Pannell v. Louisville Tobacco Warehouse Co.

• Decision Date: 06 June 1902
• Citation: Pannell v. Louisville Tobacco Warehouse Co., 68 S. W. 662 (Ky. Ct. App. 1902)
• Parties: PANNELL et al. v. LOUISVILLE TOBACCO WAREHOUSE CO. et al. [1]
• Court: Kentucky Court of Appeals

68 S.W. 662

PANNELL et al. v. LOUISVILLE TOBACCO WAREHOUSE CO. et al. ^[1]

Court of Appeals of Kentucky.

June 6, 1902

Appeal from circuit court, Jefferson county, common pleas division.

"To be officially reported."

Actions by S. A. Pannell and others against the Louisville Tobacco Warehouse Company and others to recover penalties for violation of a statute, consolidated with an action by the Louisville Tobacco Warehouse Company and others against S. A Pannell and others to enjoin the prosecution of such actions. Judgment dismissing the actions brought by S. A. Pannell and others, and granting the Louisville Tobacco Warehouse Company an injunction, and S. A. Pannell and others appeal. Reversed.

McCandless & James, for appellants.

Humphrey Burnett & Humphrey, for appellees.

HOBSON J.

In the year 1900 the appellants instituted a number of suits at law to recover penalties for the violation of sections 4799, 4801, 4803, Ky. St. Section 4799 provides that a warehouseman, in settling with a shipper, shall account to him for the net weight of the tobacco sold, including the sample; section 4801, that the warehouseman, in selling leaf tobacco at public auction, shall receive as compensation therefor $2 a hogshead from the owner or his agent; section 4803, that it shall be unlawful for the warehouseman directly or indirectly to charge the seller or owner anything by way of commission or otherwise for paying to him the money for which his tobacco is sold. Section 4807 makes the warehouseman liable to the party aggrieved in the sum of not less than $25 nor more than $100 for a violation of these provisions. Appellees are warehousemen in Louisville, Ky. and appellants are sellers of tobacco. The actions instituted by appellants sought to recover penalties for violation of the foregoing sections by the warehousemen in not accounting to the shipper for the full weight of his tobacco, and in charging him commission on the price in addition to the $2 a hogshead for selling it. After these suits had been filed appellees filed a petition in equity in the Jefferson circuit court, in which they enjoined appellants from the prosecution of the actions to recover the penalties on the ground that the statute is contrary to the state and federal constitutions, and operates to deprive appellees of their property. We do not perceive that there is any violation of the state constitution if the rates fixed by the act are not so low as to operate as a taking of private property for public use without just compensation. From the foundation of the state the legislature has exercised the power of control over the selling of tobacco in public warehouses, which, from the beginning, has been one of its staple crops. While the state was yet a part of Virginia, during the Revolutionary War, regulations on this subject were prescribed. Similar acts were passed in this state soon after its creation, and have from time to time been amended and extended. See Appendix, 3 Litt. Ky. Laws, pp. 580, 582; 1 Ky. St. Laws, 88, 136, 137; 2 Ky. St. Laws, 137; 3 Ky. St. Laws, 227; Meyers' Supp. Rev. St. pp. 520, 523, 526; Gen. St. (Feland's Ed. 1887) p. 1265. In view of this legislative policy, the present constitution of the state provides: "All elevators or storehouses, where grain or other property is stored for a compensation, whether the property stored be kept separate or not, are declared to be public warehouses, subject to legislative control, and the general assembly shall enact laws for the inspection of grain, tobacco and other produce, and for the protection of producers, shippers and receivers of grain, tobacco and other produce." Section 206. At the time of the adoption of the constitution the power of the legislature to regulate tobacco warehouses had been expressly sustained. Nash v. Page, 80 Ky. 539, 44 Am.Rep. 490. This was recognized by the provision of the constitution just quoted, which was intended to require the legislature to enact proper laws on the subject. The statute referred to was passed pursuant to it, and does not differ essentially from the previous acts, except that it cuts down somewhat the compensation of the warehouseman. The validity of the statute was assumed by the court in Warehouse Co. v. Minor (Ky.) 53 S.W. 641, and in Wright v. Gardner, 98 Ky. 454, 33 S.W. 622, 35 S.W. 1116; but in neither of these cases was the precise question made that is now presented.

It is shown by the evidence that for years a custom has existed among the warehousemen to deduct from the net weight of the tobacco 10 pounds for sample, and to settle with the seller on this basis, although the sample in fact weighs about 5 pounds less, and the warehouseman collects from the buyer for the entire net weight of the tobacco, less the actual weight of the sample. In other words, it is shown that the warehouseman, as the agent of the seller, collects from the buyer the price for about 5 pounds more of tobacco on each hogshead than he accounts to the seller for. It is also shown that the buyer gets the sample, which usually weighs about 5 pounds, and for this, by the custom, he pays nothing. The warehouseman, in selling the tobacco of his principal, should account to him as his agent for all the money he in fact receives for it, and any rule of the tobacco exchange allowing him to account for a less number of pounds than he in fact receives from the buyer is unreasonable and void. The rule was also in violation of the act of March 8, 1876. That act made a violation of its provisions a misdemeanor punishable by a fine of not less than $50 nor more than $100. As this was not effective, the act complained of prescribed a penalty recoverable by the seller or party aggrieved. Section 4799, Ky. St., simply provides, in substance, that the buyer shall pay for all the tobacco he gets, and that the warehouseman shall account for all the tobacco that he is paid for. We are unable to see any objection to this section on constitutional grounds, and are of opinion that the circuit court improperly sustained the injunction in so far as it sought to recover a penalty for a violation of this section.

It is shown by the proof that, in addition to the charges made by the warehouseman against the seller, he also charges the buyer what is known as an "outage fee." This is not a charge for the selling of the tobacco, but covers the services of the warehouseman in having the hogsheads recoopered and stored for the buyer for a reasonable time until he is ready to receive them. By the custom of the trade the buyer has 15 days for this purpose, and after this he is charged storage. The outage fee charged the buyer is $2. The statute does not affect this charge; it only regulates the charges to be paid by the seller. As shown by the proof, the only reduction in charges under the statute from those made by the warehousemen under their rules is that the statute cuts off a charge of 1 per cent. commission on the amount of the sale which the warehouseman collected from the seller, and reduced the charge for reselling a hogshead of tobacco from $2 to $1.50. As a hogshead of tobacco ordinarily sells for from $50 to $100 on an average, the 1 per cent. commission would amount to from 50 cents to $1 on a hogshead. Something like one-fourth of the sales are rejected, and on these resales of one-fourth of the tobacco under the statute the charge would be for selling these hogsheads $3.50, instead of $4, as under the rule. The statute would, therefore, make a net reduction of the fees charged by the warehouse of something like $1 on the hogshead, and the question presented is, would such a reduction of their fees amount to a taking of their property for public use without just compensation, or deprive them of their property without due process of law? The right of the state to prescribe reasonable rates...