110 N.E. 765 | NY | 1915
The action is replevin. The plaintiffs sold to George A. Alden Company and the New York *351 Shellac Company two hundred cases of shellac. At the time of the sale the shellac was stored in a warehouse, and the plaintiffs held warehouse receipts, issued in their name, and negotiable in form. These receipts the plaintiffs indorsed and transferred to the purchasers. This was done on February 13, 1913. On February 14, 1913, one of the purchasers, the New York Shellac Company, tendered the receipts to the warehouseman and requested that new receipts be issued. This was refused because the charges of the warehouseman were not paid. A few days later both purchasers became bankrupts. The shellac has never been paid for, and the plaintiffs on learning that the buyers were insolvent paid the warehouse charges and demanded delivery. This demand was refused; an action of replevin against the warehouseman followed; and thereafter the trustees in bankruptcy of the buyers were substituted as defendants. They have demurred to the complaint, the demurrer has been sustained, and the question whether a cause of action has been stated has been certified to this court.
The plaintiffs insist that the merchandise was never brought into the possession of the purchasers, and, hence, that they have never lost their lien as vendors for the payment of the price. The effect of the indorsement of warehouse receipts is now prescribed by statute. Where the receipts are negotiable in form, the holder to whom they have been negotiated acquires thereby "(a) such title to the goods as the person negotiating the receipt to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value, and (b) the direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt as fully as if the warehouseman had contracted directly with him" (General Business Law [Cons. Laws, *352
ch. 20], § 125). Where the receipts are not negotiable the holder "acquires the right to notify the warehouseman of the transfer to him of such receipt, and thereby to acquire the direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt," but "prior to the notification of the warehouseman by the transfer or transferee of a non-negotiable receipt, the title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be defeated by the levy of an attachment or execution upon the goods by a creditor of the transferor, or by a notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor" (General Business Law, §
The significance of this statute will become manifest when we consider the law as it stood before the statute was enacted. It was long a mooted question whether the transfer of a warehouse receipt divested a vendor's lien unless the warehouseman had consented to become the bailee for the vendee. Some courts held the view that such a consent was necessary. It might be given in advance, but unless it was given in some form, either before or after the event, the warehouseman, it was *353
thought, remained the bailee of the vendor, and the transfer of the receipt, though effective to change the title, left the possession undisturbed (Williston on Sales, p. 739; Benjamin on Sales [5th ed.], pp. 216, 846, 853; Farina v. Home, 16 M.
W. 119; Bentall v. Burn, 3 B. C. 424; Hallgarten v.Oldham,
When the statute is read in the light of these decisions, its meaning is not doubtful. It charges every warehouseman who issues a negotiable receipt with a direct obligation to any one and every one to whom the receipt has been negotiated. It charges every warehouseman who issues a non-negotiable receipt with a like obligation after notice of the transfer. In the one case, the holder acquires "the direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt as fully as if the warehouseman had contracted directly with him." In the other case, the holder acquires a like right upon giving notice of the transfer. *354 The assent of the warehouseman to act as bailee is thus written by the law into the contract embodied in the receipt. "By a receipt in that form the bailee assents in advance to becoming bailee for any one who is brought within the terms of the receipt by an endorsement of the same" (Union Trust Co. S.W. Co. v.Wilson, supra, p. 536; Selliger v. Kentucky, supra). The moment that a receipt, negotiable in form, is indorsed and delivered, a new relation of bailor and bailee springs into being, and with the birth of that relation the possession, once held by the bailee for the account of the vendor, is transmuted into a possession for the account of the vendee. The result "is a real delivery to the same extent as if the goods had been transported to another warehouse named by the pledgee" (UnionTrust Co. S.W. Co. v. Wilson, supra. See also: Mills v.Charlesworth, L.R. [25 Q.B.D.] 421, 425). With the transmutation of possession the vendor's lien is at an end (Personal Property Law [Cons. Laws, ch. 41], § 135).
We think there is nothing in section
The plaintiffs insist that if they have lost their lien, they may none the less regain possession by the exercise of the *355
right of stoppage in transitu. This claim need not long detain us. Merchandise is not in transit unless it has been delivered to a bailee for the purpose of transportation (Rosenthal v.Weir,
The order should be affirmed with costs, and the question certified answered in the negative.
WILLARD BARTLETT, Ch. J., HISCOCK, CHASE, COLLIN, SEABURY and POUND, JJ., concur.
Order affirmed. *356