Washington County Nat. Bank v. Motter

Briscoe, J., delivered the opinion of the Court. The questions in this case arise upon certain exceptions to an audit distributing the assets of the Undine Milling Company of Carroll County, an insolvent corporation, among its creditors now in the hands of its receivers in the Circuit Court for Washington County. _ The real contention in the case is between the holders of what are termed warehouse or storage receipts and the receivers, representing the general creditors of the company. The appellant, the Washington County National Bank of Williamsport, contends that as the holder of eighteen warehouse receipts, for five hundred bushels of wheat each, it is entitled to a preference over the general creditors, under sec. i of Art. 14 of the Code, which provides that all warehouse, elevator .or storage receipts whatsoever for goods, chattels, &c., &c., of any kind stored or deposited, &c., &c., for any purpose in any warehouse, elevator, &c., &c., shall be and are hereby constituted and declared to be negotiable instruments and securities unless it be provided in express terms to the contrary on the face thereof, in the same sense as bills of exchange and promissory notes, and full and complete title to the property ⁵⁴⁷ in the instruments, &c., &c., shall enure to and be vested in each and every bona fide holder thereof for value. The appellees on the other hand contend that the Milling Company was not a warehouseman within the meaning of Art 14 of the Code, and consequently the receipts issued by it to the appellant and others are not valid and legal receipts, so as to give the bank priority as claimed.

The facts appear from the record to be as follows: The Undine Milling Company of Carroll County was incorporated on the 31st day of May, 1895, under the general laws of the State, for the purpose of manufacturing flour and feed, and doing a general milling business and for the sale of the products thereof, and for the purchase, sale and storage of all kinds of grain. Sometime prior to 1900 this company had been engaged in the milling business at Williamsport, in Washington County, where its principal place of business was located. Prior to the appointment of the receivers, and at different times during the year 1899, the company borrowed from the appellant bank the sum of $5,400 on eighteen notes of $300 each and gave as collateral security for each of them a receipt which is in form as follows: , Williamsport, Md., Apl. 4, 1899. Received in store from Wash.

Co. Natl. Bank five hundred bushels of prime milling wheat subject only to the order hereon of Wash. Co. Natl. Bank, and only to be delivered upon the surrender of this receipt.

Certified to by Undine Milling Company. J. W. Crow, Weigher. per F. H. Darby, Pres. At the time of the failure of the company there were about 9,185 bushels of wheat in its elevator. These were subsequently sold and the proceeds of sale were distributed to all of the creditors, whose claims amounted to the sum of $33,336.48, without allowing any priority to the claim of the bank under the receipts.

The controlling question, then, is, whether the Undine Milling Company was a warehouseman as claimed by the appellant, and if so, was it authorized to issue the receipts here in controversy. ⁵⁴⁸ Now while it is true, as will be seen, that under its charter this company was authorized to engage in the storage of all kinds of grain, yet’as a matter of fact, and according to the evidence in the case, it was at the time the so-called storage ■receipts were issued simply conducting a