162 Ga. 758 | Ga. | 1926
Lead Opinion
Originally, warehouse receipts were not by our statute authorized to be pledged as collateral; but by the act of
In Citizens Banking Co. v. Peacock, supra, this court quoted with approval from Colebrook on Collateral Securities this proposition: “The pledgee of warehouse receipts, receiving the same, with
But our statute expressly treats the transferee as a purchaser. Our Civil Code, § 3533, declares that “The pawnee may transfer his debt and with it the possession of the thing pawned, and the purchaser stands precisely in his situation.” Here the transferee of a pledge is distinctly declared to be a purchaser of the thing pledged. When the thing pledged is represented by a symbol, such as a bill of lading, or a cotton warehouse receipt, the transfer of the symbol amounts to a sale sub modo of the goods represented by the symbol. Now, if the goods so represented by the warehouse receipt have no existence, what is the right of the transferee, or purchaser? The seller in all cases of sales of goods (unless expressly or from the nature of the transaction excepted) warrants that he has a valid title and a right to sell. Civil Code (1910), § 4135. Thus in all cases, sellers of goods, or the symbols of goods (for the latter are but. shadows of the absent goods, and represents them), impliedly warrant that they have a valid title and a.right to sell them. What does the language, “a valid title and a right to sell,” mean ? Has a seller a valid merchantable title to goods which have no existence ? Has he a right to sell a special interest in chattels which do not exist? Generally delivery of goods is essential to the perfection of a sale. Delivery may be dispensed with, if such is the intention of the parties. It is true that delivery need not be actual, but may be constructive. Civil Code (1910), § 4125. “Delivery of a warehouse receipt is constructive delivery of the articles which it represents; but constructive delivery will not suffice if actual delivery at the time of the sale is impossible.” Livingston v. Anderson, 2 Ga. App. 274 (58 S. E. 505). The transferee of a warehouse receipt for cotton is entitled to demand the delivery of the cotton upon presentation of the warehouse receipt. Lightsey v. Lee, 8 Ga. App. 762 (70
Treating the trust company as a transferor of this warehouse receipt and not as the seller thereof or of the cotton represented thereby, the conclusion reached is the same. The transaction between the trust company and the bank can not be treated merely as a sale or transfer by the former to the latter of the note of the Cotton Warehouse Company. This would be taking too narrow a view of the transaction. It is true the trust company made to the bank an absolute sale of the note of the warehouse company. This sale was effected by a mere transfer by delivery of this instrument. Attached to this note as collateral security was a note of the Ellis Cotton Company, and attached to that note as collateral security was a warehouse receipt of the warehouse company which represented that 32 bales of cotton had been deposited by the maker of this note with the warehouse company, and that this cotton was in the actual possession of the warehouse company at the time of this transaction. The trust company, at the time it sold and transferred to the bank the note of the warehouse company, transferred to the bank by delivery the note of the Ellis
In view of what is said above, the transferor of a cotton warehouse receipt impliedly warrants that the cotton represented by such receipt is in existence at the time the receipt is transferred; and this is so whether the transaction is a mere sale or a transfer. To allow the holder of such receipt to get the money of a transferee when the latter gets nothing for his 'money paid in consideration of getting security for the note which he purchases, and for which such receipt is pledged as collateral security, would violate every sense of right and justice. If the cotton represented by such receipt was incapable of delivery because the means of its' identification were lacking, it was in effect not in existence; and proof of such fact would' authorize a finding that the cotton was not in existence' or was not in the custody of the warehouseman.
So the questions propounded by the Court of Appeals should be answered in the affirmative.
Dissenting Opinion
dissenting. “Every transferor of a negotiable instrument, whether by indorsement or delivery, warrants (unless otherwise agreed by the parties) that he is the lawful holder and has a right to sell, that the instrument is genuine, and that he has no knowledge of any fact which proves the instrument to be worthless, either by insolvency of the maker, payment, or otherwise.” Civil Code (1910), § 4277. There is here no mention of implied warranty as to collateral security attached to negotiable instruments. The Code of Georgia above quoted states explicitly what warranties in such circumstances are implied. Under the •facts stated, none other than those enumerated will be implied. Under the Code there was no implied warranty by the Continental Trust Company that the cotton represented by the receipt was in the warehouse at the time the Bank of Harrison purchased the note. At most, the Continental Trust Company warranted that it had
Pawns and pledges stand upon the principles of collateral security. Our Code (1910), § 3533, declares: “The pawnee may transfer his debt, and with it the possession of the thing pawned, and the purchaser stands precisely in his situation.” In Bank of Forsyth v. Davis, 113 Ga. (supra), at page 342 this court said: “When, the pawnee transfers his debt, and delivers to the transferee the property given to secure the debt, the transaction is not a sale of the pledge, but simply places the transferee in the same position which the original creditor occupied.” The above facts and the words of the question show that the Bank of Harrison only obtained a special property right in and to the warehouse receipt. Bouvier defines the word “collateral” to mean: “That which is by the side, and not in direct line. That which is addi