Documents of Title
| Publication year | 1982 |
| Pages | 1150 |
| Citation | Vol. 11 No. 5 Pg. 1150 |
1982, May, Pg. 1150. Documents of Title
Despite its seemingly broad title, this article deals specifically with those documents of title discussed in Article 7 of Colorado's Uniform Commercial Code ("UCC").(fn1) The importance of these documents is obvious to anyone who has ever shipped or stored merchandise. In addition, as these documents are generally negotiable, it is vital that business people and their counsel be familiar with the statutes concerning them.
Typical situations involving warehouse receipts include the storage of grain in elevators and the storage of furniture and other personal belongings in the recently popular self-storage facilities available. Situations involving bills of lading generally concern shipments of packages by air, sea, rail and truck (including the firms which specialize in overnight service).
Only intra-Colorado situations are covered by Article 7 of the UCC. Bills of lading issued by any common carrier for the transportation of goods in any U.S. territory, the District of Columbia, from one state to a foreign country, from one state to another state, or from a place in one state to a place in the same state through another state or foreign country are governed by the Pomerene Bills of Lading Act,(fn2) which is not discussed here. Article 7, by its express terms, is subject to any applicable U.S. treaty, statute, regulatory statute, tariff, classification or regulation.(fn3)
The term "document of title" includes bills of lading, dock warrants, dock receipts, warehouse receipts or orders for the delivery of goods. It also covers any other document which in the regular course of business is treated as evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it concerns.(fn4)
A document of title must purport to be issued by or addressed to a bailee,(fn5) and must purport to cover goods in the bailee's possession, which are either identified or are fungible portions of an identified mass.(fn6) Since the two most common documents of title in this area of law are bills of lading and warehouse receipts, they are the main focus of this article.
A bill of lading is a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods (usually a common carrier) and includes an airbill, which is a document serving as a bill of lading for air transportation.(fn7) No particular form of document is necessary to create an effective bill of lading. A warehouse receipt is a receipt issued by a person engaged in the business of storing goods for hire.(fn8) This person is commonly called a warehouseman.(fn9)
Documents of title, including warehouse receipts and bills of lading, are
A warehouse receipt is commonly issued by a warehouseman. Where goods, including distilled liquor and agricultural products, are stored pursuant to any statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, an issued receipt has the same effect as a warehouse receipt, even if issued by the owner of goods who may not be a warehouseman.(fn11)
A warehouse receipt does not have to be in any particular form to be effective. However, if a warehouse receipt fails to embody within its written or printed terms any of the following items, the warehouseman will be liable for damages caused by the omission of any of these items:
Location of the warehouse where the goods are stored;
Date of issue of the receipt;
Consecutive number of the receipt;
A statement whether the goods received will be delivered to the bearer, to a specific person or to his order;
Rate of storage and handling charges, except that a statement that the goods are stored under a field warehousing arrangement is sufficient on a non-negotiable receipt;
Description of the goods or of the packages containing them;
Signature of the warehouseman (or his authorized agent);
If the receipt is issued for goods which the warehouseman owns, either solely or jointly, the fact of such ownership; and
If the precise amount of an advance is stated or if liabilities incurred are unknown at the time of the issue of the receipt, a statement to this effect and the purpose thereof is sufficient.(fn13)A statement of the amount of advances made, and liabilities incurred, for which the warehouseman claims a lien or security interest.(fn12)
A warehouseman may insert in any warehouse receipt issued by him any other terms which are not contrary to the provisions of Article 7 and which do not impair his obligation to deliver the goods or his duty of care. Any contrary provisions are ineffective.(fn14)
A party to or a good-faith purchaser for value of a warehouse receipt who relies upon the description of the goods contained therein may recover from its issuer damages caused by the non-receipt or misdescription of the goods. However, recovery is limited to the extent that the document conspicuously indicates that the issuer does not know whether any part or all of the goods were in fact received or conformed to the description.(fn15)
A warehouseman is liable in damages for the loss of or injury to any goods caused by his failure to exercise such care in regard to them as a reasonably careful person would exercise under like circumstances. However, unless otherwise agreed upon, he is not liable for damages which could not have been avoided by the exercise of this standard of care.(fn16)
The amount of damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in the case of loss or damage. This limitation may set forth a specific liability per item, or value per unit of
Unless otherwise provided by the warehouse receipt, the warehouseman is under a duty to keep separate the goods covered by each receipt, so as to permit identification and delivery of those goods. However, different lots of fungible goods may be co-mingled.(fn19) Fungible goods which are so co-mingled as to be impossible to separate are deemed to be owned in common by the persons entitled to them, and the warehouseman is severally liable to each owner for that owner's share. Where there is an over-issue of receipts (a mass of fungible goods is insufficient to meet all the receipts that were issued against this mass), the persons entitled to a portion of that mass include all holders to whom over-issued receipts have been duly negotiated.(fn20)
A warehouseman, upon notifying the person for whom the goods are being held and any other person known to claim an
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