of American Express Field Warehousing Corporation. The corporation (by transfer of its corporate stock) and the bulk of its assets were then sold to the Lawrence Warehouse Company, after which Field assumed its present name. It is upon this sale and under the agreement made by the parent corporation, Express, that its liability as a third-party defendant to defendant Field is predicated. Excepted from the sale had been Field warehousing business associated with the Allied Crude Vegetable Oil Refining Corp. It was this excepted business which was transferred, at the time of the sale, to the newly-created subsidiary of Express known as American Express Warehousing, Ltd., the bankrupt second bailee above mentioned.
All of the dishonored receipts concern deposits of soybean oil delivered or purportedly delivered at the premises of Allied on which the Field warehousing operations were conducted successively by the first and second bailees as wholly-owned subsidiaries of Express. When, in the fall of 1963, Allied became notoriously insolvent and then a bankrupt, it was discovered that it had been the vortex of frauds and the unexplained nonexistence or disappearance of huge quantities of edible oils for which warehouse receipts had been issued to others. In due course, Limited, the second bailee, also became a bankrupt. The present actions were initiated by the hoders against Field, the first bailee, which thereafter brought in Express as a third-party defendant. For reasons readily apparent, on these appeals involving summary judgment granted to plaintiff holders, Express and Field are joined in resisting such judgments. The bankrupt second bailee, Limited, is not a party to the actions or the appeals.
While the Allied collapse involved the unexplained disappearance of 1.6 billion pounds of edible oils, the six actions relate but to 95,233,792 pounds. The aggregate stated value of the receipts in the six actions is as follows:
Proctor & Gamble Distr. Co. $1,013,075.12
Garnac Grain Co. 1,846,537.50
A. J. Armstrong Co., Inc. 1,647,950.00
National Dairy Prod. Corp. 1,358,628.66
Continental Grain Co. 2,269,903.28 1
J. R. Williston & Beane, Inc. 1,684,580.00
____________
$9,820,674.56
Of these only Procter & Gamble and National Dairy were direct shippers for which they received non-negotiable warehouse receipts from Field....
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