LAW OF WAREHOUSE RECEIPTS IN ENGLAND AND AMERICA.

BY PROFESSOR H. C. GUTTERIDGE, CASSEL PROFESSOR OF COMMERCIAL AND INDUSTRIAL LAW IN THE UNIVERSITY OF LONDON.*

The movement towards uniformity of law appears to be making rapid progress in the United States of America, in so far as matters of commerce are concerned, and the day would seem to be approaching when commercial law will be uniform throughout the Republic. The Uniform Negotiable Instruments Act has been adopted by all the States with the solitary exception of Georgia, and this statute is closely followed in popularity by the Uniform Warehouse Receipts Act which has been enacted by all the States excepting Arizona, Indiana, Kentucky, Mississippi, New Hampshire, Oklahoma and South South Carolina. Twenty-two States now have the Uniform Sale of Goods Act, and twenty-one States have adopted the Uniform Bills of Lading Act. The impatience with which men of business regard restrictions imposed by territorial limits is strikingly illustrated by the fact that, of the thirteen different uniform laws which were adopted by twenty-three States in the course of the year 1919, no less than eleven dealt with commercial matters. Herein, one may also find proof, if any be needed, that the law merchant is still striving, as it has done throughout its history, to retain its quasiinternational character.

The marked success which has attended the framing of a uniform law of Warehouse Receipts is a matter which would seem to entitle this measure to careful consideration by English men of business and lawyers. This result is probably due to the fact that vast quan

*This Article is by permission reproduced from the Journal of Comparative Legislation and International Law.

1 The American Political Science Review, vol. xiv., p. 458.

tities of produce are warehoused throughout North America, and that the goods are principally dealt in by way of the transfer of the receipts given to the depositors by the warehouseman, and that these receipts are utilized by the holders for the purpose of obtaining advances from their bankers. English commerce is chiefly sea-borne, and the functions performed in America by these receipts are largely fulfilled in England by bills of lading, but a stage is very often reached at which a document issued by a warehouseman comes into existence either in substitution for the bill of lading or as supplementary to it.

It would therefore seem that the matter is one of sufficient importance to merit an investigation of the rules laid down by the American law, and a comparison of those rules with the English law affecting those documents (other than bills of lading) which are included under the heading of documents of title to goods.

The success of the Uniform Warehouse Receipts Law also proves incidentally that American men of business possess in a high degree the power of influencing commercial legislation in the various States; and that, when a real demand exists for uniformity of law, machinery is available which is capable of attaining the desired end without undue delay or friction."

Initiative of Business Men.

The refusal of the common law to attribute the quality of negotiability to these receipts had led to a certain amount of indiscriminate legislation by the various States prior to 1906, but the difficult problems involved had not been properly considered or thoroughly worked out, so that the statutes which had attempted to bring the law into harmony with the theory of commerce, in most cases, had failed to

Whether a dock warrant or delivery order displaces the bill of lading as the only symbol of goods in transitu is a difficult question. See Scrutton, Charter Parties and Bills of Lading, 9th Edition, p. 188, and Mr. A. T. Carter's article in L.Q.R., vol. viii., p. 300.

See Journal of Comparative Legislation, vol. xvi.. p. 154.

achieve their purpose. In the meantime the establishment of the Commission on Uniform State Laws had offered a way out of the difficulty by rendering it possible to bring the different States into line on such questions. The initiative seems to have been taken by the American Warehousemen's Association, with the active collaboration of the bankers and lawyers. The funds to meet the necessary expenses were easily found, and the Commissioners on Uniform State Laws were induced to entrust the drafting of a projet de loi to two well-known experts, Professor Williston of Harvard, and Mr. Barry Mohun, a practising lawyer and the author of the principal text-book on the subject. The draft as originally prepared was considered and discussed by all the business interests involved, and also by the Commercial Law Committee of the American Bar Association. A joint conference of all these bodies was held at New York, at which the draft was very fully discussed. Two thousand copies of the draft law were printed and distributed among commercial organizations, lawyers, judges, law teachers, and writers, inviting criticism and suggestions. The draft then came before the Commissioners on Uniform State Laws, the draftsmen reading it section by section and explaining its purport. The meeting of the Commissioners was attended by the President and Vice-PresiIdent of the American Warehousemen's Association and the Counsel and Secretary of the Standing Law Committee of the American Bankers' Association. The draft was thoroughly discussed and finally adopted by the Commissioners on August 28, 1906.*

The result of this co-operation between the State and all other interests involved was to ensure that the Act, when adopted, would have the support both of those who were to be affected by its provisions and those who would be called on to administer them.

p. 238.

Reports of American Bar Association, 1906, vol. xxx., Part II.,

It is substantially correct to say that the law relating to warehouse receipts has become uniform throughout the United States and that a basis is now provided for a comparison of the laws of the two great English-speaking nations dealing with this complicated and important question.

In each case the parent stock of the law, as it now exists, was the common law of England; and in each case the common law has been substantially varied by legislation in order to make it conform to mercantile theory. But the process of evolution has been more complete in the United States than is the case in England.

English Common Law.

The common law of England consistently refused to recognize commercial documents of the class to which warehouse receipts belong (e.g. dock warrants, delivery orders, wharfingers' certificates and receipts, etc.) as being in the nature of documents of title, or to regard them as symbolical of the goods they represent, as was the case with bills of lading. The Courts, in fact, construed them as being merely "tokens of authority to receive possession," and declined to allow either possession or property to pass by virtue of their transfer or negotiation. This was not in harmony with the current mercantile theory that these documents were so completely identified with the goods. which they represented that a transfer of the document itself was sufficient to give property as well as possession to the holder. A long struggle ensued between the judges and the mercantile community, which ended in the triumph of the common law principle that these documents merely operated as authorities to receive the goods from the bailee, and that an attornment by the latter was necessary before any change of possession could be effected. The result,

See Factors Act, 1889, s. 1 (4) for definition of documents of title, also s. 111 of the Stamp Act, 1891.

Blackburn on Sale, 3rd Edition, p. 451; Farina v. Home, 16 M. & W. 119.

from the business point of view, was that persons taking these documents in the ordinary course of trade were liable to all outstanding claims or equities, and might find, in the end, that their bargain was worthless.

English Statute Law.

The Legislature was accordingly set in motion to remedy this state of affairs, with the result that the law of England on the subject is now largely contained in certain intricate and sometimes obscure provisions of the Factors Act, 1889, and the Sale of Goods Act, 1893. In addition to this, there has also been a good deal of subsidiary legislation of a special character, dealing with warehouses situated in particular localities.

The operation of the Factors Act and Sale of Goods Act is confined to certain special cases, and it is noteworthy that these are dealt with on the footing that the documents in question are documents of title. These special cases are: (1) Dispositions of documents of title made to purchasers for value in good faith by: (a) Mercantile agents in possession with the consent of the owner, (b) vendors remaining in possession subsequent to the sale, (c) vendees in possession with the consent of the vendor; and (2) the protection of a sub-vendee against the original vendor's rights of lien and stoppage in transitu. Apart from this the common law still holds good. The documents do not represent the goods, as in the case of a bill of lading, and as between immediate vendor and vendee it is still necessary (apart from custom) to have an attornment by the bailee in order to constitute a constructive delivery of the goods. The transfer of a document of

1E.g. London and St. Katherine's Dock Act, 1864; the Legal Quays and Sufferance Wharf Acts, and various private Acts of Parliament, as to which see L.Q.R., vol. viii., p. 300.

As an instance of the difficulty which may be caused by this rule of law see Bentall v. Bunn, 3 B. & C. 423, where the mere fact that a delivery order was given for the goods and accepted by the buyer was held not to be an acceptance of the goods themselves, and that, as there was no contract in writing, the seller had no remedy.