Liability of a warehouseman

What are the acts for which a warehouseman is liable?

(1) Failure to stamp “duplicate” on copies of a negotiable receipt (Sec. 6 and 15)        

· When more than one negotiable receipts are issued for the same goods, the word “duplicate” must be plainly placed by the warehouseman upon the face of every such receipt except the 1^st. 

· In such case, the warehouseman warrants:

a.  that the duplicate is an accurate copy of the original receipt

b.  such original receipt is uncancelled at the date of the issue of the duplicate

              NOTE:  The duplicate imposes no other liability upon the warehouseman.

(2) Failure to place “non-negotiable” on a non-negotiable receipt (Sec. 7)

(3) Misdelivery of the goods (Sec. 10)

a.  To one not lawfully entitled to possession

-    Liable for conversion (unauthorized assumption and exercise of the right of ownership over goods belonging to another through alteration or the exclusion of the owner’s right)

b.  To a person entitled to delivery under a non-negotiable receipt or written authorization OR person in possession of a negotiable receipt

-    Still liable for conversion if:

1.    prior to delivery, he ad been requested NOT to make such delivery

2.    he had received notice of the adverse claim or title of a 3^rd person

(4) Failure to effect cancellation of a negotiable receipt upon delivery of the goods (Sec. 11)

-  This is applicable ONLY to negotiable receipts but NOT to a situation where there was a valid sale in accordance with Sec. 36

a.  When the goods are delivered already: Failure to cancel will make him liable to any one who purchased for value in good faith such receipt

b.  When only some of the goods were delivered: Failure to cancel or to state plainly in the receipt that some goods were delivered will make him liable to any one who purchased for value in good faith such receipt

(5) Issuing receipt for non-existing goods or misdescribed goods (Sec. 20):

GR:  a warehouseman is under obligation to deliver the identical property stored with him and if   he fails to do so he is liable.

Exception:  if the description consists merely of marks or labels upon the goods or upon the packages containing them, etc., the warehouseman is NOT liable even if the goods are not of the kind as indicated in the marks or labels

(6) In case of lost or destroyed receipts (Sec. 14)

·     Remember that a warehouseman must deliver to the one who has the receipt but if such was lost, a competent court may order the delivery of the goods only:

a.    upon proof of the loss or destruction of the receipt; AND

b.    upon giving of a bond with sufficient securities

NOTE:  the warehouseman is still liable to a holder of the receipt for value without notice since the warehouseman can secure himself in the bond given.

(7) Failure to take care of the goods (Sec. 12)

(8) Failure to give notice in case of sales of goods to satisfy his lien (Sec. 33) or because the goods are perishable and hazardous (Sec. 34)