Whitney National Bank of New Orleans v. Sandoz

• Decision Date: 23 June 1966
• Docket Number: No. 21551.,21551.
• Citation: 362 F.2d 605
• Parties: WHITNEY NATIONAL BANK OF NEW ORLEANS et al., Appellants, v. William C. SANDOZ, Trustee, Pine Grove Canning Company, Inc., Bankrupt, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

362 F.2d 605 (1966)

WHITNEY NATIONAL BANK OF NEW ORLEANS et al., Appellants, v.William C. SANDOZ, Trustee, Pine Grove Canning Company, Inc., Bankrupt, Appellee.

No. 21551.

United States Court of Appeals Fifth Circuit.

June 23, 1966.

Paul J. Thriffiley, Jr.(now deceased), New Orleans, La., Minos H. Armentor, New Iberia, La., Joseph H. Stephens, Houston, Tex., G. Henry Pierson, Jr., New Orleans, La., Lawrence E. Donohoe, Jr., Andrew J. S. Jumonville, Lafayette, La., for appellants.

Wm. A. Brinkhaus, Opelousas, La., for appellee.

Before WOODBURY,^* and JONES and GEWIN, Circuit Judges.

JONES, Circuit Judge.

By this appeal this Court has for review a decision of the district court affirming an order of its Referee which held invalid, in a conventional bankruptcy proceeding, warehouse receipts issued under a field warehousing arrangement on canned goods of the bankrupt which it had pledged to banks, including the appellants.In re Pine Grove Canning Company, D.C., 226 F.Supp. 872.We affirm and express our agreement with the conclusions of the district court.There is little that need be said in addition to that which the district court has so well said.The district court has set out the factual situation and it need be only highlighted here.

The bankrupt, Pine Grove Canning Company, operated vegetable canning plants in two Louisiana parishes.In order to provide financing upon the security of its inventory of canned goods, it made an arrangement for the issuance of warehouse receipts purporting to represent canned goods in storage.Pine Grove made a lease of a part of its canning plants to Emile Duchamp, an attorney, who was nominally a warehouseman for a brief period.He was succeeded by Nelius Bordelon, an automobile dealer who procured a license as a warehouseman.Pine Grove retained possession of the warehouse space and its contents, and moved goods in and out without asking permission of or the giving of notice to the so-called warehouseman whose principal and perhaps sole function was to affix his signature to warehouse receipts describing merchandise and reciting its storage in the warehouse.He was a warehouseman only in name.There was no separation of the various kinds, grades and sizes of canned goods.There was no attempt to mark or otherwise designate any of the merchandise so as to identify any particular goods with any specific receipt.

One or more of the banks which had made loans to Pine Grove on the purported pledge of goods represented by warehouse receipts was advised of the insufficiency of the goods in storage to cover the outstanding receipts.At the instance of the bankers, Edmund De Jaive took over the warehouses with the assent of Bordelon and excluded Pine Grove from further access to the warehouse area.Three weeks later De Jaive turned the keys over to the State Warehouse Commission which, a few days later, surrendered the keys pursuant to an order of the Referee in Bankruptcy.

"Field warehousing," as this Court has previously said, "is a term applied to an arrangement whereby a wholesaler, manufacturer, or merchant finances his business through the pledge of goods remaining on his premises.The arrangement is valid and effective where there is an actual delivery to the warehouseman by the bailor who has hired the warehouseman and given him exclusive possession of the warehouse goods.The warehouseman in turn issues warehouse receipts which serve to secure loans made by third parties to the bailor on the security of the deposited goods.In effect, it is an arrangement whereby the borrower, instead of taking his goods to the warehouse, arranges for the...