State ex rel. Hermann v. Farmers' Elevator Co., 5741.

• Decision Date: 30 July 1930
• Docket Number: No. 5741.,5741.
• Citation: 59 N.D. 679,231 N.W. 725
• Parties: STATE ex rel. HERMANN v. FARMERS' ELEVATOR CO. et al.
• Court: North Dakota Supreme Court

59 N.D. 679

231 N.W. 725

STATE ex rel.HERMANN

v.FARMERS' ELEVATOR CO. et al.

No. 5741.

Supreme Court of North Dakota.

June 28, 1930.

Rehearing Denied July 30, 1930.

Syllabus by the Court.

Where grain is deposited in a public grain warehouse, the storage receipt issued therefor pursuant to section 3113, Comp. Laws 1913, evidences a bailment and not a sale.

Syllabus by the Court.

A grain warehouseman receiving grain for storage may ship out and sell the grain thus stored, provided he substitutes therefor other grain of like kind and quality; if, however, he ships out and sells such grain without substituting other grain, he thereby converts the same, but his default in this respect is cured if, before demand is made for the grain, other grain of like kind and quality is procured and substituted therefor.

Syllabus by the Court.

Proof of demand for and refusal of grain stored with a public warehouseman is not essential to establish a conversion, if, in fact, the warehouseman would have been unable to comply had such a demand been made.

Syllabus by the Court.

Where a warehouseman ships out and sells stored grain without substituting other grain therefor, a conversion results as of the date of the shipment and sale and not as of the date of a subsequent demand for the grain by the owner thereof.

Syllabus by the Court.

Record examined, and held, for reasons stated in the opinion, that the evidence establishes a conversion of the plaintiff's grain by the defendant elevator company, and that the plaintiff was restricted to his prejudice in his examination with respect to the time of the conversion and the value of the grain at the date thereof.

Appeal from District Court, Rolette County; G. Grimson, Judge.

Action by the State, on the relation of A. B. Hermann, for the use and benefit of A. B. Hermann and others, against Farmers' Elevator Company of Rolette and others. Verdict for defendants, and, from an order denying a motion for judgment notwithstanding the verdict or for a new trial and from a judgment entered pursuant to the verdict, plaintiff appeals.

Reversed and remanded for a new trial.

F. B. Lambert, of Minot, for appellant.

J. J. Kehoe, of Cando, for respondents.

NUESSLE, J.

This action is brought to recover on account of the conversion of certain grain belonging to the plaintiff, Hermann.

The defendant elevator company was engaged in the grain warehouse business at Rolette, N. D. The remaining defendants are the sureties on its bonds. Plaintiff is the owner of certain grain warehouse receipts issued by the elevator company pursuant to the provisions of section 3113, Comp. Laws 1913. These receipts evidence wheat and rye aggregating 879 bushels delivered to the elevator company in the years 1920, 1921, and 1922. In the fall of 1924 the company met with some financial difficulties. On the 20th of October of that year it ceased to buy grain, and closed its elevator. Thereafter its board of directors met and took some steps to adjust its troubles. The state supervisor of grades, weights, and measures was called in and took the company's books for the purpose of auditing them and ascertaining the condition of its affairs. The directors designated one Tweeten as trustee, but it does not definitely appear what the character of his trust was or what his powers and duties were thereunder. However, he weighed out, shipped, and sold grain, paid off storage tickets, and, in part at least, looked after its business. An account was opened in his name in a local bank, collections were deposited therein as made, and thereafter payments of claims against the elevator company were made by checks drawn on this account signed by Tweeten as trustee. One Curtin had been the manager and in charge of the elevator business. He continued to look after the affairs of the concern. He, together with Tweeten, made collections, shipped out and sold grain, audited and allowed claims, and drew checks in payment thereof. These checks were drawn against the trustee account, and Tweeten signed them. There was some grain in the elevator at the time business was suspended on October 20th, but all this was shipped out during the remaining days of October or the first ten days of November, excepting about 1,300 bushels of oats and some 3,200 pounds of a mixture of wheat and other grain, apparently sweepings. Eight or nine carloads of grain were shipped to the terminal markets and sold during this period. Curtin testifies that arrangements were made with another local elevator whereby the defendant company might procure such grain as should be needed to satisfy outstanding storage tickets in case a demand for the grain represented by them was made upon the company. Also, that when the stored grain was sold, hedges were bought to protect it.

The elevator company had various accounts outstanding. These were collected in as fast as possible, and the ticket holders were paid off as tickets were presented when funds were available, which was not always the case. On the 8th of January, 1925, one Mortenson the agent of the plaintiff went to the elevator to see Curtin regarding the plaintiff's storage tickets. Tweeten, and Smith, a representative of the state supervisor of grades, weights and measures, were with Curtin in the elevator. Mortenson had a letter and telegrams from the plaintiff directing him to sell the grain and get the money for it, if it was possible to do so. There is a dispute in the record as to what took place when Mortenson went to perform this errand. He says he advised Curtin that he wanted to sell the plaintiff's grain, and demanded the price therefor. Curtin says that he demanded a price three cents above the market on the day of the demand, and that he also demanded a reduction amounting to three-sevenths of the regular storage charge. So Curtin refused to pay, saying he would not pay that price if he had a barrel of money. It is agreed that there was no demand for the grain in so many words. Thereafter at various times there were some negotiations between the plaintiff or his agent and Curtin or Tweeten with respect to the matter, but they arrived at no adjustment of the matter. The elevator remained closed from October 20, 1924, until the latter part of July, 1925, when it resumed business. During this period there was no grain in the elevator excepting the oats and sweepings above referred to. In the meantime, all of the storage tickets excepting the plaintiff's had been paid off. When the elevator reopened, it bought and stored grain as theretofore, and at all times thereafter had on hand a sufficient quantity of wheat and rye to satisfy the plaintiff's storage tickets.

In September, 1926, the plaintiff began this action seeking to recover the value of the grain as of date January 8, 1925, with interest from that date. In his complaint he set up that he was the owner of the storage tickets in question; that on the 24th of October, 1924, and thereafter, the defendant elevator company was insolvent; that on the 8th of January, 1925, he demanded the possession of the grain represented by the tickets or the payment of the market value thereof; that the company refused to honor that demand. The defendants, answering, admitted the storage of the grain and the issuance of the tickets; denied the insolvency of the elevator company, the demand, and the conversion, and the value of the grain as alleged by the plaintiff; and further alleged that the elevator company had at all times been able, willing, and ready to satisfy the tickets either by delivery of the grain or the payment of the market value thereof, less proper charges. The case came to trial before a jury. The defendants had a verdict. The plaintiff, having laid the proper foundation therefor, moved for judgment notwithstanding the verdict or for a new trial. The motion was denied, and the plaintiff appeals from the order made accordingly and from the judgment entered pursuant to the verdict.

The plaintiff on this appeal predicates error on account of...