Procter & Gamble Districuting Co. v. Lawrence American Field Warehousing Corp.

266 N.Y.S.2d 78 (1965)

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Nature of the Case

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Facts

Allied trades in vegetable oils manufactured by various producers including P. P sold such merchandise outright on sight draft with a bill of lading attached. Allied persuaded P to engage in a practice known as field warehousing. When Allied purchased vegetable oils from P, and other producers, as it did f. o. b. seller's plant or warehouse, Bayonne, New Jersey, the oil would be shipped to Bayonne to the seller's order and stored for the seller's account in D's warehouses. Down payments were made, described in the contract as 'Margin Requirements on Consigned Shipments', amounting to about 20% of the purchase price, at the time of receipt of the oil at d's warehouse, and the balance by sight draft with bill of lading attached, or cash in advance of shipment to buyer, as Allied disposed of the oil. P shipped 9,206,740 pounds of fully refined soybean oil under bills of lading to P itself as consignee at Bayonne, New Jersey, which was delivered for storage and safekeeping to D at the said warehouse for P's account. D issued five warehouse receipts for this oil. The warehouse receipts and month-end statements, based on D's books, are evidence that the oil was received by the defendant at its tank warehouse in Bayonne, New Jersey. It is undisputed that the market price of this commodity is fixed by frequent transactions between processors and their customers, and that on these delivery dates it was never less than the prices shown in the warehouse receipts which represented the $1,013,075.12 selling price agreed upon between P and Allied. The oil simply disappeared. P sued D for conversion. The court granted summary judgment to P. It held damages as the value of the oil on the day P discovered it missing. D appealed. D claimed it had a defense of reasonable care under 7-204. P appealed claiming that the damages should be the highest market value from delivery to the discovery that the oil was missing. The appellate division reversed a judgment of the Supreme Court and remanded the action for an assessment of damages. The modification consisted of granting partial summary judgment on the issue of liability only with respect to the first cause of action and severing the second cause of action. Ds again appealed. P appealed from so much of the judgment as reduced the amount of P's recovery by $ 217,279.06.