Street v. Farmers' Elevator Co.

WHITING, J. This cause is before us upon rehearing. Our former opinion is to be found in Street v. Elevator Co., 33 S. D. 601, 146 N. W. 1077. The order granting the rehearing limits-the further consideration of this appeal to the single question of the constitutionality of the Warehouse Act, when given the construction given to it by the majority of this court in our former opinion. [1-2] The particular section of this act which appellant contends is unconstitutional, as construed by us, is section 495, P. C., which reads as follows: “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 whpm such receipt was issued, or his assigns thereof, and such receipt 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.” Appellant contends that said section 495 “violates two fundamental rules -of constitutional law: First, that it violates what is commonly referred to as the fourteenth amendment to the Constitution of the United States* and section. 2 of article 6 of the Constitution of this state, which is as follows 5 ‘No- person shall be deprived of life, liberty or property without due process of law.’ Second, that this statute attempts to take away a fundamental right, and precludes a judicial inquiry into the liability of a warehouseman upon a storage receipt, by a conclusive presumption of fact.” As we read its brief, the sole basis for its contention is the-claim that such section makes the storage receipt conclusive evidence of ownership of the grain, and therefore is an attempt, on: — 526 — the part of the Legislature to deprive parties of a judicial determination of their rights. We think appellants error lies in not looking back of the language used and determining the real effect of such section. It is true that, upon its face, it purports to prescribe a rule of evidence ; but we think a careful consideration discloses that it proclaims a rule of substantive law and not a rule of evidence. As is said by Wigmore, at section 1353 of his work on Evidence: “On the one hand, so far as a so-called rule of conclusive evidence is not a rule of evidence at all, but a rule of substantive, law, it is clear that the Legislature is not infringing upon the prerogative of the judiciary.” This same thought is announced by Chamberlayne in his Modern Law of Evidence, wherein he says: “The phrase ‘conclusive evidencef may be used to state a proposition as to which the law of evidence has nothing whatever to do, though couched in the appropriate phraseology of the subject — the equivalence between two things prescribed by the substantive law. Thus the rule of substantive 'law that prescriptive user of a no-ncorporeal hereditament for a period of 20 years bars the right of action may be,announced by saying that proof of such a user is conclusive evidence of a lost grant, or by the equivalent expression that a lost grant is conclusively presumed from the fact of such user.” Let us suppose a statute were enacted which provided that a bailee could never dispute the bailor’s -title ta the thing bailed; that such a statute prescribed a rule of substantive law could and would not be questioned. Suppose a statute were enacted which provided -that proof of the existence of the relation of bailor and bailee should be conclusive evidence, as against the bailee, that the bailor was the owner of■ the thing bailed; would not such a statute be, in its legal effect, exactly the same as the first supposed 'statute, and merely provide the same rule of substantive law — that a bailee could never dispute the bailor’s title? Going one step further, so as to- bring the supposed statute on all fours with the statute at bar, let us suppose a statute which provided that, in every case of bailment, the bailee should give to the bailor a written receipt for the goods bailed, and should further provide that this receipt should be conclusive evidence, as against the — 527 — bailee, of the bailor’s title; would we not have in such a statute but a declaration of two rules of substantive law(i) That a written receipt must be given; (2) that the bailee could not dis-■ pute the bailor’s title? Is not the receipt but proof of the relation, and the relation the thing that conclusively precludes the questioning- of the bailor’s title? Let us take the first half of said section 495, down to the word “thereof”; would any one contend that this was other than a declaration of a rule of substantive law — a declaration of estoppel? Take the latter half of such section, and in place of the words “such receipt” substitute “proof of the relation of bailor and bailee,” and in place of “saíne” substitute “receipt”; does not the substitution of these words render it perfectly apparent that the second half of the section as enacted is but a second declaration of the same rule of substantive law announced in the first half — that a public warehouseman is estopped from denying the title of his bailor to the thing bailed? To illustrate the distinction between a purported rule of evidence, which is but a declaration of a rule of substantive law, and a rule that is purely what it purports to be, we need but compare said section 495 to a supposed law which should provide that the receipt given by the warehouseman should be by him acknowledged and that a warehouseman’s receipt duly acknowledged should be conchusive evidence of the execution of such receipt. In the one case, we have what amounts to a rule of substantive law, resting upon and flowing from the relation of the parties; in the other case, we have a pure and simple rule of evidence. Wigmore, in treating of the subject of the constitutionality of statutes making testimony conclusive, in section 1353 of his great work, following the words jve quoted above, distinguishes between those statutes that in fact do lay down a rule of conclusive evidence and those which announce a rule of substantive law, and he then, in the same section, notes that those statutes, which announce a rule of substantive law, may, for reasons entirely foreign to any question of evidence, be unconstitutional — as where a law, retroactive in its effect, would impair án obligation of contract, or where a law, purporting to make a tax deed conclusive evidence that all due proceedings had been had, would have the effect of taking property without due process, by declaring as unnecessary what the Constitution declares necessary. Then in section 1354 — 528 — he distinguishes between statutes, such as those attempting to make tax deeds “conclusive evidence” of the validity of the -tax proceedings, thus attempting to abolish the necessity of the existence of essential facts which are constitutionally required for a “taking by due process of law,” and statutes which announce a rule of substantive law based upon the contractual relations of the parties, such as laws making “the terms of a bill of lading or of a policy of insurance * * * ‘conclusive’ in certain respects”; and this learned writer announces the test which, when applied, will demonstrate the constitutionality of the latter class of laws. He says that “a statute which enlarges the rules of contract by creating an estoppel is constitutional.’1 It is -because there is no contractual relation upon which estoppel can be based that statutes attempting to make tax deeds “conclusive evidence” of the validity of tax proceedings are unconstitutional. The statute before us is one which “enlarges the rules of contract by creating- an estop-pel,” and is constitutional. This court has recognized the constitutionality of this class of legislation. In Peever Mer. Co. v. State Mut. Ins. Co., 25 S. D. 406, 127 N. W. 559, the question of the constitutionality of section 1849, C. C., was raised. This section reads: “An acknowledgment in a policy of the receipt of premium is conclusive. evidence of its payment, so far as to make the policy binding, notwithstanding- any stipulation therein that it shall not be binding- until the premium is actually paid.” Justice Smith, speaking- for the court, said: “We are not able to find any constitutional provision limiting the power of the legislative assembly in the enactment of such legislation.” A similar statute was -before this court in Lawver v. Globe Ins. Co., 25 S. D. 549, 127 N. W. 615, and its provisions enforced. In upholding an insurance statute analogous to the statute before us, and in marking the distinction between what is and what is not constitutional, in a case wherein it was urged “that the statute takes away a fundamental right and precludes a-judicial inquiry * * * by a conclusive presumption of fact,” the same contention as is made in this -case, the federal Supreme Court, in Orient Ins. Co. v. Daggs, 172 U. S. 557, 19 Sup. Ct. 281, 43 L. Ed. 552, said: — 529 — “It makes no contract for the parties. In this it permits absolute freedom. It leaves them tO' fix the valuation of the property upon such prudence and inquiry as they choose. It only ascribes estoppel after this is done — estoppel, it must be observed, to the acts of the parties, and only to their acts in' open and honest dealing. * * * It is one thing to- attribute effect to the convention of parties entered into under the admonition of the law, and another thing to give to circumstances, maybe accidental, conclusive presumption, and proof to 'establish and force a result against property or liberty.” The question of the constitutionality of a statute purporting to make a bill of lading conclusive evidence of the facts stated therein was before the court in Yazoo & Miss. Val. Ry. Co. v. Bent & Co., 94 Miss. 681, 47 South. 805, 22. L. R. A. (N. S.) 821, and was most exhaustively discussed. That court in part said: “In the case of Hazard v. Illinois C. R. Co., 67 Miss. 32, 7 South. 280, this court has already- held that this státute ]vas not a mere rule of evidence, but was designed -to change the character and legal effect of the contract evidenced by the bill of lading. So we see, in the case above cited, we have á declaration by this court that, though the Legislature has spoken of this statute as furnishing conclusive evidence, etc.; it is in truth not a statute merely enacting a rule of evidence, but making' certain acts, voluntarily done by the railroad company, -operate by way of estoppel to establish an incontrovertible contractual liability. In short, it precludes the railroad company from showing the' untruth of that which they have asserted to be true in their bill o-f lading, when same reaches the hands of a bona fide holder for value. This statute creates a substantive rule of law, the end and aim of which is to promote justice, accuracy, and fairness. Mr. Wigmore, in his work on Evidence, in a note to be found in volume 2, p. 1667, says: ‘Legislators frequently seem tó believe that 'something is gained by labeling such statutes as rules of evidence.’ But, when the effect of the statute is to create a rule of substantive law, the statute cannot be invalidated because of its label.” The -court, in the Mississippi Case, reviewed the opinion in the case of Missouri, etc., v. Simonson, 64 Kan. 802, 68 Pac. 653, 57 L. R. A. 765, 91 Am. St. Rep: 248, and showed wherein the — 530 — majority opinion was unsound. The Simonson Case is, we think, the only case to be found supporting appellant’s contention, and holding unconstitutional a statute which merely enlarges some rule of contract by creating an estoppel. The Simonson Case was decided by a majority of one. Chief Justice Doster, in the dissenting opinion, said (the italicizing being ours) : “A proposition in denial of the legislative power in the case stated is incomprehensible to me. There is not a case in the books which in principle or in similarity of facts affords ground for the majority opinion. The instances in which the exercise of the power in question has- been attempted are not numerous. Nearly all of them were cases in which the Legislature sought to give tax deeds a conclusive effect to establish the substantive rightfulness of tax sale proceedings. This -class of cases was not adverted to toy the majority, because of the obvious fact that in such cases the act from which it was sought to derive a conclusive effect was clearly the act of an adversary party, and the effort was to find those in which the Legislature had exceeded its authority by undertaking to found a presumption of conclusiveness upon the act of the party himself. This -could not be .done. There are no such cases; that is, there are no cases in denial of the legislative right to found an estoppel upon the contract act of a party, and that — and it alone — is the case in hand. * * * I may well object to a law which from.the hostile act -of another seeks to raise against me a conclusive presumption, and I may well object to a law which seeks to found an estoppel against me upon some undesigned and easily explicable circumstance; but I can have no objection to a law which merely seeks to give to my own deliberate business engagement a conclusive and irrevocable effect.” An examination of the majority opinion in the Simonson Case discloses that every case cited in support of the court’s conclusions was fundamentally different in its facts from the Simonson Case or the case at bar, in. that not one of such -cases was one where there were contractual relations upon which an estoppel -could be based. While a statute might be unconstitutional which attempted to make certain evidence conclusive as to the person in whom the title to property was vested, when the question of title was material, yet a statute would be constitutional -which, though pur — 531 — porting to prescribe a rule of conclusive evidence as to such title, yet in effect provides that a person who has assumed a certain relation to another in regard to such property cannot question the title of such person to such property. Section 495 belongs to this latter class, and such section is constitutional. The fact that this statute eliminates all exceptions to the rule that a bailee cannot dispute his bailor’s title does not affect its constitutionality. It merely carries the estoppel a little further than courts were doing without the statute. No reason has been suggested why the Legislature might not eliminate one or all of the exceptions to the general rule, and when we consider that, by legislation, there have been provided remedies that relieve the bailee from' the situations that gave rise to these exceptions, there certainly can exist no constitutional reason why, by legislation, such exceptions cannot be eliminated. We must remember that the business of a public warehouseman, being public in its nature, is a special subject for regulation under the police power of the state. This business is as public in its nature as that of public carriers or of insurance companies. As said by Chief Justice Waite in Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77, at a time when the business of storing grain was in its infancy, in speaking of such business: “Certainly, if any business can be clothed ‘with public interest and cease to be juris privati only,’ this has been.” Another thing that should not be lost sight of is the fact that the rule of estoppel, as applied to a bailee’s disputing his bailor’s title, has gradually undergone a change from the days of the early -common law to the present time, and this regardless of statute. Can it be -said that the Legislature is not authorized, under the police power and upon grounds of public policy, to enact, as the law of today, that rule which, .at one time, was the established law laid down by the courts? In Rolle’s Abridgment, 606, tit. “Detinue,” it is said: “If the bailee of goods deliver them to him who has the right to them, he is, notwithstanding, chargeable to the bailor, who in truth has no right.” In Georgia we find a statute prescribing, as against carriers, a like rule of estoppel to that prescribed by said section 495. Section 2076, Code of 1873, reads: — 532 — “The carrier cannot dispute the title of the person delivering the goods to him by setting up adverse title in himself, or a title in third persons, which is not being enforced agcdnst him.” This statute was enforced in Wallace v. Matthews, 39 Ga. 617, 99 Am. Dec. 473. In New Jersey there is a “warehouseman’s” statute (3 Gen. St. p. 3747, p. 6) which, among other things, provides: “No property shall be delivered except in surrender arid cancellation of said original receipt or the indorsement of such delivery thereon, in case of partial delivery.” Another section of the same act provides that the above-quoted provision “shall not apply to property removed by operation of law.” This statute was, in the case of Wheeler & Wilson Mfg. Co. v. Brookfield, 70 N. J. Law, 703, 58 Atl. 352, cited in our former opinion, held to be a good defense to a warehouseman who had refused to surrender the bailed property to- a third person, and had then delivered it to the bailor, and this regardless of whether the bailor was really entitled to said property as against such third person. Speaking of the purpose and effect of such statute, the court, in the Brookfield Case, said: “The purpose of our statute evidently was to remedy the un- - certainty and perils of the situation in which a warehouseman was placed at the common law when a third party gave him notice of a claim of ownership in the stored property, and to- relieve the warehouseman from liability to a person thus giving notice, if, after such notice, the warehouseman should redeliver the property to the bailor or other person holding the warehouse receipt for the same before the property was removed from his custody by operation of law. By our statute the warehouseman cannot, without liability, deliver to- any other than the bailor or his transferee. If the bailor, or the transferee of his receipt for the bailment, demands the property and surrenders the receipt, the warehouseman cannot defend against the receipt holder for damages for its conversion, if he fail to deliver the property, upon the ground that he has delivered to another, and justify under that other’s title. He will not be permitted to dispute his bailor’s title. He can only justify for a failure to redeliver to the bailor or his transferee upon the ground, to quote the statute, that ‘the property has been removed by operation of law.’ ” — 533 — It is strenuously contended that this section 495 has the effect of divesting the owner of his property without his consent and without his having an opportunity to be heard upon the question of ownership. There is absolutely nothing in this section or in the whole Warehouse Act to support such a contention, as the statute takes from the owner of the grain -bailed neither any right nor any remedy; it does not affect him in the remotest degree. Neither does this statute prevent a bailee from being relievd from his contract, or from having the storage receipt reformed, when such contract was entered into .through fraud or mistake; but when, under the Warehouse Act, a valid contract of bailment is •entered into, while the true owner of the thing bailed is not affected thereby, the bailee, owing to the contractual relation which he has voluntarily assumed, is absolutely estopped from denying title in the bailor, and that regardless of where title is really vested. In our former opinion herein we in some places made an inaccurate use of the term “receipt,” where we should have substituted therefor that of which the receipt is but the evidence, to-wit, the relation of the parties as bailor and bailee; but we fully recognized that section 495, supra, declared a rule of substantive law when we propounded the question: “Has 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?” -and then answered such question by declaring that: “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.” Appellant contends: “That the act by which sections 494 and 495, Revised Political Code, originally became a part of the law of this state, to-wit, chapter 99, Laws 1890, and the act by which the Revised Political Code was adopted, each embraces more than one subject, which is not expressed in the title, in violation .of .article 3, § 21,_ of the Constitution.” ■. , ... .While this question is npt properly .before us upder. the order — 534 — granting the rehearing, yet we would suggest that appellant’s contention is disposed of by the decisions of this court in Wilson v. Surety Co., 31 S. D. 175, 140 N. W. 263; Schaller v. Grain Co., 32 S. D. 15, 141 N. W. 993. The former decision of this court is affirmed.