Court Opinion

ID: 8839406
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:35:38.252283+00
Date Added: 2024-06-11T17:05:09.551199
License: Public Domain

Bare, J.,
(dissenting in part.) It is quite clear, from the statement of facts, that the Fourth National Bank made the loans and received the pledge of the 85 barrels and the 15 barrels of whisky without knowledge or suspicion that the whisky did not belong to the Newcomb-Buchanan Company; and it is equally clear that, as between that company and George, the company had no authority to make the pledges, except as to the extent of its lien for taxes advanced in unbonding the whisky. This settles the question against the Fourth National Bank, unless the 'Kentucky factors’ act, as it is called, entitles the bank to a recovery to the extent of its debts, or, rather, to the value of the whisky, if not beyond the extent of the debts. It is claimed that the Newcomb-Buchanan Company in this transáction was not within the provisions of the factors’ act, and is expressly excluded by the fourth section, which enacts that “nothing contained in this act shall be taken to authorize a common carrier or warehouseman, who is not a factor or dealer in merchandise, to whom merchandise may be intrusted for transportation or storage only, to sell or hypothecate the same; and nothing contained in this act shall be taken to authorize any person to sell or hypothecate any merchandise in his possession upon which he has issued a warehouse receipt.” The Newcomb-Buchanan Company was not merely a warehouseman, but “its business was that of a maker or distiller of Kentucky whiskies, and a dealer therein,” and it did in fact Sell whiskies for George; therefore the first part of this section has no application. Neither is the latter part applicable. It may be argued that this part of the section applies only to merchandise in actual possession, and not to documents of title, but, be that as it may, the language can, we think, only include merchandise in possession, upon which there is an outstanding warehouse receipt given by the person who has the possession of the merchandise. In this case, the 85 barrels of whisky for which the Newcomb-Buchanan warehouse had issued warehouse receipts had been removed to Doherty’s warehouse, and the warehouse receipts executed by the Newcomb-Buchanan Company were returned and canceled. Reading the first and sixth sections of this act together, the case turns upon the question of whether or not the warehouse receipts pledged were “intrusted” to the Newcomb-Buchanan Company by George, within the meaning of this act. The original warehouse receipts given for the whisky in bond were sent to the company by George in July, 1883, for the purpose of raising the money necessary to pay the tax, and take the whisky out of bond. Thirty-five barrels of this was unbonded, and put in the Newcomb-Buchanan free warehouse, and receipts issued to George. These were pledged to the Bank of Kentucky to secure the joint and several noto of George and the company for $1,233. With the proceeds of this note, the 35 barrels of whisky were freed from the tax. Thus far the company acted strictly within its authority, and the Bank of Kentucky became the actual custodian of these receipts pledged *270to it. But the natural inquiry is, what was the relation of the company towards these receipts at the time the note was paid the bank by it and the receipts taken in? Did the company receive these warehouse receipts as George’s agent? It was entitled to be substituted in.the bank’s stead when it paid the note as the surety of George, hut this right, in the absence of any agency, arose from the company’s being George’s surety, and possession thus obtained would not be “intrusted,” within the meaning of the statute. The company was intrusted with the original receipts, for the purpose stated, and was intrusted with the receipts issued for the whisky when freed from the tax, for the purpose of pledging them to the Bank of Kentucky, but only receipts for 35 barrels were actually pledged. In the correspondence between George and the company in July, 1883, George expresses a strong desire to sell a part of this whisky to pay the tax, instead of borrowing money for that purpose; and requests in a letter to the company that “when an opportunity may offer for the sale of, say, 25.bbls., please report it, and price, to me;” but I do not find that George actually authorized the company to sell any part of this whisky without further authority from him. He did, at the maturity of the note in June, 1884, authorize the company to sell other whiskies which he owned, and which were in the possession of the company, and to apply the proceeds of sale to the payment of this note. The company was the agent of George to pledge the receipts to secure the note executed to the Bank of Kentucky, and it may be insisted that, considering the company’s other relations to George as stated in the agreed facts, the company’s agency continued for the purpose of receiving from the bank these receipts whenever the note was. paid. Undoubtedly, had the company sold the other whiskies as authorized, and applied the proceeds to the payment of the note, and thereupon received from the bank these receipts, it would have been as the agent of George, and George would have intrusted the company with the receipts; but the mere fact that the company had been the agent of George to pledge these receipts to the Bank of Kentucky, and continue the pledge by delivering the renewal notes, did hot authorize the company to receive these pledged receipts as the agent of George, when it paid the note, without his knowledge or authority. I conclude, therefore, that these warehouse receipts were not intrusted to the company by George, within the meaning of the first séction of the factors’ act, and that the Fourth National Bank is only entitled to a lien for the amount of note, ($1,233,) with interest.
•The receipts representing the 15 barrels of whisky were sent to the Newcomb-Buchanan Company, so the whisky might be unbonded. These were sent at the same time as the other receipts, and for the same purpose. The company made an attempt-to export this whisky, but failed, and,, upon its return from the Canadian border, paid the tax, but did not put it into one of its own warehouses, but carted it from the cars directly to Doherty’s warehouse, and took a warehouse receipt in its own name. This receipt was subsequently pledged to the Fourth National Bank. . The. correspbndence between Gnorge.and the company *271proves that George knew this whisky had not been pledged to the Bank of Kentucky, and that the company would make other arrangements to pay the tax which was then due. This was in August, 1883, and on the 12th February, 1884, George was informed by letter that the company had this whisky “in store here.” There does not appear to have been any directions from or inquiry made by George after this, about the whisky, until after the company’s failure, in the fall of 1884. Doherty’s receipt is dated February 25,1884, and was pledged to the Fourth National Bank in June, 1884, which was long after George knew the company held this whisky “in store,” and when he knew that, he did not have either the Newcomb-Buehanan Company’s or any other warehouse receipt in his possession for this whisky. After the receipt of the letter of the 12th February, 1884, George acquiesced in the company’s holding “in store” his whisky without giving him its or any other warehouse receipt. The warehouse receipt of Doherty, which was pledged, was obtained by reason of the possession of this whisky which George intrusted the company with, and is clearly within the factors’ act. I therefore conclude that the Fourth National Bank’s lien on the 15 barrels of whisky is valid, to the extent of the debt of $1,500, for which it was pledged by the company, and to this extent dissent from the conclusions of Judge Jackson.