2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 7 - Documents of Title › Part 4 - WAREHOUSE RECEIPTS AND BILLS OF LADING; GENERAL OBLIGATIONS › Section 55-7-403 - Obligation of bailee to deliver; excuse.

(a) A bailee shall deliver the goods to a person entitled under a document of title if the person complies with Subsections (b) and (c) of this section, unless and to the extent that the bailee establishes any of the following:
(1) delivery of the goods to a person whose receipt was rightful as against the claimant;
(2) damage to or delay, loss or destruction of the goods for which the bailee is not liable;
(3) previous sale or other disposition of the goods in lawful enforcement of a lien or on a warehouse's lawful termination of storage;
(4) the exercise by a seller of its right to stop delivery pursuant to Section 55-2-705 NMSA 1978 or by a lessor of its right to stop delivery pursuant to Section 55-2A-526 NMSA 1978;
(5) a diversion, reconsignment or other disposition pursuant to Section 55-7-303 NMSA 1978;
(6) release, satisfaction or any other personal defense against the claimant; or
(7) any other lawful excuse.
(b) A person claiming goods covered by a document of title shall satisfy the bailee's lien if the bailee so requests or if the bailee is prohibited by law from delivering the goods until the charges are paid.
(c) Unless a person claiming the goods is a person against which the document of title does not confer a right under Subsection (a) of Section 55-7-503 NMSA 1978:
(1) the person claiming under a document shall surrender possession or control of any outstanding negotiable document covering the goods for cancellation or indication of partial deliveries; and
(2) the bailee shall cancel the document or conspicuously indicate in the document the partial delivery or the bailee is liable to any person to which the document is duly negotiated.
History:
1953 Comp., § 50A-7-403, enacted by Laws 1961, ch. 96, § 7-403; 2005, ch. 144, § 78.
Compiler's notes.
— New Mexico did not adopt the optional language of the uniform act in Subsection (1)(b) which would have placed the burden of establishing negligence in cases relevant to that subsection on persons entitled under the document.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Prior Uniform Statutory Provision.
— Former Section 7-403 [55-7-403 NMSA 1978].
Changes.
— Definition in former Section 7-403(4) [55-7-403(4) NMSA 1978] moved to Section 7-102 [55-7-102 NMSA 1978]; bracketed language in former Section 7-403(1)(b) [55-7-403(1)(b) NMSA 1978] deleted; added cross reference to Section 2A-526 [55-2A-526 NMSA 1978]; changes for style.
1. The present section, following former Section 7-403 [55-7-403 NMSA 1978], is constructed on the basis of stating what previous deliveries or other circumstances operate to excuse the bailee's normal obligation on the document. Accordingly, "justified" deliveries under the pre-Code uniform acts now find their place as "excuse" under Subsection (a).
2. The principal case covered by subsection (a)(1) is delivery to a person whose title is paramount to the rights represented by the document. For example, if a thief deposits stolen goods in a warehouse facility and takes a negotiable receipt, the warehouse is not liable on the receipt if it has surrendered the goods to the true owner, even though the receipt is held by a good faith purchaser. See Section 7-503(a) [55-7-503(a) NMSA 1978]. However, if the owner entrusted the goods to a person with power of disposition, and that person deposited the goods and took a negotiable document, the owner receiving delivery would not be rightful as against a holder to whom the negotiable document was duly negotiated, and delivery to the owner would not give the bailee a defense against such a holder.
See
Sections 7-502(a)(2), 7-503(a)(1) [55-7-502(a)55-7-503(a) NMSA 1978].
3. Subsection (a)(2) amounts to a cross reference to all the tort law that determines the varying responsibilities and standards of care applicable to commercial bailees. A restatement of this tort law would be beyond the scope of this Act. Much of the applicable law as to responsibility of bailees for the preservation of the goods and limitation of liability in case of loss has been codified for particular classes of bailees in interstate and foreign commerce by federal legislation and treaty and for intrastate carriers and other bailees by the regulatory state laws preserved by Section 7-103 [55-7-103 NMSA 1978]. In the absence of governing legislation the common law will prevail subject to the minimum standard of reasonable care prescribed by Sections 7-204 [55-7-204 NMSA 1978] and 7-309 [55-7-309 NMSA 1978] of this Article.
The bracketed language found in former Section 7-403(1)(b) [55-7-403 NMSA 1978] has been deleted thereby leaving the allocations of the burden of going forward with the evidence and the burden of proof to the procedural law of the various states.
Subsection (a)(4) contains a cross reference to both the seller's and the lessor's rights to stop delivery under Article 2 and Article 2A respectively.
4. As under former Section 7-403 [55-7-403 NMSA 1978], there is no requirement that a request for delivery must be accompanied by a formal tender of the amount of the charges due. Rather, the bailee must request payment of the amount of its lien when asked to deliver, and only in case this request is refused is it justified in declining to deliver because of nonpayment of charges. Where delivery without payment is forbidden by law, the request is treated as implicit. Such a prohibition reflects a policy of uniformity to prevent discrimination by failure to request payment in particular cases. Subsection (b) must be read in conjunction with the priorities given to the warehouse lien and the carrier lien under Section 7-209 [55-7-209 NMSA 1978] and 7-307 [55-7-307 NMSA 1978], respectively. If the parties are in dispute about whether the request for payment of the lien is legally proper, the bailee may have recourse to interpleader.
See
Section 7-603 [55-7-603 NMSA 1978].
5. In addition to compliance with Subsection (b), Subsection (c) conditions the bailee's duty to deliver the goods to a person entitled under a negotiable document on the surrender of possession or control of the document for cancellation or indication of partial deliveries. It also states the obvious duty of a bailee to take up a negotiable document or note partial deliveries conspicuously thereon, and the result of failure in that duty. It is subject to only one exception, that stated in subsection (a)(1) of this section and in Section 7-503(a) [55-7-503 NSMA 1978]. Subsection (c) is limited to cases of delivery to a claimant; it has no application, for example, where goods held under a negotiable document are lawfully sold to enforce the bailee's lien.
Subsection (c) does not specify any conditions on the duty of the bailee to deliver the goods covered by a nonnegotiable document to a person entitled, other than the conditions inherent in the definition of "person entitled under the document."
See
Sections 7-102(a)(9) [55-7-102 NSMA 1978] (defining "person entitled under the document") and Comment 6; 7-504. In addition, the document itself may specify that the person entitled must present the document to the bailee in order to obtain delivery of the goods.
6. When courts are considering subsection (a)(7), "any other lawful excuse," among others, refers to compliance with court orders under Sections 7-601 [55-7-601 NMSA 1978], 7-602 [55-7-602 NMSA 1978] and 7-603 [55-7-603 NMSA 1978].
Point 2: Sections 7-502 [55-7-502 NMSA 1978] and 7-503 [55-7-503 NMSA 1978].
Point 3: Sections 2-705 [55-2-705 NMSA 1978], 2A-526 [55-2A-526 NMSA 1978], 7-103 [55-7-103 NMSA 1978], 7-204 [55-7-204 NMSA 1978], and 7-309 [55-7-309 NMSA 1978] and 10-103 [55-10-103 NMSA 1978].
Point 4: Sections 7-209 [55-7-209 NMSA 1978], 7-307 [55-7-307 NMSA 1978] and 7-603 [55-7-603 NMSA 1978].
Point 5: Section 7-503(1) [55-7-503(1) NMSA 1978].
Point 6: Sections 7-601 [55-7-601 NMSA 1978], 7-602 [55-7-602 NMSA 1978], and 7-603.
"Bailee". Section 7-102 [55-7-102 NMSA 1978].
"Conspicuous". Section 1-201 [55-1-201 NMSA 1978].
"Delivery". Section 1-201.
"Document of title". Section 1-201.
"Duly negotiate". Section 7-501 [55-7-501 NMSA 1978].
"Goods". Section 7-102.
"Lessor". Section 2A-103 [55-2A-103 NMSA 1978].
"Person". Section 1-201.
"Receipt of goods". Section 2-103 [55-2-103 NMSA 1978].
"Right". Section 1-201.
"Terms". Section 1-201.
"Warehouse". Section 7-102.
ANNOTATIONS
Repeals and reenactments.
— Laws 2005, ch. 144, § 78, effective January 1, 2006, repealed former 55-7-403 NMSA 1978 as enacted by Laws 1961, ch. 96, § 7-403, and enacted a new section. Pursuant to 12-2A-14 NMSA 1978, the 2005 revision is considered an amendment rather than a new enactment.
Burden of proving ordinary care upon warehouseman.
— Plain and unambiguous language of the law has changed common-law rule so as to place the burden upon the warehouseman to show that in the exercise of ordinary care, he is unable to redeliver the goods bailed to him.
Denning Warehouse Co. v. Widener
, 172 F.2d 910, 13 A.L.R.2d 669 (10th Cir. 1949) (decided under prior law).
Not enough to show fire of unknown origin.
— Establishment of fact that broomcorn in warehouseman's custody was destroyed by fire of unknown origin does not, without more, sustain the burden of showing due care with respect to it.
Denning Warehouse Co. v. Widener
, 172 F.2d 910, 13 A.L.R.2d 669 (10th Cir. 1949) (decided under prior law).
Evidence allowable in damage suit.
— In damage suit to recover for broomcorn in custody of warehouseman, evidence to effect that debris had been allowed to collect beneath platform or floor on which broomcorn was stored, and concerning smoking in and around the place were properly submitted to the jury and its findings were held binding on review.
Denning Warehouse Co. v. Widener
, 172 F.2d 910, 13 A.L.R.2d 669 (10th Cir. 1949) (decided under prior law).
Am. Jur. 2d, A.L.R. and C.J.S. references. —
13 Am. Jur. 2d Carriers § 459 et seq.; 15A Am. Jur. 2d Commercial Code §§ 36, 63; 78 Am. Jur. 2d Warehouses §§ 38, 75, 78, 201, 203, 205, 208 to 210, 212, 214, 215, 217 to 219, 255, 293.
Duty of carrier to deliver goods on siding or private track of consignee, 1 A.L.R. 1425.
Delivery of goods to one whose authority to act for consignee has ceased, 2 A.L.R. 279.
Duty to notify consignor when consignee, or person to be notified, refuses to accept goods, 4 A.L.R. 1285.
Lost or mislaid property, respective rights of carrier or one in similar relation to owner and finder, 9 A.L.R. 1388, 170 A.L.R. 706.
What constitutes delivery to carriers of goods in warehouse, 22 A.L.R. 985, 113 A.L.R. 1459.
Delivery without collecting charge as stipulated or directed as affecting liability, 24 A.L.R. 1163, 78 A.L.R. 926, 129 A.L.R. 213.
Delay, or damages incident to delay, in transportation, due to strike, liability of carrier, 28 A.L.R. 503, 45 A.L.R. 919.
Rights of purchaser of warehouse receipt against warehouseman, 38 A.L.R. 1205.
Delay in transportation or delivery as affecting carrier's liability for loss of or damages to goods by act of God, 46 A.L.R. 302.
Delivery by carrier or warehouseman of property to impostor, 54 A.L.R. 1335.
Warehouseman's bond as covering warehouse receipts issued by warehouse to itself or for its own property, 61 A.L.R. 331.
Diverting shipment, right of shipper or consignee, 61 A.L.R. 1309.
Carrier's employees as agents of shipper or consignee in unloading or caring for livestock at destination, 62 A.L.R. 525.
Interest on damages for warehouseman's refusal to deliver property, or for injury to, or loss of property, 96 A.L.R. 18, 36 A.L.R.2d 337.
Provision in warehouseman's receipt limiting liability as applicable where warehouseman converts property, 99 A.L.R. 266.
Presumption and burden of proof as to carrier's responsibility for goods received in good condition and delivered to consignee in bad condition, 106 A.L.R. 1156.
Duty of warehouseman to take up and cancel negotiable receipt upon delivering goods as delegable or nondelegable, 139 A.L.R. 1488.
Consignee's refusal to accept delivery at place specified in the contract, or carrier's inability to make delivery at that place, as terminating its liability as carrier, 149 A.L.R. 1118.
When carrier put upon notice that delay in transportation or delivery will cause special damages, 166 A.L.R. 1034.
Presumptions and burden of proof or of evidence where goods stored in situation governed by Uniform Warehouse Receipts Act are stolen, or are damaged or lost by fire or water, 13 A.L.R.2d 681.
Shipper's ratification of carrier's unauthorized delivery or misdelivery, 15 A.L.R.2d 807.
Carrier's liability for conversion by delivery in violation of provision in bill of lading prohibiting or limiting consignee's right to inspect goods shipped, 25 A.L.R.2d 770.
Liability of carrier for delivering goods sent C.O.D. without receiving cash payment, 27 A.L.R.3d 1320.
13 C.J.S. Carriers §§ 408 to 417; 80 C.J.S. Shipping § 268 et seq.; 93 C.J.S. Warehousemen and Safe Depositaries §§ 27, 64.