Southwest Cotton Co. v. Valley Bank

• Decision Date: 07 August 1924
• Docket Number: Civil 2136
• Citation: 227 P. 986,26 Ariz. 559
• Parties: SOUTHWEST COTTON COMPANY, a Corporation, Appellant, v. THE VALLEY BANK, a Corporation, SARIVAL STORAGE COMPANY, a Corporation, G. P. NEVITT and L. ZELLNER, Appellees
• Court: Arizona Supreme Court

227 P. 986

26 Ariz. 559

SOUTHWEST COTTON COMPANY, a Corporation, Appellant, v. THE VALLEY BANK, a Corporation, SARIVAL STORAGE COMPANY, a Corporation, G. P. NEVITT and L. ZELLNER, Appellees

Civil No. 2136

Supreme Court of Arizona

August 7, 1924

APPEAL from a judgment of the Superior Court of the County of Maricopa. F. H. Lyman, Judge. Affirmed.

(Rehearing denied October 10, 1924. See 27 Ariz. -- , 229 P. 98.)

Mr Richard E. Sloan, Mr. C. R. Holton, and Mr. E. G. Scott, for Appellant.

Messrs Kibbey, Bennett, Gust & Smith, Mr. Samuel White and Mr. G. P. Nevitt, for Appellees.

OPINION

WINDES, Superior Judge.

This is a suit by the plaintiff Southwest Cotton Company to foreclose a landlord's lien upon 220 bales of cotton located at the warehouse of the Sarival Storage Company at Gilbert, Arizona. The plaintiff under date of December 26 1919, subleased 520 acres of land to the defendant Zellner for a period of two years from January 1, 1920, to December 31, 1921. Zellner assigned this sublease to the defendant G. P. Nevitt, who farmed the land during the season of 1920 and grew a crop of cotton thereon. This cotton was ginned at the gin of the Southwest Cotton Company in Gilbert and stored in the yards of the Sarival Storage Company at that place, which storage company issued warehouse receipts therefor in the name of the defendant G. P. Nevitt. Between June 12, 1920, and March 4, 1921, Nevitt borrowed at different times from the defendant, the Valley Bank, the aggregate sum of $65,850. The warehouse receipts were delivered at different times to Nevitt by the Southwest Cotton Company and the Sarival Storage Company, and Nevitt in turn indorsed the same and delivered them to the Valley Bank as security for these loans.

The trial court rendered judgment that the Valley Bank had a first and prior lien upon the cotton and the warehouse receipts therefor except as to the lien for storage charges, and declared that such lien of the Valley Bank was superior to any right or lien of the plaintiff Southwest Cotton Company. The plaintiff brings this appeal claiming that the court erred in adjudging that the lien of the Valley Bank was superior to the landlord's lien of the plaintiff for the rent due from the defendants Zellner and Nevitt.

The appellee in order to sustain the action of the trial court contends, first, that the plaintiff did not prove that the cotton represented by the warehouse receipts was raised on the land rented from the plaintiff; second, that the bank at the time it received the warehouse receipts from Nevitt as security had no notice, actual or constructive, that the cotton represented by the receipts was grown upon the land rented from the plaintiff; and, third, that if the plaintiff ever had any landlord's lien for its rent it has by its conduct waived the same.

We think the record fairly establishes that the cotton represented by the receipts held by the bank was grown on the land leased from the plaintiff, and we also think the record fairly shows that the Valley Bank had knowledge of such facts as would charge it with actual notice of the landlord's lien on the cotton. The next question therefore is whether the plaintiff can be held to have waived its lien.

The testimony shows that the bank originally agreed to loan Nevitt $35,000 upon a crop mortgage. This mortgage was never made and subsequently it was understood between the bank and Nevitt that warehouse receipts should be delivered to the bank as security. On October 13, 1920, Nevitt wrote a letter to one Mr. Hinkle of the Southwest Cotton Company stating he had borrowed funds from the bank and that he had informed Mr. Moore of the bank that he would leave all bale receipts with the Southwest Cotton Company and that "if he should, during my absence, call for bale receipts as security for the loan, I instructed him to call you by telephone and request the amount of bale receipts necessary as security." The letter to Mr. Hinkle further stated that should Mr. Moore call for the receipts "to deliver same in any amount requested." Pursuant to the request embodied in this letter Mr. Hinkle advised Mr. Moore that he would turn the receipts over to Moore as he wanted them.

The plaintiff. Southwest Cotton Company, in June, 1921, made a written demand upon the Sarival Storage Company for the possession of the cotton for the reason that Nevitt had failed to pay his rent. This demand states that Nevitt's lease "terminated on January 14, 1921." Nevitt testified that the lease terminated about February 8, 1921, because he was "broke." These warehouse receipts were delivered to Nevitt at different times and in different amounts between the latter part of December, 1920, and March 5, 1921. Nevitt testified that he got the last large bunch on March 5, 1921, which were delivered to the bank during that month. Mr. Moore further testified that the bank loaned Nevitt additional funds to pay the Southwest Cotton Company for ginning, seed, and other things in order to secure possession of these last receipts, and the record shows that the bank did make Nevitt a loan of $4,000 on March 4, 1921. In fact subsequent to January 1, 1921, and prior to the filing of this suit, the bank loaned Nevitt the aggregate sum of $6,850.

The Sarival Storage Company, who issued the warehouse receipts, is a company organized and controlled by the Southwest Cotton Company and the plaintiff consequently actually had power of granting or withholding delivery of the bale receipts to Nevitt. Therefore the decision of the court will be based upon the theory that the receipts were in possession of the Southwest Cotton Company and by it delivered to Nevitt.

While there are numerous decisions declaring what is, and what is not waiver and whether there has been a waiver under a particular set of facts, yet counsel have cited no case and the court has been unable to find any wherein the facts are such as they are here. It therefore becomes necessary to resort to the general fundamental principles of the law of waiver.

A waiver is a voluntary and intentional relinquishment of a known right, or such conduct as warrants an inference of the relinquishment of such right. 40 Cyc. 252; Easterwood v. Three-for-One Oil Co. (Tex. Civ. App.), 246 S.W. 671; Springfield Gas & Electric Co....