Street v. Farmers' Elevator Co.

■' 'WHITING, J.

The complaint herein alleged that defendant' is a corporation duly licensed to engage in and engaged in the business of storing grain pursuant to the laws, of this state in relation to public-warehouses; that plaintiff, being the owner of certain grain, deposited it with the defendant and received from it’ storage receipts in the form -provided by section 487 of the Political -Code; that afterwards plaintiff presented such receipts to the defendant, offered to pay all storage charges upon the grain deposited, and demanded the delivery of said1 grain; that defendant refused to deliver any of said grain, or any grain of -equal grade, and refused to -honor such receipts and ha-s kept- all of said grain and converted' the same to its own use; that plaintiff has sustained damages in the amount of the value of said grain as therein stated. • Defendant admitted that it is a corporation licensed to receive and store grain under the statutes-of this state, and that it did receive grain from plantiff and issue to- -him the storage: receipts described in the complaint. By way o-f defense, it alleged in substance as follows: First, that plaintiff was not -the owner o-f, nor in any manner the agent or representative of the -owners o-f an undivided one-fourth interest in and- to -the said grain; that, upon- demand- of the owners of such one-fourth interest, it had, prior to plaintiff’s demand therefor, delivered to them one-fourth of such grain; -that it had offered to, and was ready and willing to- deliver -to plaintiff the remaining three-fourths. Second, that it delivered the storage tickets under the following conditions, to-wit:-at the time plaintiff deposited the -grain he represented that he was -the owner of part of said grain and agent for the o-wners of the remainder, and falsely and fraudulently demanded that the storage receipts be made in the name of plaintiff; that the said representation was knowingly false and fraudulent as to an undivided one-fourth of said grain; that, through such, false rep-resentation and the mistake on the part of defendant in believing the same to be true and in relying thereon, defendant was induced, upon plaintiff’s demand, to issue the storage receipts in his name; that such false representation and demand were made for the purpose of defrauding defendant; that in truth plaintiff and certain other parties, including the parties to whom the one-fourth of the grain was delivered, were co-tenants of certain land and the grain in question was a part of the landlord’s share of the crops grown on such land and owned by the owners of said land in the same proportion as the land was owned. Third, and by 'way of counterclaim, — that the receipts were issued owing to the mistake of defendant as to the facts, which mistake was brought about through the misrepresentations of plaintiff above referred to, wherefore defendant prayed for a reformation of such receipts -by substituting, in the place of the number of bushels of grain described in such receipts, the three-fourths thereof. To such answer plaintiff demurred upon the ground that the 'same did not state facts sufficient to constitute either a defense or counterclaim.- The .demurrer was in all thing's sustained. From the order’ sustaining such demurrer this appeal is taken.

It is the contention of appellant that the provisions of Art. 2, Chap. 1, under the title Deposit, being §§ 1358-1363 Civ. Code, relate to the bailment before us in this -case and are not affected by the provisions of chapter 8 Pol.- Code, known as the Public Warehouse Act; appellant further contends that, under such general law, a bailee has the right, whenever demand for the possession of the thing deposited is made by its true owner, to deliver the thing deposited to such true owner, and .that such delivery will constitute an absolute defense against any right of recovery upon the part of the party making the deposit. Respondent concedes that the above is -the ordinary rule governing deposits and the rule under the general statute above .referred to,, but contends that this rule, so far as it relates to a bailment such as the one under consideration in this case, has been changed by the express provisions of the Public Warehouse Act — it being the contention of respondent that, under such statute, the bailee must, upon presentation of the ticket, deliver to the holder or owner of said ticket the grain represented thereby, and deliver such grain regardless of whether the person who deposited the grain was the true owner thereof or not; that the bailee cannot surrender the possession of s.uch grain to the true owner and then set up title in the true owner and the fact of such delivery as a defense to the recovery of such grain by the party holding the storage ticket.

[1] It was a fundamental rule of the common law that, inasmuch as the 'bailee derived his right of possession from the bailor, he could neither assert title in himself nor in a third person — that his position was similar to that of a lessee who was forbidden to deny or dispute the title of his lessor; and it was also a fundamental rule of the common law that one who owned and was entitled to the possession of personal property might enforce his right of possession as against any person. Thus, if one, not the owner of personal property, deposited it with a bailee, the true owner could demand possession thereof, and if possession was not given him, he could maintain an action for the property or its value; and, when demand was made by the true owner, the bailee could not dispute his bailor’s title and right of possession, and, at the same time, was in danger of being mulcted in damages by the true owner; he was thus placed in an unconscionable position. As a consequence there has gradually arisen recognized exceptions' to the rule that a bailee cannot dispute the title of his bailor. The rule with those exceptions thereto which have been established by the great weight of authority is thus stated: “The general rule is ■that the bailee can discharge his liability to the bailor only by returning the identical thing which he has .received, or its proceeds, under the terms of the bailment; but to this rule there are certain exceptions. The bailee may show .that the property has been taken from him by process of law, or by a person having a paramount title, or perhaps excuse his default in some other way. But he cannot set up jus tertii against his bailor, however tortuous the possession of the latter, unless the true owner has claimed the property and the bailee has yielded to the claim.” Jensen v. Eagle Ore Co., 47 Col. 306, 107 Pac. 259, 33 L. R. A. (N. S.) 681; 19 Ann. Cases, 519.

[2] Pías the Public Warehouse Act prescribed another rule so that a bailee under such act cannot voluntarily surrender the bailed property to the true owner thereof, and then interpose the fact of such surrender as a defense to a claim by -the bailor?

Recognizing the importance, in an .agricultural state such as this, of the establishment of public warehouses where the producers’ grain can be stored and held subject-to future demand,— and at the same time realizing the necessity of allowing the warehouseman to commingle and even to ship to market the grain so deposited — which commingling and shipping would, at common law, have constituted a conversion by a bailee,- — the Legislature enacted the Public Warehouse Act, which, after providing for -the licensing of the business of conducting a public warehouse and for the giving of a bond by the warehouseman, provides among other things as follows:

Ҥ 487. All owners of such bonded warehouses and elevators so licensed shall upon the request of any person- delivering grain at such warehouse give a warehouse -receipt therefor, subject -to the owner or consignee, * * *

Ҥ 488. On the return of any warehouse receipt properly endorsed and the tender of all proper charges upon the property represented by it, such grain, or an equal quality [quantity] of the same grade, and kind, shall be immediately delivered to the holder of such receipt as rapidly as due diligence, care and prudence will justify. * * *

Ҥ 494. Whenever any grain shall be delivered, to any person, association, firm or corporation doing a grain warehouse or grain elevator business in this state, and receipts issued therefor, providing for a delivery of a like kind, amount and grade, to the holder thereof in return, such delivery shall be a bailment and not a sale of. the grain so delivered; and in no case shall the grain so stored be liable to seizure upon process of any court in actions against such bailee, except actions by owners or holders of such warehouse receipts to enforce the terms of .the same; but such grain shall at any and all times, in the event of the failure or insolvency of such bailee, be first applied exclusively to the redemption of outstanding warehouse receipts for grain so stored with such bailee. * * *

Ҥ 495. No person, association, firm or corporation, doing a grain warehouse or grain elevator business in this state, having issued a receipt for the storage of grain, as in this article provided, shall thereafter be permitted to deny that the grain- represented thereby is the property of the person to whom such- receipt was issued, or his assigns thereof, and such receipts shall be deemed and held, -so far as the duties, liabilities and obligations of such bailee are concerned, conclusive evidence of the fact -that the party to whom the same was issued, or his assigns thereof, is the owner of such grain and is the person -entitled to make surrender of such receipt and receive the grain thereby promised to- be delivered.

“§ 496. Every person and every member of any association, firm or -corporation doing a grain warehouse or grain elevator business in this state who shall after demand, tender and offer as provided in section 488 wilfully neglect or. refuse to deliver, as provided by -said section, -to the person making such demand, the full amount of grain of the kind and grade or market value thereof which such person is entitled to demand of such bailee, shall be deemed guilty of larceny and shall on conviction thereof be punished by a fine or imprisonment, or both, as is prescribed by law for the punishment of larceny.”

It is urged by appellant that the words, “subject to the owner or consignee,” contained in section 487, supra, have the effect of preserving to the true ozvner all the rights he would have under the general law, it being contended that the word “owner,” as contained in such phrase, refers to the true owner of the grain. We do not think this section was enacted for the purpose of safeguarding, or that it in any way relates to, the rights of any person other than the party named in the receipt; section 487 prescribes -the contents of the receipt to be given by the bailee; it is to be given in favor of somebody; there must be someone named therein who shall be recognized as the party entitled to the grain therein described. The -effect of the use of these words in -section 487 is to require that the receipt shall name, as the bailor, the person who is represented, at the time of the deposit, to be.the ozmer of such grain, or the person to whom the depositor announces the grain is consigned. When a depositor goes to a warehouseman and seeks to deposit grain, the warehouseman asks him to whose order he wishes the grain to be “-subject”; the depositor can give either the name of the one whom he claims to be the owner of the grain, or the name of the one to whom he desires to consign the grain. The clear intent of the use of the words “owner” and “consignee” is to -provide that the receipt shall name therein the person to zchose order the grain shall he “subject” — the person who can negotiate the receipt. If such was not the purpose and effect of incorporating these words into such section, then there is no provision in this law under which a warehouseman is required to insert in such receipt the name of any person. That he must insert either the name of the pretended owner or the name of the person to whom the depositor desires to consign the grain; and that, after having so inserted such name and received the grain subject to the order of the person named, he is estopped, as to such person or his assignee, from questioning his ownership of the grain, seems clearly the effect-of the several sections of this law.

Respondent contends that the effect of section 494 is to take away from the true owner, if not the holder of the storage receipt, the right to bring an action against the bailee to recover such grain; and he further contends that, when the bailee is thus relieved from liability to suit, the reason for that rule of common law which allows a bailee to surrender possession to the true owner and then interpose the fact oE such surrender as a defense in an action by the bailor, ceases to exist, and such bailee cannot thus surrender possession and defend against the holder of the receipt. Appellant contends that the sole purpose of this section and the only effect thereof, is to render a deposit of grain under this act a bailment; it contends that the word “owners” as used in said section 494 refers to1 the true owner of the grain and not necessarily to the owner of the reecipt, and that the latter part thereof but declares the established rules of the common law, and leaves the owner’s right of suit the same as at common law. While it is clear that the main purpose in the legislative mind when enacting this section was to declare a deposit under this Act a bailment, yet it is equally clear that the word “owners” as used in section 494 refers to and is limited by the phrase, “of such warehouse receipts.” The contention of the respondent to the effect that the true owner of grain can not bring an action therefor against the bailee,'where the bailor was' other than such true owner, seems to be based on that part of section 494 reading: “and in no case shall the grain so stored be liable to seizure upon process of any court in actions against such bailee * * *;” but the clear purport of this clause is to emphasize the fact that the transaction of storing grain under the act shall be treated as a bailment and as in no manner vesting title to the grain in the bailee — this section does not, and it was never intended that it should deprive a true owner of his common law right to pursue his grain in whomsoever’s hands he may find it.

Though a receipt, given without the knowledge or consent of the true owner' to one having no right to deposit the grain therein described, can in no manner affect the right of the true owner to recover such grain, it does not necessarily follow that such a receipt cannot be, in all respects, valid and binding as between the bailor and bailee, and estop the bailee from voluntarily surrendering the possession of the grain to the true owner and then setting up such surrender to and title in the true owner as a defense to an action brought by the receipt holder. Section 495 does not contain any exceptions under which the estoppel therein declared shall not apply; but, under this section, the warehouseman, after giving the receipt, is thereafter estopped “to deny that the grain represented thereby is the property of the person to whom such receipt was issued, or his assigns thereof”; moreover, without providing for any exception to the rule therein announced, said section provides that such receipt “shall be deemed and held, so far as the duties, liabilities and dbligatons of such bailee are concerned, conclusive evidence of the fact that the party to whom the same was issued, or his assigns thereof, is the owner of such grain.” The clear purpose in enacting this section was to forbid a bailee assuming, as between the party claiming under the receipt and a third party, to determine which is the rightful claimant of the property.

The dissenting opinion herein will be found to contain a most exhaustive review of the decisions bearing upon the right of a bailee to surrender, to the true owner, the thing bailed; and these decisions establish beyond question the fact — which all parties hereto fully concede — that the rule of law, supported by the great weight of authority, is that announced in the excerpt, hereinbefore contained, from the decision in Jensen v. Eagle Ore Co. The discussions found in the decisions reviewed by the minority of this court cannot but convince one of the wisdom' and justice of the established rule, and it might have served a good purpose if the reasoning in some of these decisions had been called to the attention of the legislative branch of our state government, at the time it was considering- the enactment of ,tbe Act before us. But the question for our consideration is not the wisdom of enactinga statute prescribing the rule that a bailee of grain shal-l not be permitted to deny the ownership of the bailor therein, and omitting therefrom those exceptions -to such rule which had become en-grafted thereon by the courts. If sections 495 and 496 had been omitted from such statute’, then the general -statutes relating to bailments and the rule announced in Jensen v. Eagle Ore Co. would control. The real question confronting us is -our right to read into section 495 these exceptions to- the rule therein announced. Upon this question, the only question really before us, not a single authority cited by appellant or by our colleagues has any bearing — not even .the opinion in Dianiels v. Palmer, 41 Minn. 116, 42 N. W. 855, as clearly appears from a reading- of the whole opinion. Nothing- is to be gained from the citation of or the quotation from the opinions of even the most renowned law writers or the most eminent jurists, when it is clear that such opinions are in no manner controlled by statutory provisions such as those we are called upon to construe.

[3] Unless we deem it unconstitutional, we are bound to sustain a statute though we may deem it opposed to a reason and to every principle of right and justice; though no text writer or judicial authority has ever announced a rule of law agreeing therewith or advocating its adoption. There are, however, decisions wherein the right -of the bailee to voluntarily surrender possession to the true owner, not the bailor, is- denied and this even in states where there are no statutes forbidding such surrender; moreover the right to enact statutes so providing- cannot be disputed. We find in New Jersey a statute denying the right of a bailee to voluntarily surrender the property to -one not the owner or holder of the receipt, and prescribing that he can only defend against the holder of the receipt when the -property has been taken from him by operation of law. Wheeler v. Brookfield, 70 N. J. Law, 703, 58 Atl. 352.

Section 495 forb-kls the bailee “to deny that the grain represented thereby is the property of the person to whom such receipt was issued, or his assigns thereof.” What clearer denial of the bailor’s title could there be than for the bailee to voluntarily surrender possession to one claiming adversely to such bailor? It seems to us most illogical to contend, as do our col- ' leagues, that “The same transaction (accounting to the true owner) which terminated the -bailment, also, at the same time, freed appellant from the 'conclusive’ effect of the warehouse statute by extinguishing the obligation.” Can it be possible that the law permits one to voluntarily violate one provision of a statute, and then be supported in his claim that, by violating- such statute, he has terminated the relation that such statute created and become released from the provisions of such violated statute? If section 495 contained an exception under which a bailee might surrender possession to the true owner of the grain, then such a surrender would terminate the bailment and the provisions of such section relating to rules of evidence would cease to apply to that particular transaction. We do not hold that section 495 was enacted for the purpose of “preventing a warehouseman from being placed in an 'unconscionable’ position with relation to adverse claimants to stored grain,” and we deny that the effect of our views would, be to “sanction, in some cases, a double recovery.” Section 495 puts the warehouseman in a worse position than he would be in without it, as he is denied a right which he otherwise would have as bailee — the right to voluntarily surrender possession to the true owner. The bailee is in no danger of suffering through “a double recovery,” for the simple reason that, in case a demand is made for the possession of the property by one claiming to- be the true owner, he can do any one of three things, either one of which will protect him from double recovery: (1) He can allow the claimant to bring suit, defend the same, and, if judgment goes against him and the property is taken from him, plead such involuntary surrender of possession as a termination of the bailment ; (2) He can allow the claimant to bring suit, and then, under section 97, C. C. P., apply to the court and ask that the bailor be required to interplead, and he be released from liability in the suit; (3) As soon as demand is -made by the claimant, he can proceed under section 98, C. C. P., and be allowed to deposit the property in court.

[4-5] But appellant contends that, admitting a bailee would ordinarily be estopped from pleading and proving delivery to and ownership in the third party, it is not so estopped because one can never be estopped by the contents of a writing obtained by fraud, and it contends that the receipt in question was procured through fraud. It must ¡be conceded that an estoppel 'by deed may be prevented by the existence of an estoppel in pais, and that “Where an estoppel exists against an estoppel, the matter is set at large.” 16 Cyc. 748. Is respondent estopped by his misrepresentations? It is fundamental that the following elements must exist in order for there to be an estoppel resulting-from misrepresentations: (1) The false representation or -concealment of material facts. (2) Knowledge, actual or constructive, on part of the party estopped. (3) Tack of knowledge or means of knowledge on the part of the party claiming the estoppel. (4) The misrepresentation must have been made with the intention that it should be acted upon. (5) The party to whom the representation was -made must have relied or acted upon it to his injury; that is, he must have suffered a loss of a substantial character, or have been induced to alter his position for the worse in some respect. 16 Cyc. 726-744. There can be no estoppel if either of these elements are wanting — • they are each of equal importance. If it were conceded that the answer shows the existence of the first four elements, certainly the facts alleged do not establish the existence -of the last element. It must he borne in mind that the answer reveals this grain to have been the landlords’ share of grain raised upon land owned by several co-tenants, of whom respondent was one and the parties to whom appellant surrendered one-fourth of the grain were others. Each co-tenant’s interest in the grain so raised was, under the provisions of section 201, C. C., an interest in common. At the time of the delivery of this grain to appellant, respondent was in the actual possession of the same, and, so far as appears from the answer, such possession, as to all of the grain, was rightful— it not appearing that any demand had been made 'by his -co-tenants for their aliquot shares of the grain.

[6] Respondent -contends that there was no fraud such as would estop 'him from relying upon the estoppel otherwise resulting from the giving of the receipt, because, under the facts pleaded in appellant’s answer, respondent was rightfully in possession of said grain- and had the right to deposit all of same; and, this being true, that it necessarily follows that appellant was not “induced to alter his position for -the worse,” by the alleged false representation. Suppose respondent had been in fact the sole owner of this grain, and yet had gone to appellant to deposit it and had, either through ignorance of his title to all of said grain or through wilfullness, represented that he was the owner of but a part thereof and agent for the owner of the remainder, and then appellant had issued to him a ticket in which he was named as the owner of said grain; could appellant claim the ticket was procured by fraud and escape the estoppel that would otherwise result from the giving of the ticket? Certainly not, for the perfectly clear reason, that it would have been in no manner injured by such misrepresentation. The case above supposed is no different in effect from the one presented by the facts pleaded. At the time this grain was delivered to appellant, respondent was the owner of an undivided interest in each and every bushel thereof; there had been no demand for possession of their shares by his co-tenants, hence respondent’s possession was rightful as to every bushel of such grain. It follows that he had at that time, as the rightful custodian of said grain upon whom rested the duty to care for and preserve the same, the absolute right to deposit all of said grain in his own name, a right which, as a mere agent for the owners of a part thereof, he might not have had at all. As hereinafter shown, in discussing the right of appellant to a reformation of .the contract, if the receipt had shown that respondent deposited the grain claiming same as co-owner in possession, appellant’s rights would be no different than they are under the receipt given. We are not called upon to determine whether, if respondent, after refusing .to deliver to his co-tenants their shares of said grain, had represented that he had a right to deposit it all in his own name, such representation would have been a fraud sufficient to work an estoppel against the estoppel arising from the giving of the receipt. The misrepresentation pleaded did not amount to a legal fraud, and appellant remained estopped by the receipt issued.

[7-8] Appellant contends that Sec. 1363, C. C. expressly authorized it to do what it did. This section reads : “If a thing deposited is jointly owned or in common by persons who. cannot agree upon the manner of its delivery, the depositary may deliver to each his proper share thereof, if it can be done without injury to the thing.” There are several reasons why this section can have no application to the case presented. It would first have to be pleaded and proven that the bailor was but a tenant in common, and the receipt before us being one given under the Public Warehouse Act, appellant is forbidden either to plead or prove such fact. But, even if it were a bailment not under such Act, the pleading would have to set forth the existence of those facts which would authorize such division, namely, — that the owners in common could not agree upon the manner of the delivery of the grain. If the receipt had named the several co-tenants as co-owners of the grain, and there had been an allegation setting up the conditions named in the statute, the pleading would have then set up a good defense.

[9] Was appellant entitled to a reformation of .the storage receipt? The only reformation to which he could claim a right, would be one which would conform such receipt to the true facts. It follows that -the only reformation he could ask would be that such receipt should recite the reception of the grain from respondent claiming same as a co-tenant in possession and holding such possession on behalf of all the co-tenants. If the receipt so read, appellant could not, under all the facts pleaded, rightfully have surrendered the grain to any one but respondent.

The order sustaining the demurrer is affirmed.