Weil Bros., Inc. v. Keenan

• Decision Date: 17 January 1938
• Docket Number: 32904
• Citation: 178 So. 90,180 Miss. 697
• Court: Mississippi Supreme Court
• Parties: WEIL BROS., INC., v. KEENAN

178 So. 90

180 Miss. 697

WEIL BROS., INC., v. KEENAN

No. 32904

Supreme Court of Mississippi

January 17, 1938

Division A

1 WAREHOUSEMEN.

Where cotton owner intrusted negotiable warehouse receipts, payable to bearer, and samples of cotton to another for use in proposed sale of cotton to cotton buyer with whom owner customarily dealt, owner thereby vested holder of receipts with every indicia of ownership, and, on holder's sale of receipts to a different buyer without knowledge of owner buyer, who purchased receipts in good faith for value and without notice, became rightful owner of receipts and of cotton (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

2 WAREHOUSEMEN.

That party obtaining possession from cotton owner of negotiable warehouse receipts, payable to bearer, was guilty of a larceny by fraud in falsely representing that he wished to use them in proposed sale of cotton to cotton buyer with whom owner customerily dealt, did not preclude another cotton buyer, to which receipts were sold by holder from becoming legal owner of receipts and of cotton (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

3. WAREHOUSEMEN.

The prime purpose of Uniform Warehouse Receipts Act is to make standard receipts issued by warehousemen for chattels documents of title so that honest purchasers will be protected as purchasers in good faith (Code 1930, section 3481 et seq.).

4. ESTOPPEL.

Where one of two innocent parties must suffer from fraud of a third, one reposing trust and confidence in fraudulent agent should bear the loss.

5. ESTOPPEL.

Where cotton owner delivering negotiable warehouse receipts, payable to bearer, to another for use in proposed sale of cotton which is not carried out, and good-faith purchaser of receipts for value without notice are both innocent, cotton owner, as the one reposing trust and confidence in another, should be required to bear the loss (Code 1930, sections 3517, 3520, 3521, 3527, 3537, 3538).

6. WAREHOUSEMEN.

That agent of purchaser of negotiable warehouse receipts, payable to bearer, knew that holder, who had obtained possession thereof by false statements, had previously been employed by cotton buyers furnished no reason for believing that holder had not been buying cotton and was not authorized to sell receipts (Code 1930, sections 3520, 3538).

HON. J. L. WILLIAMS, Chancellor.

APPEAL from the chancery court of Sunflower county HON. J. L. WILLIAMS, Chancellor.

Bill of interpleader by the Federal Compress & Warehouse Company against Chris Keenan and Weil Bros., Inc., to determine which of the defendants was legal owner of certain warehouse receipts and the cotton evidenced thereby, wherein Chris Keenan filed a cross-bill. Decree for defendant Keenan, and defendant Weil Bros., Inc., appeal. Reversed and rendered.

Reversed, and judgment here for appellant.

Shands, Ehnore, Hallan & Causey, of Cleveland, for appellant.

The rights of the parties, appellant and appellee, are controlled by the provisions of the Uniform Warehouse Receipt Act.

Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 60 L.Ed. 417; Lundy v. Greenville Bank & Trust Co., 174 So. 802; Starkev v. Nixon, 270 S.W. 980; Federal Compress & Warehouse Co. v. Coleman, 143 Miss. 620; Mason v. Exporters & Traders Compress Co., 94 S.W.2d 758; 3 Uniform Laws Annotated, page 91.

The five warehouse receipts are negotiable bearer warehouse receipts, which are negotiable by delivery according to and issued in compliance with the provisions of the Uniform Warehouse Receipt Act, being Chapter 71 of the Mississippi Code of 1930.

Lundy v. Greenville Bank & Trusi Co., 174 So. 802; Starkey v. Nixon, 270 S.W. 980.

Chris Keenan, the owner of the receipts, was induced by fraud on the part of Spencer to entrust, and did entrust, said five warehouse receipts to Spencer.

Winstons Simplified Dictionary (Adv. Ed.), pages 325 and 517; Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 60 L.Ed. 417; 3 U. L. A. Commissioner's note, pages 74 and 81: Southern Pacific Ry. v. Bank of America, 23 F.2d 939; Mason v. Exporters &, Traders Compress Co., 94 S.W.2d 758; Joy v. Farmers National Bank of Chickaska, 11 P.2d 1074; Lundy v. Greenville Bank & Trust Co., 174 So. 802.

Spencer having possession of said receipts sold, negotiated and delivered them to Well Brothers in breach of his duty to Keenan, and it purchased same in good faith for value without notice of the fraud or breach of duty by Spencer, and thereby became the bona fide purchaser in good faith for value thereof as against Keenan and all others.

3 U. L. A. Commissioner's Note, page 81; Mason v. Exporters & Traders Compress Co., 94 S.W.2d 758; Lundy v. Greenville Bank & Trust Co., 174 So. 802; Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 60 L.Ed. 417; Joy v. Farmers National Bank of Chickaska, 11 P.2d 1074; Starkey v. Nixon, 270 S.W. 980.

Keenan entrusted said receipts upon the possession of Spencer and thereby clothed Spencer with the indicia of title of ownership thereto and ability to convey title thereto to a bona fide purchaser for value, and is now estopped to claim ownership thereof against Well Brothers, the bona fide purchaser thereof for value on the principle that where one of two innocent persons must suffer, he who made the injury possible must bear the loss.

Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 60 L.Ed. 417: Lundy v. Greenville Bank & Trust Co., 174 So. 802; Mason v. Exporters & Traders Compress Co., 94 S.W.2d 758; Joy v. Farmers National Bank of Chiekaska, 11 P.2d 1074; McGee v. Carver, 141 Miss. 463.

The Supreme Court should reverse the decision of the lower court and render a final judgment in this court for appellant Well Brothers, adjudging it to be the owner of the receipts with all rights incident thereto and the goods represented thereby.

Kwong v. Board of Miss. Levee Comrs., 164 Miss. 250; Hariston v. Montgomery, 102 Miss. 364; Scottish Union Insurance Co. v. Warren Lbr. Co., 104 Miss. 636.

Cooper & Thomas, of Indianola, for appellee.

There was never any voluntary surrender of these receipts to Goldbug. There was an attempted delivery to a cotton buyer. We submit that the true and reasonable rule is, in considering whether or not an act is larceny or obtaining property by false pretenses, that if a person making the delivery intended to transfer title to the person for whom the thing was intended and not to the one who falsely represented himself to be that person or the servant and agent of that person, there was no passing of title and there was no voluntary surrender of possession and the offense was therefore larceny.

Harris v. State, 12 A. S. R. 355; Towns v. State, 78 N.E. 1012; State v. Mintz, 189 Mo. 268, 88 S.W. 12; State v. Kosy, 191 Mo. 1, 90 S.W. 454; Stale v. Mintz, 189 Mo. 268, 88 S.W. 12; Collins v. Ralli, 20 Hun. 246; Martin v. Terr, 4 Okla. 105, 43 P. 1067; Johnson v. State, 46 Tex. C. R. 4115, 80 S.W. 621.

As against real owner, a bona fide purchaser of a negotiable warehouse receipt acquires title to the goods where he purchases from the owner's agent, within the actual or apparent scope of Ms authority; but not where the transfer is made by one other than the owner, without any ostensible authority to issue or negotiate the receipt, or by one who has been given custody of the receipt only fora particular purpose without authority to transfer it, or where the receipt has been issued in violation of the rights of the real owner of the goods.

Where the receipt has been lost or stolen a transferee thereof from the thief or finder acquires no title as against the real owner of the receipt, unless the latter, by indorsing the receipt in blank and leaving it with his agent, put it in the power of such agent to steal and negotiate it. A bona fide holder acquires no right to the goods under a negotiable receipt which has been lost or stolen and upon which the name of the original holder has been altered and the indorsement forged, or where it has been indorsed by one who is not the original depositor or owner, in whose name the receipt was issued, and, even though the statute provides that material and fraudulent alteration of a receipt shall not excuse the warehouseman from liability to deliver according to the terms of the receipt as originally issued, a bona fide purchaser, in such a ease, cannot compel the warehouseman to deliver the goods to him.

67 C. J., page 479, sec. 60; Love v. Peoples Compress Co., 102 So. 275; Weaver v. Batesville Compress Co., 38 A. L. R. 1200; Schmitt v. Federal Compress, 153 So. 815.

It has never been legal to buy stolen cotton and we plant our position upon the foundation that nothing in the negotiable warehouse act makes valid the negotiation of a stolen receipt.

Tennessee Joint Stock Land Bank v. Bank of Greenwood, 172 So. 323; Marine, etc., v. Greenville, 133 Miss. 91, 97 So. 526; Schmitt v. Federal Compress, 153 So. 815; Commercial National Bank v. Canal-Louisiana Bank & Trust Co., 60 L.Ed. 417; Hanna v. State, 151 So. 371.

Keenan had no intention of transferring the title or possession of either the warehouse receipts or the cotton which they represented to Goldbug, and Goldbug so understood.

Watson v. State, 36 Miss. 593; 2 Morris St. Cas. 1184; Akroyd v. State, 107 Miss. 51, 64 So. 936; 36 C. J., page 760, sec. 93, page 761, sec. 100.

After this court trod settled the principles of what constitutes larceny of warehouse receipts in the case of Hanna v State, 151 So. 371, 168 Miss. 352, it later had a similar proposition in the case of Latimer v. Stubbs, 159 So. 857. In that case it was so evident that Hanna had obtained possession of the receipts in a way as not to invest him with the...