Michigan City Bank v. First State Bank

*759 Pugh, District J. This is an action for the recovery of damages for the alleged conversion of two automobiles. A jury was waived and trial had to the court. The trial court made findings of fact, conclusions of law, ordered judgment for the plaintiff and judgment was entered thereon. The defendant made motion for a new trial, specifying errors in law occurring at the trial and the insufficiency of the evidence to support the judgment, which motion was denied. Defendant appeals from the judgment and from the order denying the motion for a new trial. The material facts as they appear from the record are these: During the years 1919, 1920 and 1921, one B. H. Stary owned, operated and conducted a garage and garage business at Conway, sold automobiles and tractors, accessories, oils and gasoline, and in connection with his business operated a repair shop. The building in which this business was conducted is of one story, divided into three parts, and is situated in Conway, North Dakota. Automobiles were kept in the front part, the repair shop in the middle section and tractors in the rear. . A corporation named the Conway Storage Company was formed *760 December 21, 1919, with B. II. Stary as President, John B. Stary as Secretary and Madeline Stary as Vice President. Application was made to the Board of Railroad Commissioners for a. public storage company license, and, January 5th, 1920 that Board issued such license to it. Stary became indebted to defendant in the sum of $2000.00 which was due November 1, 1920. For the security of the payment of this indebtedness, defendant held certain notes and other collateral. On or about the 5th day of November 1920, Stary paid the interest on this indebtedness to November 1, 1920, gave a new note to defendant dated November 1, 1920. The defendant surrendered to him the collateral it then held and received in place thereof a storage receipt which appears upon the face of it to have been issued by said Conway Storage Company, and which receipt reads as follows: Original. Negotiable Receipt- Number 104. Conway Storage Company, Oonwav, N. D. Nov. 1st, 3 920. This is to certify that we have received from and hold in storage the following described automobiles and will deliver the same to First State Bank, Manvel, N. I), or order, upon the surrender of this receipt, and on payment of storage and other charges and advances as indicated hereon. Storage from date. Storage 3.00 per mo. for first month, or any paid thereof and 3.00 per mo. for each month thereafter or any part thereof. Minimum charge 3.00 (here follows description of the automobiles by model, serial number, trade name and value). After the figures designating the value of each is a bracket, and then follow the figures “2000.00.” (Signed) Conway Storage Co. By B. H. Stary, Manager, Deliveries noted on back of this receipt. Prior to November 1st, 1920, the Conway Storage Company and B. II. Stary were also indebted to the plaintiff, which indebtedness was represented by notes aggregating $10,800, signed by the Conway Storage Company and B. H. Stary, and secured .by collateral which in- *761 eluded three certain warelicrase receipts issued to it by Conway Storage Opmpany, covering tractors and automobiles, which receipts were identical as to form with that issued to the defendant, but that particular receipt issued to the plaintiff under daté of March 24th, 1920 is numbered 50, while the numbers of the other two receipts issued to the plaintiff are not disclosed by the record. December 9th, 1920, this indebtedness was renewed by the giving’ of three notes dated that day, signed by the Conway Storage Company and B. H. Story, and also as additional .collateral security. B. IT. Story executed and delivered to George "Reed, one of the directors of the plaintiff, his three notes in identical sums corresponding as to amount, date and maturity, with the three notes executed by the Conway Storage Company and himself, jointly,- and also executed and delivered to said Reed his chattel mortgage upon five automobiles, which included two of the automobiles described in the defendant’s storage receipt. Said chattel mortgage was thereafter, by said Reed, assigned to the plaintiff. At the time of the renewal of said notes and the giving of said chattel mortgage, plaintiff continued to hold and thereafter remained in possession of the said three storage receipts which had been issued to it about nine months previous thereto, defendant was in possession of the receipt issued to it, while the automobiles described in defendant’s storage receipt were in the warehouse in the location therein where defendant’s cashier and tia¡d Story had placed them. The defendant presented its storage receipt shortly after the 9th day of December, 1920, and received thereon two of the automobiles therein described, and it is for the alleged conversion of these two automobiles this action is brought. The trial court found that B. II. Story was the owner and in possession of the two cars in question on the 9th day of December, 1920, that said Story executed and delivered said chattel mortgage as such owner and Avhile in possession thereof, and the court held that the plaintiff was entitled to recover for the amount of the damages sustained throiigh the conversion thereof. The trial court therefore necessarily held and found that the lien of the plaintiff under its chattel mortgage Avas superior to the lien of the defendant asserted by reason of the storage receipt held by it upon the same automobiles. The defendant challenges the correctness of this conclusion and main *762 tains tliafc its lien on the automobiles in question is superior to the chattel mortgage of the plaintiff. ' This is the decisive question in the case. The first question presented is as to what weight and effect shall be given to the findings of the trial court on this appeal. The case is one properly triable to a jury but tried to the court by consent. It is the respondent’s contention that the same force and effect must be given to the findings of the trial court as would be given to the verdict of a jury, and that if such findings are supported by some credible testimony they may not be disturbed on appeal. The rule is that in such cases the findings are presumed to be correct; that they must stand unless they are clearly against the preponderance of the testimony; that the burden rests upon the party alleging error of demonstrating the existence of such error. But this court on appeal is not precluded from weighing the evidence; and if it appears that the findings are clearly contrary to the preponderance of the evidence, they will not stand. Hartung v. Manning, 50 N. D. 478, 196 N. W. 554 and cases cited. The statute governing the licensing of storage companies is article 77 of chapter 38 (§§ 3138-3148) of the Political Code. Section 3138 provides: “The Board of Railroad Commissioners may license any suitable person, persons or corporations ... to carry on the business of public storage companies or public warehousemen, who may keep and maintain public warehouses for the storage of goods, wares and merchandise, etc.” The applicant for such license is required to furnish a bond running to the treasurer of the state in the sum of $5000 with good and sufficient sureties to be approved by said Board of Railroad Commissioners, ■conditioned for the faithful discharge of its duties as such. Comp. Laws, § 3139. It is also provided in said article that it shall be unlawful for any person, persons or corporations, not duly licensed as therein provided,' to conduct or carry on the business of a public storage company or public warehouseman. § 3146. A penalty for violation of any of the provisions of said article 77 is provided by § 3147. . ¶ (h) of section 2, chapter 250, .Laws of 1917 (Uniform Warehouse Receipts Act) provides that if the warehouse receipt is issued for goods of which the warehouseman, is owner either solely or jointly *763 or in common with others, such receipt must embody within its written or printed terms the fact of such ownership. Section 53 of the Uniform Warehouse Receipt Act provides, “Where there are deposited with or held by a warehouseman goods of which he is the owner either solely or jointly or in common with others, such warehouseman or any of his officers, agents or servants, who knowing this ownership issues or aids in issuing a negotiable receipt for such goods which does not state such ownership, shall be guilty of a crime, and upon conviction shall be punished for each offense by imprisonment not exceeding one year or by a fine not exceeding one thousand dollars, or by both.” The Conway Storage Company had its office at Conway in the office used by B. H. Stary, who signed the receipts issued by it as “Manager.” Conway was a little country town of not to exceed 300 people. There was no other place where it did do business than at the warehouse or garage of B. H. Stary .using the same as its warehouse. The plaintiffs had actual knowledge through transactions with the said Conway Storage Company that it was' purporting to act as a warehouseman and issuing receipts for goods held with it as such, and that Stary was its president and manager. • ■ In this case the goods stored belonged to Stary. Stary was the presi•dent and manager of the warehouse company. The company, so far as it did business, used the garage of Stary as its warehouse. A warehouse may be such though used for other purposes, whether owned or ■hired, and if hired, whether of the owner of the goods deposited or a third person. Union Trust Co. v. Wilson, 198 U. S. 530, 49 L. ed. 1154, 25 Sup. Ct. Rep. 766. State use of Hart-Parr Co. v. Robb-Lawrenee Co. 17 N. D. 257, 16 L.R.A.(N.S.) 227, 115 N. W. 846. , While the goods belonged to Stary and were deposited by him in the warehouse, yet at the direction of the defendant they were set apart from the other goods therein, and by and with the consent of Stary the ¡receipt was issued by the warehouse company direct to the defendant. We can see no reason why, if the defendant acted in good faith in thus transacting this business, such procedure was not in all respects proper ■and within the law. Surely Stary cannot be heard to complain, nor .the warehouse company. Such receipt so issued by the warehouse eomL pany to, the, defendant was the written, acknowledgment .by the -Ware *764 houseman that it had received and held the goods therein described for die person to whom it was so issued. The receipt was a symbol of ownership of the goods covered by it, Vannett v. Keilly-Herz Auto. Co. 42 N. D. 607, 173 N. W. 406. The plaintiff contends that- Conway Storage Company was in fact B. H. Stary. It insists that- Conway Storage Company was merely a pretended storage company; that it had neither warehousé nor business. The record, however, discloses that for upwards of nine months prior to December 9th, 1920, plaintiff had actual knowledge of the existence of this storage company and of the issuance by it of warehouse or storage receipts. It had knowledge that it- had no other place of business than the premises of Stary. Long prior to the time the warehouse company issued said receipt to defendant it issued to plaintiff and plaintiff received and held three storage receipts covering a large number of tractors and automobiles, pledging the- same to the plaintiff as security for the payment of promissory notes aggregating $16,800.00 due to it from Stary and the Storage Company. Said storage receipts wore identical in form with that issued to the defendant. The Storage-Company’s name was signed to these notes by B. H. Stary as president, and to the storage receipts by B. II. Stary as manager. Nor did plaintiff surrender its said storage receipts at the time of the renewal of these obligations owing by Stary and the Storage Company to it on December 9th, 1920. At that time plaintiff’s officers spent several hours in Stary’s place of business. And that was not their first visit therA There can be no doubt, then, that the plaintiff had actual knowledge of the manner in which Stary and the Storage Company transacted their business and of the methods employed by them. This and the plaintiff’s prior dealings with Stary and the Storage Company may properly be considered in determining the good faith of the defendant; also as evidence that a storage business was, in reality, being conducted. There seems to be no dispute as to what took place between Stary, the Storage Company and defendant on the day of the issuance of the storage receipt to defendant. The record shows that on the day in question the defendant’s cashier went to Conway; in company with Stary he examined the cars, noted the number of them; the factory numbers of the cars were taken down; at his request and under his direction the cars were placed in the corner of the front room of the garage building. *765 A storage receipt was then issued to the bank, and delivered to the cashier. Said storage receipt has since said time been and now is held by the bank. Counsel for plaintiff in his brief says, “Defendant’s cashier went to Stary’s place of business iii Conway, and there Stary agreed yith him as to certain cars that he, Stary, would issue storage receipts for such cars; that the two men went to Stary’s garage, selected the cars, moved them from one side to the other, after which Stary issued the receipt.” The cashier of the defendant saw the charter of incorporation of the Storage Company and the license issued to it by the Board of Railroad Commissioners in frames which were hung on the walls of the office. Defendant offered, but was not permitted, to show what inquiries were made of Stary, and that Stary said that other automobiles and tractors were stored in the same garage or warehouse. The good faith of the defendant throughout this transaction is apparent from and is wholly unchallenged by the record. Nor does it appear from the record that either Stary or the Storage Company up to the time of the issuing of said receipt did any act incompatible with good faith in the conduct of their business. The plaintiff also urges that the warehouse or storage receipt issued to defendant in this case, does not conform to the requirements of the statute regulating the issire of warehouse receipts, although such receipt is identical as to form with those issued previously to'the plaintiff. The legislature enacted what is known as The Uniform Warehouse Receipts Act at the Session of 1917, same being chapter 250 of Sess. Laws 1917, § 1 of that act provides that “Warehouse receipts maybe issued by any warehouseman.” Sec. 2 provides that: “Warehouse receipts need not be in any particular form, but every such receipt must embody within its written or printed terms: a. The location of the'warehouse where the goods are stored. b. The date of the issue of the receipt. c. The consecutive number of the receipt. d. A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his order. e. The rate of storage charges. *766 f. A description of the goods or of the packages containing them.' g. The signature of the ■warehouseman, which may be made by his authorized agent. h. If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership, and i. A statement of the amount of advances and liabilities incurred for which the warehouseman claims a lien.” The act further provides in Sec. 2 thereof, that “A warehouseman shall be liable to any person injured thereby for all damages caused by the omission from a negotiable receipt of any of the terms herein required.” An examination of the receipt in question in connection with the requirements of this section of the statute, discloses that the receipt contains the material and essential requirements of the statute, and is in substantial compliance therewith. 27 R. C. L. 962; State v. Henzell, 17 Idaho, 725, 27 L.R.A. (N.S.) 159, 107 Pac. 67; Smith Bros. Co. v. Richheimer & Co. 145 La. 1066, 83 So. 255. Por the reasons indicated, we are of the opinion that the findings of the trial court are not. supported by the evidence. However, we are not satisfied that the defects in plaintiff’s proof may not be supplied upon another trial. It follows that the judgment appealed from should be reversed and a new trial granted. It is so ordered. Birdzehl, Nuessle, and Christianson, JJ., concur.