PEKIN WAREHOUSE COMPANY v. PARNELL COMPANY
| Decision Date | 26 February 1957 |
| Docket Number | No. 15508.,15508. |
| Citation | 242 F.2d 166 |
| Parties | PEKIN WAREHOUSE COMPANY, a Corporation, Appellant, v. The PARNELL COMPANY, Inc., a Corporation, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
COPYRIGHT MATERIAL OMITTED
Haywood Scott and John W. Scott, Joplin, Mo., filed brief for appellant.
Ray E. Watson, Joplin, Mo., filed brief, for appellee.
Before SANBORN, JOHNSEN and WHITTAKER, Circuit Judges.
A holder in due course of some negotiable warehouse receipts sued the warehouseman for damages, under Missouri law, from failure of the goods to correspond with the description in the receipts.1 The court, on a jury-waived trial, granted a recovery, and the warehouseman has appealed.
The action was one based on V.A.M.S. § 406.200, which provides:
This provision is an enactment of section 20 of the Uniform Warehouse Receipts Act. The object and effect of the section are stated by the National Conference of Commissioners on Uniform State Laws, in 3 Uniform Laws Annotated 33, note, as follows: See also 93 C.J.S., Warehousemen & Safe Depositaries, § 4, p. 400.
The warehouse involved was an Internal Revenue Bonded Warehouse, 26 U.S.C. A.Int.Rev.Code of 1939, §§ 2872 et seq., and the goods on which the receipts were issued consisted of 281 barrels of distilled spirits entered in bond. The barrels themselves were reused charred containers, into the heads of which had been burned the words "Corn Whiskey", and onto which had been stenciled the further words "Treated with Oak Chips". Both of these designations on the barrel heads were required to be made as to the particular liquor, under the Regulations of the Treasury Department, to entitle it to entry and storage in the warehouse. See 26 C.F.R. § 186.60.2 The duty of so marking the barrel heads, at the time the liquor was entered in the warehouse, was imposed upon the warehouseman. 26 C.F.R. § 185.253. If oak chips had not been added to the liquor by the distiller, the barrel heads would have been entitled to be branded simply as "Corn Whiskey".
The receipts had used only the term "Corn Whiskey", in their description of the kind of liquor, and had failed to in-include the words "Treated with Oak Chips". It was because of this omission that the holder of the receipts claimed misdescription and liability, in that, as the complaint alleged, under the Regulation referred to above, and also by the concepts of the liquor trade, "corn whiskey, treated with oak chips" denoted and constituted a different class or type of liquor than the term "corn whiskey", appearing in the receipts.
The principal contention made by the warehouseman in defense was that the receipts did not declare that the liquor was "corn whiskey" but merely stated in effect that it had been represented by the depositor thereof to be such. In form, each receipt certified that the warehouseman had received the barrels of distilled spirits specified in it (the serial number of each barrel, the original quantity of proof gallons, the date of making, and the distillery by which produced, being duly set out), "in apparent good condition and said to contain corn whiskey". Because of the use of the expression "said to contain corn whiskey", and as a matter of alleged depositor statement on which to predicate the right of use, the warehouseman asserted that he came within the exculpating provision of V.A. M.S. § 406.200, supra, and so could have no liability for failure of the receipts to show that the liquor was "corn whiskey, treated with oak chips", instead of "corn whiskey".
The trial court was of the view that, in appellant's legal status as a warehouseman of liquor in bond, he should be regarded, and Missouri law would so regard him, as being officially chargeable with knowledge that the liquor involved was "corn whiskey, treated with oak chips", and that a reference to it on his part, for any liquor purpose, as being "corn whiskey" would constitute a misdescription, so that his use of the expression "said to contain corn whiskey", in issuing negotiable receipts upon the liquor, was without such right of reliance and such exercise of responsibility as were intended and entitled to constitute a basis for exculpation from liability under V.A.M.S. § 406.200.
The court further held that, even if the warehouseman had not been so chargeable with knowledge as to the legal character of the liquor in the issuing of the receipts, there had not in fact been any statement on the part of the depositor, in connection with the issuance of them, which under the Missouri statute could provide a basis for the warehouseman to claim that the barrels had been "said to contain corn whiskey", and the presence of the expression in the situation was due simply to the warehouseman having made a routine use of his printed receipt-form.
The reason the court felt that appellant, as a warehouseman in bond, should be directly charged with knowledge of the character of the liquor, in his issuing of negotiable receipts upon it, was because of the strict responsibility imposed upon him under federal law to deal with such liquor, in all the custodial or "in bond" incidents of his business, covering the receiving, marking, entering, storing, transferring and releasing of the liquor, only upon the basis of the designations, records and reports prescribed as to it by the federal statutes and regulations, and not in any other manner.
Concededly, a warehouseman of liquor in bond cannot receive, mark, enter, store, transfer or release such liquor except upon the basis of the federal statutes and regulations. See Taney v. Penn Nat. Bank, 232 U.S. 174, 34 S.Ct. 288, 58 L.Ed. 558. His information or knowledge as to the character of the liquor, for purposes of any of these official incidents, must come to him from the checkings or approvings of the federal storekeeper-gauger and the records for the liquor made up therefrom, and not from any outside statements. See generally, on the functions of the storekeeper-gauger, Gauging Manual, 26 C.F.R. Part 186. The statutes make a federal storekeeper-gauger joint custodian of the warehouse with the proprietor. 26 U.S.C.A.Int. Rev.Code of 1939, § 2872. Forms are prescribed by the Treasury Department for use in relation to the various incidents or operations involved in the warehousing of the liquor, and the filled-out forms constitute or are the basis for the official information and records as to the liquor.3 And copies of such forms required to be filled out by the storekeeper-gauger as are necessary for information or record purposes on the part of the warehouseman are supplied to him by the storekeeper-gauger, as the printed record before us indicates had been duly done in the present situation.
The warehousing of liquor in bond thus is, because of the "exigencies of the business", 232 U.S., supra, at page 183, 34 S.Ct. at page 290, a highly sensitive and minutely regulated business. The primary purpose of the warehousing regulations is, of course, to protect the Government in the revenues to which it is entitled on such spirits. The details and the exactness required in forms and records as to such spirits are designed, as indicated in 26 U.S.C.A.Int.Rev.Code of 1939, § 2915(a), "to insure the correct delivery thereof and proper accountability therefor".
The strictness imposed upon a warehouseman, as to designation, marking, etc., of such spirits, is also capable, however, of serving a purpose beyond the immediate status of the liquor in bond. It is possible for it to facilitate administrative identification and enforcement in respect to the subsequent use of the spirits.
Again — and perhaps of more significance here — since the outlet for such spirits in bond is primarily in the bottling or rectification field, the identification which is caused to be established by the regulations has also, as the record before us shows, resulted in the designations or terminology required in the warehousing of the liquor, being carried generally into the commercial dealings of buyers or brokers in relation to such liquor. These dealings in the trade are for the most part in the form of transfers of warehouse receipts. And such receipts are, in their commercial purposes, treated as being "completely equivalent to the spirits themselves". Taney v. Penn Nat. Bank, 3 Cir., 187 F. 689, 700.
In this connection, it is entitled to be observed that, while the federal law does not undertake to regulate generally the matter of issuing warehouse receipts upon liquor in bond, it does so far concern itself with the possibilities of the use and consequence of such instruments as to make it unlawful for anyone to sell...
To continue reading
Request your trial