Federal Compress & Warehouse Co. v. Coleman

^* Corpus Juris-Cyc References: Appeal and Error, 4CJ, p. 1167, n. 94; Warehousemen, 40Cyc, p. 473, n. 9; Liability of warehouseman for damages to or destruction of property by fire, see note in 16 A.L.R. 280; 27 R.C.L., p. 1002; 4 R.C.L. Supp., p. 1781; 5 R.C.L. Supp., p. 1492. This is an appeal by the Federal Compress Warehouse Company from a judgment rendered against it in the circuit court of Alcorn county for two hundred twenty dollars, the value of two bales of cotton alleged to have been stored by the appellee with the defendant company at Corinth, Miss., on November 1, 1925, and to have been destroyed by fire on November 12, 1925.

The original declaration filed in this cause averred that the defendant was the successor of the Corinth Compress Company, and that, during the times complained of, it operated a compress for the compressing of cotton at Corinth, Miss., and, in connection therewith, maintained a cotton warehouse in which it stored cotton for hire; that on November 1, 1925, the plaintiff placed with the defendant in its warehouse two bales of cotton, grading "middling or better," which the defendant received for storage; that the plaintiff lost the receipt numbers and weights of said cotton, but the same aggregated one thousand and one hundred pounds; that the warehouse receipts, a copy of which was attached as an exhibit to the declaration, were never delivered to the plaintiff by the defendant; that these receipts were still in the possession of the defendants, and demand was made upon the defendant to produce them at the trial of the cause. The declaration further averred that it was the duty of the defendant to use all reasonable and proper care to preserve the cotton and to protect it from damage, and that it did not use such due, proper, and reasonable care, but negligently and carelessly allowed the cotton to be burned on November 12, 1925; that the plaintiff had demanded of the defendant his cotton, and, first, had offered to satisfy the warehousemen's lien, second, had offered to surrender the receipts with such indorsements thereon as defendant might require, and, third, had offered to sign, when the goods were delivered to the plaintiff by the defendant, an acknowledgment that the goods had been delivered, if such signature was required by the defendant; that it then became the duty of the defendant to deliver the cotton to the plaintiff, or pay the value thereof, which the defendant refused to do, and there was then a demand for judgment for the value of the cotton.

There were eight other similar suits filed against the defendant, and the defendant filed a motion to transfer each of these suits to the chancery court upon various grounds, which, in view of the conclusion which we have reached upon another phase of the case, it is not necessary here to state. This motion was overruled, and thereupon the defendant filed a demurrer to the declaration. In passing upon this demurrer the court below held that the declaration "did not sufficiently set out how and under what terms the Federal Compress Warehouse Company became the successor of the Corinth Compress Company, or became connected with or under liability to the plaintiff," and thereupon the plaintiff amended his declaration by inserting therein the following averment:

"And plaintiff further states that the compress so operated by the defendant, Federal Compress Warehouse Company, had been, prior thereto, owned and operated by the Corinth Compress Company; and, on or about the 8th day of October, 1925, the defendant, Federal Compress Warehouse Company, purchased all of the assets of the Corinth Compress Company, including its real estate, machinery, and all of its property, franchises, etc., and took over the operation of the said compress so located and operated at Corinth, Miss.; and that, after the said Compress Warehouse Company had so purchased, taken over, and begun operations of the said compress, this plaintiff delivered to it, for storage purposes, the aforesaid two bales of cotton, for which no warehouse receipts were delivered to the plaintiff, but for the storage of which plaintiff was able and willing to pay; and plaintiff states that he does not know whether or not the exhibit attached to the declaration, marked ``Exhibit B,' is in the exact form in which the receipts were being issued by the defendant, but charges that, whether the warehouse receipts were actually signed by the Corinth Compress Company, or the Federal Compress Company, said receipts were in fact being issued by the said defendant, Federal Compress Warehouse Company."

After the demurrer to the declaration as amended was overruled, the defendant filed a special plea, which averred that —

"It had a lawful excuse for its failure to deliver said cotton herein sued for to said plaintiff, in this, to-wit, that on the 11th day of November, 1925, the entire compress and warehouse wherein this cotton was stored, and this plaintiff's cotton, was destroyed by fire."

To this plea the plaintiff demurred on the grounds, among others, that the plea does not show that the defendant was not guilty of negligence in allowing the cotton to be burned; that the plea fails to show that defendant used due care in protecting plaintiff's cotton against loss by fire; that said plea does not show that defendant exercised that degree of care in the safe-keeping of plaintiff's cotton which a reasonably careful man would exercise with regard to cotton of his own; and that said plea does not show the existence of a lawful excuse for defendant's refusal to deliver plaintiff's cotton on demand. This demurrer to the special plea was sustained, and the defendant declining to plead further, a final judgment in favor of the plaintiff for the value of the cotton was entered, and from this judgment this appeal was prosecuted.

The controlling and important question presented for decision by these pleadings is whether, by virtue of the provisions of the Uniform Warehouse Receipts Act, the burden of proof was upon the defendant warehouseman to establish not only that the cotton was destroyed by fire, but also that the fire was not due to its negligence.

Prior to the passage of the Uniform Warehouse Receipts Act, this court held in Railroad Co. v. Hughes, 94 Miss. 242, 47 So. 662, 22 L.R.A. (N.S.) 975, that in an action against a warehouseman for the value of goods destroyed in a fire which burned the warehouse, the burden is on the bailor, in the absence of proof as to the circumstances of the fire, to show that it resulted from the bailee's negligence.

Under the Uniform Warehouse Receipts Act, chapter 218, Laws of 1920, the obligation of a warehouseman to deliver is found in section 8 thereof, which provides that — "A warehouseman, in the absence of some lawful excuse provided by this act, is bound to deliver the goods upon demand . . . (here follow conditions with which there must be compliance). In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder or depositor so accompanied, the burden shall be upon the warehouseman to establish the existence of a lawful excuse for such refusal."

Section 3 of this act provides that a warehouseman may not insert in a receipt any terms or conditions which shall "in any wise impair his obligations to exercise that degree of care in the safe-keeping of the goods intrusted to him which a reasonably careful man would exercise in regard to similar goods of his own," while section 21 prescribes the degree of care required of a warehouseman, as follows:

"A warehouseman shall be liable for any loss or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful owner of similar goods would exercise, but he shall not be liable, in the absence of an agreement to the contrary, for any loss or injury to the goods which could not have been avoided by the exercise of such care."

Section 57 of the act provides that it "shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it."

In the case of Commercial National Bank v. Canal-LouisianaBank Trust Co., 239 U.S. 520, 36 S. Ct. 194, 60 L. Ed. 417, in discussing the effect of prior local decisions upon the construction of uniform acts, Justice HUGHES said:

"It is apparent that if these uniform acts are construed in the several states adopting them according to former local views upon analogous subjects, we shall miss the desired uniformity and we shall erect upon the foundation of uniform language separate legal structures as distinct as were the former varying laws. It was to prevent this result that the Uniform Warehouse Receipts Act expressly provides (section 57): ``This act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.' This rule of construction requires that in order to accomplish the beneficent object of unifying, so far as this is possible under our dual system, the commercial law of the country, there should be taken into consideration the fundamental purpose of the uniform act and that it should not be regarded merely as an offshoot of local law. . . . We think that the principle of the uniform act should have recognition to the exclusion of any inconsistent doctrine which may have previously obtained in any of the states enacting it. . . ."

In the case of Union Trust Co. v. McGinty, 212 Mass. 205,98 N.E. 679, Ann. Cas. 1913C, 525, with respect to the Negotiable Instruments Act, and again in Rudy v. Quincy Market Warehouse Co., 249 Mass. 492, 144 N.E. 286, with respect to the Uniform Warehouse Act, the court said:

"It ought to be interpreted in such a way as to give effect to the beneficent design of the legislature in passing an act for the promotion of harmony upon an important branch of the law. Simplicity and clearness are ends especially to be sought. The language of the act is to be construed with reference to the object to be attained. Its words are to be given their natural and common meaning, and the prevailing principles of statutory interpretation are to be employed. Care should be taken to adhere as closely as possible to the obvious meaning of the act, without resort to that which had theretofore been the law of this commonwealth, unless necessary to dissolve obscurity or doubt, especially in instances where there was a difference in the law in the different states."

Applying this principle and construing the act without reference to the holdings of this court upon the question of the burden of proof prior to the passage of the act, we think the effect of the statute is to definitely place the burden of proof upon the bailee to show a lawful excuse for failure to deliver goods upon demand, and in order to do so he must show that he exercised that degree of care in regard to them that a reasonably careful owner of similar goods would exercise. A loss by fire due to the negligence of the bailee was never a lawful excuse for a failure to deliver goods, but under the rule announced in theHughes case, supra, when the bailee proved that the loss of the goods was occasioned by fire, the burden was then shifted to the bailor to prove that the fire was due to the bailee's negligence. The clear import of the language of this statute is to place the burden on the warehouseman to establish a lawful excuse for a failure to deliver, and this requires more than a mere showing that the failure to deliver was due to an event which might or might not have been caused by his negligence. To meet this burden the warehouseman must show that he exercised that degree of care required by the statute.

Prior to the adoption of the Uniform Warehouse Receipts Act, the Massachusetts court held, in accordance with the common-law rule, that the burden of showing negligence was on the bailor, but in the case of Rudy v. Quincy, etc., Warehouse Company,supra, that court said:

"It is contended that the common law rule as to burden of proof has been changed by the Warehouse Receipts Act. That act is to a considerable extent a statement in statutory form of the law governing warehouse receipts and the responsibilities and duties of warehousemen. . . . We are of opinion that the effect of the statute is to shift the burden of proof upon this point to the defendant and thus to change the common law in that particular. That is the natural import of the language used. . . . It would be difficult to give a reasonable construction to the statute without attributing to it the force of placing the burden of proof for failure to deliver on the warehouseman."

In Leckie v. Clemens, 135 Md. 264, 108 A. 684, the defendant warehouseman requested the court to instruct the jury that — "The verdict must be for the defendant unless they shall further find from the evidence that in storing said goods the defendant failed to exercise such care in regard to them as a reasonably careful owner of similar goods would exercise, and that such failure was the cause of said loss."

The court modified this instruction by adding:

"And the burden is on the defendant to show by the evidence that in storing said trunk and contents he did use such care."

In discussing this modification the court said:

"The effect of the modification of this prayer is that it places upon the defendant the burden of showing that he exercised the care required of him under this prayer in storing said trunk and contents in his warehouse. Such burden, we think, was properly placed upon him.

"This question has been before the courts many times with the result that in some jurisdictions it has been held that where the property is damaged, destroyed or lost, the burden is upon the bailee to show that the same was not caused by his negligence, while in other jurisdictions it has been held that the burden is upon the bailor to show that the loss sustained by him was caused by the negligence of the bailee. This court, it seems, up to the time of the passage of the Act of 1910, chapter 406, designated as article 14-A (Code, vol. 1, p. 317), adopted the view last expressed, that the burden was upon the bailor to show the negligence of the bailee. (Citing authorities.) After the decisions in the above cited cases, the legislature at its session of 1910 passed the act above referred to" (the Uniform Warehouse Receipts Act).

The court then calls attention to sections 8 and 21 of the act, and discusses the reasonableness of the rule requiring the bailee to prove the exercise of due care, and held that since the passage of this statute, the rule is established in that state that the bailee has the burden of proving due care, or overcoming the presumption of negligence.

In the case of Caldwell v. Skinner, 100 Kan. 567, 164 P. 1166, the facts and pleadings were the same as in the case at bar, and the supreme court of Kansas there said:

"Cases are cited by defendants which tend to sustain their view, and there is a conflict of authority on the question, but the legislature has provided a different rule for establishing claims of this character. In the act relating to warehouses it is provided that in the absence of lawful excuse the warehouseman upon demand must deliver the goods, upon the payment of the warehouseman's lien, a surrender of the warehouseman's receipt and an acknowledgment of the delivery. It then provides: ``In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder or depositor so accompanied, the burden shall be upon the warehouseman to establish the existence of a lawful excuse for such refusal.' Gen. Stat. 1915, section 4422.

"Under the statute, if it be shown that goods were delivered to the warehouseman in good condition and destroyed, lost or returned in a damaged condition, it then devolves upon him to acquit himself of negligence; that is, to show a lawful excuse for his failure or refusal to deliver the goods in compliance with the demand. Doubtless the legislature considered that the warehouseman who had control of the premises and the goods intrusted to his care was better situated than the depositor to know the facts and circumstances under which the destruction, loss or damage occurred, and is best able to prove them."

The declaration in this cause specifically charges that the cotton was delivered for storage purposes to the defendant, the Federal Compress Warehouse Company, and the issuance of the warehouse receipts by it, and the failure to deliver the cotton upon demand made in compliance with all the statutory conditions, and we think the demurrer to the special plea filed in the court below was properly sustained, and under section 147 of the Constitution of 1890, which provides that "no judgment or decree in any chancery or circuit court rendered in a civil cause shall be reversed or annulled on the ground of want of jurisdiction to render said judgment or decree, from any error or mistake as to whether the cause in which it was rendered was of equity or common law jurisdiction," this court cannot reverse this cause for the error, if any, of the trial court in refusing to transfer the cause to the chancery court. The judgment of the court below will therefore be affirmed.

Affirmed.