Court Opinion

ID: 3611342
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:55:25.523672+00
Date Added: 2024-06-11T14:24:12.529377
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 189 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 190 
The differing views of the judges of the learned court whose decision is before us, as to the proper construction and effect of the receipt, indicate difficulty in the question, but we think it was well disposed of. Not only must the provisions of the United States Statutes control, but the contract appears to have been actually made in reference to them. It acknowledges the receipt of the whisky, not generally, but for "storage" in the "distilling bonded warehouse;" and while it is dated 25th January, 1876, states that the whisky was made in March, 1875, and contains a guaranty that the loss by evaporation, etc., shall not exceed two and one-half gallons at the time of "withdrawal." These phrases represent facts or conditions made important by statute. The defendants were warehousemen, not in the usual sense, but from necessity and force of law. Their duties were by statute confined to a single article, and that of their own production. As the place of storage of that article is defined by statute, so is the length of time prescribed during which the storage may continue. As distillers, they were required to provide a warehouse on their distillery premises, constituting a part of it and to be used only for the storage of distilled spirits of their own manufacture until the tax thereon is paid. This upon approval by the proper officer "is declared to be a bonded warehouse of the United States, to be known as a distillery warehouse" (R.S. of *Page 192 
U.S., § 3271), and placed in the joint custody of the proprietor thereof and a storekeeper assigned to it by the government. (R.S. of U.S., § 3274.) With formalities prescribed by statute, spirits distilled by the owner are removed into this warehouse (§ 3287) under an entry which must contain among other things (§ 3293) the name of the person making it, the date thereof and the amount of tax. The distiller is at the same time required to give a bond, as was done in this case, and which in substance requires him to remove the property therefrom within one year from its date; for by section 3289, no distilled spirits on which the tax has been paid can "be stored or allowed to remain on any distillery premises, under a penalty of a forfeiture of all spirits so found;" and section 3294 makes provision for the withdrawal of such spirits from the warehouse. These provisions were known to or at least binding upon both parties at the time of making the receipt. They become therefore a part of the contract and are essential in determining the rights of the parties as so modified. (Clark v. Pinney, 7 Cow. 681; 2 Parsons on Cont. 515.) The statutory provisions may be deemed referred to or written in the receipt. It will then read as declaring that the whisky is to be held on storage in the distillery bonded warehouse not exceeding one year from the date of entry; and this (in view of the statement of the time of its manufacture and the law relating to the subject [§ 3293]), is the same as saying not exceeding one year from April 5, 1875; for it is there said the entry shall be made within five days after the beginning of the month succeeding its manufacture. With the expiration of the year, then, the receipt, so far as it defined the obligation of the defendants, ceased. They were no longer bound to keep the property in the warehouse, for they had no power to do so. (Dunbar v. Mitchell, 12 Mass. 373.) It could not have been done without violating the law and subjecting the property to forfeiture. This could not have been contemplated by either party. At the end of the year the defendants in fact paid the tax and the owners resumed possession of the property. The receipt was in their hands at the time, and they retained it. *Page 193 
But it cannot be pretended that the possession of the receipt would have availed James Gill  Co., in any subsequent demand of the property. One who pays his negotiable note or bill of exchange before maturity, and without exacting its delivery or cancellation, runs no other risk (save to a bona fide holder) than his inability to prove payment if again called upon by the payee or by one who took it after it became due. How, then, can the possession of this receipt, acquired after its force was spent and after, in fact, its subject-matter had been delivered to the bailor, avail the plaintiff? At common law, not at all. But he relies on the statute of Kentucky to shut out the equities which, against Gill  Co., would prevail. That statute regards the plaintiff as the holder of a negotiable instrument; likens him to one acquiring a bill of exchange by proper transfer. In this capacity, if we are right in our construction of the receipt, he cannot recover. He received it after it reached maturity, when the specific obligation of the defendants had ceased; and as he is chargeable with knowledge of the law, he is thereby and by the language of the receipt affected with notice of that fact. It stood in the line of his title to the property. He bought the whisky of James Gill  Co. They did not deliver it to him, but, as the complaint states, "as a means of delivery" thereof, they gave him the receipt. It contained a clear notice to him that the custody of it by the defendants as keepers of a government or "distillery bonded warehouse" had ceased. He was then put upon inquiry to ascertain what had become of it. If made, it would have resulted in the information obtained subsequently by him in September — its delivery in due time to the owners. That is, that the terms of the obligation had been fulfilled; the duty owing by the warehouseman to the owner of the whisky, paid or discharged. His position in this regard is not different from that of an assignee of a bill of exchange after maturity. As to that, after it is due, "it comes disgraced to the indorsee, and it is his duty to make inquiries concerning it. If he takes it, though he give a full consideration for it, he takes it on the credit of the indorser and subject to all the equities with *Page 194 
which it may be incumbered." (Byles on Bills, 262 [6th Am. ed.], citing Lord ELLENBOROUGH.) Except for the statute of Kentucky, the plaintiff would have no other rights than the holder of a special contract, and those the same as belonged to his assignor. By virtue of that statute he has none greater than the holder of a bill of exchange negotiable by law. As such he could not recover. Moreover, the bill of sale to plaintiff expressly declares the whisky to be "in bond or tax paid." It went with the receipt. It was notice that one or the other of these conditions affected the whisky. Knowing the law, the plaintiff must have known that if the tax was paid the property could not be in the distillery bonded warehouse, mentioned in the receipt. If in bond, it was necessarily elsewhere; and in the relation itself there was sufficient to put him upon inquiry. For if either fact existed, the liability of the defendants was modified. They must have ceased to hold the property in the character in which they gave the receipt, and could not be liable for goods in the described warehouse. As general depositaries, or persons having charge of the goods of another, they might have been liable had they retained the spirits. Such a liability does not here exist, for the property was restored to its owners. Nor could the defendants be bound by the receipt any longer than the property could lawfully remain in the warehouse. The appellant, however, claims that under the statute of Kentucky before quoted (§ 8), he is entitled to damages as one "aggrieved" by the omission of the defendants to retain the property until the delivering up of the receipt. It is well answered by the respondent; the complaint makes no case for that claim, and whether the courts of this State would entertain such an action need not be decided. The terms of the receipt are special. By reason of them the defendants have incurred no liability, for, as to James Gill 
Co., they performed their obligation. As to the defendants, none is due, for they claim under a fraudulent transfer of an assumed right, and if they suffer, it is by reason of their own negligence.
The judgment should be affirmed.
All concur, except FOLGER, Ch. J., absent from argument.
Judgment affirmed. *Page 195