Court Opinion

ID: 8633992
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:42:10.324707+00
Date Added: 2024-06-11T16:55:52.127617
License: Public Domain

DILLON, Circuit Judge.
Grain may be disposed of by the owner to a warekouse-man, or to an elevator or mill proprietor. either by sale or bailment. In the former the title passes; in the latter it remains with the owner. It is sometimes difficult to determine whether a particular transaction is a sale or bailment. If a specific amount of grain is deposited by the owner, which is not to be changed by the bailee, but retained until called for, when the identical grain is to be restored, this is, of course, a plain ease of bailment. Under the Minnesota statute of March 3d, 1870, however it might be in the absence of such an enactment, a specific amount of grain deposited for storage does not cease to be a bailment, and does not become a sale, because it is mingled by the warehouseman, or elevator or mill proprietor, with the grain of other persons, since the statute authorizes the intermixture of grain of the same kind and grade, and recognizes the continued ownership of the depositors to a .quantity of grain equal in amount to that by them respectively deposited. Prior to the enactment of the statute just mentioned, it was decided, in Rahilly v. Wilson [Case No. 11.532], where there was an express contract, or an agreement implied from the known and invariable course of business, that the warehouseman or elevator proprietor might mingle specific wheat received with other wheat of like kind and grade, and ship or sell at his pleasure, with the further agreement or understanding that, on demand, he would pay the person from whom the grain was received the highest market price, or deliver the same amount of grain of a like quality, but not the identical grain deposited, nor grain from any specific mass, that such a transaction was a sale at the time of the delivery, and not a bailment.
There is an inherent difference between bailments and sales. If I deposit my wheat to be stored and safely kept for me, my property remains, and I extend no credit to the bailee. But if I leave my wheat with him with authority to sell it for his own benefit, and not as my agent, and upon his promise to pay me the value of the wheat, or to give me a like quantity of wheat when I shall demand it, the transaction is in essence a sale of my wheat and the extending by me of a personal credit for its value. *1223I see no satisfactory evidence that the act of the Minnesota legislature of March 3d, 1876, meant to abrogate essential distinctions between bailments and sales, so far, at least, as to place the grain owner who authorized, the warehouseman to sell, and the grain owner who only authorized him to store and ■safely keep, upon the same footing. Let me illustrate. Suppose I deliver one thousand bushels of wheat to a warehouseman, or elevator proprietor, with authority to sell, and it is sold; and the next da.y you deliver to him one thousand bushels to store,- and he does so; the next day he fails with your one thousand bushels on hand, and no more. Was it intended by the Minnesota legislature that I might take the one thousand bushels by replevin, or even share it pro rata with you? It seems to me not. The act, although not carefuHy drawn, and in many of its provisions far from clear, seems throughout to confine its remedial provisions to persons who deposit grain “for storage” or safe keeping, and not to those who deposit it with authority to sell.
The act is conceded to have been passed in consequence of the decision in Rahilly v. Wilson [supra], and I have felt, in view of the facts of that case, considerable embarrassment in ascertaining the precise scope of the act, although its general purpose is manifest. While it must be admitted to have made important provisions to protect persons who deliver grain for storage, I am inclined to think that it was not intended to embrace the case of persons who deliver giain to the warehouseman with express authority to sell the same on his own account, and upon an understanding that he is to pay the value of a like quantity of grain, or to deliver a like amount, upon demand; nor to embrace the case of one who leaves wheat with a miller with authority, as in Randell’s Case, L. R. 3 P. C. 101, to use it as part of his current consumable stock, and upon an agreement to pay the farmer or owner the value, or to deliver a like quantity when demanded.
The 1st section of the Minnesota act, if •it stood alone, might be construed to cover cases such as those just mentioned, but the 6th section forbids the warehouseman •or other person “receiving or holding grain in store to sell or otherwise dispose of or •deliver out of the storehouse or warehouse where such grain is held or stored, the same, or any part thereof, without the express authority of the owner of such grain and the return of the receipt given for the same.” No more effectual protection can be given to depositors of grain than this requirement that their grain shall not be sold, disposed of, or delivered out of the warehouse or the place where it is stored, without their consent. Unless the depositors otherwise agree, the grain deposited, or, at all events, an equal amount of the same grade, is always kept on hand, and, without their consent, the bailee is not authorized to sell it or to consume it, and substitute other grain in its place. If it is wrongfully sold or disposed of, it may be true that the owner’s rights will attach to other grain substituted in its place, or to any grain which the bailee may own, but we have no occasion now to discuss or determine the point. See 2 Kent, Comm. (12th Ed.) 590 (Mr. Holmes’ note).
In case of the insolvency of the warehouseman, or mill or elevator proprietor, where the grain on hand does not equal the amount of outstanding receipts, a person who has authorized his wheat to be sold or consumed, and pursuant to which authority it has been sold and removed or consumed, cannot come in competition, as respects grain on hand, with depositors for storage only, who have never authorized any sale, disposition, or removal of their grain.
The act authorizes the depositor - of grain for storage to demand and receive a receipt therefor; makes it criminal to issue a fraudulent receipt; makes the receipt negotiable and to stand for the grain, so that .whoever owns the receipt owns the grain; makes it larceny wilfully to negleet or refuse to deliver the grain, and criminal to sell, dispose of, or deliver the grain without the authority of the owner and the surrender of the receipt. Under this statute the warehouseman must be careful what kind of receipts he issues. If the contract under which the grain is received is one for storage, this excludes any implied right arising from custom or usage to sell or dispose of or deliver the grain out of the warehouse.
For the protection of the depositor, the. authority to sell or ship or remove the grain must be express; and for the protection of the public, the receipt given for the same must be returned.
Difficult questions may arise under this act as to the respective rights of depositors where there has been a wrongful sale or removal of the grain, and where there is not enough grain for all; but this case does not require us to consider them.
The record before the court is meagre in the statement of the facts. Prima facie, the receipt issued is one for storage; but it would appear to be remarkable if the real understanding was that the grain should not be used — that the mill company would be willing, as a business transaction, to store it free of charge for an indefinite time.
In my judgment, the receipt is not of such a nature as necessarily to exclude all parol evidence to show the character of the transaction, and to show by the acts and conduct of the parties that the wheat therein mentioned was bought for the purpose of being manufactured into flour, and was so manufactured, with the knowledge or consent of the defendant, soon after it was received.
LSee Case No. 8,CCS.]
The district judge states that his notes show the undisputed evidence was that defendant was the president of the bankrupt mill company; that he bought the wheat to enable the mill to carry on its operations; that the secretary issued to him the receipt; that the wheat was almost immediately made into flour, with the defendant’s knowledge, but the receipt was not surrendered until a short time before the bankruptcy, when the money was paid to the defendant. The bill of exceptions rests upon the proposition that, even if such were the facts, it is not competent, in view of the terms of the receipt and the provisions of the statute, to show these facts, or similar facts, by parol evidence. True, it is not competent to allow a witness to state what he intended by the use of the language in which the receipt was couched, but the bill of exceptions, taken as a whole, does not show that this was permitted. The contention of the defendants seems to have been, if such a receipt was given, that no state of case could be shown by parol evidence' which would make him liable to the assignee in bankruptcy. Such a proposition is too broad to be sound, and, if adopted, might be the means of not only working a fraud. upon the bankrupt act, but upon bona fide grain depositors under the local statute.
Parol evidence to show the circumstances under which the grain was received, the custom and mode of doing business, the use made of the gráin with the consent of the depositor, etc., has often been admitted in cases like the present. Rahilly v. Wilson [supra]; Randell’s Case, L. R. 3 P. C. 101; Chase v. Washburn, 1 Ohio St. 244; Lonergan v. Stewart, 55 Ill. 44. The only change in this respect made by the local statute is that the authority to sell must be “express,” but it need not necessarily be in writing.
I regret that the bill of exceptions is not more full and precise, but, as I construe it, no error is affirmatively disclosed, and the judgment below is affirmed. Affirmed.