McGee v. Carver , 141 Miss. 463 ( 1926 )

The Bolivar Compress Company, which conducts a public warehouse for the storing of cotton, filed a bill of interpleader in the court below alleging that it had in its possession a bale of cotton for which it had issued a negotiable receipt, and which was claimed by several named persons, and prayed that they be summoned to appear and propound their claims to the cotton, which would thereafter be dealt with by the compress company in accordance with any decree the court might render relative thereto. Pursuant to the summons served on them, the appellants, who are copartners doing business under the firm name of McGee, Dean Co., and the appellee appeared and propounded their claims to the cotton. An issue was made up and tried between them, and a decree was rendered, awarding to each of them a one-half interest in the cotton, from which decree McGee, Dean Co., brought the case to this court.

McGee, Dean Co. purchased the cotton from R.N. Somerville, who was in possession of and delivered to them the negotiable receipt therefor, on the back of which Norwood's name had been written as an indorsement in blank. The cotton was produced in 1923, by Q.L. Norwood, on land belonging to Carl Carver, under an a agreement by him with Carver that the crops raised on the land worked by Norwood should be divided equally between himself and Carver. In addition to the cotton here in question, Norwood produced several other bales of cotton under this agreement with Carver, each of which was stored by Norwood, when gathered, with the Bolivar Compress Company, and a negotiable receipt was issued therefor to him with the knowledge and consent of Carver. Each of these bales of cotton was sold by Norwood, and the proceeds thereof were divided by him with Carver. Some of the sales were made by Norwood without and others by previous agreement with Carver.

Norwood executed a deed of trust to a man by the name of England on his interest in the crop to be produced by him on Carver's land, to secure a promissory note executed by him to England, which note and deed of trust afterwards became the property of the Bank of Grenada. The sales made by Norwood of the cotton produced by him on Carver's land were made without the knowledge or consent of the Bank of Grenada which, on learning thereof, instituted legal proceedings for the enforcement of its deed of trust thereon. A criminal proceeding was also instituted against Norwood for having sold the cotton subject to the lien and the deed of trust without informing the persons to whom he sold it thereof. While under arrest on this charge he, together with his counsel, had a conference with Somerville, an attorney at law who represented the Bank of Grenada, in which it was agreed that all of the legal proceedings, both civil and criminal, against Norwood growing out of the sale by him of the cotton, should be dismissed. Receipt for the bale of cotton here in question was turned over to Somerville, with authority to indorse Norwood's name on the back thereof, to sell the cotton, indorse Norwood's name on the back of the warehouse receipt, and transfer it to the purchaser.

According to Somerville, the money realized by him from the sale of the cotton was to be applied by him to the payment of Norwood's note to England then owned by the Bank of Grenada. According to the evidence of Norwood and his attorney, Somerville was to hold the receipt and sell the cotton in conjunction with Carver, who was to receive one-half of the proceeds thereof, and the other one-half was to be applied by Somerville to Norwood's note to England.

Somerville admits that he knew of Carver's one-half interest in the cotton, but claims that Norwood promised to obtain a release from Carver thereto, and that Norwood afterwards told him that he had arranged the matter with Carver, and that he (Somerville) could proceed to sell the cotton and apply the proceeds to the England note.

McGee, Dean Co. purchased the cotton in good faith, without notice of Carver's claim to an interest therein. Norwood's name was written on the back of the warehouse receipt by Somerville, and, while the appellee denies that he was authorized so to do, it is manifest from the evidence that he was so authorized.

After the cotton was sold to McGee, Dean Co. Carver instituted a proceeding against the cotton under the landlord and tenant chapter of the Code, and the sheriff attempted thereunder to sell the cotton without having taken the cotton into his possession, at which sale Carver, having made the best bid therefor was declared by the sheriff to be the purchaser thereof. No cross-appeal was taken by Carver from the decree awarding the owner a half interest in the cotton, and, as we understand the brief of his counsel, he does not and could not successfully contend that he acquired any title to the cotton by virtue of the attempted sale thereof under the landlord and tenant proceeding.

The receipt for the cotton issued to Norwood recites that, "upon the return of this receipt properly indorsed . . . the said one bale of cotton will be delivered to the above named depositor or his order," and under section 5, chapter 218, Laws of 1920, was negotiable. Other pertinent provisions of this statute are as follows:

Section 37:

"A negotiable receipt may be negotiated by delivery — . . .

"(b) Where, by the terms of the receipt, the warehouseman undertakes to deliver the goods to the order of a specified person, and such person or a subsequent indorsee of the receipt has indorsed it in blank or to bearer."

Section 40:

"A negotiable receipt may be negotiated — . . .

"(b) By any person to whom the possession or custody of the receipt has been intrusted by the owner, if, by the terms of the receipt, the warehouseman undertakes to deliver the goods to the order of the person to whom the possession or custody of the receipt has been intrusted, or if at any time of such intrusting the receipt is in such form that it may be negotiated by delivery."

Section 41:

"A person to whom a negotiable receipt has been duly 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."

Section 47:

"The validity of the negotiation of a receipt is not impaired by the fact that such negotiation was a breach of duty on the part of the person making the negotiation, . . . if the person to whom the receipt was negotiated, paid or a person to whom the receipt was subsequently negotiated, paid value therefor, without notice of the breach of duty," etc.

When Somerville indorsed Norwood's name on the back of the warehouse receipt, as he was authorized to do, it became negotiable by delivery under section 37 of this statute. And, even if it be true, as Carver claims, but which Somerville denies, that, in negotiating the receipt, he violated a promise not to negotiate it without Carver's consent, nevertheless McGee, Dean Co., having purchased the cotton and received the receipt therefor in good faith, without notice of Carver's interest therein, acquired thereby, under section 41 of the statute, the full and unrestricted ownership of the cotton.

The appellee's main contention is that a landlord's statutory lien on crops grown on the leased premises has not been superseded by the Uniform Warehouse Receipts Act, and that, notwithstanding section 41 thereof, his lien on the cotton here in question may be enforced, although the appellants purchased the warehouse receipt therefor without notice of his lien. The two cases relied on by the appellee are Campbell v. Farmers'Bank of Boyle, 127 Miss. 668, 90 So. 436, and Marine Bank Trust Co. v. Greenville Savings Bank Trust Co., 133 Miss. 91, 97 So. 526.

We are not here called on to determine whether the appellee could enforce his landlord's lien on the cotton, had it been deposited in the warehouse and a negotiable receipt therefor been issued to Norwood without his (the appellee's) consent; for, as hereinbefore set forth, he permitted Norwood to store the cotton in the warehouse and receive a negotiable receipt therefor, thereby permitting him to be clothed with the apparent ownership of the cotton through the possession of the warehouse receipt. Having trusted Norwood with the indicia of ownership, he is precluded by the statute from asserting a lien thereon against one who purchased the warehouse receipt in good faith for value.Commercial Nat. Bank v. Canal Bank, 239 U.S. 520, 36 S. Ct. 194, 60 L. Ed. 417, Ann. Cas. 1917E, 25. This case was referred to in Marine Bank Trust Co. v. Greenville Savings Bank TrustCo., supra, and it was there expressly pointed out that the cotton there involved had been stored in the warehouse without the consent of the holder of the lien. The views herein expressed are strengthened when the cases of Phillips v. Thomas,128 Miss. 729, 91 So. 420; Judd v. Delta Grocery Cotton Co.,133 Miss. 866, 98 So. 243, and Tonnar v. Washington Issaquena Bank (Miss.), 105 So. 750, are taken into consideration.

The decree of the court below will be reversed, and a decree awarding the cotton to the appellant will be here rendered.

Reversed, and decree here.