§ 1062. Effect of transfer of receipt.

Section 42.-[RIGHTS OF PERSON TO WHOM A RECEIPT HAS BEEN TRANSFERRED.] A person to whom a receipt has been transferred but not negotiated, acquires thereby, as against the transferor, the title of the goods, subject to the terms of any agreement with the transferor.

If the receipt is non-negotiable such person also acquires the right to notify the warehouseman of the transfer to him of such receipt, and thereby to acquire the direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt.

Prior to the notification of the warehouseman by the transferor or transferee of a non-negotiable receipt, the title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be defeated by the levy of an attachment or execution upon the goods by a creditor of the transferor, or by a notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor.23

Section 43. [TRANSFER OF NEGOTIABLE RECEIPT WITHOUT INDORSEMENT.] Where a negotiable receipt is transferred for value by delivery, and the indorsement of the transferor is essential for negotiation, the transferee acquires a right against the transferor to compel him to indorse the receipt, unless a contrary intention appears.

receipt represent not simply the title the person negotiating it had, but also whatever property the depositor had, that being what the receipt represented. Many States previously had statutes making warehouse receipts negotiable; but these statutes have been so brief that they have been variously construed and have to some extent failed of their purpose. See Shaw v. Railroad Co., 101 U. S. 557; Hurt's Case, 99 Ala. 140; Bank v. Lee, 99 Ala. 496. The Supreme Court of the United States has shown a disposition to construe the present statute liberally. Commercial Nat. Bank v.

Canal-Louisiana Bank, 239 U. S. 520, 36 Sup. Ct. 194, 60 L. Ed. 417. See also Commercial Germania &c. Bank v. W. M. Hoyt Co., 205 Ill. App. 352. Cf. Under the common-law view, the expressions of the court in Sanders v. Standard Warehouse Co., 101 S. Car. 381, 386, 85 S. E. 900.

23 So far as a non-negotiable receipt is concerned, this states the rights at common law of any purchaser of bailed goods. Therefore the purchaser gets nothing by the warehouse receipt except evidence. In the case of a negotiable receipt the purchaser has the further right given by the next section.

The negotiation shall take effect as of the time when the indorsement is actually made.24

§ 1063. Warranties on assignment of receipt.

Section 44. [WARRANTIES ON SALE OF RECEIPT.] A person who for value negotiates or transfers a receipt by indorsement or delivery, including one who assigns for value a claim secured by a receipt, unless a contrary intention appears, warrants

(a) That the receipt is genuine,

(b) That he has a legal right to negotiate or transfer it, (c) That he has knowledge of no fact which would impair the validity or worth of the receipt, and

(d) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose whenever such warranties would have been implied, if the contract of the parties had been to transfer without a receipt the goods represented thereby. 25

Section 45.-[INDORSER NOT A GUARANTOR.] The indorsement of a receipt shall not make the indorser liable for any failure on the part of the warehouseman or previous indorsers of the receipt to fulfil their respective obligations. 26

Section 46. [NO WARRANTY IMPLIED FROM ACCEPTING PAYMENT OF A DEBT.] A mortgagee, pledgee or holder for security of a receipt who in good faith demands or receives payment of the debt for which such receipt is security, whether from a party to a draft drawn for such debt or from any other person, shall not by so doing be deemed to represent or to warrant the genuineness of such receipt or the quantity or quality of the goods therein described.

24 This follows the analogy of bills and notes. Brannan, Negot. Inst.

Law, Sec. 49.

25 This section, except (d), follows the Negotiable Instruments Law. Brannan, Neg. Inst. Law, Sec. 65. (d) it is believed states the law as it exists apart from statute.

26 Mercantile usage in regard to

warehouse receipts differs from that in regard to bills and notes in the matter to which this section relates. It states the previously existing law even where statutes made warehouse receipts and bills of lading negotiable. Shaw . Railroad Co., 101 U. S. 557, 25 L. Ed. 892; Mida v. Geissmann, 17 Ill. App. 207.

§ 1064. Effect of fraudulent negotiation, etc.

Section 47. [WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, MISTAKE, OR DURESS.] The validity of the negotiation of a receipt is not impaired by the fact that such negotiation was a breach of duty on the part of the person making the negotiation, or by the fact that the owner of the receipt was induced by fraud, mistake, or duress to entrust the possession or custody of the receipt to such person, if the person to whom the receipt was negotiated, or a person to whom the receipt was subsequently negotiated, paid value therefor, without notice of the breach of duty, or fraud, mistake or duress.27

Section 48. [SUBSEQUENT NEGOTIATION.] Where a person having sold, mortgaged, or pledged goods which are in a warehouse and for which a negotiable receipt has been issued, or having sold, mortgaged, or pledged the negotiable receipt representing such goods, continues in possession of the negotiable receipt, the subsequent negotiation thereof by that person under any sale, or other disposition thereof to any person receiving the same in good faith, for value and without notice of the previous sale, mortgage or pledge, shall have the same effect as if the first purchaser of the goods or receipt had expressly authorized the subsequent negotiation. 28 Section 49. [NEGOTIATION DEFEATS VENDOR'S LIEN.] Where a negotiable receipt has been issued for goods, no seller's lien or right of stoppage in transitu shall defeat the rights of any purchaser for value in good faith to whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the seller's claim to a lien or right of stoppage in transitu. Nor shall the warehouseman be obliged to deliver or justified in delivering the goods to an unpaid seller unless the receipt is first surrendered for cancellation.29

27 This section merely elaborates for the sake of clearness certain cases within the terms of Section 40.

28 This is copied from Section 25 (1) of the English Sale of Goods Act, where

it applies to all sales of goods. It is of especial importance in the case of negotiable documents of title.

29 This perhaps goes beyond previously existing law. Mechem on Sales,

$1065. Definition of terms in the Act.

Section 58. [DEFINITIONS.] (1) In this Act, unless the context or subject-matter otherwise requires

"Action" includes counterclaim, set-off, and suit in equity.

"Delivery

means voluntary transfer of possession from

one person to another.

"Fungible goods" means goods of which any unit is, from its nature or by mercantile custom, treated as the equivalent of any other unit.

"Goods" means chattels or merchandise in storage, or which has been or is about to be stored.

"Holder" of a receipt means a person who has both actual possession of such receipt and a right of property therein. "Order" means an order by indorsement on the receipt. "Owner" does not include mortgagee or pledgee.

"Person" includes a corporation or partnership or two or more persons having a joint or common interest.

To "purchase " includes to take as mortgagee or as pledgee.

"Purchaser" includes mortgagee and pledgee.

Receipt" means a warehouse receipt.

"Value" is any consideration sufficient to support a simple contract. An antecedent or preëxisting obligation, whether for money or not, constitutes value where a receipt is taken either in satisfaction thereof or as security therefor. "Warehouseman" means a person lawfully engaged in the business of storing goods for profit.30

§ 1507. See, however, Newhall v. Central Pac. R. R., 51 Cal. 345, 21 Am. Rep. 713; Williston, Sales, § 542. The protection of dealings in negotiable receipts clearly requires that a vendor. who has by giving up possession of goods or warehouse receipts allowed negotiable receipts to be outstanding, should not be permitted to defeat one who buys such receipts. Sections 50-55 impose criminal penalties for various frauds connected with the issue of, or dealing, with receipts.

Sections 56 and 57 relate to the interpretation of the Act, providing in effect that the unwritten law shall govern cases not covered by the statute, and that the statute shall be so construed as to give effect to its purpose to make uniform the law of the States which enact it. See Commercial Nat. Bank v. Canal-Louisiana Bank, 239 U. S. 520, 36 Sup. Ct. 194, 60 L. Ed. 417.

30 This included one who conducts safe deposit vaults. New Jersey &c.

(2) A thing is done "in good faith" within the meaning of this Act, when it is in fact done honestly, whether it be done negligently or not.31

§ 1066. Innkeepers.

31

An innkeeper is one who holds himself out to the public as prepared to accommodate all travellers with the necessities for a temporary sojourn.32 This definition excludes a householder who for hire occasionally takes travellers into his house, but who refuses to accept others; 33 one who keeps a restaurant without rooms for lodgings;34 one who furnishes lodgings without food,35 one who keeps a boarding house for those planning to make a stay of long duration.36

On the other hand, one who keeps a hotel on the European plan is an innkeeper, though meals are separately paid for in a room resorted to not only by guests of the hotel, but by others, as a restaurant; 37 and an innkeeper who supplies food and lodging need not necessarily provide all conveniences, as for instance, accommodation for horses. 38

1067. Who are guests.

The obligations of one who is not an innkeeper with reference to property intrusted to him, and even such obligations

Trust Co. v. Rector, 76 N. J. Eq. 587, 75 Atl. 931, but not a casual bailee for hire. Alton v. New York Taxicab Co., 66 N. Y. Misc. 191, 121 N. Y. S. 271.

31 The only one of these definitions requiring comment is that of value, which follows the Negotiable Instruments Law (Sec. 25. See infra, § 1146), and applies the rule generally prevailing in regard to bills and notes to warehouse receipts. See also Williston, Sales, §§ 619, 620.

* See Cooley, Torts (3d ed.), § 1338. Jackson v. Virginia Hot Springs Co., 213 Fed. 969, 975, 130 C. C. A. 375, 381.

33 Howth v. Franklin, 20 Tex. 798, 73 Am. Dec. 218. See also McClaugherty v. Cline, 128 Tenn. 605, 163 S. W.

801.

34 Regina v. Rymer, 2 Q. B. D. 136; Lewis v. Hitchcock, 10 Fed. 4; Merrill v. Hodson, 88 Conn. 314, 91 Atl. 533, L. R. A. 1915 B. 481, Ann. Cas. 1916 D. 917; Sheffer v. Willoughby, 163 Ill. 518, 45 N. E. 253, 34 L. R. A. 464, 54 Am. St. Rep. 483; Kisten v. Hildebrand, 9 B. Mon. 72, 48 Am. Dec. 416.

35 Davis v. Gay, 141 Mass. 531, 6 N. E. 549; Kelly v. New York Commissioners, 54 How. Pr. 327. Cf. Huntley v. Stanchfield (Wis.), 169 N. W. 276.

36 Bonner v. Welborn, 7 Ga. 296.

37 Pinkerton v. Woodward, 33 Cal. 557, 91 Am. Dec. 657; Nelson v. Johnson, 104 Minn. 440, 116 N. W. 828, 17 L. R. A. (N. S.) 1259.

38 Kisten v. Hildebrand, 9 B. Mon. 72, 48 Am. Dec. 416.