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ADAMS v. RYAN & CHRISTIE STORAGE

February 23, 1983

Hugh T. ADAMS
v.
RYAN & CHRISTIE STORAGE, INC., Ryan & Christie Transit Corp.



The opinion of the court was delivered by: POLLAK

LOUIS H. POLLAK, District Judge.

 The issues in this case can, I think, be simply stated, although their resolution in a sense is not simple for the reason that there was no controlling Pennsylvania authority with respect to the issues.

 The case is a diversity matter. The plaintiff's father deposited with defendant warehouse a substantial quantity of items for storage, most especially including carpets apparently of considerable value. That was back in 1955. Within a year the senior Mr. Adams had died and the plaintiff, his son, upon whom these items in storage had now devolved, over the course of years added substantially to what was in storage and occasionally removed certain items. It was noted on the original warehouse receipt that the deposit was in a particular so-called Vault No. 4 in Building No. 2.

 The matters giving rise to litigation arose when in 1980 the plaintiff, on coming to look at what was in storage, discovered that certain carpets he had seen there in 1977, in the vault -- a vault which, incidentally, had never been locked shut -- were not there. When questioned, none of defendants' officers or employees were able to supply any information with respect to the missing carpets, and a formal letter of inquiry produced no response.

 There is no controversy with respect to the absence of a number of stored items. The controversy before the court relates solely to the measure of compensation.

 The goods were originally stored, and supplementary storage evidently followed the same pattern, under receipts which contained in small but not indecipherable language a limitation of liability on the part of the warehouse to thirty cents per pound. Although the original Mr. Adams and his son, the plaintiff, were authorized to provide for more substantial coverage, that is, a higher ceiling on liability, by paying to defendant some additional premium, this was at no time undertaken. The claim by plaintiff is that under the facts in this case, facts that I have summarized and to which the parties have stipulated, the thirty-cents-per-pound limitation should be regarded as inapplicable, and defendant should be required to reimburse plaintiff at the actual value of the items that have been lost.

 The framework for the case is section 7204(b) of chapter 72, volume 13, of Purdon's title 13, which recites:

 
Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight beyond which the warehouseman shall not be liable; provided, however, that such liability may on written request of the bailor at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt be increased on part or all of the goods thereunder, in which event increased rates may be charged based on such increased valuation, but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the tariff of the warehouseman, if any. No such limitation is effective with respect to the liability of the warehouseman for conversion to his own use.

 Now, plaintiff's theory is that this is a case falling within the closing sentence of the section that I have just read: "No such limitation is effective with respect to the liability of the warehouseman for conversion to his own use."

 The parties are at one pursuant to stipulation that nobody in fact knows, or at least nobody within the range of this judicial process knows, what happened to the lost goods. It is the position of the plaintiff, however, that the burden is on the warehouseman, whose access to the relevant information must generally be regarded as superior to the information available to the bailor, to come forward at least as an initial matter with some explanation of what has happened to the lost goods if the warehouseman is to avoid the inference that he has converted the items to his own use, but not to the inferance that the items were simply lost through the negligence of the warehouseman, in which case the stipulated thirty-cents-per-pound liability would apply.

 The parties agree that there is no body of Pennsylvania case law that leads unerringly in one direction or another. The present issue, so far as the diligence of counsel can fetch up what is relevant, simply appears not to have arisen in Pennsylvania. The issue has arisen elsewhere, and until recently the prevailing authority seemed to be reflected in, as a quite recent example, the Florida decision of Sanfisket, Inc. v. Atlantic Cold Storage Corp., 347 So.2d 647, an appellate decision of vintage 1977. There the court concluded that a loss which was unexplained by the warehouseman gave rise to an inference of negligence but not of conversion.

 In 1980 the New York courts brought an end to what seemed to be the even tenor of authority of which Sanfisket was an example with the litigation entitled ICC Metals, Inc. v. Municipal Warehouse Co., 50 N.Y.2d 657, 431 N.Y.S.2d 372, 409 N.E.2d 849.

 There the New York Court of Appeals affirmed judgments of the trial court and the Appellate Division which found for the plaintiff -- where no explanation whatsoever was offered by the warehouseman -- that the appropriate inference was conversion and hence a loss of insulation from liability above the particular amount stipulated in the warehouse receipts. The thrust of Judge Gabrielli's rather extended opinion was that the warehouseman had superior sources of information, and that if the warehouseman could be confident that non-explanation would result simply in liability up to the stipulated amount and not beyond, those in the warehouse business would be ...


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