Court Opinion

ID: 6252448
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:19:33.863214+00
Date Added: 2024-06-11T08:59:27.406203
License: Public Domain

Opinion by
Mr. Justice Moschzisker,
In this case a master and auditor was appointed, by consent of the several parties in interest, to pass upon all questions relative to the ownership of certain whiskey in the bonded warehouse of the Thomas Moore Distilling Company, and to make distribution of a fund in *321the hands of its receiver derived from sales of this liquor; three separate claims of the Fourth National Bank of Boston, now merged with and known as the Fourth-Atlantic National Bank of Boston, were refused, and it has appealed in each instance. The three appeals were argued as one; and, since there are certain controlling principles common to all, we shall dispose of them together.
The master and auditor filed a most elaborate opinion, certain portions of which will be printed in connection herewith; these abstracts, together with a statement of the material facts relevant to each of the three appeals, which likewise will appear in connection with the report of this case, and the excerpts which we are about to quote from the opinion of the court below, practically cover the questions involved. The court below states:
“The Thomas Moore Distilling Company was a corporation, organized under the laws of Pennsylvania, for the purpose of manufacturing and selling distilled spirits. Its principal place of business was in......, Pennsylvania. It maintained bonded warehouses......, wherein was stored the whiskey which it had manufactured, pending the payment of the taxes thereon to the United States government. On the 25th day of July, 1910, a receiver was appointed for said corporation, it being at that time insolvent. The receiver in due course filed his first account. Disputes had arisen among various claimants of the whiskey, which was in storage. All of the whiskey, to which reference is hereinafter made, was sold by the receiver, with the consent of the parties, and the rights of the respective claimants were transferred to the proceeds......”
“The first dispute is respecting the ownership of 350 barrels of whiskey; these are claimed by the Fourth National Bank of Boston, and by S. Rosenbloom and Company......Certificates for these barrels of whiskey, identified by serial numbers, were issued by the distilling company to a firm named Weiler Brothers; they were *322dated February 4,1910. Probably on February 5,1910, the distilling company applied to the Fourth National Bank of Boston for the discount of a note in the sum of $25,000, dated February 5, 1910, made by said Weiler Brothers to the order of the Thomas Moore Distilling Company, and by the latter endorsed. The collateral security offered for this note included the aforesaid certificates for 350 barrels of whiskey. The application was not then accepted by the bank, it desiring to first ascertain whether or not the storage charges had been paid. On February 11, 1910, the note was accepted for discount, and on that date the bank paid the proceeds thereof to the order of the Thomas Moore Distilling Company, and the money reached the latter in due course on or about February 14, 1910. Meantime, on February 8, 1910, S. Rosenbloom and Company purchased from the Distilling Company 350 barrels of whiskey and received therefor certificates for the very same barrels which were described in the said certificates issued to Weiler Brothers, dated February 4,1910, and now held by the Fourth National Bank of Boston. On the same day, to wit: February 8,1910, S. Rosenbloom and Company paid the distilling company in full for said whiskey. The whiskey was never removed from the warehouse of the distilling company, and it passed into the possession of its receiver, when he was appointed. Thus, there are two claimants for the same barrels of whiskey. They are both innocent, there being no finding that either the bank or S. Rosenbloom and Company knew anything about the fraud that was perpetrated.”
“The master awarded these 350 barrels to S. Rosenbloom and Company, because, as he held, that firm had the title to said whiskey and had the better title thereto as against the Fourth National Bank of Boston. Exceptions to these rulings have been filed......by the ......bank......upon the ground that,......its certificates were prior in date to those of S. Rosenbloom and Company and it had made advancements thereon bona *323fide......The bank contends that, having entered into negotiations on February 5 th with the distilling company and having accepted the proposition and paid its money innocently on February 11th, its title related back to February 4th, the date of its certificates, and is therefore better than that of S. Rosenbloom and Company. It reasons that the issuing of the certificates was sufficient to pass title, that the distilling company had thereafter no title which it could transfer, and that any subsequent transferee took only what the distilling company could convey, which was nothing as against the bank, an innocent pledgee.” In expressing its disagreement with these contentions, the court below holds that the certificates issued by the distilling company, although, under some circumstances, capable of passing title to the whiskey, were not “warehouse receipts within the purview of the statutes of Pennsylvania,” saying, “The distilling company was not a warehouseman within the meaning of the law......; there is no statute which authorizes distillers to issue storage warehouse receipts, they have been accustomed to issue them, for convenience, and, when issued, such receipts have been generally recognized in commercial transactions and by the courts as efficacious to transfer title to the whiskey therein described.” The court then adds, with reference to the present case, this important query: “But, at what time did the title pass?”
In answering the query just stated, the opinion continues thus: “The question here presented is not one of liability in damages, on the part of the distilling company — it is a question of title to specific goods as between two innocent claimants......; something more than the mere issuing of a certificate is necessary — title can only pass by this symbolical delivery when there is a completed contract between the purchaser or pledgee and the distilling company, and this can only arise upon payment of the consideration and delivery of the symbol of the property. It requires the act of both parties to *324consummate the contract, and it is only by the creation of mutual legal obligations that a transfer of title to the goods can result......It must be conceded that no contract existed between the distilling company and the bank, prior to February 11, 1910. It is true, the application for discount of the note was made on February 5th, but it was not accepted until February 11th; therefore, no binding contractual relations existed between the parties until the latter date, upon the familiar principle that the acceptance of a proposition is what constitutes a contract. Prior to February 11th, either party might have withdrawn, for neither was obligated to the otherit follows that, upon that date, the rights of the bank accrued. Upon that date, and not sooner, the bank could have demanded from the distilling company the delivery of the barrels of whiskey described in the certificates which it held. But, between February 5th, the date of the application for discount of the note, and February 11th, the date of acceptance of the proposition, to wit, on February 8th, S. Rosenbloom and Company had purchased and paid for the very same barrels of whiskey and had received the certificates therefor from the distilling company......The rights of S. Rosenbloom and Company accrued on February 8, 1910, on that date they made their agreement, they paid the price and they received the certificates for the goods, and everything was then done that was necessary to complete a transfer of the title......; hence, their right to this whiskey accrued three days earlier than that of the bank, and when the latter subsequently closed its contract, the distilling company had no title to convey. We are of opinion that the maxim, Trior tempore, potior jure/ applies......, and......are therefore obliged to hold......that, as between these innocent claimants, S. Rosenbloom and Company have the title to the 350 barrels of whiskey. The ruling upon this dispute governs in the disposition of the controversies between the ......bank and Herman Hoechstetter, respecting 250 *325barrels; ......and W. E. Newlin, receiver, respecting 250 barrels......; the same questions are involved in all of the said cases.”
The foregoing excerpts from the opinion of Judge Swearingen dispose correctly of most of the important points presented to us, and little need be added. After a close study of the argument of the able counsel for the appellant, we feel that the weakness of his position lies in the fact that he gives to the certificates issued by the distilling company all the attributes of warehouse receipts, whereas, under the laws of the United States, a whiskey warehouse is intended for the benefit of the distiller and for the storage of his own goods, and this court has ruled [Tradesmen’s Nat. Bk. of New York v. Kent Mfg. Co., 186 Pa. 556, 563] that our Warehousing Act contemplates a warehouseman as one engaged in the business of receiving and storing goods of others, that is to say — he, the warehouseman, “shall (always) be another than the owner of the goods”; adding, “a large part of the security of the holder of a receipt for the actual production of the goods when called for is the business interest and good faith of the warehouseman and the penal consequences of any breach of duty by him; and this security would be diminished greatly, if not rendered worthless, if an owner could choose to say his goods were on storage with himself and issue receipts which should pass from hand to hand for value, while the goods remained under his control and subject to levy by his creditors.”
We agree with the conclusion reached below — that these whiskey certificates are not the equivalent of warehouse receipts and that, while, under the authorities, the passing of such a certificate may be sufficient to show a symbolical delivery of the article therein described, yet, the title to the whiskey must be determined by the general law relating to the sale or pledge of personal property, and the delivery indicated by the possession of the certificate is only good as of the time when an actual *326valuable consideration passed between the parties to the transaction; and we further agree that the certificate first bona fide delivered for a valuable consideration carries the title to the goods which it covers as against duplicate certificates bearing earlier dates but delivered for value at a later time.
There is only one other feature of the case which calls for discussion. To begin with, we must acquiesce in the facts as stated by the master and auditor, for in no in-, stance has the appellant demonstrated clear error therein; next, we must accept the inferences that naturally flow from these facts; and finally, we cannot sustain contentions which depend upon facts not found or facts which, cannot naturally be inferred from those found. When we keep these guiding principles in mind, it appears that on each occasion the bank dealt directly with the distilling company and paid the proceeds of the note to it, so far as the record shows, there being no dealings with Weiler Brothers, the makers of the paper, yet, nevertheless, the appellant argues its case as though Weiler Brothers always had possession of the whiskey certificates and the loans from the bank had been directly to them. All the testimony has not been printed, and the record, as brought to us, does not disclose the details of the transactions between the makers and endorsers of these notes; but there is some evidence to the effect that the certificates in question were simply loaned to Weiler Brothers by the distilling company. If the whiskey certificates were ever actually in the possession of Weiler Brothers, they must have returned them to the distilling company, for all the circumstances in the case point to that conclusion and indicate that the certificates were in the company’s possession and control when the bank agreed to discount the notes and when it actually paid over the money. The master and auditor found that no consideration whatever passed between the parties to these notes at the time they were signed; the appellant argues, however, that the whiskey certificates were *327originally intended as an indemnity to Weiler Brothers for the loan of their credit to the distilling company, and that this loan of credit was a sufficient consideration to support a transfer of the whiskey to that firm and establish the validity of the certificates. Appellant has pointed to no evidence to sustain the position thus taken; but should we assume the fact to be as asserted, still, since none of the notes was intended to take effect until actually accepted by the bank, there would be no valuable consideration present to support a passing of the whiskey until the discount of the notes; and on the respective discount dates, in each instance, as already indicated, not only were the certificates back in the possession of the distilling company, but prior thereto that company had, in each instance, for a valuable consideration actually paid to it by other parties, issued duplicate certificates covering the same whiskey to the several purchasers or pledgees thereof. Under the circumstances, even though the certificates held by the bank were first issued to Weiler Brothers, yet, as against the certificates subsequently issued by the distilling company and bona fide delivered for a valuable consideration to other parties before the bank paid over its money, these earlier certificates cannot serve to defeat the title passed by the later ones and now vested in the present appellees; on the principle controlling this point, in addition to Block v. Oliver, 102 Ky. 269, and the other cases cited by the master and auditor, see Crawford v. Dollar Savings Fund & Trust Co., 236 Pa. 206, 210.
In conclusion, it must be borne in mind that, in matters such as we have before us, the Supreme Court of the United States has recognized that the “legal effect of the transaction depends upon the local law” [Taney v. Penn Bank, 232 U. S. 174, 180], and we must further remember that Pennsylvania differs from jurisdictions like Maryland [Merchants Nat. Bk. v. Roxbury Distilling Co., 196 Fed. 76], in that we have no statute expressly making whiskey certificates “negotiable instru*328ments.” While, perhaps, none of the authorities cited by the master and auditor, or referred to by us, rules the case at bar, yet each of them contains enlightening discussion on the principles here involved. Finally, it may be well to state that the record before us shows no evidence of laches, as in Miller v. Browarsky, 130 Pa. 372, to defeat the claims of the respective appellees.
The assignments of error are all overruled, and the decree is affirmed.