2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 7 - Documents of Title › Part 2 - WAREHOUSE RECEIPTS; SPECIAL PROVISIONS › Section 55-7-204 - Duty of care; contractual limitation of warehouse's liability.

(a) A warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care.
(b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse's liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse's liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods.
(c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement.
History:
1953 Comp., § 50A-7-204, enacted by Laws 1961, ch. 96, § 7-204; 2005, ch. 144, § 60.
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 7-204 [55-7-204 NMSA 1978].
Changes.
— Updated to reflect modern, standard commercial practices.
1. Subsection (a) continues the rule without change from former Section 7-204 [55-7-204 NMSA 1978] on the warehouse's obligation to exercise reasonable care.
2. Former Section 7-204(2) [55-7-204 NMSA 1978] required that the term limiting damages do so by setting forth a specific liability per article or item or of a value per unit of weight. This requirement has been deleted as out of step with modern industry practice. Under subsection (b) a warehouse may limit its liability for damages for loss of or damage to the goods by a term in the warehouse receipt or storage agreement without the term constituting an impermissible disclaimer of the obligation of reasonable care. The parties cannot disclaim by contract the warehouse's obligation of care. Section 1-302 [55-1-302 NMSA 1978]. For example, limitations based upon per unit of weight, per package, per occurrence, or per receipt as well as limitations based upon a multiple of the storage rate may be commercially appropriate. As subsection (d) makes clear, the states or the federal government may supplement this section with more rigid standards of responsibility for some or all bailees.
3. Former Section 7-204(2) [55-7-204 NMSA 1978] also provided that an increased rate can not be charged if contrary to a tariff. That language has been deleted. If a tariff is required under state or federal law, pursuant to Section 7-103(a) [55-7-103 NMSA 1978], the tariff would control over the rule of this section allowing an increased rate. The provisions of a non-mandatory tariff may be incorporated by reference in the parties' agreement.
See
Comment 2 to Section 7-103. Subsection (c) deletes the reference to tariffs for the same reason that the reference has been omitted in subsection (b).
4. As under former Section 7-204(2) [55-7-204 NMSA 1978], subsection (b) provides that a limitation of damages is ineffective if the warehouse has converted the goods to its own use. A mere failure to redeliver the goods is not conversion to the warehouse's own use.
See Adams v. Ryan & Christie Storage, Inc.
, 563 F. Supp. 409 (E.D. Pa. 1983) aff'd 725 F.2d 666 (3rd Cir. 1983). Cases such as
I.C.C. Metals Inc. v. Municipal Warehouse Co.
, 409 N.E. 2d 849 (N.Y. Ct. App. 1980) holding that mere failure to redeliver results in a presumption of conversion to the warehouse's own use are disapproved. "Conversion to its own use" is narrower than the idea of conversion generally. Cases such as
Lipman v. Peterson
, 575 P.2d 19 (Kan. 1978) holding to the contrary are disapproved.
5. Storage agreements commonly establish the contractual relationship between warehouses and depositors who have an on-going relationship. The storage agreement may allow for the movement of goods into and out of a warehouse without the necessity of issuing or amending a warehouse receipt upon each entry or exit of goods from the warehouse.
Cross References.
— Sections 1-302 [55-1-302 NMSA 1978], 7-103 [55-7-103 NMSA 1978], 7-309 [55-7-309 NMSA 1978] and 7-403 [55-7-403 NMSA 1978].
"Goods". Section 7-102 [55-7-102 NMSA 1978].
"Reasonable time". Section 1-204 [55-1-204 NMSA 1978].
"Sign". Section 7-102.
"Term". Section 1-201 [55-1-201 NMSA 1978].
"Value". Section 1-204.
"Warehouse receipt". Section 1-201.
"Warehouse". Section 7-102.
ANNOTATIONS
Compiler's notes.
— New Mexico did not enact a Subsection (4) to this section which would have placed a higher standard of care upon the warehouseman or invalidated limitations upon that duty allowed under Article 7.
Repeals and reenactments.
— Laws 2005, ch. 144, § 60, effective January 1, 2006, repealed former 55-7-204 NMSA 1978 as enacted by Laws 1961, ch. 96, § 7-204, 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. —
15A Am. Jur. 2d Commercial Code § 48; 78 Am. Jur. 2d Warehouses §§ 44, 139, 140, 188, 234, 248, 251.
Liability of warehouseman for damage to or destruction of property by fire, 16 A.L.R. 280.
Liability of warehouseman for theft of property in his care, 26 A.L.R. 223, 48 A.L.R. 378.
Warehouseman's bond as covering warehouse receipts issued by warehouse to itself or for its own property, 61 A.L.R. 331.
Right of owner to sue on insurance policy taken out by warehouseman, 61 A.L.R. 720.
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.
Validity and applicability of stipulation in warehouseman's receipt fixing valuation of property as basis of responsibility, 142 A.L.R. 776.
Damages recoverable from warehousemen for negligence causing injury to, or destruction of, goods of a perishable nature, 32 A.L.R.2d 910.
Liability of warehouseman for injury to, or destruction of, stored goods from floods, heavy rains or the like, 60 A.L.R.2d 1097.
Liability of warehouseman for deterioration of goods due to improper temperature, 92 A.L.R.2d 1298.
Liability of warehouseman or other bailee for loss of goods stored at other than agreed-upon place, 76 A.L.R.4th 883.
8 C.J.S. Bailments § 40; 93 C.J.S. Warehousemen and Safe Depositaries § 27.