International Bedding Co. v. Terminal Warehouse Co.

Parre, J., delivered the opinion of the Court. The Internationa] Bedding Company bought of the William Eraser, Jr., Inc., three hundred bales of cotton linters which were to be delivered during the months of March and April, 1923. For the unliquidated damages flowing from a failure to make its delivery within the specified period, the International Bedding Company procured an attachment to issue out of the Superior Court of Baltimore City on May 23rd, 1923, against the William Eraser, Jr.; Inc., as a nonresident corporation. At the time of the issuance of the writ, ⁴⁸² the seller bad in storage with the Terminal Warehouse Company two hundred bales of cotton linters for which the warehouse company had theretof ore delivered to the seller, William Eraser, Jr., Inc., its four negotiable warehouse receipts.

The warehouse company had then in possession for the carrier two other shipments of cotton linters of seventy-three and fifty bales, respectively, for which negotiable bills of lading were outstanding, and whose ownership was not known to the warehouse company. The shipment of seventy-three bales was from Rose City Cotton Oil Mill to itself as consignee, with an instruction to notify the Maryland Bedding Company, a local business corporation. These bales were received by the warehouse company on May 23rd, 1923, but it was not until June 8th, 1923, that the outstanding negotiable bill of lading was presented and delivered by William Eraser, Jr., Inc., the holder in due course by endorsement, to the warehouse company; whereupon these seventy-three bales were stored in the name of the William Eraser, Jr., Inc., and a negotiable warehouse receipt therefor was issued and delivered to it by the warehouse company. The ignorance of the warehouse company as to the ownership of the other lot of fifty hales was caused by these circumstances.

The William Eraser; Jr., Inc., had shipped to itself as consignee on April 9th, 1923, fifty bales of cotton linters, and, on April 11th, 1923, another fifty bales; and received a separate negotiable bill of lading for each shipment. These two shipments were transferred en route into one car, which arrived at the warehouse company on May 8th. The shipment did not correspond to the original billing, and only one of the negotiable bills of lading was received, so the additional fifty bales in the freight car were unaccounted for and could not be delivered by the carrier until the confusion in transportation was ascertained, the goods were identified, and the other negotiable bill of lading was produced and surrendered. These fifty bales remained at the warehouse of the appellee under these circumstances rurtil June 18th, 1923, when the bill of lading in ⁴⁸³ question was delivered to' appellee by the William Fraser, Jr., Lae., with instructions to sterender the bill of lading to the carrier, receive the bales, and place them in storage in the name of William Eraser, Jr., Inc., issuing a negotiable warehouse receipt therefor.

The appellee issued and delivered its negotiable warehouse receipt to William Eraser, Jr., Inc., on June 18th, 1923, when the bill of lading was received, and a day later the goods were delivered by the carrier and placed in storage by the appellee. The International Bedding Company was aware that the warehouse company had in storage the two hundred bales, but did not have any knowledge of the two shipments of fifty and seventy-three bales. The sheriff went to the warehouse where fifty of the two hundred bales were stored, and to the other warehouse where the remaining one hundred and fifty bales were; asked for the specific bales, which were indicated to him; and attached, scheduled and appraised the fifty bales on May 23rd, 1923, and the one hundred and fifty bales on May 25th, 1923. The two hundred bales thus scheduled and appraised were left in the possession of the appellee by direction of the attaching creditor.

The sheriff’s return was that these two hundred bales had been so attached, and that the writ was “also1 laid in hands of Terminal Warehouse Company, a corporation, by service on Samuel E. Lippin-eott, president, 23rd May, 1923, and garnishee summoned and copy left.” Under the authorities, this was sufficient to bind the appellee as garnishee with respect to- any attachable property or credits. The lower court quashed the attachment as to both the two hundred bales and the one hundred and twenty-three bales, on the ground that none was attachable property in the hands of the appellee. There can be no question of the correctness of this ruling to the extent of the two hundred bales, which were in the possession of the appellee as warehouseman and for which, prior to the laying of the writ of attachment, it had issued negotiable warehouse receipts to the owner. These receipts had not been surrendered to the ⁴⁸⁴ appellee, nor bad tbeir negotiation been enjoined, before the seizure of the goods by tbe sheriff under the writ.

Under snob circumstances, tbe garnishment of these two hundred bales was explicitly inhibited by the Uniform Warehouse Receipts Act in force at the time. Section 25 of article 14A of the Code of Public General Laws. The appellant does not contend that there was any error below except in the holding that the remaining one hundred and twenty-three bales were not subject to . attachment by garnishment in the hands of the warehouseman. The question as to the propriety of quashing the attachment so far as these bales are concerned involves, first, whether or not these bales are within any statutory exemption from attachment and, second, if not, were they so attached as to constitute a valid garnishment in the hands of the appellee.

First: The position of the appellee is that the one hundred and twenty-three bales of cotton linters were represented at the time of the laying of the attachment by outstanding negotiable bills of lading, and were, therefore, not subject to attachment, by virtue of the Uniform Sales Act (Code, art. 83, sec. 60) and of the Uniform Bills of Lading Act (Code, art. 14, sec. 24). . Both of these provisions and that of the Uniform Warehouse Receipts Act (Code, article 14A, sec. 25) are similar in their language. They provide that (a) if a negotiable document of title to goods as defined in section 90 of article 83 be issued by a bailee, (b) or if a negotiable bill of lading be issued for goods by a carrier, (c) or if a negotiable warehouse receipt be issued for goods by a warehouseman, on the delivery of the goods by the owner, the goods, in any one of the three instances stated, cannot thereafter, while in the possession of the bailee, or of the carrier or of the warehouseman, be attached by garnishment or otherwise, or be levied upon under an execution, unless the aforesaid negotiable documents of title be first surrendered to the bailee, carrier or warehouseman, as the ca'se may be, or be impounded by the court. As the negotiable bills of lading for the one hundred and twenty-three bales were issued before the writ of attachment, ⁴⁸⁵ the carrier was unquestionably not subject to garnishment; by reason of this provision of the statute.

But, for the third party, the warehouseman, to be brought within the terms of the statute relied on, it is an indispensable prerequisite of the act that the negotiable warehouse receipt be issued before the goods are attached by garnishment or otherwise, or are levied on by execution. The statutes implicitly recognize that if the negotiable document of title has not been issued, the goods may be attached by garnishment or otherwise or be levied on by execution. It cannot successfully be contended either that goods in the possession of a warehouseman before a1 negotiable warehouse receipt is issued are not subject to attachment by garnishment; or that such goods may be made the subject of a garnishment after such issuance. The change in the status of the goods is, therefore, under the act, referable to the time of the issuance of a; negotiable warehouse receipt for the goods.

If a creditor’s rights in the goods have become fixed by garnishment, the debtor and the warehouseman may not destroy them by the warehouseman’s subsequent issue to the debtor of a negotiable warehouse receipt. If so, a debtor could destroy an inchoate lien created by law and deprive his creditor of the fruits of his diligence. To permit this would open a new way of escape for the debtor’s goods, and defeat a primary object of attachment, without any statutory authorization. All that a purchaser of a negotiable warehouse receipt is entitled to enjoy under the statute cited is the right to rely upon the status of the goods, represented by the receipt, not becoming affected, after its issuance, by attachment by garnishment or otherwise, or by levy under an execution.

The purchaser of a negotiable warehouse receipt acquires only 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 the direct obligation of the warehouseman to hold possession ⁴⁸⁶ of the goods for Mm according to the terms of the receipt as fully as if the warehouseman had contracted directly with him. (Code, art. 14A, see. 41.) However great the desire to interpret the laws mentioned so as to enforce their object to afford protection to bailees, carriers and warehousemen, and to holders in good faith for value of negotiable documents of title of goods, the plain language of the acts may not be disregarded; and there can be no justifiable inclination to that course when its effect would be to impair the efficacy of an established and valuable procedure on the part of creditors to- subject the property of their debtors to the payment of their claims. In this case; the carrier held the goods subject to the surrender thereof to the holder of the outstanding bills of lading, and, pending this surrender, the warehouseman had the temporary custody of the goods which were then owned by the William Fraser, Jr., Inc., by virtue of its ownership of the negotiable bills of lading. The holder of the bills desired to store the goods for which the bills were issued with the warehouseman and to receive therefor a negotiable warehouse receipt from the warehouseman.

In order to' do this, it was necessary to accomplish a complete change in the relation of all the respective- parties, and in the status of the goods. Before the change could be made, the care of the goods for the carrier by the warehouseman had to become an actual possession of the goods by the warehouseman. This was brought about by the transfer of the negotiable bills of lading to the warehouseman, and a delivery to it by the carrier of possession of the goods'on its surrender to the carrier of the bills. The warehouseman then had, for the first time, complete possession of the goods, for the use of the owner, who was the debtor in the garnishment.

At this juncture, the inchoate lien of the garnishment attached to the property, and the warehouseman and debtor had no more power to destroy this lien than if the goods -had been actually seized by the officer. When the warehouseman issued the negotiable warehouse receipts, it held both the goods as warehouseman ⁴⁸⁷ and the receipts as the bailee of the debtor for a short, but necessary and appreciable, time, before it forwarded the negotiable receipts by mail to the debtor and owner of the receipts. Before these transactions the garnishment was in operation. By this garnishment the warehouseman had been warned or notified to hold, subject to the lawful rights therein of the creditor, all attachable property subsequently coming into its possession for the use or benefit of the debtor. 2 Poe's Pl. &.

Pr. (4th Ed.), sec. 532; Farmers and Merchants Bank v. Franklin Bank, 31 Md. 404, 412, 413 ; Wade on Attachments, sec. 338; Rood on Garnishments, sec. 192. These facts distinguish this case from the two Pennsylvania cases cited by appellee. In Stamford Rolling Mills Company v. Erie R. Co., 257 Pa. 507 , the shipment was stopped in. transitu by the consignor to whose order the negotiable bill of lading was issued by the carrier.

The consignment was made on May 23rd; the stoppage in transitu was on May 25th, and the writ of attachment was issued on June 28th, while the goods were in the possession of the carrier, which was also the garnishee, and while the negotiable bills of lading remained outstanding. The case of Pottash v. Albany Oil Co., 274 Pa. 384 , was one where the seizure of the goods in transit and the garnishment of the bank holding the bill as a collecting agent were both made after the issuance of the negotiable bill of lading, and while it was in force. These cases were, therefore, correctly decided to be within the express terms, of the Uniform Bills of Lading Act of Pennsylvania, which are similar to section 24 of the Maryland act, but they cannot be accepted as authority for