Security Bank of Minnesota v. Minneapolis Cold Storage Co.

Warehouse receipt construed. A warehouse receipt stated that the property was deliverable “on payment of charges,” without stating their nature or amount, the spaces for the insertion of the amount of “storage” and “advanced” charges respectively being left blank. Held, that this was sufficient to put a purchaser of the property upon inquiry as to the amount and character of the charges, and that the warehouseman was not estopped, as against such purchaser, from asserting his lien for “advanced” charges. (Opinion published 56 N. W. Rep. 583.)

Appeal by plaintiff, tbe Security Bank of Minnesota, from an order of tbe District Court of Hennepin County, Robert D. Russellr J., made August 26,1893, denying its motion for a new trial. On November 27,1892, tbe defendant, tbe Minneapolis Cold Storage Company, a corporation, contracted with J. W. Stevens & Co. to receive and store 640 barrels of apples valued at $1,280 at its cold storage warehouse No. 69 Nicollet Street on Nicollet Island, Minneapolis. Tbe apples were about to arrive by tbe Chicago, M. & St. P. By. Co. and defendant agreed to advance and pay tbe freight,. $566.78, and receive and store tbe apples and was to receive eight (8) cents per barrel, per month, for storage and be repaid tbe money it advanced for tbe freight with interest. Tbe defendant received and stored tbe apples, paid tbe freight and issued to W. J. Stevens- & Co. a receipt stating it bad received tbe apples and that they were deliverable to tbe firm or order on payment of charges. Storage -. Advance charges-. Loss or damage by fire at owners’ risk. J. W. Stevens & Co. sold, indorsed and delivered the receipt to the Bank and on May 23, 1893, it tendered to defendant the storage .and demanded the apples. The defendant demanded the further sum of $566.78 paid by it for freight, with interest. The Bank refused to pay this freight and brought this action and replevied the .apples. At the trial on June 28,1893, the Court sustained the claim of the defendant and ordered judgment in its favor. The Bank moved for a new trial and being denied appeals. The Bank claims that the receipt does not in terms show a lien right in the Cold Storage Company, but is silent and blank as to .any advance charges, and that as against it, being an innocent purchaser for value without notice, the company is estopped from making any such claim. The language of the receipt is defendant’s own, used deliberately and hence, in case of ambiguity, is to be taken most strongly against it. The amount of the advance charges was within the knowledge of defendant at the time the receipts were issued, and should have been inserted. The defendant in order to reserve a right in itself, beyond its right as a warehouseman, was bound to express the fact of this right and the extent of it, in terms clear and unequivocal. Dean v. Driggs, 137 N. Y. 274; Sears v. Wingate, 3 Allen, 103. The warehouse receipts in question were negotiable instruments. 1878 Gr. S. ch. 124, § 17; State v. Loomis, 27 Minn. 521; Bradwell v. Howard, 77 Ill. 305; Lichbarrow v. Mason, 1 Smith’s Lead. Cas. 1147. The equities disclosed show that there was knowledge on the part of the original owners, who took the receipt from defendant, that the goods were still bound for certain freight charges. This defense' is not available to defendant, provided the Bank had no knowledge of the facts and parted with value upon the faith of the paper and the goods represented thereby. First Nat. Bank v. Dean, 137 N. Y. 110. The representation held out to the Bank was, that there were no advance charges, and upon the familiar principle that where one of two innocent persons — that is, persons each guiltless of an intentional wrong must suffer a loss, it must be borne by that one of them who by his conduct, acts or omissions, has rendered the injury possible. 2 Pomeroy, Eq. Jur. §§ 803, 805. In Stein v. Rheinstrom, 47 Minn. 476, the language of the receipt’ was such as would ordinarily put a purchaser upon his inquiry. There is in reality but one question involved in this appeal and that is whether the warehouse receipt issued to J. W. Stevens & Co, contained such information or was so worded as to put the Bank upon inquiry as to the precise terms of the bailment. The receipt states that the apples are subject to charges. This-required the exercise of ordinary care and prudence in reference to those charges. Stein v. Rheinstrom, 47 Minn. 476; Rail v. Hale, 8-Conn. 336; Ayer v. Hutchins, 4 Mass. 370; First Nat. Bank St. Paul v. Scott County, 14 Minn. 77; Slater v. West, 3 Car. & P. 325;. Wiggins v. Bush, 12 Johns. 306.