GRAIN WAREHOUSES

GRAIN WAREHOUSES

Section 2, chapter 103, Laws of 1947, has no application against any insurance carried by the third party owner on a grain warehouse building where the grain warehouse building is leased to a licensed grain warehouseman.

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                                                                  March 29, 1950

Honorable Sverre N. Omdahl
Director of Agriculture
Old Capitol Building
Olympia, Washington                                                                                                              Cite as:  AGO 49-51 No. 244

Dear Sir:

            We have your letter of March 27, 1950, in which you ask the following question:

            "Please give us your opinion as to the applicability of the lien created by section 2, chapter 103, Laws of 1947 (11569-16 Rem. Supp. 1947), on any insurance carried by a third party owner on a grain warehouse building where the grain warehouse building is leased to a licensed grain warehouseman."

            The conclusions reached may be summarized as follows:

            Section 2, chapter 103, Laws of 1947, has no application against any insurance carried by the third party owner on a grain warehouse building where the grain warehouse building is leased to a licensed grain warehouseman.

                                                                     ANALYSIS

            Chapter 103, Laws of 1947 (11569-15 to 17 Rem. Supp. 1947) consists of three sections.  Section 1 relates to the evidence of insurance policies which a prospective grain warehouseman must file with the Director of Agriculture at the time of applying for his license and would appear to be immaterial to this opinion.  Section 3 relates to matters immaterial herein.  Section 2 is the section with which this opinion is primarily concerned.  It provides:

             [[Orig. Op. Page 2]]

            "Should any public grain warehouse be partially or completely destroyed by fire, internal explosion, lightning or tornado, the owners of warehouse receipts, storage receipts and receiving scale weight receipts of any grain damaged or destroyed therein shall, in addition to the insurance provided in section 1 hereof, and to the extent of the market value of said grain have a first lien upon the interest of the owner of such public grain warehouse in the proceeds of any policy of insurance on said building payable to the owner thereof."

            It would seem clear that where the licensed warehouseman also owns the grain warehouse building in fee simple, that section 2 creates a lien upon any insurance carried by the licensed grain warehouseman thereon, all as provided in such section.

            Would the lien be also impressed where the grain warehouse building was owned by a third party and was leased under any arrangement to the licensed grain warehouseman?

            The word "owner" is not a technical term and its precise meaning must be determined according to the subject matter and the connection in which it is used.  Stahl Brewing and Malting Co. v. Van Buren, 45 Wash. 451, 88 Pac. 837; Clarke v. Yukon Inv. Co., 83 Wash. 485, 175 Pac. 624; Prentiss v. Bogart, 84 Wash. 481, 147 Pac. 39;Smith v. Craver, 89 Wash. 243, 154 Pac. 156;State ex rel. Hall v. Savidge, 93 Wash. 676, 161 Pac. 471; Great Northern Ry. Co. v. Oakley, 135 Wash. 279, 237 Pac. 990;State ex rel. Erickson v. Martin, 4 Wn. (2d) 421, 103 P. (2d) 1097.

            A statute which creates a right where none existed at common law should be strictly construed.  Dernac v. Pacific Coast Coal Company, 110 Wash. 138, 188 Pac. 15;Kuehn v. Faulkner, 136 Wash. 676, 241 Pac. 290;Post v. Fischer, 191 Wash. 577, 71 P. (2d) 659.

            Under section 1 the director cannot issue a license for operating a grain warehouse until the applicant has filed satisfactory evidence of the existence of an insurance policy as provided in the section.  If the policy be cancelled, the director must suspend the license until a new policy can be issued.  The lien given by section 2 is simply an additional security given to the owners of warehouse receipts, storage receipts and receiving scale weight receipts.

             [[Orig. Op. Page 3]]

            Where the warehouse building is owned by a third party and is leased under some arrangement to a licensed grain warehouseman, such licensee might carry insurance to protect his leasehold interest, such as use and occupancy insurance.  If such licensee had such insurance and the elements mentioned in section 2 occurred, then whatever insurance such licensee might carry would possibly be subject to the lien.

            A reading of all the laws pertaining to licensed grain warehousemen would seem convincing that the legislature, at least until the passage of chapter 103, Laws of 1947, had been concerned only with the licensed grain warehouseman as one party and the owner or holder of warehouse receipts, storage receipts, and receiving scale weight receipts as the other party.  Prior to the passage of chapter 103, the legislature had evidenced no particular interest or concern in a situation where a third party might own a building and lease the same to a licensed grain warehouseman.  In this last mentioned situation the director might grant or refuse the license, as the facts of the situation demanded.  We need not particularize.  See generally section 6978 to 7015 Rem. Rev. Stat.; chapter 186, Laws of 1933; chapter 157, Laws of 1935; and chapter 90, Laws of 1937.

            To determine the legislative intent we may resort to the title of the act.  McKenzie v. Mukilteo Water Dist., 4 Wn. (2d) 103, 102 P. (2d) 251; Hastings v. Bremerton, 159 Wash. 621, 294 Pac. 551; State ex. rel. Seymour v. Superior Court, 168 Wash. 361, 12 P. (2d) 394;State ex rel. Ham, Yeardsey & Ryrie v. Superior Court, 70 Wash. 442, 126 Pac. 475.

            The title of chapter 103, Laws of 1947, reads:

            "AN ACT relating to the licensing of public grain warehouses and requiring insurance on all grain accepted for storage by operators of public grain warehouses."

            It would seem to us that the title to the act is not broad enough to comprehend an interpretation of section 2, which would have the effect of creating a lien upon insurance which a third party owner of a building used as a grain warehouse might be carrying upon such building.  Post v. Fischer, 191 Wash. 577, 71 P. (2d) 659; also Thayer v. Snohomish Logging Co., 101 Wash. 458, 172 Pac. 552;Ayers v. City of Tacoma, 6 Wn. (2d) 545, 108 P. (2d) 348.

            The title would probably be held broad enough to make the lien created by section 2 embrace any insurance carried by the warehouseman, if such warehouse building is owned by the licensee.  It might also be held broad enough to include any insurance in the nature of use and occupancy carried by the licensee if he be the lessee of such warehouse.  But it would not be  [[Orig. Op. Page 4]] broad enough to comprehend any lien upon any insurance carried by a third party owner of a warehouse which is leased to a licensed grain warehouseman and written to protect such interest of such third party in the warehouse.

            We should harmonize the act with the constitution.  Robb v. Tacoma, 175 Wash. 580, 128 P. (2d) 327.

            We therefore hold that section 2, chapter 103, Laws of 1947, should be interpreted so as to make the lien therein created apply where the licensed grain warehouseman also owns the grain warehouse building in fee simple and is carrying insurance thereon.

            Such lien probably would exist where the licensed grain warehouseman is lessee of a warehouse building and carries some insurance to protect his leasehold interest, such as use and occupancy insurance.

            We further hold that section 2, chapter 103, Laws of 1947, has no application against any insurance carried by a third party owner on a grain warehouse building where the grain warehouse building is leased to a licensed grain warehouseman.

Very truly yours,

SMITH TROY
Attorney General

GEORGE DOWNER
Assistant Attorney General