Opinion ID: 1640458
Heading Depth: 3
Heading Rank: 2

Heading: Trust fund liability for receipts issued by other warehousemen

Text: With regard to the three warehouse receipts issued by other warehousemen to VFBA which were endorsed to the Banks, we agree in essence with the district court's analysis and resolution of the issue: Portland Farmers Elevator Company and Central Valley Bean Co-op had no statutory authority or legal basis to issue such warehouse receipts. The warehouse receipts are `paper transactions' at most which created on paper a property interest that did not exist. The issuance of the warehouse receipts was not done in conformity to statutes. The beans presumably stored were already burdened by scale tickets to the claimants hereinbefore described. VFBA had no authority to endorse over warehouse receipts except as to beans over and beyond its own storage liability. In a circuitous and bootstrap transaction, VFBA could not by endorsement of storage tickets issued by other warehouses defeat the ownership interest of producers having beans stored in VFBA itself. Having no title to such beans by Portland and Central, the warehouse receipts are a nullity. Having no title in such beans by VFBA, the warehouse receipts are a nullity. The warehouse receipts all being a nullity, the endorsement becomes a nullity. A transferee can acquire no greater title than its transferor had. 41-02-48 NDCC. The trial court correctly concluded that the warehouse receipts issued by VFBA to the Banks and the warehouse receipts issued to VFBA and endorsed by it to the Banks were a nullity. Those receipts did not change the Banks' status from that of a secured creditor to that of a receipt holder. Consequently, the Banks were not entitled to share in trust fund assets.