American Pig Iron Storage Warrant Co. v. Sinnemahoning Iron & Coal Co.

Opinion by

Mb. Justice Dean,

In April, 1899, Frank B. Baird leased from the Sinn email oning Iron & Coal Company, a corporation, its furnace property in Cameron county, consisting of about 10,000 acres of land, with blast furnace, coal washers, mines, coke ovens, railroad sidings, and like improvements for three years from date of lease. The lessee covenanted to pay a minimum annual rental of $14,000 quarterly, and on the execution of the lease at once took possession. The lease was to be binding upon both parties, their heirs, executors, administrators and assigns. There was no express provision as to subletting or restriction as to terms of sublease; so it may be assumed that there was plainly an implication of a right to sublet. In December, 1899, the tenant assigned his lease to Chester R. Baird, and he assigned it to the Emporium Furnace Company, a corporation promoted by Baird, and this company continued to manufacture pig iron in large quantities, piling it up on the property near the casting-house from day to day as it was manufactured. By this method of conducting- its business the furnace company had accumulated on the premises about 7,200 tons of pig iron when it leased this small part of the land to the Philadelphia Warehouse Company for warehouse purposes; then on July 25,1900, the Warehouse company leased that part of the land to the American Pig Iron Storage Warrant Company, a New Jersey corporation, having under our statutes full authority to do business in Pennsylvania, such as to receive iron on storage and to issue its negotiable warrants therefor. It had a large quantity of this pig iron near the furnace in its storage yard a few feet from the furnace, which had been manufactured at the furnace and on which it had issued warrants, many of them to the furnace company and to C. R. Baird & Company, the first lessees from the owner. The lessees fell in arrears for rent to the amount of $7,536.36; a landlord’s warrant was issued to Constable Yentzerwho by virtue of it seized the pig iron in the alleged storage yard of the American Pig Iron Storage Warrant Company, this appellant; this latter company then replevied the iron seized by the constable, alleging the iron was not lawfully subject to distraint for rent, it being the property of the storage warrant company. When the case came on for trial the parties by agreement submitted the issue, both fact and law, to the decision of the court under the act of 1874.

The court in opinion filed gave judgment for the Sinnemahoning Iron Company, and the constable, thus in effect, holding that the iron was subject to distress for rent. From that judgment comes this appeal by the storage warrant company with twenty-one assignments of error. The subject of all of them is so fully discussed in the opinion of the learned judge of the court below, that but little further need be here said. The only question raised in our minds as to the correctness of the legal conclusion of the court has its source in the Act of the 24th of September, 1866, P. L. (1867) 1868. That act after authorizing the issuing of warrants by warehousing companies and making such warrants negotiable, goes on to say: “ And any person to whom the said receipt or bill of lading may be so transferred shall be deemed and taken to be the owner of the goods, wares and merchandise therein specified, so as to give security and validity to any lien created on the same, subject to the payment of freight and charges thereon.”

This act was obviously framed for the protection of the warrant holders and it is the duty of the courts to give full effect to its intent, but they cannot go further and by construction disregard or subvert the law which long settled the rights of a landlord to distrain for rent the goods on the demised premises. But for this act, there could be no question raised as to the right of the landlord to seize this iron made in the leased furnace from ore and coal mined on the leased land. It had been taken from the casting house and piled about the same distance from the furnace as it would have been, had there been no transfer to the storage company. The warrant itself does not determine and fix that the iron has been warehoused; there must have been an actual change of possession ; any other ruling would suggest a most fruitful method of fraud which is not warranted by any reasonable interpretation of the act.

Notice the character of warehousing done here; the lessee was in arrears for more than a quarter’s rent; the iron manufactured before and during that quarter had been piled up just where it lay when seized ; at the end of the quarter the storage company leased from the tenant the small piece of land on which the iron was piled, ran a wire fence around it and claims that it was stored by the storage company on its premises, therefore under the act of 1866 it is not subject to distress for rent. Notice of this subletting was not given the landlord. It was answered, he was not entitled to notice. This may be, if the subletting was for the same purpose as the orignal lease, the manufacture of iron; but this sublease was for warehouse and storage purposes ; it may well be doubted whether the implied right of the first lessee to assign a right to manufacture iron embraced the right to assign a part of the demised premises for other and distinct purposes. But the finding of fact by the court below clearly vindicates the judgment on another ground. Appellant argues that the rule as announced by Gibson, C. J., in Brown v. Sims, 17 S. & R. 138, must control the case before us. It may be said that Brown v. Sims was no modification of or departure from the common-law rule, that the goods on the demised premises are liable to distress for rent; it is merely an exceptional case on its facts as appears from the language of the opinion thus: “ Where the course of the business must necessarily put the tenant in possession of the property of his customers it would be against the plainest dictates of honesty and conscience to permit the landlord to use as a decoy and pounce upon whatever should be brought within his grasp, after having received the price of its exemption in the enhanced value of the rent.” From that follows a long line of exceptional cases on similar facts down to Karns v. McKinney, 74 Pa. 387, where after an elaborate discussion of most of them the exceptions to the rule are all embraced in these few words: “ When the tenant in the course of his business is necessarily put in possession of the property of those with whom he deals or those who employ him, such property, although upon the demised premises, is not liable to distress for rent due thereon from the tenant.”

This pig iron did not come upon the demised premises from the possession of a third person; it was manufactured and piled there by the tenant; it was not, necessarily, there for any purpose ; appellant ran a wire fence around it and left it there for its own convenience and then assumed it was in its storage yard or warehouse, without even notice to the landlord, that there had been a constructive change of ownership. These findings of fact by the court below bring the iron under the operation of the general rule, that the goods on the demised premises are distrainable for rent and which does not encourage what Blackstone calls a dangerous combination between strangers and tenants to defraud the landlord of his rent; ” or as the court below puts it, “ all that would be necessary, as was done in this case, would be to deposit the entire output in this storage yard and when there deposited, claim that it was exempt from distress for rent.” On the facts as found this question is not affected by the act of 1886. If the landlord had hauled his iron to appellant’s storage yard and placed it in their custody and control and they had issued warrants upon it, the holder of the warrant would have been protected by that act; nevertheless, while the act hedges around the owner of the warrant with almost every possible protection, he must run the risk of the warehouseman issuing a warrant upon goods, that never were legally put in his possession by a landlord who has a prior right of lien.

All the assignments of error are overruled and the judgment is affirmed.