20 F. Cas. 179 | U.S. Circuit Court for the District of Minnesota | 1873
The proofs satisfy me that the invariable and known course of business at the elevator warehouses in Lake City, was to mingle together all grain of the same grade, whether purchased outright and paid for at the time, or received on tickets specifying the grade and quantity and which contemplated the future delivery of the like amount of the same grade of wheat to the holders of such receipts when they should call for it. or the payment in money of the value of that amount and quality of grain. Those who deposited wheat must be taken to know, and in fact did know, that it would be thus mingled with other grain; that it would be shipped and sold by the ware-housemen, when the latter should deem it to be for their interests (for such was the uniform practice), and consequently if the depositor should demand wheat instead of the value of the wheat, he would not receive, unless by accident, any of the identical wheat
Under these circumstances the question is, what is the relation which exists between the grain depositor and the warehouseman? Is the depositor a bailor, simply, and the warehouseman a bailee, or is the former a seller, and the latter a purchaser, of the wheat? The district court held the former theory, and that the holders of outstanding receipts were entitled to the grain in the warehouse at the time of the failure of the bankrupts, and that as the amount therein did not equal the amount called for in the outstanding receipts, they must share pro rata.' This view proceeds upon the ground that the title in the grain deposited does not pass to the warehouseman, but remains in the depositor, and that the latter has the title at all times to an amount of wheat in The warehouse equal to that called for in his receipt; and it is contended that if sales are made by the warehouseman, this is a conversion of the depositor’s property, and if other like property is placed in the warehouse, the law will imply that it is placed there in substitution for that which was wrongfully removed, and hence that the grain at any time on hand belongs to the depositors to the extent of their receipts or tickets. It seems to me that this view cannot be maintained, and that it would lead to difficulties and confusion, and that it is against the established legal principles by which sales and bailments are discriminated. If this view is sound and the warehouse should burn without the fault of the owner, this would be a defence to any demand on the part of the ticket holder either for the wheat or its value — a proposition which cannot, I think, be maintained, and which is against the precise point adjtidged in several well-considered cases. Chase v. Washburn (1853) 1 Ohio St. 244; South Australian Ins. Co. v. Randell (1869) L. R. 3 P. C. 101.
Viewed in the light-of the uniform course of business, the contract is not one of bailment proper, but one (mutuum) where the property passes to the mutuary or receiver, and is delivered to him for his own use or consumption, and where he is not bound to return the identical article in its original or altered shape, but property of the same kind and value; in which case it is a sale, and the title passes, and the receiver becomes a debtor for the stipulated return. Jones, Bailm. 64, 102; Story, Bailm. § 439; 2 Kent, Comm. 590.
That this is a correct view of the relations between the wheat depositors and the bankrupts is expressly adjudged in the following cases, which, in their facts, are idenucal with the one under consideration. South Australian Ins. Co. v. Kandell, supra; Chase v. Washburn, supra; Lonergan v. Stewart (1870) 55 Ill. 44; Johnston v. Browne, infra. See Myers v. Adams [Case No. 62]; Stearns v. Raymond, 26 Wis. 74.
Applying the principle above mentioned, the privy council in the Case of South Australian Insurance Company, in an elaborate judgment, decided, where corn was deposited by farmers with a miller to be “stored,” and used as part of the current or consumable stock or canital of the miller’s business, and was by him mixed with other corn deposited for a like purpose, subject to the right of the farmers to claim at any time, an equal quantity of corn of the like quality, without reference to any specific bulk from which it is to be taken, or in lieu thereof, the market price on any equal quantity, on the day on which he made his demand, with a small charge for general purposes, that the transaction was a sale by the farmer to the miller of the corn deposited, and not a bailment. In giving their lordships’ judgment, Sir Joseph Napier says: “It appears to their lordships that there is no sound distinction, in principle, between this, and the case of money deposited with a banker on a deposit receipt; * * * that it is not the case of a possession given (by the farmer) subject to a trust, but that it is the ease of property transferred for value, at the time of delivers-, upon special terms of settlement. L. R. 3 P. C. 109, 311.
And so the supreme court of Iowa, in Johnston v. Browne (1873) 37 Iowa, 200, has also held. In the case just cited, wheat was left in an elevator with the understanding that when the depositor should be ready to sell it, the proprietor of the elevator would give the highest market price or the same amount of wheat of like grade and quality — the custom being to ship off grain, but to keep t u hand sufficient to fill outstanding storage receipts, but not the identical wheat received —and it was adjudged that the transaction was a sale and not a bailment.
I regard the case at bar distinguishable from Young v. Miles, 20 Wis. 615, 23 Wis. 643. and Kimberly v. Patchin, 19 N. Y. 330, and like cases, where the bulk from which the mingled articles were to be taken was specific and not subject to constant fluctuations.
I am of opinion, therefore, that the court erred in holding that the receipt owners had the right to the wheat in the warehouse as against the assignee, and its decree in this respect is reversed, and a decree will be entered here dismissing the bill.
I may add, thaL I am entirely satisfied, in
In respect to the claim of the- bank upon the two wheat receipts for 12,000 bushels, made by the bankrupts after their failure, to secure $10.000 to their local bankers, I concur so fully in the views of Judge Nelson that I do not deem it essential to do more than refer to his opinion. The decree of the district court, dismissing the cross-bill of the bank is affirmed. The cause will be remanded to the district court with directions to tax the costs in that court equitably as between the receipt holders and the bank. The costs on this appeal will be borne equally between the same parties. Decree accordingly.