4 Ga. App. 308 | Ga. Ct. App. | 1908
This was an action of trover brought by the Bank of Sparta against D. L. Butts, on the following state of facts: > Butts was engaged in the warehouse business, and also in the com
The case was tried by the judge Avithout the intervention of a jury, and he rendered a judgment against Butts for the full amount of the suit, less $34.38 principal, which the court allowed as a credit to Butts for advances which he had made on the cotton prior to December 30, 1905 (this being the date of demand by the Bank of Sparta for the cotton), and interest to that date on the said sum of $34.38 principal, amounting to $3.74. The writ of
There are no disputed questions of fact in the case, the question being one of law arising from the facts as above substantially stated. This one question of law seems to be covered by sections of the Civil Code. Section 3956 provides, that “promissory notes and evidences of debt, warehouse receipts, elevator receipts, bills of lading, or other commercial paper symbolic of property, may be delivered in pledge.” Section 3957 declares that a pledgee is such a bona fide holder of the property represented by the symbol as will protect him under the same circumstances as' a bona fide purchaser. Section 3960 provides that while the general property in the goods or pledge remains in the pledgor, the pledgee has a special property for the purpose of the bailment. These sections of our code have been applied by the Supreme Court to warehouse receipts, in the case of Citizens Banking Co. v. Peacock 103 Ga. 171 (29 S. E. 752); and this decision, in our opinion, eliminates any question of doubt as to the rights of a bona fide holder of warehouse receipts, if, indeed, there was any doubt under these sections. Under this decision of the Supreme Court, supported by authorities therein cited, it is now well established that when warehouse receipts for cotton or other goods aré delivered in pledge, as collateral security for the payment of a debt, the legal effect of such delivery is to put the title to the property pledged and described in such receipt in the pledgee. The Supreme Court quotes with approval the statement of Mr. Colebrooke, in his work on Collateral Securities, §§413, 414, that “the transfer for value, as collateral security, of warehouse receipts, by indorsement and delivery, or by delivery only, where such receipts are made payable to ‘holder,’ or ‘only upon the return of this receipt,’ vests the legal title and possession of the property in the pledgee, and is equivalent to an actual delivery of the property;” and that “the pledgee of warehouse receipts, receiving the same, with or without indorse
It is contended in this case that the statement in the warehouse receipt, that the cotton which it represents is only deliverable to the holder of the receipt on-payment of “customary charges and all advances^” is sufficient to put any one who takes it on notice that any advance made on the cotton will have to be paid before the cotton can be demanded. These general words are printed in the receipt with a blank space left for the statement of the amount of the advances; and in the present case no amount 'is inserted in the receipts. We think that where warehouse receipts containing these words are pledged as collateral security, they do not convey notice to the pledgee that any advances have in fact been made, or that the pledgee would be required to pay any advances which may have been made or will be made on the cotton represented by the receipts. If, when the pledgee took the receipt as collateral, it contained a definite statement that, in addition to the customary charges, such as storage and insurance, a certain sum stated had been advanced to the pledgor, on the cotton, the pledgee would take it subject to that advance. It was the duty of the warehouseman, when he issued the receipt, if he had made an advance to the owner of the cotton at that time, to so state in the body of the receipt;'and if he subsequently advanced to the owner any money for supplies, on the cotton in his possession as warehouseman, he should have required the production of the receipt and have entered thereon a statement of such advance. Any other rule would render warehouse receipts worthless as collateral security. It would'enable the pledgor and the warehouseman to perpetrate a fraud on the pledgee, against which he would have no-
The foregoing decision, we think, is in entire harmony with adjudicated eases and with the law merchant. We therefore conclude that the trial court erred in allowing a credit to the warehouseman for any advances which he had made, other than the customary charges for storage and insurance, prior to the date of the notice of the bank to him that it held the warehouse receipts. It was not necessary for the bank to have given him any notice; for when he issued the receipts he did so with the knowledge that they were negotiable, and that the title to the property represented by these symbols passed with their transfer. The judgment in favor of the plaintiff is correct, except that, as finally diminished by credits allowed by the court, it is not large enough. The judgment is therefore reversed, so that it may be corrected and remodeled by the court in accordance with this opinion. Judgment reversed.