84-7-403. Obligation of bailee to deliver; excuse. (a) A bailee shall deliver the goods to a person entitled under a document of title if the person complies with subsections (b) and (c), unless and to the extent that the bailee establishes any of the following:
(1) Delivery of the goods to a person whose receipt was rightful as against the claimant;
(2) damage to or delay, loss, or destruction of the goods for which the bailee is not liable;
(3) previous sale or other disposition of the goods in lawful enforcement of a lien or on a warehouse's lawful termination of storage;
(4) the exercise by a seller of its right to stop delivery pursuant to K.S.A. 84-2-705, and amendments thereto, or by a lessor of its right to stop delivery pursuant to K.S.A. 84-2a-526, and amendments thereto;
(5) a diversion, reconsignment, or other disposition pursuant to K.S.A. 2024 Supp. 84-7-303, and amendments thereto;
(6) release, satisfaction, or any other personal defense against the claimant; or
(7) any other lawful excuse.
(b) A person claiming goods covered by a document of title shall satisfy the bailee's lien if the bailee so requests or if the bailee is prohibited by law from delivering the goods until the charges are paid.
(c) Unless a person claiming the goods is a person against which the document of title does not confer a right under K.S.A. 2024 Supp. 84-7-503(a), and amendments thereto:
(1) The person claiming under a document shall surrender possession or control of any outstanding negotiable document covering the goods for cancellation or indication of partial deliveries; and
(2) the bailee shall cancel the document or conspicuously indicate in the document the partial delivery or the bailee is liable to any person to which the document is duly negotiated.
History: L. 2007, ch. 90, § 28; July 1, 2008.
KANSAS COMMENT, 1996
Subsection (1) states the circumstances excusing the bailee's failure to deliver the goods and consolidates and rewrites several sections of the former law covering warehouse receipts. See former K.S.A. 82-108, 82-109, and 82-110. Under this subsection, the bailee must deliver the goods to the "person entitled under the document" unless he is excused under one of the listed paragraphs. Subsection (4) defines the "person entitled under the document" referred to in subsection (1). The term "holder" is defined in 84-1-201(20). See also K.S.A. 34-252 through 34-255. K.S.A. 34-252 states the persons to whom a warehouseman is justified in delivering grain, while K.S.A. 34-253 declares that a warehouseman who delivers to anyone else is liable "as for conversion."
Paragraph (1)(a) gives priority to persons with paramount title over the person entitled under the document. This is normally the true owner of the goods. See 84-7-503(1). This provision is in accord with prior Kansas law. Peck v. Merchants' Transfer & Storage Co., 85 K. 126, 116 P. 365 (1911). But see K.S.A. 34-260, 34-261 and 34-262, which provide circumstances where an adverse claim of title of a third person is and is not a defense to a claim for failure to deliver.
Paragraph (1)(b) excuses the bailee in those situations in which the bailee would be excused from nondelivery under the common law. The bailee's standard of care in these cases is stated in 84-7-204 and 84-7-309. When negligence is a necessary part of the plaintiff's case, the burden of proving freedom from negligence will rest on the bailee. This was so under former K.S.A. 82-108, for warehousemen, and appears to be true for carriers under K.S.A. 66-304. The Kansas legislature omitted language which the uniform provision of this paragraph indicated that states could differ on without serious damage to uniformity. That language would have placed the burden of proving negligence on the person entitled under the document. The provision Kansas omitted has also been omitted by 35 other jurisdictions.
Paragraph (1)(c) excuses the bailee's failure to deliver when the bailee has sold the goods in lawful enforcement of its lien under 84-7-210 or 84-7-308, or the warehouseman's lawful termination of storage under 84-7-206.
Paragraph (1)(d) excuses the bailee's failure to deliver when the seller has ordered stoppage under 84-2-705. Paragraph (1)(e) is similar, and excuses failure to deliver when the bailee has honored a diversionary order under 84-7-303.
Paragraph (1)(f) preserves any common law defense which may be available to the bailee. Paragraph (1)(g) also preserves common law defenses, and may also apply in the situations encompassed by such provisions as 84-7-602 and 84-7-603.
In Butler Mfg. Co. v. Americold Corp., 841 F. Supp. 1113 (D. Kan. 1993), the court granted summary judgment to Americold and held that Americold was not a bailee or warehouseman where it leased space to Safeway which in turn stored goods for QHC under warehouse receipts. The court found that Americold did not have custody, possession or control over QHC's goods. Americold had no contractual relationship with QHC. Safeway issued the warehouse receipts and had control of the premises. Americold only had the right to enter and inspect the leased premises at reasonable hours and to perform duties called for in the lease with Safeway.
Subsection (2) protects the bailee's lien by providing that the claimant must satisfy the lien if requested by the bailee. Former K.S.A. 82-108 was similar in general operation and provided that the warehouseman had to surrender the goods on demand if the demand was accompanied by an offer to satisfy the lien. Under subsection (2), there is no implication that the claimant must formally tender the amount of the charges due. If charges are due, however, the claimant will have to pay them to receive delivery if requested, and if the request for payment is delayed, the claimant will be liable in any event.
Subsection (3) is in substantial accord with former K.S.A. 82-111. The exception created in favor of a person against whom the document confers no right is new. K.S.A 34-254 and 34-255 are identical in substance to this subsection. Under K.S.A. 34-294, a warehouseman who delivers grain under a negotiable receipt without obtaining possession of the receipt is guilty of a crime.
Revisor's Note:
Former section 84-7-403 repealed by L. 2007, ch. 90, § 78 and the number reassigned to the current text.
CASE ANNOTATIONS
1. Whether warehouse operator who leased space to lessee was liable for damages to sublessee's property examined. Butler Mfg. Co., Inc. v. Americold Corp., 841 F. Supp. 1113, 1114, 1115 (1993).
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