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Gould v. Walker

May 13, 1944

GOULD ET AL.
v.
HIRAM WALKER & SONS, INC., ET AL.; ARPS ET AL. V. SAME.



Appeal from the District Court of the United States for the Southern District of Illinois, Northern Division; J. Leroy Adair, Judge.

Author: Evans

Before EVANS, SPARKS, and KERNER, Circuit Judges.

EVANS, Circuit Judge.

This controversy arose in this manner.A New York Company*fn1 bought a large quantity of whiskey from the Hiram Walker Company, and possessed warehouse receipts for some of it, and a contract to purchase, the balance of this stock. The New York Company sold "interests" in the whiskey to hundreds of tavern keepers, received down payments therefor, and issued to them what it called "whiskey warehouse certificates" to evidence such sales and such purchasers' interests. The New York Company became embarrassed financially and its assets were sold by the New York State Tax Commission in September, 1940. The sale was upon written notice.

Plaintiff, Gould, was notified of the impending sale by the manager of the New York Company and he attended and was the highest bidder. The sale was made to him and he paid $30,000 for the 1861 barrels so sold. The auctioneer read the notice of sale in plaintiff's presence. He asserts that it was not until after the sale that he learned of these alleged prior equities, and that he could not have ascertained their existence had he inquired of the Hiram Walker Co., the possessor of the liquor. He contends that the equity holders were guilty of negligence in not asserting their claims or notifying the possessor of the liquor of their rights thereto.

Plaintiff instituted this suit in March, 1941, against Hiram Walker Company to recover possession of the 1861 barrels of whiskey thus purchased at the auction sale. The Hiram Walker Company answered, and filed a counterclaim, in the nature of an interpleader, setting up the fact that it held the whiskey, to which two adverse claims were being made; that it did not know who was the rightful claimant and that it was ready to abide the decision of the court. It alleged the auction sale, and the fact that over two hundred persons had filed with it, claims of interest in the whiskey. An answer by one counter-defendant (a holder of a whiskey warehouse certificate) was filed and it was stipulated that it stand for all the remaining counter-defendants.

The real contest is between plaintiff (Gould) and the counter-defendants who assert their right to, or a lien on, said whiskey.

The evidence consisted of the oral testimony of plaintiff and the depositions of an attorney for the New York Tax Commission, and for one of the certificate holders, who attended the sale.

The trial court made findings of fact and conclusions of law. It found, inter alia:

"That at no time prior to the completion of Gould's purchase at said Warrant Agent's sale, or prior to Gould's notice to the Walker Companies of his purchase of said warehouse receipts and warrants, and their acceptance of him as the purchaser and owner thereof, did either the Walker Companies or the said Robert Gould have any notice or knowledge of any rights or claims of any of the Counter-Defendants herein, unless as a matter of law, the statements contained in the Warrant Agent's Notice of Sale be held to be notice to Gould thereof."

"That (the N.Y. Company) * * * kept records in which were recorded the names and addresses of the inter-pleaded Counter-Defendants, and the fact that certificates had been issued to them by (the N.Y. Company) * * * and disclosed the payments which had been made by the Counter-Defendants on account thereof, but that at the time of the Warrant Agent's sale in Brooklyn, New York, those records were in the possession of the New York State Tax Commission in Albany, about 150 miles distant from the place of sale."

As conclusions of law it found:

"That the Warrant Agent's notice of sale did not constitute such a warning of possible claims of a nature, such as have been asserted by the Counter-Defendants herein, as to place upon a reasonable man any duty of making inquiry of any one other than the Walker Companies. * * *

"That Robert Gould, in purchasing the Hiram Walker Warehouse Receipts and Warrants at the Warrant Agent's sale, was an actual bona fide purchaser thereof for value and without notice ...


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