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HARRIS TRUST & SAV. BANK v. SLT WAREHOUSE

March 28, 1985

HARRIS TRUST AND SAVINGS BANK, PLAINTIFF,
v.
SLT WAREHOUSE COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Harris Trust and Savings Bank ("Harris") has charged SLT Warehouse Company, Inc. ("SLT") with breach of duty and failure to exercise due care as a warehouseman of grain in which Harris held a security interest. SLT now moves under 28 U.S.C. § 1404(a) ("Section 1404(a)") for transfer of this action to the United States District Court for the Western District of Kentucky. For the reasons stated in this memorandum opinion and order, the motion is granted.

Facts

Both Harris' place of incorporation and its principal place of business are in Illinois. As to SLT, both those relationships are with Missouri. SLT is licensed to do business in both Illinois and Kentucky and conducts field warehousing operations in both states.

This action arises out of warehousing services SLT provided to Wathen's Elevators, Inc. ("Wathen's")*fn1 in Henderson County, Kentucky between 1977 and 1982. To obtain credit from Harris for grain purchases, Wathen's turned over to SLT control of the grain storage facilities and inventory on Wathen's property. Wathen's would purchase grain from farmers and store it with SLT. SLT would issue a non-negotiable warehouse receipt to Harris, to secure the latter's interest in the grain. SLT could not release grain for resale without Harris' prior approval.

SLT hired Wathen's bookkeeper and office manager Raymond Sheets ("Sheets") to conduct SLT's warehousing operation on Wathen's premises. Sheets' duties to SLT included maintaining grain elevator and inventory records, preparing and issuing the warehouse receipts to Harris and obtaining executed withdrawal records for grain released for shipment. Harris in turn employed the First National Bank in Henderson ("Henderson Bank") as its agent to deal with Sheets and SLT. Henderson Bank processed the paperwork, including the warehouse receipts, for Wathen's line of credit. Upon notification by Henderson Bank that the proper paperwork had been completed, Harris would wire funds to Wathen's.

In March 1982 Wathen's ceased operations and filed for bankruptcy. When Harris attempted to enforce its security interest in Wathen's remaining inventory it discovered soybeans and white corn valued at over $435,000 were missing. Harris then filed its Complaint here against SLT:

    1. Counts I and II charge SLT with failure to exercise the
  due care required of warehousemen under Kentucky common law.
    2. Count III asserts SLT (through Sheets) breached its duty
  to notify Harris of a change in Wathen's financial condition
  that rendered Wathen's unable to perform its agreement with
  Harris.
    3. Count IV charges SLT violated its Kentucky statutory duty
  (Ky.Rev.Stat. § 359.110) to deliver grain promptly upon
  demand by Harris.

Wathen's bankruptcy has also given rise to other lawsuits currently pending in the Western District of Kentucky.

Section 1404(a) Standards

Section 1404(a) provides:

  For the convenience of the parties and witnesses, in the
  interest of justice, a district court may transfer any civil
  action to any other district or ...

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