who may issue warehouse receipt

8/22/2019 Who May Issue Warehouse Receipt

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WHO MAY ISSUE WAREHOUSERECEIPT?> A warehouseman is a person lawfully engaged in the business of storing

goods for profit.

> Only a warehouseman may issue warehouse receipts

WHAT SHOULD BE DONE TO PUTTHE RECEIPT WITHIN THE

PURVIEW OF WAREHOUSERECEIPTS LAW?> The warehouse receipt should be issued by the warehouseman

FORM OF RECEIPTS; ESSENTIAL

TERMS1. The location of the warehouse where the goods are stored

2. The date of issue of the receipt

3. Consecutive number of the receipt

4. A statement whether the goods received will be delivered to the bearer, to a

specified person or to a specified person or his order

5. The rate of storage charges

6. A description of the goods or of the packages containing them

7. The signature of the warehouseman which may be made by his

authorized agent

8. If the receipt is issued for goods of which the warehouseman is


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owner, either solely or jointly or in common with others, the fact of such

ownership

9. A statement of the amount of advances made and of liabilities incurred

for which the warehouseman claims as lien. If the precise amount for such

advances made or of such liabilities incurred is, at the same time of the issue of

the receipt, unknown to the warehouseman or to his agent

who issues it, a statement of the fact that advances have been made or liabilities

incurred and the purpose thereof is sufficient

EFFECT OF OMISSION OF THEESSENTIAL CONTENTS> A warehouseman shall be liable to any person injured thereby all

damages caused by the omission from a negotiable receipt of any of the

terms herein required

> Validity of the receipt not affected

> Negotiability of the receipt not affected

TERMS THAT CANNOT BEINCLUDED IN THE WAREHOUSERECEIPT1. Those contrary to any provision of the law

2. In any wise impair the warehousemans obligation to exercise that

degree of care in the safekeeping of the goods entrusted to him which a

reasonably careful man would exercise with regard to similar goods of his own


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NON-NEGOTIABLE WAREHOUSERECEIPT

> Receipt in which it is stated that the goods received will be delivered to the

depositor or to any specified person

NEGOTIABLE WAREHOUSERECEIPT> Receipt in which it is stated that the goods received will be delivered to the

bearer or to the order of any person named in such receipt

> No provision shall be inserted in a negotiable receipt that it is non-negotiable.

Such provision if inserted shall be void.

DUPLICATE RECEIPTS MUST BEMARKED> When more than one is issued for the same goods, the word duplicate

shall be plainly placed upon the face of every such receipt, except the first

one issued

> A warehouseman shall be held liable for damages for failure to do so to

anyone who purchased the subsequent receipt for value supposing it to be

original, even though the purchaser be after the delivery of the goods by

the warehouseman to the holder of the original receipt

OBLIGATIONS AND RIGHTS OF WAREHOUSEMAN UPON THEIR


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RECEIPTS

PRINCIPAL OBLIGATIONS OF THEWAREHOUSEMAN1. To take care of the goods entrusted to his safekeeping

2. To deliver them to the holder of the receipt or the depositor provided

the following conditions are fulfilledthere is demand by the depositor

accompanied by either

a. An offer to satisfy the warehousemans lien

b. An offer to surrender the receipt, if negotiable with such indorsements as

would be necessary for the negotiation of the receipts

c. A readiness and willingness to sign, when the goods are delivered, an

acknowledgement that

they have been delivered, if such signature is requested by the

warehouseman

WHAT SHOULD ACCOMPANY THEDEMAND FOR THE RETURN OFTHE GOODS?1. An offer to satisfy the warehousemans lien

2. An offer to surrender the receipt, if negotiable with such indorsements

as would be necessary for the negotiation of the receipts

3. A readiness and willingness to sign, when the goods are delivered, an

acknowledgement that they have been delivered, if such signature is


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requested by the warehouseman

A WAREHOUSEMAN ISJUSTIFIED IN DELIVERING THEGOODS TO ONE WHO IS1. Person lawfully entitled to the possession of the goods, or his agent

2. Person who either himself entitled to delivery by the terms of the non-

negotiable receipt issued for the goods, or who has written authority from the

person so entitled either endorsed upon the receipt or written on another paper

3. Person in possession of a negotiable receipt by the terms of which the

goods are deliverable to him or order, or to bearer, or which has been

indorsed to him or in blank by the person to whom delivery was promised by the

terms of the receipt or by his mediate or immediate indorser

WAREHOUSEMANS LIABILITY FORMISDELIVERY> Where a warehouseman delivers the goods to one who is not in fact lawfully

entitled to the possession of them, the warehouseman shall be liable for

conversion/estafa to all having a right of property or possession in the goods if

he delivered the goods otherwise than as authorized

> And though he delivered the goods as authorized he shall be so liable if prior to

such delivery he had either

o Been requested, by or on behalf of the person lawfully entitled to a

right of property or

possession in the goods, not to make such delivery


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o Had information that the delivery about to be made was to one not

lawfully entitled to the

possession of the goods

WHAT IS CONVERSION?> Unauthorized assumption and exercise of the right of ownership over

goods belonging to another through the alteration of their condition or the

exclusion of the owners right

NEGOTIABLE RECEIPTS MUSTBE CANCELLED OR MARKEDWHEN GOODS DELIVERED ORWHEN PART OF IT ISDELIVERED. FAILURE TO DOSO WILL MAKE THEWAREHOUSEMAN LIABLE> The warehouseman is liable to any one who purchases for value in good

faith such receipt, for failure to deliver the goods to him, whether such

purchaser acquired title to the receipt before or after the delivery of the

goods by the warehouseman

EFFECT OF ALTERATION ONLIABILITY OF WAREHOUSEMAN


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1. Alteration immaterialwhether fraudulent or not, whether authorized or

not, the warehouseman is liable on the altered receipt according to its original

tenor

2. Alteration materialif the alteration is material, but authorized, the

warehouseman is liable according to the terms of the receipt as altered

3. Material alteration innocently madethe warehouseman is liable on the

altered receipt according to its original receipt

4. Material alteration fraudulently madewarehouseman is liable according

to the original tenor of the receipt to a purchaser of the receipt for value

without notice, and even to the alterer and subsequent purchasers with

notice except that as regards to the last two, the

warehousemans liability is limited only to delivery as he is excused from any

liability

NOTA BENE: it is clear that even a fraudulent alteration cannot divest the

title of the owner of stored goods and the warehouseman is,

therefore, liable to return them to the owner.But a bona fide holder acquires no right to the goods under a negotiable

receipt which has been lost or stolen or to which the endorsement of the

depositor has been forged.

LOST OR DESTROYED RECEIPTS

> The court may order the delivery of the goods upon satisfactory proof ofsuch loss or destruction and upon the giving of a bond with sufficient sureties to

be approved by the court to protect the warehouseman from any liability or

expense, which he or any person injured by such delivery

may incur by reason of the original receipt remaining outstanding


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> The court may also in its discretion order the payment of the warehousemans

reasonable costs and counsel fees

> The order of the court shall not relieve the warehouseman from liability to a

person to whom the negotiable receipt as been or shall be negotiated for

value without notice of the proceedings or of the delivery of the goods

LIABILITY OF WAREHOUSEMAN ASTO DUPLICATEHE WARRANTS1. That the duplicate is an accurate copy of the original receipt

2. Such original receipt is uncancelled at the date of the issue of the duplicate

WAREHOUSEMAN CANNOT SETUP TITLE IN HIMSELF> The warehouseman cannot refuse to deliver the goods on the ground that

he has acquired title or right to the possession of the same unless such

title or right is derived

o Directly or indirectly from a transfer made by the depositor at the time of

the deposit for storage or subsequent thereto

o From the warehousemans lien

INTERPLEADER OF ADVERSECLAIMANTS> If more than one person claims the title or possession of the goods, the

warehouseman may, either as a defense to an action brought against him for


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non-delivery of the goods, or as an original suit, whichever is appropriate,

require all known claimants to interplead

WAREHOUSEMAN HASREASONABLE TIME TODETERMINE VALIDITY OF CLAIMS> If someone other than the depositor or person claiming under him has a

claim to the title or possession of goods, and the warehouseman has information

of such claim, the warehouseman shall be excused from liability for refusing to

deliver the goods, either to the depositor or person

claiming under him or to the adverse claimant, until the warehouseman has

had a reasonable time to ascertain the validity of the adverse claim or to bring

legal proceedings to compel all claimants to interplead

LIABILITY OF WAREHOUSEMAN

FOR NON-EXISTENCE ORMISDESCRIPTION OF GOODS> As a general rule, the warehouseman is under obligation to deliver the identical

property stored with him and if he fails to do so, he is liable directly to the owner

> As against a bona fide holder of a warehouse receipt, the warehouseman is

estopped whether the receipt is negotiable or not, to deny that he has

received the goods described in it

LIABILITY OF WAREHOUSEMANFOR LOSS DUE TO LACK OF CARE


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> The warehouseman is required to exercise ordinary or reasonable care

in the custody of the goods, that is, the care is reasonably careful owner

would exercise over similar goods of his own.

> The warehouseman isnt liable for any loss or injury to the goods, which

couldnt have been avoided by the exercise of such care. Of course,

what constitutes ordinary or reasonable care depends upon the

circumstances such as the character and value of the property and the

character

and location of the warehouse.

COMMINGLING OF DEPOSITEDGOODS> As a general rule, a warehouseman may not mingle goods belonging to

depositors

> In case of fungible goods, the warehouseman may mingle them with the goods

of the same kind and grade provided that he authorized by agreement or custom

> Commingling is intended for the benefit of the warehouseman.

It would, indeed be strange if the warehouseman could escape his liability

to the owner of the goods by the simple process of commingling them

without authorization

ATTACHMENT OR LEVY OF ANEGOTIABLE RECEIPT> The warehouseman has the direct obligation to hold possession of the

goods for the original owner or for the person known the negotiable receipt


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of title has been duly negotiated.

> While in possession of such warehouseman, the goods cannot be

attached or levied upon under an execution unless

o The document is first surrendered

o Its negotiation is enjoined

o The document is impounded by the court

> This shall not apply if the person depositing is not the owner of the goods

or one who has no right to convey title to the goods binding upon the owner.

> Neither shall it apply to actions for recovery or manual delivery of goods

by the real owner nor to cases where the attachment is made before the

issuance of the negotiable receipt of title

CREDITORS REMEDIES TOREACH NEGOTIABLE RECEIPTS> A creditor whose debtor is the owner of negotiable receipt shall be entitled to

such aid from courts of appropriate jurisdiction, by injunction and otherwise, in

attaching such receipt or in satisfying the claim by means thereof as is

allowed by law or in equity in regard to property which cannot be readily

be attached or levied upon by ordinary legal process

WHAT CLAIMS ARE INCLUDED

IN THE WAREHOUSEMANS LIEN1. All lawful charges for storage and preservation of the goods


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2. All lawful claims for money advancedInterests, Insurance,

Transportation, Labor, Weighing, Cooperating and other charges and expenses

in relation to the goods

3. All reasonable charges and expenses for notice and advertisements of

sale

4. Sale of goods where default has been made in satisfying

warehousemans lien

AGAINST WHAT PROPERTY THELIEN MAY BE ENFORCED1. Against all goods, whenever deposited, belonging to the person who is

liable to the debtor for the claims in regard to which the lien is asserted

2. Against all goods belonging to others which have been deposited at any

time by the person who is liable as debtor for claims in regard to which the

lien is asserted if such person had been entrusted with the possession of

the goods that a pledge of the same by him at the time of the deposit to one who

took the goods in good faith for value would have been valid

HOW WAREHOUSEMAN LOSESHIS LIEN1. By surrendering possession thereof

2. By refusing to deliver the goods when a demand is made with which he isbound to comply under the provisions of the law


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LIEN WHERE RECEIPTNEGOTIABLE

> With the exception of the charges for the storage or preservation of

goods for which a negotiable receipt has been issued, the lien exists only

for the other charges expressly enumerated in the receipt so far as they

are written although the amount of the said charge isnt stated

OTHER THINGS IN CONNECTION

TO WAREHOUSEMANS LIEN1. Warehouseman need not deliver lien is satisfied

2. Warehousemans lien doesnt preclude other remedies

SATISFACTION OF LIEN BY SALE1. The warehouseman shall give a written notice to the person on whose

account the goods are held, and to any other person known by the

warehouseman to claim an interest in the goods. Such notice shall be

given by delivery in person or by registered mail addressed to the

last known place of business or abode of the person to be notified.

2. The notice shall contain

a. An itemized statement of the claim, showing the sum due at the time

of the notice and the dates when it became due

b. A brief description of the goods

c. A demand that such amount of the claim as stated shall be paid on or before

the day mentioned, not

less than 10 days from the delivery of the notice if it is personally delivered, or


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from the time when

the notice shall reach its destination, according to due course of post, if the

notice is sent by mail

d. A statement that unless the claim is paid within the time specified, the goods

will be advertised for sale

and sold by auction at a specified time and place

ENFORCEMENT OFWAREHOUSEMANS LIEN1. By refusing to deliver the goods until the lien is satisfied

2. By causing the extrajudicial sale of the property and applying the

proceeds to the value of the lien

3. By filing a civil action for collection of the unpaid charges or by way of

counterclaim in an action to recover the property from him

EFFECT OF SALE OF GOODS1. In case of sale of goods, the warehouseman is not liable for

nondelivery even if the receipt given for the goods when they were

deposited be negotiated.

2. When the sale was made without the publication requirement and

before the time specified by law, such sale is void and the purchaser of

the goods acquires no title in them.

ACTS FOR WHICHWAREHOUSEMAN IS LIABLE


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1. Failure to stamp duplicate on copies of negotiable receipt

2. Failure to place non-negotiable or not negotiable on the not negotiable

receipt

3. Misdelivery of the goods

4. Failure to effect cancellation of a negotiable receipt upon delivery of the

goods

5. Issuing receipt for non-existing goods or misdescribed goods

6. Failure to take care of the goods

7. Failure to give notice in case of sale of goods to satisfy the lien or because

the goods are perishable or hazardous

NEGOTIATION AND TRANSFER

OF RECEIPTS

NEGOTIATION OF NEGOTIABLERECEIPT BY DELIVERY1. Where by the terms of the receipt, the warehouseman undertakes to

deliver the goods to the bearer

2. Where by the terms of the receipt, the warehouseman undertakes to

deliver the goods to the order of a specified person, and such person or a

subsequent indorsee of the receipt has indorsed it in blank or to bearer

a. Where by the terms of the receipt, the goods are deliverable to bearer or

where a negotiable receipt

has been indorsed in blank or bearer, any holder may indorse the same

to himself or to any other


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specified person, and in such case the receipt shall thereafter be negotiated

only by the indorsement

by such indorsee

NEGOTIATION OF NEGOTIABLERECEIPT BY INDORSEMENT1. If indorsed in blank or to bearer, the document becomes negotiable by

delivery

2. If indorsed to a specified person, it may be again negotiated by the

indorsement of such person in blank, to bearer or to another specified person.

Delivery alone isnt sufficient.

TRANSFER OF NON-NEGOTIABLERECEIPT> A non-negotiable receipt of title cannot be negotiated.

> Nevertheless, it can be transferred or assigned by delivery

> The assignee or transferee only acquires the rights of the transferor or

assignor

ADVANTAGES OF A NEGOTIABLE

WAREHOUSE RECEIPT1. It protects a purchaser for value and in good faith

2. The goods covered by the receipt cannot be garnished or levied upon

under execution unless it is surrendered, or impounded, or its negotiation


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enjoined

3. In case of negotiation, the holder acquires the direct obligation of the

warehouseman to hold possession of the goods for him without notice to such

warehouseman

4. The goods it covers arent subject to sellers lien or stoppage in transitu

WHO MAY NEGOTIATE A RECEIPT1. By the owner thereof

2. By any person to whom the possession or custody of the receipt has

been entrusted by the owner, if by the terms of the receipt, the warehouseman

undertakes to deliver the goods to the order of the person to whom the

possession or custody of the receipt has been entrusted, or if at the

same time of such entrusting, the receipt is in such form that it may be

negotiated by delivery

RIGHTS OF PERSON TOWHOM RECEIPT HAS BEENNEGOTIATED1. The title of the person negotiating the receipt over the goods covered

by the receipt

2. The title of the person to whose order by the terms of the receipt the goodswere to be delivered over such goods

3. The direct obligation of the warehouseman to hold possession of the

goods for him, as if the warehouseman directly contracted with him


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RIGHTS OF PERSON TOWHOM RECEIPT HAS BEEN

TRANSFERRED1. Title to the goods as against the transferor

2. The right to notify the warehouseman of the transfer thereof

3. The right thereafter to acquire the obligation of the warehouseman to

hold the goods for him

RIGHTS OF TRANSFEREE OFNEGOTIABLE RECEIPT1. The right to the goods as against the transferor

2. The right to compel the transferor to indorse the receipt

RULE WHERE RECEIPT ISSUBSEQUENTLY INDORSED> For the purpose of determining whether the transferee is a purchaser for

value in good faith without notice, the negotiation shall take effect as of

the time when the indorsement is actually made not at the time the receipt is

delivered

> Reason for the rule: negotiation becomes complete only at the time of

indorsement


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WARRANTIES ON SALE OFRECEIPT

1. That the receipt is genuine

2. That he has a legal right to negotiate or transfer it

3. That he has knowledge of no fact which would impair the validity of the

worth of the receipt

4. 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 of the goods represented thereby

INDORSER, NOT A GUARANTOR> The indorsement of a receipt doesnt make the indorser liable for any

failure on the part of the warehouseman or previous indorser of the receipt

to fulfill their respective obligations

NO WARRANTY IMPLIED FROMACCEPTING 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

> In other words, the holder of a security who in good faith accepts payment of a


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debt from a person doesnt warrant thereby the genuineness of the receipt

nor the quality or quantity of the goods therein described

WHEN NEGOTIATION NOTIMPAIRED BY FRAUD, DURESS,MISTAKE> The validity of the negotiation of a receipt isnt 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 to a

person to whom the receipt

is subsequently negotiated paid value therefor, without notice of the breach of

duty, fraud, mistake or duress

EFFECT OF SUBSEQUENTNEGOTIATION BY SELLER, ETC.> The purchaser, mortgagee, or pledgee of goods for which a negotiable receipt

has been issued, or of the negotiable receipt itself, has the duty to require the

negotiation of the receipt to him otherwise, his failure will have the same

effect as an express authorization on his part to the seller, mortgagor, or

pledgor in possession of such receipt to make subsequent negotiation

> The subsequent purchaser must have taken the receipt in good faith and for

value in order to acquire a better right


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INDORSEES RIGHT SUPERIOR TOVENDORS LIEN

> An innocent holder of a negotiable receipt has a better right to the goods

for which the receipt is given than the vendor who has a vendors lien upon such

goods

> Warehouseman isnt obliged to deliver or justified in delivering the goods to

an unpaid seller unless the receipt is first surrendered for cancellation

HOW DO YOU ATTACH ORIMPOSE A LIEN OVER GOODSCOVERED BY A WAREHOUSERECEIPT?If it is not negotiable, the court would issue a writ of attachment. If it is

negotiable, the court should require the surrender of the receipt and restrict

further negotiations.

who may issue warehouse receipt

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