 |
District of Columbia Official Code 2001 Edition. |
|
|
Division V. Local Business Affairs. |
|
|
Title 28. Commercial Instruments and Transactions. |
|
|
Subtitle I. Uniform Commercial Code. |
|
|
Article 7. Warehouse Receipts, Bills of Lading and Other Documents of Title. |
|
|
Part 4. Warehouse Receipts and Bills of Lading: General Obligations.
|
The obligations imposed by this article on an issuer apply to a document of title regardless of the fact that:
(a) The document may not comply with the requirements of this article or of any other law or regulation regarding its issue, form or content; or
(b) The issuer may have violated laws regulating the conduct of his business; or
(c) The goods covered by the document were owned by the bailee at the time the document was issued; or
(d) The person issuing the document does not come within the definition of warehouseman if it purports to be a warehouse receipt.
(Dec. 30, 1963, 77 Stat. 727, Pub. L. 88-243, § 1.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
Prior Uniform Statutory Provision
Section 20, Uniform Warehouse Receipts Act; Section 23, Uniform Bills of Lading Act.Changes
Most of the material is new; the uniform act sections cited deal only with non-receipt and misdescription.Purposes of Changes and New Matter
The bailee's liability on his document despite non-receipt or misdescription of the goods is affirmed in Sections 7-203 and 7-301. The purpose of this section is to make it clear that regardless of irregularities a document which falls within the definition of document of title imposes on the issuer the obligations stated in this Article. For example, a bailee will not be permitted to avoid his obligation to deliver the goods (Section 7-403) or his obligation of due care with respect to them (Sections 7-204 and 7-309) by taking the position that no valid "document" was issued because he failed to file a statutory bond or did not pay stamp taxes or did not disclose the place of storage in the document. Sanctions against violations of statutory or administrative duties with respect to documents should be limited to revocation of license or other measures prescribed by the regulation imposing the duty. As to the continuing vitality of regulations, in addition to those found in this Article, of documents of title, see Sections 7-103 and 10-103.
Cross References
Sections 7-103, 7-203, 7-204, 7-301, 7-309 and 10-103.
Definitional Cross References
"Bailee". Section 7-102.
"Document". Section 7-102.
"Document of title". Section 1-201.
"Goods". Section 7-102.
"Issuer". Section 7-102.
"Person". Section 1-201.
"Warehouse receipt". Section 1-201.
"Warehouseman". Section 7-102.
Prior Codifications
1981 Ed., § 28:7-401.
1973 Ed., § 28:7-401.
Neither a duplicate nor any other document of title purporting to cover goods already represented by an outstanding document of the same issuer confers any right in the goods, except as provided in the case of bills in a set, overissue of documents for fungible goods and substitutes for lost, stolen or destroyed documents. But the issuer is liable for damages caused by his overissue or failure to identify a duplicate document as such by conspicuous notation on its face.
(Dec. 30, 1963, 77 Stat. 727, Pub. L. 88-243, § 1.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
Prior Uniform Statutory Provision
Section 6, Uniform Warehouse Receipts Act; Section 7, Uniform Bills of Lading Act.Changes
Consolidated and rewritten.Purposes of Changes
1. This section treats a duplicate which is not properly identified as such like any other overissue of documents: a purchaser of such a document acquires no title but only a cause of action for damages against the person who made his deception possible, except in the cases noted in the section. But parts of a bill lawfully issued in a set of parts are not "overissue" (Section 7-304). Of course, if the issuer has clearly indicated that a document is a duplicate so that no one can be deceived by it, and in fact the duplicate is a correct copy of the original, the warehouseman is not liable for preparing and delivering such a duplicate copy.
2. The section applies to nonnegotiable documents to the extent of providing an action for damages for one who acquires an unmarked duplicate from a transferor who knew the facts and would therefore himself have had no cause of action against the issuer of the duplicate. Ordinarily the transferee of a nonnegotiable document acquires only the rights of his transferor.
3. Overissue is defined so as to exclude the common situation where two valid documents of different issuers are outstanding for the same goods at the same time. Thus freight forwarders commonly issue bills of lading to their customers for small shipments to be combined into carload shipments for which the railroad will issue a bill of lading to the forwarder. So also a warehouse receipt may be outstanding against goods, and the holder of the receipt may issue delivery orders against the same goods. In these cases dealings with the subsequently issued documents may be effective to transfer title; e.g. negotiation of a delivery order will effectively transfer title in the ordinary case where no dishonesty has occurred and the goods are available to satisfy the orders. Section 7-503 provides for cases of conflict between documents of different issuers.
Cross References
Point 1: Sections 7-207, 7-304, and 7-601.
Point 3: Section 7-503.
Definitional Cross References
"Bill of lading". Section 1-201.
"Conspicuous". Section 1-201.
"Document". Section 7-102.
"Document of title". Section 1-201.
"Fungible" goods. Section 1-201.
"Goods". Section 7-102.
"Issuer". Section 7-102.
"Right". Section 1-201.
Prior Codifications
1981 Ed., § 28:7-402.
1973 Ed., § 28:7-402.
(1) The bailee must deliver the goods to a person entitled under the document who complies with subsections (2) and (3), unless and to the extent that the bailee establishes any of the following:
(a) Delivery of the goods to a person whose receipt was rightful as against the claimant;
(b) Damage to or delay, loss or destruction of the goods for which the bailee is not liable;
(c) Previous sale or other disposition of the goods in lawful enforcement of a lien or on warehouseman's lawful termination of storage;
(d) The exercise by a seller of his right to stop delivery pursuant to the provisions of the article on sales (section 28:2-705);
(e) A diversion, reconsignment or other disposition pursuant to the provisions of this article (section 28:7-303) or tariff regulating such right;
(f) Release, satisfaction or any other fact affording a personal defense against the claimant;
(g) Any other lawful excuse.
(2) A person claiming goods covered by a document of title must satisfy the bailee's lien where the bailee so requests or where the bailee is prohibited by law from delivering the goods until the charges are paid.
(3) Unless the person claiming is one against whom the document confers no right under section 28:7-503 (1), he must surrender for cancellation or notation of partial deliveries any outstanding negotiable document covering the goods, and the bailee must cancel the document or conspicuously note the partial delivery thereon or be liable to any person to whom the document is duly negotiated.
(4) "Person entitled under the document" means holder in the case of a negotiable document, or the person to whom delivery is to be made by the terms of or pursuant to written instructions under a non-negotiable document.
(Dec. 30, 1963, 77 Stat. 727, Pub. L. 88-243, § 1.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
Prior Uniform Statutory Provision
Sections 8 through 12, 16 and 19, Uniform Warehouse Receipts Act; Sections 11 through 15, 19 and 22, Uniform Bills of Lading Act.Changes
Consolidated and rewritten.Purposes of Changes
1. The general and primary purpose of this revision is to simplify the statement of the bailee's obligation on the document. The interrelations of the separate sections of the old uniform acts dealing with "obligation to deliver," "justification in delivering," and "liability for misdelivery" are obscure. The present section is constructed on the basis of stating what previous deliveries or other circumstances operate to excuse the bailee's normal obligation on the document. Accordingly, "justified" deliveries under the old uniform acts now find their place as "excuse" under subsection (1). Unjustified deliveries, i.e., "misdeliveries" under the old acts, are simply omitted from the list of excuses, thus permitting the normal obligation on the document to be asserted.
2. The principal case covered by subsection (1)(a) is delivery to a person whose title is paramount to the rights represented by the document. For example, if a thief deposits stolen goods in a warehouse and takes a negotiable receipt, the warehouseman is not liable on the receipt if he has surrendered the goods to the true owner, even though the receipt is held by a good faith purchaser. See Section 7-503(1). However, if the owner entrusted the goods to a person with power of disposition, and that person deposited the goods and took a negotiable document, the owner's receipt would not be rightful as against a holder to whom the negotiable document was duly negotiated, and delivery to the owner would not give the bailee a defense against such a holder. See Sections 7-502(1)(b), 7-503(1)(a).
3. Subsection (1)(b) amounts to a cross reference to all the tort law that determines the varying responsibilities and standards of care applicable to commercial bailees. A restatement of this tort law would be beyond the scope of this Act. Much of the applicable law as to responsibility of bailees for the preservation of the goods and limitation of liability in case of loss has been codified for particular classes of bailees in interstate and foreign commerce by federal legislation and treaty and for intrastate carriers and other bailees by the regulatory state laws preserved by Section 7-103. In the absence of governing legislation the common law will prevail subject to the minimum standard of reasonable care prescribed by Sections 7-204 and 7- 309 of this Article. The optional language in subsection (1)(b) [not adopted in Minnesota. See Minnesota Code Comments, supra] states the rule laid down for interstate carriers in many federal cases. State decisions are in conflict as to both carriers and warehousemen. Particular states may prefer to adopt the federal rule.
4. Subsection (2) eliminates the implication of the old uniform acts that a request for delivery must be accompanied by a formal tender of the amount of the charges due. Rather, the bailee must request payment of the amount of his lien when asked to deliver, and only in case this request is refused is he justified in declining to deliver because of nonpayment of charges. Where delivery without payment is forbidden by law, the request is treated as implicit. Such a prohibition reflects a policy of uniformity to prevent discrimination by failure to request payment in particular cases.
5. Subsection (3) states the obvious duty of a bailee to take up a negotiable document or note partial deliveries conspicuously thereon, and the result of failure in that duty. It is subject to only one exception, that stated in subsection 1(a) of this section and in Section 7-503(1). It is limited to cases of delivery to a claimant; it has no application, for example, where goods held under a negotiable document are lawfully sold to enforce the bailee's lien.
Cross References
Point 2: Sections 7-502 and 7-503.
Point 3: Sections 7-103, 7-204, 7-309 and 10-103.
Points 5: Section 7-503(1).
Definitional Cross References
"Bailee". Section 7-102.
"Conspicuous". Section 1-201.
"Delivery". Section 1-201.
"Document". Section 7-102.
"Document of title". Section 1-201.
"Duly negotiate". Section 7-501.
"Goods". Section 7-102.
"Person". Section 1-201.
"Receipt of goods". Section 2-103.
"Right" Section 1-201.
"Terms". Section 1-201.
"Warehouseman". Section 7-102.
"Written". Section 1-201.
Prior Codifications
1981 Ed., § 28:7-403.
1973 Ed., § 28:7-403.
A bailee who in good faith including observance of reasonable commercial standards has received goods and delivered or otherwise disposed of them according to the terms of the document of title or pursuant to this article is not liable therefor. This rule applies even though the person from whom he received the goods had no authority to procure the document or to dispose of the goods and even though the person to whom he delivered the goods had no authority to receive them.
(Dec. 30, 1963, 77 Stat. 728, Pub. L. 88-243, § 1.)
HISTORICAL AND STATUTORY NOTES
UNIFORM COMMERCIAL CODE COMMENT
Prior Uniform Statutory Provision
Section 10, Uniform Warehouse Receipts Act; Section 13, Uniform Bills of Lading Act.Changes
Consolidated and rewritten.Purposes of Changes
The generalized test of good faith and observance of reasonable commercial standards is substituted for the attempts to particularize what constitutes good faith in the cited sections of the old uniform acts. The section states explicitly what is perhaps an implication from the old acts that the common law rule of "innocent conversion" by unauthorized "intermeddling" with another's property is inapplicable to the operations of commercial carriers and warehousemen, who in good faith and with reasonable observance of commercial standards perform obligations which they have assumed and which generally they are under a legal compulsion to assume. The section applies to delivery to a fraudulent holder of a valid document as well as to delivery to the holder of an invalid document.
Definitional Cross References
"Bailee". Section 7-102.
"Delivery". Section 1-201.
"Document of title". Section 1-201.
"Good faith". Section 1-201.
"Goods". Section 7-102.
"Person". Section 1-201.
"Receipt of goods". Section 2-103.
"Term". Section 1-201.
Prior Codifications
1981 Ed., § 28:7-404.
1973 Ed., § 28:7-404.
