161 So. 2d 124 | La. Ct. App. | 1964
Lead Opinion
This is an action instituted by Carl H. Loewer against Frank J. Duplechin,. d/b/a Duplechin Bonded Warehouse, and the New Amsterdam Casualty Company, surety on Duplechin’s warehouseman’s bond, for a sum of money alleged to be due plaintiff as the purchase price of rice which plaintiff had delivered to defendant’s warehouse and which thereafter was allegedly sold. Both of the defendants answered denying liability. New Amsterdam Casualty Company also filed a third party complaint against Duplechin in which it seeks to recover from Duplechin any sum which it may be condemned to pay plaintiff. After trial, judg
This suit was consolidated for the purposes of trial and appeal with the cases of Bieber v. New Amsterdam Casualty Company et al., 161 So.2d 136, and Bieber v. New Amsterdam Casualty Company et al., 161 So.2d 136. These suits, although filed by different plaintiffs, were instituted against the same defendants who are named in the instant suit, and the actions are based on facts similar to those which exist here. A third party action was filed by New Amsterdam in each of these suits and the same legal and factual issues are presented in them as are presented in this case. In each of the above-styled suits judgment was rendered in favor of plaintiff and against defendants, in solido, and judgment was further rendered for the same amount in favor of the third party plaintiff and against Duplechin. The defendant, New Amsterdam Casualty Company, has appealed from the judgments rendered in all of these consolidated cases.
The evidence shows that during the year 1957 defendant Duplechin owned and operated a public warehouse in Eunice, Louisiana, known as Duplechin Bonded Warehouse, which warehouse was licensed and operated as a bonded warehouse under the provisions of Title 54, Chapter 4, of the Louisiana Revised Statutes. In compliance with the requirements of LSA-R.S. 54:250, Duplechin furnished and filed with the State Warehouse Commission a surety bond, with Duplechin as principal and New Amsterdam Casualty Company as surety, which bond provides that:
“NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal shall honestly conduct said business, faithfully perform all duties and obligations to all parties doing business with said Principal as a warehouseman, and shall pay all monies or accounts owed by it to the State Warehouse Commission, any person, firm, exchange, corporation or association whatsoever arising out of its conduct of such business as a warehouseman in farm produce, and otherwise conducts its said business in accordance with the provisions of the Louisiana Revised Statutes of 1950, Title 54, Chapter 4 (Act 218 of 1940), and the regulations issued thereunder then this obligation shall be null and void, otherwise to remain in full force and effect.”
In September, 1957, Duplechin entered' into a separate oral agreement with each, of the plaintiffs in these consolidated cases to the effect that he would guarantee each of them a certain amount per barrel for the rice raised by them, which rice was. then still growing in the field but was to. be delivered to the defendant’s warehouse immediately after being harvested, and that payment would be made for that rice at the agreed price as and when it was sold by Duplechin. Under this agreement, Loewer was to receive $7.25 per barrel for his rice, and the plaintiffs in the other two suits-were to receive $7.50 per barrel for theirs. Pursuant to these agreements, each of these plaintiffs delivered his rice to Du-plechin’s warehouse after it was harvested', and the rice was then dried and stored in that warehouse. Later, and pursuant to the same agreement, Duplechin sold' and delivered the rice, but he has never paid plaintiffs the amounts which he had “guaranteed” them for it, nor has he accounted to them for any of the proceeds- of the sale. Plaintiffs thereupon instituted' these-suits against Duplechin and his surety for the balance due on the agreed price for such rice.
Plaintiffs contend “that they delivered', their rice to Duplechin under an agreement constituting Duplechin their agent or broker, as a warehouseman, to store their rice,.
The trial judge concluded “that Duplechin was, insofar as his dealings with the three plaintiffs are concerned, operating as a warehouseman and that, consequently, plaintiff should recover judgment against Duplechin and the New Amsterdam Casualty Company.
On this appeal New Amsterdam contends that the trial judge erred in holding that this transaction occurred during the course and scope of Duplechin’s duties “as a warehouseman.” It argues that the agreement between plaintiff and Duplechin constituted either (1) a credit sale of rice to Duplechin, or (2) the delivery of rice to Duplechin under a mandate to him for the purpose of sale. Since the surety bond which New Amsterdam issued to Duple-■chin is conditioned upon the latter’s “doing business * * * as a warehouseman” ■and since LSA-R.S. 54:58 defines a warehouseman as “a person lawfully engaged in the business of storing goods for profit,” New Amsterdam contends that its surety undertaking does not cover Duplechin’s individual obligation, either as a purchaser of the rice or as an agent or factor to sell it for plaintiff.
Duplechin testified that at the time he entered into these agreements with plaintiffs he understood that he was purchasing their rice, as a growing crop, for a stated price per barrel, which purchase price was to be paid to plaintiffs as and when Duplechin sold the rice. He understood that title to the rice passed to him “when it was delivered, when it was brought into my warehouse * * *, as soon as it was weighed, when I gave them” a weight certificate; and that while the rice was in his warehouse prior to being sold plaintiffs were without authority to sell it themselves. Duplechin further testified that he purchased plaintiffs’ rice as an individual and not as a warehouseman, that no storage charges were ever sought or collected by him for the storage of this rice, and that although the rice was actually stored in his warehouse for a period of time before being sold, it was stored for Duplechin’s personal use and not for plaintiffs.
Each of the plaintiffs understood the oral agreement to be that he retained ownership of his rice while it was stored in the Duplechin warehouse, that he could have removed or sold the rice at any time, and that he had merely designated Duple-chin as his agent to sell the rice for not less than a stipulated price per barrel. According to the testimony of each plaintiff, he understood that Duplechin had no authority to sell the rice for less than the agreed price per barrel without plaintiff’s permission, unless Duplechin wanted to make up the difference, that plaintiff was not obligated to pay any storage, drying or sacking charges on the rice under any circumstances, but that Duplechin was entitled to retain all that portion of the proceeds of the sale of such rice which exceeded the agreed price per barrel.
None of the plaintiffs were ever issued any “bonded warehouse receipts” on the rice involved in these suits. At the time the rice was delivered to the warehouse each of said plaintiffs received “weight certificates” which show the weight and variety of the
Since Duplechin has not appealed, the judgment in favor of plaintiffs and against him is final. The sole question presented here, therefore, is whether New Amsterdam, as the surety under the warehouseman’s surety bond furnished by Duplechin, is also liable to plaintiffs for the amounts claimed.
We think the evidence establishes, as contended by plaintiffs in each of these suits, that plaintiffs delivered rice to the Duplechin warehouse with the understanding and agreement that Duplechin was to sell the rice for them at a stipulated price per barrel, and he was to pay to plaintiffs that agreed price per barrel immediately after the rice was sold. Under these agreements, therefore, Duplechin was appointed as the agent, broker or factor for each of said plaintiffs in disposing of this rice.
This seems to he the first instance in which a Louisiana appellate court has been called upon to determine whether the buying and selling of grain by a public warehouseman, or his serving as an agent or factor in selling grain which is stored in his warehouse, are acts which constitute a part of his duties and obligations to the patrons of his “warehouse,” as that term is used in Title 54 of the Louisiana Revised Statutes, so as to make the surety on his warehouseman’s bond liable for failure of the warehouseman to pay for the grain purchased or to remit the proceeds of the sale to the original owner of the grain.
LSA-R.S. 54:58 defines “warehouseman” as follows:
“(11) ‘Warehouseman’ means a person lawfully engaged in the business of storing goods for profit.”
In Fields v. General Casualty Co. of America, 216 La. 940, 45 So.2d 85, our Supreme Court said:
“ * * * The storing of goods on property for purposes of sale and distribution does not constitute the operation of a warehouse. It is only where a person is engaged in the business of storing goods for profit that he can he classed as a ‘warehouseman’ and the structure in which the goods are stored as a ‘warehouse.’ * * * ”
At 121 A.L.R., page 1157, Anno. — Public Warehouseman’s Bond, we find the following statement:
“The sale of merchandise and the collection and remittance of the proceeds thereof not coming within the duties of a public warehouseman as defined in the Uniform Warehouse Receipts Act, it has’been held that a surety on the bond of the warehouseman conditioned that he will faithfully perform the duties required of him by law is not liable for the failure of the warehouseman to pay over or account for the proceeds of such sales or collections made by him under an agreement with the owner in states where such statute is in force. (Citations omitted). (The section of the Uniform Warehouse Receipts Act above referred to as defining the duties of a warehouseman is § 58, which defines ‘warehouseman’ as ‘a person lawfully engaged in the business of storing goods for profit.’)”
Volume 56 of American Jurisprudence, at Anno. — Warehouses, contains the following statements:
“§ 120. Obligations of Sureties. — A warehouseman’s bond is generally given to secure the faithful performance of the warehouseman’s obligations under the law of the state, and a surety’s*128 liability on a bond given in compliance with a statute to qualify the principal as a public warehouseman, and executed by the surety in the light of statutes in force defining the duties of a public warehouseman, cannot be extended beyond the duties so embodied in the statutes. A statute defining a warehouseman as a person lawfully engaged in the storing of goods for profit has been held to confine the surety’s obligation on a statutory bond of a public warehouseman to the storing of goods for profit, not withstanding the warehouseman undertakes additional obligations.
“§ 121. For Default Relative to Distribution of Proceeds of Sale of ■Goods. — On the ground that the sale of ■merchandise and the collection and remittance of the proceeds thereof do not come within the duties of a public warehouseman, as defined by statute, a default relative to the proceeds of a sale <of the stored goods, where the sale and collection of the proceeds, or the collection of the proceeds alone, are undertaken by the warehouseman under .authority from the depositor, has been held not to be within the terms of a bond conditioned upon the faithful performance of ‘acts and duties enjoined upon the warehouseman by law,’ or ‘duty as a public warehouseman, in accordance with the law.’ The latter result has been reached notwithstanding that extrastatutory duties in respect of •collection and remittance of proceeds of stored goods are customarily assumed by warehousemen. * * * ”
In State ex rel. Cawrse et al. v. American Surety Co. of New York et al., 148 Or. 1, 35 P.2d 487, the plaintiffs, wheat farmers, liad deposited some wheat with the warehouseman with the understanding that the warehouseman would sell the wheat for them and then credit their accounts with the proceeds. Pursuant to that agreement the wheat was sold, but plaintiffs’ accounts were not .credited, so plaintiffs sued the warehouseman and his surety for conversion. In holding -that the surety was not liable for such conduct, the Supreme Court of Oregon stated:
“ * * * jn Savage v. Salem Mills Co., 48 Or. 1, 85 P. 69, 10 Ann.Cas. 1065, and State v. Stockman, 30 Or. 36, 46 P. 851, we held that bailments did not arise when grain was delivered to warehousemen under agreements that authorized them to use the grain and discharge their obligation to the depositors by paying for it, or, in the event that the warehouseman neither used nor sold it, to deliver, upon demand of the depositors, a like amount of grain.
“Thus, a warehouseman is a person who receives grain for the purpose of its storage and return. He is not a factor nor a sales agent. Such being true, we are satisfied that if the warehouse company sold grain belonging to the plaintiffs and collected the prices obtained, those services were not performed by it in its capacity as a warehouseman. * * * ”
In Republic Underwriters v. Tillamook Bay Fish Co. et al., 133 Tex. 141, 126 S.W. 2d 641, 121 A.L.R. 1152, the Tillamook Company delivered a shipment of canned salmon to a warehouseman in Texas with the understanding that the warehouseman would deliver it to a certain purchaser, collect the purchase price therefor, and remit it to the Tillamook Company. The warehouseman delivered and collected but failed to remit, so Tillamook sued him and his surety for recovery of the proceeds. The evidence showed that there was a general custom among public warehousemen in Texas to deliver and collect and remit. In holding that the surety was not liable to plaintiffs under its bond and under the Uniform Warehouse Receipts Act, which was in effect in that state, the Supreme Court of Texas held that:
“ ‘ * * * The bond was given in compliance with the provisions of the statute as a prerequisite to the right to*129 qualify as a public warehouseman and it is apparent that the surety in executing the same did so in the light of the statutes then in force defining the duties of a public warehouseman, and the surety’s liabilities so assumed cannot be extended beyond the duties so embodied in the statutes. (Citations omitted). No provision is found in the statutes making it the duty of a public warehouseman to collect and remit the sale price of goods stored with him. * * * The fact that such extra duties are customarily assumed by those engaged in the business does not enlarge the obligation of the surety on the bond where the statute defines the duties of the principal and the bond which was given in compliance with the provisions of the statute merely binds the principal to perform the duties as such in accordance with the law. (Citation omitted).’
* * * * * *
“ * * * The statute defines a warehouseman as a ‘person lawfully engaged in the business of storing goods for profit.’ This definition limits the statutory duties of a warehouseman to ‘storing goods for profit,’ under the provision fixed by law.
“While the warehouseman might make a valid additional contract (which we do not need to decide), the surety’s obligation extends only to the statutory duties.”
In Jensen v. United States Fidelity & Guaranty Company, 78 Idaho 145, 298 P.2d, 976, the plaintiff delivered wheat to a warehouseman and was given “scale or weight slips,” but no “warehouse receipts.” Plaintiff contended the grain was delivered to the warehouse “for storage only,” but the warehouseman contended the grain “was purchased by him.” When the warehouseman failed to pay plaintiff for his grain, he sued the warehouseman and his surety for the amount due him. In holding that the surety was not liable on its bond, the court stated:
“The Bonded Warehouse Law and the Uniform Warehouse Receipts Law make it clear that a warehouseman by the act of delivery does not acquire any right to the goods except to possession. A warehouseman is merely a bailee of the goods stored, 56 Am.Jur. p. 331, and, except as to fungible goods, is under the obligation of delivering the specific goods stored to the owner or other person entitled to possession.
“A surety on a warehouseman’s bond is not liable for the defaults of a purchaser who fails to pay or of a factor who fails to account, State ex rel. Cawrse v. American Surety Co., 148 Or. 1, 35 P.2d 487; Republic Underwriters v. Tillamook Bay Fish Co., 133 Tex. 141, 126 S.W.2d 641; Note, 121 A.L.R. 1157.
“If Hubbard (the warehouseman) was a purchaser of the wheat, title passed to him not later than at the time of delivery and' the obligation to pay the price then or at a time agreed upon attached. Plubbard could not be a purchaser of the grain under obligation to pay the price and at the same time be a warehouseman under obligation to redeliver the grain.”
And, in United States v. Fireman’s Fund Insurance Company, 191 F.Supp. 317 (N.D. Idaho, 1961), where an action was instituted against a warehouseman and his surety for conversion of grain, it was necessary for the court to interpret Idaho’s Uniform Warehouse Receipts Act. The intervenor in that suit, Frazier, had sold the warehouseman a crop of oats, and had agreed that the warehouseman would sell another lot of oats for him to prospective purchasers. The warehouseman’s check for the crop was returned for lack of sufficient funds, and the sale of the other lot of oats failed to materialize, so intervenor sued for the agreed sales price of both. In hold
“ * * * it is clear that the relationship between these parties was not that of bailor-bailee which normally results from conducting a warehouse business in accordance with the provisions of the Bonded Warehouse Law * * *. The most reasonable inferences which may be drawn from the conduct of the parties here indicates that either a purchaser-seller relationship existed, or, more realistically, that Melvin was acting as the Intervener’s commercial agent or factor. * * *
“ * * * Since the evidence discloses that the warehouseman here, Melvin, was acting either as a purchaser or a factor who either failed to pay or account, and not as a bailee of Inter-vener’s oats, the Court is of the opinion that the Intervener’s action must fail.”
The decisions hereinabove discussed are based on uniform statutes in effect in the states involved, which statutes are almost identical to the ones applicable in this State. These cases seem to be uniform in holding that where the warehouseman accepts goods for the purpose of selling them as an agent or factor for the owner, as in the instant suit, the relationship between the owner and the warehouseman is not that of bailor and 'bailee, and the surety on the warehouseman’s bond is not liable for the failure of the warehouseman to remit to the owner the proceeds of the sale of those goods-. No, cases have been pointed out to us, and we know of none, where a different conclusion was reached under the same or similar facts.
LSA-R.S. 54:57 provides:
“This Chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which -enact its provisions.”
In view of the legislative mandate expressed in the above-quoted section of the Revised Statutes, we feel that we should follow the pertinent decisions of other states who have enacted the Uniform Warehouse Receipts Act, where there is no conflict in those decisions and where the interpretations followed appear to us to be reasonable, logical and sound. We think the reasoning in each of the cited cases is sound, and accordingly, we hold that the trial court erred in holding that Duplechin’s dealings with plaintiffs were in his legal capacity as a public warehouseman and that New Amsterdam was liable to plaintiffs on its surety bond. In our opinion when a warehouseman accepts grain as an agent for the purpose of selling it, he is not acting as a public warehouseman whose duties are defined by law as the “storing of goods for profit.” And, under those circumstances the warehouseman’s surety is not liable for his failure to remit the proceeds of such sales when the surety’s obligation is restricted by its contract with the warehouseman to his dealings “as a warehouseman.”
In arriving at this conclusion we do not mean to hold that a surety, by appropriate provisions in its contract, could not extend its obligations under its surety bond to include liability for the failure of the warehouseman to remit proceeds of the sale of goods left with him for the purpose of sale. Also, we agree that a different result might be reached in some future case, even under a contract identical to the one involved here, if the Legislature later should see fit to change or enlarge the duties of a warehouseman to include the serving as agent or factor for the sale of goods delivered to the warehouseman for that purpose.
Since we have concluded that plaintiffs are not entitled to recover in these consolidated cases, after reviewing the cases on their merits, it is not necessary .for us to consider the exceptions of' no cause of action and no right of action filed by the defendant-appellant.
For the reasons herein set out, the judgment appealed from is reversed insofar as it (1) condemns defendant, New Amsterdam
Affirmed in part and reversed in part.
Dissenting Opinion
(dissenting)'.
The scholarly majority opinion has well and correctly stated the facts. It has also set out well the law relating to the Uniform Warehouse Receipts Act, found at Chapter 1 of Title 54, Louisiana Revised Statutes (Sections 54:1-58); as well as the jurisprudence of certain other states regarding the sureties’ liability under the bonds there in question.
The majority’s fundamental error, however, consists in failing to perceive that the present suit does not involve any construction of the Uniform Warehouse Receipts Act. It further does not involve a surety bond with the more limited indemnifying agreement found in the bonds in the Oregon, Texas, and Idaho decisions relied upon.
What we are here concerned with is a Louisiana statute, enacted by.Act 218 of 1940 — more than three decades later than the Warehouse Receipts Act. The act we are concerned with is now found in the. Revised Statutes of Chapter 4 of Title 54 (Sections 241-260), and it is entitled “State Regulated Farmers’ Warehouse”.
Although the State Warehouse Commission also regulates the issuance of warehouse receipts, the function of the Louisiana warehouseman’s statute is broader. It is designed to regulate the licensing of the operation of agricultural products warehouses in the interest of protecting Louisiana farmers and of encouraging the development of Louisiana agriculture. Cf., LSA-R.S. 54:247.
The bond required of a warehouseman by this Louisiana statute (Chapter 4) is much broader, as we shall see, than merely protecting against defalcation in the issuance of warehouse receipts in accordance with Chapter 1, the Warehouse Receipts Act. However, before describing in more detail the statutory and bond provisions applicable to this casa, I think it well to recapitulate briefly the present facts.
I.
The three farmers in the present companion suits had delivered certain seed rice to the warehouseman for storing, with the agreement that the warehouseman was authorized to sell this seéd rice to buyers at the warehouse for a minimum net price per barrel ($7.25 Loewer, $7.50 Bieber), green weight.
It was specifically understood by the parties that the warehouseman could not sell this seed rice for less than the minimum price, without contacting the farmers. During the entire time the rice was stored in the warehouse, it remained the property of the farmers; they themselves could sell it or mortgage it directly, if they wished.
These plaintiff farmers were issued warehouse weight certificates, identifying their rice by lot and bin number. Their sacks were tagged with identifying numbers. On the books of the warehouse, it was shown as stored as their rice.
The record reveals that the farmers who stored rice in the present state-regulated warehouse customarily took these warehouse weight certificates, instead of a negotiable warehouse receipt, because normally the rice buyers purchased the rice at the warehouse where it was stored. A formal negotiable warehouse receipt was usually obtained only when a government price support loan was obtained on the rice.
The record further reveals that agreements such as the present farmers had with the warehousemen, were common in the agricultural community. The farmer stored his rice with the warehouseman and received a weight certificate therefor, and he
Under the custom of the community, this was simply part of the trust accepted by the warehouseman in storing the products for the farmers. As stated by one of the farmers, “A warehouse is where a farmer takes his rice to he sold”. Tr. 154. “The buyer comes in there and looks at it * * * and if he likes it, he buys it if the price is right”. Tr. 155.
We are here dealing with 1957 seed rice. Because the warehouseman defaulted in turning over the proceeds of the 1957 rice stored with him, we do not have as complete a picture of the arrangements between the parties as in the instance of the 1956 rice crop.
In that year, a similar arrangement was made between the present parties, storing the rice with the warehouseman and authorizing him to sell same at a minimum price of $7.00 per barrel dry-weight. At the end of the season, the remainder of the rice not sold directly from the warehouse was conveyed to a rice mill; the warehouseman then calculated and paid the farmers the gross receipts for the rice, and the farmers then paid the warehouseman for his storing, sacking, and drying charges, at this time that the mutual accounts between the parties were settled.
Under these circumstances, it seems to me that the trial court correctly concluded that the customary duties of the warehouseman included not only the storing of the goods for a profit (as defined under the Uniform Warehouse Receipts Act, Chapter 1 of Title 54, quoted by the majority; which statute, however, is not the enactment applicable to the present facts). Such duties also included his function of turning over to the farmers the proceeds from the buyers who purchased the farmers’ rice per the authorization given to the warehouseman at the time the rice was stored. The trial court correctly concluded that the defendant Duplechin “was, insofar as his dealings with the three plaintiffs are concerned, operating as a warehouseman”, so that therefore the defendant surety was liable under its bond.
Further, the facts indicate, at the very least, that the defendant Duplechin’s default in turning over the proceeds of the rice stored with him “arose out of” his duties as a warehouseman, even if technically not a breach of his duties “as” a warehouseman per se. As we shall shortly see, this distinction is material under the terms of the surety bond issued by the defendant insurer herein, a broader insuring protection than afforded by the more restricted surety bonds incorrectly relied upon by the majority.
It is appropriate now to discuss in more detail the legal sources upon which the majority incorrectly relied, in restricting the protection afforded to the present plaintiff farmers by the enactment designed by the legislature of Louisiana to afford farmers state-regulated “bonded” warehouses in which they could store their farm products. I may add, before discussing the law, that the record also reveals that the warehouse here in question was advertised as a “bonded warehouse”, and that the farmers in question relied upon this circumstance in dealing with the warehouseman here in question.
II.
In the first place, as I noted earlier, the majority fell into grave error, in my opinion, in regarding this to be a case in which the uniform interpretations of the Uniform Warehouse Receipts Act apply.
Thus, the majority’s reliance upon LSA— R.S. 54:57, providing for uniform interpretation of “this chapter” (i. e., Chapter 1, Sections 1-58 inclusive only, pertaining to “Warehouse Receipts”), is completely misplaced. For the present is a case arising
I may further add that the majority’s implication is unfounded that the present Louisiana farmers’ warehouse enactment is one of the uniform enactments. See Table 4, 1 Uniform Laws Annotated (1962) p. LI. The provisions of the Louisiana statute are individual as to this state, not a uniform enactment.
III.
What, then, does the Louisiana act require of a statutory bond issued to a warehouseman licensed by the state under the state-regulated farmers’ warehouse enactment, Chapter 4 of Title 54, LSA-R.S. 54:-241-54:260?
The relevant provision of LSA-R.S. 54:-250 is that “ * * * [t]he bond shall be conditioned on the faithful performance of duties and obligations to the patrons of the warehouse and of the provisions of this Chapter [i. e., not only the Warehouse Receipts Act] and the regulations prescribed by the commission.”
Likewise, what does the particular bond we are concerned with in this case provide ? (For the surety’s obligation is measured by the terms of the bond it issued herein, not by the terms of the bonds in the Idaho, Oregon, and Texas cases relied upon by the majority).
The insuring provisions of the bond (which are set forth in full as Appendix A to this opinion) provide that the condition of the bond is that the principal shall (1) “honestly conduct” the “business of a warehouseman of farm produce”, licensed by Louisiana as a state-regulated farmers’ warehouse; (2) “faithfully perform all duties and obligations to all parties doing business with said principal as a warehouseman” ; and (3) “pay all monies or accounts owed by it to * * * any person * * * whatsover arising otit of its conduct of such business of a warehouseman in farm produce.”
The bond here in question, and the statutory protection here afforded, are broader than in the instances of the foreign decisions relied upon by the majority opinion, which concerned bonds with a different wording, and also warehouses regulated by differing state statutes. See: Republic Underwriters v. Tillamook Bay Fish Co., 133 Tex. 141, 126 S.W.2d 641, 121 A.L.R. 1152 (1937); State ex rel. Cawrse v. American Surety Co. of New York, 148 Or. 1, 35 P. 2d 487 (1934); Jensen v. United States Fid. & Guar. Co., 78 Idaho 145, 298 P.2d 976 (1956) ; United States v. Fireman’s Fund Ins. Co., 191 F.Supp. 317 (N.D.Idaho, 1961) ; all cited in the majority opinion. See also Annotation, Public Warehouseman’s Bond, 121 A.L.R. 1155.
Succinctly, the liability under the bonds involved in those cases, was conditioned upon the warehouseman’s faithful performance of his duties as a public warehouseman (which the courts there in question felt did not include the function of apting as an honest agent in turning over to the farmers the purchase price collected for goods stored with the warehouseman). Some of these cases can also be distinguished in other respects also — for instance, the Cawrse decision strictly concerned the liability of a warehouseman in connection with the issuance of warehouse receipts under the Uniform Warehouse Receipts Law, a matter not at all at issue in the present proceedings.
In the case before us now, however, the obligation of the present bond was conditioned, not only on the faithful performance of all duties as a warehouseman, but also upon the “honest conduct” of said business, and, further, “upon the warehouseman’s payment of all monies or accounts owed by it * * * arising out of its conduct of such business as a warehouseman of farm produce.”
There is a distinction between the default in faithful performance of duties strictly as a warehouseman (which may sometimes be
We must remember that we are here dealing with a bond issued by a compensated surety. It is well settled that, in Louisiana, the obligations set forth in a bond given by a compensated surety are strictly construed in favor of affording protection to the obli-gee in whose favor it is issued. Bickham v. Womack, 181 La. 837,160 So. 431; Victoria Lumber Co. v. Wells, 139 La. 500, 71 So. 781, L.R.A.1916E, 1110; Texas & Pac. Ry. Co. v. United States F. & G. Co., La.App. 2 Cir., 16 So.2d 671.
Applying the required construction in favor of affording protection to the obligees (the farmer-customers of the warehouseman), I think it plain that a warehouseman’s default in paying over the proceeds of agricultural products stored with him in his state regulated warehouse, “arose out of” the performance of such business as a ware
IV.
And finally, it might be said, the law is not quite so uniform as the majority implies, on the question of the liability of the warehouseman’s surety in instances similar to the present.
See, e. g., Hartford Accident & Indem. Co. v. State of Kansas, 247 F.2d 315 (C.A. 10, 1957) (pointing out surety’s liability, under the Kansas warehouse act, for disposal of stored wheat- for which weight tickets were issued, as in the present case, rather than negotiable warehouse receipts; and also the importance of customary usage in determining the extent of the warehouseman’s duties); State for Use of Altorfer Bros. Co. v. Dalrymple, 227 Minn. 533, 35 N.W.2d 714 (1949) (where breach of customary duty of warehouseman to collect and remit proceeds for stored goods, was found to be a loss to the owner which was covered by the warehouseman’s bond, and where absence of conflict with Uniform Warehouse Receipts Act was noted) ; Indemnity Ins. Co. of North America v. Archibald, Tex.Civ.App., 299 S.W. 340 (1927) (which was later distinguished in the Tillamook Bay case cited by the majority, but which concerns the general, liability of a warehouseman’s surety in instances where a Uniform Warehouse Receipts Act does not apply) ; Lane v. Kasey, 1 Mete. (Ky.) 410 (1858), discussed at 121 A.L.R. 1158.
These cases concern liabilities under the bonds and statutes peculiar to them. They thus may be distinguished as applying to the present facts now before us — just as may the cases cited by the majority. We mention the decisions in question only in the interest of completeness, as well as to indicate that there is not quite the unanimity of holdings as the majority implies, in the sparse eight or ten decisions somewhat relating to the present questions that have arisen in all the American jurisdictions over the past one hundred years.
For the reasons assigned, therefore, the writer respectfully dissents.
APPENDIX “A”
Insuring Provisions of Present Bond:
“ * *’ * WHEREAS, in . accordance with the.terms and provisions of the Louisiana Revised Statutes of 1950, Title 54, Chapter 4 (Act 218 of 1940), the Principal has made application to the State Warehouse Commission-of the State of Louisiana for a license to engage in the business of a warehouseman of farm produce in the State, of Louisiana, and
. “WHEREAS, .the State Warehouse Commission of the State of Louisiana has approved said application.
“NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal shall honestly conduct said business, faithfully perform all duties and. obligations to all parties doing business' with said Principal as a warehouseman, and shall pay all monies or accounts owed by it to the State Warehouse Commission, any person, firm, exchange, corporation. or association whatsoever arising out of its conduct of such business of a warehouseman in farm produce, and otherwise conducts its - said business in accordance with the provisions of the Louisiana Revised'Statutes of 1950, Title 54, Chapter 4 (Act 218 of 1940), and the regulations issued th.ereunder then this obligation shall be null and void, otherwise to remain in full force and effect. * * * ”
On Application for Rehearing.
En Banc. Rehearing denied.
TATE, J., dissents. 'FRUGE believes a rehearing should be granted.
. For instance, at page 11 of the 1963 Cumulative Pocket Parts, 4 Words and Phrases (Perm.Ed.), the following annotations concern meanings assigned to the term “Arising Out Of": “Phrase ‘arising out of’ as used in automobile liability policy whereby insurer contracted to pay on behalf of insured all sums which insured should become legally obligated to pay for damages caused by accident and ‘arising out of’ ownership, maintenance or use of automobile or trailer meant causally connected with and not proximately caused by. Manufacturers Gas. Ins. Co. v. Goodville Mut. Cas. Co., 170 A.2d 571, 573, 403 Pa. 603. * * *
“An automobile liability policy covering injuries caused by accident and ‘arising out of’ ownership, maintenance or use of automobile and providing that use of automobile including the ‘loading and unloading’ thereof covered insured against liability which might be imposed upon insured by claimed negligence of insured’s truck driver in delivering sheetroek to cellar of insured’s customer who, some four hours after sheetroek had been delivered, was injured while standing near the sheetroek when it fell upon customer and injured her leg. American Auto. Ins. Co. v. Master Bldg. Supply & Lumber Co., D.C.Md., 179 F.Supp. 699, 704.
“Escrow instructions providing that bank should have right to commence or defend action to determine conflicting claims to money deposited in escrow and that parties to escrow should pay reasonable attorney’s fees incurred by bank in connection with ‘or arising out of’ the escrow, attorney’s fees were provided only in event of litigation contemplated therein such as arising out of conflicting demands made on the bank relative to terms of the escrow, funds, property or documents deposited therein, by an action by the bank for breach of the escrow or the bank’s suit in interpleader and where the gravamen of purchaser’s action against the bank was for fraud independent of the escrow instructions sounding in tort, it was not based upon or ‘arising out of’ the contract so as to entitle the successful bank to attorney’s fees. Francis v. Eisen-mayer, 340 P.2d 54, 57, 171 C.A.2d 221.
“Words ‘arising out of’ when used in connection with provision of policy covering property damage caused by accident arising out of use, operation or maintenance of motor vehicle are of broader significance than words ‘caused by’ and are ordinarily understood to mean originating from, incident to, or having connection with use of vehicle. Red Ball Motor Freight v. Employers Mut. Liability Ins. Co. of Wis., C.A.Tex. 189 F. 2d 374, 378. * * *
“Under workmen’s compensation statute, the words ‘out of’ point to the origin and cause of the accident or injury. Armstead v. Sommer, 131 N.E.2d 340, 342, 126 Ind.App. 273.
“Under exclusionary clause of property damage liability policy excluding coverage for injury or destruction of property arising out of collapse of or structural injury to any building, phrase ‘arising out of’ meant originating from, having its origin in, growing out of or flowing from. Minkov v. Reliance Ins. Co. of Philadelphia, 149 A.2d 260, 264, 265, 54 N.J.Super 509. * * * ”
